HOUSING FINANCE BILL

HL Deb 13 June 1972 vol 331 cc783-974

8.2 p.m.

House again in Committee.

LORD DIAMOND moved Amendment No. 60: Page 10, line 41, leave out ("60") and insert ("66⅔").

The noble Lord said: This is not very dissimilar from an Amendment which we discussed at an earlier stage. The figure of 60 per cent. appears in subsection (4), and it is a figure down to which the Secretary of State may come by order after substituting it for the figure of 75 per cent. which appears in Table 2 for the years subsequent to 1982–83. The argument I shall put to your Lordships is the same as I have put on a previous occasison, and therefore I shall put it quite shortly. At the moment the Table provides for a reduction by slow stages of 5 per cent. down to 75 per cent., and the assumption is that that would be the figure at which it should rest. However, in this further subsection the Secretary of State takes power to reduce that 75 per cent. to 60 per cent. In our opinion 75 per cent. is a sufficiently low figure. As we have already indicated, we believe it is 25 per cent. too low. The figure should be 100 per cent. But that is a matter which your Lordships' House has decided, and we are now compelled to have regard to a figure of 75 per cent.

If one is going to have a figure of 75 per cent., that should be the minimum figure. However, the Government think it right at this stage to contemplate the situation after 1981–82—such years after 1981–82 as may be specified in the order. The Government think it right to contemplate the situation after 1981–82 and to take powers at this premature stage and to take powers at this premature stage further to reduce that percentage to a figure not less than 60 per cent. I well recollect the arguments which the noble Lord, Lord Drumalbyn, used in supporting the Bill at an earlier stage when I sought to do the identical thing and remove the 60 per cent. He suggested then that 60 per cent. was a happy floor if one chose as a medium 75 per cent., because then one's ceiling was a similar distance away—namely, 90 per cent.—and, lo and behold, that was the ceiling in the Table, so that if one went from 90 per cent. to 75 per cent. one ought to take power to go to 60 per cent.

The error in that argument was that the Table showed a movement of 5 per cent. per annum, and the power taken by the Secretary of State was to move straightaway to 60 per cent. ft was not an argument that was sufficiently weighted to stand more than one error. One error would be sufficient to topple it, and we on this side did not regard it as being a very powerful argument in any event. Another point we made at that time, and which I repeat, was that it was going much too far to presume—that is a better word than "assume"—that at this stage one could foresee what the circumstances would be after 1982–83, which to me is a very long time ahead. The noble Lord, Lord Drumalbyn, in his flourishing youth, may regard it merely as the day after tomorrow, but I think it is an extremely long time ahead, and no Government should take upon themselves the responsibility for foreseeing what the position will be at that time, particularly as there will be ample opportunities and many Bills affecting housing, as there have been in the past, where the matter could be put right if the Government of the day wanted to put it right having regard to the facts of the day, without trying to foresee them at this long distance.

Unfortunately, the noble Lord was not persuaded as to that. In this case we have yet a further argument—that really the Committee has shown there is support on all sides for the view that 75 per cent. is 25 per cent. too low and that the figure ought to be 100 per cent. It is going a long way to reduce to 75 per cent. the contribution which the national Government are going to make to the relief of poverty. It is an intolerable suggestion that it should get down to 75 per cent. However, I have made my point and have not been able to sustain it. It is a much stronger point that it should be 100 per cent. here rather than in any other part of the Bill. The noble Lord knows that all the local authority associations feel this just as strongly as I do. It is a profound mistake of philosophy that one should regard the relief of poverty as, even in part, a local responsibility. If one does that one has gone a long way to go down to 75 per cent., and I should have thought nobody would want to go lower than that, having regard to the general temper displayed by the Committee, although for practical reasons one cannot get Division figures to represent that atmosphere precisely.

I would hope that the noble Lord would stick at 75 per cent. Why, then, have I put in a figure of 66⅔ per cent.? Not because there is any argument in support of going down as far as 66⅔ per cent., but I recognise that I am weak and the Government are strong. I am right and the Government are wrong. Unfortunately, that is something which I cannot persuade them about, and I can only appeal to them on grounds of reason and compassion and the feeling which local authorities all over the country must already have about a figure of even 75 per cent., and ask them not to go further than they need to go at present. In my view, the Government do not need subsection (4) at all, but if they insist on having it, then, for heaven's sake, let them show some sense of compromise, some sense of being conscious of the pressure and of the feelings of the local authority associations throughout the country. Let them make what is merely a token contribution to a better feeling and a better understanding between local government and central Government, which, after all, is vitally important for the smooth running of our affairs thoroughout the country, and accept this Amendment, which is a very modest one. I beg to move.

LORD DRUMALBYN

When we discussed this point on the rising costs subsidy I said that I was prepared to lock at the figure between now and the next stage of the Bill and I could not say more than that. I am quite prepared to say that in this case as well. In spite of what the noble Lord has said, I think it would be anomalous if we introduced a figure of 66⅔ here when we did not do so earlier. When I say that I will look at it, I mean of course that I will look at the whole circumstances of the three occasions where this arises. On Clause 8 we shall be coming to the third occasion. Therefore I hope that the noble Lord will accept my assurance that we shall look at this point again in relation to each of those three cases, and that he will agree to withdraw his Amendment on those terms.

LORD DIAMOND

Yes, I shall gladly do that. I am grateful to the noble Lord for repeating what he said earlier in relation to a similar Amendment. At the moment I can only say that I am grateful to him for promising to look at this point. I should not necessarily consider a different rate anomalous; that is to say, if the noble Lord cannot feel in respect of an earlier clause that he can make a reduction of the kind required, or at least review it, I should be sorry if he felt himself debarred from considering a reduction in respect of this Amendment and the subsequent one. I feel that the case is very strong indeed. I am grateful for the noble Lord's undertaking to give the matter consideration, and I therefore beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.13 p.m.

On Question, Whether Clause 6 shall stand part of the Bill?

LORD DIAMOND

I shall not detain your Lordships long on this part of the Bill. We have already discussed the essential evils in the clause and we have not been able to make much Of an impact, except that the noble Lord has been good enough to say that he will look at the minor point which I recently raised. I do not think that the provisions in this clause are sufficiently complicated to warrant a lot of time being spent on an explanation of it, although of course we shall always be glad to hear anything which the Government wish us to take on board. But I am bound to say, without going over all the ground again, that the clause contains provisions which are wholly unacceptable. Nothing will ever convince me that it is right for a Government to provide a subsidy for the relief of poverty on the basis that it is doubly limited—limited as to percentage and limited as to qualification—which is what this clause does. Therefore I am bound to say that we must show in the usual way our dissatisfaction and horror of what the Government are proposing to do.

LORD DEUMALBYN

Before my noble friend Lord Hylton speak, may I say that if we left out this clause there would be no rebate scheme at all?

LORD DIAMOND

I understand that, and I understand therefore that the noble Lord can say to me that if I carry the logic of my argument to its full length I am carrying it ad absurdum. But I have no other method of showing to the Committee and to those who read the Report of our proceedings that we share completely the views of all the local authorities that it is a monstrous thing which the Government are proposing to do in putting on to localities the responsibility for relieving poverty. That is a national responsibility. It is a national disgrace if there is poverty and not a local disgrace. Only to a very minor extent is it something which can possibly be called a responsibility of a particular locality. In certain of our regions we have great problems of unemployment, of industries receding and even dying, and great problems of low wages and of foreseeing the future. If, in addition to all that, those local authorities have to pay a share of the relief of poverty in their area, it will be monstrous.

LORD HYLTON

I should like to ask my noble friend Lord Drumalbyn why the Government have rejected the unanimous advice of the local authority associations which deal with housing. I do not think we have yet had an answer on this point. My mind goes back to the Immigration Act last summer when, against the advice of the police, the Government wished to legislate that new immigrants from the Commonwealth should register with the police. Eventually, when they were pressed from all sides of the House, they gave way on the point. Can the Government at least say that they will think again about rent rebates and who should pay for them, in the face of the unanimous advice of the local authority associations?

LORD DRUMALBYN

First of all, may I say to the noble Lord, Lord Diamond, that I can understand his wanting to register his discontent, but he is really doing it twice over. He has already done it in the case of the percentage and this is really the same point. However, if he wishes to do that, I can only say to him that his vote is capable of being misrepresented. In reply to my noble friend, may I say that of course one always listens to the advice of local authorities, but he will be the first to recognise that they themselves have a financial interest in the matter. Therefore, one has to qualify the attention which one gives to their advice by bearing that in mind. I have stated the principles which we regard as important in this matter. We disagree that this has something to do with the relief of poverty; we do not think it has. We think that this is primarily a housing problem, as can be shown, for example, by the fact that some local authorities already charge differential rents—they are not rent rebates at all—according to the means of their tenants. So, according to the line they take, they could say that that, again, is a matter which has to do with the relief of poverty. There are ample precedents for this, but we need not go over the arguments again. I am sorry that I cannot accede to my noble friend's case here, but I am sure that he will at least see our point of view, even though he does not agree with it.

LORD GARNSWORTHY

The noble Lord said that if my noble friend carries this to a Division he will be liable to be misrepresented. May I ask by whom? I am quite certain that the noble Lord. Lord Drumalbyn, does not misunderstand my noble friend's position. We are forced into registering our discontent with the Government's complete unwillingness to meet even the most moderate suggestions for ameliorating the burden which they are insisting on imposing upon local authorities. There can be no question here of misrepresenting our position. I am quite certain that the noble Lord, Lord Drumalbyn, would be the first to protest if anybody sought to misrepresent our position on this matter.

If we go into the Division Lobbies against this clause we shall do so as a protest against the unwillingness of the Government to show even the smallest degree of reasonableness. It matters not how reasonable or how modest proposals from this side of the Committee are; we are still up against a barrier that no argument seems to be able to penetrate. I cannot think that this is the fault of the noble Lord, Lord Drumalbyn, because he is a very reasonable person. It may well be that he can do nothing other than what he is doing, but it would be helpful if it could be indicated more often that he will take up strongly with his right honourable friend the Secretary of State the feeling which exists here in regard

Resolved in the affirmative, and Clause 6 agreed to.

8.30 p.m.

Clause 7 [Rate fund contributions in respect of rent rebates]:

On Question, Whether Clause 7 shall stand part of the Bill?

to the treatment which has been meted out to the three associations—the A.M.C., the U.D.C. Association and the R.D.C. Association. If we divide the Committee, let us be quite clear that it is not this side of the Committee that is putting the subsidy at issue but the decision of the Front Bench opposite or the Government for whom it speaks. They are completely unwilling to meet even the most modest of proposals for ameliorating the position of local authorities.

8.22 p.m.

On Question, Whether Clause 6 shall stand part of the Bill?

Their Lordships divided: Contents, 62; Not-Contents, 41.

CONTENTS
Aberdare, L.	de Clifford, L.	Milverton, L.
Ailwyn, L.	Derwent, L.	Molson, L.
Alport, L.	Drumalbyn, L.	Mowbray and Stourton, L. [Teller.]
Auckland, L.	Dundonald, E.
Balerno, L.	Elles, Bs.	Nugent of Guildford, L.
Balfour, E.	Ferrers, E. [Teller.]	Oakshott, L.
Balfour of Inchrye, L.	Ferrier, L.	Onslow, E.
Beauchamp, E.	Gainford, L.	Rochdale, V.
Belhaven and Stenton, L.	Glendevon, L.	Ruthven of Freeland, Ly.
Belstead, L.	Goschen, V.	Saint Oswald, L.
Berkeley, Bs.	Gowrie, E.	Sandford, L.
Bethell, L.	Grenfell, L.	Sempill, Ly.
Brabazon of Tara, L.	Hanworth, V.	Somers, L.
Brooke of Cumnor, L.	Hewlett, L.	Strathclyde, L.
Burton, L.	Inglewood, L.	Sudeley, L.
Clitheroe, L.	Killearn, L.	Tweedsmuir, L.
Colville of Culross, V.	Kinloss, Ly.	Tweedsmuir of Belhelvie, Bs.
Cranbrook, E,	Latymer, L.	Vernon, L.
Crathorne, L.	Limerick, E.	Vivian, L.
Crawshaw, L.	Margadale, L.	Wakefield of Kendal, L.
Cromartie, E.	Massereene and Ferrard, V.	Young, Bs.

NOT-CONTENTS
Archibald, L.	Hoy, L.	Seear, Bs.
Avebury, L.	Hughes, L.	Segal, L.
Bacon, Bs.	Hylton, L.	Simon, V.
Beswick, L.	Jacques, L. [Teller.]	Slater, L.
Blyton, L.	Janner, L.	Snow, L.
Burntwood, L.	Lee of Asheridge, Bs.	Stow Hill, L.
Champion, L.	Llewelyn-Davies of Hastoe, Bs.	Taylor of Mansfield, L.
Diamond, L.	Maelor, L.	Wade, L.
Energlyn, L.	Milner of Leeds, L. [Teller.]	Watkins, L.
Evans of Hungershall, L.	Morris of Kenwood, L.	Wells-Pestell, L.
Gaitskell, Bs.	Phillips, Bs.	Winterbottom, L.
Garnsworthy, L.	Platt, L.	Wright of Ashton under Lyne, L.
Greenwood of Rossendale, L.	Popplewell, L.
Hale, L.	Ritchie-Calder, L.	Wynne-Jones, L.

LORD GARNSWORTHY

Without question, this Bill is one of major importance; and, far from having any apology to offer for pressing and probing, one feels that perhaps one ought to do even more if one is to keep faith with those outside this Committee who are so much involved in the consequences of the Bill. The Bill itself will affect quite directly no less than one-third of the people of this country. It is a Bill which will affect local authorities. It is a Bill which has already affected the regard as between national and local government; a Bill which has put at issue the good will that is essential if local government is really to serve the interests of the people in the various districts and localities of this country. That is why we on this side are very conscious of the considerable opposition that exists. Indeed, I think nobody can doubt the strength of feeling so far as the Labour movement is concerned; and, perhaps more important, that of the local authorities under Labour control, who feel themselves being pressurised and coerced in a manner they deeply resent. Beyond that, of course, again, there are the views of the three associations representing the local authorities concerned with housing.

The case against Clause 7 is much the same as that which was stated when we were considering Clause 6. If I may quote the beginning of Clause 7: This section has effect as to the rate fund contributions Ito the Housing Revenue Account) to be made by a local authority in respect of rent rebates granted by the local authority for the year 1972–73 or any subsequent year. One has to hand it to the Government: they are not content with legislating for 1981–82; they are legislating in perpetuity. But I suppose we all of us know that there will be another housing Bill and there will be another Government with a different attitude.

As is stated in the clause, this section has effect as to rate fund contributions, and A local authority's costs of administering their rebate scheme under Part II of this Act for any year shall be arrived at by the local authority in accordance with such formula as the Secretary of State may from time to time determine. I do not want to traverse the same argument all over again. We are extremely anxious to be helpful in making progress on this Bill so long as no point of importance is overlooked; and we feel an obligation to give the Government every opportunity to appreciate what they are doing and the situation they are creating. As I say, without traversing the same arguments all over again, I should once more like to emphasise the views of the local authority associations. They feel that injustice is being done in this field—and it is. I was very struck, as I am sure all noble Lords in the Chamber were, by the point raised by the noble Lord, Lord Hylton. What is the Government's reason, not merely for rejecting the advice of the three associations but, so far as one is able to judge from what has been said about their attitude, ignoring their views?

LORD DRUMALBYN

Would the noble Lord allow me to interrupt? It would plainly be improper for us to traverse the same argument we had on the last clause. As I understand it, he has been making an introduction to the remarks that he is about to make in relation to this clause, which is really a machinery and an accounting clause. We have disposed of the matter of principle, and I hope, therefore, that he will direct his mind to this clause fairly soon.

LORD GARNSWORTHY

I can well understand the noble Lord, Lord Drumalbyn, putting that point for consideration; but may I remind him that the rubric to this clause reads: Rate fund contributions in respect of rent rebates. It is therefore of importance that we should give some consideration to this clause. As I promised, I have no intention of repeating all the arguments that were advanced on Clause 6. I think perhaps the noble Lord did not hear me. Let me say again that I have no intention of repeating all the arguments. But I did draw attention to the noble Lord's failure to respond or to reply to the invitation from his noble friend who sits behind him. May I say that I think, in regard to the position we are discussing, that we lack a very great deal of information. I realise that we have certain figures as to the number of tenants who will be involved in rent rebates. We can only guess how many of those tenants will claim rebates: we have no figure of the total amount that is involved. On the question of take-up, if the take-up in other fields of means-tested benefits is any indication as to the expectations in regard to this Bill, and in regard to this section of the Bill—this clause and the previous clause—there will be a shortfall in take-up.

LORD DRUMALBYN

I am very sorry to interrupt the noble Lord again. but we have our own rules of order as the noble Lord knows, and they require the observations on a particular Motion to be directed to the clause which is the subject of that Motion. Here we are not concerned with the question of take-up, because that is a payment that will have been made. We are concerned with the rate fund contributions in respect of the out-turn of the year so far as rent rebate payments are concerned.

LORD GARNSWORTHY

I am sorry if the noble Lord thinks that what I am saying has no relevance to that, because in my view it has; but I am sure that he will be a little comforted by my saying that I have pretty well reached the end of my remarks. Having said that I do not want to traverse all the arguments again, may I say that we on this side feel that the Bill would be the better for this clause being deleted.

LORD DRUMALBYN

Perhaps I can say just a quick word merely to tell your Lordships what the clause does. In view of what the noble Lord has said, I think this is perhaps what the noble Lord would like me to do. Subsection (1) really follows on subsection (1) of the previous clause, which talks about the rent rebate subsidy payable to a local authority for the credit of their general rate fund; and this provision deals with the corresponding rate fund contribution that has to be made by the local authority. Subsection (2) provides that the standard amount of rent rebates for the year will be transferred to the Housing Revenue Account. The noble Lord, Lord Diamond, has already dealt with this point in the discussion on an earlier Amendment, so I need not go over that again.

Subsection (4) deals with the costs of administering the rebate scheme, and there again we have already dealt with that in discussion on the previous Amendment. I would only draw the noble Lord's attention to the requirement that the Secretary of State shall consult with such associations of housing authorities as appear to him to be concerned, and with any housing authority with whom consultation appears to him to be desirable in the matter of determining the formula to which I referred when we were discussing the previous clause. The noble Lord complained about the inclusion of 1972–73 in this clause. In fact, the inclusion of the earlier part of the year, the expenditure on the optional rent rebate schemes that are in operation at the present time, is to the advantage of the local authorities. They will simply make a rate fund contribution in respect of those, and as I understand it this will in turn count for subsidy in the Housing Revenue Account.

LORD GARNSWORTHY

I appreciate the efforts of the noble Lord, Lord Drumalbyn, to explain the meaning of this clause. I think I had the explanation before. I do not think I discussed the question of what would happen in 1972–73. If the noble Lord reads what I said in Hansard to-morrow he will appreciate that I was making no point there. I merely read the first part of this clause. The noble Lord having read the second half of subsection (4)—I had already read the first half—I should not have thought that that was irrelevant. One of the great difficulties with this Bill is that all the Parts are bound together in such a way that it is almost impossible to discuss one thing without paying some attention to others. There are implications that it would be foolish to avoid discussing as we went along, otherwise I am quite certain that we shall later be told that we ought to have raised that point earlier. I have no wish to press this matter to a Division, but I think that noble Lords opposite will appreciate that we do not like this clause and think that the Bill would be better without it.

LORD AVEBURY

Before we leave this clause may I ask the noble Lord, Lord Drumalbyn, why he said that the question of take-up is not relevant to the discussion of the Question, Whether Clause 7 should stand part of the Bill? I should have thought that it was very relevant in deciding how much the local authorities' rate fund contributions are going to be. Clause 28, which contains the definition of the standard amount, sets out clearly the amount of the rent rebate, and perhaps the amount of the contribution is dependent on the take-up. If tenants do not ask for rent rebates the amount of money which is transferred under this clause will be that much less. I think it was legitimate for the noble Lord, Lord Garnsworthy, to mention the question of take-up and to probe the Minister and ask for further figures.

When the matter was discussed in Standing Committee in another place, figures were given by the Minister. The rate fund contribution was estimated to amount to £35 to £45 million in the year 1975–76—I hope I have the year right; the noble Lord will correct me if I am wrong. Will he tell the Committee what assumptions regarding take-up have been made by the Government in calculating this figure? We know from the work done by the Child Poverty Action Group that the take-up in the family income supplement and in school meals, free school milk and so on has never come up to the expectations of the Government. In the case of the F.I.S, I think Sir Keith Joseph anticipated a figure of £85 million, and it is just over £50 million. Now is the time that we must discuss this matter. If we let the clause pass it will be too late.

Is there any reason to suppose that the take-up of the rent rebate will be higher in percentage terms than other benefits such as the F.I.S.? Will the Minister kindly justify the figure given to Standing Committee E of £35 million to £45 million?

LORD DRUMALBYN

Obviously this is an estimate. I would only say that the Government have provided in the Bill for publicity to be given to the scheme. It is intended that the greatest possible publicity should be given to rent rebates and rent allowances. It is a good deal easier—I speak with some knowledge of this from the point of view of National Insurance and supplementary benefit—for a local authority to publicise within its own area schemes of this sort than it is to do it on a national scale. In spite of what is done for supplementary benefits and the like, I should think that the take-up would be higher than in those days when we were trying to raise the level of national assistance take-up. I cannot give the noble Lord a definite answer, but if I can find out more about the assumptions on which the figure was arrived at I shall let him know. I accept, in connection with the rate fund contribution, that the degree of take-up is germane. I thought the noble Lord was going to enter on to a wider discussion of take-up which I think would not have been appropriate on what is essentially a machinery clause.

LORD AVEBURY

I do not want to seem ungracious, but it surprises me that the noble Lord can stand at the Box and say that he cannot give any estimate as regards the take-up figure on which £35 to £45 million was calculated. The work must have been done in the Department, and I think it is unsatisfactory for the Committee to leave this clause—I know we have to move on—before we have any real information about what the Government have in mind regarding take-up. I appreciate the point which the noble Lord, Lord Drumalbyn, makes, that it is easier for the local authorities to do this. They have rent collectors going round each week or each fortnight as the case may be and they can discuss matters with the tenant and explain any provisions which they do not understand, which is not the case with national schemes such as family income supplement. When information has been given, as in the F.I.S. scheme, it has always been lower than the Minister predicted. I must warn the Minister that when the scheme comes into operation this is one of the matters in which we are going to be most interested. If the Government are going to help those in greatest need this is essential information for the Committee to have.

LORD DRUMALBYN

It is difficult to forecast what the effect will be in future. I am now informed that rent rebates, even under the present scheme which is by no means complete, are at a very high level—over 75 per cent. The reason is precisely that given by the noble Lord; namely, the close contact of collectors and so on with the tenants, the direct relationship between the local authority and their own tenants. Wherever there is difficulty about a tenant not paying his rent, one of the first questions a landlord—in this case the local authority—will ask is whether he is eligible for assistance under the rent rebate scheme, so one would expect a pretty high take-up. I would hesitate to put an estimate on this, but I imagine that the Ministry's estimate has been based on the experience at the present time. But I should hope that they would do even better than that.

LORD GARNSWORTHY

I am sure the Committee are very grateful to "Lord Lubbock" for getting more information from Lord Drumalbyn than I was able to get. He treated seriously the point raised by the noble Lord, Lord Avebury. I apologise to him for calling him "Lord Lubbock"; I have made the mistake before. I suppose he is lucky I have not called him "Lord Orpington". That comes of making a reputation for himself under the name he was born with. But the noble Lord accepted from Lord Avebury what he suggested I ought not to have raised on this clause. This is the difficulty, is it not? The night is very young in terms of what I have been told we may expect of the intentions of the Government to keep us here. If we are going to lose patience with each other at 8.45 p.m. it is not going to be a very enjoyable evening.

LORD DRUMALBYN

I hope that the noble Lord will absolve me from losing patience with him. I thought that at this stage of the evening it was just as well to remind ourselves of the rules of the House. He will perhaps agree that he was making a fairly long general introduction to his remarks and I thought that he was going on in that vein. As he did not, I think I may not have needed to intervene. But I hope that the Committee will not take it amiss.

LORD GARNSWORTHY

By way of personal explanation, may I say that the Committee was very thin in numbers when I got to my feet and I hoped before developing my argument that more Members would come into the Chamber.

Clause 7 agreed to.

Clause 8 [The rent allowance subsidy]:

8.52 p.m.

LORD GARNSWORTHY moved Amendment No. 61: Page 12, line 5, leave out ("a percentage") and insert ("the total").

The noble Lord said: I hope that nobody will say that I am too long in my introduction of this Amendment. With Amendment No. 61, I should like to speak to Amendment No. 63. Again the point is to ensure that local authorities get a 100 per cent. subsidy. It seems to me that the case for this Amendment has been made self evident and overwhelming, as I thought had been the case for earlier Amendments. No one knows at the moment what the cost of dealing with it will be. With brevity, and I hope with clarity—clarity in the sense that those who want to understand the argument will read it if they did not hear what was said—I beg to move.

LORD DRUMALBYN

As the noble Lord has said, we have indirectly discussed this Amendment before. I am grateful for his moving it so briefly. As was mentioned at an earlier stage, the incidence of rent allowances is likely to be very uneven as private tenants are concentrated in relatively few areas. This is a point that has already been mentioned, and it is one of the reasons why there is a slightly higher rate here. But the arguments put forward for not having a permanent 100 per cent. subsidy are still valid. The grading of the subsidies reflects the agreement of the Government that there is room for a higher degree of assistance in the case of rent allowances than in the case of rent subsidies; but we do not think they ought to go to 100 per cent. except in the initial years where we are anxious to give the maximum aid to those areas with the greatest financial burdens so far as housing is concerned—burdens represented by both the construction of housing and the replacement of houses involved in slum clearance. For that reason we have as a temporary measure the 100 per cent. subsidy; but I do not think on a general principle it would be right to maintain that 100 per cent. forever.

LORD GARNSWORTHY

I am most grateful to the noble Lord for what he has said. In my introduction I was brief to the point of not mentioning the issue of rent allowances. I had spoken about this on an earlier Amendment when possibly the noble Lord did not realise that I had understood his argument. I was making a point of the different manner in which the Government behave as regards rent rebates and rent allowances. I understood. But I am still at a loss to understand why the Government are prepared to accept 100 per cent. at the beginning of the rent allowances, yet are unwilling to do so in regard to rebates. I tried to make the point in regard to the level of fair rents. I cannot see why the 100 per cent. cannot be continued, particularly in the case of rent allowances. There is no justification at all for burdening the Housing Revenue Account with the cost of administering housing allowances. But having heard what the noble Lord has said and having promised to be brief, without accepting his argument—and I have no wish to press the Amendment to a Division—I will withdraw it and bide my time.

LORD AVEBURY

Before the noble Lord withdraws his Amendment may I ask the noble Lord, Lord Drumalbyn, a question? I have been interested over a period of many years in the decline in the number of privately rented dwellings in this country. I kept track of the figures from 1957 onwards, particularly when we were discussing the Rent Bill in 1965 in the other place. It was interesting to note that the total number of privately rented dwellings had declined by about 6 per cent. per annum from 1957 (when the Tory Government passed a Rent Act) through 1964 and 1965 and have continued to do so since. The effect of legislation has not been quite what one might have anticipated. Despite the control imposed under the 1965 Bill on properties that had a rateable value of less than £200 in England and Wales and less than £400 in Greater London, the legislation had practically no effect on the rate at which property disappeared out of the privately rented sector, either because it was taken over for other development by local authorities or because when the landlords obtained vacant possession they sold them for owner-occupation.

When one sees the figures given by Mr. Amery (again I must refer back to what was said in another place, for we have not been given any figures here) of the calculation of rent allowance subsidy over the next few years extending to 1975–76, if one assumes that the figure is left at 100 per cent. as has been suggested, this would be 100 per cent. of a declining amount. I suggest that it would be art amount which declined by about 6 per cent. per annum, for our experience over many years of different economic circumstances and different types of legislation has been that this rate is pretty constant. One would not be asking for an absolute amount to remain fixed; one would be saying that by keeping this figure at 100 per cent. one would be allowing it to decline at a rate of 6 per cent. per annum. I am asking the nobly Lord what estimate was made at the time of the calculations of the rate at which privately-rented properties are going to disappear out of circulation, either by reason of their transfer to owner-occupation or because they have been taken over for some redevelopment purposes.

LORD DRUMALBYN

I will try to answer the noble Lord, Lord Avebury, but here again it is very difficult to dissociate one element in these estimates from everything else. I do not honestly know the details of how these estimates were arrived at in each case. I think he is mistaken, if I may say so, in saying that figures have not been given as yet. I understood they were given: that the rent allowance subsidy would amount to £5 million—£10 million in the first year, would rise by 1975–76 to £30 million to £50 million and would be rather lower the following year. I think my noble friend has already referred to the reason in that case. It is partly the decline in the numbers of unfurnished tenancies, and that is reflected in the decline in the rent allowance subsidy in that year. It is thought that the total number who could qualify for rent allowance might be of the order of 700,000 to 800,000 in 1972–73 declining to 500,000 to 700,000 in 1975–76; the costs I have already given. The biggest unknown variable is the rate of take-up among tenants who could qualify. The lower range of figures assumes about 50 per cent. take-up and the higher virtually 100 per cent. take-up. I hope that gives the noble Lord, Lord Avebury, the information that he wanted.

To the noble Lord, Lord Garnsworthy, I would say that he must not assume that the percentage will necessarily be 80 per cent. One of the advantages of having 100 per cent. subsidy for the first four years is that it will give the Secretary of State time to gain experience over the country as a whole of the working of the rent allowance subsidy and it may be desirable to use his powers, by means of an order, to increase the percentage in later years above the level that is mentioned in the table. He can do that either by applying the alteration to all local authorities or the specified description of local authorities, no doubt, in particular, those with a relatively large number of private tenants in their area. I understand perfectly the noble Lord's feeling about this but what I am saying to him is that, while we maintain that in principle the local authority which is administering this scheme should pay a portion of it the portion will be related to its capacity to pay and to the heaviness of the burdens that rest upon it in accordance with the Bill.

LORD GARNSWORTHY

The noble Lord, Lord Drumalbyn, tempts me when he goes into detailed consideration of the clause and the consequence of the Amendments particularly Amendment No. 63. I must resist temptation. May I say to him that I would rather not be tempted lest I give way?

Amendment, by leave, withdrawn.

9.4 p.m.

LORD DIAMOND moved Amendment No. 62: Page 12, line 7, at end insert ("and the amount, if any, by which the rent allowances granted by the local authority for the year exceed the said standard amount and the local authority's costs of administering their allowance scheme for the year.")

The noble Lord said: What we are discussing here is in similar circumstances but not identical circumstances to those of a previous clause dealing with rent rebate subsidy. We are discussing the extent to which the Government should cover, at the percentages laid down—they are 100 per cent. to begin with—additional expenses which are set down in the Amendment. I should like to pick up a phrase which the noble Lord, Lord Drumalbyn used in discussing the last Amendment. He referred to the "proportion" of the administrative costs borne by the local authority. As I read this clause subsection (2) provides that the amount of rent allowance subsidy payable to a local authority for any year shall be a percentage of the local authority's standard amount of rent allowances for the year, as defined by Section 20(8)". Perhaps I had better turn to Section 20(8) which states that an authority's 'standard amount of rent … allowances' means for any period— (a) if the authority have been operating the model scheme for that period, the amount of … allowances which they have granted for that period otherwise than under subsection (1) or subsection (2) of Section 21 below; Those refer again to exceptional cases.

LORD DRUMALBYN

No doubt the noble Lord noted my remarks. I am not sure in what connection I made them but I thought I was referring to the proportion of the year in relation to the costs for 1972–73. I am not quite certain what the noble Lord, Lord Diamond, is referring to. I think we were talking at that time of the cost of the rent rebate scheme, a proportion of the cost relating to the first part of the year when the scheme was still optional. That is what I meant by "the proportion". "The proportion" related to time and not to a proportion of costs.

LORD DIAMOND

I am grateful to the noble Lord, because what we are going to discuss is whether the local authority should be required to contribute a proportion of the cost of administering the rent allowance scheme. As I read the Bill, at the moment the local authority has to pay 100 per cent. of the cost of administration. I had heard—because I listen to every word that drops from the lips of the noble Lord, Lord Drumalbyn, with care and attention: words escape the barrier of his teeth—"The proportion of the costs". I do not think he described the proportion in more detail. He has now made it clear that he is talking about a different proportion, and we are ad idem. He and I are saying the same thing; namely, that the Bill, left in its present evil condition, will provide that the local authority has to pay for the whole of the administration costs of a new system of relieving local poverty put upon them by the Government. It is not surprising in those circumstances that I am seeking once more, only to a greater extent, to persuade your Lordships, and in particular to persuade the Government, that there should be a complete switch of that argument; that the amount payable by the local authority of its administration costs should be nil, and that the whole administration should be borne by the central Government.

The noble Lord has been good enough to make my case a good deal easier, and so has the Bill. He recognises that there are special, different circumstances relating to a rent allowance scheme as opposed to a rent rebate scheme. A rent rebate scheme is something which already exists; it already enters into local authority financing, and is already part of what the central Government pay for. But, so far as a rent allowance scheme is concerned under which an allowance is paid to a tenant of a private landlord as opposed to a local authority landlord, this is something totally new. It is wholly welcome and acceptable, but the Government simply have not gone far enough. They have said that it is wholly new, and because it is wholly new they have said that for the first four years—and four years is quite a time—they are going to pay 100 per cent. of the cost of the allowance; the subsidy is going to be calculated at the rate of 100 per cent. I took careful note of the fact that on this case the Government have come off the argument that you must insist on a local authority paying a proportion lest you get sloppy administration, costly administration, or any other of the unpersuasive arguments which the noble Lord used in an attempt to support a figure of less than 100 per cent. But at a later stage in the Bill we shall come to this a little more closely, when I shall have an opportunity of quoting to the noble Lord his own words.

At the moment, I say that the principle of this clause is welcome; the 100 per cent. is welcome; the 100 per cent. for four years is very welcome and, in the light of what the Government have previously said, quite daring. We are grateful for that. This is admittedly a new and different scheme, and something which the Government therefore recognise ought for the first four years to be wholly subsidised, instead of, as in the case of the rent rebate scheme, subsidy for the first four years subsidised at the respective rates of 90, 85, 80 and 75 per cent. These are very different figures: 1975–76 in the rent rebate scheme, 75 per cent., and 1975–76 in the rent allowance scheme, 100 per cent. The only question is: Why in these circumstances, when it is a totally different scheme, do the Government not recognise that equally they should have the responsibility of paying for the cost of the scheme? Why should a local authority have to pay the cost of administering something which it is clearly now doing as the agent of the central Government? It is not contributing 1p towards the subsidy. It is not a scheme of its own thinking. It is a scheme tightly laid down by the central Government. It is a good scheme and a welcome scheme—I need not keep repeating that; but why should a local authority be compelled to contribute not only a part of the cost of running the scheme, but the whole of the cost, especially, as the noble Lord has indicated, when nobody knows quite how this will work out.

As Mr. Henry Aughton asked—he is the highly popular Borough Treasurer of Hemel Hempstead— Has sufficient thought been given to this? The difficulties look formidable. We know something about our own tenants, and have, over three-quarters of the country's council housing stock, a rent rebate scheme already in operation. As rents go up there will be a great increase in the volume of work, as many more of our tenants and eventually most tenants for a lot of us, will come into eligibility. But our difficulties with rebates for our own tenants will be a bagatelle compared with the administration of rent allowance in the private sector. We shall have the same application forms to process and check, the interviews to hold; but then, where our task virtually ceases in the case of rent rebates, we shall find ourselves involved in unlimited additional complications. Is the rent a fair rent? Is our rent allowance being passed on to the landlord? What will recovery involve us in if it is not? If rent is payable weekly, how do we avoid a cash payment weekly? What steps do we take to check for additional earners, dependants, non-dependants, people in the house in receipt of supplementary benefits, children, lodgers, changes of circumstances, seasonal earnings, the self-employed? Those queues at Manchester Town Hall drawing rent allowances? On Saturday morning, or Friday evening, or when? The imagination boggles. Well, Mr. Henry Aughton, who is a pretty tough Borough Treasurer, finds that his imagination boggles when he has to contemplate giving effect to this scheme.

It is a welcome scheme but it will be difficult to administer and many unknown questions will arise. The cost may be proportionately more expensive: one just does not know. All I am saying is that there really is no argument whatsoever—in this case above all—for charging those costs to the local authority. The noble Lord knows that all the local authority associations are united in condemning this; and Mr. Henry Aughton is merely one Borough Treasurer who happens to have written an article which we regard as objective and not wholly dissimilar from our own point of view. That is why we quote it from time to time. So I come back to the Amendment, which provides for the elimination of this expenditure by including the local authority's cost of administering their allowance scheme for the year. It may be that the form of the Amendment is not wholly satisfactory to the Government but we shall have plently of time to deal with that later if the Government will accept it. I hope that the Government will look very favourably on this and indeed on several other points in this clause. Perhaps we shall be able to deal with these more appropriately during the discussion on clause stand part.

I hope I have made it clear why I regard this case as even stronger than other cases previously discussed. I hope we shall receive a favourable reply from the Government. I beg to move.

LORD WOLVERTON

I hope that the Government will reconsider this point because I think the arguments are very strong. If we are going to give for the next four years a 100 per cent. rent allowance subsidy for the private sector, I think they ought to pay 100 per cent. for the administration. I served on a county council for nine years and I think that the work done on trunk roads is a good example. Like all county councils, we were an authority for the maintenance of, and for the making of minor improvements to, trunk roads and we were always paid 100 per cent. of the cost of the work and 10 per cent. for the services of the local authority surveyor and his staff. There was no argument about that. I should think that would be quite a good analogy to put forward to Her Majesty's Government. I hope they will reconsider this point.

9.20 p.m.

LORD DRUMALBYN

I thank my noble friend for his remarks, but of course when one uses loosely the word "agent" here it is rather different from the way that word is used in the case of trunk roads, where the local authorities are specifically the agents for central Government. I suppose that even in those terms it is perfectly proper that they should be reimbursed for the expenses involved. I speak now without having advice on this, but I should imagine from general experience that it would be rather easier to separate out from the general run of management expenses the costs of administering trunk roads than it would be in the case of rent rebates and rent allowances. I hope that the noble Lord will not take offence—I do not think he will; he will probably criticise what I am saying—if I say that it is a little odd that when one gives exceptionally, as we do, 100 per cent. subsidy for an initial period we should be asked for the management expenses as well. The management expenses to a large extent simply reflect the fact that this is a housing responsibility. The local authority has an over-all housing responsibility in its own area. I do not think it is unreasonable when they are getting 100 per cent. subsidy in the early years that they should be asked to bear the management expenses, bearing in mind the difficulty of separating out management expenses and allocating them to a particular purpose. In a sense, the same applies to rent rebate management expenses, where up to a certain limit they are to be borne on the rates. We have already examined how the limit is to be defined by a formula.

But in the case of rent allowances it seems to me that it is quite reasonable that the management expenses should be borne entirely by the local authorities. I fully appreciate the point of view expressed on this but when setting up a new scheme of this sort one has to go, so far as possible, for ease of control. Goodness knows! it is complicated enough, but if we are going to complicate it further by requiring the management expenses to be sorted out as the Amendment requires we are asking rather a lot. I hope therefore that the noble Lord will not press this Amendment. We shall certainly be looking at the whole of this matter again; but I do not want to give any encouragement or commitment on this simply because it is a question of principle that there should be some element of responsibility upon the local authority and at the same time it is a general administrative matter in devising means that will be easily workable.

VISCOUNT SIMON

I do not see why it is any more difficult to allocate a proportion of the administrative charges in the matter of housing than it is in the matter of roads. As I understood it from the noble Lord's noble friend the arrangement of the roads is that an arbitrary percentage of the expenditure is allowed for that proportion of the local authority's engineer's department which deals with trunk roads. I would have thought that without trying specifically to divide up the administrative costs it would be possible to reach a similar arrangement by which a certain percentage of the total of the rent allowances could be allowed as the expenditure on that account. As the noble Lord, Lord Diamond, made clear, this is a very difficult case because so far as I can see the ordinary rent officers who deal with the council house rents will not be able to take on this extra burden; it will be an additional administrative job which the local authority are going to be asked to undertake.

THE EARL OF BALFOUR

I would much rather a local authority, with its elected representatives, dealt with rent rebates and allowances than if it were taken over completely by the Government in hundred per cent. grants where the whole rent rebate allowances might be dealt with by an organisation such as the Ministry of Social Security. This would not give rise to the same interest that can be taken so often by local county councillors. I do not think it would be in the general interests of the country if this were to happen. From some of the expressions from noble Lords opposite I wonder if it is the desire in trying to get the 100 per cent. grant to have the whole scheme run by the Government and not by the local authority. I should be sorry if that were the case.

LORD HYLTON

I should like to take a slightly contrary view to that of my noble friend. In the long run, although rent rebates and rent allowances will come into the new system to be put forward in the Green Paper on negative income tax and in the meantime both rebates and allowances will be centrally financed, noble Lords on all sides of the Committee have asked that the interim cost of administering rebate allowances should also be borne centrally.

LORD DRUMALBYN

Perhaps I may answer my noble friend. I do not believe that to be the view of the local authority associations. I think they are perfectly willing to administer the schemes themselves and I think myself it would be a great mistake if the administration were to be taken over simply by the Government. I do not think that would be at all in accordance with the wishes of the local authorities.

I think one must have a little give and take in this, but part of the reason for the 100 per cent. is because this is a new scheme. The local authorities will be setting up their own administration, and, as I have already said, it is always possible to vary the percentage in later years where the expenses of administration are particularly high. Therefore while I quite understand the point of view of those who think that it should be a centralised scheme, whether run by local authorities as agents or not, given that our conception of it is that it is a local authority scheme, it seems to me that it is better that it should be local authority administered and that the management expenses should be borne by the local authority, which management expenses will be taken into account when they are particularly high, so far as the percentage grant is concerned.

9.28 p.m.

LORD DIAMOND

I do not know whether other noble Lords feel that we have made any progress, but I myself do not—which is surprising, because the drafting of the clause itself shows that the Government recognise that this is a very special scheme. There is no need for me to repeat that it is a welcome scheme for the local authorities and their associations. We all start off on that basis, but it is an unknown scheme and in particular the costs of administering it are unknown and are likely to be quite expensive. It depends upon the extent to which local authorities are required to check and vouch for every single item of expenditure which is incurred.

Everyone who has been concerned with the administration of finance knows that it is much more costly to give cash than to give credit. Very properly, much more care has to be taken in paying out public money than in giving credit. For example, when you give a deduction for depreciation of assets it is a much more simple matter than distributing cash in a similar way by means of allowances. So it will be very expensive in relation to the amount involved as compared with a rent rebate scheme. Therefore, if one is starting off with a scheme which is novel and new and attracting rebate of 100 per cent. surely one is entitled to ask that the costs of it should be similarly dealt with. I do not know why they should not be so dealt with.

The noble Lord, Lord Drumalbyn, has produced two reasons why they should not: the first was a negligible one which we can deal with in a moment. He said that it is less easy to separate out. There is no problem about protecting the Government in this Bill against a local authority which seeks to be a little self-centred or greedy in its apportionment of expenses relating to administering this scheme. It is perfectly easy for the Government to protect themselves, as they have done throughout, by saying, in effect, "Such amount as the Minister may determine." That or a similar phrase appears in legislation time and again. There is, therefore, no technical difficulty in overcoming this problem. If there is a difference of opinion as to whether an apportionment has been made too much in favour of local authorities and too little in favour of the Government's interest, the Minister can protect himself fully, which means that, with respect, I cannot regard that part of his case as anything of an argument.

The noble Lord then said that we should be satisfied if the Government, out of their generosity, are willing to pay 100 per cent. and that we should not ask them to pay the administrative expenses as well. I do not know who the Minister thinks is being generous. The noble Lord is not personally being generous. Nor are the Government. They are not paying money out of the noble Lord's or their own pocket. This is a matter of financing a necessary scheme.

This is not a case where I feel that it is necessary for us to say "Thank you" to a wonderfully generous Government for providing a subsidy which, although a welcome one, should be financed as to its management expenses by the Government. I do not give the noble Lord credit for putting the figure at 100 per cent. I cannot see what other percentage he could have chosen for a new and unknown scheme of this kind. Although 100 per cent. is the right figure, the administrative expenses should be covered in the same way.

I must press the noble Lord on this matter, particularly as in another place the attitude towards the clause was much more receptive than the noble Lord indicated to-day. After all, subsection (4) says: The Secretary of State may from time to time … substitute … such other percentage, greater than 80 per cent. … The table in the clause provides for 80 per cent. and the Government are taking power to increase it above that figure, as one would expect. In other words, the Government are saying, "Here is a scheme which it is safe to begin only with a subsidy of 100 per cent. We will run it on that basis for four years and, after that period, reduce it to 80 per cent. As that may be dangerous because local authorities might be put in a fix, we had better take power here and now to increase the 80 per cent. back to 100 per cent. for the period 1976–77 to 1981–82."

In that subsection the Government recognise that this is a special scheme. It is special, and it is odd that the administrative expenses—although they are unknown they are bound to be expensive considering what they are for the rent rebate scheme—are being excluded in this case. We must therefore press the noble Lord. If he says that he is willing to look at the matter again, we will leave it at that. I imagine that that will be his reply. If it is not, he will be at variance with what his colleague, the Parliamentary Secretary, said on this matter in another place.

If the noble Lord is not prepared to give that assurance, we shall once again feel obliged to demonstrate what the local authorities and their associations think—namely, that it is preposterous that local authorities should be required to pay any part of these administrative costs.

LORD DRUMALBYN

I am quite prepared to have another look at this. As the noble Lord knows, I personally have found this a particularly difficult subject and I shall go on having a look at it. But I cannot give any commitment about it although I am quite willing to have a look at it.

LORD DIAMOND

I am grateful to the noble Lord. I do not want him to go beyond that. The last time he said he would have a look at it he looked at it with a view to rejecting it, but now I am grateful that he will have an objective look at it without commitment one way or the other. I seek your Lordships' permission to withdraw the Amendment.

Amendment, by leave, withdrawn.

9.37 p.m.

LORD DIAMOND moved Amendment No. 64: Page 12, line 30, leave out ("60") and insert ("66⅔").

The noble Lord said: I hope that I can save the Committee's time by moving this Amendment very shortly. It is an Amendment to leave out "60" and insert "66⅔". It is not an Amendment based on argument; it is based on compassion. If there was an argument it would be not for 66⅔ but for 100 per cent. The noble Lord on two previous occasions has said that he would consider the matter. In this case we are in a very strong position indeed because of everything I have said and I hope that the noble Lord will respond in the same way. I beg to move.

LORD DRUMALBYN

I take it that what the noble Lord is saying is that this is the same case as Clause 6, but more so, just as Clause 6 was the same case as Clause 4 but more so. In those terms I am perfectly prepared to give it at least the same treatment as the other two.

LORD DIAMOND

I am grateful to the noble Lord for saying that he will give it at least the same treatment. This is an even stronger case than the first one. I am grateful to him and seek your Lordships' leave to withdraw the Amendment. I hope your Lordships will forgive me for having taken up so little time upon it.

Amendment, by leave, withdrawn.

On Question, Whether Clause 8 shall stand part of the Bill?

LORD DIAMOND

I do not want to delay the Committee. It is a very important clause but I think I and my noble friend have discussed it sufficiently in the Amendments we have raised. The important issue is that this is a clause which provides for a subsidy at 100 per cent. for the first four years. That figure of 100 per cent. should continue and the qualifying amount should be all the expenditure to which the local authority is put. We could not possibly vote against the clause. It is welcomed by the local authorities, the Opposition, and I am sure by the Liberal Party, too—I am grateful for confirmation of that—and we cannot get all we want at the Committee stage. But we have the Report stage, the Third Reading and all those other stages ahead of us. No doubt the Government in their wisdom are reserving a good deal of benefits and allowances to give us as we move to the different stages of the Bill and we must be content with this. I am not going to resist that this clause stand part of the Bill. We shall be glad to see it. As the clause stands it is fairly clear on the face of it.

LORD DRUMALBYN

I think that this is the nearest the noble Lord has got to welcoming the clause yet.

Clause 8 agreed to.

Clause 9 [The town development subsidy]:

LORD WINTERBOTTOM moved Amendment No. 65: Page 13, line 11, at end insert— ("(3) The Secretary of State may from time to time by order specify such other percentage greater than 25 per cent. as may be specified in the order in substitution for the figure of 25 per cent. specified in the preceding subsection. Section 16 of this Act shall apply to any order under this subsection.")

The noble Lord said: I beg to move the Amendment standing in the name of my noble friend Lord Shepherd and other noble Lords. As an introductory remark may I say that I hope that the House will forgive me if I link Clauses 9 and 10 together. This would not be inappropriate, I feel, since Clause 9 is only made understandable by subsection (1) of Clause 10. The one depends on the other. The intention of these two clauses is quite clear in the Explanatory and Financial Memorandum, which says: … which relate to town development, require a sending authority to pay to a receiving authority amounts equal to the rate fund contribution associated with transition subsidy or rising costs subsidy, or the rate fund contribution in respect of rent rebates, made by the receiving authority in respect of tenants from the sending authority, 25 per cent. of any payment so paid by the sending authority is met by town development subsidy. That is quite clear, in reasonably straightforward English. And in fact the principle behind these two clauses is, I think, entirely acceptable to my noble friends, and I believe to most noble Lords. Most of us, when we look at great conurbations in this country, realise that they cannot be permitted to grow continually; that the creation of satellite towns around them is desirable so that people can get out of their cramped narrow Victorian streets and move closer to the countryside. This is a wise policy, and supported by every person interested in the conditions in which people live.

If I may say so as an aside, I find it very surprising when, as for example in the case of London's overspill, the policy begins to be successful, we start getting cries of anguish from the Greater London Council, who say London is shrinking, when the whole policy we have been following over the years is to make it shrink. This is perhaps the real raison d'être behind my noble friend's Amendment; it is to make simpler and more attractive, and to remove any obstacles from, the movement of people from a highly concentrated conurbation to a satellite town. What my noble friend is moving in his Amendment is: The Secretary of State may from time to time by order specify such other percentage greater than 25 per cent. as may be specified in the order in substitution for the figure of 25 per cent. specified in the preceding subsection. Subsection 16 of this Act shall apply to any order under this subsection. This is really all this Amendment is about. If the Secretary of State, watching developments, finds that the flow of people from the over-populated areas of the great conurbations to healthier and, one hopes, happier, satellite towns is being hindered because of the unwillingness to increase contributions, he may increase the actual percentage that he pays from the town development subsidy to a figure above 25 per cent. And of course Clause 16 of this Bill, which we have not yet reached, in fact gives him this power. It gives him power in his wisdom to alter percentages. It is for this reason my noble friend has put down Amendment No. 65. I beg to move.

9.46 p.m.

LORD MOWBRAY AND STOURTON

We now come to an easier clause of the Bill for us to deal with, because we are now on a much simpler point. The Amendment which the noble Lord, Lord Winterbottom, has moved really is asking for more than 25 per cent. to be given in town development subsidy. The figure of 25 per cent. has been fixed by agreement between representatives of the Department and sending authorities, as representing a fair amount of Government assistance to the rate funds of the sending authorities under the new system of housing finance. Town development schemes have and do relieve the sending authorities of a substantial potential burden on their general rate fund, because it is nearly always cheaper to provide a dwelling in the receiving authority's area than in the area of the sending authority. Moreover, if the sending authority provided the dwellings themselves they would probably have to make a rate fund contribution to their own Housing Revenue Account equal to the whole of their payment to the receiving authority. So the 25 per cent. town development subsidy enables them to meet only 75 per cent. of that payment. As a result of this, from 1975–76 onwards the Government are going to meet, broadly speaking, not only 75 per cent. of any deficit caused by town development in the Housing Revenue Account of the receiving authority, but also 25 per cent. of the remainder of such a deficit, which will give a total of 81¼ per cent. This is as much as it is reasonable for the Government to meet of subsidy.

As I have said, by going in for town development large towns gain more. This amount is not only very fair but generous, and I hope the noble Lord will be able to withdraw this Amendment, especially when I remind him that we are all in agreement that distressed areas should be met by overspill development and that the G.L.C., which in most cases is the sending authority, has an arrangement with the receiving authorities. This is what Clause 10 deals with. There are only two towns in the country which have this problem. They both have fewer than 100 empty houses, and I do not think it is a great problem. All new agreements which are being made by sending authorities and receiving authorities are following the pattern which Birmingham and London now have, so the Amendment is probably unnecessary.

LORD WINTERBOTTOM

Providing the noble Lord, Lord Mowbray and Stourton, can assure me that the 25 per cent. is not like the laws of the Medes and Persians, which altereth not, and that if events prove it insufficient Clause 16 will be applied, I shall be glad to withdraw this Amendment.

LORD MOWBRAY AND STOURTON

I think Clause 16 is going to apply in this instance, but I would point out again that 81¼ per cent. is not a bad grant. If these sending towns built in their own areas they would not get the extra 6¼ per cent.

LORD AVEBURY

If one looks carefully I do not think one will find anything in the clause as it stands which entitles the Secretary of State to make an order, and therefore the provisions of Clause 16, which give the Minister power to vary or revoke an order, cannot come into operation. Perhaps the noble Lord, Lord Mowbray and Stourton, would set the record straight and say that the provisions of Clause 16 cannot apply to the 25 per cent. which is mentioned in Clause 9.

LORD MOWBRAY AND STOURTON

I do not think I am in disagreement with what the noble Lord is saying on this point.

Amendment, by leave, withdrawn.

Clause 9 agreed to.

Clause 10 [Town development: payments by sending authority to receiving authority]:

9.53 p.m.

LORD WINTERBOTTOM moved Amendment No. 66: Page 13, line 34, leave out ("both numbers") and insert ("Y").

The noble Lord said: When I tried to understand Clause 10 I reached a simple solution to the problem of understanding. At first I thought of proposing that Clauses 9 and 10 be deleted and the text in the Explanatory and Financial Memorandum inserted in their place, because this is an entirely comprehensible explanation of what the intentions are. Then we get this quite extraordinary Clause 10, with its 13 subsections. I am not quite certain about procedure. I believe it is in order if one quotes a Minister speaking in another place, but not a private Member.

The Minister in another place, speaking in Standing Committee E, said at column 485 of the OFFICIAL REPORT:" I am delighted that the honourable Member has moved this Amendment"— it was not this Amendment— because he deals with my favourite Clause, the only point in the Bill at which we move into the algebraics of the scheme. It is with particular pleasure that he should move an Amendment dealing with algebraical formula of the Government's town development subsidy which I am sure is crystal clear to all honourable Members and I will not take the trouble to explain it."—[OFFICIAL REPORT, Commons, Standing Committee E, 16/12/71; col. 485.] I recognise that ploy as one which I myself have used and got away with. He may have escaped problems in his own Committee, but he has passed the problems on to this Committee.

As I believe that the other place is rather younger in its membership than this one, its Members will have left school a little more recently than we have, so one assumes that many of them are numerate. Therefore, the Minister was probably right to assume that the algebra of Clause 10 was crystal clear to everyone. But it is not clear to me and I wonder whether it is as clear to noble Lords as it was to those in the Commons, when there was not one dissenting voice about what the Minister said in that Committee. Therefore I ask no more than whether the 13 subsections of Clause 10 achieve the results proposed.

The Amendment allows for qualification for subsidy by the exporting authority for houses which are vacant in the receiving authority. What happens is that "the best laid schemes o' mice an' men gang aft agley." Industry is supposed to move to a satellite town, and houses are built to receive the workers but industry does not move. Therefore in some places, such as in East Anglia, there are large numbers of very fine modern houses standing empty because there is an imbalance. My noble friends' Amendment is designed to enable the financial problems arising from that imbalance to be dealt with. If the noble Lord can assure the Committee that the 13 subsections of Clause 10 will achieve this result, then I shall naturally be glad to withdraw the Amendment. But the clarity of understanding which was evinced in another place is not available to me, so I shall be grateful for any help which I can receive from the noble Lord opposite. I beg to move.

LORD MOWBRAY AND STOURTON

I trespassed on this clause slightly when I spoke on the last clause. The purpose of this Amendment is to vary the formula for calculating the contribution which a sending authority is required to pay to a receiving authority under subsection (2), in respect of rate fund contributions which the receiving authority have to make on account of dwellings provided under a town development agreement. The effect of the Amendment would be to include the vacant dwellings which had not previously been let in the number of dwellings available for tenants from the sending authority. As a result the sending authority would, broadly speaking, have to reimburse to the receiving authority any rate fund contributions associated with transition subsidy or rising costs subsidy which the receiving authority made and which was indirectly attributable to the vacant dwellings. The formula in the Bill excludes these dwellings.

The clause as drafted follows the arrangements agreed with the local authority associations. Because of the differing circumstances and differing arrangements governing individual town development schemes, the clause may have slightly different effects on different sending and receiving authorities. But these differences are not great enough to justify a departure from the agreed arrangements which, taken as a whole, represent a fair deal for all parties.

We have had the problem of houses standing empty in some expanding towns, with an imbalance between the provision of houses and jobs. In some instances the employer has over-estimated his requirements. In other instances the number of houses required for employees to be recruited from London has been over-estimated. I can give the noble Lord, Lord Garnsworthy, one slightly comforting fact. In December last year in the London overspill areas some 3,000 houses were lying empty. In March of this year the figure was down to 2,857, and it is estimated that by December there will be a further improvement and the figure will be reduced to some 2,200. So the matter is being looked after and, as I said when speaking on the last clause, the receiving authorities will not lose on this imbalance because agreements with the G.L.C. will provide that this will not happen in future.

LORD AVEBURY

I wonder whether the noble Lord, Lord Mowbray and Stourton, can give us the equivalent figures for the Birmingham overspill towns.

LORD MOWBRAY AND STOURTON

I think I can. Daventry had some 155 houses in December, 1971. The only other town with which Birmingham is associated is Tamworth and the latest information I have is that it has 98 empty houses.

LORD WINTERBOTTOM

Since the noble Lord, Lord Mowbray and Stourton, has explained with greater clarity than elsewhere the consequences of Clause 10 I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 10 agreed to.

Clause 11 [The slum clearance subsidy]:

LORD HUGHES moved Amendment No. 67: Page 16, line 22, at end insert ("and of determining slums to be dealt with by urban renewal when a local authority exercises its powers under Part V of the Housing Act 1957").

The noble Lord said: It would perhaps be for the convenience of the Committee if I were to speak at the same time to Amendment No. 69 which seeks to include a new paragraph in the Bill. The first Amendment to a certain extent leads on to the second. My intervention at this stage serves two purposes; it is like that of my noble friend Lord Winter-bottom. It brings a welcome, although rather brief, relief for my noble friends Lord Diamond and Lord Garnsworthy, who have been bearing the burden not only in the heat of the day but of several days and who have to look ahead to the unknown future.

It also serves a useful purpose from my point of view in that next week we shall be starting on the Scottish equivalent and this gives me an opportunity of testing the coldness of the weather, particularly as I understand that there is a possibility of the noble Lord, Lord Mowbray and Stourton, being drafted in to deal with the Scottish Bill as well. I am glad that my intervention on the Scottish Bill is going to be rather brief and I should like in advance to tender my condolences to Lord Mowbray and Stourton that this should be so. It is going to be very difficult when arguing on the Scottish Bill to justify what is being done in the English Bill when in some directions the Scottish Bill is more favourable. It was just by complete coincidence that I was looking at possible Amendments to the clause of the Scottish Bill dealing with slum clearance when I realised that my noble friend Lord Winterbottom had reached the point ahead of me; and in looking at what was said in another place on Scottish slum clearance, I have to be very careful, because there the Scottish Undersecretary, in seeking to repel objections to the Scottish Bill, was arguing how very much more favourable the Scottish conditions for slum clearance were than are the conditions in the English Bill. Then he found that perhaps this was not the most tactful thing for a member of the Government to say, and he hurried on to say that of course the conditions in the two countries were really quite different and it was very difficult to make comparisons between the two systems. I shall therefore not make any comparison between the two systems, in case in due course I shall be moving Amendments to the Scottish Bill on slum clearance and the noble Lord, Lord Drumalbyn, should use anything I have said in favour of Scotland as a reason for resisting Amendments which may then be made.

I therefore looked at what was said in another place on this clause. This was one of the clauses which was discussed in another place, but rather briefly; and perhaps one of the reasons for the comparative brevity in the discussions there was that it was accepted that this was a clause which was not altogether without merit. The attitude of my honourable friends in another place was that, so far as the clause went, they approved it, but they went on to say that, unfortunately, it did not go nearly far enough, and that when the Government had been stating the merits of the clause they very much exaggerated the effects which it would have in leading to the clearance of slums in England over a period of ten years. Your Lordships may wonder why I make reference to the period of ten years. It is because it figures so very prominently in what members of the Government have said in relation to the clearance of slums in England and Wales, where it has been laid down as a reasonable objective that the Government should seek to set out the conditions which would enable slums to be removed in a period of ten years.

One of the reasons why the Government had stated that this was a working proposition was that they believed that the principal barrier in the way of clearance was that the financial incentives were not sufficiently good. So far as the financial incentives are concerned, I think it was fairly clearly demonstrated in the comparatively short discussion that took place in Committee E that, while some places may benefit from the new subsidy arrangements, certainly the benefits are not uniform; and, unfortunately, in some parts of England where the problem is most acute it is at least open to doubt whether the authorities will be better off under these new provisions than they are under the existing ones. One place where this is quite possibly the case—and I think a reference to Committee E will show that the Minister did not go out of his way to rebut these suggestions—is in the area of the Greater London Council and in the London boroughs, and to a certain extent in Birmingham, where it is very doubtful whether the new incentives are in fact better than the old.

However, my criticism of the clause, and my willingness to move these Amendments, really rest on the fact that, as it stands, the clause does not go far enough. It is one thing to knock down houses which everyone recognises are slums and are totally unfit for habitation, but there are very few places in the country, even in the largest cities, where you can deal adequately with this problem if you confine your activities to knocking down only the totally unfit houses. They tend to be set in areas which, while not consisting totally of slums, need very considerable work done on them if it is going to be possible for rebuilding to take place. It is not a phenomenon of London or of any particular place that many people are very reluctant to be removed even from very poor houses in an area in which they have lived for a long time if the result is that they are taken far away to another area. So many of them would infinitely prefer to exist—I hesitate to use the word "live"—in a house which is in itself poor and may be in a poor area because they dread the thought, particularly in the case of older people, of going into an area which is strange, among people they do not know, among shopkeepers who have never heard of them, and they resist as much as they can the attempt to move them.

Certainly in Scotland we come up against the problem where people are trying to cling to unfit houses in the centre of cities rather than move to the fine new houses built on the perimeter. It is part of the problem which we are seeking to deal with in Scotland and I am sure that the situation in England is just the same. We should be trying to clear large areas in the centre of cities and rebuilding houses where people want to live. It is good value. We do not have to go to the expenditure of building great masses of new streets, laying new sewers, building new schools, churches and shops and all the facilities that go to make civilised living. This clause does not really permit this urban renewal to take place on that scale.

Regarding the second Amendment in page 17, line 26, we should like very much to broaden the scope of what may be done. In replying to the debate in another place, the Under-Secretary expressed sympathy with some of the views which had been put forward by my honourable friends, and he conceded that some of the criticisms of the clause were valid. He was even forthcoming on the subject of widening the scope. This is what he said: This is a very understandable point of view, and one which many of us would put forward when the occasion arises."—[OFFICIAL REPORT, Commons, Standing Committee E, 16/12/71, col. 504.] Then he concluded by saying that he did not think he could accept the Amendment. Having said that it was something very suitable to put forward when the occasion arises, and wishing he could accept the Amendment and not stating any reason why he did not accept the Amendment, one wonders why the Under-Secretary in another place did not in fact accept it.

May I suggest to the Committee that these are very appropriate Amendments to be seriously considered by the Government at this stage. After all, in the clauses we have discussed there are references to the years 1982, 1983 and beyond. If we are legislating in housing finance for a period of ten years or more can it truthfully be said that this problem, which I am certain everyone agrees exists, is not going to be an occasion arising now? Are we to say that this is not something which should be taking place within the ten years or that it is merely the justification for saying, "Let us leave it. We are biting off so much in this Bill at the present time that we do not want to add yet another subject to it"?

Yet if the Government are serious in their desire to have some slum clearance carried out effectively—and for the purpose of this Amendment I am prepared to accept that they are—then they ought to do it in the way which would make the best possible use of the central slum sites, the sites which include not only unfit houses but houses which are in badly laid-out areas, houses which are in multi-occupation and houses which, if occupied by a single family, would be all right but which when occupied by from three to six families are really worse than some of the houses which are possibly designated as slums. I hope therefore that the Government are not so thirled—I should not have used that word—not so completely tied to the idea of having the Bill leave this House in the same condition as it arrived that they will not agree that this is the occasion when this may be done. I hope that the Minister will perhaps say not so much that he wished he could accept the Amendment but that if he cannot say he does accept it that he accepts the principle, that it is only defective drafting which prevents his accepting it and that he will come back with accepting own perfect scheme at a later stage. I beg to move.

10.12 p.m.

VISCOUNT MASSEREENE AND FERRARD

Before the Minister replies, might I ask what will be the position in regard to flats over shops? As I read this clause there appear to be built-in restrictions to prevent the sweeping away of slummy flats over shops. Although I think this is an excellent clause and that it represents a wonderful step forward in the clearance of slums, I should like to ask the Minister about the position of slummy flats over shops? The other question is this. If you are going to clear away a lot of houses in the centre of which there is a slummy timber yard or a slummy factory, can that be cleared away, too? It cannot be right to build beautiful new houses and to leave slummy factories in the middle of them.

LORD HUGHES

I am glad that I intervened in this debate because for the first time in the eleven years I have been here I have found the noble Viscount, Lord Massereene and Ferrard, being helpful to me. This is one of the purposes of the Amendment: to make it possible for losses incurred by local authorities in the case of commercial and industrial premises to be taken account of in the development of the area. Without the Amendments this will not be the case. The local authority is going to have to carry these losses themselves. I am most grateful to the noble Viscount. I felt in moving the Amendment that I had spoken long enough—I do not know if it was long enough to serve the purposes for which I was put in—to explain the reason for the Amendments. I did leave out one or two bits of material and I am grateful to the noble Viscount for reminding me of an important one.

THE DUKE OF ATHOLL

Before my noble friend replies and as the noble Lord, Lord Hughes, has entered into this, perhaps he will forgive me if I also enter. We all appreciate the problem which he has enumerated. It is one that occurs in all cities where there is a great deal of slum clearance to be done. It is extremely difficult to persuade people, particularly old people who live in bad areas, to move to the fine new houses built on the outskirts. I am not convinced that the noble Lord's Amendment would help this because as I read it it gives authorities powers to sweep away even more houses, shops, pubs, et cetera, than they do at present. Therefore I would have thought that the effect would have been that people, when they were re-housed on the same areas as they occupied before—and I think we all agree that this is probably a desirable thing—would find that the small shopkeepers and the publicans who used to look after their needs have been replaced by large multiple stores and large chains of hotels which they would not find so acceptable. I was wondering if either my noble friend or the noble Lord, Lord Hughes, could confirm whether I am right in thinking this. I am thoroughly sympathetic to the noble Lord's cause but I have a feeling that this is not the way to achieve it.

LORD HUGHES

I do not think it would be inappropriate for me to answer insofar as I believe the Amendment deals with the point which the noble Duke, the Duke of Atholl, has raised. It is perfectly correct that, if this Amendment were accepted, what the noble Duke says would happen. More premises like the derelict industrial premises and timber yards would be swept away. Obviously, if one is going to make the best use of the site, unfortunately perhaps the corner shop goes at the same time, but it is not outwith the bounds of local authorities' powers to replace when they are building—as they used to do when they were building in the centre of towns—shops which are not necessarily to be let at the exorbitant rents which are sometimes charged by the larger property companies.

I know it is more difficult for a small shopkeeper to pay the rent of a completely new building than to pay the rent of something which was built 60, 80 or 100 years ago and which is perhaps comparable in some ways to the rent of the old houses. I am quite certain that the noble Duke's second fear, that areas such as this kind are going to have large groups of hotels built in them, is less likely to take place. But I suggest to him that there are two alternatives before us: one, to do what the Clause as it stands permits—confine it virtually to slum houses. This means piecemeal knockdown and piecemeal development with old people not having perhaps the best opportunity of living in the area in the numbers which otherwise would be possible or taking sufficiently large areas to enable new reasonably self-contained small communities to be built. I think it is possible, given the will, to do this.

I did say, speaking for the first time on this, that the financial incentive was not the only one. After all, it is going to cost local authorities a great deal of money even if these Amendments are accepted and in some cases it may cost them more than it is costing at present. They will not go ahead with this task if they are only concerned with financial incentives. They have got to have the social will to get on with this task. If they accept that one of the lessons to be learned from the massive house-building of recent years is that we have gone too much to the outskirts and have not done enough in the areas in which people have been accustomed to live, they will agree that their task includes more than just building houses. Their task is the creation of new communities in which people can live completely self-contained lives as they wish, and I think the amended clause, as it would be, would make this more readily possible than the clause as it at present stands. I do not suggest that it will be perfect, because the task is so massive that it is doubtful whether any given Amendment or scheme will achieve perfection. My justification for putting forward the Amendment is that I believe this will do the job better than Clause 11 as it stands at present would do it, although I accept that, taking the country as a whole, Clause 11 is slightly better than the present position.

LORD HYLTON

When the noble Lord, Lord Hughes, mentioned piecemeal redevelopment I believe he put his finger on the very heart of the matter. This is the sort of thing we need to achieve a human scale in redevelopment. When my noble friend comes to reply, I hope that he will be able to touch on this matter: and not only that, but also the part that improvement and renewal without demolishing can play in dealing with these particular areas.

THE EARL OF BALFOUR

I am grateful to the noble Lord, Lord Hughes, because this Amendment has raised some interesting points. Tremendous interest has been taken both by the present Government and the last Government in preserving building of architectural or historic interest and the external appearances of certain buildings. Often these buildings are complete slums inside, but they can be completely remodelled internally. In this respect I am not talking about rows of miners' cottages: I am talking about some of the Regency or Georgian houses, which in their day were regarded as the finest types of houses. But today, because of lack of repair or the fact that no money has been spent on them, they have become internally damp, dark and without modern convenieneces such as toilets, baths, hot and cold water and so on.

Some local authorities, often small boroughs, have at great cost done these houses up, preserving the outside four walls. May I give one example? In the small borough of East Linton in Scotland, close to my own home, the council acquired a piece of the High Street and built two very nice four-apartment houses, preserving the old red sandstone face. The site was bought for a mere £250, but the total cost of the houses—and they really are two very nice four-apartment houses—was £17,000. If the council had just gone outside or to the edge of their boundary they could have built two houses on an agricultural field, giving the same accommodation, at a mere cost of? 8,000. I am only too well aware that it is so easy to call in the bulldozer, absolutely flatten the area and then build one of these huge blocks of flats. If I may mention Scotland again—and I hope that here I may have the sympathy of the noble Lord, Lord Hughes—there are the huge blocks of flats, as your Lordships may possibly have seen, in Glasgow, where, not being satisfied that they have built them high enough, they proceed to build them on stilts. They are not very attractive and I should not be very happy living in the top storey of one of those buildings, but I quite realise that that type of building may be the easiest and cheapest form of building for a local authority faced with a difficult housing situation.

I must admit that I think this is one of the finest clauses in the Bill, and the financial provisions seem to be very favourable. I must at the same time support what the noble Lord, Lord Hughes, said about how difficult it is to get people to move. I well remember a B.B.C. commentator saying, when there was the evacuation at the beginning of the war, that a number of families enjoyed the journey so much that when they reached their destination they took the some train back home again. The same sort of thing is apt to happen over slum clearance. You move people to the outskirts of a city and as soon as they can they promptly move back again and create an even worse situation. At the same time I do not think that this Government can cover every point. Perhaps they have gone far enough for the moment. Again, I think there is something in what the noble Lord, Lord Hughes, said—we may have bitten off as much as we can chew. But to come back purely on a technical point of law, Part V of the Housing Act, 1957—I am not very familiar with English law—seems to deal with the provision of housinig accommodation, the general powers and duties of local authorities. I feel that slum clearance is covered more by Part II than Part III of that Housing Act.

LORD HOY

I hesitate to intervene but I do so simply because the noble Earl who has just spoken uses the same argument as many others of your Lordships' House, and seeks to frighten people by saying that every time you demolish old property you immediately build on the site some great towering block of flats. Of course there are other alternatives. I am encouraged to speak because in my own constituency, which I am sure the noble Earl knows, in the very old fishing village of Newhaven, the Edinburgh Corporation effected considerable clearance of the whole area and then rebuilt homes without building any towering blocks. They now have a most attractive housing scheme which provides homes for, in the main, the people who previously resided there. They simply moved them for the time being; they cleared the site and then built these attractive houses and moved the people back.

All my noble friend was arguing was that this is the sort of thing that ought to be made public. The Under-Secretary in another place argued that this is not the time. I would say that that is completely misleading. The noble Earl has just said that perhaps the Government have gone far enough for the moment; but if this is the situation which is confronting the country, surely now is the time to be putting it right. Anyone who comes from the city of Edinburgh—and indeed has seen it happen—knows that the centre of the city is being demolished right round Bristol Street, the Lauriston area and George Square. People are being cleared out of the centre and sent to the outskirts so that the University may extend its buildings, but this is denuding a very important central part of the city of human beings. All we are saying in this Amendment is that if this is the situation that confronts the people, then the Government ought at least to encourage and make provision for rebuilding to take place on those sites.

I cite two other examples in support of my case. I know that part to which the noble Earl referred, East Linton, and I am aware that the improvement has been made. But there again, in the city of Edinburgh, right in the centre, in the Royal Mile, which I am certain the noble Duke knows, redevelopment has taken place. The houses have not been destroyed. The Corporation have restored them and they are now providing admirable houses, although perhaps they are a little more expensive than is normal for Corporation houses.

All my noble friend was arguing, if he was arguing a case at all, was this: here is an opportunity when we are doing this (and the Government have gone a little step along the road) to take this further step and make it possible for the local authorities to undertake this work. Not a single Member of your Lordships' Committee has denied, nor would they seek to deny, that throughout the whole country elderly people have lived in these areas and it is an absolute heartbreak for them to be shifted away to a district that they know practically nothing at all about. In the course of a lifetime they form associations with friends and with businesses. Anything we can do to help rehouse them in these areas I am certain would earn for us the gratitude of these elderly people.

So we have the example of what has been accomplished. We should take advantage of this Bill and take this one step further, which I am certain would bring benefit to the local authorities. The Under-Secretary was arguing in another place that this was a formidable argument that had been presented but the time was not right to accept it. I think the time that has elapsed between his saying that and the Bill's coming here is long enough. Your Lordships will be willing to take this step; I can only hope that the Minister will agree that it has to be done. I am sure that then he would earn not only the respect of the Committee but the gratitude of the people that this change would affect.

LORD MOWBRAY AND STOURTON

This has been a remarkable little debate. One might have thought one had wandered over the Border. Out of the seven Peers who have so far spoken in it, six have been from North of the Border. We welcome the advent of the noble Lord, Lord Hughes, in this Committee. I found myself echoing agreement with his wise words in nearly everything he said. His eloquence was delightful to listen to, as it always is. When he was talking to my noble friend the Duke of Atholl, I recalled a few years back when he sat where I am standing now, and my noble friend sat behind where he is—

LORD HUGHES

Should not the noble Lord have said, "Stood where I am standing now"?

LORD MOWBRAY AND STOURTON

I accept that correction. This Amendment is trying to achieve what we all wish to achieve. My right honourable friends, the Minister for Housing and Construction and the Secretary of State for the Environment are second to none in their dislike of slums, and I think it would be common ground with all noble Lords in this House that it is the most appalling state of affairs that in the 20th Century there are now estimated to be some 1,100,000 people living in conditions which are not fit to be lived in. My latest figures are that of these people some 400,000 are in slums which are outside clearance areas. There are some 700,000 who are inside clearance areas. I am now talking (with great risk) of South of the Border and Wales; I am not including Scotland.

Mr. Amery has said quite recently that he sees no reason why we should not have cleared all these slums by 1980—not ten years', but eight years' time. He is at this moment asking every council to look closely at what houses they have in their areas which need dealing with and he is asking for their plans and suggestions as to where he can help. Having said that, I accept totally what the noble Lord, Lord Hughes, said. It is a social problem as well as an economic problem. One has great local affection for where one has been born and bred. One has relations in the area, and clubs and shops that one knows, and one is fond of the place. This is appreciated very much now, and as well as urban renewal we have many housing improvement schemes going on throughout the country. I think it is common ground with all Parties that we are all delighted that so many local authorities are taking up these housing improvement areas and having campaigns to publicise them. The people concerned have to show good will, and the problem is being tackled.

The only question we have to tackle here is whether, as my noble friend the Duke of Atholl asked, this Amendment will really achieve its purpose. The other day my right honourable friend the Under-Secretary of State in another place said that this was meant to be a sudden, sharp fillip to help the housing authorities to get rid of slum areas which up to the moment they had probably cleared and then done nothing about. When they have appropriated this area to the right housing account they are then able to add to it the appropriate 75 per cent. of the housing sum subsidy. In this my right honourable friend met the wishes of the Party opposite by antedating this provision to 1965. I think he showed his compassion and desire to help the work on by doing that, and I am sure he would have been pleased to have heard everything that has been said here to-day.

Having said that, it is still the duty of us all to help slum clearance, and I have indicated that it is still a large problem, although nothing to what it was. Naturally, as we improve old houses we shall not see the slum population being increased. Once we clear the slums we hope that it will be some time before the houses which are now becoming old get into that state. We are now trying to concentrate on slums, and slum clearance must have complete priority. Although we should all like to see badly planned and obsolescent houses removed they are not as bad as slum houses. Therefore we think it right that in urban renewal the planning and re-development subsidy should be the appropriate subsidy. The figure of 50 per cent. can be obtained, as can be explained in a subsequent Amendment. Again, I think it will be appreciated that the point raised by my noble friend Lord Massereene and Ferrard is dealt with under Section 43(2) of the Housing Act 1957. Any building, shop, disused factory, or even house which is contiguous and necessary to an area of slums can be brought in, and then for the purpose of making this a declared area it will attract slum clearance subsidy.

The type of property which has been listed in the second Amendment does not therefore qualify for slum subsidy. As I have said, it can be acquired for use as Part V housing. In that case the burden of loan charges can be charged to the Housing Revenue Account, and if there is a deficit in that account it will then be taken into account for the purposes of rising costs subsidy or other deficit subsidies which are payable in relation to Housing Revenue Account deficits. Should there not be a deficit in the Housing Revenue Account the authority has no need of a subsidy towards the expenditure in question.

I think I have made it clear that while we have every wish to help in every way we can we do not think it would be right to extend the figure of 75 per cent. which is specifically intended to pinpoint the slum clearance to general areas of urban development. With that explanation, I hope that the clause may be allowed to stand as it is drafted.

10.40 p.m.

LORD HUGHES

The noble Lord disappointed me doubly. Before taking up his official brief he was full of sympathy. He agreed with what I had said, he referred sympathetically to some words used by the Minister in another place and he raised my hopes greatly—and then he came to the word "but". I also thought that he was making it a totally Scottish debate. If I remember rightly, when the noble Lord was on this side of the Committee he was an assistant spokesman on Scottish affairs. While, therefore, we are dealing with an English Bill, it has been interesting to see so many Scots taking part in these deliberations. However, like the Under-Secretary in another place, the noble Lord, after expressions of sympathy, agreement, concurrence and condolence, finally took to his Departmental brief and came to the word "but". He said "But this is not the time to take this step."

The noble Lord made a peculiar mistake. He spoke about areas adjoining slums as being "contagious"—a slip of the tongue for "cintiguous"—but he was not so far wrong because they are contagious. The slums spread out, and if the Government do not accept this Amendment, then two, three or maybe five years from now they will be dealing with what they must accept as slums within their definition, simply because of the contagious effect of being contiguous to slums.

The Government are not by this clause clearing slum areas. They are making provision for the demolition of individual slum houses, and that is not enough. They will continue the policy which has gone on for far too long in too many parts of the United Kingdom—indeed, throughout the nation—as a result of which for decades slum houses have been condemned and demolished, leaving sites that are far too small to be useful.

The noble Lord said that it was possible for something to be done. If local authorities used their powers in other directions, they might, he said, get a modified subsidy under the residual subsidy arrangements. On the other hand, if their accounts were in a sufficiently healthy state, they would not get any subsidy. In other words, they will either do it at less cost to the Government or at no cost to the Government at all. The Minister is really arguing "We agree that this should be done as soon as possible, but if we do not give a slum clearance subsidy now, we may get this work done more cheaply by local authorities accepting a greater burden on their ratepayers than would be the case if the Govern-did the proper thing."

The late President Roosevelt once said in relation to a disaster "A lot of people are saying 'I am full of sympathy for the unfortunate people who are suffering in this disaster.' I like the person who says I sympathise one dollar'." How much are the Government prepared to sympathise in this instance? I want them to go a little further than words.

While in his usual friendly and charming manner the noble Lord was kind and sympathetic—that is, before taking up his official brief—in this case sympathy alone is not enough. I thought that this would be one case when, because our request was so in line with stated Government objectives, the noble Lord would concede to something which had been sought in another place and where there was an indication that something would be done in future. I did hope that perhaps the future and the present might have coincided.

I am very sorry I cannot accept that the Government are being reasonable in this matter and I must, therefore, decide that we should divide on this Amendment. It is really too important to let the matter rest on the basis that the Government say "Yes, we are in agreement with these things being done but we are not prepared to vote for it."

LORD MOWBRAY AND STOURTON

Before the noble Lord proceeds to this Division, I should like to say that one thing is recognised in general. Every authority with slums outside the London area recognises very clearly that this slum clearance subsidy is going to be a very important help to them. Even in London the Under-Secretary of State said that the slum clearance subsidy would mean that the London authorities will be better off in totality. Outside the London area they will be much better off. Every local authority will gain considerably from the present position. There is a lot more money which will go into the kitty from the Government source for helping with this purpose and I do not think that it is quite fair to say that we are not doing enough. This will not cost peanuts, my Lords, it will cost a considerable sum of money and the Government is pinpointing this as an area of stress needing to be helped here and now. We do not want to diversify however worthy the diversifications in themselves may be.

LORD HUGHES

My final word to the Minister would be, "Be not weary in well doing. Get on with it."

10.47 p.m.

On Question, Whether the said Amendment (No. 67) shall be agreed to?

Their Lordships divided:—Contents, 28; Not-Contents, 70.

CONTENTS
Archibald, L.	Hale, L.	Simon, V.
Avebury, L.	Hoy, L.	Somers, L.
Bacon, Bs.	Hughes, L.	Stow Hill, L.
Bernstein, L.	Jacques, L. [Teller.]	Tanlaw, L.
Champion, L.	Llewelyn-Davies of Hastoe, Bs.	Walston, L.
Diamond, L.	Maelor, L.	Watkins, L.
Donaldson of Kingsbridge, L.	Milner of Leeds, L. [Teller.]	Wells-Pestell, L.
Gaitskell, Bs.	Morris of Kenwood, L.	White, Bs.
Garnsworthy, L.	Phillips, Bs.	Winterbottom, L.
Greenwood of Rossendale, L.
NOT-CONTENTS
Aberdare, L.	Elles, Bs.	Northchurch, Bs.
Amherst of Hackney, L.	Emmet of Amberley, Bs.	Nugent of Guildford, L.
Atholl, D.	Ferrers, E.	Oakshott, L.
Balfour, E.	Ferrier, L.	Onslow, E.
Beauchamp, E.	Fisher, L.	Orr-Ewing, L.
Belstead, L.	Gage, V.	Rankeillour, L.
Berkeley, Bs.	Gainford, L.	Rochdale, V.
Bethell, L.	Glendevon, L.	Ruthven of Freeland, Ly.
Brabazon of Tara, L.	Goschen, V. [Teller.]	St. Just, L.
Brooke of Cumnor, L.	Gowrie, E.	Saint Oswald, L.
Brooke of Ystradfellte, Bs.	Hailes, L.	Sandford, L.
Burton, L.	Hives, L.	Sempill, Ly.
Carrington, L.	Hood, V.	Strathcarron, L.
Colville of Culross, V.	Inglewood, L.	Sudeley, L.
Craigmyle, L.	Killearn, L.	Swansea, L.
Cranbrook, E.	Latymer, L.	Terrington, L.
Crathorne, L.	Limerick, E.	Tweedsmuir, L.
Crawshaw, L.	Lothian, M.	Tweedsmuir of Belhelvie, Bs.
Cromartie, E.	Margadale, L.	Vernon, L.
de Clifford, L.	Massereene and Ferrard, V.	Vivian, L.
Derwent, L.	Merrivale, L.	Wakefield of Kendal, L.
Drumalbyn, L.	Mountevans, L.	Wolverton, L.
Dundee, E.	Mowbray and Stourton, L. [Teller.]	Young, Bs.
Effingham, E.

Resolved in the negative, and Amendment disagreed to accordingly.

10.55 p.m.

LORD HUGHES moved Amendment No. 68: Page 16, line 43, leave out paragraph (a).

The noble Lord said: With your Lordships' permission, I wish to speak to Amendment No. 68, which proposes to leave out paragraph (a), which reads: may direct that expenditure of any class or description shah not be taken into account unless, and except so far as, the Secretary of State has approved the expenditure together with Amendment No. 70, in page 17, line 27. I shall not read this Amendment. It is rather longer, but, again, is a list of items which shall not be taken into account in reckoning the expenditure.

The purpose of moving these Amendments, which were tabled in another place but which, because of the way they work there, were not discussed and therefore not answered, is to probe exactly what the effect of these two sets of words is. Reading there without knowing exactly what they mean, one gets the impression that they are designed to exclude certain things which might otherwise be to the benefit of local authorities in reckoning their slum clearance subsidy. There may be perfectly proper reasons for excluding them. Sometimes one finds exclusions of this kind for the purpose of preventing the same item being reckoned for subsidy under two different heads. Therefore I formally move the first of these Amendments and hope the Minister will tell the Committee exactly what these two sets of words seek to accomplish.

LORD MOWBRAY AND STOURTON

The noble Lord, Lord Hughes, is quite right. This Clause is very technical, and I must stick very closely to my brief or I shall wander into deep areas. The only expenditure envisaged at present for which prior approval would be required is expenditure on land purchased by agreement or appropriated for slum clearance purposes.

LORD AVEBURY

Agreement or what?

LORD MOWBRAY AND STOURTON

By agreement. A local authority, by private agreement, can purchase some slum property.

LORD HUGHES

The noble Lord, Lord Mowbray and Stourton, added some other words. I think he said by agreement or something.

LORD MOWBRAY AND STOURTON

I beg your pardon. I said "or appropriated"—moving it to the appropriate account in the housing account. This is land outside a clearance area. Some control is required to ensure that any land which does not itself contain slums and which is purchased or appropriated for slum clearance purposes will count for the purpose of calculating slum clearance subsidy only if the Secretary of State regards this as reasonable. But even this control is not intended to operate on all such land, because under Section 43(2) of the Housing Act 1957, as I mentioned before, a local authority may purchase any land surrounded by a clearance area and the acquisition of which is reasonably necessary for the purpose of securing a cleared area of convenient shape and dimensions. No prior approval for slum clearance subsidy purposes will be needed in respect of any land that is surrounded by the clearance area.

Under Section 43(2) of the Housing Act a local authority may also purchase land adjoining a clearance area—this is also a point I dealt with last time—the acquisition of which is reasonably necessary for the satisfactory development or use of the cleared area. If the adjoining land is included in a compulsory purchase order made for slum clearance purposes and that area is confirmed by the Secretary of State, no prior approval will be required for slum clearance subsidy purposes. However, if such land is purchased by agreement or is appropriated from some other function of the local authority, then prior approval for subsidy purposes will be required.

LORD AVEBURY

That was a very useful explanation of how this paragraph is intended to operate, but one would like to ask the noble Lord why he cannot write that into the Bill instead of leaving the powers in a much more general form. What the Bill actually states is that the Secretary of State may direct that expenditure of any class or description shall not be taken into account", whereas the Minister has now told us—sticking closely to his brief—that the only kind of expenditure which is envisaged under this paragraph is on any land which is either purchased by agreement and not under an order (which has to be confirmed by the Secretary of State in any case) or land which is appropriated to the Housing Revenue Account; as I take it, from some other account belonging to the same local authority.

Surely it is not beyond the wit of the Parliamentary draftsmen, and of those instructing them in the Department, to devise a form of words to replace that paragraph. Because if we leave it as it stands, local authorities can never be certain in advance that expenditure which they have incurred will be immune from orders made by the Secretary of State. There is no point in having the paragraph in this form if the restrictive interpretation of the Minister's statement were to be confirmed. So it would be a great reassurance to local authorities if the noble Lord could agree to take this clause back and look at it again, and come forward at Report stage with a restriction confined to the terms of the statement which he has made this evening.

LORD MOWBRAY AND STOURTON

I think the simple answer to the noble Lord is that under Clause 11(6)(a) the Secretary of State may direct that expenditure shall not be taken into account, and the details of the regulations will be subject to annulment by either House.

LORD HUGHES

I cannot pretend that I am any more satisfied than the noble Lord, Lord Avebury, about the way in which the Minister has replied. In so far as his example goes, I accept that. But as the noble Lord, Lord Avebury, has said, there is really nothing in the broad way in which this paragraph is phrased to prevent the Minister from introducing regulations in future excepting from subsidy almost any class of expenditure which presently ranks for a subsidy. Given the unwillingness of Government majorities to annul regulations made by their Government, the Negative Resolution procedure on regulations is not necessarily a very good safeguard in this direction. I shall not press this Amendment at this stage, although I am not happy about it. But I suggest that what the noble Lord, Lord Avebury, has put forward is reasonable. The Government should have another look at this matter and see whether it is possible for them to come forward at the next stage with a form of words which is not so all-encompassing as this and which is more clearly related to what their restrictive intentions are. With those words, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

11.5 p.m.

LORD HUGHES moved Amendment No. 70: Page 17, line 27, leave out from the beginning to end of line 34.

The noble Lord said: I spoke to Amendments Nos. 68 and 70 together, but I think the answer which the Minister gave was confined solely to No. 68. I must therefore formally move Amendment No. 70 so that the Minister may give us the benefit of a closely detailed examination of his brief. I hope that it will be more satisfactory in its terms than the last one was. I beg to move.

LORD MOWBRAY AND STOURTON

Section 18 allows a local authority to take proceedings under Sections 9 and 10 of the 1957 Act in relation to a part of a building or an underground room. As a result of such proceedings the premises will either be made fit, if they were unfit, or brought up to a reasonable standard of repair. In either case the premises end up by providing permanent housing accommodation. Any expenditure to achieve this result should not count for calculating a slum clearance subsidy. Very obviously this has nothing to do with the clearing of slums.

Sections 30 to 32 are very technical and concern the making by a local authority of well-maintained payments, owner-occupier supplements, and payments in respect of expenses in removing or in respect of loss suffered as a result of the disturbance of a trade or business. To those of your Lordships who have not studied the Bill I would say that the well maintained payment is the compensation for extra well maintained property. Such payments are usually made where the building concerned is demolished, and the payments count for slum clearance subsidy. But there is one case where such payments are made in which the buildings concerned are permanently used for housing. This is the case of houses acquired under Section 12.

Such houses, although originally unfit, are made fit by the authority, and they become part of the authority's permanent housing stock. They are included in the Housing Revenue Account and after the Bill comes into force the cost of acquiring and repairing such houses will be taken into account in calculating any subsidies payable for the credit of that account. Section 12 is not therefore included in the definition of slum clearance functions and in consequence Sections 30 to 32, in so far as they relate to Section 12, are similarly excluded.

Lastly, under Section 67 of the 1957 Act the Secretary of State may make an order allowing the reasonable expenses properly incurred by an owner of land comprised in a clearance order or a Part III compulsory purchase order in opposing the order, and the owner's expenses and the expenses incurred by the Secretary of State in relation to such an order are to be paid by the local authority concerned. The allowance of an objector's expenses is in practice made dependent upon his objection being to some extent successful. If such expenses were to be allowed for slum clearance subsidy purposes it might encourage local authorities to become careless in deciding which land to include in such orders. This is an important point. It is reasonable, therefore, that the Secretary of State's costs should be allowed for subsidy but that the objector's expenses should not. This accords with current practice for calculating the cost of land for the purpose of subsidies under Part I of the Housing Subsidies Act 1967.

LORD HUGHES

The Minister has been quite exhaustive in his details of what these sections are. I wish that I had brought with me a copy of the Scottish Bill because it lends point to what the noble Lord, Lord Avebury, said in relation to the wording of the previous section which we queried. I am not absolutely certain of this, but it is my belief that the same sort of exceptions from reckonable expenditure are included in the Scottish Bill. But unless I have been more assiduous in looking up references than at the moment I think I have, it is my impression that the sort of words which the Minister used to explain what Sections 30 to 32, and so on, mean are in fact spelt out in the Scottish Bill—the items which are excluded. If this is so—and I am not at this stage prepared to guarantee it—then I would invite the Minister to have a look at what the Scottish draftsman has done, because it is always more satisfactory, if a local authority has a set of exclusions of this kind to look at, to know exactly what is being excluded by reading it in the Bill, rather than having their clerk go and look up various sections of other Acts of Parliament.

In begging leave to withdraw the Amendment, I myself will look again at the Scottish Bill, and if I am right I will remind the noble Lord, Lord Mowbray and Stourton, in due course of the wording, and hope that he will be able to do something about it. If I am wrong, and if in fact I am merely recollecting something which I have looked at and have written into the Bill in my own mind, I will of course remain completely silent to him.

Amendment, by leave, withdrawn.

Clause 11 agreed to.

Clause 12 [The Housing Revenue Account]:

11.12 p.m.

LORD DIAMOND moved Amendment No. 73: Page 19, leave out line 23.

The noble Lord said: I return to this task, delighted to find the excellent progress that has been made during the short moment that my back has been turned. This Amendment is to leave out line 23 on page 19, which is the line in the clause which refers to the disposal of any surplus in the account. The subsection draws attention to the provisions of Schedule 1, and says that the provisions of Schedule I shall have effect as respects (a), (b) and (c), (c) being the disposal of any surplus in the account". So although we shall come to the details in the Schedule, I think it is right to draw attention at this stage to the fact that here is the first reference to the proposal of the Government—a monstrous proposal—that a surplus built up by a local authority, maybe over a period of years as a result of wise and careful management, should be disposed of in one of several ways, which, without going into the detail, means that a large part of it goes to and remains in the coffers of the Government.

So the first question I want to ask the noble Lord who is dealing with this section is: on what possible basis can the Government justify what I think they call in another place "purloining" and what I should prefer to call "filching" a surplus which has been built up by a local authority out of local revenues and as a result of local economies and wise and cautious financial discipline and accounting procedures? By what justification can they claim that any part of that surplus should belong to the central Government? The noble Lord will know that this is a matter which has been the subject of correspondence and representation by the local authorities, who say—and these are the words of the Association of Urban District Councils: It is outrageous that authorities who, through their own good management and their rent policies, have built up a sound financial position should be at risk of having to pay some of these accumulated funds to the Secretary of State if they are intact on the 31st March, 1973. Provision should be made for such inherited surpluses above £30 per dwelling to be transferred to the general rate fund.

I do not think I need to refer to the £30 per dwelling. The effect of transferring to the general rate fund is transferring to the coffers of the local authority. They will always belong to the local authority and will not be taken from them. That is the view of the local authorities, of the Association of Urban District Councils and without going further I must ask the Government on what basis they justify their proposal. The onus of proof is entirely on the Government if they seek to withdraw from a local authority any part of the surplus which that local authority may have built up over the years. I beg to move.

LORD SANDFORD

I am glad of an opportunity to explain the rationale behind these arrangements. Noble Lords opposite have been agreeing with us that it is right to concentrate resources on those places and those people who need them most, and the main burden of their criticism is that we are not doing enough of this, and that housing problems generally and in particular require more resources. It is therefore very interesting that they should be moving this Amendment. If noble Lords opposite want more resources, more public funds spent on meeting housing needs, and to that extent are in agreement with us, they would not want surpluses which are left with the local authorities as a result of the application of all these subsidies for sufficient years to create a balance, because, by definition, when that balance has been reached the worst housing problems will have been dealt with. While the worst housing problems remain undealt with in any one place, housing subsidies will be attracted because there is a deficit on the Housing Revenue Account which will attract such subsidies. Once there ceases to be a deficit and the account moves into surplus, then, by definition, under this system the worst housing problems of that authority will have been met. Any funds left in their Housing Revenue Account can be used only for purposes that do not constitute the most pressing housing problems, or may not be applied to housing problems at all.

It is not true to say that this surplus, when it is treated under the terms of Clause 12 and Schedule 1, will be returned to the coffers of central Government. It is true that in the terms of the Bill they are paid back to the Secretary of State, but then they are applied as set out in the Schedule. The first charge on the surplus paid back to the Secretary of State is the payment of rent allowances in the area from which the surplus was derived, which otherwise are borne as to 100 per cent. by the Exchequer for the first four years. After that period slightly different arrangements apply. We shall come to that in another Amendment. The second charge after rent allowances have been met is that 50 per cent. of the surplus should go to the general rate fund and 50 per cent. remains with the Exchequer.

The case for this surplus returning in that way to the central Exchequer is very strong indeed. Looking at it in broad and general terms, the surplus overall is not likely to amount to more than about £30 million, whereas, as has already been made clear by the Financial Memorandum to the Bill, the contribution to the housing problems of the nation as a whole in England and Wales by the Exchequer will remain at something of the order of £300 million to £350 million. As the noble Lord has said, we shall be going into details in connection with surpluses when we come to Amendments 81 to 84. That is what I would say in reply to his general request for an explanation as to why surpluses should be dealt with in this way.

LORD DIAMOND

Can the noble Lord explain to what the £30 million referred? He said that the surplus will not amount to more than. £30 million. Is it £30 million per annum? This year? Next year? 1975–76? 1981–82? To what period does the figure refer?

LORD SANDFORD

To be more precise, for 1975–76 it is estimated to amount to only about £30 million. A part of that comes back to the local authorities under the Bill as drafted, in the formula that has been described.

11.21 p.m.

LORD HYLTON

On Second Reading, I argued that surpluses arising from public sector housing should be treated as a national asset. After all, they have been built with loans or subsidies centrally provided for the purpose. I am delighted to be able to support my noble friend in resisting this Amendment.

LORD DIAMOND

I congratulate Lord Hylton on his referring to the essence of the argument in the Amendment. I may not share his views but I am grateful for his coming to the point. I cannot say the same about his noble friend on the Front Benches. What Lord Sandford explained to us was in relation to matters I did not raise. I can understand the Divinity student who, when asked in an examination to give a list of the Kings of Judea, explained that he did not know the Kings of Judea but "the following were the Kings of Israel". No doubt the noble Lord, Lord Sandford, is familiar with that. What I was referring to was the surplus that had been built up over the years under existing circumstances as a result of the local authority's efforts and not necessarily out of the subsidies. It might have been assisted by the subsidies, it might not. The noble Lord, Lord Hylton, made an allegation, but it is a general allegation and he must give chapter and verse for it.

What, I ask, is the justification for surpluses built up by the local authority which increased its revenue by reducing expenditure or by carrying forward amounts that it would not otherwise have carried forward or by charging additional sums on the rates that it would not otherwise have charged? Take the case of the normal local authority which builds up a large repair account as compared with another local authority which does not. In one case it might have to make some contribution from the rate fund; in another case, not so. It would be true to say that the local authority which might contribute to and build up a surplus in this way, as far as you can allocate a particular pound to a particular purpose, has, out of its citizens' pockets, built up a reserve which would not have been built up it if had taken an alternative point of view and had, for example, called for a smaller increase in the rate in a particular year or over a number of years.

I cannot go the whole way with the noble Lord, Lord Hylton, and paint with a broad brush a picture of local authorities building up surpluses entirely out of national funds. Even if they were built up out of national funds the national funds were not loaned to the local authority. These were the contributions made by central government to the local authority after long consultation and agreement every second year with the local authorities' associations; funds provided so that local authorities could carry out social services and other functions which central government wished the local authorities to carry out. So far from saying I go the whole way I go none of the distance with the noble Lord, Lord Hylton: I say this regrettably because I have been much impressed by the point of view he has displayed with regard to this Bill. Allies are so rare and difficult to find on this Bill that the last thing I would want to do would be to lose him.

I now turn my attention to the noble Lord, Lord Sandford, and invite him once more to say what is the justification for a local authority surrendering to central Government surpluses which had been created over the past in this way. That is the first question. I then turn to what he had to say about surpluses arising in the future. He did commit himself, if I may say so, to the not-wholly-accurate phrase that I was not right in saying that these funds were imbedded within the Exchequer. What happens if a surplus does go to the Exchequer? First, rent allowances are deducted from it. This is the sum which would be paid 100 per cent.—for the next four years at all events—out of the Exchequer to relieve rent allowances.

If one is relieving the Exchequer of a payment of 100 per cent. it is idle to deny that this is exactly the same as paying money into the funds of the Exchequer. This is merely using words to hide the fact—and I have no doubt that these words are used to hide the fact, because the noble Lord has got a guilty conscience about it; of that I am not at all surprised—that the Government, by this reference and by the combination of this subsection and the Schedule, is purloining or filching moneys which may have been built up and, if they have not been built up, moneys which would otherwise have fallen on the Exchequer for providing for the relief of poverty in the country at large, which relief is a responsibility of central government wholly and not at all a responsibility of localities.

We have been into this argument and one only has to have regard to the simple fact that the circumstances of localities vary to such a degree that it would be wholly wrong to put upon a local authority the responsibility of relieving poverty. This would mean that the poorest areas would not only suffer from their citizens being in poverty, but that they would have to provide for that themselves without adequate assistance from the central government. That is the first answer I make to the noble Lord's point.

The second answer is that I agree with him that 50 per cent. remains in the Exchequer after doing that and then 50 per cent. is returned to the local authority. Surely he will agree with me that at all events 50 per cent. is the point I was making when I said that part of the funds go to the Exchequer. I am saying more than that; that not only do those funds—which he admits amount to one half—go to and remain in the Exchequer, but that the part which goes to relieve poverty by way of rent allowances is of the identical nature. So we get back to the situation where I dispute that that is anything other than what I myself said of a part of the funds going to and being imbedded in the Exchequer. I am waiting for an explanation as to why the Government think it right to take away surpluses created over past years from local authorities.

LORD HYLTON

Referring to what the noble Lord, Lord Diamond, said, it may be that I over-simplify it slightly in suggesting that a distinction should be drawn between, on the one hand, surpluses, and, on the other hand, balances and reserves for repairs.

11.30 p.m.

LORD SANDFORD

I do not think there is much more to be said on this. Of course one recognises that local authorities have by thrift and good management made a contribution towards a situation which in some cases may result in a surplus, if not now, then quite soon, on their housing revenue account. It is true that we regard the council houses in a particular area as belonging to that area, because they vest in the local authority. But the noble Lord knows perfectly well, as we all do, that most of those houses would never have been built if there had not been a substantial Exchequer subsidy available for years and years in order to ensure that they were built; and it may be that the ratepayers themselves have never contributed one penny towards their provision.

I am not saying that that is true of all cases, but in many it is—a contribution either to their provision or to the maintenance of these assets, which is vested in the local authorities. But their claim to share in the surplus arising as a result of all this enterprise, particularly under the new system when it comes into force, with the much larger central Exchequer subsidies that are attracted by, for instance, a substantial building programme, is certainly not as strong as that of the Consolidated Fund. I do not think there is anything more to be said about it. I can see there is a disagreement between the noble Lord and myself on this point.

LORD DIAMOND

There is a substantial disagreement, because the noble Lord is now saying that perhaps one argument is stronger than another. But he has not attempted to deal with the case that I am making for the accumulation of funds in the past. There can be no doubt whatever that these are funds which have arisen through wise management of the local authority. I find it difficult to think of any circumstances in which a local authority has contributed nothing whatever to its housing stock. But if the noble Lord says he can find such a local authority, perhaps out of all the

local authorities in England and Wales there is one such. But there can be no doubt what the general situation is, or what the feeling of the local authorities is. I have already indicated what the feeling of the Urban District Councils' Association is: it regards it as outrageous.

Perhaps I can refresh the memory of the noble Lord as to the view of the Association of Municipal Corporations. It says: The Association has throughout maintained that the surrender by local authorities of the equity in their housing stock to central government on a financial arrangement which is quite incalculable in its effect breaches another principle which is of equal importance to local authorities. "Another principle" means other than the principle of asking local authorities to contribute to the national responsibility for removing poverty. So this is a principle which the A.M.C. put on the same level as that principle. When it says, "on a financial arrangement which is quite incalculable in its effect", it is referring to the arrangement under the Bill.

There are two local authority associations, one dealing in particular with funds that have been accumulated in the past, the other dealing in particular with funds arising under the financial arrangements contemplated in the Bill, both saying the same thing: namely, that it is quite improper that they should be asked to surrender any part of those funds to central government, and indeed that is precisely my view too. If we cannot get the Government to have second thoughts about that as I would so invite them, then we must divide the Committee to show our dissatisfaction with that principle.

11.35 p.m.

On Question, Whether the said Amendment (No. 73) shall be agreed to?

Their Lordships divided: Contents, 23; Not-Contents, 69.

CONTENTS
Archibald, L.	Hughes, L.	Simon, V.
Avebury, L.	Jacques, L.	Stow Hill, L.
Bernstein, L.	Llewelyn-Davies of Hastoe, Bs. [Teller.]	Strabolgi, L. [Teller.]
Diamond, L.		Tanlaw, L.
Donaldson of Kingsbridge, L.	Milner of Leeds, L.	Walston, L.
Garnsworthy, L.	Phillips, Bs.	Wells-Pestell, L.
Hale, L.	Shackleton, L.	White, Bs.
Hoy, L.	Shepherd, L.	Winterbottom, L.
NOT-CONTENTS
Aberdare, L.	Elles, Bs.	Orr-Ewing, L.
Amherst of Hackney, L.	Ferrers, E.	Pender, L.
Atholl, D.	Ferrier, L.	Rankeillour, L.
Balfour, E.	Fisher, L.	Rochdale, V.
Beaumont, L.	Gainford, L.	Ruthven of Freeland, Ly.
Belhaven and Stenton, L.	Goschen, V.	St. Just, L.
Belstead, L.	Gowrie, E.	Saint Oswald, L.
Bethell, L.	Greenway, L.	Sandford, L.
Brabazon of Tara, L.	Hailes, L.	Sandys, L.
Brooke of Cumnor, L.	Hives, L.	Selkirk, E.
Brooke of Ystradfellte, Bs.	Hood, V.	Sempill, Ly.
Burton, L.	Hylton, L.	Strathcarron, L.
Carrington, L.	Killearn, L.	Sudeley, L.
Colville of Culross, V.	Latymer, L.	Swansea, L.
Colwyn, L.	Limerick, E.	Terrington, L.
Craigmyle, L.	Lothian, M.	Teviot, L.
Cranbrook, E.	Massereene and Ferrard, V.	Tweedsmuir, L.
Crawshaw, L.	Merrivale, L.	Tweedsmuir of Belhelvie, Bs.
de Clifford, L.	Mowbray and Stourton, L. [Teller.]	Vernon, L.
Denham, L.		Vivian, L.
Drumalbyn, L.	Northchurch, Bs.	Wakefield of Kendal, L.
Dundee, E.	Nugent of Guildford, L.	Wolverton, L.
Eccles, V.	Onslow, E.	Young, Bs. [Teller.]
Effingham, E.

Resolved in the negative, and Amendment disagreed to accordingly.

Clause 12 agreed to.

Schedule 1 [The Housing Revenue Account]:

11.40 p.m.

LORD DIAMOND moved Amendment No. 74: Page 111, line 44, after ("may") insert ("after consulting the authority").

The noble Lord said: I beg to move Amendment No. 74, and perhaps it will be convenient to take with it Amendment No. 75. At this point in the Schedule we have in paragraph 5(1) the statement: Where it appears to the Secretary of State that amounts in respect of incomings or outgoings … ought properly to be credited or debited to a Housing Revenue Account or that the amounts in respect of any of the incomings and outgoings aforesaid which ought properly to have been credited or debited thereto have not been so credited or debited, or that any amounts have been improperly credited or debited to that account, he may give directions for the appropriate credits or debits to be made, of for the rectification of the account, as the case may require. We are not objecting grossly to the Secretary of State having the power to give directions for the appropriate credits or debits to be made, or for the rectification of the account—although it does not say on what basis he would decide what are appropriate and what are not appropriate credits or debits, or to what extent the account is wrong and therefore requires rectification. What we are saying is that it would be quite wrong for such an action to be taken without the fullest consultation with the housing authority. If the Minister is going to say that that is sensible and normal, and that would be the practice, then I say again (as I have said on many occasions before) that it would be right to include a statutory provision in the Bill for that to happen. At the moment the Bill reads in a way which is unduly authoritarian and aggravating and upsetting to a local authority. It says, "It does not matter at all what you think; you are not necessarily consulted at all. We just say what we think is right as to debits and credits"—presumably those as to which there might be a difference of opinion, because if there were not a difference of opinion presumably the local authority would deal with the matter properly in the first place. That is why I am suggesting that it would be sensible and good local authority relations—we still have hopes that the Government will maintain good relations in certain respects, if not in industry then at all events in the sphere of local authority.

Similarly, at page 113, line 25, a point arises in relation to paragraph 10(2), where it says: Where it appears to the Secretary of State that a local authority have … failed to comply with"— the particular sub-paragraph— he may give to the local authority such directions as appear to him appropriate to ensure compliance with that sub-paragraph, and the direction may contain such particulars as to the amounts of the rate fund contributions, and the years for which they are to be made, as appear to the Secretary of State to be appropriate to ensure compliance with that sub-paragraph. That is not the identical situation, of course, but it is a related point. It is a different set of circumstances, but again it provides that a Secretary of State is to give a local authority such directions as appear to him to be appropriate. It may be that he is a person who, after taking account of all the facts and being acquainted with all the people concerned, will be the right person to reach a decision on this particular point. At all events that decision should not be reached until there has been full consultation.

I should be astonished to hear that there is not to be full consultation, but if there is to be full consultation I should have thought it would be sensible and wise and helpful to the Government's standing and would help to make relations a good deal smoother than they are at the moment between local authorities and their associations on the one hand and the Government on the other if there were statutory provision for this consultation. Therefore I hope that the Government will agree to both these suggestions. I beg to move.

LORD SANDFORD

I certainly confirm that the Government look kindly on the principle behind these Amendments, and I can repeat what I said on several occasions when the noble Lord has been moving Amendments of this kind, namely, that of course it is, and will continue to be, the practice to consult on a number of these issues where statutory provision has not in the past been thought necessary—as it was not in this particular case. There are almost always consultations in cases like this, either with the individual authorities or, where some general matter of application to all authorities is the case, with the local authority associations, or sometimes both. I can remind the noble Lord of one or two instances where it is made quite clear how alive and aware we are of the importance of this, and I will do so in a moment.

The noble Lord is right to draw out attention to this matter because although the parts of the Schedule to which the Amendments refer do not involve the Secretary of State and the local authority in negotiations and discussions different in kind from those which took place in the past, the result of the determination is, of course, of greater significance, in that the new substantial subsidies depend on these calculations. However, only yesterday we were discussing the rising costs subsidy, and because the calculations there are so significant we have incorporated in Clause 4, to which I particularly draw the noble Lord's attention, statutory provision for consultation. This demonstrates that where the determinations to which these consultations refer are of the greatest significance, statutory provision for them is incorporated in the Bill. On the other hand, these other two, though important, are not of the same significance, and I therefore assure the noble Lord that while of course consultations take place, either with the local authority associations or with individual authorities or both in matters such as this, it has not hitherto been thought necessary to provide for it by Statute, and it is not thought necessary to provide for it at this point.

11.52 p.m.

LORD DIAMOND

When the noble Lord says that it is not thought necessary in this case, he really means that he and the Government do not think it necessary. I assure him, however, that others think it is necessary, and I will explain why.

In Clause 5 the Government first think that it is necessary to consult and, having arrived at that conclusion, they provide for that to happen in the Statute. On the two points to which the Amendments refer, we are on common ground in that the Government also think that there should be consultation, and they say they will consult. If so, what is the difference? The difference is over the question whether it is worthwhile giving statutory form to the intention of the Government. I cannot see how the noble Lord can distinguish between giving statutory form to that intention in more important cases and not doing so in less important ones; in more important and less important cases consultation will take place.

Had the noble Lord said, "We propose to consult only in important cases" there might have been some reason for making this distinction in the Bill. But if he is saying "We will consult in all three cases"—but in the first that intention is stated in the Bill while in the other two it is not—then the only conclusion which the outside world will draw is that there is some distinction between what is said in the Bill in case one and what is not said in cases two and three. People do not read Hansard when interpreting the law. The law, as stated in the Bill, provides for consultation in one case but not in the other two.

It would, therefore, be more sensible and consistent to provide for consultation in all three cases. The only argument against doing so is that it would occupy a few extra lines in the Bill. The form of words to be used is no problem. The noble Lord can choose any form of words he finds convenient. He can limit the consultation to the individual local authority, to a class of authorities, to associations of local authorities or to housing authorities—as long as he makes it clear that the Secretary of State has it in mind to act after, and not before, consultation. The very fact that this is not given statutory form in two of the three cases will lead any reasonable person to draw the conclusion that the Government do not attach the same importance to consultation where it is not stated. That would be very unfortunate, especially as—and I have said this before but I must say it again—we are starting on a totally new scheme.

The background of it is that we are starting on a totally new arrangement for local government and there is great dissatisfaction up and down the country with the Government's local government proposals, which may or may not come before your Lordships' House. Therefore, I will not deal with them at too great a length, but there is great dissatisfaction and anxiety in relation to the provisions of this Bill which is before your Lordships' House. In those circumstances of a now totally new subsidy structure, of great anxiety and of great hostility, it is surely worth while putting pen to paper and incurring an extra few pennies cost in the printing of the Bill to include the provision for the consultation which the noble Lord says the Government wish to undertake. I hope he will be good enough, therefore, to say that he will give this matter further thought.

LORD AVEBURY

I can suggest a way of doing this without adding any extra lines to the Bill, if the noble Lord, Lord Diamond, will give the matter his consideration, and that is to say that, wherever the Secretary of State has power under this Bill to determine what is reasonable or appropriate—to use the phraseology of paragraph 4 to which the Minister drew attention—there must be prior consultation with the local authority associations or with the individual authorities as the case may be, wherever they are affected by that provision. A blanket clause could be put in at some suitable point in the Bill laying the duty on the Secretary of State to undertake these consultations. Then it would apply not only to paragraph 4 or to Schedule 1 but to any other place in the Bill where the Minister had power, having looked at all the circumstances, to issue directions, or to make a determination of what was reasonable in the circumstances. Since the Minister said that in practice it would always be the case that they would enter into these consultations with the local authority associations, although it is not actually written into the Schedule that it would be the intention of Ministers to do so, I should have thought that he would immediately accept that that was the right way to do it.

I do not think it is at all an answer to say, as he did, that the provisions of paragraph 4 are more important than those we are dealing with in Schedule 1. It is certainly true that the overall financial effect of paragraph 4 may be more significant, but in particular cases what we are talking about now may affect one local authority very markedly. We are not talking about the overall sums of money involved. We must look at it from the point of view of a particular local authority which has debited or credited sums to the Housing Revenue Account in perfectly good faith and the Secretary of State says, "In my opinion you should not have done this. We are going to revoke that right you have hitherto enjoyed to arrange the housing revenue account in this way and to force you to take that item out and put that item in". It is only reasonable when the Minister is taking such extremely wide powers to have consultation. If the Government would accept my suggestion the Amendment should not be put in at this place but that a general provision would be put in at some other point in the Bill, and if the Minister will rise and say that he will do that then I personally would be very happy to see this particular Amendment withdrawn.

LORD SANDFORD

I will certainly undertake, without commitment, to have a look at this to see whether it can be dealt with in that way. I think it is possible and justifiable to make a distinction between some points at which these determinations are of such significance that consultation is desirable. It is desirable to make statutory provision for it. There are other cases, and these are where the working relationships between local authorities and central Government are so well established for it to be quite unnecessary. We have had no request from local authorities to embody it at this particular point. It is not entirely straightforward. There is the difficulty that sometimes the consultations with the associations have been of such a kind that no subsequent consultation with individual authorities is necessary. But I will certainly look into it in the terms Lord Avebury has asked me to do.

LORD DIAMOND

I am sure that the noble Lord, Lord Avebury, is grateful to the Minister, as indeed am I, that he has said he will look into this matter. So far as I am concerned, may I say straight away that if the draftsman can draft, and the Government are content that he should draft, an omnibus provision, as there are certainly provisions affecting the whole of one Part of the Bill, provided that wherever the Secretary of State issues directions the directions are not issued until the appropriate consultations have taken place, making whatever reservation the noble Lord and the Government think proper, I should be very content indeed. That would serve the purpose. It is getting quite tiresome, every time one sees a glaring omission of an undertaking to consult, having to argue the same point again. The noble Lord, Lord Sandford, produces different reasons each time why they should not consult, on this occasion trying to distinguish between the necessity to say in one case and not say in another case, although in both cases you are proposing to consult. This is a distinction that really does not lie. The noble Lord has been good enough to say that he will give it careful consideration, and in those circumstances I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

12.2 a.m.

LORD DIAMOND moved Amendment No. 76: Page 113, line 36, leave out from beginning to end of line 2 on page 114.

The noble Lord said: I beg to move Amendment No. 76, and I hope it will be convenient to take with it Nos. 77, 78, 79 and 80. These five Amendments all relate to the same point, a point which was touched upon earlier when we were on the clause, which the Government pleaded with us it was not appropriate to pursue on the clause and that it should be left to the discussion on the Schedule. We are now on the Schedule.

The effect of all these Amendments is to alter the order of the Table appearing in Part III. Part III sets out a Table in relation to the limitation of certain subsidies and rate fund contributions. This Table is not easy to follow, but it provides the order in which certain subsidies shall be phased out. It provides that the first one to be phased out is the transition subsidy, the second one is the rising costs subsidy and the third one the operational deficit subsidy. They are respectively described as A, B and C. If noble Lords look at Amendment No. 78, it will be seen that the alphabet has slipped slightly and instead of having A, B, C, D and E we have C out of place, coming first, and we have C, A, B, D, E. Perhaps we can forget D, E because that is the order in which they are in the Bill already and there is no alteration there.

The reason why we are proposing C, A, B instead of A, B, C is to move C from third to first. C is the operational deficit subsidy and the Amendment proposes that that subsidy shall be first in the firing line instead of third. Why do I call it the firing line? Because whichever subsidy comes first in the firing line is the subsidy which is phased out in certain circumstances, the circumstances being broadly that the subsidy is not required because the housing revenue account is in balance, or that the subsidy is not wholly required because the housing revenue account would be more than in balance if the whole of it were credited to the housing revenue account. This phasing out is a method whereby a housing revenue account does not receive more than it should.

A subsidiary point we must bear in mind the whole time is that for every subsidy which is credited to the housing revenue account a matching contribution on the scale laid down in the Bill, in the various percentages we discussed earlier, is made from the rate fund. At the moment, therefore, one finds that subsidies which attract a smaller contribution from the Government are placed further back in the tiring line than subsidies which attract a large proportionate contribution from the Government. The position at present under this Schedule is that where one has a subsidy as to which the Government contribute 75 per cent., the other 25 per cent. falling on the rate fund, it is put in the firing line ahead of a subsidy where the Government contribute only 50 per cent., the balance of 50 per cent. falling on the general rate fund.

If noble Lords will be good enough to imagine, as I instanced on the previous occasion we discussed this, a circumstance in which a housing revenue account is in such a state that a further £1 million will put it in balance—neither surplus nor deficit, but in balance—then the question we have to consider is how the order of these subsidies should be arranged so as to achieve fairness as between local authority and central Government in the filling of this gap of £1 million. If the Bill remains in its present form the gap will be filled as follows: by the central Government, half a million pounds; by the rate fund—the ratepayers—half a million pounds, totalling £1 million. If the Bill is altered and if the Schedule is varied in the way this group of Amendments suggests, the effect will be that the gap of £1 million will be filled as to three-quarters of a million pounds from the central Government and the balancing figure of one-quarter of a million pounds from the rate fund.

I hope I have made the position clear. We have alternative treatment—in one case the treatment provided in the Schedule of £1 million being supplied as to half a million pounds from the central Government. The other treatment is the treatment provided for in the Amendments, which results in three-quarters of a million pounds being provided by the central Government. These are illustrative figures. The actual figures may be much more than that. That is the effect of altering the position and of making it clear that the first subsidy in the firing line—the first subsidy to be phased out—is a subsidy which provides for a lower proportionate contribution by the central Government, and that a subsidy not to be phased out so readily but being put back is one which has a higher contribution. The order is purely arbitrary. They have been described as A, B, C, D, but they could have been put in any order. Until the order is justified there is nothing to say other than that it is purely an arbitrary order.

So the question I am asking the noble Baroness is: why do the Government think it right that the order should be so arranged, when there are differing subsidies with differing shares of contribution by central Government, that the Government come off best? Of course, any spokesman for the Government may want to say, "That is fine. I represent the Government and they should come off best", but we want to know the reasons why. I am putting forward the alternative view of the local authorities who see no reason why, even with this situation which is as complicated as the wit of man can make it—and, by heavens, the Government have been very witty in this respect—and when it is necessary for the Housing Revenue Account to be balanced each year in one way or another, the order should not be reversed slightly with the operational deficit subsidy put first in the firing line. I hope that I have made the position clear. I am asking the noble Baroness to justify her proposal or to adopt my proposal, which is the local authority proposal and is the just proposal. I beg to move.

12.13 a.m.

BARONESS YOUNG

As the noble Lord has said, the difficulty is to find an order of withdrawal of subsidies which is fair both to local government and to central Government. In fact, the point of the noble Lord is met in the Schedule. In the year 1972–73, the operational deficit subsidy is phased out first, the others following upon it. It reverts to the order A. B, C. D and E in the years after 1973–74. This is because in the year 1972–73 it is thought to be fairest to local authorities to give them the benefit of this phasing out. Furthermore, in that year they will have transferred to them the working balances which will come from the winding-up of the housing repairs account, which will no longer be kept separately. It is thought right in the subsequent years that the Government should give the major part of the subsidies, because this will help the authorities with their additional house building. There has therefore been this split to devise a balance between central and local government which is thought to be fair to both.

VISCOUNT SIMON

I think the noble Baroness said that the change is made after 1973–74. Does she mean from 1973–74?

BARONESS YOUNG

From 1973–74, yes.

LORD DIAMOND

I congratulate the noble Baroness on her brevity, but I am afraid that that is as far as my congratulations can go. She has reverted to the argument that for the first year the order which I suggested does indeed apply.

BARONESS YOUNG

That is right.

LORD DIAMOND

So that we are marching in step as to the first year. I thought this point would come better from the noble Baroness than from me. So the first move towards accepting the weight of my argument is that it is perfectly right that this should, at all events, apply in the first year.

The noble Baroness then has to say why she proposes it should be different in subsequent years. The only difference of which the noble Baroness can think is that in the first year the local authorities will have the benefit of their own money transferred from their own housing repair accounts. That is perfectly true, but the point I am making is that it is their own money. There is no distinction between one year and any following year. In the first year they are required by the fiat of the central Government to transfer to one page of their ledger what was previously on another page; nothing more than that.

It was at all times their own money. It was described on one piece of paper; it is now required to be described on another piece of paper. That is the total difference and there is no significance in that whatsoever. So I do not accept for one moment that there is any distinction to be drawn on account of housing repairs being transferred from one page to another page. I do not think there is any reason in that particular happening to distinguish between what should happen in the first year and what should happen in subsequent years.

In the first year the order is the order on the Order Paper; it is on the Marshalled List as "CABDE". Why then should this not be the order in future years? The only possible effect of altering the order would be to save the central Government money and to cost the local authorities more money. There must be some justification for that. At the moment the noble Baroness has given us none. She merely says that she thinks it right. I think it wrong and so I am inviting the noble Baroness to say what justification there is for departing from what is an order acceptable to both sides of the Committee in the first year and proposing a different order for the subsequent years.

LORD BROOKE OF CUMNOR

I wonder whether it is necessary for my noble friend Lady Young to explain again what she has explained already. I have listened to the debate on this Amendment from the beginning. The noble Lord, Lord Diamond, asked the Government to explain why they took the view which is embodied in the Bill and not the alternative view embodied in this set of Amendments. My noble friend explained quite clearly and with commendable brevity the reason why the Government took that view. Either Lord Diamond understands what she said or he does not. If he does not we cannot help him. If he does, the inference is that he disagrees with it. But there will be no help to him or to any of us by going over the same explanation a second time. If he disagrees with it he has an opportunity to see how many of his friends will follow him into the Division Lobby.

LORD AVEBURY

This is the first time in these proceedings that we have had the benefit of the advice of the noble Lord, Lord Brooke of Cumnor, and he tells everybody to shut up. If the noble Lord does not want to take part in our debate he is welcome to leave the Chamber, but some of us want explanations of things in the Bill which are difficult to understand, not just by us but by local authorities which have to apply the provisions of the Bill. They want to see from the Minister's statements how they are going to work. We need to get proper explanations. With great respect to the noble Lord, Lord Brooke, let me say that I did not think that what the noble Baroness said was at all satisfactory from this point of view. I could not understand what she was getting at any more than the noble Lord. Lord Diamond, could. Therefore, we are perfectly entitled to demand a further explanation. If the noble Lord, Lord Brooke, does not want to hear it and if he is not interested in the application of these provisions in Schedule 1 it is his right not to take part in our discussions. But I think he should be a little more discreet in giving advice to the Committee when, so far as I am aware, he has not taken part in the proceedings until this very late stage.

The noble Baroness said, if I understood her aright, that the reason for the difference between 1972–73 and subsequent years was that you have this once-and-for-all transfer from the housing repairs account into the housing revenue account which local authorities are obliged by the provisions of this Bill to make—they have no choice—and that they can use the amounts which are so transferred to reduce the contributions which would otherwise have been required from the general rate fund to the Housing Revenue Account. I hope that I follow the noble Baroness correctly in her explanation, because it is extremely important that we get it right. She is then saying that in the years from 1973–74 onwards, because you no longer have this amount coming into the Housing Revenue Account from the repairs account, therefore you should alter the sequence of the firing squad, as it has been called in another place, and should adjust it to the order which is set out in the Bill.

If the noble Lord, Lord Diamond, is right and this is a purely paper transaction of moving an amount which is shown on one page on to another, then the explanation of the noble Baroness will not stand up. If, on the other hand, there is a substantial difference made in the year 1972–73 by reason of this transfer having been made—and this is what I think the noble Baroness did not explain adequately—then perhaps she could go into a little more further detail. What in fact is the result of this transfer? How does it affect the amounts which are paid by the central Government and the general rate fund, respectively, to the Housing Revenue Account; and what will be the difference as between 1972–73 and, for instance, 1973–74? If the noble Baroness could give us a representative set of calculations so that we could see how this works, then I think it would be most valuable to the Committee.

BARONESS YOUNG

I have tried to explain this point once, but I have found—and I was most grateful for the intervention of my noble friend Lord Brooke of Cumnor on this point—that it really seems to be necessary to explain everything several times over. What we are trying to do is to strike a balance between what is really best for the local authorities and what is best for the Government in this, and the fact is that local authorities gain most by the withdrawal of the operational deficit subsidy first, and the Government by the withdrawal of it later on—a point on which the noble Lord, Lord Diamond, and myself are in complete agreement; a point which I recognised at the beginning. In striking the balance, it is withdrawn first in the first year and third in subsequent years. This is the balance that has been drawn in this matter, and it seems to us a fair one.

LORD DIAMOND

I do not know whether I had best centre my remarks on the noble Baroness or on the noble Lord, Lord Brooke. I speak with great affection for the noble Lord, Lord Brooke, for a variety of reasons. First of all, I know him well and respect his ability. I do not say that he is not entitled, at this hour of the night, to show a little impatience; that is very understandable. But, more particularly, I am indebted to the noble Lord, Lord Brooke, for being elected to the House of Commons in 1957, because I then achieved a majority in my constituency of 8,000, as compared with my predecessor of 750, because the country was feeling the weight of the rent proposals which the noble Lord was then putting forward with the same understanding as that with which he made his speech a few moments ago. So I have nothing but gratitude to the noble Lord, Lord Brooke, for that.

All I want to say about this matter is that the noble Lord, Lord Brooke, and I are at one in wanting to make progress with this Bill, but I doubt whether the best way of making progress is for a Minister or for the Government to refuse to explain their point of view, or to attempt to justify it. Of course, it is possible for a Minister to get up and say in a very few words, "This is our view", and then to sit down again; and, of course, in this Committee one knows that those who are so inclined can determine the form of any legislation in that way. One knows that the only democratic process left to an Opposition in those circumstances is to appeal again, and in more detail, for reconsideration. That is what I am doing. I do not share the view that has been expressed by the noble Baroness, and I am asking for an explanation.

I am much benefited by the views and the speech of the noble Lord. Lord Ave-bury, who equally does not share the view, and we both start off on the basis that in year one all three Parties are satisfied with the order in which subsidies are phased out. Nothing of any relevance or of any substance is different or takes place between year one and subsequent years. Why, then, is there one treatment for year one and a different and less favourable treatment, so far as all localities are concerned, for the following and all subsequent years? Surely to any reasonable person and to any reasonable local authority and to anybody who wants to maintain good relations between central Government and local authorities there should be some justification for that difference in treatment. This Amendment seeks merely to maintain the treatment provided for by the Government in this Bill in year one.

One tries to strike a balance. The Government are giving favourable treatment in year one and unfavourable treatment in subsequent years, and that does not coincide with my ideas of a balance. I regard it as wholly unbalanced. So do the local authorities. I would say to the noble Baroness that we hope that she will consider the present proposals in the Bill. The difference between her proposal and mine is either to favour the Government or to favour the local authorities. We think, as do the local authorities themselves, that they are having a raw deal. That is their expression, an expression of the Urban District Councils Association. They think they are having a raw deal under this Bill and we are anxious that some of the rawness should be removed and that a fair deal should take its place—that would be for the order to remain as it is in year one.

The noble Lord, Lord Brooke of Cumnor, invites me to divide the House every time we have a difference of opinion. That would take a lot of time and we should make no progress. The Bill would make no progress, and there would be no progress in meeting what I consider to be the valid points of dissatisfaction felt by local authorities and their associations. I still take the view that we have a responsibility to represent their points of view and see that in a Chamber which is dominated by the Government a point of view other than that of the Government is heard, even though it irritates some people and causes a certain amount of impatience. I hope I do my duty as an Opposition spokesman with normal courtesy and normal relevance; therefore I come back to what I said before. In the interests of improving relations with local authorities I should think it would be a useful opportunity for the Government to justify their position. I would say to the noble Lord, Lord Drumalbyn, that it is not my intention to divide on this Bill endlessly throughout the course of the night. We can do that time and time again and we know exactly what the results would be. So, in spite of some normal inclination to visit short temper upon short temper, to return impatience for impatience, I do not propose to do so, and I do not propose to divide on this important Amendment. It is important, and if nothing further is said it will leave local authorities firmly of the view that the Government is rough-riding over them.

On Question, Amendment negatived.

12.30 a.m.

LORD DIAMOND moved Amendment No. 81: Page 115, line 24, leave out from beginning to end of line 26.

The noble Lord said: The three lines which are sought to be left out refer to working balances. In Part IV of the Schedule it states: Provided that the local authority may, instead of carrying forward the whole or any part of the working balance, treat the balance, or that part of it, as a surplus. This I take to be the provision in the Schedule whereby a surplus which has accumulated or is part of past transactions is to be treated as a surplus. One knows what happens to a surplus: a surplus goes to the Government. The Government use as much of it as may be needed to cover the subsidy for rent allowances (which is a Government responsibility) and then gives half back and retains half. So a working balance, if treated as a surplus, would go to the Government; and the majority of it would be gone for good. It is in these circumstances that, first, I invite the Government to say whether I am right in assuming that this is the part of the Bill which gives authority for that to happen and, secondly, that I should explain to the Government why we think the balance which has been accumulated in this way should remain with the local authority and should not be taken, as to the majority of it, for the funds of the central Government.

It would be a great disincentive on local authorities for all time if they knew that once the Government felt like doing so, they could do so in respect of any local authority which has so organised its affairs, perhaps by means of a high contribution from its taxpayers or by some other method, as to create a surplus. It would be a very great disincentive for those authorities to act in that way in the future if they knew that whenever a surplus arose the Government would filch it. I therefore suggest that this Amendment should be made so as to remove that temptation from the Government.

LORD SANDFORD

The noble Lord has already invited me (and I responded to the invitation) to describe why local authorities should not be allowed to accumulate a surplus indefinitely in their housing revenue account and to describe what happened to a surplus when it did accumulate. So I will not go over all that again. But in answer to his request I will explain the effect of omitting the words that the Amendment seeks to omit. The effect would be that the option provided by these words would be removed. That option is an option for the local authority either to treat a working balance as a working balance up to the maximum permitted—£30 times the number of buildings in the housing revenue account—or to treat it as a surplus. I do not think there is anything more to be said on this particular Amendment.

LORD DIAMOND

Perhaps the noble Lord could explain what is the benefit to the local authority of treating this as a surplus. He said if these words were removed then option would be withdrawn from a local authority. I cannot envisage in what circumstances a local authority, instead of describing a sum as a working balance, which means a sum of money which remains within the coffers of a local authority, would wish to describe it as a surplus. This would mean that the majority of it would go to the central government. Perhaps I have misunderstood, but I cannot see any point whatsoever in having those words in the Bill as no local authority would in its senses wish to exercise the option.

LORD SANDFORD

The words will not do any harm in that case. Working balances are needed for a variety of purposes and authorities do not always need a working balance of the full size provided for the generality of local authorities by this particular part of Schedule I.

LORD DIAMOND

I am grateful to the noble Lord, Lord Sandford. I am completely at a loss to understand the point of these three lines, but if the noble Lord cannot offer an explanation then we merely come to the conclusion that either there is no explanation or that the Government are not aware of it.

12.37 a.m.

LORD AVEBURY

I always work on the assumption that it is better not to have words in Acts of Parliament when they are wholly redundant. The noble Lord's justification for leaving them in is that they cannot do any harm. He still has not explained.

LORD SANDFORD

If the noble Lord, Lord Avebury, will forgive me, that is not at all what I said. What I said was that these words provide an option for the local authority of treating its working balance as a working balance or as a surplus.

LORD AVEBURY

But he also said they cannot do any harm and Hansard will show that I am correct in my recollection of his words. But if I am wrong and his words that I have remembered do not appear in Hansard tomorrow then I will offer him my apology. I thought that was part of the noble Lord's justification. It is not very usual for Parliament to incorporate words in Acts of Parliament on the grounds that they do not do any harm and to leave this option for local authorities to use if they see fit is not an adequate justification. The noble Lord has not explained, in response to the two requests made to him by the noble Lord, Lord Diamond, how that could be any benefit to a local authority. If I have missed something I would be grateful if the noble Lord could explain it to me.

How could there be benefit to a particular local authority, the ratepayers, the tenants, or any other class of people, in making a transfer from the working balance into what is then to be treated as a surplus? I think the noble Lord said that not all local authorities would require to use the maximum amount of the surplus which is a working balance provided for under Clause 15(1). How could it matter to them whether the amount is £30 per dwelling or some lesser sum? If they had reached the £30 which is the maximum permitted and they said "We do not really need a working balance of this size; £25 would be perfectly adequate", and then transferred the remaining £5 per dwelling, into the surplus, as the noble Lord, Lord Diamond, explained, this would immediately go into the coffers of the central government.

LORD SANDFORD

Perhaps I could interrupt at this point and it might save time. This was a phrase that the noble Lord, Lord Diamond, used and I rebutted it. If the noble Lord, Lord Avebury, had been listening or heeding what I said, he would see that my rebuttal included the point that, although some of the money goes to the Consolidated Fund, some goes into the local authority General Rate Fund where it can be used for other purposes. If the local authority holds the view that it has more of a working balance than it really needs this may be what it wants to do with it.

LORD AVEBURY

I was listening very carefully when the noble Lord explained on an earlier Amendment that part of the money that we have said is transferred into the coffers of central Government came back again in another form. He explained very thoroughly that it came back, first of all, in helping to meet the cost of rent rebates which are being granted by the local authority. Then the noble Lord, Lord Diamond, pointed out that the Exchequer would have paid the rent rebate subsidy, irrespective of whether or not there had been a surplus. The amounts that were coming from the central Government to the local authority were the same in either case. Therefore it was quite wrong for the noble Lord to have said, as he did—and I did not quarrel with him at the time, because I did not want to take up too much time—that this was, as he called it, a first charge on the monies paid over in the form of surplus. You cannot have a first charge on a sum that would have been payable in any case by one authority to another—in this case by the central Government to the local authority concerned. If the central Government were obliged to pay the rent rebate subsidy, irrespective of whether or not there had been a surplus paid over in the first place to the Exchequer, I do not think the description of the state of affairs which the noble Lord gave was a satisfactory one. But that is not the point that we are dealing with. We are talking about working balances now, and I think that the noble Lord has not given a satisfactory explanation of what happens in this case. He has not shown how it could possibly be to the benefit of the local authority for these words to be left in. Therefore I say that, since it is contrary to the good practice of Parliament to have redundant wording in the Statutes, these words ought to be removed.

LORD DONALDSON OF KINGSBRIDGE

Just to clear a Back-Bencher's mind on this point, does the sentence mean anything other than that the local authority has the option either to keep the money or give it to the Government?

LORD SANDFORD

It certainly does. It means that the local authority has the option of treating this money as a balance, or if it thinks its working balance is larger than it really needs for the purposes of the Housing Revenue Account, and it has perhaps many useful things it would like to do with part of those funds in the general rate fund, it may treat it as a surplus. The surplus is then used in the way that I was describing in answer to Amendment No. 73. I do not want to repeat what I said, but it does result in a part of the surplus—not the whole of it—going into the general rate fund. It is quite conceivable that there would be local authorities who, rather than having more on the working balance of the Housing Revenue Account, would like to have some of that money in the general rate fund. The option provided in the proviso which the noble Lord's Amendment would leave out is there for the housing authority to exercise in those circumstances.

LORD DIAMOND

I think we have taken this matter as far as we reasonably can—and we have clarified it by our joint efforts—and I am grateful to noble Lords on this side who have participated. As I read it now, what the words mean is that any local authority which wishes to pay a penalty of anything up to about 90 per cent. can transfer the amount from its Housing Revenue Account to, in effect, its rate fund: because the way it goes round the houses and via the Exchequer means that the whole of the amount needed to cover the rate allowance subsidy would be deducted, half the balance would be deducted, and what remained would be available to the local authority's own revenue, as opposed to the local authority's revenue allocated, appropriated and earmarked for the Housing Revenue Account. I cannot imagine any circumstances in which a local authority would want to lose all that money. It is not absolutely as put by the noble Lord, Lord Donaldson of Kingsbridge; apparently it is not a 100 per cent. loss; but it is a very substantial loss. I cannot imagine any local authority that would want to lose all that money in order to have a much smaller sum on one piece of paper than on another. But, as I say, I think we have taken it as far as we can, and I am grateful to the noble Lord for the explanations that he has felt able to give. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

12.45 a.m.

LORD DIAMOND moved Amendment No. 82: Page 116, line 18, leave Out paragraphs 17, 18 and 19.

The noble Lord said: I beg to move this Amendment. This is a probing Amendment. May I say by way of preface that we are dealing here with a very long and complicated Schedule. It is ten pages long, has 23 paragraphs and is full of complexity. Most of my noble friends with whom I have discussed it say that they cannot follow it, so I hope that the Government will not feel that we are wasting the time of the Committee by seeking enlightenment of the more complex parts.

We are already dealing with an Amendment affecting paragraph 17, which is eight pages on; and so far we have had three discussions on this Schedule. It is, of course, tiresome for Governments to have to explain what they are doing, and no doubt they would much prefer to be relieved of the necessity for explaining and justifying their legislation, but while our procedures remain as they are it would be right for us to invite the Government to explain the Bill. I find paragraphs 17, 18 and 19 difficult to understand and should therefore like to have an explanation so that I might then see whether it is possible to persuade the Government that these three paragraphs should be omitted.

LORD SANDFORD

When the noble Lord moved Amendment No. 73 dealing with surpluses in general, I responded by explaining the ideas behind the disposal of the surplus. I went on—and indeed he then criticised me for going further than he had invited me to go—to explain the manner of disposal. If he will remember, I said that the first charge on the surpluses were the rent allowances and the second charge was the consolidated fund and the general rate fund of the authority. I will not repeat that; but what I think would help the Committee now would be an explanation, with an example, of the disposal of the surplus in the most complicated situation that arises after 1975–76. Before I do that, perhaps the noble Lord would be kind enough to confirm that that is the difficulty he wishes me to try to resolve.

LORD DIAMOND

I should like to save the Minister as much inconvenience as possible and also to save the time of the Committee. What I should really like to know is the effect of these three paragraphs, so that I can see whether it would be right to pursue my point of seeking to have them omitted. So if the noble Lord has his brief handy, telling him the purposes of paragraphs 17, 18 and 19, I should be grateful if he would let us know, as shortly as he likes, what that brief says.

12.50 a.m.

LORD SANDFORD

I tremble at inflicting my full brief on the Committee. I have explained in outline the simple way in which the surplus is disposed of; namely, as a first charge it goes to the rent allowances; as a second charge it goes in between the consolidated fund and the general rate fund. But there are refinements and extensions of that to which paragraphs 17, 18 and 19 apply. To run right through all those paragraphs would be extremely laborious and I doubt if the Committee would be much enlightened at the end of it. What I believe would be helpful, and would illustrate the matter much more satisfactorily, would be if I were to give the noble Lord and the Committee an example of what happens when a surplus is disposed of in various proportions, as it would have to be, in the years after 1975–76 when the rent allowances are not then met as to 100 per cent. by the Exchequer. I do not think that there is any other point to which these particular paragraphs refer, and perhaps therefore it would be better if I did this.

May I invite the Committee to consider the situation where there is a surplus of £200,000 to be disposed of. Let us assume the cost of the rent allowance scheme, which is the first charge, is based on the model scheme. The standard amount of rent allowances is, say, £100,000, and at this period the Government would meet £80,000 and the rates would meet £20,000. We apply the first £100,000 of the surplus to the rent allowances; that is to say, £80,000 to the consolidated fund and £20,000 to the rate fund. We split the remainder equally between the consolidated fund and the rate fund: £50,000 to the consolidated fund and £50,000 to the rate fund. Thus the total distribution of £200,000 surplus is then £130,000 to the consolidated fund and £70,000 to the rate fund. That illustration serves to show simply the way in which a surplus would be disposed of at that period in the operation of these rather complex paragraphs. I hope that will serve the purpose that the noble Lord was seeking.

LORD DIAMOND

I am grateful to the noble Lord for the illustration that he has given, an illustration which I take to be a typical one in which the surplus is treated so that 35 per cent. (I think he said) was retained by the local authority and 65 per cent. went into the coffers of the central Government. I think that was the broad effect of his explanation, and I am assuming that is a typical case.

LORD SANDFORD

I did not say it was a typical case. I was using large, round figures to make the explanation easier.

LORD DIAMOND

I hope it was a typical case. We would want to think that the Government are giving us figures likely to reflect the kind of situation which would arise. I do not mean necessarily as to amount, but as to the kind of distribution. The noble Lord would not wish to mislead us by giving us a case which was quite unique or exceptional, but give a normal case from which we could draw our conclusions. He prefers to give us a short description of the effect of the straightforward circumstances of these three paragraphs put together. He has been supplied with what he describes as a very full brief dealing with the refinements which are to be found in the various sub-paragraphs of these three paragraphs. I will simply read very carefully what he has said and if we do not need to come back to it in detail at a later stage I shall be delighted. If we do need to come back to it in detail at a later stage it will be because the explanation given by the noble Lord has not been sufficient to make the position fully clear. I do not think I shall go beyond that at this stage. I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD DIAMOND moved Amendment No. 83: Page 116, line 19, leave out from ("year") to end of line 21.

The noble Lord said: This is a smaller Amendment accommodated within paragraph 17(1), which reads: The provisions of this paragraph have effect where a surplus is shown in the account for any year"— and then it goes on to say— (whether or not consisting of or comprising any amount treated as a surplus under paragraph 14(2) above). That paragraph is the penultimate one that we were discussing. We found it difficult to understand why any local authority would seek to have described as a surplus a sum of money, and, at a loss which I put then at anything up to 90 per cent. and of which the example now given shows 65 per cent; seek to have it placed on one page as opposed to another page. I do not think that there would be many local authorities who would wish to avail themselves of that alternative. Therefore I do not think that the words: whether or not consisting of or comprising any amount treated as a surplus under paragraph 14(2) would be needed or revelant. If, however, the Government on further consideration think that they would like to justify these words, of course we shall be only too glad to listen to them. My own view is that the words are as unlikely to be needed as the proviso to paragraph 14(2) which we discussed earlier. I beg to move.

LORD SANDFORD

I am glad to have an opportunity to explain this to the Committee. I think the noble Lord, Lord Diamond, is mistaken in assuming that there would be no circumstances in which a local authority would decide to exercise the option to convert one of these working balances into a surplus, because if there were comparatively few, or no, private tenants entitled to or drawing rent allowances, 50 per cent. of the working balances which a local authority decided to treat as a surplus could be removed from its Housing Revenue Account to its general rate fund where it would be glad to have it. That is the reason why the option is provided in paragraph 14, and why the surplus so derived features in paragraph 17.

LORD DIAMOND

I express my gratitude for that explanation and seek the leave of the Committee to withdraw this Amendment.

Amendment, by leave withdrawn.

1 a.m.

LORD DIAMOND moved Amendment No. 84: Page 116, line 22, leave out from beginning to end of line 14 on page 117 and insert— ("(2) The local authority may dispose of the surplus by using it for any of the following purposes—

1. (a) in payment of a further rebate in rents of its dwellings in such manner as it thinks fit;
2. (b) in payment of the local authority's costs of administering its rent rebate scheme under Part II of this Act for the year;
3. (c) by financing capital expenditure for housing purposes in order to reduce the local authority's recourse to borrowing;
4. (d) by accelerating repayment of capital already borrowed for housing purposes;
5. (e) by repaying to its tenants or any of them in such manner as it thinks fit a proportion of the capital cost of their respective dwellings, being not greater than the amount which the local authority calculates has been repaid by a tenant in his rent;
6. (f) in payment of the costs of improvement to its dwellings or provision or improvement of amenities provided for its tenants;
7. (g) for any other purpose connected with the provision of housing and associated amenities;
8. (h) by payment to its general rate fund.")

The noble Lord said: The Bill sets out how the surplus which a local authority has accumulated, either out of its resources long before this Bill saw the light of day or subsequently arising, should betreated. The Amendment suggests that a better treatment can be found for this money, as I will explain.

The proposal is that instead of the division in the Bill, we should say that the local authority may dispose of its surplus by using it for any of the purposes set out in the Amendment. The first is: (a) in payment of a further rebate in rents of its dwellings in such manner as it thinks fit. If the authority is satisfied that those living in its area need further rebates in order to have an appropriate and diminishing proportion of their incomes devoted to rents, it should have the power to grant those further rebates. The second is: (b) in payment of the local authority's costs of administering its rent rebate scheme under Part II of this Act for the year. We have discussed the issue of the cost to local authorities of administering the scheme and the Committee has been informed that all the local authority associations take the view that it is preposterous to expect the expense of administering a rent rebate scheme to fall on the rates; and the proposal in the Amendment for the use of the surplus is fair and reasonable.

The third is: (c) by financing capital expenditure for housing purposes in order to reduce the local authority's recourse to borrowing". A local authority is normally limited by its borrowing requirements in building its houses, and in this way that limitation would be reduced by the authority being able to use its surplus to assist the building of houses for its own citizens. The fourth is: (d) by accelerating repayment of capital already borrowed for housing purposes. That is slightly different from the proposal in (c). When a local authority has borrowed money, which it generally does over a long period of years, it could by this method accelerate its repayment if it has the funds to do so.

The fifth is: (e) by repaying to its tenants or any of them in such manner as it thinks fit a proportion of the capital cost of their respective dwellings, being not greater than the amount which the local authority calculates has been repaid by a tenant in his rent. In many local authority dwellings, especially older ones and particularly where rents have been pooled, a tenant, far from being in receipt of subsidy, has subsidised the authority in that he has more than paid in his rent for the use of the property, and a portion of what he has paid is attributable to the purchase of it, so that a portion of the capital cost should now be returned if the authority, as a result of those excessive payments, has a surplus.

The sixth is: (f) in payment of the costs of improvement to its dwellings or provision or improvement of amenities provided for its tenants. That is self-explanatory. The seventh is: (g) for any other purpose connected with the provision of housing and associated amenities. That, too, is self-explanatory. And if there is anything left over, then the appropriate place for it appears in the eighth, which is: (h) by payment to its general rate fund.')". That is a proposal which strikes us as being much more appropriate and just, having regard to the history of the circumstances as to how a local authority might dispose of any surplus that it was fortunate enough to have acquired as a result of the contributions made, in the main, by tenants and ratepayers. It does not necessarily mean that these should be in the order described because the provision is that it could be used for any of the following purposes but some of the purposes are much more obvious and more likely to be used than others. This is a sensible way and much more sensible indeed than the provision made in the Bill which provides, in the main, for the money simply to go to the coffers of the central Government and to be used for the reduction of taxation. I think this is a far better method and I therefore beg to move.

THE EARL OF BALFOUR

It appears to me that in this Amendment paragraphs (a) (b) and (e) would be in direct contradiction to Clause 22. On the point of the rules of borrowing, I regret to say that I do not know enough about English conditions to say whether this would be possible, but I understand there could be complications.

LORD SANDFORD

This Amendment makes a number of counter-proposals as to how the surplus should be dealt with, and it is probably most convenient, though it may be a bit laborious, if I deal with those points by commenting on each of the particular proposals, or most of the particular proposals, made in the Amendment. Head (a) says that it should be used for granting further rebates in the rents of dwellings. But this would enable authorities with relatively low historic costs to reduce the rents of their dwellings below fair rents and this would breach one of the cardinal principles of this particular legislation, which is that everybody should pay fair rent, both in the private and in the public sector, but that those whose resources and needs require it should have the benefit of rent rebates and rent allowances. If what is proposed were done, not only would the principle be breached but unfairness between the private and public tenants in any one local authority area would immediately arise.

Head (b) makes the point that the surplus should be used to meet the cost of administering the rent rebate scheme. Although that is a good point, it is not necessary, because by the time the Housing Revenue Account is in balance or in surplus, Clause 7(2)(c) will be operating and the cost of administering the rent rebate scheme will have been met in that way. Heads (c) and (d) suggest that it should be used for financing capital expenditure for housing purposes and by accelerating repayment of capital. Any part of a Housing Revenue Account surplus which is returned to an authority for credit of the general rate fund under the provisions of paragraphs 17 and 18 of Schedule 1 may be used by the authority to meet capital expenditure incurred by that authority. So the issue, therefore, is simply whether the whole of the Housing Revenue Account surplus should be available to the authority for that or only the part returned to it by the Government.

Head (e) is the proposal that it should be used for repaying to tenants the proportion of the capital cost of their dwellings which the tenant has repaid in his rent. But I would submit to the Committee that this proposal is based on the fallacy that each tenant is meeting the cost of providing the dwelling which he occupies; that is, that his rent pays the loan charges. But rent, whether paid by a council tenant or a tenant of a private landlord, is a payment for the occupation of the dwelling and is not a form of instalment purchase. Head (f) is a proposal that the surpluses should be used for the payment of the cost of improvements of amenities provided for tenants. In the new subsidy system, when an authority's Housing Revenue Account is in surplus the full cost of improving H.R.A. dwellings will have been met; in other words, any rate fund contribution which would otherwise have been required to meet this kind of expenditure which does not count for subsidy will have been eliminated before the surplus arises.

Heads (g) and (h) are for any other purposes connected with the provision of housing and associated amenities and by payment to the general rate fund. Any part of a surplus returned to the local authority will be available to meet whatever kind of expenditure the authority wishes. It could, for example, reimburse the general rate fund for the compulsory rate fund contribution to the H.R.A., in respect of amenities shared by the whole community; to meet the 25 per cent. of slum clearance loss which will not be met by subsidy; or to meet the rate fund's share of the cost of improvements to privately-owned dwellings. The issue again is whether the whole surplus should go to the authority or a share, and that broad issue is the one which we have already discussed in relation to Amendment No. 73.

LORD DIAMOND

The noble Lord has said that on some of these points we are in agreement, that the provisions in the Amendment coincide with what can already be done and that there is no reason for them not to be included. As to heads (f) and (g), the noble Lord said, rather naïvely, if I may say so, that any part of the surplus returned to the local authority can be used for these purposes. Of course any part can, but by the time the surplus will have gone through the machine, as we know it, the Government will have taken the 70 per cent. in the example given by the noble Lord, or a higher percentage in other examples that one can imagine. Therefore that is not really very relevant, or very helpful, if I may say so. Of course, anybody can pour his money down the drain if he wants to, but he is not likely to regard that as a sensible method of proceeding.

So we really come down to the basic difference in sub-paragraph (2)(a) and (2)(e). In sub-paragraph (2)(e) the noble Lord proposes the novel principle that no matter how high the rent you pay it is a rent in respect of the use of the premises and not something in the nature of an instalment, by which he means a building society instalment or a purchase instalment. There is no justification for that proposition at all. Economically speaking, if a payment is made which is vastly in excess of the use of the interest which would be attributable to historic cost, then in fact you are paying for something more than the use of the premises; you are paying something over and above that, which can only be regarded as a proportion of the capital costs; the excess can only be regarded in that way. And there are many cases where this will be the case, that the historic cost will have been paid time and time again in terms of rent, and the only way in which you can regard the excess being paid is as a proportion of the capital cost. We are totally at odds with the noble Lord in that matter.

We are completely at odds with him also on the first item— in payment of a further rebate in rents of its dwellings in such manner as it thinks fit; The noble Lord says this would be against the principles of the Bill in relation to fair rents—we have not yet reached that matter; we will make our position clear when we reach it—and that it would be

1.24 a.m.

LORD DIAMOND moved Amendment No. 85: Page 117, line 36, leave out paragraph 21.

The noble Lord said: Paragraph 21 deals with the district audit and reads:

wrong to have regard to historic costs. We do not think it would be wrong to have regard to historic costs. That is the cost on which most people base the income they require to meet the outgoings on a property, a business or whatever it may be. In our view it should apply to rents just as much as to anything else.

We will develop this argument much more fully when we reach the part of the Bill dealing with fair rents. I want to establish here and now that we totally disagree with the noble Lord in his view about 2(a), and we would therefore wish to divide the Committee on this Amendment.

1.17 a.m.

On Question, Whether the said Amendment (No. 84) shall be agreed to?

Their Lordships divided: Contents, 15; Not-Contents, 63.

CONTENTS
Bernstein, L.	Hughes, L.	Shepherd, L.
Diamond, L.	Jacques, L. [Teller.]	Stow Hill, L.
Donaldson of Kingsbridge, L.	Llewelyn-Davies of Hastoe, Bs.	Strabolgi, L. [Teller.]
Garnsworthy, L.	Segal, L.	Wells-Pestell, L.
Hale, L.	Shackleton, L.	White, Bs.

NOT-CONTENTS
Aberdare, L.	Elles, Bs.	Mowbray and Stourton, L. [Teller.]
Amherst of Hackney, L.	Ferrers, E.
Atholl, D.	Ferrier, L.	Nugent of Guildford, L.
Balfour, E.	Fisher, L.	Onslow, E.
Beaumont, L.	Gainford, L.	Pender, L.
Belhaven and Stenton, L.	Gowrie, E.	Rankeillour, L.
Belstead, L.	Greenway, L.	Reay, L.
Brabazon of Tara, L.	Hailes, L.	St. Just, L.
Brooke of Cumnor, L.	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Saint Oswald, L.
Brooke of Ystradfellte, Bs.		Sandford, L.
Burton, L.	Harvey of Prestbury, L.	Sandys, L.
Colville of Culross, V.	Hives, L.	Selkirk, E.
Craigmyle, L.	Hood, V.	Sempill, Ly.
Cranbrook, E.		Sudeley, L.
Crawshaw, L.	Killearn, L.	Swansea, L.
Darcy (de Knayth), Bs.	Kilmarnock, L.	Teviot, L.
de Clifford, L.	Latymer, L.	Tweedsmuir, L.
Denham, L. [Teller.]	Limerick, E.	Tweedsmuir of Belhelvie, Bs.
Drumalbyn, L.	Lothian, M.	Vernon, L.
Dundee, E.	Masham of Ilton, Bs.	Vivian, L.
Eccles, V.	Massereene and Ferrard, V.	Wakefield of Kendal, L.
Effingham, E.	Merrrivale, L.	Young, Bs.

Resolved in the negative, and Amendment disagreed to accordingly.

"… the housing accounts of such a council shall accordingly in every case be subject to audit by a district auditor under Part X of that Act."

The present position is that audits are undertaken either by the district auditor or, if the local authority so desires, by a professional auditor, and of about 340 boroughs in England and Wales some 200 have now adopted the professional audit. In particular, over three-quarters of all county boroughs, which are the larger and more powerful municipal corporations, have also adopted the professional audit. So there is clearly a situation in which the majority of all authorities and in particular three-quarters of the largest authorities made use of the option—and it is only an option—to have professional auditors and advice rather than the district audit, although there is a district audit limitation for certain aspects.

So it is not surprising that the various institutions representing the accountancy profession have raised this matter. The Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants in Scotland and the Institute of Chartered Accountants in Ireland—it is nice to have a situation in which we are all happily united—the Association of Certified Accountants and the Institute of Municipal Treasurers and Accountants, which is a most important body in this context, asked why they were being excluded from doing what they had always been allowed to do if the local authorities wanted them to do it. It is an exclusion of the liberty of local authorities to act in this way.

The proposal in the Bill would mark a major change in the existing statutory position. I am not seeking by this Amendment to do anything more than restore the statutory position which applies elsewhere. All municipal corporations, both county and non-county boroughs, are empowered by Section 239 of the Local Government Act 1933 to adopt a professional audit instead of a district audit. The accountancy bodies therefore object to the proposed change on several grounds. First, they say that it would be a major interference with the liberty and powers of autonomy of municipal corporations and would deprive them of the benefit of the services of their professional auditors in relation to these accounts. Secondly, they regard it as a substantial curtailment, without any cause or explanation being given, of the right of professional auditors to serve the community.

Thirdly, it is said that the housing account is not the only account which is materially concerned with the financial management of housing. Debt management is another substantial related item and by artificially hiving off or separating, as this clause seems to want to do, the audit of the housing account from the audit of the rest of the overall audit responsibility would be divided and audit effectiveness would be much reduced. Next, they say that this provision would be wholly inconsistent with the tenor of the audit clauses, that is, Clauses 151 to 163 of the Local Government Bill which is now before Parliament. I do not want to dwell on that unduly, but it is right to draw attention to the fact that under that Bill the Government are proposing to maintain the status quo as between the district and professional audit of boroughs, yet under this Bill they are proposing to do something which is almost wholly opposed to that. If there were to be any variation, any major change, in what is now a long-established situation—and not without difficulty: we have had this argument before; I remember making similar speeches back in 1946 or 1947—the proper place to deal with it would be in a local government Bill which set out the relationship between local government and central Government, and provisions of this kind, and not as a paragraph in a Schedule to a Bill dealing exclusively with housing finance. So all the accountancy professions seek the removal of this provision, and the Amendment would serve that purpose. It is for those reasons that I beg to move.

LORD SANDFORD

I think the main concern of the noble Lord and his friends in the accountancy profession ought to be and can be met, and will be met by the provisions of the Local Government Bill. However, that is not the Bill which is before us at the moment, and in dealing with this particular matter we are dealing with something rather different. The effect of the noble Lord's Amendment would be to remove the requirement that the housing accounts—and it is only the housing accounts we are talking about—of the council of a borough which has not adopted the system of district audit should be so audited.

I think noble Lords will readily recognise that here we are dealing with housing revenue accounts which are extremely detailed and complex, and this complex detail in those accounts has greatly increased significance because the calculations leading to and attracting this range of larger subsidies are based upon the credits and debits in the housing revenue account. For this reason, it is essential that the claims for subsidy derived from the credits and debits on the housing accounts should be examined and audited by persons with suitable and relevant experience. At present, it is only the District Auditor who is so experienced; hence the provision in the Bill.

But, as the noble Lord rightly said, in the Local Government Bill we shall be making much wider provision for all authorities to have a choice to adopt private or district audit. Under that provision, which I mention because it is linked with this one although it does not arise out of this Bill, there will be moment we have to move in a rather different direction.

ample scope for accountants with suitable training and experience to apply their skills to the wide-ranging accounts of a large number of local authorities; but I think that he will recognise that in this particular case at this particular

LORD DIAMOND

I recognise no such thing. It is an astonishing reply that the noble Lord has made. First of all he says the professional accountants are not equipped to understand the complex details of a housing revenue account. That is an astonishing statement to make.

LORD SANDFORD

It is not equipment so much as experience.

LORD DIAMOND

I do not know why the noble Lord says they are not experienced, because they are at the moment engaged in this work. I have just read out the number of boroughs which are engaged in this very work. All the noble Lord is saying—and he has something of a point here—is that this Bill is so jolly complex that almost nobody can understand it. He has something of a point there, but when he takes it as far as all the chartered accountancy bodies then I think he is taking it too far. With the greatest respect, this is one of the more simple things to understand so far as an accountant is concerned. In accountancy terms it is a very straightforward matter indeed. But he need not accept my view of that: he ought to accept the view of the five professional bodies, all of whom take the same view. It does not carry any weight at all to say that because the housing revenue account is becoming wider and has more items in it than before it is something which an accountant is incapable or inexperienced of understanding. He is not inexperienced and he is not incapable.

The second leg of the argument was that we should not nay much attention to this now because when the Local Government Bill comes in it will be put right; what is being proposed in this Bill will be opposed in the Local Government Bill. The Local Government Bill merely continues the existing statutory position almost precisely, so we have no complaint about the Local Government Bill but every complaint about this rather odd provision under Section 21, under which the Ministry seeks to claw back to itself, as it has over the years, the exclusive right to have district auditors performing audits—lest local authorities should have the benefit of the wider advice and experience of professional accountants. It is an extraordinary thing to do, an extraordinary argument to put forward, and we are wholly opposed to it.

I would hope that the noble Lord would accept the Amendment now, or say he is prepared to reconsider it very seriously in relation to the Government's provisions in the Local Government Bill and in relation to the representations of various accountancy bodies and to the statutory position which exists at the present time.

1.37 a.m.

LORD SHACKLETON

I intervene in order to allow the noble Lord to read the brief he has had on this subject—if it is on this subject. Could I ask the noble Lord—and this is a substantial Committee point—whether there have been discussions with the professional bodies on this? There was a moment when my noble friend Lord Diamond was auditor to a company of which I was a director, and I am well aware, as are many other noble Lords, that professional accountants have to deal with complexities at least as great as I believe are going to arise out of this exceedingly complex Bill. I am wondering whether the noble Lord could not undertake to give some consideration to this. If there had been more noble Lords here at this moment they would have found this a convincing argument and one very much consistent with the policies of the Party opposite. Could the noble Lord give some further undertaking on this matter?

LORD SANDFORD

I am only too willing to consider it again, but it is something which has been thoroughly discussed:

LORD SHACKLETON

Who with?

LORD SANDFORD

It has been discussed both on this Bill and on the Local Government Bill, with all the professional bodies and in many other circles, including local authorities. It would be wrong of me to hold out much hope of being able to come back with any decision different from the one which I am now advocating to the Committee, but I will consider it.

A point which I omitted to make before is that we are dealing with a situation here where, under the existing established practice with which the noble Lord will be familiar, all local Government claims on central Government have to be examined by the district auditor, and the whole business is made very much simpler if he is a person who has audited the accounts. This is a point additional to that which I have already made. I cannot hold out any serious prospect of being able to return with any different decision from the one I am now advocating, but I will agree to have a look at it to see whether anything is possible. But I cannot commit myself to come to any different conclusion.

LORD DIAMOND

We are grateful to the noble Lord for having said that he will consider it. We are at an early stage in our consideration of this Bill and there will be many opportunities of coming back to this point. Therefore I will accept his proposal with gratitude and hope that he will give it careful consideration. The argument he has just adduced is really another wholly irrelevant one. Whether or not the claim has to be seen by a district auditor has nothing to do with the question of whether the local authority ought to retain their present independence of choice. They can choose at the moment whether they want a district auditor or a professional auditor. All that is suggested is that the position should continue. If they want to choose a district auditor, let them do so; if a professional, let them do so. They should do whatever they think to be in the best interests of getting the best advice for themselves and their citizens. That is the present position and that is what we are suggesting should continue.

However, I have made the case clearly and pointedly and I have reminded the noble Lord that this is not the first time that I have been engaged on this argument. It has been going on, to and fro, since the late 1940s and the Ministry have done their best throughout to retain the exclusive right to use their district auditor as against the claim of the professional auditors to be allowed to be engaged, and against the claim of the local authorities to have the option of deciding on which kind of auditor they want to rely on for advice. This has been going on for a long time, and the professionals are well aware of the desire of the Ministry to claw back into their control the appointment of auditors and to deny to local authorities this freedom. So I hope we shall not be driven into the same bitterness and hostility which went on for a long period, was ultimately resolved and which I am sorry to see recur in this form.

LORD SANDFORD

Before the noble Lord withdraws his Amendment, I should like to confirm that under the Local Government Bill, in respect of all other accounts all authorities will have the option to do what he is urging on the Committee. To that extent, the housing account being the only exception, the point that he and his professional friends and colleagues have been striving for will be met.

LORD DIAMOND

I am grateful to hear that that is the position in the Bill to which I referred earlier. Until the Bill is altered, assuming it will not be altered in that respect, that position holds good. The noble Lord will recognise that it makes it all the more odd and inexcusable that the Government should choose this one smaller and more limited aspect in which to exclude the right of the local authorities to choose their professional advisers. With the permission of the Committee, I beg leave to withdraw the Amendment.

Amendment by leave withdrawn.

Schedule 1 agreed to.

Clause 13 agreed to.

Schedule 2 agreed to.

Clause 14 [Amendments of New Towns Act 1965]:

1.44 a.m.

LORD STOW HILL moved Amendment No. 87: Page 20, line 16, leave out subsections (2) and (3).

The noble and learned Lord said: There are two other Amendments to Clause 14 on the Order Paper which really bear upon the question whether or not subsection (3) should be left out. Perhaps it would be convenient for the Committee if, in moving Amendment 87B, I developed also the arguments on Amendments 87C and 87D. I think the noble Lord, Lord Sandford, would agree with me if I said that the object of Clause 14 is to introduce into the Bill certain provisions designed to adapt the financial situation of the New Town Corporations to the new situation which emerges as the result of this Bill. The New Town Corporations, as the Committee knows, are entitled to receive four out of the eight subsidies: the residual subsidy, the transitional subsidy, the rising costs subsidy and the rent rebate subsidy. Clause 14 is, as I apprehend, designed to make some changes in the existing legislative provisions governing the finances of the New Town Corporations in the light of that new situation. It also deals with the Commission. The Committee may remember that the present consolidating Act which sets up the Commissions and the New Town Corporations, in that Act called the development corporations, is the New Towns Act 1965. So if one looks at Clause 14 one finds that it makes some changes in some of the sections of the New Towns Act 1965.

With that introduction, may I address myself to the argument in support of the proposal that subsection (2) of Clause 14 should be left out. Subsection (2) deals with surpluses and provides a system for disposing of surpluses somewhat different from that contained in Schedule II with regard to the surpluses of local authorities. If noble Lords would be so good as to look at the provision on page 20, they will see that it seeks to insert after Section 45 of the 1965 Act a new section, Section 45A. The Committee may feel that it is desirable to look rather more closely at this new section in view of the fact that I think I am right in saying that Clause 14 was not discussed before Standing Committee E in another place, and therefore comes before this Committee—shall I say?—ripe for exploration.

The objects of my Amendments are to probe the Government's intentions and to ascertain from them how it is that they propose to operate the new clauses which they wish to insert in this Bill. Section 45A, which if this clause is carried will go into Section 45 of the 1965 Act, provides that where in the case of a development corporation a surplus emerges either on capital or on revenue account, then after provision is made for future requirements and reserves the whole of that surplus, if the Secretary of State so directs, is to be paid to him and paid by him into the Consolidated Fund. That is followed by a further new subsection to this effect: that the Secretary of State can nevertheless direct that a portion of that surplus, such proportion as he thinks appropriate, shall be applied for the purpose of repayment of loans advanced to the New Town Corporation under Section 42(1) of the 1965 Act. To summarise that, if there is a surplus either on capital or on revenue account achieved by a New Town Corporation, it has to go to the Consolidated Fund, except as to such part of it, if any, as the Secretary of State directs is to be applied towards repayment of loans made to the New Town Corporation under Section 42 of the 1965 Act, that proportion having to go back into the National Loans Fund.

If one looks at the 1965 Act, one finds that the sections which deal with the financial position of the Corporations are Sections 42, 45 and 46. The Committee will remember that the New Towns Act 1965 sets up a somewhat complicated structure for the purpose of development of the New Towns. There are the New Town Corporations, as I have said, referred to as the Development Corporations in that Act, and there is also the Commission. The Commission is in effect to some extent, though not entirely, a holding company: it holds property, and it has certain functions with regard to that property. But the active partners in the transactions are the New Town Corporations themselves. Section 3 of the 1965 Act imposes upon them the broad and extensive duties of laying out and developing the New Towns.

The situation therefore of the Commission in relation to any surplus that may emerge on its accounts is by no means identical with the situation of the individual New Town Corporations in relation to any surplus they may develop. As I have said, it is really to some extent rather like a holding company; but they are active companies which must actively engage on the functions of laying out and devolping a New Town.

If I may go back to Section 45 of the 1965 Act, if the Committee have had an opportunity of looking at that section they will have seen that subsections (1) and (2) of that section contain provisions which are almost in identical wording, applied to the Commission itself, to that of the provisions contained in this new clause, Section 45A (1) and (2) which it is sought by the Bill to insert after Section 45. I can understand it being said that in the case of the Commission, in view of the functions which it discharges and the limits of its responsibility as a comparatively quiescent partner in the transactions that are carried out, if a surplus emerges on its accounts it should be treated in the way provided for by this new Clause 45A: the surplus should go back to the Consolidated Fund, except such portion as the Secretary of State, or then the Minister, directs should be treated as a repayment of loans made to the Commission. But I do not quite understand the Government's thinking which leads them to put into Clause 14 of this Bill provisions in this new Section 45A practically identical in application to the New Town Corporations to those at present incorporated in Section 45 of the 1965 Act applying to the Commission.

I would put my difficulties in this way. Supposing you have two New Town Corporations (and really here I am rather rehearsing again the arguments so cogently advanced by my noble friend Lord Diamond when he was discussing the surpluses which emerge on the housing revenue accounts of the local authorities) one extremely efficient and one not in the least efficient, both of them entitled under the provisions of this Bill to receive, by way of the four subsidies, roughly speaking the same sum, but the efficient one developing on its capital or revenue accounts a substantial surplus and the inefficient one remaining in deficit on both its capital and revenue accounts, why should that surplus achieved by the more efficient corporation be treated in the way in which the Commission's surplus is treated, in the way described in this new Section 45A?

I should perhaps remind the Committee that when one is talking in terms of this Bill of a New Town Corporation, one calls its Housing Revenue Account its housing account and one calls its rate fund its general revenue account; so one has in mind the housing account and the general revenue account. When one is looking at the new Section 45A one is not confining one's consideration to the housing account at all: one is looking at any of the accounts of the New Town Corporation—any of the accounts which form part of the housing account, or general revenue account, whether they are capital or revenue in nature. One is looking at the whole scope, in other words, of the undertakings of the New Town Corporation. What I cannot understand is (rather along the lines advanced by my noble friend Lord Diamond in relation to the enquiries about surpluses on the Housing Revenue Account of the local authority) by what process of justice can it be said that the surplus achieved by the more efficient of those two New Town Corporations should be liable to be appropriated and paid into the Consolidated Fund, except as to any portion of it which is appropriated under the direction of the Secretary of State towards repayment of the loans advanced to the New Town Corporation under Section 42 of the 1965 Act. If the Minister's answer is that the Secretary of State can direct that it be applied to the advantage of the New Town Corporation because he can direct that it shall be applied towards repayment of loans, then it still seems to me that a difficulty arises. Of course I should preface my statement of the difficulty by asking what would in any event be the policy of the Government in a case of that sort.

Suppose you have an efficient New Town Corporation which, because of its efficiency, has achieved a surplus of half a million pounds on its revenue account, and suppose that part of that surplus is normally likely, in any event, to be built up (as the New Towns are within the scope of the fair rents scheme) because of the fact that its tenants pay a higher rent—the new fair rent—than they may have been paying before. But the large surplus may have been achieved simply because to a large extent this is a New Town Corporation which has efficient officials to run its affairs and which does things more economically, expeditiously and effectively than its rival of perhaps fifty miles away. I submit, as did my noble friend Lord Diamond, that if a surplus is achieved in those circumstances it should accrue to the advantage of those who live in that New Town. When we were discussing the Amendment before last, my noble friend suggested a number of purposes to which a surplus could be applied by a local authority. There are endless purposes, which are perfectly legitimate and proper, to which the New Town Corporation could apply any surplus that emerged on its accounts, whether revenue or capital accounts.

Should it not be the case, in the circumstances I have described, that the surplus should return to the New Town, for use at its discretion in forwarding its undertaking and securing the better laying out of the town for which it is resonsible, together with the provision of better amenities in all sorts of ways for the inhabitants of that New Town? I do not for the moment: understand what the fairness or logic is of the provision that its surplus should be treated in exactly the same way as the surplus which may be achieved by the Commission by far less active processes than those upon which the New Town Corporation itself is engaged. I emphasise that the Commission is not a sleeping partner—that would be quite untrue—but is nothing like so active a partner in the development of any New Town as the actual New Town Corporation which is directly responsible for undertaking the duty of developing the New Town.

Therefore I ask, by way of probing, what is the Government's thinking in this matter? Do they not think that it would be right to make a distinction in the way in which a New Town Corporation's surplus is treated and the way in which the Commission's surplus is treated? I submit that the answer to that should be, "Yes". In the case of the New Town Corporation it should belong to its inhabitants, to the New Town viewed as a corporate entity, in which a number of individual human beings live and pass their lives. If the answer is, "Yes, but they get the advantage in that it may be ordered by the Secretary of State that that surplus should be applied towards the repayment of a loan", I say this. The New Town Corporation, under the provisions of the 1965 Act, can borrow only from the Government; its borrowing powers are limited to borrowing from the Government. It can borrow from no outside source, and it borrows from the Government at interest rates which are much less than the rates it would have to pay if it went to get its money on the market. It has loans which are on advantageous terms. It may be that the New Town will have framed its financial programming upon the basis that the loan is repayable over a period of time, which is again advantageous to it.

Is it the intention of the Government that the Secretary of State shall, at any rate sometimes, say, "The portion of the surplus (that portion which does not go into the Consolidated Fund) is to be applied straight away to repayment, and before the dates on which the loan is repayable under the terms of the original borrowing", with the result that in addition the New Town Corporation loses the benefit of having what are in effect subsidised interest rates? I do not mean "subsidised" in the sense that there is a payment made by the Government towards the payment of interst, but that their interest rates are much less than the Corporation would have to pay if they went to the market outside Government sources. I am pressing for a full statement—I know the Minister will give this, as he always does—as to what is the Government's thinking. Do they not think that perhaps they are being unfair to the more efficient New Town Corporations in seeking to embody the arrangements in Clause 45A into the Bill?

It is germane to the question of the emergence of a surplus to look at one or two of the other features of Clause 14. For this purpose I invite the Committee's attention to the new subsection (3)(a) which subsection (1) of Clause 14 seeks to insert into Section 42 of the New Towns Act 1965. Section 42 enables the Minister to make loans and grants to the New Town Corporations and to make loans, though not grants, to the Commission. Here is a new power which is inserted by subsection (1) of Clause 14 to make grants to the Commission for the purposes of general housing expenditure. The question I ask the Minister is this: What is the object of taking that new power? How is it going to be used? It would enable the Minister to make a very substantial subsidy payment to the Commission. What need has come to light to prompt the Government into inserting into Clause 14(1) that new power? How is it going to be used and what sort of sums is it contemplated should go to the Commission?

I should like to put this general question. I think I am right in saying that the Minister earlier said that the total surplus expected to emerge—I think he said by 1974–75—in the accounts of the local housing authorities was in the region of £30 million. If he has it available I should be grateful if he would give the equivalent figure in the case of the surplus which it is thought is likely to emerge in the accounts of the New Town Corporations and the Commission. That figure would be of interest to the Committee.

May I then turn to the second part of the first Amendment, namely, that part of it which seeks to leave out subsection (3) of Clause 14? That deals with a different aspect of the matter: it deals with the question of the form of accounts. If the Committee will be so good as to glance at subsection (3) it will be seen that it seeks to insert into Section 46 of the 1965 Act a new subsection (1)(a), giving the Secretary of State, with the approval of the Treasury, drastic powers as to the directions which he can give to the Commission, or a development corporation, as they are there called, as to the kind or number of the accounts which they are to keep, the amounts which are or are not to be credited to any account, the manner of rectifying the account and provisions for working balances.

What I find a little puzzling in the new subsection (1)(a) which it is sought to put in Section 46 is this. One looks at Section 46 and one sees that the existing subsection (1) already seems, as I read it, to contain all the powers that the Minister or the Secretary of State could possibly want. I will quote it: The Commission and every development corporation shall keep proper accounts and other records in relation thereto, and shall respectively prepare in respect of each financial year annual accounts in such form as the Minister may with the approval of the Treasury direct, being in the case of the Commission, a form which will show the Commission's financial position both generally and in relation to each of their towns. What is it that prompts the Government to seek to give to the Secretary of State, who succeeds The Minister, this new power? Has he not got everything that he wants in the existing subsection? He can say what form the accounts are to take and he can prescribe all that can possibly be said to be requisite in the manner in which the New Town Corporations keep their accounts. But there are some very unusual provisions, and one of the Amendments seeks to leave out one of them; namely, sub-paragraph (b), which enables him to give directions, as to the amounts which are or are not to be credited or debited to any account.

Suppose the New Town Corporation sends an employee to mend a window sash and he is paid wages for doing so. Is the Secretary of State to be able to direct that that is to be debited as a revenue outgoing? I should like to ask what has emerged in the history of the New Town Corporations and the Commission which makes it necessary in the Government's thinking to supplement Section 46(1), which I have read out, by this very drastic new power? It is so drastic as to be almost insulting to those who are responsible for keeping the accounts of the Commission and the New Town Corporations. If their ordinary accountancy services cannot give them the proper advice as to what should be debited to each account, I should have thought that they would feel extremely inhibited in the exercise of any discretion that they normally thought belonged to them and would feel rather offended. I do not remember seeing any power to give directions in a form such as is contained in the new subsection (1)(a) in any other measure. Perhaps I am wrong, but it seems to go far beyond anything that I have encountered. I therefore ask what, in the experience of the New Towns, has made it necessary to incorporate this new provision.

The spirit of the other Amendment has been discussed previously. It simply requires that the Secretary of State shall give directions only after consultation with the Commission or New Town Corporation concerned, and that Amendment speaks for itself. I have propounded arguments in favour of all the Amendments in this group and I would be grateful if the Minister would give the Government's thinking on this subject and answer the questions I have asked.

2.12 a.m.

LORD SANDFORD

I am grateful for the opportunity which the noble Lord has given me to expound in rather more detail the thinking behind Clause 14. I agree with the noble Lord that it probably would be for the convenience of the Committee if I were to speak to all three Amendments together. Rather than deal with each of his questions one after the other, I will attempt a general explanation of our whole approach to this matter, and I hope that in doing that my remarks will embrace most of the points which the noble Lord raised.

As the noble Lord pointed out, this clause provides for three amendments to the New Towns Act 1965. The first is contained in subsection (1) and enables the Secretary of State to make grants to the Commission for New Towns towards any housing expenditure. He already has power, as the noble Lord recognised, to make grants to the development corporations under Section 42 of that Act. This power is at present normally used to make annual grants in addition to housing subsidies towards the cost of houses built by a development corporation. The grants are higher in the earlier years of a corporation's life, when its financial problems are greatest.

Under the proposed new system of housing finance the existing power to make grants to development corporations and the proposed new power to make grants to the Commission for New Towns will be used for a different purpose—namely, to make good to the general revenue account payments made out of the general revenue account to the housing account of the New Town Corporation under the provisions of Part I and Schedule 2 of this Bill and under directions made under Section 46 of the 1965 Act. This is because we are trying to make the New Towns as near as may be similar to the local authorities for treatment under this measure. Thus, the new grant for the Commission really provides the means whereby the Commission, in respect of its four towns, can make payments derived from that grant in the same sort of way that a local authority makes payments from its general rate fund into its housing revenue account.

The second amendment to the Act of 1965 which is provided for in subsection (2) of this clause provides for a development corporation to pay to the Secretary of State, after he has consulted them and the Treasury, such amount as he may direct, after allowing for their future requirements, of any surplus arising on a capital or revenue account of the corporation. There is already a similar provision in respect of surpluses arising in the accounts of the Commission for the new towns. But earlier legislation did not provide for the treatment of surpluses arising on the accounts of a development corporation.

Under the provisions of the Bill, development corporations may attain a surplus on their accounts earlier or accumulate it faster than they would otherwise have done, because of the operation of the new subsidies. The Secretary of State may use his power under this subsection to direct the corporation to pay some or all of any surplus to him, but whether he would do so or not would depend on his view of the overall financial position of the corporation. The Secretary of State might decide to regard money in an account either as a surplus, or as a working balance, or as a contingency reserve.

The third amendment to the 1965 Act which is contained in subsection (3) of Clause 14 enables the Secretary of State to give directions to new town corporations as to the keeping of accounts—another point the noble Lord raised. Section 46(1) of the 1965 Act requires corporations to keep proper accounts and annual accounts for each financial year in such form as the Secretary of State may, with the concurrence of the Treasury, direct. Therefore, the general power is already there.

In connection with the proposed new subsidy system which we have been discussing up to now in outline, a more specific power is needed to secure that the necessary accounts for the operation of this whole new system are kept, and in such manner that the following aims can be achieved: First, that the new town corporations' entitlement to the subsidies under Part I can be ascertained and the present accounts they are required to keep would not enable that to be done; secondly, that the new town corporations make the contributions from the general revenue account to the housing account which are referred to in Schedule 2, following as closely as may be the pattern adopted by the local authorities; and, thirdly, that the amount of any surplus on account can be ascertained.

As I have already explained, these particular aims in the new towns are part of the wider aim that the new town corporations should be treated as nearly as possible like the local authorities for housing subsidy purposes, that is to say, as nearly as is practical and appropriate, bearing in mind their different character and having regard to the differences between these two types of housing authority. I hope that that explanation of our general approach to new towns in the context of this Bill has met the kind of enquiries that the noble Lord was making of me.

LORD AVEBURY

Before the noble Lord sits down, could I ask him one question? He said the object was to try to put the new town corporations as nearly as possible on an identical footing with the local authorities and this I perfectly understand. But, has he not got this clause in such a form that he can claw back surpluses arising on accounts other than the housing account of development corporations, and does this not put them in a relatively disadvantageous position as compared with the local authorities who only have to yield up to the Consolidated Fund a proportion, which we have discussed, of any surplus that they accumulate on the one account and one account only, the housing revenue account?

LORD SANDFORD

In answer to the noble Lord I want to say this. Whilst a new town development corporation may keep a number of accounts relating to its various activities—at the moment with some flexibility, but in the future in order to make it fit in with this new subsidy system as more specifically directed by the Secretary of State—its finances are really managed as a single income. Apart from rent income, all its financing accrues to it from advances made by the Secretary of State, and there really is no distinction between expenditure from loan and rate-borne expenditure, as there is with the local authorities, because the development corporation does not levy rates. So although we are trying as far as possible to treat the New Town Corporations and the local authorities alike for the application of this new range of housing subsidies, this is a point at which the dissimilarity between the New Town Corporations and the local authorities just has to be accepted.

LORD STOW HILL

I am grateful to the noble Lord. I think he has answered some of the questions that I put, but I do not think, with respect, he answered all of them, in particular the one which related to the equity of taking from the New Town Corporation which was more efficient that surplus which it was enabled, by being more efficient, to achieve, as against a less efficient New Town Corporation. The argument I put was that in equity that surplus should certainly belong to the inhabitants of that New Town. He did not, if I may say so, quite deal with the point that it was not necessarily to the advantage of the New Town Corporation to have part of its surplus applied in repayment of a loan which it might not be under an obligation to repay except over a considerable period of time, and the use of which it was enjoying at a rate of interest which was well below the rate of interest it would have to pay in the outside money market. I submit that the noble Lord did not really address himself to that question. He dealt with it rather shortly by saying that the surplus was likely to arise because of the four subsidies which were being phased out. But part of the surplus is an element which I should have thought would certainly be attributable to the fact that a fair rent might be a rent which was in excess, perhaps considerably in excess, of the rent paid heretofore by the tenant, and a considerable element in the surplus would be greater efficiency. He did not deal with those points. And I was not quite clear why it was that the existing provisions of subsection (1) of Clause 46 did not require accounts to be kept in a form which was perfectly adequate for the purpose of allocating to those accounts the payments by way of subsidy which they were entitled to receive under this Bill.

LORD SANDFORD

Perhaps I could deal with those two points a little more thoroughly. Under the provisions of the Bill and with the application of these new subsidies, development corporations may well attain a surplus on their accounts earlier, or may accumulate it faster, than they otherwise would have done. Whether the Secretary of State uses his power to direct any Corporation to pay some or all of any surplus back to him will depend on his view of the overall financial position of the Corporation. That, in turn, would undoubtedly depend on the efficiency with which they had conducted their affairs. The opportunity occurs, therefore, for the Secretary of State to distinguish between one Corporation and another.

LORD STOW HILL

There is no power to make any portion of that surplus available to the New Town Corporation for its general purposes. All that can be done is either to pay it into the Consolidated Fund or to pay it into the Loans Fund by way of a repayment of part of the loan which the Corporation may be enjoying on very advantageous terms. I should have thought that there should be a much wider power to pay the surplus back to those who live in the New Towns, so that the New Town Corporation can use it on their behalf.

LORD SANDFORD

Before we reach that point, may I say that the Secretary of State is free to decide whether to regard the money in an account of a New Town Corporation either as a surplus, a working balance or a contingency reserve. Those are the points I made. The discretion arises, and the Secretary of State is free to exercise it before we reach the point which the noble Lord, Lord Stow Hill, is now envisaging. There was one further point on which he asked me to expand. I wonder whether he would be kind enough to remind me what it was.

LORD STOW HILL

The further point was the argument which related to paragraph (b) of the new subsection (1A) which subsection (3) of the Bill seeks to insert in the section of the 1965 Act dealing with powers to give directions as to the keeping of accounts. I do not remember ever having seen any provision which enables the Secretary of State to say what item is to be posted to what account. I should have thought that ordinarily that must be within the discretion of those who are responsible for the accountancy sections of the individual New Town Corporations.

LORD SANDFORD

The noble Lord, Lord Stow Hill, is perfectly right. Hitherto these are things which it would have been perfectly proper and right to leave to the discretion of the staff of the New Town Corporation, who are perfectly competent to decide the manner in which their accounts should be kept over a fairly wide range of discretion. But now the accounts have to be kept in a way which relates much more precisely to the manner prescribed for Housing Revenue Accounts, in order that the new subsidy system should operate equitably as between one New Town Development Corporation and another and, broadly, as between the New Towns and the other local authorities.

LORD STOW HILL

I am most obliged to the noble Lord, Lord Sandford, for his full and careful answer. I dare say my noble friends will wish to consider this matter further between now and the Report stage. I think we have examined it adequately at this stage, and, with the permission of the Committee, I will withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

Clauses 15 to 17 agreed to.

Clause 18 [Rent rebates]:

2.29 a.m.

LORD SHEPHERD moved Amendment No. 87E: Page 22, line 29, leave out ("No rebate from the rent of a dwelling") and insert ("It shall be within the discretion of a Housing Authority as to whether rebate from the rent of a dwelling")

The noble Lord said: It is now shortly before half past Two, and we are moving to Part II of the Bill. In some respects this is a significant stage because we are moving from general considerations of the position of local authorities and housing associations to consider how this Bill affects individual tenants. I mention the time because I wonder whether the Committee is properly composed to consider these important aspects. I recognise that we on this side of the Committee agreed with the noble Lord, Lord Drumalbyn, that we should sit until 7 o'clock this morning in order to consider this contentious Bill. I should like to say to my noble friend Lord Diamond, my noble friend Lord Garnsworthy and my noble friend Lord Stow Hill a special word of gratitude, on behalf of the Committee, for the way in which Part I of the Bill has been examined.

We have so far conducted our discussions in Committee in the most friendly and co-operative spirit. I know that there is some criticism in the Corridors and in some of the darkened rooms of the Palace of Westminster, that what we are doing on this Bill is not for the House of Lords. I have always taken the view that your Lordships' House is a reforming Chamber and that we therefore have a duty to consider a Bill of this nature, which is what we have been doing. I question only whether we ought to proceed because of the numbers present. There are a number of Amendments shortly to be moved which will strike very much to the heart of Members, particularly those who are chronically sick and disabled, and the opportunity for a full discussion will clearly not exist tonight. But I think we ought to proceed and, having expressed my gratitude to my noble friends, I now take up the cudgels and the responsibility for dealing with Part II.

With this Amendment I shall discuss Amendment No. 87A, and I am grateful to the noble Lord, Lord Drumalbyn, for his list of suggested amalgamations of Amendments. With one exception, I agree with them. The purpose of these two Amendments must be quite clear. In Clause 18(1), a duty is laid upon every housing authority to bring into operation not later than 1st October 1972 a scheme for granting to persons who occupy as their homes Housing Revenue Account dwellings let to them by the authority rebates".

We could not possibly disapprove of the intention of that part of the clause.

However, subsection (3) states that no rebate from the rent of a dwelling shall be granted to three different categories of tenants. I think it is true to say that the number of persons who will be involved in this limitation must be very small. There are the employees of local authorities who may live in council dwellings and, as I understand the position having read the Report of the proceedings in another place, they will not be required to pay what is called a fair rent. However, a local authority is empowered to charge such rent as it thinks fit, and some authorities may feel it right not to differentiate between their servants and other tenants, and may think that all should be treated alike. Under paragraph (b) there is also the category of persons who are conducting business and occupying a local authority dwelling. Again, an authority may wish to charge a fair rent so that there is no differentiation.

The kernel of my argument is that the Government have made it clear on a number of occasions that they wish to give full discretion and liberty to a local authority. So I am suggesting in this Amendment that a local authority should be entitled to decide whether its servants, or those who come under paragraph (b), should be entitled to a rebate or should pay a fair rent in the same way as other people.

The purpose of the Amendment is, as I say, to ensure that a local authority can exercise its discretion in this respect. On a number of occasions the Government have expressed the view that they trust local authorities to exercise their discretion properly. Therefore, the purpose here is to test whether in this small area the Government are prepared to leave it to the discretion of the local authority in dealing with (a) its services and (b) those who may be employed in business in the locality but occupy local authority premises. I beg to move.

2.36 a.m.

THE EARL OF BALFOUR

There are one or two points I wish to raise. First of all, it is important to say at this stage of the discussion on the Bill that unless matters are decided differently in another place we cannot permit any proportion of the rent which is attributable to furniture or furnished accommodation to be allowed for in a rent rebate scheme. Subsection 3(b) is concerned with a person who occupies a dwelling in pursuance of a contract of service. We must look also at Clause 49(2) and Clause 63(2).

Clause 49(2) states: Nothing in this Part of this Act shall impose any obligation as to the amount to be charged to a person— (a) who occupies a dwelling in pursuance of a contract of service.… This is pretty well the same wording as we had just now. Clause 63(2)(b)(i) says that increases towards fair rents will be excluded from any dwelling for the time being occupied by a person within section 49(2) of this Act.… It is written into the Bill that whatever rent a person is paying or not paying, as the case may be, it shall not be altered. Clause 18(b)(i) is concerned with the Landlord and Tenant Act 1954 which deals with security of tenure for business, professional or other tenants. I do not think that that should come into the question of whether they should receive rent rebates or rent allowances. For that reason I cannot support the Amendment.

LORD AVEBURY

I should like to take up a point made at the beginning of the discussion on this Amendment. Nobody asked me whether I wanted to sit here until 7 o'clock in the morning. I do not. It is most undesirable that the important provisions contained in Part II of the Bill should be dealt with at this time of night when, as my noble friend Lord Shepherd said, we have not anything like a full Committee. Many noble Lords who would have liked to take part in the proceedings have been prevented from doing so because of other commitments. Very little attention can be given by the Press and the public outside to these important matters which we are about to discuss. So I thought that, if we follow the logic of the noble Lord's argument, we should pack up at this stage and come back to Part II when we are fresh and ready to deal with it in a proper manner, and when other noble Lords who are not present now could take part in the discussions.

So I beg leave to dissent from what the noble Lord has said, and to recommend that we should go home at this stage. I do not suppose anybody will pay the slightest attention to that recommendation, but I put it forward for what it is worth. I also enter a protest at not having been consulted in the decision on the hour to which we should sit, and I hope the noble Lord will bear this in mind for future occasions. It would be nice at least to be told in advance what is going to happen, even if there can be no more consultation than perhaps there is in the case of some of these clauses with the local authority associations.

To come on to the Amendment itself, I think the point of substance here concerns the service tenants who occupy local authority dwellings. There must indeed be very few who would be covered by paragraph (c). I think that really we are talking about people like school caretakers, who were the subject of a discussion in another place. In reply to the debate there, Mr. Paul Channon said that one did not need to give local authorities the kind of discretion that is sought to be written into this Bill because they already had freedom to decide what rents to charge their own service tenants.

I should like to look at it the other way round, if I may suggest doing so, and say that since local authorities may have varying scales of rent for service occupiers of property, such as school caretakers, and since in a neighbouring authority a person employed in the same occupation may not be paying the same rent, and therefore, if you like, his effective take-home pay may be different, then similarly local authorities should have power to grant rebates so as to level up the final amount which that person receives. I hope the noble Lord has followed my argument, and that he will see that to put in this discretion, at least so far as the service tenants are concerned, would give an additional freedom to local authorities which they might quite value and which certainly the persons occupying service accommodation would find to their advantage.

2.44 a.m.

LORD DRUMALBYN

At this moment, when the new shift comes on, I am very glad to see the noble Lord, Lord Shepherd, looking so fresh and well; and I very much appreciate the way in which he is approaching the task that we have before us. I do not think any of us very much relish sitting at this time of night, but there are occasions when even the House of Lords does so. Fortunately, they are not nearly so frequent as in the place from which the noble Lord, Lord Avebury, has quite recently come, and I am quite sure that he of all people is very well accustomed to sitting late. I must say that he has been one of the most constant attenders, if I may put it in that way, throughout our debates to-day, and I congratulate him on his energy.

LORD AVEBURY

It is only that I had fondly imagined I had escaped from all-night sittings.

LORD DRUMALBYN

This is only a very occasional disappointment for him, and I am glad that he is still here with us. I certainly join with what the noble Lord, Lord Shepherd, has said about the noble Lords, Lord Garnsworthy and Lord Diamond. I would only say to the noble Lord, Lord Avebury, in this connection that the number of Members who have actually been speaking in the course of our debates, as opposed to the number who have attended, has not been all that great; and I must confess that I had not noticed an enormous attendance in any parts of the Galleries of the House during most of our proceedings. But, be that as it may, I think it is worthwhile making some further progress. We have been making very good progress up to now, and I think we should do our best to deal with the various Amendments that are set down, and with the clauses. In the past, we have not been unsuccessful, and I hope we shall be successful tonight. I am sorry the noble Lord, Lord Avebury, was not consulted about the length of tonight's sitting. I am sorry if the Liberal Party was not consulted in the usual way. I am afraid this must have been due to an oversight. I am sure that the noble Lord will appreciate that some of these arrangements are difficult to achieve though he should at least have been informed.

I am grateful to the noble Lord who moved this Amendment very reasonably, but may I explain to him the difficulty in accepting it? The trouble in regard to Amendment 87A is that as long as rent allowance schemes do not cover furnished tenants of private landlords it would, as my noble friend Lord Balfour has said, be illogical for rent rebates to cover tenants occupying local authority dwellings. As the noble Lord, Lord Shepherd, and the noble Lord, Lord Avebury, both said, the problem is that there are very few furnished lettings of housing revenue account dwellings, but local authorities have power, under Section 94 of the Housing Act 1957, to make a separate agreement for selling furniture to a tenant or for supplying furniture under a hire purchase agreement where tenants are poor—perhaps the old, or unmarried mothers. The authority may require that any payment for furniture is suited to the tenant's means by supplying furniture of adequate quality, and we do not anticipate that any serious trouble will arise from this. We shall come later to the more general question of the tenancy of furnished dwellings.

The Amendment also excludes service tenants. I shall be moving an Amendment shortly to make clear what was intended here by "contract of service with the authority", but here I can only say that it is wrong in principle to grant rebates to a service tenant with the authority, because he may have the advantage of a low rent as part of the emoluments of his employment. The employer is also in a position to judge what rent to charge here as part of the contract of service and it would, I think, be wrong in principle for a subsidy to be paid where the rent was, at any rate ostensibly, rather high.

The other Amendment is intended to provide a discretionary power to grant rebates to the three categories excluded by subsection (3) of this clause. I think it is right to say that one of the objects of the national rent rebate scheme proposed under Part II is to make eligible for rebate any category of tenant of a local authority dwelling, and he ought to be so eligible, whether he is the tenant of one local authority or another. The dilemma is this: that if it is right that rebates should be granted to furnished tenants, or to service tenants or to business tenants then every housing authority should include such tenants in their rebate scheme. If it is not right that rebates should be granted to such tenants, it should not be possible for some housing authorities to do so, and for rent rebate subsidy effectively to meet the major part of any housing revenue account deficit caused by the granting of rebates to service tenants or business tenants. That is the dilemma.

I do not think there is anything else that I need to say except that this was an Amendment which was moved in another place. It was fully debated but was withdrawn because of a Government undertaking that any extension of the rent allowance scheme to private tenants would apply also to council tenants. I hope that in the circumstances the noble Lord will feel disposed to withdraw his Amendment.

LORD SHEPHERD

I am grateful to the noble Lord for his reply to the Amendment. I deliberately did not speak to that part dealing with furnished accommodation because, as the noble Lord said, we shall be dealing with this in a comprehensive way in a later Amendment. However, I must say to the noble Lord, Lord Avebury, that I am equally sorry that there was no consultation with the Liberal Party in terms of the timing of this Bill. I would only say to the noble Lord, Lord Drumalbyn, that it is true that another place quite regularly sits through the night. Most of them are full-time (shall we say?) professionals. They are certainly fully paid for it. I do not know about other noble Lords, but so far as I am concerned I have board meetings to-morrow. Therefore it is a very special strain. Still, I agree with the noble Lord, Lord Drumalbyn, that there are occasions when one is required to sit through the night in order to see legislation through. I only hope that perhaps wiser counsels may prevail and that we may be able to find some way in which this House can avoid these Sittings. As Lord Drumalbyn knows, I have made one or two tentative suggestions to him. It is a question for him to pick up and to enter into consultations with us.

In the light of what the noble Lord has said, I do not intend to proceed any further this Amendment and will be ready to discuss the clause as a whole. I beg leave to withdraw Amendment No. 87E.

Amendment, by leave, withdrawn.

LORD DRUMALBYN moved Amendment No. 88: Page 22, line 35, after ("service") insert ("with the authority").

The noble Lord said: This is a drafting Amendment to define more expressly those tenants of a housing authority who are ineligible for rent rebates because they occupy Housing Revenue Account dwellings in pursuance of a contract of service with that authority. They are not eligible for rebates if their conditions of service with the housing authority cover the question of any payment for rent. As at present drafted, the clause has given rise to doubt whether tenants occupying H.R.A. dwellings under a contract of service with another employer, other than the housing authority, were also ineligible for rent rebates. The Amendment makes it expressly clear that such tenants are eligible for rent rebates.

On Question, Amendment agreed to.

2.54 a.m.

On Question, Whether Clause 18, as amended, shall stand part of the Bill?

LORD SHEPHERD

I think we ought to consider Clause 18 in some detail. There are a number of local authorities who deal with the problem of lowly paid workers by having rebate schemes brought into being. There are other local authorities who have sought to avoid this by keeping their general level of rents low. We on this side of the Committee are not opposed in principle to the rent rebate scheme; but Clause 18 has to be considered in relation to the whole policy the Government have in mind in regard to this Bill. We do not know the number who are likely to be involved. I see that the Minister in another place thought that some 40 per cent., perhaps 50 per cent., of local authority dwellings will now be involved in rebate schemes. This means a very considerable amount of administrative work, but it also means that those who work in industry, particularly in the services—and I am thinking of the railway-men whom we were discussing earlier—who are able to pay existing rents are now going to be brought into a position in which they will appear to be living on some form of charity. Whether this is right or wrong, that is what many people will feel to be the case. We all know that many of the services that are provided by central Government to deal with poverty are not taken up by those who are entitled to them. Therefore one should be very careful about giving ready assent to the setting up of this mandatory form, as it is in the Bill, for the provision of rent rebates.

I cannot help but feel that it would have been better to devise some way to avoid the necessity of putting large numbers of people on to some form of means test. This, I suppose, will now be necessary if the Government intend to proceed in raising the rents on these premises, as is proposed in the Bill, by some £1 a week. I should like to express my general protest at the way the Government are proceeding in this matter by voting against Clause 18, but it might well be misunderstood if we were to do so. It would look as though we were voting against the whole system, and particularly in regard to those local authorities who grant rent rebates. It is quite wrong that we should bring a large number of people who to-day are very self-reliant into a form of poverty description; the need to go to a local authority to seek assistance. I do not like this aspect of the Bill but this is not an occasion to vote against this clause. I hope the Government are quite clear in their minds as to our attitude towards this particular clause.

LORD DRUMALBYN

Naturally one understands the point of view that the noble Lord, Lord Shepherd, has expressed, but I am afraid one has just to face the fact that every kind of arrangement that one makes has advantages and disadvantages. To our way of thinking on this side of the Committee, we believe that it is right that those who can afford to pay the proper price of a service should pay it. Side by side with that, we want to have a system where those who need some form of assistance in order to pay the proper rent should get that amount of assistance; and that inevitably involves some form of means test. I think things have changed a great deal since the time when in the 'thirties there was a lot of objection to any form of means test. For one thing, we learned at that time a good deal by experience of how not to have means tests, and we have tried in this Bill to avoid it. For another thing, there is much more publicity now about what people are paid. I remember that when I first went into my job it was considered an absolute personal secret how much one was paid. That is not so any longer. When people are appointed to public jobs, the first thing that is put in brackets after their name is their age, and the next thing is what they are going to be paid. There is so much more publicity about these things these days than there used to be. If a person is in a well-known job, the wage for it can be looked up almost anywhere. If he has a rather large family, it does not seem to me that there is any kind of slur, shame or discredit in his taking advantage of what the law provides and getting a rebate. This, in any case, is inevitable in the system.

What we are here seeking to provide is that everybody should be properly housed in accordance with his requirements, irrespective of his means, but should get assistance to supplement his earnings where he is unable to pay a full rent. It has to be remembered that in every factory, workshop and so on there is a vast mixture of different people with different circumstances: some have large families; some are bachelors or spinsters; some are living in houses that they are purchasing; some already own, having fully paid for, their houses; some live in furnished accommodation; some are local authority tenants and others are private tenants. What we are seeking to do here is to bring them all so far as possible on to the same kind of terms, so that there will not be this feeling as between one person and another, working side by side, that one is getting a house at a specially low rent and another is having to pay an extremely high rent representing the market value at a time of scarcity, but that they are all on, as nearly as possible, a fair basis of comparison. The implication of that must be that we should assist people with their rents, and in order to assist them fairly one has to know what they are earning. I think we all recognise that. I think we all recognise the difficulties, the administrative troubles and all the rest of it.

I sympathise with the noble Lord in saying that he would have liked to find some other way of doing it. I dare say we all should. But, to my knowledge, no other way of doing it is available. Therefore I think the noble Lord is right if he decides not to vote against this clause. One has to accept the advantages and disadvantages of any particular system, and I think it would be a mistake to vote against the rebate scheme, certainly in circumstances where the Bill is providing for us to move towards a fair rents system, both in the private sector and in the public sector. I hope the noble Lord will not feel that he must vote against the clause.

LORD GARNSWORTHY

The noble Lord has had quite a lot to say about means testing. May I put it to him that very few people are proud of being poor. This is a point that the Government would do well to take note of: people are not proud of being poor. The real answer to this problem is that people should earn enough to keep their families decently. What we are up against is that too many people are in receipt of low wages. I think we are reaching a point where there is far too much means-testing. People are getting fed up with it. I have seen some of the forms which are being issued by local authorities regarding rent rebates and they go into a tremendous amount of detail, which is resented by a number of people I have spoken to.

One of the really worrying things is that, accepting in good faith that the Government want to use rebates to help those in need—and I hope the noble Lord will excuse my returning to this point—we have no idea what the take-up is likely to be. Despite the fact that rent collectors will be calling to advise people, many of those most in need of help will feel themselves too proud to take advantage of it. They also feel that the information asked for on some of the forms is their own private business. For example, I have seen one question on such a form: "How much money have you in the house?" In view of such questions as that, it is not astonishing that there is so much resentment.

There is one further point: we are having means-tests in every direction for far too many people. There is a point where an increase in wages means virtually a reduction in the amount of money available for the family to live on. Accepting the Government's good faith on this matter, I think they are going to fail, because they are overdoing it. Of course we welcome rebates to help people whose incomes are too low; but I want to put this question to the noble Lord: why is it that tenants of council houses are so dissatisfied by the way in which matters have been operated? We on this side recognise the need for tidying up the system, but again and again one comes back to the fact that local authorities are not going to be free. They are having to operate the fair rents system at a figure above the economic cost. It is a rent that is going to compare with privately-owned properties with comparative facilities; and the local authorities are going to have to work the rebate scheme. I hope the Government will give some further thought to this matter before the Bill reaches the Statute Book, because I have the feeling that, as with F.I.S., there is going to be a failure on quite a large scale to take up the benefits.

LORD DONALDSON OF KINGSBRIDGE

Before the noble Lord replies, may I put another question to him on Clauses 18 and 19 as regards the timing? My noble friend has been talking about what might be called the poverty trap. When people get allotted a council house at a certain rent and then have to fill in a form, presumably by the time that has been done and an answer has been given as to what they are entitled to there will have been some delay, and these people at the lower income levels will find themselves paying a rent that they cannot afford for a week or two weeks. Certainly this is more likely to happen under Clause 19 than Clause 18 and they may get into worse trouble. I should like to know whether any provision is made for any machinery on this matter.

3.10 a.m.

LORD DRUMALBYN

I have sympathy with what the noble Lord, Lord Garnsworthy, has said, but I do not think I can enter into a profound discussion on this Bill on the wider question of low incomes as a whole. We have to take matters as they are and deal with them as they are. This is what we are trying to do in the Bill. The noble Lord says that there are cases in which there is a wage increase but there is an actual reduction in net income. I do not think that will happen under this Bill. It may happen in certain cases in the wider area with the family income supplement and taxation. There are difficult break-even points and points where you may even go into the red, but it cannot happen under this Bill so far as the sums that I have done are concerned. We have had correspondence on this particular point and the noble Lord was good enough to tell me that he was aware of the point about which I wrote to him. The noble Lord asks what evidence there is that tenants of local authority houses are so dissatisfied. With respect, I do not think that is the point. In so far as local authority tenants are paying a rent which is lower than the economic rent—and that is another matter we would have to discuss—and are being subsidised in one way or another from the rates, I suppose that they have little reason to be dissatisfied. I do not think that point arises. What is much more pertinent is whether the best use of national resources is being made when those who can afford to pay the full rent are not doing so. I do not want to enter into an argument on what an economic cost is, but I do not think that it is the same thing as the historical cost. He says that he is afraid that there will be a failure to take up; we shall simply have to see. But he agrees with the very close relationship that there is between a local authority and the tenants of their houses, and that everybody should be aware of their rights. I think that there would be only a minority but there will always be those who are too proud to take any assistance at all.

The noble Lord, Lord Donaldson of Kingsbridge, referred to entitlement and asked what happens to a local authority tenant during the period from the date of application to the date when he receives his increase. The answer is that he will be entitled to the increase from the date of application. I agree that that is not the whole answer. The local authority is the landlord here and will know if the tenant is finding difficulty in paying his rent. It is just in this way in many cases that the local authority will be able to contact him and say, "Can you afford to pay the full rent? Ought you to apply for a rebate?

I hope that I have said something in respect of local authority houses to indicate, first, that the take up is likely to be large, and secondly that the machinery in this Bill is designed to avoid hardship from the date of application.

LORD GARNSWORTHY

May I say that I appreciate very much the sympathetic and kindly and courteous way in which the noble Lord, Lord Drumalbyn, has just spoken. I said earlier in the evening—and we are now getting well on into the morning—that he should not tempt me by what he said about means tests and the rebate scheme. He did so tempt me. I feel that he himself is a very sympathetic person—at least he always gets this across—and that if we only had him to deal with we might achieve more than we are now doing. He was good enough to be very complimentary to a number of my colleagues and myself just now. May I say that I have nothing but admiration for the manner in which he discharges his duty? I think he is being worked extremely hard. I do not like to see him looking tired, and I think if he were not overtired a little more attention might be paid to the remarks made by my noble friend Lord Shepherd and the noble Lord, Lord Avebury, about the length of the Sitting.

3.17 a.m.

LORD SHEPHERD

Perhaps I might just respond here. May I say to the noble Lord, Lord Drumalbyn, that I deliberately did not go into the general philosophy on fair rents behind the Bill. I was merely seeking to express a view as to the consequences of Clause 18, which brings in persons who earn, I think in the view of the noble Lord, Lord Drumalbyn, a quite adequate salary, such as £30 per week. My understanding is that a person who earns £30 a week and has two children could claim a rebate. Many of those who are in that class are most unlikely to claim; they are men of pride and substance and there will be a great reluctance to go to an authority, to fill in the various forms and, as I understand it—unless there is a change—to make application every six months, and whenever they get an increase they have to notify the local authority. Many will feel a great repugnance to this, and I have a feeling that the relationship between tenants and local authorities will suffer as a consequence.

As I said earlier I do not think we could or should vote against this particular clause, although we do not like the general context that it has within this Bill.

Clause 18, as amended, agreed to.

Clause 19 [Rent allowances]:

3.20 a.m.

LORD SHEPHERD moved Amendment No. 88C: Page 22, line 41, leave out ("1st January 1973") and insert ("1st April 1973").

The noble Lord said: I think it may be for the convenience of the Committee if, in moving this Amendment, I also speak on 88L, dealing with furnished accommodation. The purpose of Amendment 88C is to delay the implementation of rent allowances, that is allowances to private tenants, for some three months, in order that the Government and also local authorities can deal with the very serious problem of those tenants who now live in furnished accommodation.

The increase which the Government have in mind for rented accommodation will not be as serious in the private sector, and particularly in the private furnished sector. In this connection, I refer the Committee to page 291 of the Francis Report, which refers to table 29. That table reveals the general picture of rents in the furnished sector. It shows that higher rents are paid for inferior accommodation as measured by the gross annual value, and this applies particularly to accommodation in the stress areas.

Table 29 shows that the average gross rent, excluding rates, in the London area for furnished accommodation is—this was the position when the Francis Committee examined this matter—£393 per annum; that the median rent divided on the basis of different classes in different income groups is £290; and that the median take-home pay of the head of the household in London is £870. In other words, one-third of the total income of the average furnished tenant goes in rent. That tenant has no prospect of sharing in the rent allowance scheme which the Government have in mind for unfurnished dwellings.

The Francis Report also reveals that 57 per cent. of furnished tenants are paying more than £120 per room per annum, whereas only 4 per cent. of unfurnished tenants are paying more than £120 per room per annum. By contrast, 63 per cent. of unfurnished tenants in London pay less than £60 per room compared with only 4 per cent. of furnished tenants who pay less than that amount. Whether or not these figures emerge sharply, it is clear that those who live in furnished accommodation in London have a particular problem.

I hope the Government will treat this Amendment with sympathy. In another place the Minister said he was setting up a working party to consider the whole problem of furnished tenancies. I do not know when that working party will report, but we should in this Bill make it possible, if not mandatory, for the Secretary of State to deal with the problem of furnished tenancies, particularly at a time when the Government are introducing the principle of paying allowances to tenants of unfurnished premises in the private sector. I hope the Committee will pay further attention to this important subject.

LORD DRUMALBYN

When I first saw this Amendment I did not appreciate that 88C was a paving Amendment for 88L. I am very glad to hear that. Here one is in the great difficulty that it is very difficult to do good all round at the same time and the problem is simply whether one should postpone doing good in one particular sector until one can do good in another sector. In this, of course, we have to bear in mind that if we postpone the bringing in of rebates from January 1, 1973, to April 1, 1973, then there would be a number of private tenants who would be paying increased rents from January 1, 1973, but who would be unable to get their allowances for three months. I should have thought that it would not be right to postpone introducing the allowances merely because we are not at the same time able to introduce allowances for furnished dwellings.

The noble Lord has quoted figures from the Francis Report. I have not got it with me, but when I was asked to participate in handling this Bill I thought that was the first document that I ought to read and I did so. It would be difficult for me to go further at the present time, and I cannot tell the noble Lord when the Working Party is likely to report. I cannot go further than what my right honourable friend the Minister said on the Committee stage in the House of Commons. The difficulties in this matter are well known. Perhaps I should just say that the noble Lord has made a comparison between the rents of furnished and unfurnished dwellings in the private sector. Of course, the market for furnished dwellings is different from the market for unfurnished dwellings. As my right honourable friend said at that time, even after deducting the elements of rent attributable to furniture and services, the reasonable rent for a furnished dwelling is higher than the fair rent would be for the same dwelling unfurnished. Letting furnished property involves more work, the landlord provides more services, and accepts more responsibility for repairs and decoration. As the noble Lord said, there is more risk of bad debt and the dwelling is more often empty because lettings are of shorter duration. The principal difficulty is that of identifying those furnished tenants who deserve help, because one has to find some way of singling out those who have made their homes in furnished dwellings, and are not just pure birds of passage, and whose claim for help is as good as the family which has made its home in unfurnished accommodation.

My right honourable friend concluded his statement by saying that he was embarking on formal consultations—and that was in April—with the local authority associations to work out a practical and effective scheme. It would be a mistake to seek to take powers to make regulations until we knew that it was possible to work out a practical and viable scheme. All I can say is that we are trying very hard to do so and we hope that we shall be able to do so before very long. But it would not be possible to do so certainly before this Bill passes through this House, and we do not think that it would be feasible to prescribe these kinds of allowances for furnished tenants by regulations for the reason that is so often pointed out—that if it were done by regulations it would be impossible to amend them in Parliament and therefore it would be better to have appropriate legislation to fit the particular case. So I am afraid I am not able to hold out any hope of being able to solve the immediate problem of furnished tenants. I hope the noble Lord will accept the assurance that we are doing all we can to solve problems involved. We fully recognise the problem and are sympathetic towards it.

LORD SHEPHERD

I must say I am very disappointed with the reply of the noble Lord. I accept that there are some tenants in furnished accommodation who may be there on a temporary basis perhaps waiting for unfurnished accommodation to become available. But there are very many people, particularly in London, who are forced to live in furnished accommodation because that is the only accommodation that is available. The noble Lord nods his head with approval. I do not think there is any doubt at all that the vast majority who live in this class of accommodation are those who perhaps are in the greatest need of unfurnished accommodation at a very reasonable rent. There is no doubt at all that the marked increase in council house rents will push up even further the present rents being charged even for the most inferior form of furnished tenancy.

We have seen, have we not, during the last nine months the quite astronomical rise in the value of property, the operations of various organisations seeking to obtain, and having obtained, accommodation, seeking to raise the rents, despite the fact that persons have lived in that accommodation for very many years, well beyond the capacity of the tenant to pay. That is not entirely the fault of the Government, but the Government must recognise that if they are raising the rents of the vast majority of those people who live in local authority houses, which is one-third of our housing stock, this is bound to increase the problems and difficulties of those who live in furnished tenancies. I think the Government must have been aware of this; certainly they must have been aware of the disturbing report that the Francis Committee produced to Parliament, and which I think was discussed in both Houses. I find the noble Lord's reply to my earlier plea most unsatisfactory, and I would invite the House to express a view that the Government ought to accept particularly Amendment No. 88L, of which Amendment No. 88C is a paving Amendment, which brings furnished accommodation within the rent allowances and gives the Secretary of State power to deal with this matter by regulation.

3.34 a.m.

On Question, Whether the said Amendment (No. 88C) shall be agreed to?

THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL)

Tellers for the Contents have not been appointed pursuant to Standing Order No. 51, and therefore a Division cannot take place. I declare that the Not-Contents have it.

LORD SHEPHERD

I apologise to the Committee. Certainly it was not my intention that such a situation should arise. It must be that at this time of night we did not take note of the passing of the second hand, and, as is required, notify the Clerk at the Table who were our Tellers. I apologise to the Committee. We must put it down to the time, and nothing else.

LORD DENHAM

Does the noble Lord, Lord Shepherd, mean to say he would have appointed Tellers?

LORD SHEPHERD

Certainly.

LORD DENHAM

Perhaps the Committee would allow the noble Lord, Lord Shepherd, to appoint Tellers.

LORD SHEPHERD

If the Committee were agreed. I rose only to apologise to the Committee, but it was my intention to have a Division, and if the Committee is willing I would now appoint Tellers.

THE CHAIRMAN OF COMMITTEES

I cannot do more than advise noble Lords on this point, but my understanding is that the Committee has already decided that the Not-Contents had it.

LORD SHEPHERD

All right.

LORD SANDFORD

I am sure the noble Lord, Lord Shepherd, is not really worried because I believe the Amendment he intended to have a Division on was No. 88L.

LORD SHEPHERD

Yes, but No. 88C was a paving Amendment, and I thought it was right to do it there.

3.39 a.m.

LORD SHEPHERD moved Amendment No. 88D: Page 23, leave out line 16.

The noble Lord said: This Amendment is very much on the question of principle. Clause 19 deals with rent allowance and the Government have in mind—and we do not disagree in any way—that allowances should be given in the private sector where it is clear that a person's income is insufficient to meet the rent of his dwelling. In many respects this is different from the rent rebate scheme under local authorities. This is a device by which the problem of poverty can be overcome, and we applaud the decision of the Government to deal with it in this way; but we do not believe it is right that a housing authority should bear the bulk of the cost of providing this service. We believe that if poverty, wherever it may be, is to be alleviated, it is a national responsibility and such sums of money as are required should come from the national Exchequer.

LORD DRUMALBYN

I am very sorry to interrupt, but I am not clear which Amendment the noble Lord is speaking to.

LORD SHEPHERD

I am moving No. 88D and, if the noble Lord agrees, will also speak to Nos. 88G and 88K. I hope that the Government will be able to say something about this matter. It may be that the burden falling on a local authority will not be so great as we fear, but we certainly stand by the general principle that dealing with poverty throughout the country should be a national responsibility and should not bear directly upon a certain locality. I beg to move.

EARL FERRERS

One of the effects of these Amendments to which the noble Lord has spoken is that tenants of county councils would be eligible for rebates from the county councils instead of being eligible for rent allowances from the district councils. Another effect, which may not be intended, is to make non-Housing Revenue Account tenants of district councils ineligible for rent rebates. I do not make much point of that, because I do not think that was the intention. But in the case of tenants of county councils, I would point out that the County Councils Association has not asked that county councils should become responsible for granting rebates to their tenants. County councils are not of course local authorities for the purposes of the Housing Act 1957, and they do not have housing responsibilities. The associations representing the local authorities which have housing responsibilities have not objected to including tenants of county councils in their rent allowance schemes.

In the discussions with the local authority associations which led to the issue of the White Paper Fair Deal for Housing, the associations pressed strongly that the proposed Housing Finance Bill should not oblige them to treat tenants of their non-Housing Revenue Account dwellings in the same way as tenants of Housing Revenue Account dwellings. The non-Housing Revenue Account dwellings are very few in number and many authorities own none at all. With that explanation, I hope that the noble Lord will feel that his Amendments are not really necessary.

3.45 a.m.

LORD AVEBURY

May I point out that when the local authority associations asked the Government to do something the Government had already made up their mind? This argument is used by the Government Front Bench, but when the local authority associations have objected to any of the provisions of the Bill that fact seems to have been ignored.

LORD SHEPHERD

Is that not the custom of the Government Front Bench? My Amendments may be imperfect but I did not get a reply to my general proposition that it is wrong that poverty within the private sector should be a matter primarily for the local authority instead of being a national matter and the sums of money found from the national Exchequer. This is the purpose of my Amendments. They may be imperfect, but perhaps the noble Lord, Lord Drumalbyn, would comment on my general line of argument in support of them.

LORD DRUMALBYN

I should like to help the noble Lord, Lord Shepherd, in this matter. We had a long discussion on this very subject at an earlier stage of the Bill when we were dealing with the percentage of the subsidy payable in the case of rebates and in the case of allowances which are not the same. It was difficult for us to follow exactly how the noble Lord was relating what he was saying to these Amendments. But in view of the fact that we discussed this at considerable length earlier this evening I wonder if he would be so good as to withdraw these Amendments.

LORD SHEPHERD

I would not wish the noble Lord, Lord Drumalbyn, to repeat what no doubt was a full explanation. If such an explanation has been given I will read it with great care tomorrow in the OFFICIAL REPORT. If I am then still dissatisfied I shall come back to it. But I accept the noble Lord's suggestion and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD SHEPHERD moved Amendment No. 88F: Page 23, line 23, at end insert ("And is also a private tenant if he occupies a caravan for residential purposes which is kept permanently on a caravan site and for which he makes a payment of rent or any analogous payment").

The noble Lord said: I am sure the Government must be aware that quite a number of private tenants occupy caravans for residential purposes, particularly caravans that are kept permanently on caravan sites or on sites prepared and provided by local authorities. A person with a certain income may be paying rent of such a character that he would be entitled to rent allowance if he were living in a permanent building. The purpose of this Amendment is to enable a number of people throughout the country who may need assistance to get such assistance.

LORD AVEBURY

This is similar to a point that I was making earlier in the proceedings. I am glad that my noble friend Lord Shepherd has given us an opportunity to return to it because we have an important and fundamental dispute on the question of whether people who live in caravans should be entitled to benefits which are conferred on tenants of ordinary houses. When we are bringing in legislation which benefits private tenants and when the Government have promised at some future date to take care of the needs of people who live in furnished accommodation then the only section of the population left out are those people who live in mobile homes or caravans.

Although the noble Lord says we are talking about a few people, from memory I think that the figure in the last census was 176,000, so it is by no means an insignificant sector of the population, and it is a sector of the population which faces very considerable accommodation costs. Most of the people who live in caravans pay a site charge, either to the local authority or to a private landlord, and on top of that they purchase their mobile homes under hire-purchase arrangements, which can be very expensive indeed. One should not imagine that living in a caravan is an economical proposition, and many people do so in desperation because, having tried to get on to the housing list of a local authority or to find privately-rented accommodation within their means, this is the only course left to them.

I know that some people prefer living in caravans for other reasons—elderly people because of the ease of looking after them, the reduction in housework through having a small space to look after, and so on. But if one looks at the Consumer Council's report of some years ago, Living in a Caravan, one sees that many of the people who occupy mobile homes are in the less well off sector of the community, and therefore need this help. If the Government are really genuine and sincere in what they say about giving help where it is most needed, then they ought to look very sympathetically at the Amendment proposed by the noble Lord. I do not know whether he intended it to apply only to persons living on local authority sites.

LORD SHEPHERD

Not necessarily.

LORD AVEBURY

I am glad to have his confirmation that that is not so, because, in fact, by far the largest number of people we are talking about live on privately-owned sites, because local authorities have not been very enthusiastic about exercising their powers under the Caravan Sites and Control of Development Act 1960 to provide this sort of accommodation. In fact, there is a good deal of prejudice, I may say, in local authorities against mobile home living of any kind. It is thought by some people in the local authorities that the sooner people are moved out of caravans and into permanent accommodation the better. That is an argument we could have on some other occasion; but, in spite of the fact that these residents are not tenants—they are in fact licensees—I think that this Amendment is a very simple way to bring them into the scope of the assistance which is being given to other people. What the noble Lord, Lord Shepherd, is saying is that a person who lives in a caravan is going to be treated as a private tenant for the purposes of this clause and I think that is a very reasonable way to approach the problem.

I hope the noble Lord on the Front Bench opposite will be a little more forthcoming than he was the last time we discussed this, because otherwise I can see this problem dragging on for many years to come. As he knows, the National Mobile Home Residents' Association has been making strong representations to the Government, saying that it needs further assistance. Now is an occasion when the noble Lord could stand up and make a great concession to these 176,000 people who are in greatest need.

LORD DRUMALBYN

It was not I who dealt with this at all on the previous occasion—I think it was my noble friend Lord Sandford—but I am sure the noble Lord will agree that my noble friend was sympathetic to this matter. I do not know that I can give the noble Lord a great deal of comfort on this Amendment. In the first place, it seems to be rather narrowly drawn for the purpose that he has in mind, because under the Amendment we are talking of a caravan for residential purposes which is kept permanently on a caravan site"; and I do not quite know what the noble Lord, Lord Shepherd, means by "any analogous payment". I do not know how wide that expression is intended to go; that is, whether it will cover a hire purchase payment or something of that kind. I do not know quite what he has in mind; but, clearly, if you have a caravan you either own it or you rent it. Those who rent a site would own or be buying their caravans. They would not be tenants of the caravan, and as the owners or purchasers they would be eligible for relief on the interest element of any loan they obtained for the purchase of their caravan. Under the Finance Bill now before another place it is proposed that any interest payments in excess of £35 a year will be allowable for tax. This will in effect make allowable for tax interest in respect of purchase by instalments in so far as it exceeds £35 a year.

LORD AVEBURY

I think I am right in saying that the Finance Bill will not help those people who are buying caravans on hire purchase arrangements, which is the vast majority of the people we are talking about.

LORD DRUMALBYN

I should be glad to take up that point. If they have a loan they would be eligible in this way. On the other side, so far as tenants are concerned, the contract for the hire of a caravan at a rent, upon the terms that the caravan is to be lived in only on a particular site and not to be removed from that site, which I understand the Amendment to mean, would in general be a Part VI contract—under Part VI of the Rent Act 1958—because caravans are normally furnished and the rent normally includes payment for the use of furniture or services. We are up against the same difficulty as arises under the Amendment which we are about to come to, Amendment 88L, so far as furnished dwellings are concerned. I have no doubt that this will be considered in conjunction with the question of furnished lettings, and I hope that whatever solution is arrived at in that case will cover this point as well. I am afraid we are up against the same point to which the noble Lord has already taken exception.

LORD SHEPHERD

I had not considered the point that this Amendment was dealing with those persons who may be purchasing their caravan. I had in mind those persons who may, because of sheer shortage of permanent accommodation, be living or required to live on a caravan site in a caravan and may well be paying quite a high rent to the landlord. The purpose of this Amendment was to ensure that they could be treated in the same way as any other tenant in the private sector. It may be that the numbers are not very great, although the noble Lord. Lord Avebury, mentioned some 160,000. This is a figure of which I was not aware. It may be that a fair percentage of those numbers will be purchasing their caravan, but I wonder whether, between now and the Report stage, the noble Lord would ask the Department whether they have any figures as to the number of people who are living as tenants in caravans for residential purposes, to see whether their numbers and conditions would warrant their being brought into the general ambit of Clause 19. If the noble Lord would undertake to look into the matter, I should not wish to press it further to-night.

LORD AVEBURY

I should like to say one more word for the purpose of clarifying what I think is a slight misunderstanding. People living in caravans make two kinds of payment—payment in respect of the purchase of the van, which is normally to a hire purchase company, and the noble Lord might like to give us the answer to the question whether they would benefit under the Finance Bill. Secondly, they pay to the site owner in respect of a licence and not a tenancy, a payment for the occupation of a pitch, as it is called, on that caravan site. As I understood Lord Shepherd's Amendment, it was in relation to these payments that he was seeking to amend the Bill. That was what I understood him to mean by "analogous payments". As they are not tenancies they pay, not rent hut a fee in respect of the licence. If the noble Lord could think of some way of bringing into the Bill that element of their occupation costs, that would satisfy me. Rebates could be applied to the pitch costs and not to the H.P. contract, which would be covered by other arrangements. If the noble Lord would bring forward on Report some Amendment dealing with this problem it would be fair to the caravan residents and would bring them on an equal footing with the people who live in bricks and mortar houses.

LORD DRUMALBYN

I am not quite sure, in view of what I have said, that it would be worth while raising this subject at a later stage of the Bill. In the meantime, I will write to the noble Lord, Lord Shepherd, about the numbers, if the information is available. In any case I will write and give him some information. I will also write to Lord Avebury on the H.P. point and we will look into the question of how to treat the difficult problem of the licensee. Whether is it possible to deem him to be something else I do not know. This is obviously a legal question.

Amendment, by leave, withdrawn.

4.2 a.m.

LORD SHEPHERD moved Amendment No. 88H: Page 23, line 34, leave out ("may") and insert ("shall").

The noble Lord said: I beg to move Amendment No. 88H and at the same time to speak to Amendment No. 88J. Clause 19(8) of the Bill says: A local authority may treat as if he were a private tenant any person who occupies a dwelling let by them other than a Housing Revenue Account dwelling…". It goes on to say: …and accordingly may provide in their allowance scheme for the grant to any such person of a rebate from his rent equal in amount to the allowance which they would have granted if he had been a private tenant.

The purpose of this Amendment is to make it mandatory on a local authority to treat as in the first case, and in the second case to make it mandatory to provide in their allowance scheme for the grant in order to pay such a person the allowance due. The purpose is to make it mandatory as opposed to permissive.

EARL FERRERS

This matter was considered by the Government and we decided that the word "may" would be better than the word "shall" for two reasons. First, there are not very many non-Housing Revenue Account dwellings. They were not provided under Part V of the Housing Act 1957 or earlier similar legislation, but were acquired and held under local Act powers. The local authorities association thought (and the Government agreed with their view) that it would be wrong for local authorities to be bound to do certain things under a Housing Bill in relation to dwellings not provided under Housing powers. The second reason was that the local authorities gave an assurance that they would recommend to their members that they should of their own accord charge for non-Housing Revenue Account dwellings which were being used to meet general housing needs rents which would correspond to rents charged for similar Housing Revenue Account dwellings under the Bill; and that they should be ready to grant rebates to tenants of such dwellings on the same basis as to tenants of Housing Revenue Account dwellings. There is reason to believe that the local authorities concerned will accept the recommendation that their association has undertaken to make. That is why we believe it would be better to keep to the word "may" rather than to use the word "shall".

LORD SHEPHERD

Here again the Government are using the county council associations in support of their view whereas earlier in the Bill they were not even prepared to consider their representations. Am I to assume from what the noble Earl has said that it is the expectation of the Government that what is provided in subsection (8) shall be performed and carried out by the authorities concerned? Am I right in assuming that that was what the noble Earl said?

EARL FERRERS

Yes, the noble Lord is correct.

LORD SHEPHERD

Then why cannot we put it in as we have done in other parts of the Bill and make it mandatory? What is the difficulty?

EARL FERRERS

The difficulty is simply that the housing associations have given the undertaking that they will do this and we believe that that was given in good faith. If we enter into the Bill words to make it mandatory this would infer that the Minister would not accept the word given by the local authority associations. They have given this undertaking and I would have thought that this should have been sufficient, particularly in view of the fact that the noble Lord has always pressed the Government to take note of what the local authority associations say. We have here done so.

LORD SHEPHERD

Parliament is of the view, as is the Government, that these responsibilities should be performed and I would have thought it was right to put it quite clearly in the Bill that it shall be performed. It may be that the Government have an assurance from the county council associations. This Bill is clearly going to last for a number of years. Local authorities change; county councils change; their composition changes; and what may be an assurance now may not be applicable or enforceable by the Government on local authorities some years hence. I cannot really see why the Government cannot accept these Amendments.

4.7 a.m.

LORD SIMON OF GLAISDALE

Surely an assurance by the associations of district councils, or municipal councils, or county councils, is not binding on any member of the association. While it is given in good faith and no doubt with the support of the majority of the councils, if we want to see this applied it would stem to me much better to insert the word "shall" rather than "may".

LORD DRUMALBYN

I am wondering if we can consider this. I am sure the noble Lord will recognise that it would be very difficult for us to accept an Amendment of this kind at any rate without reference back to the associations again. If he would leave us to consider this we shall see whether the associations still feel as strongly as they did on this matter and whether they would be prepared to have an obligation placed on the authorities in the Bill, or to place a moral obligation on the authorities in accordance with their instructions.

LORD SHEPHERD

Before Lord Drumalbyn intervenes I must say to the noble Earl that I would have pressed this to a Division because it seems to me that if Parliament is of a view it should be quite clear and established in the Bill that that is their view and that is their intention. If the noble Lord, Lord Drumalbyn, has given this undertaking to consider this matter then naturally I would not wish to press it. Quite clearly there ought to be co-operation and understanding between the county council associations and the Government but there is also Parliament to consider. If we are going to put these provisions in, it ought to be made quite clear that it is the Government's desire that these should be

fulfilled and it is for Parliament to so order it by changing the permissive nature of this subsection into a mandatory one. But in view of what the noble Earl has said about giving further consideration to this I would not press this matter this evening.

Amendment, by leave, withdrawn.

Clause 19 agreed to.

LORD SHEPHERD

I beg to move formally Amendment No. 88L, since we have already had a debate on this matter.

Amendment moved— After clause 19 insert the following new clause.

Application of s. 19 to furnished tenancies

.—(1) The provisions of section 19 shall also apply to tenants under a contract (in this section called a "furnished tenancy") to which section 70 of the Rent Act 1968 applies or would apply but for subsection (3) of that section but subject to the provisions of the following subsections and the expression "private tenant" in this section shall be construed accordingly.

(2) The date of bringing into operation of the allowance scheme shall be 1st April 1973.

(3) The Secretary of State may by regulation make provision for determining what portion of the rent payable under a furnished tenancy is attributable to the use of the premises (as distinct from the provision of services and the use of furniture) and which will qualify as the rent in respect of which rent allowance is payable.

(4) Regulations under subsection (3) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.—(Lord Shepherd.)

4.10 a.m.

On Question, Whether the said Amendment (No. 88L) shall be agreed to?

Their Lordships divided: Contents, 16; Not-Contents, 53.

CONTENTS
Avebury, L.	Hale, L.	Shepherd, L.
Barrington, V.	Hughes, L.	Simon, V.
Bernstein, L.	Jacques, L.	Tanlaw, L.
Diamond, L.	Llewelyn-Davies of Hastoe, Bs. [Teller.]	Wells-Pestell, L.
Donaldson of Kingsbridge, L.		White, Bs.
Garnsworthy, L. [Teller.]	Shackleton, L.
NOT-CONTENTS
Aberdare, L.	Brooke of Cumnor, L.	de Clifford, L.
Amherst of Hackney, L.	Brooke of Ystradfellte, Bs.	Denham, L. [Teller.]
Balfour, E.	Burton, L.	Drumalbyn, L.
Beaumont, L.	Colville of Culross, V.	Dundee, E.
Belhaven and Stenton, L.	Craigmyle, L.	Effingham, E.
Belstead, L.	Cranbrook, E.	Elles, Bs.
Brabazon of Tara, L.	Crawshaw, L.	Ferrers, E.
Fisher, L.	Lothian, M.	Sandford, L.
Gainford, L.	Massereene and Ferrard, V.	Sandys, L.
Gowrie, E.	Merrivale, L.	Selkirk, E.
Greenway, L.	Mowbray and Stourton, L. [Teller.]	Sempill, Ly.
Hailes, L.		Sudeley, L.
Hailsham of Saint Marylebone, L. (L. Chancellor.)	Nugent of Guildford, L.	Swansea, L.
	Onslow, E.	Teviot, L.
Hertford, M.	Pender, L.	Tweedsmuir, L.
Hives, L.	Rankeillour, L.	Tweedsmuir of Belhelvie, Bs.
Hood, V.	St. Just, L.	Vivian, L.
Latymer, L.	Saint Oswald, L.	Young, Bs.
Limerick, E.

On Question, Amendment agreed to.

Clause 20 [The model schemes]:

4.19 a.m.

LORD SHEPHERD moved Amendment No. 88A. Page 24, line 16, at end insert— ("( ) Where the Secretary of State is satisfied that a scheme proposed by the local authority conforms to the model scheme the Secretary of State shall compensate the local authority with the cost of the scheme including administrative expenses.")

The noble Lord said: This Amendment deals with a model scheme which the Government have in mind, and much of our debate on the model schemes will take place when we are considering Schedules 3 and 4 of the Bill. Clause 20, certainly as it is now drafted, will place a very considerable burden upon the local authority both in terms of providing the sums required for the rent allowance scheme and what I believe will be the quite heavy administrative expenses involved in this matter. We on this side of the Committee believe that dealing with poverty should be a national responsibility rather than falling to be borne by a particular locality. The purpose of the Amendment is that where a model scheme has been adopted by a local authority and the Secretary of State is so satisfied, then the Secretary of State will compensate the local authority with the cost of the scheme, including the administrative expenses. It may be that there is a subsidy to assist in the field of rent allowances; but my understanding is that this does not include expenses for operating this scheme.

It would be right, since the local authority here is acting as an agent of the central Government, that the expenses involved in this matter should be borne by the central authority and not by the ratepayers of the particular locality. I suspect, too, that those local authorities who will have a special burden to bear in this matter are perhaps those who have the greatest pressures and problems in rehousing. Other authorities will find it relatively light. I hope that the Government will accept the general principle of this Amendment. If it is not word perfect perhaps we can discuss it. I hope that the Government will accept the view that if a model scheme has been adopted, and the Secretary of State is so satisfied, then the Secretary of State will compensate the local authority for the cost of the scheme, including administrative expenses. I beg to move.

4.22 a.m.

LORD DRUMALBYN

I congratulate the noble Lord on the pithiness of his argument and on the way he has put his case. But we divided not once but twice on this very issue (on Clause 6 and, I think, on Clause 8) when the matter was argued—and I do not complain—at much greater length. I do not know whether the noble Lord will be good enough to do as he did on a previous occasion and look at what was said when we were discussing Clauses 6 and 8, and will be satisfied with that. I do not want to trespass on the noble Lord's credulity, but the noble Lord, Lord Garnsworthy, will admit that this was very fully discussed when discussing the percentages. We also discussed the position so far as administrative expenses were concerned, which I regret to tell the noble Lord are not wholly included in the case of rent rebate and not at all in rent allowances.

LORD SHEPHERD

I am advised that there was a discussion and it was of such significance that it was mentioned on sound radio this evening. I will certainly look at what was said. One does not put down Amendments for the sake of repetition; I was not present when this matter was discussed. It certainly falls within the question of Clause 20, the model schemes. Since we have, I gather, already divided—

LORD GARNSWORTHY

We had a very good vote.

LORD SHEPHERD

We always have a very good vote, considering the numbers that are available. Since we have had a vote, I do not intend to divide the Committee. I will look at what the noble Lord has said and decide whether we should come back to it at a later stage.

Amendment, by leave, withdrawn.

THE CHAIRMAN OF COMMITTEES

Before I call Amendment No. 88M I think I should point out to the Committee that if this Amendment is agreed to I cannot call Amendments No. 88N or 88O.

4.25 a.m.

LORD SHEPHERD moved Amendment No. 88M: Page 24, line 25, leave out subsection (5) and insert— ("( ) If it is shown to the satisfaction of the Secretary of State—

1. (a) that the general level of rents of the Housing Revenue Account dwellings (or any section thereof) of any housing authority is higher than the general level of the rents of the Housing Revenue Account dwellings of all the housing authorities (except those in Greater London), or
2. (b) that the general level of rents paid by private tenants in the area (or any section thereof) of a local authority is higher than the general level of rents paid by private tenants elsewhere (except Greater London)

he shall on the application of the authority authorise them to treat Schedule 3 to this Act, as it applies, in a case under paragraph (a) above in relation to their rent rebate scheme and in a case under paragraph (b) in relation to their rent allowance scheme as providing during such period (being not less than two years) as may be specified in the direction for such lower minimum rent or higher maximum rebate or allowance as he may direct but in accordance with the principle that where paragraphs (a) or (b), respectively, apply and the general level is higher than the level which is compared then the minimum rent shall be determined according to the formula: Minimum rent=40 per cent/Y X weekly rent where Y=the general level of the local authority's rents under paragraphs (a) or (b) above expressed as a percentage of the general level with which it is compared.").

The noble Lord said: I fear that this is one of the more difficult amendments, but I am advised that the proposition is a good deal simpler than it would appear from the Amendment. The general average levels of rents throughout the country outside London, I understand, is some £4 a week. In those circumstances the minimum rent for a house having a rent of £4 per week would be £1.60. If we assume that rents in London are twice as high as the average rent throughout the rest of the country, under the formula in the Bill the minimum rent in London would be £3.20 a week, or 40 per cent. of £8. To apply the formula, however, the figure of 40 is divided by 200, the rents in London being twice as high as elsewhere. Thus 200 per cent. is substituted for Y, and 40 divided by 200 produces a fraction which, converted into a percentage, equals 20. The short answer, as I understand it, would then be that the minimum rent in London would still be £1.60.

The purpose of this Amendment is to ensure that there is a fairer distribution of the burden. I hope that the Government will consider this proposition, and I will listen carefully to what the noble Lord has to say. I beg to move.

Loan DRUMALBYN

This Amendment seeks to alter the existing provisions in subsection (5) in four main ways: first, in comparing the general level of rents for an authority with that of other authorities I understand that the rents in Greater London are to be excluded. This would have the effect of lowering the point at which an authority's rent levels become exceptionally high, by comparison with the level for other authorities since, as the noble Lord says, rents in Greater London are on the whole the highest in the country. A message I have received indicates that we cannot agree with what he said about the average rents. My information is that on April 1, 1971, the average rents for all housing revenue account dwellings for authorities outside Greater London ranged from £2.13 to £2.41 a week, but for the London borough councils they were £3.50 and for the Greater London Council £3.57. I am not sure that the noble Lord did not combine in his figures local authority houses and the private sector houses, but I will give him the figures that I have.

The overall national average for housing revenue account dwellings was £2.48. In the private sector fair rents registered in the first quarter of 1971 averaged £6.17 in Greater London and £3.29 outside. The result of the exclusion of Greater London would obviously be to lower the threshold for authorisations and so to bring more local authorities potentially into the sphere of eligibility. So this part of the Amendment would also have the effect of making most of the London borough councils and the Greater London Council more or less automatically eligible. To widen the provision in this way would have the undesirable result that a rebated tenant might pay hardly any more rent for the advantage of living in art area of high amenity or more desirable location. Some may think that this would be a good thing. On the other hand, some of us think that while certain people like to spend their money on, say, better houses, others prefer to spend it on, for example, better motor cars and in other ways.

The first Amendment lays down a mandatory formula which would reduce the minimum rent proportionate to the excess of the authority's rent levels over the general rent level outside London. Such a rigid formula could lead to anomalies between authorities, anomalies which could be avoided if the Secretary of State has discretion under the Bill to treat each case on its merits. This Amendment would also require an authorisation to last for at least two years. But the situation justifying the authorisation might have altered after one year, and it is thought better to leave the Secretary of State with discretion as to the length of the period. The first Amendment, like the third, would make an authorisation mandatory instead of discretionary. But the Secretary of State may consider that an authorisation is not justified, even though a prima facie case has been made for it. For example, the authority may have unnecessarily built most of its housing revenue account dwellings in the most select part of its area.

The second Amendment would have the effect of enabling a tenants' association, with the support of at least 100 tenants, to apply for an authorisation as well as an authority. The noble Lord did not refer to this, but perhaps I should say that we do not think that such a dual provision for applications would be right because it would take away from, and conflict with, the position and responsibility of the local authority, particularly if the 100 tenants represented only a small fraction of all the tenants concerned. I hardly think that this Amendment would be acceptable to local authorities, although I recognise that this is by no means an overriding consideration of the noble Lord, but local authorities would obviously be liable to contribute from the rates towards any extra cost resulting from the authorisation.

As my right honourable friend said in another place, local authorities will no doubt forward representations they receive to the Secretary of State, and my honourable friend, Mr. Channon, pointed out in another place that, for example, Camden and Islington had done this. Mr. Channon explained the basis on which authorisations under Clause 20(5) would be given. He explained that the aim would be to ensure, broadly speaking, that families with one or more dependent children living in the typical dwellings of, or in, the authority concerned shall not be called on to pay more than 10 per cent. of their income in rent where that income equals their needs allowance.

I hope that this explanation is sufficient to indicate to the noble Lord that we do not think that the formula which he proposes would be an improvement on the formula in the Bill. We should like the Secretary of State to retain more flexibility than his Amendment would allow because we feel that this would be generally to the benefit of local authorities.

LORD SHEPHERD

I am most grateful to the noble Lord for what I thought was a very full explanation on Amendment 88M. I will very carefully read what he has said and will consider whether I should come back to it either in the present form or in a different form. I did not speak to Amendment No. 880, but since the noble Lord has himself referred to it perhaps I may say this. I see the difficulties that the noble Lord has explained, but I feel very strongly that these associations of tenants are to be encouraged and that they should have an opportunity of making representations to the Secretary of State. Whether this is the way to proceed in the Bill I am not certain. I will give it further consideration and see whether we should not make it a requirement in the Bill for the Secretary of State to receive such representations as are made by a recognised association of tenants, merely to ensure that a local authority would pass on such representations for the consideration of the Secretary of State. I beg leave to withdraw this amendment.

Amendment, by leave, withdrawn.

Clause 20 agreed to.

Schedule 3 [Computation of rebates and allowances]:

LORD DRUMALBYN moved Amendment No. 89: Page 121, line 39, after first ("for") insert ("or collected in").

The noble Lord said: In moving this Amendment it may be convenient at the same time to your Lordships to take Amendment 97, page 128, line 19, which is identical. These are drafting Amendments which are consequent on a similar Amendment to Clause 71(5) of the Commons Report stage to take account of the fact that under a rent-free-week system an authority may wish to collect the weekly amount payable over, say, 48 weeks instead of 52 weeks. Such an administrative arrangement would not alter a tenant's liability to pay a certain weekly sum as his rent although that sum may be collected by way of a slightly larger amount collected during 48 weeks with no amount being collected in the other weeks. That is the effect of these small drafting Amendments. I beg to move.

4.38 p.m.

LORD SHEPHERD moved Amendment No. 89A: Page 122, line 3, leave out paragraph (5).

The noble Lord said: Paragraph 5(1) is one of the more obnoxious sections of the Bill. The Committee should have its attention drawn to the wording of it. It says: If some person who resides in the dwelling occupied by the tenant appears to an authority to have a higher income than the tenant, and the authority have grounds for considering that in the special circumstances of the case it would be reasonable to make their calculations under this Schedule by reference to the income of that other person and not of the tenant… This paragraph—and I hope the noble Lord, Lord Drumalbyn, will confirm this—would in no way affect what would be the legal status of a tenant as to his occupancy of the premises. But it is quite wrong that an authority here should be able to say that because a person may be living in that house, perhaps temporarily, and who may be a son or daughter, and merely because that person's income is higher than that of the father who may be the tenant, that in that case the whole question of what rent rebate or rent allowance is made should be made on the basis of the income of the perhaps dependent son or daughter. There are many aspects where difficulties could arise between the tenant and the other person who may be in the premises. I hope that the Government will be willing to withdraw this particular paragraph. I beg to move.

LORD DRUMALBYN

This is a discretionary provision, and what it does is to give the authority discretion, if it considers it reasonable to do so, in the special circumstances of the case where some other person is residing with the tenant and appears to have a higher income than the tenant, to treat him as the tenant for the purpose of computing the rebate or the allowance. I confirm that it does not have any effect on the legal status of the tenancy. This is not a new provision. I might say that it was envisaged in the circular that was sent to local authorities by the previous Government; that contained an illustrative scheme as guidance. And it has been a common feature of many existing rebate schemes. It is intended that it should be used only in those exceptional cases where to act in any other way and to grant a rebate or allowance on the basis of the tenant's income only would result in an abuse of the scheme and a misuse of public funds. Its present use does not cause difficulty in practice, and authorities will be advised by circular, when the Bill is enacted, to make only sparing use of the provision.

May I give an example? During Standing Committee debate it was explained that the kind of circumstances in which it might be necessary to use the provision is where, for example, a non-dependant with a very high income has also made his home in the tenant's dwelling and where, for all practical purposes, the tenancy and the responsibility for meeting the rent have in all but name been assumed by the non-dependant. The noble Lord instances the case of a son or daughter who might be living there temporarily. I do not think this would arise in the nature of the way these matters are settled, because the periods covered are normally six months, and a year in the case of a retired person. So mere casual or temporary stay would not affect the issue. My honourable friend, Mr. Channon, who was then Parliamentary Under-Secretary of State, gave an assurance that a circular would be issued to local authorities indicating the way in which the provision should sensibly be used and that it should be used only in exceptional cases. He also said that the advisory committee on rebates and allowances would be asked to keep a constant watch on the working of this part of the Schedule. This is one of those things which looks very much more formidable on paper than it really is in practice. It is just a fallback to prevent misuse of public funds and abuse of the scheme.

LORD GARNSWORTHY

One takes something of the point the noble Lord is trying to make on this matter; nevertheless my noble friend Lord Shepherd is thoroughly justified in indicating that this is quite an obnoxious provision. I do not think anybody would dispute that the tenant is regarded as the head of the house. If the head of the house is not the person paying the rent but that person is somebody living in the house with that tenant, I suggest that the status of the tenant is thereby altered and, indeed, lowered. The noble Lord, Lord Drumalbyn, was careful to say that local authorities would have discretion and that they had been given guidance. Some local authorities can behave in odd ways. There are occasions when not merely an element of parish-pump politics but an element of street politics comes in. So little is to be gained and so much is to be put at risk by putting in this provision that it would be a good thing to drop it.

The noble Lord concluded by informing the Committee that this was a situation which was going to be watched constantly. He said that there had been very little trouble about it, but it appears that the Government are disturbed about the possible consequences. We cannot ignore the fact that if discretion is allowed to local authorities there could be occasions, despite the guidance and advice that may be given, when a son or a daughter is driven from the home.

The Committee generally will appreciate the kind of person the noble Lord was hinting at—a non-dependent person of high income. I venture to suggest that there are other ways than this of dealing with that situation. There is an occasion, if it is thought that the non-dependent person of high income is taking advantage of a situation, when local authorities could be in a position to deal with the tenancy itself. Obviously in that sort of case something is wrong, and this is not the way to put it right. I hope the appeal my noble friend has made will be listened to and that at some stage the Government will indicate that they have had further thoughts.

LORD DRUMALBYN

I appreciate the feelings of the noble Lord, Lord Garnsworthy, on this matter. This matter is well precedented, and I am not aware of an abuse of it by local authorities, although theoretically I suppose it is possible. In view of that, I do not think I should be justified in accepting the Amendment. We can certainly have a look at it between now and the next stage, if the noble Lord wishes, and find out what evidence of abuse, if any, has come to light in the past. I believe I am right in saying (I am not sure of this) that this is a power which is available to the Supplementary Benefits Commission—at least it was in the days when I had something to do with these things. One can look at it to see to what extent it is used and to what extent there has been complaint about its use. In view of what I have said I am afraid I should not feel justified in acceding to the noble Lord's plea.

LORD SHEPHERD

Can the noble Lord say what he has in mind when he says that this power will be used sparingly and wisely? Here is a permissive power and the drafting is such that a local authority would think it was the wish of the Government that they should proceed as I have suggested.

LORD DRUMALBYN

Let me give a very typical example. How often nowadays one finds that the father of a family is in an old kind of occupation which attracts relatively low pay, whereas his son or sons are earning very high pay. In the normal way, I do not think the power would be used in those circumstances. Where the father has been the tenant all along and it is obviously his house, I do not think the power will be used, because we have paragraph 12 which provides for deductions from rebates or allowances in respect of non-dependants. I should have thought that those deductions would be made in such cases. But there might be cases where there was an obvious attempt to get a higher supplementary benefit or a higher rent allowance than was justified. When I say that the power would be used sparingly, I mean that there would have to be a glaring attempt to evade what was reasonable in the circumstances.

LORD SHEPHERD

The noble Lord said that there may be occasions when someone seeks to extract from the Supplementary Benefits Commission sums that he is not entitled to. I should not have thought that a Bill dealing with rents was the right vehicle for stopping an abuse. I do not like this paragraph. I recognise that the noble Lord has sought to remove our fears and has said that the power would be used sparingly. In other words, he recognises that there would be very few cases where it was used. But if that is the case, I should much prefer to see this paragraph entirely removed from the Bill. It is a most obnoxious paragraph to put into any Bill and I intend to press this Amendment to a Division.

LORD AVEBURY

The noble Lord has said that this power would not normally be used in the case of a son or daughter who has been living at home, and has grown up and entered an occupation where he or she is paid more than the parent. He said that such cases would normally be dealt with under paragraph 12, under which a deduction is made for each of those dependants who are still living at home. Therefore, would it not be reasonable, if the noble Lord will not consent to remove this provision altogether, to insert the words: If some person other than a son or daughter of the tenant who resides in the dwelling"? That would make it clear to the local authorities that they were intended to use the provisions of paragraph 12 in a case of that kind, rather than treat a son or daughter as the person on whom the rebate should be assessed.

I fear that if it is not made absolutely clear that the sons and daughters are excluded, there will have to be an army of snoopers employed by the local authorities to go around and see whether a large car is parked outside the home, perhaps belonging to a child of the tenant, and then ask the neighbours whether he has a large car as a result of earning more than his father. We have enough snoopers going around now, and the noble Lord knows that there has recently been great criticism of the Supplementary Benefits Commission because of the so-called cohabitation rule and the AX Code. We do not want to import that kind of unsavoury activity into the assessment of rent rebates, which will apply to 1,750,000 tenants. I feel certain that, as the sons and daughters would be the ones most likely to earn more than the tenant in the circumstances which the noble Lord has described, to exclude them from paragraph 5(1) would remove a great deal of the apprehensions that some of us feel.

THE EARL OF BALFOUR

As a councillor I feel that this provision should be left to the discretion of the local authorities. Most councillors know the people who are occupying their houses. It is a clause which is in the rebate schemes of a number of authorities I know and it would be a mistake to cut it out. Let me give just one example. Supposing the parents had retired and their son and daughter-in-law were living in the house. The son could be earning a very big wage and it would be a mistake for the parents to claim the full rebate subsidy that they would get under the provisions of this Bill when their son who is living with them could take advantage of that situation. I feel that it is something which can be left with absolute safety to the local authorities.

4.57 a.m.

LORD GARNSWORTHY

One always listens to what the noble Lord, the Earl of Balfour, has to say because he has a good deal of experience. It is very interesting that he has quoted the very instance which the noble Lord, Lord Drumalbyn, said was not likely to arise. He has picked on the son and this seems to me to be one of the difficulties. He indicated that as a councillor he could say that councils know their people. I venture to suggest that what he has said supports what we have been trying to put before your Lordships. There are other ways of dealing with this problem of somebody with a very high income living in the house. I do not think that anybody would want to feel that he was going to be responsible for breaking up a family. I am quite certain that if the Government try to find another answer to this problem they will find it without all the risks of domestic upset.

LORD DRUMALBYN

Perhaps it would help noble Lords if I reminded them that this was a Schedule that was criticised during the Committee stage in another place. As a result of that criticism it was substantially amended. The Amendment was not discussed on Report because it came under the guillotine. The following words were inserted at the Report stage: … and the authority have grounds for considering that it the special circumstances of the case it would be reasonable to make their calculations …". So the Government have done their best to tighten this provision up and to meet the criticisms that have already been made. I cannot give an undertaking that in all cases it would be reasonable to treat the father as the tenant. What I can say is that we shall be able to deal with the typical case of a son having grown up in the house and now earning more than the father. I agree with my noble friend Lord Balfour that this is a matter which can be left to the local authority. All I can say is that we have endeavoured to meet the points of criticism while at the same time safeguarding public funds.

LORD SHEPHERD

I wonder whether the noble Lord was really wise to rest part of his case upon what the noble Earl, Lord Balfour, said. Today—yes, it is today—the noble Earl expressed his complete confidence in how local authorities would perform their duties, but if the noble Earl will remember I questioned him very severely when he was bitterly critical of various local authorities and the manner in which they looked after the public purse. If I may say so, I think the noble Earl must be a little consistent, perhaps.

I do not like this subsection. I wish the noble Lord had been willing to undertake to consider the exclusion from this provision of those who are, one might call, family—the son or daughter. But I do not know whether one should restrict it even that far. There may be a case in which a son-in-law is living with the daughter of the tenant, and I should have thought that it ought to apply as much to him as it should to a direct son or daughter. I would not wish that a tenant should be able to take in what one might call a highly-paying lodger and obtain a rent allowance or a rent rebate, with such an income coming in; but I think it is quite a different matter as far as the family is concerned.

I think I should like to test the view of the Committee on this matter, unless the noble Lord is willing to consider this particular provision, which he himself has said is going to be used very rarely indeed. I do not know whether he would be willing to consider restricting this subsection as far as the direct family is concerned. If the noble Lord would be willing to undertake that and to accept this as a general principle, then I would be very happy not to press this, but unless he can go that far I think I should like to test the view of the Committee.

LORD DRUMALBYN

It would be churlish of me not to say that I would consider this, and certainly I shall discuss it in the light of what the noble Lord has said to see if this is really a practical solution in the light of the experience that we have on these matte's. I do not think I can do more than that. I certainly could not give any assurance on the matter, I am afraid, without having discussed it with my right honourable friend the Minister.

LORD SHEPHERD

I fully understand that the noble Lord could not accept this on the Floor of the Committee, but in view of the fact that he is willing to look at this matter I will certainly not press this Amendment. I do so because I see the noble Baroness, Lady Masham, is most eager to move to her own Amendment. She has been extraordinarily patient through a very long night, and I therefore do not intend to delay the Committee in considering her important Amendment.

Amendment, by leave, withdrawn.

5.4 a.m.

LORD CRAWSHAW moved Amendment No. 90: Page 122, line 33, after ("blind") insert ("or chronically sick and disabled").

The noble Lord said: I think it might be for the convenience of the Committee if we considered Amendments 90 to 94 together; and I would suggest also that we might take Amendment No. 107, which is an Amendment on the same subject, as well.

LORD DRUMALBYN

I wonder if the noble Lord would mind if we left that one over, because there are other Amendments of the same character as that particular provision. I think it would be better if we stuck to the first five Amendments, Nos. 90 to 94.

LORD CRAWSHAW

On the Second Reading of this Bill I expressed general support for the principles, and I suggested that it contained elements which gave rise to certain anxiety in certain sections of the community. I warned the Government and the House that I should be seeking to amend this Schedule. I do not think I need speak long or wax emotional on the subject. I simply want to make a few practical points, and I hope that the Government will accept the principle of the Amendments, and even more that they may accept the Amendments themselves.

Quite rightly, the Government have recognised that the blind have special expenses which are higher than those of ordinary people. We all have a great admiration for the blind, and we do not want in any way to jeopardise their position, but we want the chronically sick and disabled to be treated in the same way. Under Section 28 of the Chronically Sick and Disabled Persons Act it is provided that: …the Secretary of State… may by regulations made by statutory instrument … make provision as to the interpretation for the purposes of that provision of any of the following expressions…that is to say, "chronically sick", "chronic illness", "disabled" …". I believe that is flexible and wide and the best available interpretation, and if it works for the purpose of the Chronically Sick and Disabled Persons Act I see no reason why it should not work in this Bill as well.

I suppose one could have taken the word "blind" out of the Schedule altogether, for blindness, serious as it is, is simply one form of disability. In fact, last afternoon my noble friend and I attended a reception in the other place where the subject of the combined operations of the physically disabled and blind was being discussed. I think this is the modern approach to these problems, and I find the wording in the Schedule old-fashioned. The disabled—and that includes the blind—find that their living expenses are higher than the living expenses of others. I mentioned some examples of this on a general front in the Second Reading debate, but I would say that on purely housing matters problems have been found, to put it mildly, in such things as digging gardens, mending plumbing and electricity, moving furniture, laying carpets, cleaning windows, and matters of that sort. The only solution, as I see it, is for the disabled person to call someone in to do these jobs and to pay them, and not to have it done as a favour; but this solution does increase the expense.

The needs allowance is the kernel of the argument. The incomes of disabled people—again including the blind—are helped by the supplementary benefit system to a certain degree, but only to a certain degree, and not to a degree above able-bodied people; but, as I say, the expenses are always greater. At this moment I am not so concerned about the war or the industrial disabled, who, under the Schedules do receive the £2 allowance, but I am concerned about the ordinary civilian, and particularly the employed civilian working on equal terms, unsubsidised, with the able-bodied.

I am also concerned about the homebound person who does not get the attendance allowances. On this point—and I mentioned this on Second Reading —there is a fear that the specially-designed local authority houses may become too expensive, under the fair rents scheme, for the tenants they were designed for. There have been some fine houses built. I suppose they could attract a rent that certain people could not afford if they were assessed under the fair rents system. I believe that there is a great deal of support in the Committee for these Amendments. I shall be most interested to see how great that support is and to hear what my noble friend Lord Drumalbyn has to say. I beg to move.

THE EARL OF BALFOUR

Before he completes what he has to say, I should like to ask the noble Lord, Lord Crawshaw, whether it is true that the chronically sick and disabled people are able to get additional supplementary benefits that blind people do not get. This information was given to me and I should be interested to know whether or not it is correct.

LORD CRAWSHAW

My information is that it is not correct.

LORD AVEBURY

I should like to support the Amendment so ably moved by the noble Lord, Lord Crawshaw, and to say that I think what he asks for is very modest indeed. If you look at the Schedule, we are simply adding £1.25 to the needs allowance as computed for a disabled or chronically sick person. Since the noble Lord has mentioned the houses specially designed for the chronically sick, it would be interesting to hear from the noble Lord, Lord Drumalbyn, what difference this will make in the fair rents as compared with dwellings designed for the physically fit and able people. It could be that under the fair rents scheme, tenants of those properties will find themselves paying at least £1.25 more than their fellow citizens living in neighbouring houses not specially adapted.

Therefore, if we pass the Amendment that the noble Lord is proposing, all we are going to do is to compensate the chronically sick and disabled for the additional rent they are going to have to pay under the Government's fair rent scheme; and they would be no better off. They would not have anything to assist them towards the special costs they incur as a result of their disablement. I should like to draw the attention of the Committee to the recently published pamphlet by the Disablement Income Group in which there is mention of this particular factor. The Disablement Income Group give as one of the reasons for the community taking an interest in the problem of the disabled and assisting them to live in the community, that it is much more expensive to keep somebody in hospital than at home.

Even if we do not look at this from the humanitarian point of view, even if we study the Amendment solely on grounds of economy, we should have a powerful argument here for saying that it must be clone. In many cases the additional help we give by granting an extra £1.25 in the case of families where there is one disabled person could make the difference between that person being able to live at home and within his means and having to spend long periods in hospital at great expense to the community. I know that the Committee would prefer to rest the argument on humanitarian rather than on cold financial grounds. I am sure that this Amendment will appeal to all sides of the Committee and that the noble Lord, Lord Drumalbyn, will accept it.

BARONESS MASHAM OF ILTON

I should like to support the noble Lord, Lord Crawshaw, and to echo the question to the Minister: why have the blind been incorporated into this Bill and not other disabled who might benefit from this? What about the disabled housewife or the woman who goes out to work to keep her disabled husband? Do these women get any benefit? I wish the noble Baroness, Lady Summerskill, were here. She is a better campaigner for women than I am. Talking to some Conservatives, as I have done in the last few days, I have found that they seem to be under the impression that all disabled people get splendid benefits. This is just not so. The publicity that has been given to the attendance allowance may have done more harm than good. So few people get it, and even when it is extended not many people are going to benefit from it. If the Government would really look closely into who does and who does not get benefit I am sure that they would learn a great deal about extra hardships.

There has been so much talk about all the disabled who cannot help themselves. There are a great many disabled people leading good family lives who have to struggle with all the extra expenses such as carpets being worn out by chairs, not being able to shop around, extra shoes, calipers wearing out trousers and all sorts of other things. If the Government were to include in this Bill certain disabled people with the blind, I am sure the blind themselves would support this. Surely this would be in line with the Conservative policy of encouraging those who are trying to help themselves.

BARONESS DARCY (DE KNAYTH)

I should like to support extremely briefly what the noble Lord, Lord Crawshaw, has said. I do not want in any way to suggest that the blind should not be treated sympathetically or that they do not have extra expenses or very great problems, but as noble Lords have already heard from my two noble friends, life for the disabled is much more expensive and their earning capacity may be less than that of the able-bodied. By granting the blind this concession, the Government have admitted that the blind need to be compensated for the extra cost of day-to-day living and this allowance, I should like to point out, is in addition to the income tax allowance of £100 a year already received by the blind. Surely it must logically follow that the disabled also need to be compensated for their extra expenses. In the past the blind were singled out for compensation, I think perhaps because their difficulties were more easily imagined, but recently it has been recognised more and more that other handicaps can present as many difficulties to an individual as blindness does. This increased awareness is certainly not reflected in this Schedule. I strongly support the noble Lord's Amendment.

LORD WELLS-PESTELL

I would like to associate myself with what has been said by my noble friends. It is quite right and proper that the blind should be included in this, but I would urge the Minister to accept these Amendments because I think it is of supreme importance that the chronically sick and disabled should be included. Many of us do not realise the extra expense with which the chronically sick, the bedridden and the housebound are faced from day to day. Those of us who have had the unfortunate experience of being disabled and, as in my own particular case, have emerged from it, can speak with some personal experience of the expense involved. For many who do not get the attendance allowance—and there are very few who do—and who can do a job of work there are considerable disadvantages. I do not want to go over the same ground again, but there are extra expenses for clothing, as I can personally testify. Without being too unpleasant, there can be a very heavy laundry bill for matters which are beyond the control of the disabled person. There are extra expenses for special foods and these amount in the course of the week to a very considerable sum. I would urge the Minister to accept the Amendment because it is really important that some special provision should be made for the chronically sick and disabled.

VISCOUNT MASSEREENE AND FERRARD

I should like strongly to support the Amendment, and I hope that the Government will accept it. Apart from the humanitarian reasons, which of course are the most important, I wish to bring out the point made by the noble Viscount. Lord Amory, about hospitals. Giving these extra allowances to the chronically disabled will surely take some of the pressure off hospitals. I shall be very surprised if the Minister does not accept this Amendment.

THE EARL OF ONSLOW

I also should like to support Lord Crawshaw's Amendment. After all, the blind have been given special privileges by this Bill. The chronically sick and disabled have been given special privileges by a previous Statute. Surely they should be allowed the same privileges under this Bill. How much will it cost, even if we do argue it on the basis of pounds, shillings and pence? It cannot be all that much. Is it going to be all that more than the cost for the blind? If the Government do not accept this Amendment, perhaps they would put down their own Amendment on Report stage.

LORD SANDYS

I should like to associate myself heartily with the noble Lord, Lord Crawshaw. I would remind the Government of the words of the Prime Minister on this subject as a general topic some years ago. If, with your Lordships' permission, I may quote one sentence, the Prime Minister said: We as a nation must be judged by our treatment of the elderly, by our attitude to the disabled, by the conditions in our hospitals and particularly in our mental hospitals, and by the shelter we can afford to the homeless and the badly housed. I think that is quite comprehensive, and the Government will have by now gained from all sides of the Committee the feeling on this most important Amendment.

LORD GREENWAY

I, too, should like to support my noble friend Lord Crawshaw on this Amendment. I think it is a very wise Amendment, and I hope that the Government will accept it.

VISCOUNT SIMON

I firmly support this Amendment, but I do not think one can add anything to what has been so ably put by noble Lords and noble Baronesses who know so well what disablement involves. I only want to ask the noble Lord, Lord Drumalbyn, if he can help me on one point. I am not familiar with the definitions in the Chronically Sick and Disabled Persons Act, but I am wondering whether the profoundly deaf—and I am thinking here particularly of those who are deaf from birth and suffer grave disability—are included among chronically sick and disabled persons. I should declare an interest in this matter as President of the Royal National Institute for the Deaf.

LORD DRUMALBYN

If anyone is against this Amendment they have not said so. One must have sympathy with the Amendment. The noble Baroness, Lady Masham, asked why the special needs allowances for the blind were included in the model scheme. The answer is quite simply that it is just to keep in line with the supplementary benefits scheme as approved by Parliament. It is thought desirable that the needs allowances in this case should be related to the supplementary benefits scheme. Of course they are not on all fours. The importance of the needs allowance is brought out in paragraph 11, which shows how the amount of the rebate or the allowances is to be calculated. It is based on the needs allowance and the weekly income after taking into account the minimum weekly rent.

I should just make it clear that some provision has already been made for the disabled, so they have not been omitted altogether from this Bill. Noble Lords will have observed that the model scheme makes separate provision for meeting these needs in a number of ways. First of all, there is the total disregard of any sums of money received by disabled persons by way of attendance allowance; and this in itself has the same effect as an increase in the needs allowance under the scheme equivalent to the attendance allowance received. Besides that, there are to be special disregards for war and industrial disablement pensions, again in line with the practice under the supplementary benefits scheme. Apart from that, local authorities will be free to make their rent rebate or rent allowance schemes more generous than the model schemes, and they may wish to use their discretion under Clause 21 to give help over and above what is provided in the model scheme for the disabled and the chronic sick. The Circular to be issued after the enactment of the Bill will remind local authorities that this will be a very appropriate way in which to use their discretion under Clause 21.

That leads me again to consider whether the disabled and the chronic sick should be specifically mentioned in paragraph 8, which deals with needs allowances. Noble Lords would probably agree that those who need, and receive, the constant attendance allowance have no case for receiving an increased needs allowance as well. This would be disregarded under the Schedule. That leaves the sick and disabled persons not in need of a constant attendance allowance. I should be very willing to consider extending the higher needs allowance for the blind to tenants who are registered as permanently and substantially disabled under Section 29 of the National Assistance Act 1948 and who do not receive the attendance allowance. I think this would be the best way of dealing with this problem, and if that commends itself to noble Lords I will certainly give the utmost consideration to it, in conjunction with my right honourable friend the Secretary of State. I hope it will be possible to put down an Amendment on those lines at the next stage. I am afraid I cannot go further than that at the present time, but I am sure that the noble Lord knows that I mean it when I say that sympathetic consideration will be given to this aspect.

LORD SHEPHERD

Could the noble Lord assist the Committee? The Amendment here refers to the Chronically Sick and Disabled Persons Act 1970, and I think the noble Lord in his reply referred to the National Assistance Act 1948. Could he say whether there is a significant difference between the descriptions of "chronically sick" and "disabled"? I think it would be helpful to know if there is any significant difference between these two Acts.

LORD DRUMALBYN

Yes. The first point is that under Section 29 of the National Assistance Act 1948, people are registered as "permanently and substantially disabled", which means that they are certainly not in full-time employment and are probably receiving supplementary benefit in one form or another. So far as the definition in Section 28 of the 1970 Act is concerned, my noble friend Lord Crawshaw mentioned that that section gives the Secretary of State power to make regulations on the interpretation of any provision of that Act as to any of the expressions appearing therein; that is to say, chronically sick, chronic illness, disabled and disability. His fifth Amendment would have applied that to this Bill. I should like further time to consider the best way to deal with this matter. As I am at present advised, it would be more appropriate to deal with it as I have suggested, extending the higher needs allowance for the blind to tenants who are registered as permanently disabled under the National Assistance Act.

5.31 a.m.

LORD AVEBURY

Would the noble Lord also consider whether he can make further extension to persons occupying dwellings which are constructed under the provisions of Clause 3(1) of the Chronically Sick and Disabled Persons Act 1970? There may be some overlap between these categories. I drew the attention of the noble Lord to the fact that these dwellings are likely to be more expensive under the fair rents scheme than those of an equivalent size for occupation by fit persons. I asked if the noble Lord could give the Committee any in formation on this point. I do not know whether we have enough experience under that Act to compare similar properties and find out what the differences in rents are in the present circumstances, let alone what they may be when the fair rents scheme is introduced. It is worth considering this point. The noble Lord has promised to look at Clause 29 of the National Assistance Act, and he can also see whether his concession he is offering could be extended to the persons occupying these dwellings constructed under Section 3(1) of the Chronically Sick and Disabled Persons Act.

LORD WELLS-PESTELL

The noble Lord was good enough to refer to war disablement and industrial disablement, but the vast majority of the chronically sick and disabled would not come within either of those two categories. He also mentioned Clause 21. Looking at it rather hastily it is difficult to see how that could be applied to the chronically sick and disabled. It gives us a good deal of pleasure to hear that the noble Lord is prepared to look at the matter carefully. I and my friends would be very happy if he could come back with something that specifically refers to the chronically sick and disabled.

THE EARL OF BALFOUR

I should like to add one or two points further to what the noble Lord, Lord Garnsworthy, has said. In my own area we have built a number of free apartment houses specially for the disabled at a cost of, say, £4,500 instead of £4,000. That is the difference in the cost of the building. It may be of help if a provision could be put in the Bill that where houses are built specially for disabled people the rent charged for those houses shall not be at a higher figure than would be charged for ordinary houses in comparative situations. To continue for a moment, in these houses specially designed for people using wheel chairs, for example, the doors are made wide, there are ramps up to the front door, and the bathrooms are specially built. There are a number of facilities like this that add quite a lot to the building cost.

LORD GARNSWORTHY

The noble Earl gave me too much credit. I have been listening to most of the debate and I am quite certain that I did not speak. I may have had my eyes closed.

LORD SHEPHERD

I wonder whether the noble Lord, Lord Drumalbyn, would consider this suggestion. I think quite clearly he recognises where the sympathy of the Committee lies and wisely he has agreed to look at this matter, but speaking as one who has not taken part in this debate for quite deliberate reasons I should be a little more satisfied when we reach the Report stage of this Bill if the noble Lord, Lord Drumalbyn, would undertake to have conversations with the noble Lord, Lord Crawshaw, who moved this Amendment, to see whether it is possible to find a satisfactory Amendment for the Report stage, so that we can then have the feeling that this has been looked at in the fullest sense, dealing with all those who might need special assistance under the provisions of this Bill. There are often occasions when there is this form of consultation, and I hope the noble Lord will undertake so to do.

THE EARL OF BALFOUR

May I just make an apology to the noble Lord, Lord Garnsworthy, and to the noble Lord, Lord Avebury, for my mistake?

LORD DRUMALBYN

I welcome the suggestion made by the noble Lord, Lord Shepherd. I hope I would have done this without his suggestion because I am sure it would be right, and I shall be happy to talk to my noble friends about this before tabling an Amendment. I apologise to the noble Lord, Lord Avebury, for not having mentioned the point that he raised about the value of houses that are specially designed and equipped. It was a point that I myself enquired about because it seemed to be one that was likely to arise. I gather that the position is not really quite as he suggested, although I do not think there is any hard fact about it.

I think theory comes into it rather more than fact. Although it costs more to build and equip a house it does not follow that its value in the open market—even less scarcity cost—would be greater. It might well be less than an ordinary house, because not everybody wants to live in a house which is specially equipped for the disabled. This is one of the paradoxes of the market, although I do not think it is really important. However it is important to see that the rents charged should not be more, or if they are more, that there should be some allowance to compensate for that in the case of the disabled and the chronically sick.

LORD AVEBURY

Did the noble Lord say that there will be some way of compensating for it? This may not be the right place to do it. It may be that it would be fairer to do it under the fair rent clause and cause the assessment to disregard any facilities for the chronically sick and disabled, as the noble Lord opposite suggested, and perhaps he will consider that point.

LORD DRUMALBYN

That is an interesting suggestion and I certainly will consider it. I actually had in mind Clause 21, which was referred to by the noble Lord, Lord Wells-Pestell. It is true that there is no specific reference here, but personal domestic circumstances that are exceptional would seem to cover this point, and I am advised that this was the kind of case that the Government had in mind in drafting Clause 21. I have already said that this would be the subject of a circular drawing the attention of local authorities to this, as being one of the ways in which they might use the powers in Clause 21.

LORD SHEPHERD

I am much obliged.

LORD DRUMALBYN

I hope with that the noble Lord will be prepared to withdraw his Amendment, and I shall be happy to look into it further.

LORD CRAWSHAW

I wish, first, to thank all noble Lords who have spoken in support of the Amendment. Indeed, I am in somewhat of a quandary in that if I were to press it, there is no doubt which way the Division would go. However, I do not want to put the hacks of the Government up at this stage because we are trying to do what we can for the disabled, and in view of the assurances given by my noble friend, Lord Drumalbyn, I do not think that pressing the Amendment would serve our interests best.

My noble friend, Lady Masham of Ilton, has often told me that what we do not like hearing too much is the word "sympathy". We need something far more constructive. I mentioned the question of the attendance allowance. It was not the people in receipt of that to whom I was particularly referring, nor to the war and industrial disabled, but to the ordinary civilian disabled, and I hope that I stressed that point. I agreed with everything Lord Avebury said about local authority houses, and I referred to that subject earlier.

As to the question of a circular, in the past my noble friends and I have not been impressed by circulars. We want to get something definite in black and white in the Bill. The Amendment was the best I could think of at the time, but in view of what my noble friend said, I should like to consider whether we can find a better one and I hope that, in consultation with him, it will be possible for us to produce a suitable Amendment on Report which will receive the same amount of support and will be added fairly and squarely to the Bill. In the meantime, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.42 a.m.

LORD SHEPHERD moved Amendment No. 94A: Page 122, line 39, at end insert— ("The above amounts shall be varied annually by amounts and on a date specified by the Secretary of State to reflect changes in the cost of living index").

The noble Lord said: Paragraph (8) of the Schedule sets out the details of the needs allowance for each week in considering any rebate or allowance, and the Amendment is designed to give the Secretary of State power to vary the amounts involved according to the movement of the cost of living index. It would leave the Secretary of State free to decide the variations in amounts and the dates on which those variations should take place. Although the Secretary of State has power in the Bill to vary the figures, it is not tied to movements in the cost of living index. If accepted, the Amendment would ensure that these amounts were varied annually in accordance with fluctuations in the cost of living index. I beg to move.

EARL FERRERS

I appreciate the point which the noble Lord, Lord Shepherd, has made on this subject and I assure him that in fact the needs allowances are based on the scale rates which are approved by Parliament for assessing need for the purpose of supplementary benefit. In addition, the needs allowances include elements for the payment of the minimum rent and rates and the expenses of employment.

In regard to the frequency of any variation of needs allowances, I can give the noble Lord the assurance that there will be no question of the Government not keeping them up to date. As he will know, they were updated in the Bill when it was in another place at the same time as supplementary benefits were increased, and this is the procedure which it is intended to adopt.

LORD AVEBURY

As a matter of fact what the noble Lord is saying is that the Government intend to be more generous than has been suggested, because, generally speaking, over the last few years the supplementary benefit scale rates have increased faster than the cost of living. If it is the intention of the Government to make these adjustments every time the supplementary benefit rates go up, it should be written into the Bill. It does give the potential recipients of rent rebates some guarantee which they can see on paper. As we said on the last Amendment, it is always better to have things in black and white in a Bill than to have some assurances given across the floor of the Committee. I should be grateful if the noble Lord would consider writing in the undertaking he has given at the end of this particular paragraph. It would be of great benefit to everybody who has to interpret this Bill and who might benefit from it.

EARL FERRERS

I can give the noble Lord the assurance that it is the intention of the Government to keep these allowances up-dated and for them to be updated at the same time as the supplementary benefits are up-dated as they are based on the same scale, albeit they may not cover exactly the same things. I would have hoped that that assurance would have been sufficient to the noble Lord rather than actually writing the specific words into the Bill because this is in fact the Government's intention.

LORD SHEPHERD

I hope that since the Government themselves have already amended this Bill and therefore there is no problem about the Bill going back to another place for consideration, whether the noble Earl will consider putting his assurance into the Bill. Could the noble Earl help me? Which part of this Bill gives the Secretary of State power to alter these figures that are now in the Bill? Clearly there must be a power. I expect it exists but perhaps the noble Earl will tell me where that power can be found?

LORD AVEBURY

I do not want to weary the Committee at this late hour by prolonging the discussion, but whilst one accepts the assurances given by the Minister, that was not the point that I was trying to make. I said that assurances given across the Floor of the House were never quite so valuable from the potential recipient's point of view as if they were written into a statute. That is what I am asking him to do. As we had some argument this morning or yesterday—I forget which it was—about redundant words we felt should be left out, the argument of the Government was, "You might as well leave them in because they might come in useful sometimes", so it is not a question of trying to ensure brevity through this Act. It is long enough already but I am sure that the noble Lord with the assistance of the parliamentary draftsmen could embody the undertaking he has given to the Committee in a very few lines.

EARL FERRERS

The noble Lord, Lord Shepherd, asked where was it written into the Bill that the Secretary of State had power to alter these figures? It is in Clause 20, subsection (2) in which you sec that the Secretary of State has got the power to alter the allowances in the Schedule. The noble Lord, Lord Shepherd, and the noble Lord, Lord Avebury, are obviously concerned that the assurance which I have given should be written into the Bill. If the noble Lords will permit me, I should like to see if it is possible and, if so, whether any different kind of Amendment should be made. If indeed the noble Lord would care to withdraw his Amendment I would certainly see if we could accommodate that.

LORD SHEPHERD

If the spirit is willing there is always a way to achieve the end. I hope the noble Earl can meet us on this matter and in those circumstances I seek leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD SHEPHERD moved Amendment No. 94D: Page 123, line 10, leave out ("earnings") and insert ("income").

The noble Lord said: The purpose of this Amendment in one respect is to probe why in (c) it is the earnings of a woman who is either the tenant or the tenant's wife and why we are using the word "earnings". It seems to me on reflection, however, that if we were, as the Amendment suggests, putting the word "income" in instead of "earnings" that would mean a person with some small income from investments and savings, as they could only have because there is a limit on the amount of capital a person is entitled to have if he is going to receive a rent rebate or rent allowance. I would have thought in those circumstances it would be generous that that income should be disregarded when considering the income of the tenant or spouse. I wonder whether the Government could meet us on that point. I beg to move.

LORD DRUMALBYN

The disregard of £2.50 of wife's earnings as opposed to income follows the practice in the supplementary benefits scheme, and the reason for that disregard is that it was thought right to reflect the additional costs incurred by a wife who goes out to work—for example, the cost of paid help and the higher cost of convenience foods—and also to encourage women to supplement household income by working. That was the purpose, rather than to give a general supplement on the basis of the wife's income.

LORD SHEPHERD

I am sorry the noble Lord could not be a little more generous. It is now ten to six, and the birds are singing outside. I would hope he would give this matter further consideration. It seems to me rather hard that a person who may have a small income from investments should not have it disregarded in considering what is the overall income of the family. I will not press it now, but I hope the noble Lord will see whether he cannot be as generous as he was to our noble friends on a previous Amendment, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD SHEPHERD

I beg to move Amendment No. 94DA. I do not know whether I need to move this Amendment in the light of the undertaking given to the noble Lord, Lord Crawshaw on Amendment No. 90. If the noble Lord, Lord Drumalbyn is able to meet the noble Lord, Lord Crawshaw, it seems to me that my Amendment, No. 94DA will be unnecessary. I am seeking an assurance. I beg to move.

Amendment moved— Page 123, line 18, at end insert— ("( ) a war disablement pension; ( ) industrial disablement benefit.").—(Lord Shepherd.)

THE EARL OF CRANBROOK

There are certain other pensions, which are presumably covered under head (h)(iv) and which are comparable to war pensions but in fact are technically retired pay with a disability fraction or something like that. This Amendment does not include the other pensions which the Minister can accept as being analogous. Perhaps the noble Lord when he replies will bear those pensions in mind.

LORD DRUMALBYN

Here again the provisions in the Bill reflect the corresponding provisions so far as the supplementary benefit is concerned. The Amendments do not fit in with the logic behind the disregards at present in paragraph 9(2), because under the Schedule as drafted the disregards are in the main the same as those adopted for the purpose of calculating supplementary benefit.

My noble friend has just given the Committee an undertaking that if the supplementary benefit disregards are increased so will those in the model rebate and allowance schemes. These disregards are already treated more generously under the model rebate and allowance schemes than under the supplementary benefit one, in this way. Only 17 per cent., where the weekly income exceeds the needs allowance—25 per cent. where it does not—of any excess over £2 is taken for rent, whereas under the supplementary benefit scheme full account is taken of all excess. In addition, the model disregards are minimum standards which an authority can make more generous under the provisions of Clause 21, as I mentioned on the last Amendment.

This will be explained to local authorities in the circular to be issued when the Bill becomes law. I should add that the £2 disregard was mentioned in the circular issued by the previous Government on guidance about what voluntary model rebate schemes should be. This is well precedented, and it would be a mistake to depart from the general pattern, especially in view of what I have said about the way in which the rent allowance is calculated.

LORD SHEPHERD

Clearly the noble Lord, Lord Drumalbyn, has replied to this Amendment without taking real note of the discussion we had on Amendment No. 90. The Committee was quite clear what it wished to do—to see that the chronically sick and disabled were brought within the needs allowances special provisions. The purpose of the Amendment was to see that the full amount of the war disablement pension and the industrial disablement benefit was fully disregarded and that the first £2 was not taken into account. If the noble Lord, Lord Drumalbyn, had said that the disabled part of the Chronically Sick and Disabled Persons Act 1970 was going to include persons who would have fallen within these two categories—the war and the industrial disablement pension or benefit—I should have been quite content to leave it there, but if the noble Lord says that this is not so I would wish to impress on him that persons who come within these two categories ought to be treated specially and should not have the first £2 taken into account.

LORD DRUMALBYN

I find it difficult to agree with the noble Lord, Lord Shepherd, because this is well established in the supplementary benefit provisions. I can remember this being argued on previous occasions. I do not think it would be right to depart from that in this case in view of the fact, as I have explained, that in the case of rent rebate and rent allowance it works out much more favourably than in the case of supplementary benefit. To disregard the whole of the war disablement pension and the industrial disablement benefit is quite at variance with common practice, and I do not see how we can justify it in this case. I am sorry to have to give that answer, but I do not think it would be right to make a change in what is really established practice. It is quite a different category of case from what we were talking about when we were dealing with needs allowances, because needs allowances are different from the calculation of the income and the disregards, together with the limit of disregards which cannot exceed £2 in all under sub-paragraph (3). I know that the noble Lord wants to amend that as well, but this, again, is very firmly in the supplementary benefit provisions and I do not think we ought to make different provisions here. We want to keep them in line.

LORD SHEPHERD

The noble Lord places me in a very difficult position. I find his explanation quite unsatisfactory. I recall that when he was dealing with Amendment No. 90 he explained some of the difficulties in relation to supplementary benefit. What I am concerned about is that if I press this Amendment to a Division I may not achieve the same degree of sympathy—and I dislike using that word—as the noble Lord, Lord Crawshaw, and may prejudice him in terms of Amendment No. 90. So I shall not proceed with these two Amendments although I feel very strongly about them, but will see what comes out of the discussion between the noble Lord, Lord Drumalbyn, and the noble Lord, Lord Crawshaw. Then, in the light of what the noble Lord, Lord Drumalbyn, intends to do, I shall see whether we can include these two categories in the provisions which the noble Lord, Lord Drumalbyn, may have in mind for the noble Lord, Lord Crawshaw. I hope that the Committee will recognise my difficulty. I feel very strongly that these two categories of people should be treated in a special way. But in the light of what I hope will be a very satisfactory conclusion, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD SHEPHERD had given notice of his intention to move Amendment No. 94E: Page 123, line 19, leave out ("£2.00 of any") and insert ("the whole").

The noble Lord said: I think the same remarks apply to this Amendment as applied to the last one. I shall therefore not move it, but reserve my right to come back to it at a later stage.

6.0 a.m.

LORD SHEPHERD moved Amendment No. 94F: Page 123, line 41, at end insert— ("(l) any family allowance or maternity benefit").

The noble Lord said: Sub-paragraph (2) of paragraph 9 lists the various items which are to be disregarded. The purpose of this Amendment is to add to the list any family allowance or maternity benefit which a family may receive. I beg to move.

LORD DRUMALBYN

There are many existing rent rebate schemes which disregard family allowances, but they are just as much income as any other source of income. They are counted as such for supplementary benefit purposes and are treated as income for tax purposes. Family allowances are complicated by the income tax "claw-back" arrangements whereby a standard rate taxpayer pays back in taxation 100 per cent. of the part of family allowance representing the 50p increase in the allowances made in 1968. To make specific provision to deal with this problem by disregarding the part of family allowance clawed back would add an undesirable complexity to the model scheme. Instead, the difficulty is dealt with by the greatly increased needs allowance for each dependent child of £2.75. This covers the first child who is not covered by family allowance, as compared with the £1 allowed in the previous Administration's 1967 illustrative scheme which disregarded family allowances in full. I hope that because of this increase in the needs allowance the noble Lord, Lord Shepherd, will agree that his Amendment is not necessary.

Maternity benefit is also not disregarded for supplementary benefit purposes but is not subject to tax. Benefit may be paid by a lump sum, in which case it would be capital and would not count for the assessment of entitlement to rebate or allowance. Where benefit is paid as a weekly sum it is paid for a relatively short period, and it would be reasonable for an authority to take the view that the period in which such benefit was received was not typical for the purposes of assessing the likely income over the rebate period. In this case the authority would assess the income of the tenant and spouse over some other period when maternity benefit was not in payment. I hope that I have satisfied the noble Lord on that point.

LORD SHEPHERD

I must say that I find that answer quite unsatisfactory. We on this side of the Committee feel that these two items should be disregarded in considering the income of a tenant and spouse.

6.15 a.m.

LORD SHEPHERD moved Amendment No. 94G: Page 123, line 41. at end insert— ("(m) that part of the income of the tenant or his spouse which is paid from his or her income by say of superannuation contributions and national insurance contributions.").

The noble Lord said: This Amendment relates to expenses which fall upon all of us, and we think that they should be taken into account in considering the income of a person under this part of the Bill. I beg to move.

LORD DRUMALBYN

This is really the same principle that we have been discussing. It is questionable how much of the income of a tenant or his spouse one can disregard. I think there must be a special reason for disregarding, and we are dealing, after all, with gross income and not net income, except so far as the special disregards are concerned. I am afraid that I cannot accept this Amendment. I think the noble Lord will himself agree that it is a much less

6.7 a.m.

On Question, Whether the said Amendment (No. 94F) shall be agreed to?

Their Lordships divided: Contents, 14; Not-Contents, 48.

CONTENTS
Avebury, L.	Hughes, L.	Simon, V.
Barrington, V.	Jacques, L, [Teller.]	Tanlaw, L.
Bernstein, L.	Llewelyn-Davies of Hastoe, Bs.	Wells-Pestell, L.
Diamond, L.	Shackleton, L.	White, Bs.
Garnsworthy, L. [Teller.]	Shepherd, L.

NOT-CONTENTS
Aberdare, L.	Effingham, E.	Nugent of Guildford, E.
Amherst of Hackney, L.	Elles, Bs.	Onslow, E.
Balfour, E.	Ferrers, L.	Pender, L.
Beaumont, L.	Fisher, L.	Rankeillour, L.
Belhaven and Stenton, L.	Gowrie, E.	Redesdale, L.
Belstead, L.	Hailes, L.	St. Just, L.
Brabazon of Tara, L.	Hertford, M.	Sandys, L.
Brooke of Cumnor, L.	Hives, L.	Selkirk, E.
Brooke of Ystradfellte, Bs.	Hood, V.	Sempill, Ly.
Burton, L.	Limerick, E.	Sudeley, L.
Craigmyle, L.	Lothian, M.	Swansea, L.
Cranbrook, E.	Massereene and Ferrard, V.	Teviot, L.
Crawshaw, L.	Merrivale, L.	Tweedsmuir, L.
de Clifford, L.	Molson, L.	Tweedsmuir of Belhelvie, Bs.
Denham, L. [Teller.]	Mowbray and Stourton, L. [Teller.]	Vivian, L.
Drumalbyn, L.		Young, Bs.
Dundee, E.

Resolved in the negative, and Amendment disagreed to accordingly.

strong candidate than the others because there is a much more widespread duty to pay the superannuation and national insurance contributions than in the other cases. This is an obligation which falls on us all and that being so, I cannot see why it would be right to disregard these sums.

LORD SHEPHERD

On this Amendment the noble Lord seems to be a little more difficult. I should have thought that these items, which can form quite a sizeable part of a person's income—and as the noble Lord said, we are now considering gross income—ought to be disregarded when considering the question of weekly income. I hope that the noble Lord will be able to be a little more helpful in this matter.

LORD DRUMALBYN

I am in some difficulty here. The noble Lord has not really established any reason why these payments should be disregarded. If he can give me a good reason why they should be, I will obviously consider whether this would be possible. I do not think it is precedented, and therefore I am afraid I am not in a position to give an undertaking on this.

LORD BERNSTEIN

Are not some things self-evident? At 6.17 a.m. I should have thought that this was self-evident.

LORD SHEPHERD

I agree with my noble friend that at 20 minutes past six a lot could be self-evident. The noble Lord has asked me to establish a case for it. First, we are dealing with gross income. We are also considering how this income is to be judged in relation to the rent rebates. I should have thought that one would have sought to give benefit to the tenants in these premises. National insurance contributions are required by Parliament; they are not paid at the discretion of the tenant. By law people are required to pay this sum of money weekly. As the noble Lord will know, for most working-class people these contributions are quite sizeable. I should have thought they ought to be taken into account when considering the income of these persons in relation to rents and rent rebates and allowances.

So far as superannuation is concerned, I accept that the case is less strong, in the sense that this may not be a payment that is required by law. On the other hand, there are some who feel that they ought to make special provision for their old age; and this is something the Government themselves have sought to encourage. If such special provision is undertaken (and the noble Lord has probably done it himself) it can represent quite a sizeable outgoing in terms of a man's weekly pay. I should have thought these two items were worthy of consideration by the Government and if the noble Lord will undertake to give serious thought to them I am prepared to leave it there.

LORD DRUMALBYN

I am afraid that I have never explained how the needs allowance is arrived at; but one could not have both disregard and an inclusion in the needs allowance. The fact is that allowance is made for the inclusion of national insurance contributions in the needs allowance so it would not be right to take it off the income as well. In these circumstances I think this Amendment is really not a starter, because the needs allowance takes broad account of the basic expenses of employment such as taxation and national insurance. The tenant who has to pay towards a contributory scheme will get less generous help than one in comparable employment who has a non-contributory scheme reflected in lower income. To the extent that that is an anomaly the issue can be considered in due course by the advisory committee on rent rebates and allowances to be established under Clause 23. The difficulty is that when you have an average content, in the needs allowance you really cannot have the specific amount of national insurance contributions deducted; the more so as the national insurance contribution varies with income. If it were still a flat-rate contribution there might be more to be said for it.

LORD SHEPHERD

Did the noble Lord say that the committee on rent rebates and allowances could rebates and allowances could consider this aspect? If so, perhaps we might leave this point to this body. I am sorry the noble Lord could not meet me on this matter, but I am prepared now to leave it to the advisory committee and hope that they will produce a much more satisfactory answer than the noble Lord has done.

Amendment, by leave, withdrawn.

6.25 a.m.

LORD SHEPHERD moved Amendment No. 94J: Page 124, line 39, leave out ("£1.00 or 40 per cent.") and insert ("20 per cent.").

The noble Lord said: In moving this Amendment I shall also speak to Amendment 94K. Paragraph 10(1) reads as follows: In this Schedule 'minimum weekly rent' means, subject to sub-paragraphs (2) and (3) below, £1.00 or 40 per cent. of the weekly rent, whichever is the greater. I have been advised that this is not a subject we have already discussed. We on this side of the Committee feel that if there is to be this minimum weekly rent the level the Government have selected is unrealistic. What we should wish to see is the 40 per cent. reduced to 20 per cent.; in other words, halving what the Government have in mind. It may be that the noble Lord's figures are as arbitrary as ours; it may be that there ought to be a figure somewhere between the two. But I should like to hear from the noble Lord how the Government have selected £1.00 or 40 per cent. as being their understanding of what a minimum weekly rent should be.

LORD AVEBURY

This is a very important Amendment because rents of the order of £8 to £10 a week assessed under the fair rents scheme are quite within the bounds of possibility. In Greater London, for example, rents are already rising well above the £10 level. Supposing that is the case, then the minimum weekly rent would amount to £4 for one of these dwellings for which the fair rent is £10. What would happen if this alteration were not made is that after the calculation provided for in this Schedule, of the tenant's needs and the other matters that are taken into account, you would have charged £1.00 but are actually going to bring into operation the phrase "whichever is the greater" and you are going to charge £4. So the particular tenant I am considering will pay £3 more than he would be calculated as having to pay under the provisions of this paragraph, and he is going to find this a very great burden. I would sooner have it as "£1.00 or 20 per cent. whichever is the less." In the case I am talking about the tenant will still have to pay £2 and it might be that the calculation would result in a minimum weekly rent otherwise of a figure less than that. But certainly the Amendment is preferable to what is in the paragraph as it stands and I hope that the Government will accept.

EARL FERRERS

The purpose of a minimum rent expressed as the fraction of the rent is that the rebated rent should in some measure reflect the value of the accommodation. If the proportion for the minimum rent were set at 20 per cent., I suggest that it would not reflect adequately the differences in the value of the accommodation. It would also greatly increase the total amount of rebates and allowances granted since a change in the minimum rent affects the amount of every rebate or allowance granted. It would also greatly increase the number of tenants who became eligible for a rebate or an allowance. The noble Lord, Lord Avebury, said that he would prefer to see in the paragraph £1.00 or 20 per cent., whichever is the less. This would mean that in fact a minimum rent would never be more than £1, which I think would be quite wrong.

The noble Lord, Lord Shepherd, asked what is the reason for 40 per cent. and whether there is any magic about that figure. I do not think there is, except that it falls into line with what his Government recommended in their guidance to local authorities on rent rebate schemes as long ago as 1967. That Government recommended minimum rents of up to 87½p, which was something above 40 per cent. of the then average council rent, and it is still about 35 per cent. of the present average council rent. The local authority associations did not in general regard a £1 or 40 per cent. minimum as unreasonable, and they would be likely to be opposed to a 20 per cent. minimum rent because of the greatly increased cost on the rates of a measure which would result basically in help at a level of income and rents at the other end of the scale, which is the least easy to justify. I hope that the noble Lord will be content to keep the figure at 40 per cent.

LORD SHEPHERD

The noble Earl must be living in cloud cuckoo-land if he thinks that I am going to accept his explanation. It may be that the previous Administration sent out a circular making certain recommendations. It is quite a different thing to impose by Statute what a particular limit should be where the local authority has no discretion whatever. Is the noble Earl not aware that the borough in which I have the honour now to live has a rent rebate scheme? I see that under that scheme the minimum rent for houses of four rooms or more built since 1919 and not modernised is 62p, and for two rooms 50p. If they were built after the war, or were modernised, in the case of the two-room accommodation the minimum rent is 62p, and in the case of four rooms 87p. So what the Government are proposing is a minimum rent in excess of what is now in existence in my borough, and what is based upon the G.L.C. recommendations for the London area. I take the view—and certainly this is the advice I have received from my colleagues who are particularly involved in this matter—that the minimum level the Government have set is too high, and will bear harshly on the tenants. We find these figures unacceptable.

EARL FERRERS

Perhaps I should remind the noble Lord that in areas where rents are very high the Secretary of State can alter the minimum rents under Clause 20 (5), which gives him discretion to lower them.

LORD SHEPHERD

If, as the noble Earl says, the Secretary of State has a discretion to move them up and down, why

6.42 a.m.

LORD SHEPHERD moved Amendment No. 94M: Page 125, line 23, leave out ("£1.50") and insert ("50p ").

The noble Lord said: I had hoped that we might adjourn at this point, but it seems to be the wish of the Government that we should press on for yet another few minutes. This Amendment relates to paragraph 12(1), which refers to the deductions from a rebate or allowance in respect of non-dependants for each week, and various categories are given. Sub-paragrah (a) permits a deduction for each person aged 18 years or more, but under pensionable and neither undergoing full time instruction at an educational establishment nor in receipt of supplementary benefit".

The figure the Government have in mind is £1.50. We take the view that this is too high. I should like an explanation from the Government as to why they have selected £1.50 and why they should not accept our 50p.

start off at an unsatisfactorily high level? The noble Earl still does not impress me.

6.35 a.m.

On Question, Whether the said Amendment (No. 94J) shall be agreed to?

Their Lordships divided: Contents, 12; Not-Contents, 48.

CONTENTS
Avebury, L.	Llewelyn-Davies of Hastoe, Bs. [Teller.]	Simon, V.
Bernstein, L.		Tanlaw, L.
Diamond, L.	Shackleton, L.	Wells-Pestell, L.
Hughes, L.	Shepherd, L.	White, Bs.
Jacques, L. [Teller.]
NOT-CONTENTS
Aberdare, L.	Effingham, E.	Nugent of Guildford, L.
Amherst of Hackney, L.	Elles, Bs.	Onslow, E.
Balfour, E.	Ferrers, E.	Pender, L.
Beaumont, L.	Fisher, L.	Rankeillour, L.
Belhaven and Slenton, L.	Gainford, L.	Redesdale, L.
Belstead, L.	Gowrie, E.	St. Just, L.
Brabazon of Tara, L.	Hailes, L.	Sandford, L.
Brooke of Cumnor, L.	Hertford, M.
Brooke of Ystradfellte, Bs.	Hives, L.	Sandys, L.
Colville of Culross, V.	Hood, V.	Sempill, Ly.
Craigmyle, L.	Limerick, E.	Sudeley, L.
Cranbrook, E.	Lothian, M.	Swansea, L.
Crawshaw, L.	Massereene and Ferrard, V.	Tweedsmuir, L.
de Clifford, L.	Merrivale, L.	Tweedsmuir of Belhelvie, Bs.
Denham, L. [Teller.]	Molson, L.	Vivian, L.
Drumalbyn, L.	Mowbray and Stourton, L. [Teller.]	Young, Bs.
Dundee, E.

Resolved in the negative, and Amendment disagreed to accordingly.

EARL FERRERS

The deductions proposed in this paragraph represent a broad assumption of what it is reasonable for non-dependants in various categories to contribute towards their share of the rent. If we do not have these abatements these people would be accommodated rent-free. This Amendment implies that the £1.50 abatement for non-dependants is too high, and the noble Lord wishes it to be 50p. It may be above the figure that many authorities provide in current schemes, but the £1.50 abatement compares with the figure in the 1967 illustrative scheme which had 50p for non-dependants aged 19 to 21, and £1 for those over 21 and under retirement age. The figure of £1.50 not unreasonably reflects those figures, taking into account the changes in money values and earnings since then. I should have thought it a reasonable figure.

LORD SHEPHERD

This is clearly not a question of a son or a daughter, but it could be a nephew—a person working but living within the family. Let us assume that the youngster is 18 years of age, I suppose that today he will probably earn £17 or £18 a week. But when deductions are taken into account that figure comes down quite considerably. One then has to consider what his contribution is likely to be in terms of food and other general services. On top of that there is the figure of £1.50, which appears to be a notional figure as to what the Government think he will be contributing to the tenant; and this is to be taken into account in assessment of income as far as the Bill is concerned. I do not suppose there are many non-dependants of 18, 19 or 20 who would be in a position to contribute much more than £5 or £6—and probably nearer the former: indeed, it might even be slightly less. Therefore in our view the figure of £1.50 is far too high, and I should like the Government to consider whether, so far as the 18 to 21 age group is concerned the figure could be lowered. I realise that probably for older people who are in full-time employment this may be a reasonable figure, but in terms of young people it is far too high. I ask the Government whether they will consider a special provision for this particular age group, taking into account their likely earnings and the sort of contribution they will need to make in terms of general services within the house, apart from the rent.

EARL FERRERS

As the noble Lord will realise, the whole object here has been to try to find a fair rebate, and under this scheme the Government have elected that certain people who are living in the house shall not be taken into account for this purpose—children who are still at school, and so forth. But for persons above the age of 18 it was considered that it would be appropriate that for those people who are at work a contribution should be allowed against the rebate. I will certainly look at the point made by the noble Lord, and there may be an argument for trying to meet it. But there are those who are older and for whom the figure of £1.50 would, I believe, be eminently reasonable. If the noble Lord wishes me to have another look at this, I am of course prepared to do so, without making any commitment.

LORD SHEPHERD

I thought the noble Earl would have realized that I was asking him to undertake to look at it. If I did not, I fear that I must be talking to myself, but I do not think that is so. Will the noble Earl look at this matter and recognise that in a wage structure there is quite a difference between the earning capacity of young people aged 18 and 21 and those who are older. There may be a sharp increase after that. If the noble Earl can meet me to this extent I shall be well satisfied, and it may be that I shall not need to move Amendments 94N, 94O, 94P or 94Q, since they fall broadly into the same category. If the noble Earl will look at these Amendments I shall be pleased. I beg leave to withdraw Amendment No. 94M.

Amendment, by leave, withdrawn.

6.50 a.m.

LORD DRUMALBYN moved Amendment No. 95: Page 126, line 11, after ("(a)") insert ("the whole or").

The noble Lord said: This Amendment ensures that any person who has the whole, and not just part, of his rent met by a rebate or allowance under an existing discretionary scheme or a scheme under local Act powers may be considered by the authority for a transitional rebate or allowance under its scheme under Part II of the Bill. These rebates or allowances may be granted by virtue of paragraph 16 of this Schedule to these tenants who pay a higher rent, after a rebate or allowance under Part II, as a result of the introduction of the authority's scheme. I beg to move.

On Question, Amendment agreed to.

LORD DRUMALBYN

I beg to move Amendment No. 96.

Amendment moved— Page 126, line 20, after ("(a)") insert ("the whole or").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

I feel that we have done well tonight. I wish to thank all noble Lords who have sat through the night and I beg to move that the House do now resume.

Moved accordingly and, on Question, Motion agreed to.

House resumed.