HL Deb 29 June 1972 vol 332 cc1019-92

4.43 p.m.

House again in Committee.

THE EARL OF BALFOUR moved Amendment No. 3: Page 2, line 1, leave out ("at the end of") and insert ("in").

The noble Earl said: This Amendment concerns the same circumstances and is worded exactly the same as Amendment No. 4 which was moved by the noble Lord, Lord Diamond, on June 6 in the proceedings on the English Bill and was accepted by my noble friend Lord Sandford on behalf of the Government. The words "at the end of" could be misleading. I have always believed that if one word will suffice, that is all that should be used. The single word "in" covers this subsection, and is adequate. I beg to move.

LORD POLWARTH

When I saw my noble friend's Amendment in print it took me some time to clear my mind as to why it was necessary or should be considered necessary. I am bound to say that on a normal reading I think that anyone other than a lawyer would have been perfectly satisfied with the sense as it appeared to read from the text of the Bill. However, as I understand that our English friends felt otherwise, I should not presume to differ from them in this matter; and as my acceptance of the Amendment is unlikely to lead to my immediate resignation, as possibly anticipated by the noble Lord, Lord Hughes, I think Her Majesty's Government would be prepared to accept the Amendment.

LORD HUGHES moved Amendment No. 6: Page 2, line 10, leave out ("six").

The noble Lord said: I spent a considerable amount of time reading what was said on this Bill in another place. There was some preliminary discussion on when they should sit in Committee, and, having disposed of that, they then went on to consider an Amendment by my right honourable friend the former Secretary of State to leave out the word "six" in a part of the Bill where it then stood. To my astonishment, they spent two and a half Sittings discussing whether the word "six" should come out. Line 11 of the Bill, as it then stood, was, "The said six subsidies are". After two and a half Sittings—I will not tell your Lordships how many hours that took—to my astonishment, the Minister got up and said that the Government were prepared to accept the Amendment. I should have thought that a Government anxious to get through business as quickly as possible could just as easily have said it at least eight hours earlier. At any rate, it was said at the end of that time.

It may be no surprise to your Lordships to learn that the deletion of the word "six" was a paving Amendment for some other Amendments which never got into the Bill. We now have the nonsense that, when we get to page 2, line 10, the word "six" survives in this subsection, in which it says: None of the six subsidies set out in subsections (2) and (3) above shall be payable … Obviously it does not in any way restrict the intentions of the Government if the word "six" is taken out here also, and it at least—as I suggest does the Amendment moved by the noble Earl, Lord Balfour, which has just been accepted—, makes more sensible reading: because this is not factually correct. It is not correct to say that there are six subsidies set out in subsections (2) and (3). There are six subsidies set out in subsection (2) and there are four subsidies set out in subsection (3). They are not exactly the same subsidies. So the subsection should refer to the 10 subsidies set out in subsections (2) and (3), or the six subsidies set out in subsection (2) and the four subsidies set out in subsection (3). What I suggest would be much more sensible would be for it to say "None of the subsidies". I think we should be consistent in following-up what the Government, after so prolonged a consideration, decided was an improvement to the Bill, and take out this "six" also. It would give me the satisfaction of knowing that I have not wasted all the hours that I have spent on seeking to amend this Bill if I could get this comparatively trifling alteration made. I beg to move.

LORD POLWARTH

My information is that in another place the acceptance was not given after a long debate but at the beginning, after which a long debate developed. On the assurance from the noble Lord opposite that a long debate will not subsequently develop, I do not think I shall be running any great risk in accepting his Amendment.

LORD HUGHES

I am grateful to the noble Lord. All I would say is that if the assurance was given at the beginning of the debate in another place, obviously the noble Lord's honourable friend there spoke with less clarity than he has.

4.50 p.m.

On Question, Whether Clause 1, as amended, shall stand part of the Bill?

LORD HUGHES

I will not detain the House much longer on this clause, but it is perhaps relevant to draw attention to what was said in the preliminaries, when we are told that the Government expect that by 1975–76 the cost of these subsidies will be £70 million to £75 million, compared with £55 million for the corresponding charges estimated for the year 1971–72.

I asked a number of questions on Second Reading—some on points of detail—and I received a very long letter from the noble Lord, Lord Polwarth. Although the noble Lord in fact apologised for its length he had no need to do so, for his letter was exceedingly helpful. In some cases it has prevented my putting down Amendments, and in others it has enabled me to put proper Amendments down; so I am grateful for the reply. However, there was one part of the letter which did not commend itself to me. It did not seem to me to be the right sort of thing for the Minister to say. With his permission, I will read the last paragraph on the second page: You asked what would have been the amount payable under the existing subsidy system had it continued. I do not see any point in making estimates about the subsidies which would have been payable under a system which has now outlived its usefulness and is no longer suited to solving Scotland's housing problems and which we are proposing should be changed. As regards the estimates of costs under the new system, these depend on a large number of variable factors, perhaps the most important of which is the cost of rent rebates. But I must emphasise that the figure we have quoted (£70.75 million for 1975.76), while it is the best estimate we can make, is in no sense a limit nor a target for subsidy payments. There is another sentence, but I will stop there.

I do not think it right for the Government to say, in reply to a request for information, that it cannot be given because it refers to a system which "has now outlived its usefulness"—your Lordships will not find general agreement with that statement in Scotland—and "is no longer suited to solving Scotland's housing problems"—and you will not find general agreement with that, either.

But even were we all agreed on the subject, I think it quite wrong for a Minister to deny information: because here we are comparing two lots of subsidies. I was, for instance, rather surprised to find that Members on the Liberal Benches seemed to get into the wrong Lobby the last time—or at least they did not get into the right one. I think that to some extent there has been some misunderstanding, because with the English Bill they have been very consistent in seeking to make the system better than what was represented by the Bill. The noble Lord knows that what I was proposing to do was to take out the first of the subsidies, retain the existing one and then add new and better subsidies on top of that. I think that in that way we should have been able to get a solution faster. But how on earth is it possible for Members of your Lordships' House, either in Committee or elsewhere, to form a completely satisfactory opinion on this matter if the Government are prepared to speculate on the cost of subsidies, particularly in this very difficult field of rebates and allowances, yet are not prepared to give information about the cost of the present subsidies? That is obviously very much easier to ascertain, because the subsidies relate solely to the number of houses which the Government may expect to build.

The noble Lord, in dealing with the first Amendment, pointed to the number of houses that had been approved and the effect these will have in the years that lie ahead. If this argument is to be accepted at face value, the Government already have in their possession, through these approvals, at least a basis for calculating with a considerable degree of accuracy what the cost of subsidies will be, at least in 1973 and 1974. And if they know where they are going as regards the number of houses that they want to be built, it becomes a very simple matter to estimate forward from 1973 and 1974 what the figure would be in the following year.

So I suggest that the Minister would be acting more in accordance with Parliamentary procedure if he obtained the information which I am quite certain, from my own experience in the Office, can be fairly easily obtained. This is not the sort of case where Ministers are justified in saying, "No, we cannot get this information because the cost of ascertaining it would be out of all proportion to the end result." Having divided on our main purpose in this clause, I would not even have spoken at the end had it not been for the fact that I am being denied information which I think should be available, not only to me but to all the Members of your Lordships' Committee. I very much hope that the noble Lord, Lord Polwarth, will be able, before we have gone very much further in this stage, to make this information available, because it could govern what we might do at the next stage in relation to subsequent Amendments.

THE DUKE OF ATHOLL

May I say just a word? I understood, reading "Financial effects of the Bill" on page vii of the Memorandum that the £70 million to £75 million refers to current prices although it is related to what will happen in 1974–75. Therefore the figure is presumably comparable (though there are bound to be some slight differences) with the £55 million which was the cost to the Consolidated Fund for Housing in Scotland in 1971–72. Therefore I should have thought it fair to say that as a result of this Bill the taxpayers are, at current prices, going to be £15 million to £20 million worse off. And I am sure that by 1975–76, with inflation continuing at the rate that it is, the figure will be considerably greater.

LORD HUGHES

No, I think the mistake which the noble Duke makes is the assumption that the completions of houses in 1975–76 will be the same as in 1971–72. If that is the Government's argument, obviously the figure will be the same then as it is now. What I want to know is what would be the figure in 1975–76 on what the Government expect to be subsidising in that year. In other words, I should like an idea of what the Government think will be the number of houses that will be built in that year.

LORD TANLAW

May I make just a short intervention on the request of the noble Lord, Lord Hughes, for further information? There are many aspects of this Bill which are better than the English Bill, and I believe that in the English Bill all the information which had been asked for was given. The information the noble Lord, Lord Hughes, asks for is needed also by Members of your Lordships' House who sit on these Benches, so I hope that the noble Lord, Lord Polwarth, will be able to help us all on this matter.

LORD POLWARTH

Any estimate, whether of the past or the future system, is inevitably bound up with certain assumptions of future trends in house building, costs and so forth. The estimate in the Explanatory Memorandum to the Bill of the figures which I have quoted, which really is the best estimate that we can make, is on a figure which is not necessarily a ceiling. It is a figure which, as we have said before, may well be exceeded. Whether or not it is possible to make an estimate of the kind that the noble Lord has asked for I am not going to commit myself to to-day. I will certainly inquire. That is so far as I am prepared to go to-day in responding to his request.

LORD HUGHES

I am certain that the noble Lord, or, at least, those who serve him, will have no difficulty in getting this information. In view of what the noble Lord said I should like to ask for some further information. He cannot say that this is not available. The total figure is between £70 million to £75 million in 1975–76. This, according to the financial statement, is the cost of all the subsidies. Will the noble Lord be good enough to furnish us with the figure attaching to each of the subsidies? How much is expected to be spent in that year on the residual subsidy? How much on the housing expenditure subsidy? How much on the high cost subsidy? How much on the rent rebate subsidy, rent allowances, and so on? That information must have been available in order to enable the figure of between £70 million to £75 million to be reached. If it is not available, then the noble Lord will have to tell me that he has a piece of information in the Bill which would be better in Comic Cuts—if that is still being published.

LORD HOY

I do not want to delay the Committee, but I am certain that the noble Lord wants to provide the figure. I am sure that he is bound to know the figure. I am certain that I know sufficient about Government Departments to know that before they put things into a Bill, or before they allow a Minister to defend things, an estimate has to be made. There is no great difficulty for the noble Lord to tell us this because he has his advisers here, as we would normally expect, to advise him on small matters like this. I cannot understand why there is any hesitation about sub-dividing the total to show how much is being allowed for under each of these headings. If we are to understand and to find out what the Government intend to do about this, then we need the figures to show how these things have been made up and what is going to be the expectation for house building.

I thought that even at this late stage I had spoken sufficiently long for the information to come from the Box. If that is not the case then I will carry on for a few seconds longer in the hope that I can help his Lordship out of a difficulty. Perhaps he will now be able to supply the information.

LORD POLWARTH

I suspect that noble Lords opposite are trading on my erstwhile professional qualifications in accountancy. I would not venture to suggest that they extend to the mysteries of Government finance as opposed to private finance. Accordingly, despite the request of noble Lords, I am not going to give any undertaking regarding these figures. I will look into the matter; I am not in a position to produce the figures here and now, in any case.

LORD HUGHES

I am quite content to let the matter rest there. But I give notice that when we come to the end of Clause 2, when we come to the Question, Whether the clause stand part, I will ask what is going to be the estimate of the cost of the residual subsidy, and the gentlemen in the advisers box had better get their pencils sharpened.

Clause 1, as amended, agreed to.

Clause 2 [The residual subsidy]:

5.4 p.m.

LORD HUGHES moved Amendment No. 7: Page 2, line 24, leave out ("1972–73") and insert ("1975–76").

The noble Lord said: It will be a relief to your Lordships to know that in speaking to Amendment No. 7 I am at the same time speaking to Amendments Nos. 8, 10, 11, 12, 13, 14, 15, 17 and 19. I wish we could devise a system whereby we could say that for each of the figures in Clause 1 we should add three years because that is what my Amendment is designed to do. This would defer the operation of the new system in relation to the three subsidies which I do not like, as distinct from the three subsidies which I like. I want to make it clear to the noble Lord, Lord Tanlaw, that the effect of these Amendments is to defer for three years the operation of (shall I say?) the questionable subsidies while bringing into operation right away the ones which we like. The Government can say with truth that in the Election campaign of 1970 it was part of their programme to seek to amend the housing laws. Speaking in the general terms to which Parties are wiser to confine themselves in elections, rather than statements such as, "Prices will be cut at a stroke", the Government said that they wanted to devise a system which, while helping to provide houses for those in need, would direct public support to those who were in the greatest need and away from those who were not in that position. That was the general line of the Government's argument. The Government can therefore say that they had a mandate to bring in a Bill to change the system of housing finance in Scotland. At least, in England they could say that they had a mandate; the Government do not have a mandate for anything in Scotland—or they would not have if we were sitting in a Parliament North of the Border—because the Government's policies were overwhelmingly rejected in Scotland. But taking the United Kingdom as a whole, the Government's policies were accepted by a majority of people and therefore they have a mandate to introduce legislation.

But the Government did not in any of these campaigns venture on any details as to what sort of legislation was going to be introduced. They did not campaign up and down Scotland telling local authorities and individuals that if they were elected and introduced a Bill the effect would be to increase rents by 10s a week each year. They did not say the extent to which they would be transferring burdens from public funds to individual tenants. They did not say the extent to which they were going to be transferring expenditure in certain directions from the national Exchequer to the local exchequer. If one thing is now certain it is that whatever support the Government had at the General Election in Scotland in terms of seats, even that modest measure of support is not at present reflected in the attitude of the people of Scotland to this Bill, whether one is talking about local authorities or individuals.

I would not doubt for one moment anything which the noble Baroness, Lady Elliot of Harwood, told us about what took place in the Roxburghshire County Council, and I should be astonished if they dared to criticise Government legislation in her presence. I should have thought it would have been as much as their re-nomination was worth in any of the districts of the council to have done that. The noble Baroness smiles, but she knows perfectly well that she would resent it if I were belittling rather than perhaps overstating her influence there. There are few local authorities who have taken that line. There may be one or two other authorities in areas where the housing problem is at an end who will quite genuinely agree with the Government. But their agreement arises not from the fact that they are enthusiastic but because they do not give a damn; they do not have to build any more houses in any case. It does not matter whether the subsidies are on a generous or a low scale. But most local authorities have not done what Roxburghshire have done, on a prod, which is to say, "We are quite happy". The rest have kept discreetly silent. If they are not coming out in opposition, at least they are not sticking out their necks and saying they support the Bill. If one thing is quite certain it is that at the present time there is a quite considerable body of opposition in Scotland to the change in this system. The effect of my Amendment, therefore, coupled with other Amendments to be moved later on, is to postpone the abolition of the present structure, but to graft on to it the national rent rebates, the procedure of the national rent allowances and the improved slum clearance operations.

It is likely that before 1975 there will be another General Election. One of three things might then happen. First of all, we might have a Liberal Government. We might have a continuation of the present Government. Or we may have the return of a Labour Government. If the present Government are returned, the Bill as I propose to amend it would automatically come into operation because the Government could then say with truth, "So much of the exception that appeared to be taken to the Bill in Scotland in 1972 has now disappeared. People are prepared to accept it and we are therefore entitled to implement this legislation." On the other hand, if, as I suspect is just as likely to happen, the Government are not returned, it becomes a very simple matter not to proceed any further with this legislation. The noble Lord on the second Bench opposite, from the fastnesses of Wales, is shaking his head. He need not be misled by the fact that I have a Welsh name, or be discouraged from commenting about what is going to happen—

LORD BRECON

The noble Lord referred previously to English Bills. They do in fact refer to both England and Wales.

LORD HUGHES

Yes; but we do not happen to be discussing England and Wales at the moment. But the noble Lord should not allow me to discourage him. The Government may want him to come in on their side and I should be perfectly happy for him to rise and make a speech. But, quite seriously, this is a valid point to make. I propose to divide on this Amendment as an alternative to dividing on the clause as a whole. It is reasonable that, if the Government have a mandate and support for this legislation in a succeeding Election, they should not have to go through the whole procedure of re-enacting it. I think that from my point of view I am being very generous in suggesting that this legislation should be put on ice for three years and then thawed out if the Government get the chance; if they do not get the chance, we will throw the ice away.

5.13 p.m.

LORD POLWARTH

I really must commend the noble Lord, Lord Hughes, on his ingenuity in devising a new form of legislation designed automatically to adapt itself to the policies of whichever Government may turn out to be in power in a period of years ahead. It is an interesting new proposition, but one I somehow do not feel that your Lordships would accept. The noble Lord spoke of opposition to the introduction of the Bill. Of course there has been opposition. I would submit, however, that a great deal of the opposition stems from the fact that the full provisions of the Bill are not as yet generally understood, and that there has been a very strong campaign to represent this Bill purely as one to increase rents without emphasising many other facets and advantages which it will bring both to tenants and to ratepayers.

To postpone the introduction of the legislation in his way would completely reduce the concept of the Bill as a comprehensive measure grasping the whole problem at one time. The aim of the Government is to recast the existing system. This Amendment would continue features of the previous system, with its indiscriminate support, and at the same time introduce some of the features of the new system. The existing subsidies are not distributed in the best way to relieve housing problems of the worst areas. The amounts paid to particular local authorities depend largely on the historical chance of council building in the area and do not necessarily bear relation to current needs. Furthermore, rents paid by tenants are not related to their capacity to pay. That is why the Government are proposing a comprehensive replacement of the existing system. To defer the introduction of a major part of this would, I submit, make the new reforms half baked instead of, we consider, comprehensive and useful. Therefore, we cannot accept the Amendment.

LORD HOY

I am grateful to the noble Lord for his reply. It is quite unsatisfactory, of course. When he says that people do not know what is in the Bill, the truth of the matter is that the more people come to understand what it is in the Bill, the less support there will be for it. Indeed, as they begin to understand it, we find these reactions which I quoted earlier to-day from Peebles and Midlothian. It is because these people now understand the Bill that they have reached their present opinion. Indeed, it is not only the opinion of noble Lords on this side of the Committee. We still have an English Bill going through the House. When the noble Lord says that people do not understand it, I maintain that he would not direct that attack against, say, the Confederation of British Industry. I understand that the Director of the C.B.I. has had something to say about the English proposals which was not of a very commendatory kind. He does not like the proposals.

All I am saying is that there is a reaction to this Bill in Scotland. The noble Lord also says that local authorities do not appreciate how much they are going to get. But how can we know what we are going to get when the noble Lord, when asked for some simple figures earlier, said that he could not supply them? He did not even know how the content of the Bill was made up or how the figure of £75 million was made up. If that is the best that can be done, then of course a local authority finds it absolutely impossible to understand the Bill. And what they do understand about it they do not like. I thought that my noble friend Lord Hughes made a perfectly sensible suggestion because, if the legislation was passed, it would not prevent a successive Government, if by some misfortune they were of the same political hue as the present Government, from carrying out this legislation. But if it were left that way, it is much more likely that those of us who occupy these Benches would form the Government and then we should not have to go to a great deal of trouble to put matters right again.

LORD HUGHES

I wonder whether the noble Lord, Lord Polwarth, is in a position, having defended the commencement of this legislation in 1972–73, to tell me what is the estimated cost of the residual subsidy in the year 1975–76? If he does not have the answer, if the sum has not been chopped into little bits, I will not press him at the moment, but it would save time if he could give me the answer in any further remarks he is going to make now.

LORD POLWARTH

I do not think it would be helpful to go into details of what are, at the best, estimates. They are described as "the best estimates". Different factors may lead to one subsidy bearing a larger amount than another. They will depend on the policies of different authorities in their operation of the Bill. I am afraid that I am not prepared to place the Secretary of State in the position of making firm estimates of this kind, and I am quite certain that the Party opposite when in power would not have given estimates of this kind in a degree of detail. It is solely a matter of estimate and, frankly, I am not prepared to be more specific because I do not think it would be helpful to be so.

LORD HUGHES

I am really astounded at this. This is a deliberate intent—I will not say to mislead the Committee, but to deny the Committee information. In the first instance, the Government make it perfectly clear in the Statement that all they are giving is an estimate of what the position would be in 1975–76. It is not a target, but this is the best estimate that they can make at the present time. Unless it is absolutely useless as any guide to Parliament, those who make the estimate must first have worked out how much they expected to spend on residual subsidy; how much they expected to spend on the housing expenditure subsidy, and so on. If we are to be given the total and then warned that we cannot use it against the Government at the end of the day because it is the best that they can do at the present time, then obviously if they give us the individual figures which go to make up the aggregate we must accept that they can be no more bound by them than they are by the total. It is only an estimate.

But if they are not prepared to reveal the individual figures, the only conclusion that can be drawn is that the Government are afraid that if the information were given it would show that certain subsidies were relatively valueless. For instance, I should not expect that a large part of the £70 million to £75 million would be attributable to the high cost subsidy, because the Government have been at their wits' end to find any authority other than Lauder which would benefit from it. So, give or take a million pounds there, we should not have much difficulty there. Obviously the figures are available and the Minister is now saying, "Yes, I have the information; I am prepared to give you the total but I am refusing to tell you what we expect this subsidy to cost". I have never heard any Minister, new or old, who has stated, "I have the information but I am not prepared to give it".

LORD TANLAW

I should like to intervene for a moment because this matter is worrying us on these Benches. As I said on Second Reading, we are trying to give a muted welcome to this Bill, despite the criticisms from noble Lords "along the road", but it will get more and more difficult if the noble Lord, at this stage, is not able to produce figures which have been very reasonably asked for by the noble Lord, Lord Hughes. It is reasonable to ask for these figures and I think we should wait until we can get some more positive replies than we have had to-day.

LORD POLWARTH

I should like to make it quite clear that I have never in fact said that I have those figures, as the noble Lord has suggested. However, in view of the close interest and the persistence of noble Lords opposite I will certainly make inquiries—and I say that without any commitment.

LORD HUGHES

That is not good enough. The Minister is in fact suggesting that the possibility exists that not even the Scottish Office knows the answer. Obviously, if this were the case, the Government would be saying that they were legislating in the dark. They would say, "We have dipped our hands into the barrel and picked out a piece of paper which says on it '£70 million to £75 million' and we have said to ourselves that it is just an estimate". Then the noble Lord is not even prepared to commit himself to the admission that they arrived at that amount by making a calculation on each of the different figures. None of these subsidies bears any relation to any other one; each one of them must be calculated separately, and no matter how rough the estimate may be it must have been counted up. Therefore, if the Minister were to say, "We did not expect this question to be asked and even my advisers do not have this information with them", it would

be a case of making inquiries; but to say "I do not commit myself to making it available even when I have found it out" really is not acceptable.

LORD TANLAW

Perhaps I may say one more word in an endeavour to help the noble Lord, Lord Polwarth. These figures are only estimates and forecasts and I hope he understands that we would accept a variation of even a million pounds one way or another. But I feel that if the noble Lord cannot give these figures we must support the noble Lord, Lord Hughes.

LORD HUGHES

I must press the Amendment to a Division. I would have done so in any event. I want to make it perfectly clear that it is not because of the unsatisfactory nature of the replies, and as I have no desire to waste the time of the Committee on this matter I will not follow up, as I had intended to do, by asking on each of the succeeding clauses for the information I require. It is obvious that the Government have come completely unprepared to deal with this matter and it would be a waste of time to follow it up to-day. However, I shall not let the matter rest there, and thanks to the useful procedure of your Lordships' House I shall have no difficulty in finding an appropriate occasion to ask for the information again on Monday. I am quite certain that it will not only be on this side of the Committee that there will be disquiet if the Minister persists in refusing to make the information available.

5.26 p.m.

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

Their Lordships divided: Contents, 49; Not-Contents, 76.

CONTENTS
Arwyn, L. Fiske, L. Meston, L.
Bacon, Bs. Gaitskell, Bs. Moyle, L.
Barrington, V. Gardiner, L. Ogmore, L.
Bernstein, L.
Garnsworthy, L. [Teller.] Phillips, Bs. [Teller.]
Beswick, L. Hale, L. Platt, L.
Blyton, L. Henderson, L. Popplewell, L.
Brockway, L St. Davids, V.
Chalfont, L. Hoy, L. Seear, Bs.
Crook, L. Hughes, L. Shackleton, L.
Davies of Leek, L. Jacques, L. Shannon, E.
Donaldson of Kingsbridge, L. Janner, L. Shinwell, L.
Douglas of Barloch, L. Llewelyn-Davies of Hastoe, Bs. Simon, V.
Douglass of Cleveland, L. McLeavy, L. Slater, L.
Evans of Hungershall, L. MacLeod of Fuinary, L. Stow Hill, L.
Summerskill, Bs. Wells-Pestell, L. Wootton of Abinger, Bs.
Tanlaw, L. Williamson, L. Wynne-Jones, L.
Taylor of Mansfield, L. Wise, L.
NOT-CONTENTS
Aberdare, L. Elles, Bs. Mowbray and Stourton, L. [Teller.]
Abergavenny, M. Elliot of Harwood, Bs.
Abinger, L. Emmet of Amberley, Bs. Northchurch, Bs.
Alexander of Tunis, E. Ferrers, E. Nugent of Guildford, L.
Alport, L. Ferrier, L. Polwarth, L.
Atholl, D. Fraser of Lonsdale, L. Reay, L.
Balfour, E. Gisborough, L. Reigate, L.
Belstead, L. Glasgow, E. Rhyl, L.
Berkeley, Bs. Goschen, V. Rochdale, V.
Brecon, L. Gowrie, E. Ruthven of Freeland, Ly.
Brooke of Cumnor, L. Harris, L. Sackville, L.
Brooke of Ystradfellte, Bs. Hawke, L. Saint Oswald, L.
Camoys, L. Hives, L. Sandford, L.
Carrington, L. Howard of Glossop, L. Selborne, E.
Chelmer, L. Jellicoe, E. (L. Privy Seal.) Selkirk, E.
Clancarty, E. Jessel, L. Sempill, Ly.
Colgrain, L. Killearn, L. Thomas, L.
Conesford, L. Lauderdale, E. Thorneycroft, L.
Cork and Orrery, E. Limerick, E. Tweedsmuir, L.
Courtown, E. Lothian, M. Tweedsmuir of Belhelvie, Bs.
Cowley, E. Mancroft, L. Vernon, L.
Craigavon, V. Mansfield, E. Vivian, L.
Denbam, L. [Teller.] Merrivale, L. Wakefield of Kendal, L.
Derwent, L. Milverton, L. Wolverton, L.
Drumalbyn, L. Molson, L. Young, Bs.
Elgin and Kincardine, E. Mottistone, L.

Resolved in the negative, and Amendment disagreed to accordingly.

5.30 p.m.

LORD HUGHES moved Amendment No. 9: Page 2, line 34, leave out from ("Act") to ("and") in line 35.

The noble Lord said: This is a probing Amendment. The provision to which it refers reads: the amount of exchequer contributions to which they are entitled in respect of property to which the housing revenue account relates for the year 1971–72 under the enactments described in Part I of Schedule 1 to this Act, as finally determined by the Secretary of State under paragraph 5 of Schedule 8 to this Act …' It is the words at the end which I propose to delete. When we turn to Schedule 8 we find that paragraph 5 reads: The Secretary of State may determine the total amount payable to a housing authority or to any housing association under the enactments described in Schedule 1 to this Act for any period ending not later than the end of the year 1971–72, and in determining that total amount he may take into account any over-payment made or any amount already paid to the authority or association not under statute. I have no doubt that the Parliamentary draftsman knew perfectly well what this was intended to do. I hope that on this occasion the Minister will be able to let us all into the secret and not do as he did when we last requested information. It is to enable him to provide that explanation that I beg to move.

LORD POLWARTH

I have a degree of confidence that the draftsman knew what he was doing. I wish that I had as much confidence that either the noble Lord, Lord Hughes, or possibly myself can know in quite as much detail how what the provision proposes is achieved, but I will do my best to explain.

Subsection 3 of Clause 2 defines the residual entitlement which will always include an amount calculated in accordance with paragraph (a). The enactments listed in Part I of Schedule 1 are all those under which subsidies have been paid to local authorities for the construction by them of new houses since 1919; these subsidies have been payable on a variety of bases which I need not go into in detail. While there is little likelihood of any problems arising over the calculation of entitlement to subsidy under earlier enactments, the Secretary of State will also have to determine the 1968 Act subsidy. This will have to be brought in and in paragraphs 2 to 5 of Schedule 8 there is provision for the methods of calculating the amount to which any local authority is entitled under all the enactments listed in Part I of Schedule 1—and, in the case of any disagreement, the outcome of such calculations—to be determined by the Secretary of State.

The 1968 Act covers a subsidy which would have been payable on the "bonus" houses to which we referred on an earlier amendment. They are to some extent still to be built and if we are to calculate the subsidy, the Secretary of State must have power of determination to make the necessary adjustment for any past payment, over-payment, under-payment, extra-statutory advance payment and any other consideration in this respect which it may not be possible to calculate exactly at the present time. This is a power which it is desirable for him to have.

I appreciate that this is not an easy matter to follow. The Secretary of State must have this power of determination because there may be such items as I have described relating to houses not as yet completed but houses which will be eligible for the residual subsidy based on the existing system. As they will not perhaps have been cleared up, as it were, by the time this Measure comes into operation, the Secretary of State must have power—indeed, I understand that he has this power in any case—in regard to subsidies affecting the payments I have described, and that is why this power is included in the Bill.

LORD HUGHES

I am grateful to the noble Lord for that explanation. I cannot say that he has exactly shed a blinding light on the subject, but at least I have a little better understanding of what the provision is designed to achieve. My first reaction is an inclination to agree with what the noble Lord said, though if I wanted to be as cautious as the noble Lord I might add that that remark should not necessarily commit me. Without giving any undertaking at this stage, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.40 p.m.

LORD HUGHES moved Amendment No. 16: Page 3, line 24, leave out ("£9") and insert ("£4").

The noble Lord said: We now come to one of the amounts mentioned in the Bill. On page 3, line 24, I beg to move that we leave out "£9" and insert "£4". I think I could quite properly speak to Amendments Nos. 18 and 20 at the same time. In each of those two cases the Amendment is to take out the figure of "£10", and insert "£5". My objection to these figures in the Bill is not because of the figures themselves but because of what they are designed to accomplish. They are related to later proposals in the Bill that the Government should require local authorities to increase rents by £26 a year until the housing revenue account is in balance. The method by which this is accomplished is by the £26 being divided up. The first £6 is taken care of because the Government disregard the first £6 of increased expenditure before they start calculating subsidies. So that is where the first £6 of the rent increase disappears. They then say, "The next £10 is ours because we are going to reduce the subsidy by £10 in taking account of the reckonable expenditure". The other £10 remains with the local authority and is available for the reduction of the rate burden for housing purposes. That is where the £26 disappears.

In the first year under the Bill the figure which the local authorities are required to increase the rents by is £24 and the first figure is £9 rather than £4. If I had been as accurate as the noble Lord in his former capacity might have been, I might have said £4.50 but at the time when I put the Amendment down its purpose was to express what we thought was—even given the way in which the Government proposed to legislate—a more acceptable way of achieving their objective. If I had thought that there was much likelihood of the Government's being converted on the road to Damascus I would have been a little more accurate and would have put in £4.50 here instead of the figure I have put in.

It is correct to say that the last Government facilitated, perhaps to a greater extent than has ever taken place before, higher rent levels in Scotland. That was done without the tremendous outcry that is taking place in Scotland at the present time over the proposed rent increases. The reason why this was so is that some of us, at least in Government, based what we proposed to do in these matters on our own past experience, and past experience both in local authorities and in new town development corporations has shown that where a local authority or a development authority proposed to make a fairly substantial increase once in a while, it met with very considerable opposition, whereas if they proposed to make a much more modest increase but at more frequent intervals, in the long run they achieved the objective with the minimum of disturbance. The essential part was to relate the increase that people were being asked to pay at any given time to an amount which the average family, or even the poorer families—we had to do it then because few authorities at that time were operating rent rebate schemes—could absorb without a major disruption of their budget.

This subject is given tremendously more topicality by what appeared in at least one newspaper to-day regarding the Department of Employment's statement on how an income is disposed of. The noble Lord looks a bit bemused, but I have been trying to get the document, and although the Press have it to-day apparently to-morrow is good enough for Parliament. We tried to get it both here and in another place and it is not to be available until to-morrow. The "fourth estate" apparently has better privileges in these matters than Parliament has. However, the effect of it is to show that an increase of 10 shillings a week on rent under existing circumstances is not an amount which can be easily absorbed. It means major changes in expenditure in other directions. What I intend to do by these Amendments, and by other Amendments, is to ensure that the level of rent increase should not be 50p per week or £26 per year but should be 25p per week or £13 a year. In order to do that at the succeeding stages, it is necessary that I should adjust the figures to the way in which the subsidies are going to be operated. That is the purpose behind these Amendments.

I am not going to attempt to be persuasive, because I know perfectly well from what has taken place on the Housing Finance Bill that, no matter what I say, there is no chance at all that the Government will accept this Amendment. I do not apologise, however, for putting it forward, although I must say that I have tried to avoid as far as possible putting forward on the Scottish Bill Amendments—particularly on the less serious points—which have already been adequately discussed on the English Bill, because the same principles apply in both. It would be a waste of time and an unnecessary trial of the patience of the members of the Committee if I were to seek to go over on the Scottish Bill all the points which could quite legitimately have been made if the Scottish Bill had been discussed in isolation or if it had been the first Bill. I am not going to pursue certain points, not because they could not have been made with equal strength on this Bill but because we accept that what the Government said on the Housing Finance Bill they will also say on the Housing (Financial Provisions) (Scotland) Bill.

There are some exceptions, however. On matters of principle, where it would be quite wrong for us not to give the House the opportunity of amending the Scottish Bill, even although the outcome may be absolutely certain, it must be made perfectly clear to people outside the House how both sides of the House stand. If instead of taking a plebiscite on the border of Northern Ireland we were to take a plebiscite in Scotland on whether people could easily absorb a rent increase of 50p a week, I have no doubt that there would be an overwhelming "No" to such a question, and the "No" would not come just from people who were living in council houses. For those reasons I seek to have the reduction in subsidies brought to a figure which will facilitate the rent increase from being confined to not more than 25p a week. I beg to move.

LORD POLWARTH

I consider that not only is the noble Lord completely within his rights but that he is right to raise this matter. This is a Scottish Bill, and it is separate from the English Bill. I have no complaint at his having done so; I think he is right. As the noble Lord said, this would significantly slow down the phasing out of the residual subsidy while the new subsidies would be coming into full operation. These are transitional arrangements, and one cannot look at this in isolation. I do not know how far we are right to move on to the object of these Amendments, which is really connected with rent levels and which will come up under a different clause which we shall be discussing in due course. But this again upsets the entire balance of the Bill. We feel that the transitional arrangements in force while the new system is coming in are generous and helpful to local authorities because they will be receiving the other subsidies at the same time, and by the time these residual subsidies have been phased out at the pace proposed the new subsidies will have built up to very significant amounts and there will therefore be a significantly greater amount of Government assistance. I am not being led into figures at this point. One must remember that the residual subsidy will be payable on houses not yet built, so that it will come to a very substantial amount.

We have to bear in mind that this is not simply rent increases. We have the rent rebates. The noble Lord has mentioned this study of peoples' disposable income. I am sorry that this information is not available or, indeed, that I did rot happen to come across it in the papers this morning. Therefore, I cannot really speak to it. One of the central points of the Bill is to try to distribute Government help where it is needed and not indiscriminately to help people who in fact do not need it. While obviously there are a great many to whom additional rents will be a burden, this is the object of the rebates and allowances. I think it would be wrong to suggest that no local authority tenants can afford to meet the increases that will result from this Bill. These matters probably arise more on subsequent clauses, but, as the noble Lord has said, the object of his slowing down the phasing out is to reduce the impact of these rent increases which, as provided in the Bill, will occur. As the noble Lord has said, I do not think he has shed a sufficiently blinding light to effect my conversion in the way he mentioned.

LORD HUGHES

I am afraid it is not light that is needed for the conversion of the Government but nuclear weapons. The unfortunate thing about nuclear weapons is that you cannot guarantee that they will affect only the people at whom you chuck them. In the interests of time and wear and tear on the carpets, I do not propose to divide on this Amendment, although it is not because I think that the Government have made out a strong case. In fact the Govern- ment have not made a case at all. For example, when the Minister talks about fairness and being a help to local authorities, changing these figures does not affect the local authorities' position in the slightest, because if we have these figures and the rate of rent increse, at the end of the day the local authorities are in exactly the same position. The person who benefits from this, and for whom the Minister has only a passing word of sympathy, is the person who will have to find an extra 50p a week and is above the level entitling him to any rebate. I am hoping that before we reach the stage of the needs allowances the Government will let us into the secret, so far only made available to the Daily Express, The Guardian and such other papers as have published it. I am sure that when I see the breakdown—and I assume that the Government have broken it down and have published the details—it will lead to perhaps some further Amendments on the reconsideration of the figures of needs allowances, but I will not anticipate that at this stage. Without in any way withdrawing anything of the belief that lies behind it, I beg leave to withdraw the Amendment.

Amendmen, by leave, withdrawn.

5.56 p.m.

LORD HUGHES moved Amendment No. 21: Page 3, line 42, leave out ("have not been completed") and insert ("are not under construction").

The noble Lord said: I do not think this can be regarded for one moment as being a party point at all. I mean this to be a quite genuine attempt to alter the Bill. On page 3, line 42 refers to the Exchequer contributions which are going to be made to local authorities for the (speaking in round figures) 55,000 houses which were submitted for approval before December 1, 1971. The words in the Bill mean that they will not get the subsidy for houses which are not completed in that year; the year is 1974–75. The Minister indicated that proposals have been put forward for some 55.000 houses. At the rate of progress to which the Government have now descended, this is a much larger number than will be accomplished in two years' building. Some of these schemes may be big schemes and sometimes with big schemes both the Government and the local authority find it advantageous to proceed in stages, completing so many and then proceeding to the next phase; and it would be quite possible, on this basis of approving houses submitted, for there to be a number amiss. Even where there has not been phasing it has not been unknown (for reasons, which, while in themselves deplorable, have been unavoidable) that houses which were contracted for at a given date have not in fact been completed three years later.

The effect of my Amendment would be for the subsidy to be payable to the local authority, but not confined to houses which had been completed but paid to the authority for any houses which were under construction. May I give an example of the effect of this? As the Bill stands, a local authority have approval for, say, 250 houses. They have in due course placed a contract for them. For some reason which we will not go into, when we reach the appropriate year, 1974–75, the local authority have completed 150 houses; there are 100 houses in various stages of construction, ranging from the foundations taken out, the painters starting to work on them, and there are 25 houses which have not been started. By the way, my arithmetic is wrong; I should not have said 100 because I would not leave 25. Suppose 125 houses are completed, 100 are in various stages of completion and 25 are not started. Under the Government's proposals the 125 would rank for subsidy, but the next 100, to which the local authority were committed and which were in various stages of completion, are not going to get the benefit of the residual subsidy. Neither would the 25 which had not been started.

The effect of my Amendment would be that any houses which were actually under construction during the period and to which the local authority were therefore irrevocably committed would attract subsidy. I do not know the extent to which my Amendment made clear in advance what it was intended to do. It is a point of elementary justice that if local authorities have sought approval for contracts and have gone ahead with them in the confident expectation that they would be completed during the period stated, and if for some reason, most prob- ably out of an authority's control, they had not been completed, the authorities should not be penalised and stuck with a number of houses for which they have got to pay and for which they are not going to receive this subsidy.

I hope the Amendment is sufficiently clear and that the Minister is in a position to say that he will accept it. If he is going to say that he will consider the matter or consult with his right honourable friend about it I would not press the Amendment at this stage. I do not think there is any Party point at all in this. It does not affect the principle of the Bill in any way. It is a once-for-all matter. There may be very few cases in which it will arise, but if it does it will be a very considerable injustice to the local authority concerned. At this stage, therefore, I would be prepared not to press the Amendment if the Minister gave me an assurance that between now and the next stage he would look at the matter. I beg to move.

THE EARL OF BALFOUR

I am not quite certain on this point, but I rather think that a local authority does not receive any subsidy until a building is completed. I am pretty certain that no subsidy is paid on the basis of so much when the foundations are put in or so much when the walls are built—

LORD HUGHES

If the noble Earl, Lord Balfour, would permit me to interrupt him, I should like to say that he is perfectly right; but we are dealing with an extraordinary situation where subsidy is being paid for houses, in some cases even before they have been started. This is an advance commitment. As the Minister said on my probing Amendment, the power to determine the matter was such that when in due course it was discovered what had been built and what had not been built the Secretary of State could withdraw the subsidy, to which the authority were not entitled because the houses had not been built. What I am seeking to do is to ensure that when the Government are working in advance in this way and accepting for subsidy houses which have not even been started, they should carry the thing to its logical conclusion and pay the subsidy for houses which are going to be completed because they have actually been started.

6.4 p.m.

LORD POLWARTH

I appreciate very much the points which the noble Lord, Lord Hughes, has made. I am bound to say that I thought the provision as set out in the Bill was adequate to deal with this case. The time given for completion is from December 1, 1971, to the end of the financial year 1974–75. That is nearly three and a half years. I think the noble Lord will agree that a time limit or restriction of some kind is desirable for applications put in before December 1, 1971. I am not suggesting it would be the case, but there could be submissions from authorities for houses which they had no intention of building in the reasonably near future, and there should be some deadline. We felt that this was a reasonable limit, although I must respect the noble Lord's very great personal experience of the problems of building, which we all know arise. However, I should have thought that with the availability of labour in the building industry in Scotland at present—naturally it is not a matter which pleases us—there should not be undue delays in the completion of reasonable housing programmes within this period. We have this provision that in an exceptional case where the local authority hits unforeseeable snags which delay building seriously and cause them to run over the deadline, the Secretary of State can waive repayment of the subsidy. I am sure it is his intention that there will be no question of requiring repayment of subsidy from authorities which have genuinely made efforts to complete these "bonus" houses for which we have made provision. I was wondering whether, with that assurance, the noble Lord would accept that the Bill as drafted does in fact look after the genuine case of difficulty in completing by this deadline.

LORD HUGHES

I have not sought to interfere with the deadline, which is obviously something that must go in. In normal circumstances three and a half years is more than adequate but we are not dealing with normal circumstances. Local authorities were encouraged to rush in applications for what they proposed to do. I am quite certain that at least some of the 55,000 (I am not going to ask for figures because it is a useless kind of exercise) have not yet gone to tender; and seven months of the three and a half years has already gone. Some may have gone to tender and fallen under the difficulties of yardstick and so on—indicative cost. I do not know. I still do not propose that the deadline should be altered. There must be a point at which it stops. Surely the basis for penalising an authority is not their intention but what they have actually done. If a local authority have got houses actually under construction then I think they ought to have something a little more sure than this provision that they will receive the necessary subsidy for these houses.

I should be prepared to withdraw the Amendment if the Minister could give an assurance that his right honourable friend would exercise his discretion in favour of any houses which were under construction and perhaps needed another three or six months to complete. I am quite certain that if the local authorities read what is said in your Lordships' Committee on this point—I think the local authority officials, at any rate, read what is said in both Houses of Parliament—they will he most enthusiastic about this aspect. It is a safeguard. I do not think that it would cost the Government a great deal of money, but it could be a very serious source of embarrassment to any authority if they found that, though they had genuinely attempted to finish a given number of houses, through circumstances outside their control only a proportion of them had actually reached stages of completion. Sometimes there are circumstances where a considerable number of houses may be nearing completion and the local authority will not take them over until they are finally finished because of earlier problems they may have had with the contractors about getting last things done. Such an authority would be placed in the invidious position either of rushing to accept houses about which they were not satisfied, and certifying them as being completed in order to get the subsidy, or of adhering to their perfectly proper policy of not taking over the houses until they had received an assurance from their architect or surveyor that everything was right. So I hope the Minister will be able at least to say that this is an aspect which could properly be taken into account by the Secretary of State in exercising his discretion on this matter.

THE DUKE OF ATHOLL

I have a certain sympathy with the noble Lord, Lord Hughes, on this point, especially since I know from personal experience that there is a great shortage of certain tradesmen in certain parts of Scotland and it is difficult to get houses started. Also, firms in the construction industry have been known to go bankrupt, which is always a serious delaying factor in completing a building scheme such as is covered by this Amendment. I should like to ask my noble friend whether, rather than use the unattractive phrase, "by the end of the year 1974–75", we could put in the precise date. I am never quite sure whether the financial year ends on March 31 or April 4, but could we insert either March 31 or April 4. 1975?

VISCOUNT BLEDISLOE

It occurs to me that there may be a difficulty about the wording of the Amendment of the noble Lord, Lord Hughes. May there not be the question whether a house is or is not under construction? It may be fairly easy to say whether a house is completed; when is a house under construction? It seems to me that there could be legal difficulties here.

LORD HUGHES

As a builder who has frequently worked with town planning authorities, I can say that there is no difficulty. As soon as a start is made on taking out the excavations, the building is under construction. When there was a possibility of the Land Commission coming into operation, a great many people rushed all over the country with bulldozers taking out tracks.

LORD HOY

I do not think there is any difficulty about this point. The Minister will know that for many years I earned my livelihood in the building industry and that—

VISCOUNT BLEDISLOE

Let me say at once, that I accept what the noble Lord has said. I just wanted it to be clear.

LORD HOY

I think the noble Lord can take it that it is clear. But there is one other point that I should like to put to the noble Lord for his consideration. The noble Duke spoke about building contractors' going bankrupt. We have had some classic cases in the City of Edinburgh in recent times. Very substantial contracts have been undertaken by very large building firms which have then gone bankrupt, with the result that the whole of the remaining work has had to be put out to other tenders. A local authority have no control over a delay caused by bankruptcy, and it would be a little hard if they were penalised. I can think of another example. It is not unknown for those employed in the building industry to have disputes with their employers, and if there is a little trouble when houses are nearing completion, as there often is, that is not the responsibility of the local authority. The local authority may have done everything within their power to fulfil their part of the contract, but are unable to have the houses completed because of these external happenings. I do not want to pitch it too high, but it would seem to me very unfair of any Secretary of State to take advantage of that circumstance and not pay the local authority concerned.

I have had the experience of having to consider how far I could go in discussing an Amendment, but we are not even asking the noble Lord to accept the Amendment. We should like him to do so if he felt that he had the power, and also felt it right to do so. But what we are asking the noble Lord is whether, having had all these circumstances presented to him, he will between now and Report stage report to the Secretary of State the fairly general opinion of your Lordships, and then come back to us and tell us what the Secretary of State feels about this matter.

LORD POLWARTH

I think there is genuine agreement on all sides that difficulties can arise in this matter, and that a deadline is not necessarily the best way of dealing with it. But what I can do—and I think this is probably the most flexible and adaptable method of dealing with this point—rather than make a firm statement that all houses under construction at a certain date should automatically qualify (because there could be cases where a local authority had not taken reasonable action to get ahead), and rather than make an absolute statement about changing the words to, "all houses under construction", is to give an assurance on behalf of the Secretary of State that he will exercise his discretion in favour of all cases where there are genuine grounds of the kinds described by noble Lords on both sides, which we all know about. That I know I can say now. If the noble Lord wishes me to try to get something even more specific, I shall be very happy to consult my colleague.

LORD HUGHES

I think what the noble Lord has said is sufficient justification for my not pressing this Amendment, and I shall withdraw it. In this case, the feeling of the Committee is with me. I gave a complete answer, and did not attempt to disguise anything, to the point raised by the noble Viscount opposite about what is meant by a house being "under construction". That I should not be terribly worried about. I should not be terribly worried about the case of an authority which had a certain number of houses at the stage where all they had done was to take out the foundation tracks and put in the foundation concrete. What I am worried about is the effect on an authority which is not making a last minute rush in order to get through the work, because words such as "have not been completed" are in the Bill.

I should prefer to see better words in the Bill, because assurances by Ministers are all very well so long as Ministers do not change; and there is no species of Minister who is more subject to threatened political demise than the Secretary of State for Scotland. It is part of the regular procedure of life to predict that a particular Secretary of State will not last very much longer. All I can say in relation to the present Secretary of State, is that if he lives as long under the threat of execution as his predecessor did, he has nothing to worry about. But it is very much better to have the appropriate words in the Bill. The Bill is quite specific in that it covers only houses which have been completed, and while local authorities would undoubtedly have a considerable degree of protection because of the assurances which the noble Lord, Lord Polwarth, has given, it would be better still if there were some better words in the Bill.

So I am prepared to beg leave to withdraw the Amendment, on the assurance which the Minister has given. But, at the same time, I would invite him to consult with his right honourable friend the Secretary of State to see whether another form of words can be inserted, even if they are in addition to the words about completion, emphasising at this point, rather than by reference to another part of the Bill, that the Secretary of State would exercise discretion. My noble friend Lord Hoy and I were in the Library to-day, when some of the noble and learned Lords were talking rather more loudly than perhaps they ought to have done. One very distinguished Member of this House was talking about the advantages, from a Minister's point of view, of legislating by reference, because, he said, it was so much easier to get through since people do not bother to look up the references. It becomes a different proposition when one has to sit on the Bench because one does not then have to consider legislative convenience. This is what is happening here. The Minister has a discretion in these matters, but it is not obvious in this clause that he can exercise that discretion. We have to look somewhere else and, not only that, we have to know where to look, and at the moment I do not know where to look for that discretion. I have no doubt that the Minister can tell me, but there is no use in him just telling me because I am not going to run around Scotland telling all local authorities what the answer is. It would be much better if something was put in the Bill. I do not think that at this stage very much divides us on this matter, so on the Minister's assurance I beg leave to withdraw the Amendment. But I would ask him in conjunction with his right honourable friend to look again at this matter.

LORD POLWARTH

I am grateful to the noble Lord, Lord Hughes, for withdrawing his Amendment. I can assure him that I will consult with my right honourable friend to see whether this can be put suitably and satisfactorily into the Bill. May I say to the noble Duke, the Duke of Atholl, who raised the question of the local authorities, that I understand that the financial year of most local authorities ends on May 15. But since it is most, and not all, it is therefore necessary not to be precise and I have to be careful.

LORD HUGHES

Edinburgh is an awkward exception.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Schedule 1 agreed to.

Clause 3 [The housing expenditure subsidy and associated rate fund contribution]:

6.22 p.m.

LORD HUGHES moved Amendment No. 23: Page 4, line 17, leave out from ("exceeds") to end of line 19 and insert ("£3").

The noble Lord said subsection (2) says: Subject to the provisions of this section, a local authority shall be entitled to housing expenditure subsidy if for the year 1972–73 or any subsequent year there is an increase in the local authority's expenditure per house which exceeds £6 or such other sum as the Secretary of State may by order from time to time determine". I have two objections to the clause as it stands. I shall not spend much time on the first because I have already spoken on the matter. This is a basic element in reaching the rent increase of £26 per year. The first £6 of the rent increase is what the local authority get to enable the Government to disregard the first £6 of expenditure. As my principal objection to these proposals is not the phasing out of the subsidies but the undue haste with which the rents have to be increased and the levels to which they have to be increased then obviously, if I want to amend the income side—that is, the rent—I must make provision for local authorities' accounts to be in a proper state to meet them. It is not reasonable to fix a level of £6 if we want the rent increase to be confined to 25p a week. So if I am going to have the rent increased I must have the factors which make that possible. There are three elements in the rent increase. There is £10 chopped off the subsidy; £10 chopped off the rates; and the remaining £6 is absorbed because the first £6 of local authorities' expenditure is not taken into account for subsidy purposes. That is my first objection and I do not intend to labour it any further. I have spoken on it enough already.

The second part which it is proposed to leave out is: … or such other sum as the Secretary of State may by order from time to time determine. I find this very objectionable because it leaves us completely in the dark. We could have a Secretary of State, saying that the sum is to be £10 or £26. He will be able to put in whatever figure he likes. And let us remember that none of these orders is to be the subject of the Affirmative Resolution procedure; they are to be dealt with by the Negative Resolution procedure. While it is reasonable in many fields of activity for the Secretary of State to have a discretion, it is an extraordinarily wide discretion which is being sought here. The Minister said in reply to my Amendments on Clause 2 that we should be completely altering the balance of the Bill by altering these figures. He could say exactly the same thing of my proposal to substitute "£3" for "£6". In the Government's case rent increases should be 50p a week, while my own idea is that rent increases should not be more than 25p a week. If the Minister contends that substituting "£3" for "£6" or "£5" for "£10" would be completely altering the structure of the scheme, I would point out that giving a discretion to the Secretary of State to put in any figure he likes in place of the £6 is a much more radical alteration. Unless we are going to alter the income side and the expenditure side at the beginning, as I am proposing to do and as the Government are so far resisting, any alteration which takes place in future should be brought in by way of amending legislation.

This is a fundamental part of the Bill, and for the Secretary of State to have the power to substitute any other figure, which might be higher or lower, and which he … may by order from time to time determine makes sense only if the Secretary of State is in due course also going to vary the £26 a year. If he is going to say that instead of increasing rents by 50p a week he is going to increase them by £1 a week he would obviously want to put the £6 up to £12. But that would be a major alteration in the terms of the Bill. The Government are seeking needlessly wide discretion in this matter. If one accepts the details behind the principles of the Bill, then if the words had ended at "£6" it would have been consistent with the whole arithmetic of the rent and subsidy schemes. But to seek a discretion of this kind in addition to fixing a higher level is asking for a far greater blank cheque than my Scottish discretion would tell me should be signed.

LORD POLWARTH

The noble Lord, Lord Hughes, realises our views in regard to the figure of the threshold., While I appreciate that his views in regard to it are different from ours, he has not pressed his point, but at this stage of the proceedings has concentrated his attention on the Secretary of State's power to vary the threshold if circumstances appear to him to warrant it. His feeling is that this should have Parliamentary approval if he were to do so. I think that this would be introducing undue inflexibility into the procedures. Before making an order varying the threshold the Secretary of State is required by Clause 14(5) to consult with such associations of local authorities as appear to him to he concerned and with any local authority with whom consultation appears to him to be desirable. Given this procedure for consultation which he is required to carry out, I think it desirable that the maximum flexibility should be left with him. I should have thought it extremely exceptional for any question of increases to arise. Normally, where there is a power to vary it is common practice that it should be left completely open in order that changing circumstances in the foreseeable future can be taken into account. The Government view is that the duty to consult with the local authority associations and with any individual local authority with whom it is considered desirable is a sufficient safeguard.

VISCOUNT BLEDISLOE

I have a great deal of sympathy with the noble Lord, Lord Hughes. As the clause stands it reads "£6 or such other sum as the Secretary of State may by order … determine." Why put "£6", if it is to be "such sum as the Secretary of State may … determine"? I should have thought the answer might be to leave the sum at £6 and to put in "or such other lesser sum as the Secretary of State may determine". What it says now is that the sum shall be "such sum as the Secretary of State may … determine". The £6 means nothing at all.

VISCOUNT MASSEREENE AND FERRARD

Regarding Lord Hughes's umbrage at the powers given to the Secretary of State, I can remember legislation brought in by the noble Lord's Government—quite a lot of it—in which the Secretary of State was given just such wide powers. I cannot see that the noble Lord is on very firm ground in objecting to these powers.

LORD HUGHES

Would the noble Viscount care to give me an instances where we sought powers for the Secretary of State to have discretion to vary on something as great in principle as this? I concede that there are many cases where the Secretary of State and other Ministers for the last 50 years have had discretion to make variations of a minor nature; but this goes to the very heart of the Bill. I should be more impressed with the noble Viscount's intervention if he could give me a parallel from the time when the present Opposition were in power.

VISCOUNT MASSEREENE AND FERRARD

I would advise noble Lords to read the Highlands and Islands Act, in which (I am speaking from memory) the Secretary of State is given very great powers to determine.

LORD DRUMALBYN

It appears to me that in this case Parliament will have the chance of considering an order which will have to be made: because, if the noble Lord will look at subsection (11) of this clause he will find that it says: Section 14 of this Act shall apply to an order under subsection (2) above. If he looks at Clause 14 he will see: An order … shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament. As my noble friend has already said, before making the order he must consult with such associations of local authorities as appear to him to be concerned and with any individual authority with whom consultation appears to be desirable.

LORD HUGHES

That had not escaped my notice. I pointed out that an order under this clause, like other orders in other parts of the Bill, is subject to the Negative Resolution procedure. No one knows better than the noble Lord, Lord Drumalbyn, that the Government prefer the Negative Resolution procedure rather than the Affirmative procedure because it is easy for the Government to get away with things under the Negative Resolution procedure. This is much too important a matter to be left to the Negative Resolution procedure. To be honest, in a matter going to the root of the Bill in this way I should not be content to accept even the Affirmative procedure. If there is to be a major change of this nature, I think it should not be made by order at all. It would completely alter the principle of the Bill. I do not say it is likely. I do not expect, for instance, that the Minister, having fixed a figure of £6 in 1972, is going to say in 1973 that it will be £20; but it is not outwith the bounds of possibility for him to say in 1973, £8 and in 1974, £10. He could, in fact, completely chop the thing to pieces in this way. It is a very wide power indeed and of course every time he bumped up the figure it would have the effect of adding to the rent increases which necessarily have to be made.

We know that the Secretary of State, in the Scottish Bill, is not going to fair rents as is done in the English Bill. But it does not follow that this is the end of the road so far as the Government are concerned. If they get the opportunity—which heaven forbid!—they will be proceeding, in due course from balancing the housing revenue account to the fair rent principle under which the local authority expect to make a profit out of housing. If that point is reached, then we may get something totally different from this £6. I think I need something a little better than drawing attention to the Negative Resolution procedure. If the Minister is able to give any indication, for instance, as to what he would expect the limit of variation to be in, say, the first three years of the Bill, it might be helpful; but I doubt whether his strange reluctance as a chartered accountant to embark on the field of figures will allow him to condescend to make a prediction.

LORD POLWARTH

My branch of the profession was never much concerned with prediction; rather more with past facts. I cannot predict what would be a likely variation in the next three years, as the noble Lord has asked. I should have thought it very unlikely—I am speaking quite personally and off the cuff—that there would be a variation at all in less than, say, three years.

We feel that the provisions of the clause represent a reasonable and proper balance in the amount of the burden of increases in expenditure to be shared between the tenant, the taxpayer and the ratepayer. With the threshold of £, the Government will in many cases bear much the greatest proportion of the increased cost of the housing revenue account. It is a matter of interest that in recent years the average increase in expenditure on the housing revenue account of all local authorities in Scotland has been consistently above £12 per house, and actually reached £21 per house in 1969–70. The proportion of what is being borne by Government in this matter appears likely to be a substantial amount of the total increase, even with a threshold of £6. Some authorities with big building programmes have had increases in their expenditure considerably above these levels. It is obviously a matter of degree. It is, however, the Government's view that in this case the Negative Resolution procedure is suitable.

LORD HUGHES

I should be quite wrong if I pretended that I was at all satisfied; but as I did not expect to get any satisfaction, I am not disappointed. The only source of satisfaction is that the Minister has stated that he does not expect there will be any variation of this figure in the next three years. That I am prepared to accept. I should think that if there is to be any variation, it will not be until after the next General Election. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.41 p.m.

LORD HUGHES moved Amendment No. 24: Page 5, line 15, leave out from ("1972–73") to end of line 19 and insert ("or subsequent years shall be payable for 15 years (including the base year).")

The noble Lord said: This again is the type of Amendment which is designed to encourage local authorities to build as many houses as possible for renting. On page 5, we have a table showing that the subsidies will vary from 90 per cent. to 75 per cent. Subsection (5) states: Housing expenditure subsidy for which the base year is any of the years 1972–73 to 1977–78 shall not be payable for the year 1982–83 or any subsequent year, and housing expenditure subsidy for which the base year is 1978–79 or any subsequent year shall not be payable for more than five years … The effect of that is that the subsidy is being paid for 10 years at decreasing percentages, starting at 90 per cent. and going down to 75 per cent. Then it falls to five years. The effect of the Amendment is that from 1972–73 onwards the subsidy would be paid for a period of 15 years; so instead of having either one year or six years at the 75 per cent., in each case they would get a great part of the remaining years, up to a total of 15 in all, at the 75 per cent. figure.

I cannot say that I am prepared to go to the stake on the assertion that it would need 15 years for the local authorities to complete their housing programmes, given the necessary encouragement by the Government; but they need to be able to look ahead for a little longer than the five years which is contemplated latterly in the subsection. When one considers that subsidies were fixed in the earlier years of housing legislation for 40 years ahead, and eventually for 60 years ahead, it seems to me that if I am making any error in this matter it is by agreeing to a figure as low as 15 years, which is still much less than any period ever adopted before. I think that the 10 years to 5 years which is the Government's proposal, is unnecessarily harsh.

LORD POLWARTH

The noble Lord, Lord Hughes, has argued that the initial period of 10 years for the payment of the housing expenditure subsidy should not fall to a five-year period. He spoke of the comparison with the present system of certain subsidies running for 60 years. That period, of course, relates to the borrowing arrangements and the period of borrowing, which is what is relevant. This is a shorter period, as we shall all agree, but here again it must be looked at not in isolation, but in the whole context of the Bill and its different provisions. Particularly we have to see the effect of the new system on tenants in the wider context of the new rent rebate scheme which we shall be discussing later, and the high cost subsidy, which I know has been the cause of much mirth in so far as it appears to have affected only one local authority—though that may well not continue to be the case.

I think it only proper that housing expenditure incurred for the benefit of housing tenants, taking them as a whole within a local authority, should in the long-term be borne by the tenants themselves, subject to the protection of the rent rebates. The method by which we seek to achieve this is by a system of pooling the costs of rents, which means that the burden is spread over the whole of the stock of the local authority. There is no need for the authority to charge an unsubsidised full economic rent for any individual new house. The local authority can spread that burden of rent throughout its housing stock within the provisions of the Bill. However, the Government accept that tenants should be protected from the immediate impact of the cost of new building and this is achieved by means of the housing expenditure subsidy in relation to all increases in expenditure above the £6 per house. It includes subsidy cost as well as the actual new building cost, the cost of repairs, management and the re-financing of existing sums; and, particularly if interest rates rise, this subsidy will be a great protection to tenants.

I think it necessary to go over these other subsidies and provisions because they are relative to the period of the phasing out of the subsidy. The protection at the end of the day, which I think is very real whatever one may feel about the duration, is that there is to be a review of rent fixing arrangements which is laid down in the Bill. The Secretary of State has undertaken in the White Paper to make this review not later than 1975–76. This means that a guarantee can be given that in reviewing the system the Secretary of State will have special regard to the likely effect of these subsidy arrangements on rents and he can influence the burden on local authorities and tenants as a result.

Of course it may be argued that these subsidies should continue into this very distant time, but in the light of the fact that there is this guaranteed review and, as I have said, there have been new Housing Bills with great regularity, it is our view that to continue these subsidies for this duration is perfectly fair in the context of all the provisions of the Bill.

LORD HUGHES

In the past I have frequently been in the position in which the Minister is now of having a brief presented to me, about which I did not know very much. As a result, one reads out something as if one were enunciating a completely new principle which is to be followed—as the Minister did when he spoke about the burden being spread over, and that a lot of local authorities would be pooling so that no individual tenant would have to pay the full economic cost of houses being built. But local authorities have been doing that for years. Pooling is not new. Otherwise folk who live in houses built under the 1919 Act would be occupying them rent free and the folk living in houses built under the 1930 Act would be occupying houses imposing no burden on the rates provided that the local authority got 25p a week from the tenants. But houses built in the last five years which have cost anything from £3,500 to £5,500, or even £6,500, are a different matter altogether. The Minister is not telling us anything new when he says that this is being done. It will go on being done even though the Minister, in a fit of madness, says, "I am withdrawing the Bill and retreating to Hawick".

LORD POLWARTH

I have not got as far as that, yet.

LORD HUGHES

We will encourage you.

It is not enough for the Minister to say, "Oh yes, but we have these things. We will look at them and we will give sympathetic consideration if we find that it is unduly hard on the tenants, and this may in fact be altered at some time in the future". Given this Government's

attitude to local authorities, we are beginning to look on some of these assurances with at least a little scepticism. After all, this was the Government who in 1970, before an Election, were castigating the previous Government for the way in which they were taking powers away from local authorities and telling them to do this, that and the next thing. In the field of education, and now in housing, this Government have taken a much more direct line in telling local authorities what they may and may not do than any Government in the past have done.

In these circumstances, the Minister will not take it as any personal reflection when I say that we are beginning to look with some doubt on assurances that things may be reconsidered in the future. I recognise that I could still be talking about this at 10 o'clock without the Minister changing his mind. This matter is of sufficient importance to register in this case that the Minister has made no impact on us at all. We still think as we did at the beginning, that he is totally wrong; and thinking that way, he may as well find out how many noble Lords agree with us.

6.53 p.m.

On Question, Whether the said Amendment (No. 24) shall be agreed to?

Their Lordships divided: Contents, 27; Not-Contents, 49.

CONTENTS
Arwyn, L. Hoy, L. Phillips, Bs. [Teller.]
Bacon, Bs. Hughes, L. Platt, L.
Beswick, L. Jacques, L. [Teller.] Shackleton, L.
Crook, L. Janner, L. Slater, L.
Davies of Leek, L. Llewelyn-Davies of Hastoe, Bs. White, Bs.
Delacourt-Smith, L. Maelor, L. Willis, L.
Garnsworthy, L. Milner of Leeds, L. Wise, L.
Hale, L. Nunburnholme, L. Wootton of Abinger, Bs.
Henderson, L. Peddie, L. Wynne-Jones, L.
NOT-CONTENTS
Aberdare, L. Drumalbyn, L. Jellicoe, E. (L. Privy Seal.)
Abinger, L. Elgin and Kincardine, E. Lauderdale, E.
Alport, L. Elles, Bs. Limerick, E.
Atholl, D. Elliot of Harwood, Bs. Lindsey and Abingdon, E.
Auckland, L. Ferrers, E. Lothian, M.
Balfour, E. Ferrier, L. Massereene and Ferrard, V.
Belstead, L. Gainford, L. Merrivale, L.
Berkeley, Bs. Gisborough, L. Mowbray and Stourton, L. [Teller.]
Boothby, L. Glasgow, E.
Brooke of Cumnor, L. Goschen, V. Northchurch, Bs.
Brooke of Ystradfellte, Bs. Gowrie, E. Nugent of Guildford, L.
Cowley, E. Harris, L. Polwarth, L.
Craigavon, V. Hawke, L. Redesdale, L.
Denham, L. [Teller.] Hives, L. Reigate, L.
Rowallan, L. Swansea, L. Wakefield of Kendal, L.
Sandford, L. Tanlaw, L. Young, Bs.
Selkirk, E. Thomas, L.

On Question, Amendment agreed to.

[The Sitting was suspended from 7.1 p.m. to 7.45 p.m.]

LORD HUGHES moved Amendment No. 25: Page 5, line 40, leave out from ("year") to end of line 44.

The noble Lord said: This is another Amendment where, for some reason which is not terribly clear on reading the clause, the Secretary of State is reserving to himself a fairly wide measure of discretion. Perhaps I may read the latter part of the subsection (8). It says: … references to a local authority's expenditure for any year are references to the total expenditure required to be debited to the local authority's housing revenue account for that year in so far as approved by the Secretary of State, but in the case of expenditure incurred as mentioned in sub-paragraphs (b), (c), (d) and (g) of paragraph 2 of Schedule 4 to this Act they are references to such amount of expenditure as the Secretary of State deems to be so incurred. If we turn to Schedule 4 to find out what the mystery is, we see that paragraph 2 refers to the debits that may be put to the housing revenue account. Paragraph 2(b) reads as follows: (b) the taxes, feuduties, rents and other charges which the local authority are liable to pay for that year in respect of houses and other property to which the account relates… I do not remember whether it was somebody in America or in this country who said that there were only two things which were certain in this world: death and taxes.

The first of those, taxes, presumably allow of uncertainty in this matter because it seems that the Secretary of State has such great doubt about them that he does not want to accept what is going to be dealt with but only to "deem" what the figure might be. As to the feuduties, if there is anything more immutable than anything else, it is feuduties. Yet the Secretary of State is not going to accept what has been paid but is going to take the right to "deem" that it might be something else. That is the first thing. Then in the expectation that matters might become a little clearer by reading further, I went to subparagraph (c). That says: The expenditure incurred by the local authority for that year in respect of the repair, maintenance, supervision and management of houses and other property to which the account relates, other than the expenditure incurred by them in the administration of a rent rebate scheme … I had a note from the noble Lord, Lord Polwarth, in relation to this item, and at least there is some ground for this exception, in other words, the "deeming". If one takes the exact figures, there could be tremendous variations from one authority to another. I gather from correspondence that the Secretary of State will look at the matter generally and say, "An average figure per house for Scotland which will cover this is so and so. Therefore we will take it as so much per house". There may be justification for deeming something other than the matters referred to in paragraph 2(c). Some authorities may receive more than they are spending, and other authorities may get less. But in the round it may work out.

Paragraph 2(d) says: The arrears of rent which have been written off in that year as irrecoverable, and the income receivable from any houses to which the account relates during any period in that year when they were not let …". If anybody is in a position to know how much has been written off as irrecoverable in that year, or of any houses which are empty and for which there is no income, it is the local authority. Why should the Secretary of State abandon the information which comes from the experts and substitute something else which is "deemed"? Obviously this is not something which can be taken in the same way as repairs, because bad debts, irrecoverables, may be much greater in one authority—for instance, in an area of high unemployment, or people moving away, doing a "moonlight"—than they are in another area. To try to get a figure for this and to say: "We will take the figure for the whole of Scotland and deem it to be a certain amount per house for every local authority" would be an absolute nonsense.

Then we come to paragraph 2(g), which says: Such other expenditure incurred by the local authority as the Secretary of State directs shall be debited to the housing revenue account. This paragraph is the one which is the most inexplicable so far as I am concerned. The Secretary of State in the first instance is going to find some other items of expenditure and he is going to direct the local authority to debit the account with those items. Having directed them to debit those amounts, he goes back to the clause and says, "I am not happy about what I have directed you to debit. I am not going to accept it; I will deem it to be some other figure which I have thought of in my wisdom".

Even if the first three items were right, why should the Secretary of State wish to take authority to deem an expenditure to be something other than that which he has in the first instance directed should be debited to the account? This is one of the cases where one item such as repairs can crop up and life can be very much simpler for everybody if we can fix on a round sum which will give rough justice to everybody concerned. Then, with an excess of caution, somebody looks at the other items and says, "We had better play safe; we will put that one on, and we will put that one on." Quite honestly, I think this is needless caution. When one considers it it makes a nonsense of giving discretion to the Secretary of State. There are so many fields in which it is obvious that it is right to give the Secretary of State a discretion to make what is provided for flexible and workable. You should not have to operate a system in a way which is a nonsense because the Bill has been framed in too tight a form. You give the Secretary of State discretion in order to overcome such a state of affairs. But when you come up against something like this provision it seems, on the face of it, to be a nonsense; it casts doubt on the wisdom of giving discretion anywhere. Discretion ought to be given in cases where there is an obvious case for it.

Having said that, I accept in sub-paragraph (c) the aspect of working this matter out. It used to be done in this way. If I remember it correctly, the legislation started off by directing that a local authority should set aside £4 a year out of rents to a repairs fund. That went up to £6, then to £8 and then to £12. After that the whole idea of a fixed sum was abandoned. That was the original legislation and it is the same conception here: rather than varying it from one local authority to another you get a figure which gives rough justice. What I should like to know is to what extent this method is necessary in regard to any of the other items where the Secretary of State is given this power to deem the expenditure to be incurred. In order that I may get some more blinding light on the subject, I beg to move this Amendment and wait on what the noble Lord has to offer me.

THE EARL OF BALFOUR

I wonder whether this method has anything to do with the system that a local authority has of borrowing money on the strength of its rates and other incomes. This Part of the Bill refers to monies which can be borowed, and I wonder whether sub-paragraphs (b) to (g) are allowances that have not been allowable in the past against expenses of a loan. It is complicated; but it has something to do, I believe, with the provisions made for borrowing money. I could be wrong.

LORD HUGHES

I am certain that the noble Earl is not right. That relates only to paragraph 2(a), (b) and (c). They are the subject of the provisos that follow paragraph 2(a)(v).

LORD POLWARTH

The noble Lord has made a plea that we should break these things down. The principle of the Secretary of State approving and deeming is not new, as he agrees. It is really a matter of detail regarding the items set out in sub-paragraphs (b) to (g) of paragraph 2 of Schedule 4. The simple answer is that while there may be a certain element of rough justice, this provision is designed to save a great deal of detailed work. I realise that certain of these items may be ascertainable with some accuracy, but the total involved is not, frankly, very substantial. The Secretary of State has consulted with the local authority working party on this item. As a result of the consultations, he has in mind to determine that for the year 1972–73 the aggregate of these items on which subsidy is payable will amount to a maximum of £4.50 a house. It may be that some authorities will spend more and some clearly will spend less, but they will all get £4.50 a house. This has been calculated after looking at the trend of expenditure on all these items over the past few years. While there may be some rough justice about this, within that total figure of £4.50 a house for a year the variations in respect of these items which the noble Lord mentioned. including rents written off, the taxes and feuduties are not going to be such as to cause any degree of serious injustice. It will be a great saving of administrative expense if the work can be done on a fixed figure of this kind, which will be reviewed regularly; I believe I am right in saying it will be reviewed annually.

8.0 p.m.

LORD HUGHES

Surely we are not talking about the same thing. The provision refers to the expenditure incurred by the local authority with regard to the state of the repair and maintenance, supervision, and so on; and we are told that those items and all the other items taken together are covered by an amount of £4.50. The local authority are spending a great deal more than that on repairs alone, so £4.50 cannot possibly cover all these items. Is it not £45?

LORD POLWARTH

I think I need to check that. To the best of my knowledge those items are included, but I had better see what my information is on this point. I am assured that over the last three years the average expenditure per house was £3.50 and the figure of £4.50 therefore represents an increase. I am quite prepared to be found wrong if I am given figures to the contrary.

LORD HUGHES

I had no intention of pressing this Amendment to a Division, but I am astonished at this. When I was a member of a local authority (and I have been out of local government for nearly 12 years), £12 a year was found to be inadequate to meet the repairs bill. Now we are being told that £4.50 a year will cover taxes, feu duties and other charges, repairs, maintenance, supervision and management of houses. It will include insurance. The noble Lord has had to do with insurance, and he will know that one does not get a great deal of insurance for £4.50 nowadays. There is also the matter of arrears of rent. I know that that is not a very big figure and that there are few local authorities where arrears of rent amount to 1 per cent.; it is mostly a fraction of 1 per cent. Other expenditure is also covered.

LORD HOY

I am sure there is a mistake somewhere because to talk about a figure of £4.50 in relation to annual repairs is ridiculous. We know what it costs to repair a slate. Four pounds fifty pence might cover two hours' work of a plumber, or something like that; but obviously a mistake has been made somewhere and I am sure that the Committee would be grateful if the noble Lord, Lord Polwarth, would say a word or two more about it.

LORD POLWARTH

I have now cleared my mind on this point. Perhaps it is the fact that it follows soon after the dinner interval that my mind is slightly confused in the matter. The noble Lord is quite right. What we are talking about here, of course, is not actual expenditure: it is increase in expenditure. This is where I misled your Lordships. I am sorry. The actual expenditure per house is indeed about £45 a year. The figure of £4.50 is the increase in one year compared with the previous year. What we are talking about is a subsidy related to the increase in housing expenditure. I apologise for having misled your Lordships.

LORD HUGHES

As this point arises so soon after my noble friend spoke about bankruptcies in the building industry, I was beginning to see how they happened. Could the noble Lord, perhaps with some more research, now tell me where the Bill refers to this amount being an increase over the previous year? At first reading it would seem to refer to the total expenditure. I do not see anything in the Bill which says that the existing expenditure is accepted and then the Secretary of State is to deem an amount which is an increase compared with the previous year.

LORD POLWARTH

What we were dealing with originally was Clause 3, page 5, line 40. Subsection (8). on which this Amendment arises, is at the foot of the page. It states: … references to a local authority's expenditure for any year are references to the total expenditure required to be debited …", and the provision refers to sub-paragraphs (b), (c), (d) and (g) in paragraph 2 of Schedule 4. This subsection (8) is in fact a definition of what the local authority's expenditure is. The clause refers to subsidy calculated on the increase on one year over another in the authority's expenditure. Therefore it is, by reference, an increase in expenditure covering those items specified in the Schedule. That is the way I see it.

LORD HUGHES

There must be a reference somewhere further back to the fact that this refers to the increase in expenditure, but up to the moment I have not seen it. Subsection (2) states: … a local authority shall be entitled to housing expenditure subsidy if for the year 1972–73 or any subsequent year there is an increase in the local authority's expenditure per house which exceeds £6 or such other sum as the Secretary of State may by order from time to time determine. To me, that does not convey what the noble Lord has said. It does not make it clear that in the Schedule all that the Secretary of State is deeming is an additional amount. We have references to the amounts which are to be debited to the local authority's account. What is going to be debited to a local authority's housing account for a year, in reference to repairs and maintenance, and so on, is what has been spent in that year. According to what the noble Lord, Lord Polwarth, has said, instead of waiting for the actual figure the Secretary of State will take the previous year's actual expenditure and then he will add to it a sum of £4.50. He is deeming £4.50 to be sufficient to cover the increase, if that is the case. But the Bill does not say that. If that is what is intended, it ought to be stated somewhere in the Bill. But the Bill refers to the amounts which are to be debited, not to the "increased amount" to be debited.

LORD POLWARTH

We are getting to an extremely complicated part of the Bill. The Secretary of State is given power to deem, and he is deeming that the increase over 1971.72 is £4.50. That is what he is deeming, after consultation with the local authorities, to be a correct average figure. He will do this each year. I do not know that I can make the point any clearer. I am assured that the explanation I have just endeavoured to give is correct.

LORD HUGHES

I have not the slightest doubt that those who are sending along the notes to the noble Lord are firmly convinced that it is correct, but I am certain that they have no more succeeded in persuading the Minister than persuading me. The only difference is that he is reading out the bits of paper and I am listening to him. But I am pretty certain the result is the same in either case, and we are no further forward. The Minister is quite correct in saying that we are getting into very difficult matter, but, after all, this is what we are here for: to try to find out what the Bill is supposed to do. At the moment not only are we not getting a blinding light, but someone has pulled out the switch somewhere and we are in the dark. This is obviously something we cannot resolve in this way across the Floor. But I think I am entitled to be shown just exactly in what way it is clear that the Bill is referring only to increases in expenditure. At the expense of the noble Lord's secretary and typist, I would be prepared to withdraw this Amendment at this stage if, before Report stage, I receive a two-page foolscap letter from him. I think it will take at least two pages to tell me what this means. However, for the moment, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.10 p.m.

Loan HUGHES moved Amendment No. 26: Page 6, line 3, leave out paragraph (a).

The noble Lord said: I am afraid that I am going to worry the noble Lord, Lord Polwarth, again because this is not an Amendment tabled for the purpose of striking out the paragraph; it is a purely probing Amendment that I put down to find out the effect of it. On the face of it the wording in the Bill sounds straightforward: … (notwithstanding paragraph 2(a)(iv) of Schedule 7 to the Act of 1968) any expenditure in connection with houses approved under section 19 of the Act (unfit houses retained for temporary accommodation) …; And the preliminary part is— There shall not be included in the local authority's expenditure for a year … Assuming that a local authority has expenditure for the year in this connection, why is it excluded? Is it because it is going into another account? Is it going into the slum clearance account, or is there some similar explanation? I beg to move.

LORD POLWARTH

I hope that I may be able to satisfy the noble Lord a little more on this Amendment than on the previous one. This subsection excludes certain items of expenditure from the categories to be taken into account in calculating housing expenditure subsidy. The houses referred to in paragraph (a) are what are generally called "patched houses"; that is, they are approved for occupation pending demolition and are held temporarily. Under Clause 23 of the Bill, dealing with the housing revenue account under the new system, and Clause 26, which deals with the new slum clearance revenue account, it is provided that from the beginning of 1972–73 expenditure on these houses will he transferred from the housing revenue account, where it falls at present, to the new slum clearance account. For the future, new expenditure incurred for these houses will fall on the slum clearance account and will be eligible for slum clearance subsidy. I do not know whether that clarifies the matter sufficiently for the noble Lord.

LORD HUGHES

I am delighted to say that we are improving. The noble Lord has completely satisfied me that my Amendment is unnecessary, and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

LORD HUGHES moved Amendment No. 27: Page 6, line 25, leave out subsection (10).

The noble Lord said: This is another Amendment which I have tabled for clarification. Subsection (10) says: (Notwithstanding paragraph 2(e) of Schedule 4 to this Act) any payment made by an exporting authority to a receiving authority in pursuance of an overspill agreement towards expenditure of the receiving authority which is included in the calculation of the receiving authority's entitlement to any subsidy under Part 1 of this Act, shall be included in the exporting authority's expenditure to the extent of 25 per cent. of that payment only. If we look at paragraph 2(e) of Schedule 4, to see whether it makes things any clearer, we find that, any payments made by the local authority to another local authority or a development corporation in pursuance of any overspill agreement, being payments towards expenditure which, if it had been incurred by the first-mentioned authority, would have been debited by them to their housing revenue account in pursuance of this paragraph;". That neither takes us backwards nor forwards.

The point that I am seeking to elucidate is this: it a local authority is paying out £x per house to another authority in pursuance of an overspill agreement, why is only 25 per cent. of that amount to be included in the exporting authority's expenditure? What happens to the other 75 per cent.? Does this mean that the other 75 per cent. will be purely rate-borne expenditure? In the hope that we shall be equally happy after information on this Amendment as on the previous one (although I have doubts about it because the Minister does not look as happy as he did last time), I beg to move.

THE EARL OF BALFOUR

I seem to remember my noble friend Lord Drumalbyn saying that this had been discussed with some of the local authorities in Scotland and was an agreed figure. He said that this was the sort of amount that they felt they could share with each other in transferring persons from one authority to another under an overspill agreement. I think also it is covered partly in the overspill agreements in Clause 8, but at the moment I cannot find it.

LORD HOY

Perhaps we could have a little elucidation on one point before the noble Lord replies. I believe the noble Earl, Lord Balfour, has just said that he had a recollection that the noble Lord, Lord Drumalbyn, had said in reply on another Amendment in the English Housing Bill that he had had consultations with Scottish local authorities. I find it difficult to understand how this came about, so before the noble Lord, Lord Polwarth, replies perhaps the noble Lord, Lord Drumalbyn, could give us the answer to this particular conundrum.

THE EARL OF BALFOUR

I think I should rescue my noble friend a little bit. This particular part was discussed in an overspill agreement that had been arrived at and I thought probably the same sort of agreement could equally well apply to Scotland as to England.

LORD HUGHES

If the noble Lord, Lord Polwarth, still needs more time I am quite willing to say that having regard to the dreadful terms of the English Bill nothing is likely to persuade me that a reason for accepting anything in this Bill is because it has happened this side of the Border.

LORD POLWARTH

I will do my best to explain this situation to the noble Lord. Admittedly it is not simple. We speak here about the overspill agreements and the one authority involved here, as we all know, is the city of Glasgow. This provision is made in order to avoid a situation where an unacceptably high proportion of overspill costs would be met by the Exchequer. Under the Bill, existing payments by Glasgow Corporation to receiving authorities in respect of overspill houses will cease and from 1972–73 the burden of the payments currently made by Glasgow Corporation will be taken over by the Government. For the future, statutory payments by an exporting authority will be replaced by voluntary overspill payments of a kind and amount agreed between the parties. We are coming to that in Clause 69 of the Bill.

While the precise form of the payments will be for discussion between the parties the consent of the Secretary of State will he required for them. For example it is envisaged that the exporting authority—Glasgow—might cover the rate-borne part of rent rebates granted to overspill tenants on moving. Without this restriction imposed by subsection (10), which is the provision being queried, the position would be, first, that the Government would pay subsidy at the rate of 90 per cent. to the receiving authority on the cost of rent rebates, and, secondly, the Government would also pay Glasgow, the exporting authority, housing expenditure subsidy on 90 per cent. on its payments—for example, 90 per cent. of the rate-borne element of the cost of the rent rebates. This would mean that in 1972–73, the first year of operation, a total Government contribution towards the cost of these rent rebates of about 99 per cent. would be involved, arrived at by the aggregation of the figures.

LORD HUGHES

That is nearly right.

LORD POLWARTH

Even with the reducing proportion of subsidies in suc- ceeding years, the Government's contribution would remain at a very high level and we consider it reasonable that housing expenditure subsidy payments by Glasgow should be restricted because there would still be a fair level of Exchequer support for its overspill programme.

LORD HUGHES

We are in the noble Lord's territory n[...]w, in discussing finance and figures, so let us see where that takes us. I agree that from Scotland's point of view this is largely a Glasgow problem. The statutory obligation on Glasgow to make a contribution is being brought to an end after this year. Glasgow will then enter into voluntary agreements with the receiving authority and—the Minister did not actually explain this—if the receiving authority and the exporting authority, Glasgow, cannot agree on a 1oluntary payment, what will happen next? Will the Secretary of State impose something on Glasgow? Does it cease to be a voluntary agreement? This sounds rather like what I was once told by an A.R.P. officer in Dundee when I was controller of the A.R.P. at that time. He referred to policemen who were wanted to do certain duty as members of the police force coming under the "Voluntary Conscription Act". What will happen if Glasgow says to an authority "We will pay you £10 a year" and the authority replies "No. We need £30 a year"?

LORD POLWARTH

We are getting into the rather wider field of the whole overspill policy. I would assume that unless there is a field for agreement, there would not be an overspill agreement. That is, of course, a personal view without knowing a great deal about the background to the overspill policy.

LORD HUGHES

If that is the case—

LORD POLWARTH

Let me add that I am only assuming that and not saying that that is necessarily the case.

LORD HUGHES

If that is the case, then I think I am beginning to appreciate where we are. It means, does it not, that under all existing overspill agreements the compulsion to pay will come to an end; the Government are accepting responsibility for the whole of this expenditure after this year, so that these figures will apply only to new overspill agreements that are made? If this is the case, then obviously, if there is no agreement between receiving authority and an exporting one, no agreement will be made. Does this apply only to overspill arrangements which do not exist now?

8.25 p.m.

LORD POLWARTH

This is a matter on which I shall need to be certain of the facts and will therefore have to communicate with the noble Lord because, as I said, we are getting into the whole overspill situation. I am not in a position to give a definite answer to the noble Lord on this matter. I understand that at present the exporting authority gets no subsidy on its contribution, and to that extent the Bill is an improvement because it will get subsidy on 25 per cent. of its expenditure under the new type of agreement that is envisaged. However, as to the position of existing or old ones, I shall have to communicate with the noble Lord about the exact position.

LORD HUGHES

Let us leave that point on one side and come to the next one. Let us assume that an authority is contributing £10 a year—in fact, I think the figure is £14—for ten years. Under this proposal it will be entitled to include in its housing revenue account expenditure only 25 per cent. of what is being paid out, and that 25 per cent. will then be part of what is taken into account in deciding how much subsidy it will get; and that subsidy will in the beginning be 90 per cent., tapering to 75 per cent. Thus, in so far as 25 per cent. of the amount is brought into account, Glasgow will eventually get a grant on 75 per cent. of 25 per cent. It will, therefore, be bearing more than 85 per cent. of the cost of the overspill agreement.

The Minister said that something of this kind had to be done or the Government would be paying twice, but presumably the receiving authority must credit their housing revenue account with the moneys received from the exporting authority. Or is there somewhere in the Bill—I have a suspicion that there may be—where it says that what receiving authorities get under an agreement is not an amount which has to be credited to the housing revenue account? If not, I can see no justification for the Government singling out this item of expenditure and saying that they must pay more and that instead of getting a 75 per cent. grant on their expenditure they will get something less than a 20 per cent. grant on their expenditure. I hasten to add that if the noble Lord, Lord Drumalbyn, says that this represents an increase on the previous position he will not get away with that.

LORD POLWARTH

I will endeavour to clarify the position, but I do so with only limited hope of total success. At present the exporting authority, Glasgow, gets no subsidy on its contributions to the receiving authority—

LORD HUGHES

May I interrupt the noble Lord at that point to remind him that the Prime Minister when he visited Glasgow shortly after being elected said that his new Government would go out of their way to give special help to Glasgow. We are told, in effect, that the previous Government gave nothing in relation to overspill agreements and that this Conservative Government will give 75 per cent. on certain expenditure, but in fact on this item, which is peculiar to Glasgow, they are giving less than 20 per cent. This does not add up.

LORD POLWARTH

Under the Bill the existing statutory payments by Glasgow Corporation will cease, voluntary agreements will take their place, and 25 per cent. of those will be eligible for subsidy, whereas I understand that at present none of them is eligible for subsidy. If we are finally to resolve this extremely intricate situation it may be necessary to do it in some detail by correspondence, if the noble Lord would agree to accept possibly another three pages of foolscap from me.

LORD HUGHES

I am prepared to read anything the noble Lord is prepared to write in this matter and I must be content with that, because we are getting nowhere at all so far as enlightement is concerned. The only difficulty I have is that we have been talking about one day for the Report stage and Third Reading and we are piling up the Amendments which may have to be moved on Report. I was hoping that the Amendments on Report stage could be kept to the very minimum and on matters of great principle. If we are going to be bogged down by having more and more Amendments moved on details such as this at Report stage, we are either not going to manage Report in one day or we are in grave danger of losing the next day's Business.

LORD POLWARTH

I will make only one final contribution which may or may not clarify the position further. I understand that under the residual subsidy Glasgow will be relieved of all its obligations to pay receiving authorities under existing agreements, while the receiving authority to whom those people move will get all these payments included in its residual subsidy. These arrangements as a whole will give Glasgow more subsidy than at present. That is all I can add. I do not know whether that helps.

LORD HUGHES

That takes care of the existing position, but one of the questions I asked was whether in future it is going to depend on voluntary agreements. I think it was the noble Earl, Lord Balfour, who put the point that this provision would perhaps relate to future agreements, and if there was in fact no agreement between an exporting authority and the receiving authority about what the voluntary payment would be, obviously there would be no export. So what we are talking about in this clause is not any overspill agreements which exist at the present time but any new ones which may be entered into afterwards. On that basis, Glasgow is going to agree to pay authority A, who will be building so many houses and receiving families for Glasgow, so much per house. This item will be debited to Glasgow's housing revenue account along with other expenditure. For housing expenditure subsidy, everything which is debited to Glasgow's housing revenue account in excess of £6 per house will rank for a housing expenditure subsidy—first of all at 90 per cent. and then, as the years go by, falling to 75 per cent. And all the items of expenditure except those which we have talked about as being "deemed", in order to get simplification of the sum, if that is the way it works out, are going to be the actual figures in the accounts.

In this case the local authority, Glasgow, is going to pay so much, but they are going to be allowed to charge only 25 per cent. of that amount to the housing revenue account. Presumably the other 75 per cent. is charged to the general rate fund. Is that not the case? Notwithstanding … shall be included in the exporting authority's expenditure to the extent of 25 per cent. of that payment only". The local authority are paying out 100 per cent. Let us say that there is only one house and they are paying the receiving authority perhaps £10. They are entitled, according to this clause, to charge £2.50 to the housing revenue account, but the other £7.50 which they have paid out has to be charged to some account, otherwise the chamberlain will be in a mess, and the only other account they can charge it to, presumably, is the general rate fund.

Amounts charged to the general rate fund are not the subject of subsidy. So they are getting the subsidy on only £2.50, and although the local authority are spending £10 on what is obviously an item of housing expenditure, they are going to get 90 per cent.—or 75 per cent. depending on the year of grant—on only 25 per cent. of what they are laying out, and the remaining 75 per cent. is being borne wholly by the ratepayers. Why, out of all the expenditure which is being undertaken in housing, should this item which, according to what the Government have said in the past, in Scotland falls almost entirely on the authority which requires special assistance, not be allowed to be debited in whole to their housing revenue account?

The matter is becoming so complicated that it would not surprise me in the slightest if eventually one of these pieces of paper elicited the information that the reason for excluding it is because the other 75 per cent. is being granted at the rate of 120 per cent. somewhere else. At the moment, however, we have not a clue about what is happening to the other 75 per cent. If the noble Lord, Lord Prumalbyn, will give us some light on this matter on the basis of English experience, I should be delighted to listen to him.

LORD DRUMALBYN

Not on the basis of English experience, on the basis of what the noble Lord has been saying. Would he look at this matter for one moment from the point of view of the Treasury. The Treasury will be paying out on the receiving authority's expenditure, in excess of its expenditure in the previous year, which will cover the new building, 90 per cent. in the first year, dropping down to 75 per cent. later. The question is how much it should pay on the remaining 25 per cent.? The 25 per cent. will come perhaps partly from the receiving authority itself and partly from a contribution from the sending authority. This is then a matter which has to be fixed by voluntary agreement as to how much the sending authority will send. It has always been by voluntary agreement in overspill matters. Of the remainder of that portion that is going to be borne by the sending authority, how much should the Treasury pay, having already borne between 90 per cent. and 75 per cent. of the whole expenditure?

LORD HUGHES

No.

LORD DRUMALBYN

That is the point: having borne already between 75 per cent. and 90 per cent. of the whole expenditure of the receiving authority to which the other authority is contributing.

LORD HUGHES

No they are not bearing between 75 per cent. and 90 per cent. of the whole expenditure of the receiving authority unless the position is, as I have invited the possibility of being told, that what the exporting authority are paying is not going into the other authority's housing revenue account. The noble Lord, Lord Drumalbyn, says that the Government are paying 90 per cent. (let us take this as the proportion) of the receiving authority's expenditure. But one of the items in the receiving authority's accounts on the credit side is the money it has received from the exporting authority so the expenditure of the receiving authority is diminished by the amount it has received from Glasgow. The Treasury are paying 90 per cent. of the difference. They are therefore paying nothing on the money which the receiving authority has got from Glasgow. Having paid nothing on that money at the receiving end, they then go to the other end and say that they will pay only 90 per cent. of a quarter. On this basis, the Treasury are excelling themselves. The next best thing is to tell the receiving authority that it will get a grant on only 25 per cent, of what it has spent, and the Treasury is winning hands down.

I would invite both noble Lords opposite to have a look at this point and find out just exactly where we are on it. It may be that if the noble Lord, Lord Drumalbyn, comes in on this with the noble Lord, Lord Polwarth, I shall get three foolscap pages instead of two. But I am quite willing to read them all. I do not think that any useful purpose is served by pursuing this now. The difficulty is that having to do this in three bits—one there, one here and one there—somewhere or another we are not making complete connection on the matter. I should prefer to leave it now.

I would, however, say this: on successive days I do not think we can contemplate a repetition of this sort of thing where information about the details which affect the way we are going to deal with the Bill have to be put back to the next stage. There is some justification for the difficulty to-day, because, it was only yesterday that the Minister and the office were aware of some of the Amendments, and they knew of the first of them only at the beginning of the week. But by next Monday—because there ought to be somebody who wrote this Bill in the first place and who knows what he meant—it should be possible to reduce it to the kind of language which those who are not draftsmen or lawyers can understand. That is all I am seeking to do, and at the moment I am no further forward than when I was hauled out of the dining room. I should have been better sitting there having another course, for all the use the last 40 minutes has been. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 3 shall stand part of the Bill?

8.41 p.m.

LORD HOY

I do not want to occupy the time of the Committee for long. All I want to say on this particular clause is that your Lordships will not be surprised to hear that we reserve the right to put down further Amendments at another stage. Quite obviously, if we are to be able to satisfy both the exporting and receiving authority they are entitled to know what provision will be made for them under the clause. I do not think this is asking too much. So far we have failed to elicit this. We shall not divide on the clause—although I must make it clear that we were tempted to do so—though we reserve our right to put down further Amendments at the next stage.

LORD DRUMALBYN

Perhaps I may say this. We are on a part of the Bill—and I have been through a similar kind of Bill before— where there is a great deal of arithmetical work. May I say in all sincerity that it is extremely difficult to put these things into language across the Floor of the House. If one can see them written down on paper it is very much easier. I would suggest to the noble Lord, Lord Hughes, that if he has doubts as to how these things will work in practice, he should put questions in writing, and we will supply the examples in answer to the questions. But it is always very difficult to do it across the Floor, especially if noble Lords will not allow one to finish the explanation.

LORD HOY

With all respect, the noble Lord provokes me. Surely it is not too much to ask the Government to say how much the exporting authority are going to receive and how much the receiving authority will receive. The noble Lord says it is very complicated. How does he expect any local authority to plan their housing programme if he cannot tell them what Government assistance there will be? If every question has to be put down in writing so that the noble Lord can send written information, the House might as well not meet; we could exchange letters and this would be very simple. But there are other Members of your Lordships' House who are interested: they want to know what is going on. I suggest to the noble Lord he should reconsider that particular point. We want to be as helpful as possible. We know these questions are difficult, but he must not seek to lay the responsibility upon us, and on my noble friend in particular, for what has been happening.

LORD DRUMALBYN

I quite take the noble Lord's point, and I do not think we need enter into any dissension about this. But this particular Amendment was put down presumably to question the reason for the smallness of the percentage. I was busy trying to explain this. I feel in all sincerity, that it will be easier to explain it in figures on paper. If the noble Lord will be so kind as to accept that in these circumstances, I think that will be the best solution.

LORD HUGHES

I have already said that I am prepared to do that, because it was quite obvious we were getting nowhere in exchanges across the Floor. The noble Lord seems to think that I prevented him finishing his explanation. I am not aware that I did so. If he has left out the "65 dollar" part of the answer, rather than the question, and I have deprived him of the opportunity of giving enlightenment, I shall be delighted to sit down and hear the masterpiece which we have not been given the opportunity of hearing. If I have deprived the Committee of that, I am sorry; but I was not aware that the noble Lord had not finished his story. He told me what the Treasury were paying, and I came back on that point, and he has not returned to it. I am delighted to give him the opportunity now. I did say, in withdrawing the Amendment, that it was not being very helpful if every time we came across one of these difficult questions we had to refer it to correspondence. Because if the correspondence does not satisfy us, then obviously we are under an obligation to put the Amendment down again, if it is of sufficient importance to justify a Division. If this point had arisen earlier in the day, as we expected, we should have divided on it if we had not received satisfactory information.

We have not been given a satisfactory answer. It may be because we on this side are being dense. I am prepared to admit that the obvious may be eluding us, but if it is we have the consolation of knowing that Ministers have not been able to point out the obvious that is eluding us. If, every time we come up against this problem, we are going to face the possibility of having Amendments on Report stage which are not matters of major substance but of trying to do then what we should be doing now, we are going to have a Report stage as long as Committee stage, and I think that is the last thing any of us wants. I did say, when I offered some time ago to withdraw the Amendment, that I hoped that on the second and third days of Committee we should not find ourselves in this difficulty, and that the Ministers would be in a position to explain the thing on adequate previous discussion with their advisers.

I know the difficulty when one has not had an opportunity of discussing the point, the difficulty of juggling about with pieces of paper passing across the Chamber, with the officials having to do two thing: first, to make it brief, and, secondly, to write it quickly and try to ensure that when it gets to the other end it is legible. There is very minimal information which passes on these pieces of paper. I accept what the noble Lord says: that it is better to do it in correspondence if we cannot do it in Committee across the Floor. But the right way is to get the answer in Committee, so that we can divide on the point or abandon it and let it go. I do not like to spend all this time and find that we have to start all over again on the same point at the next stage.

LORD DRUMALBYN

Would the noble Lord accept my explanation that I did in fact give way to him at the time, and he went on for so long when he came back that I gave up. It is quite obvious that the Treasury are paying a very high percentage of the net expenditure of the receiving authority, and the question is how much they should pay of the expenditure of the sending authority. In the light of the amount they are paying to the receiving authority, it was thought that the 25 per cent. payment by the Treasury towards the contribution of the sending authority was adequate. If the noble Lord does not think it is adequate, I do not think there is any more one can usefully add. However, we shall provide him with figures showing how we expect it to work out in a practical case. I think this is the best answer.

LORD HUGHES

I will accept that, but I cannot resist coming back to the noble Lord. I thought he was going to say that I had gone on so long with my interjection that he had forgotten what the answer was, and that might have been the case. If the exporting authority were making no payment at all the Treasury would be paying grant on the total expenditure of the authority that built the house. They are not paying 90 per cent. of the total expenditure. They are paying 90 per cent. of that expenditure, less the money which is received from Glasgow, so they are paying 90 per cent. on the net. The difference, which is a credit in the receiving authority's account, is a debit in the exporting authority's account, but they are not paying grant on the whole of that. They are paying grant on only 25 per cent. Therefore the Treasury are getting a bargain in this. If there were no agreement the Treasury would be paying 90 per cent. of the lot. They are paying 90 per cent. of one part and 25 per cent. of the remainder. My point is that they ought to be paying 90 per cent. or 75 per cent., as the case may be, of the total. If in the correspondence the noble Lord is able to show me how that works out, then we may get somewhere. At the moment we are no further forward, and unless the noble Lord wants to come back on that bit of paper I beg leave now—

LORD DRUMALBYN

Before the noble Lord does that may I intervene? I have got this information. This can come between us. It takes me back exactly to the point I was at when the noble Lord intervened before. Subsidy is paid on the total expenditure of the receiving local authority, not on the net of the overspill payment.

LORD HUGHES

Does that mean that what the receiving authority gets from the exporting authority is not included as an item of income in its housing revenue account? It is now nearly half an hour since I asked if that was the answer, and up to this point I have not been provided with an answer. Obviously if the income does not go in it is not reckoned, and that would be a different thing, but I still have not been told that is the position.

LORD DRUMALBYN

I do not know if I can make it any more plain. This is what I have been told, and I believe it to be so. It is not net of the overspill payment. It is paid on the total expenditure of the receiving local authority. I am afraid I cannot go any further than that. This is the information I have, and in so far as anything more is required may I please let the noble Lord know and show him how it works out in practice?

LORD HUGHES

For all the help that has been the noble Lord might just as well have allowed me to withdraw the Amendment the last time I tried to do so, or even the time before that. For the final time of asking, may I have permission to withdraw this Amendment?

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [The high cost subsidy and associated rate fund contribution]:

8.54 p.m.

LORD HUGHES moved Amendment No. 28: Page 7, line 8, leave out ("£39") and insert ("£10").

The noble Lord said: It is impossible to speak to Amendment No. 28 without at the same time speaking to No. 29, because although one refers to income and the other to expenditure it is really the effect of the two which determines the position. These matters were the subject of some discussion in another place. As the noble Lord has indicated, there has been great doubt as to which, if any, local authority in Scotland (other than possibly Lauder at present) have anything to gain from this high cost subsidy. My first Amendment is to leave out £39 and insert £10, and the second one, in line 16, is to do the same thing.

The first of these subsections refers to … the amount of income per house which would have been receivable … from standard rents if no high cost subsidy or associated contribution out of the general rate fund had been payable for that year or any previous year (in this section referred to as 'the local authority rent income') exceeds the amount of income per house receivable by all the local authorities in Scotland for that year from standard rents (in this section referred to as 'the Scottish rent income ') by more than £39; Reduced to more simple English, one takes what the local authority get in rent and compares it with the average rent for the whole of Scotland. If their rent is more than £39 per house in excess of that average they have established their first leg of their claim to high cost subsidy. But that is only the first leg. The second one is that the amount of expenditure per house falling on the account has to meet the same criterion. It has to be £39 more per house than the average for the whole of Scotland. Having regard to these high figures, it is not surprising that very few local authorities expect to gain any advantage from the high cost subsidy in the foreseeable future.

I think it is not stretching the point too far to say that. By the very nature of the method by which this is done—that it is to be a comparison with the average rents payable in Scotland—it can cover some fairly wide variations. I submit that it would have been reasonable for me, instead of moving £10 in place of £39, to suggest that any income and any expenditure which was higher than the average should be the criterion for an entitlement to high cost subsidy, because it would mean that it was those in the upper ranges of expenditure that were going to get this assistance. I decided that perhaps this would be going too far, because one might have the position that, apart from one or two very high ones at one end, and one or two very low ones at another end, the great bulk of the authorities' expenditure might fall within a fairly narrow band in which there was not a great deal of difference between the top and the bottom. In these cases it is fairly common to exclude some very high ones and some very low ones and to confine the considerations to what remains in the middle. If I had taken the average this might well have shown that about half the authorities in Scotland were entitled to the high cost subsidy. I am certain it was not the intention of the Government that that should ever happen.

To take it to £39 is to take it out of the realm of the probable, not just into the possible but into the extremely unlikely; and for all purposes this subsidy was likely to serve it might as well not be there for the next four or five years on this £39 basis. I have therefore suggested that the figure of £10 above the average in each of these accounts is likely to bring in some of the local authorities whose expenditure really puts them in need of additional assistance. I would expect the Government to say that there is no particular magic in the figure of £39; that it might have been £35 or £45. In the same way I would say that I do not attach any particular significance to the figure of £10; but it seemed to me to be nearer the kind of thing that would bring some relief to the authorities which were hardest pressed because of their costs in meeting their obligations. I certainly think that if the figure is not £10 it ought to be a lot nearer that than the present figure of £39. If that figure is maintained it simply means, to put it most mildly, that for some time ahead the high cost subsidy will just not exist. I beg to move.

9.0 p.m.

LORD POLWARTH

As the noble Lord has said, there is a lot of room for argument about precise figures in many places in this Bill. But the whole point of this subsidy is that it is a high cost subsidy, not simply a greater than average subsidy, and it is designed to meet exceptional cases. It is not meant to be a widely spread or general subsidy. In taking this into account one must bear in mind that there can be wide variations in the nature of the housing within the different types of authority; for example, in their amenities, qualities and general age. That is one of the factors which would make a threshold of £10 excessively low and would bring far too many authorities into the network of what is meant to be not a general subsidy, but a very special subsidy for special circumstances. As we know, it appears that only one authority appears likely to qualify for that.

In order to bring out the position, may I say a word about the question of extending this threshold? It would not be right to pay subsidy to an authority which, at the outset of the new system, had rents at a level above £39, not simply because its level of expenditure was relatively high but because of past rent policies. Such an authority would be nearer to balance than Scottish local authorities as a whole, and as other local authorities' housing revenue accounts moved towards balance under the new system the Scottish average rent would quickly come up to, or above, the rent level of such an authority. The effect of reducing the threshold from £39 to £10 would simply be that any authority which, because of rent policies in the past, had at the beginning of the system rents above the Scottish average, but whose expenditure was only £10 above the Scottish average expenditure, would qualify for subsidy—though the Amend- ment would not affect the amount of subsidy paid in such a case.

What could happen is that if the threshold for the high cost subsidy were to be fixed as low as £10, the subsidy would no longer represent as much of a safeguard against the effect on rents of much higher than average costs—and higher than average costs is what this subsidy is intended to protect against—but would, in effect, radically alter the whole principle of fixing rents according to pooled historic costs. While the pooled historic costs of most of the larger authorities lie fairly close to one another, clearly a large number are bound to fall somewhat above as low a threshold as £10. To restrict the rents of all these authorities to £10 or 25p a week above the Scottish average, would, in turn, obviously depress the Scottish average rent itself. So that it would, in effect, simply become a general subsidy towards keeping rents throughout Scotland at a level much lower than pooled historic costs. It would just be a way of pushing down rents, rather than helping to bail out the authority with genuinely higher costs.

It is a complicated situation and, as I said earlier, there is the question of authorities with different standards of housing where there could, quite justifiably, be a difference in average rents of more than £10. For that reason, we feel that the £10 threshold is distinctly too low, and that the £39 or 75p a week differential is not an unreasonable one. That is practically all I can say on the subject.

LORD HUGHES

The Minister said that the £39 threshold is a reasonable one, but the last figures that I saw for average rents in Scotland showed that the average rent of all local authority houses in Scotland is about £80 a year. So in fixing a threshold of £39, what the Government are saying is that only those local authorities whose rents are presently about 50 per cent. above the Scottish average will qualify. I made it quite clear that I was not prepared to argue that £10 was necessarily the right sum. But only authorities whose rents are presently some 50 per cent. above the Scottish average will be starters in this race, and that brings me back to the original point, which the noble Lord has conceded, that at the present time there does not appear to be any local authority of any size which will qualify.

I have no doubt that Lauder is a very important little community. In the presence of the noble Marquess I am bound to concede that. But it can hardly be said that it has a very great effect on the rest of Scotland. If Lauder were excluded and given a grant of 100 per cent, on everything they do from now until Kingdom come, it would not cost the Government very much at the end of the day. The Treasury could pay out of the petty cash for anything that lands on Lauder's doorstep, and they would not worry. So we are going to all this bother to fix a high cost subsidy in order to give a few pounds to Lauder.

I would have been a little happier about this if the Minister had said, "At the present time only Lauder is going to benefit from this. But because of the way things are developing perhaps next year Auchtermuchty will also come in and by about 1983 it might apply to places of the size of the largest small burgh". But there has been no indication that in the foreseeable future the high cost subsidy is going to benefit anywhere but Lauder. We may even find that before very long Lauder will drop out again because of the way these tapering subsidies work. What great harm would be done to anybody in Scotland, apart from Lauder—and perhaps my noble friend Lord Hoy and I could recompense Lauder out of our own pockets, if it is all that hard up—if we dropped the whole conception of the high cost subsidy? Who is going to lose anything this side of the next General Election? If the Minister can give me even the glimmer of light on the subject I shall be delighted.

9.10 p.m.

LORD POLWARTH

The noble Lord, Lord Hughes, has issued a challenge and I am bound to say that I am sorely tempted to take up his offer and get rid of the high cost subsidy forthwith. But there could well be others coming into the net in the course of the next few years as the differential increases with rising standard rents—I say "standard rents" because they will be subject to rebates and allowances. The £39 differential will not be so greatly different from the aver- age. The Secretary of State will make his review of the rent-fixing arrangement in 1975–76 when the full position can be looked at again. Meanwhile, we think it is desirable to keep this safety net to meet perhaps one or two other cases. There may not be very many; but I cannot tell until the time comes.

LORD HUGHES

I think it is must be the hour of the evening. If everybody's rent is going up by £26 a year are we not going to be in the position next year in which everybody is going to be exactly where they are to-day as far as income is concerned? Nobody is going to move away from it. How are they going to move away from this £39 if they have not attained the £39 now? Let us say that at the present time the average rent of houses in Scotland is £80. Next year that average rent will be £104. So authorities which would have failed to qualify this year because they were only £37 above the £80 will fail to qualify next year if they are only £37 above £104. What is the basis on which the other people may come in? The Government have done a great deal of research on this subject, and unearthed Lauder. What will their further researches enable them to unearth as likely candidates for the receipt of this high cost subsidy in the next three years? Could we have the names of some possible beneficiaries or would that be too chancy an estimate for the Government to make?

LORD POLWARTH

Definitely. The fact is that not everybody will go up pant passu indefinitely because in due course the housing revenue accounts of certain authorities will come into balance and they will not need to continue to make these increases.

LORD HUGHES

Will the noble Lord's researches then enable him to tell me how many of the local authorities which have major housing schemes are going to come into balance next year or the year after? Is it not the case that some 75 per cent. of the houses in Scotland will need at least three years before they can come into balance under these proposals?

LORD POLWARTH

That is indeed the case, but I would point out again and finally that the whole purpose of this subsidy is to deal with exceptional cases in which a particular form of hardship would arise. I would ask your Lordships to accept this as the purpose of this subsidy.

LORD HUGHES It may be in the light of any further information that emerges that the right thing for me to do is to add a word to the Bill and ask that this subsidy should be described as the "exceptional" high cost subsidy—for that is what it is going to be; that is what the Minister has reduced it to. High cost is not going to be a qualification. With that as a parting shot I shall ask leave to withdraw an Amendment on which in other circumstances, I should have been delighted to divide the Committee. At this stage I should hate to disturb those who are now sleeping peacefully in the Library.

Amendment, by leave, withdrawn.

9.15 p.m.

LORD HUGHES moved Amendment No. 30: Page 7, line 31, leave out from ("amount") to end of line 36.

The noble Lord said: The noble Lord has made me so frightened that I am almost afraid to move the Amendment. This was to be another probing Amendment; but probing Amendments have put us so much further in the dark that it really is cruel to ask the Committee to consider another. The effect of my Amendment would be to leave out all the words from "amount" in line 31 up to the end of line 36. The words which would be left in are: the local authority shall make an associated contribution out of the general rate fund of an amount equal to 25 per cent. of the qualifying amount and there the Amendment would leave the clause.

The words which are left out are: together with an amount equal to the amount which would have been carried to the credit of the housing revenue account under paragraph 1(5) of Schedule 4 to this Act for that year if no high cost subsidy had been payable to the authority for that year or any previous year. What is the effect of these excluded words? I am willing to say here and now that if the Minister does not think he can satisfy me in the next 20 minutes I shall be pleased to accept a letter instead.

LORD POLWARTH

I am game to try to satisfy the noble Lord in, I hope, rather less than twenty minutes; though I am beginning to doubt my ability to succeed. The intended effect of high cost subsidy is that it should appear as an item of income in the housing revenue account and should allow a local authority to balance the account by charging rents which do not exceed "the Scottish rent income", the average figure, by more than £39 per house. Without the words Lord Hughes seeks to delete, the intended result would have been achieved for local authorities which had reached the position of balance without a rate borne deficit on the housing revenue account, but there would have been a problem if high cost subsidy had become payable before a local authority reached this position. Consider, for example, a local authority which, in terms of Clause 28 of the Bill, decides that it would require to make a £26 rent increase for a given year, and even after so doing it would still have a considerable rate borne deficit on the housing revenue account. If the rent which would be charged as a result of the increase exceeded the high cost subsidy threshold level, the authority would of course receive subsidy. But there is no provision in Clause 28 to ensure that the level of rent actually charged is less than that which the original calculation required. The authority is in no way relieved of the duty to make a £26 increase.

The result is, therefore, that the payment of high cost subsidy simply serves to reduce the rate borne deficit and benefits the ratepayers rather than the tenants as intended. These words were inserted in another place to remedy what appeared to be a definite defect, in that the subsidy would go to the benefit of the ratepayers and not the tenants. This has been achieved by providing that for the purposes of the calculation of eligibility for high cost subsidy the rate borne deficit will be frozen at the level which resulted from the original calculation of the rent which would have been charged if no high cost subsidy had been payable. I am assured that this means that the subsidy will be used as was intended, to reduce the rent which has to be charged. I appreciate that this is a highly involved matter. I am assured that the effect of having put in these words is that the benefit of the subsidy goes to the tenant rather than to the rate fund as a whole.

LORD HUGHES

Towards the end of his remarks the noble Lord, Lord Polwarth, said that this is very highly involved and it is only fear which stops me from saying to him, "You can say that again!" The fear is that if I said that, the noble Lord might say it again and we should be no further forward. I have been trying to follow it, and the general impression I got is that when I read it to-morrow I may find it satisfactory. I should not like to commit myself irretrievably to that snap judgment of the matter, but that is the general sense that I take from what he said. In the hope that I may be proved right in due course, I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

9.21 p.m.

LORD HUGHES moved Amendment No. 31: Page 7, line 42, after ("year") insert ("by order").

The noble Lord said: This is a very simple Amendment which has been moved many times in the past in legislation, no matter which Party was sitting on which side of the House. Sometimes it has been accepted and sometimes it has not. Subsection (6) reads: For the purposes of this section, the Secretary of State may for any year determine the Scottish rent income and the Scottish average expenditure. I do not quarrel with that. Obviously, where you have to find what are the average amounts of income and expenditure someone has to do it, and there is no one in a better position to do so than the Secretary of State at the Scottish Office. But I think this is a piece of information which Parliament is entitled to have, and in my Amendment I suggest that we should make the subsection read: For the purposes of this section, the Secretary of State may for any year by order determine the Scottish rent income …

If the Amendment were accepted, the order becomes another of the orders subject to the Negative Resolution procedure. I think it is something which many people would be interested to see, and it would be much simpler if it were done this way, rather than that all those who might be interested should have to seek out the information or, alternatively, table a Question to find out what is the position. I concede that if this is not done it will not deprive Members of Parliament from getting the information, but it seems to me that it would be much simpler if it could be made available voluntarily by the Secretary of State. I am not quarrelling with the fact that this is the right way to find out what are the averages, but it is much better that the Secretary of State should take the necessary action to make Parliament aware of the figures year by year, rather than that it should appear that the information has to be prised out of him by one means or another. If I were sitting on the other side of the Committee trying to adopt the views of the Ministers opposite I should find it difficult to advance reasons why the Amendment should not be accepted.

LORD TANLAW

I see nothing objectionable for the Minister in the Amendment. Let me perhaps go one stage further and suggest that if the noble Lord, Lord Polwarth, is unwilling to let Parliament know these things, like rent income and the Scottish average expenditure, he might consider a Scottish elected Assembly perhaps a better body to report to on these occasions.

LORD POLWARTH

I note the point raised by the noble Lord. In another place my honourable friend Mr. Younger gave a specific assurance that calculations of the Scottish average rent, income and expenditure would be brought to the attention of all authorities by means of a departmental circular. But there is something in the point that if this is to be done, why should not Parliament now so direct. In the circumstances it would be quite unreasonable for me to object to this Amendment.

LORD HUGHES

In order that the Minister may not feel that he is casting his bread upon the waters needlessly, and as this was discussed fairly adequately on the English Bill, I will give him the bonus of not moving Amendment No. 32.

Clause 4, as amended, agreed to.

House resumed.