HOUSING FINANCE BILL

HL Deb 18 May 1972 vol 330 cc1454-535

3.58 p.m.

Second Reading debate resumed.

LORD DIAMOND

My Lords, there are two short, simple words which mean a great deal to every one of us in these Islands—homes and jobs. On these depend a great part of our happiness and contentment. Yet the present position of jobs (or rather the lack of them) is that there is widespread hardship, anxiety and discontent. Much of that can undoubtedly be laid at the door of Her Majesty's Government. In the Bill we are discussing, the Housing Finance Bill, I deeply regret to say that the Government propose to follow the same course with regard to people's homes (or, more particularly, the lack of them) and to pursue a policy which will result in widespread hardship, anxiety and discontent. It will be immediately apparent to your Lordships that we on this side of the House are wholly opposed to this Bill. But before I go into the detailed reasons for saying that I want to thank the noble Lord, Lord Drumalbyn, for his clear exposition of the provisions of the Bill which has been most effective in confirming my total opposition to it. Next he gave a certain amount of background information, and although I know your Lordships would not wish to have indigestion as a result of too many statistics, I should like to put in perspective some of the figures which the noble Lord gave because it is not only the absolute figures but the trend which matters.

I would compare the position to-day, or in recent times, with the position half a century ago. Half a century ago the total stock of housing in the country was some 8 million. Now it has grown to 17½ million—more than double. One may say that that is satisfactory, until one takes note of the fact that we in this country devote a smaller proportion of our national resources, our gross national product, to housing than any other advanced country. As to the split of the occupation of that stock of houses, the owner-occupied house has moved in the past half century from 10 per cent. to over 50 per cent. More than half the people own their own homes, which is a very good thing. So far as the other half are concerned, the private rented sector, houses rented from private landlords have dwindled from 90 per cent. half a century ago to about one-sixth to-day. I am not contradicting any of the noble Lord's figures; I am merely giving the trend which I believe illuminates those figures. So far as the public sector is concerned, local authority housing and the like, it has moved upwards from nil half a century ago to one-third. Although I have given starting and finishing figures for half a century. I can assure your Lordships that the figures show a more or less even path and therefore can be interpreted as representing the wishes of the people. They show an enormous increase in those who wish to rent local authority houses; an enormous fall in those who wish to rent houses owned by private landlords, and a commendable increase the whole time in those who wish and can afford to own their own homes.

There is only one further figure which I think will help your Lordships to understand our objection to the Bill—the income of council house tenants about which there may be a great deal of misunderstanding. There are no very recent figures, but two or three years ago the Prices and Incomes Board made a report—an authoritative view therefore—which showed that council house tenants with over £40 a week joint income of man and wife represented only 1 per cent. of the total, while those with under £20 a week represented 50 per cent.

It is against that background that this Bill contains the following main proposals. It proposes to double the rent of council house tenants, some 5½ million of them; it proposes to subject some 3 million of those families to a means test in order to save the taxpayer some £300 million in the years ahead. Its purpose is not to build one additional house of any kind; the purpose is to save the taxpayer £300 million in the years ahead. So we shall have the situation that instead of the wealthy helping the needy in the shape of a taxpayer subsidising a council tenant, we shall have the situation of a tenant being required to subsidise the taxpayer because the provisions of the Bill are that the surplus on the housing account, to which the tenant is required to contribute, will be based as to half to the Exchequer and, as the noble Lord the Minister said in introducing the Bill—not all that pointedly, but he said it—the subsidies will be kept at their present level instead of going up to the level they would otherwise do were this Bill not introduced. In that way it will save some£300 million. As we all know, that is the money available to the Chancellor for tax reduction. That is the reason why we are doubly opposed to the main principles of this Bill.

I would describe the Bill and its effects in the following critical way: first, its social effects will be divisive, humiliating, inequitable and unjust. In economic terms it will add to inflationary pressures and deter individual effort. Its philosophy is reactionary and regressive; its method is arbitrary, inefficient and authoritarian. That is a pretty long catalogue of criticism. I tried very hard, my Lords. to think of something good to say about the Bill, and I decided that I could properly say that it is well printed.

Now may I justify that catalogue of criticisms? I will do it as shortly as possible because there will be many opportunities later on. I have to say this, because some of your Lordships may think that I have come to a conclusion too quickly. There will be many opportunities during the Committee stage for expanding on the criticisms that I am making. I observe that in another place the Bill had fifty-seven Sittings in the Committee stage, but I want to relieve your Lordships of any anxiety here: we shall do our best to assist the Government in the expeditious carrying out of the business and hope to knock at least one or two off that number.

Why do I say that the Bill is socially divisive? Because clearly the effect of this Bill will be to create a one-class welfare housing citizen. It will drive out of the council estates those who can afford to pay more, and instead of having what I should have thought all of us wanted, mixed communities of people understanding one another's problems through rubbing shoulder to shoulder and understanding them as neighbours do, we shall have one-class welfare housing. That is what I call socially divisive.

I say that the Bill is humiliating because in order to have enough to live on, according to the Government's fomula over half the council house tenants—that is to say, about 3 million families—will have to submit to questions about their means and about their personal relationships with the various occupants of the house—questions which will create embarrassment and difficulties. All this in order to enable the tenant to have enough to live on and enough to pay the rent. The concept of the Englishman's home being his castle is one which no doubt finds considerable favour in your Lordships' House. It finds no favour in the Government so far as ordinary working men are concerned in the council house estates. This Bill is the snooper's charter so far as the council house tenant is concerned. And if he does not want his house examined and does not want this invasion of his privacy he can be fined and compelled to open his doors to anybody who wants to find out this information. I say that that is humiliating and an unwarranted invasion of privacy.

I say it is inequitable when compared with the owner-occupier. I want the House to understand, as I am sure it does, that I made many speeches in another place when I had an official position, making it clear how much the then Government wanted—as I am sure the present Government want—to promote home ownership. Indeed, the financial provisions brought in by the previous Government demonstrate that clearly. But the present position is that the home owner has many financial privileges as compared with the home renter. The home owner has first of all some £300 million subsidy from the State in the form of tax relief on his mortgage interest. That figure alone, without taking into account the other advantages to which I am going to refer, is, on the Minister's figures, more than the total subsidies at present being paid both from the rates and from central taxation to council tenants. So as things stand at the moment the home owner gets the advantage.

But there are other, more subtle and less obvious, advantages. There is, for example, as everybody knows, no capital gains tax on your own home. I do not wish to comment adversely on that. I had my share of responsibility in introducing that very provision. I think it is right. Equally, it is right to remind your Lordships that that is the situation. Moreover, as all your Lordships will remember, Schedule A tax is no longer payable, as it should in equity be payable as between an owner and a renter of a house. I do not know whether the Minister could give us the figure that would be payable if Schedule A tax were still in existence. My reckoning is that it is at least another £400 million. But, again, we do not propose that Schedule A tax should be reintroduced. Nevertheless, it is right to realise that in terms of equity the tenant of a house is being penalised as compared with the owner of a house, because, whereas a tenant who has some money invested pays tax on the income, an owner who has some money and invests it in his house pays no tax on the notional income. So there is that inequity as well. I do not wish to confuse your Lordships at all. One argument is good enough, and that is that in terms of cash flow at the present moment as we sit here the home owner gets more out of the State than does the council tenant That is the simple fact.

This is all to be altered as a result of the present Bill. And while we are on this topic, I should be grateful if your Lordships would take note of the fact that virtually no pre-1960 council tenant is being subsidised at all. So far as the pre-1960 council tenant is concerned, he is, on average, making a contribution to rates in the sense that he is paying a profit rental, as any accountant would calculate it—a profit rental in relation to the historic cost of the accommodation which he enjoys. That is the position with regard to virtually all pre-1960 tenants. The subsidy that is paid is paid in respect of those more recent tenants subsequent to 1960. The approximate figures are that of the 5½ million we have been discussing, 4 million receive no subsidy at all; the subsidy goes to the 1½ million.

I say that it is unjust, because the Government are attempting to import a market concept of fair rent from the private sector into the public sector where there is not a commercial market but a public service, as we all, including the Government and including the Minister, from what he just said, accept. You do not give subsidies, you do not make the kind of speech that the Minister has just made, unless you recognise that to some degree or other housing is a public service. It is net the market place. The local authority in particular has responsibilities which it has to perform. I hope that those of your Lordships who are far more informed on economic matters than I am would agree with me that it is economic nonsense to say that there is any relationship between the private sector and the public sector such as would justify an attempt to import into the public sector the notion of a market rent, which has some validity—some validity only—in the private sector. I repeat that it has only some validity.

What is it that the Government are trying to do? They are trying to determine the rent of 5½ million tenants on the basis of a fair rent which is applied to 200,000 in the private sector. Two hundred thousand is the total number of registered fair rents in the private sector, and it has taken five years for those 200,000 to be so registered. If my arithmetic is correct, that works out at 30,000 in nine months. Why do I say in nine months? Because this Bill provides that in the same period of nine months, in which 30,000 houses in the private sector were registered for fair rents, 5½ million in the public sector are to be registered. Utter impossibility; it will result in utter muddle and confusion as well as injustice.

Before I leave this point, I have only half dealt with the justifiable criticism because I have left your Lordships with the false assumption, for which I apologise, that there is some correlation between these 200,000 and the 5½ million; but that is not so. With regard to these 200,000 houses the first thing I want to point out is that an examination of the fair rents has demonstrated that there is no discernible principle whatsoever. Furthermore, of these 200,000 houses, which are to form the base of assessing 5½ million council tenants, only very few are at all comparable with the kind of house you find on a council housing estate. So there is no justification in economic theory. The only reason why the Government are doing this is in order to increase, to double, the rent of council house tenants so as to save the Exchequer money; so that the tenant will pay more and the taxpayer will pay less. It is right that we should be quite clear in our understanding and in our explanation of what it is the Government are about.

I now turn to the economic effects of this wonderful Bill! Nobody, not even on the Government side, would deny for one second that it is going to be inflationary in its effects. You cannot double people's rents without having an inflationary effect. You cannot double the rent of wage earners in the present circumstances of wage negotiations and relationships without creating a tremendous surge forward to increase wage demands. Of course that will happen. It is a great pity. It is more than a great pity. The Government are being extremely foolish in giving up this one acceptable subsidy which enables us to compete acceptably with other countries—this subsidy deriving from a social service. There are all kinds of subsidies people would like to have in order to compete more favourably with other countries. This one is a permitted one. And we are throwing it away in order to save the taxpayer £300 million. We have done very well: in spite of all the criticism that has been made, the fact remains that, with the exception of France alone, our increase over this last year in cost per unit of manufacture, which is the telling figure, has been less than that in all the other countries of the European Economic Community. So that we have done reasonably well. We are second out of seven, and yet we are throwing away this one important advantage and creating inflationary pressures for that less than worthy purpose. If the Government say, "But we recognise that, and therefore we are spreading this increase of rent over a period of years", that is true; but the minimum increase is 50p. For those of us who are more familiar with the old coinage—10 shillings. That represents for the whole country outside London an increase of 25 per cent. in the average rent. That is what the wage earner's wife is going to be faced with; that is what the wage earner will have to take account of in his next wage negotiations. So there is no doubt that in the present circumstances this is an extremely unwise inflationary device.

Why do I say that it is a deterrent to individual effort? Because the effect on an individual is just that. The noble Lord the Minister took the case of a man and wife with two children, and very properly so—the average case. If that man is earning £16 a week and is offered a new job, more arduous, more difficult, more unacceptable but with more pay—instead of £16 a week he is offered £20 a week to go to that new job—will he undertake it? He will ask how much of that additional £4 a week he will retain. We are all very familiar with this argument as surtaxpayers, are we not?

LORD DRUMALBYN

Not all of us, my Lords.

LORD DIAMOND

My Lords, most of us are familiar with the argument, if not with the underlying content. It is an argument that has been advanced so many times, is it not? "There is not much taste in nothing", as the saying goes, or, to put it as economists would, the marginal rate of tax is a deterrent.

Let us look at what the marginal rate of tax is so far as our £16 a week council tenant is concerned, who is offered the new, harder job at £20 a week. May I tell your Lordships how much of the additional £4 a week he will keep by the time he has paid his tax and national insurance and lost the rebate which this Bill is introducing and which the Minister has been putting before your Lordships this afternoon? The proportion of the £4 which he will keep is nil. The marginal rate of tax is 100 per cent. He will take on the new job, if he does take it on, with the knowledge that the whole of the excess will go in increased tax, increased national insurance and the loss of the rebate. Those are matters quite apart from consideration of all the other dozens of facilities which are available to him and to his wife—school meals, and so on—all of which again may have to be revised and increased payments made. That is for the man going from £16 to £20 a week. For the man going from £20 to£30 a week his marginal rate of taxation under this Bill will be 60 per cent. That is the marginal rate of taxation under the Minister's proposals. That is why I say, and I think with some considerable justification, that this is a deterrent to individual effort.

I call it a reactionary Bill because in the same way as the Association of Municipal Corporations and many other most respectable people have said (much more respectable than an ordinary Labour chap trying to make a speech, as I am doing) it is reactionary because many of its provisions move away from what has always been the accepted principle, that poverty is the responsibility of the nation. Frankly, a nation like ours ought to be ashamed of poverty wherever it is to be found, but whether we have feelings of shame or not we surely recognise that this is the responsibility of the nation. This Bill does not recognise that. It puts it—or part of it—on the localities which may or may not be able to afford to meet the claims of poverty.

I say that it is regressive because, as I have already explained to your Lordships, the burden is being taken off the broadest backs—those of the taxpayers—and put on to some of the weakest. I say it is arbitrary because in fixing a fair rent for his home a tenant will have no say at all. His elected representative—his local councillor—will be unable to protect him and in the ordinary way there will be no appeal to a higher court. I say that is inefficient because the process of increasing the rents of 5½ million families and then giving rebates to some 3 million families will lead to an increase, according to the Financial Memorandum to the Bill, of something of the order of 1,500 civil servants. I say it is authoritarian because any attempt by the elected councillors to carry out their present tasks of protecting their electors who live in council estates may result in the loss of all housing powers, the loss of all subsidies and the appointment of a housing commissar from Whitehall. The Bill, to be fair, uses the term "commissioner"; I think in this House "commissar" carries the meaning more readily.

So, my Lords, I conclude. There are 11 major criticisms which I have listed and which in my view are valid, and one further criticism that I touched on right at the beginning; namely, that although the proportion of our resources devoted to housing is already less in this country than in any other advanced country this Bill will do nothing whatever to put up one more house. It will do nothing whatever towards employing the 120,000 unemployed building workers. It will add greatly to the tensions within our community; it will create hardship, especially among those who always insist on showing that spirit of independence which all of us here will welcome, that determination to stand on their own two feet, which means that they refuse to take up a rebate or allowance. As we know this is already the case and will happen again here.

Were it not for our own self-imposed discipline in relation to Bills which come from another place we should certainly vote against this Second Reading. As it is, we shall seek to persuade the Government to withdraw some of the worst provisions in the Bill and will rely on that sense of fairness and justice which informs your Lordships' House to help us.

VISCOUNT MASSEREENE AND FERRARD

My Lords, before the noble Lord sits down may I query one of the figures he gave? If I quote the noble Lord aright, early in his speech he said that only I per cent. of council house tenants had incomes of £40 a week or more. Three years ago I asked the noble Lord's Government in this House, and the noble Lord, Lord Kennet, Answered—

LORD DIAMOND

My Lords, perhaps I should answer—

VISCOUNT MASSEREENE AND FERRARD

My Lords, may I just finish my question? I asked the noble Lord, Lord Kennet, how many council house tenants had incomes of £2,000 a year or over, and the Answer given by the noble Lord was 500,000. The figure of 500,000 is not 1 per cent. If the noble Lord, Lord Diamond, is so inaccurate in quoting that statistic I only hope that he will not be equally inaccurate in all his other statistics.

LORD DIAMOND

My Lords, I am grateful to the noble Viscount. I would much rather he accuses me openly of inaccuracy than merely thinks it, because it gives me an opportunity to reply. I would remind the noble Viscount, who was good enough to listen to the rest of my speech but did not hear this part completely, that I was giving the figures of the Prices and Incomes Board Inquiry, which is printed and can be found in the Library. They state that 1 per cent. —to be precise, I think it said 1.2 per cent. but perhaps the noble Viscount will forgive me that gross inaccuracy—of council tenants had that joint income of husband and wife. I said husband and wife; I did not include the lodger or the quasi-lodger. I said what the Report found. One per cent. was the figure I gave, and I hope the noble Viscount will acquit me of any inaccuracy.

4.30 p.m.

LORD AVEBURY

My Lords, the intervention of the noble Viscount just now was rather useful: it illustrates what we all know to be the Tory attitude to council tenants: they have all got vast incomes, several Jaguars in the road outside, colour television and the rest. That is the attitude which underlies the Bill, and which. if not voiced by Ministers on the Front Bench is certainly felt by them. Although they may feel embarrassed by the interventions of their noble friends behind them, we can see where the proper philosophy of the Tory Party lies.

I must say that I agree with practically everything the noble Lord, Lord Diamond, said in relation to this Bill, except for one point when he said that he thought the reduction in the time that we spent on this Bill as compared with another place is warranted or desirable. I think there are so many issues to explore, in what is one of the most complex and difficult measures to come before Parliament for many years, as would fully justify us spending as many as the 51 Sittings that they spent in another place in considering the matter on Committee. Therefore, I shall try to be very brief this afternoon and deal only with the principle.

Before coming on to the Bill itself, may I deal with one point that the noble Lord, Lord Diamond, made about the decline in the privately rented sector. This is a fact and it has been going on for some years. Since the 1957 Rent Act, I have been watching these figures fairly closely. The number of controlled tenancies in England and Wales declined from 3.89 million to 1.3 million at the end of 1969; and the total of privately rented dwellings at the end of 1961 was 3.6 million, down to 2.5 million at the end of 1969. It would be useful if the noble Lord who is to wind up could give us some figures of what we are looking at at the present day, so that we can have some rough idea of what they expect to rescue in the private sector by transferring the remaining dwellings that are in control into regulation. My own fear is that the Bill will do nothing whatsoever to rescue these houses from being transferred to the owner-occupied sector, because even where a landlord can get a fair rent it is still much more sensible for him to sell off a dwelling for owner occupation, and I do not think there is anything in the Bill that will help to arrest the decline in the private sector. We should look at the figures pre and post the 1965 Rent Act where in fact, contrary perhaps to the expectations of the Tory Party, the imposition of regulation on dwellings of a rateable value of £400 in Greater London and £200 elsewhere in the country did nothing to accelerate the decline at all; in fact it was slightly less in the years following the 1965 Rent Act than it was between 1957 and 1964.

Another point on which I must agree wholeheartedly with the noble Lord, Lord Diamond, is that poverty is the responsibility of the nation, and this Bill runs contrary to that principle in laying the burden on the council house tenant and taking away from him £300 million he would have had if the present system had continued. Not that I am going to defend the present system. As the noble Lord said in introducing the Bill, I think there are anomalies in the present structure. I would not go so far as to use the language he did, but it has worked reasonably well over a number of years and before you throw it all away and replace it with something new you want to think about it very carefully. I do not agree with the noble Lord in saying that these present proposals are an improvement on the present system. I disagree with him fundamentally in his summing-up. I see this Bill to be irrational, unfair and without compassion. And that is not only the view of the Opposition Parties; it is also the view of responsible independent organisations like Shelter and the Child Poverty Action Group, to say nothing of the large number of organisations which represent tenalts themselves—people like the Association of London Housing Estates whom Ministers in the other place discourteously refused to see to discuss the proposals, even though they represent a very large number of council tenants in Greater London. I think that act of discourtesy will be bitterly resented among council tenants who have not had an opportunity of expressing their views direct to Ministers.

I have eleven short points to make, which I shall develop at greater length on Committee. This Bill does nothing to increase the stock of housing. As the noble Lord, Lord Diamond, said, its purpose is not to build one additional house; and, as I have said, it will not arrest the decline in the number of houses in the privately rented sector. It is going to require a huge bureaucracy to administer. The noble Lord, Lord Diamond. quoted the overall figures from the Explanatory and Financial Memorandum: 400 additional officers to serve the rent assessment panels, 100 from the Department of Health and Social Security for supplementary benefit surveys and 850 more rent officers. Then, in addition, there is an unspecified number of staff in the local authorities, development corporations, Commission for the New Towns and the Housing Corporation for administration of the rent rebate and allowance schemes. I would ask the noble Lord why there is no estimate of the number of those officers in the Explanatory and Financial Memorandum. We have not got the whole story, and the 1,500 mentioned by the noble Lord, Lord Diamond, might be as low as 50 per cent. of the total needed.

If one looks at the rent officers alone, they will have an enormous task if they have to complete it within nine months with only 850 to do the work and with 5½ million dwellings to cover. I did a little arithmetic, and I worked out that assuming they work a five-day week and that they do not take any holidays at all during the nine months, each one of those additional rent officers will have to make 200 determinations a day. How is this possible? It must be done in a very superficial way if an officer has to get round such a vast number of houses every single working day during that period.

Then the Bill runs counter to the principle set out in the White Paper, with which we agree, that an objective of housing policy should be to achieve fairness as between one citizen and another in giving and receiving help towards housing costs. I very much like the neutrality of that phrase, "the giving of help towards housing costs". It does not bring in the word "subsidy", a word which is the cause of a great deal of unnecessary argument. We are talking about how the State and local authorities should help people with their housing costs, and to use the word "subsidy" brings in a whole host of overtones which muddle the discussion. The Minister for Housing and Construction, who can be pretty dense on occasions, was not able to understand how the Liberal Party could agree with the principle in the White Paper and yet dispute the Bill itself. I think the matter is pretty plain to most people: that council tenants under this Bill are going to be mulcted of several hundreds of millions of pounds while owner-occupiers are going to receive huge increases in the help that they are given towards meeting their housing costs. Housing prices will rise over the next few years, no doubt, as they have in the past. The noble Lord said subsidies are for people, and I agree with him. How does he reconcile that with the idea that the mortgage interest relief system for tax returns means that the more expensive housing you buy the greater assistance you get from the general body of taxpayers? As they go up the scale, owner-occupiers get more help, whereas council tenants will face severe penalties if they occupy more expensive properties. How does that ensure a fair deal as between one type of householder and another? I do not think the noble Lord can possibly explain that, but I should be grateful if he would try when he comes to wind up the debate.

The system of fair rents in the 1965 Act was designed to meet an entirely different set of circumstances and, as it stands, is quite inappropriate for the local authority sector. It is ironic, considering how the Tory Party opposed the 1965 Bill, that they are now defending its application to council tenants. I agree that that formula was not perfect; in fact, I tried to improve it when we were looking at it on Committee. But even if it had been as good as one could possibly have devised, I do not think it can be read over into the council sector. If we take a pair of dwellings, one privately rented and the other owned by the local authority, there is a very great difference in the economic rents from which we start. May I remind your Lordships of the figures that were given in the Milner Holland Committee Report? I realise that this was a long time ago, but I think that the proportions are probably about the same to-day as they were in 1964. For a dwelling costing £5,500 at that date, a local authority would need to charge, to break even, £3 3s. 8d. per week. A private landlord would have to charge £10 1s. 8d., which is almost three times as much as the local authority's figure. If one starts from the market rent, and then discounts the effects of scarcity by a figure of, say, 20 per cent., then, obviously, 20 per cent. off £10 1s. 8d. is very different from 20 per cent. off £3 3s. 8d. This illustrates the difference, and I hope that the noble Lord has taken this point in to see why fair rents are so wholly inapplicable to the council sector, whereas they may well have been (and in fact I agree with the Act that was passed in 1965) applicable to the private sector.

The Tories have asked, quite properly, for people who oppose this Bill to say what they would do as an alternative. As the noble Lord is aware, very few people to-day defend the idea of pooled historic costs because, as the noble Lord, Lord Diamond, mentioned, this amounts to subsidisation of one council tenant by another. The council tenants who are living in properties built before 1960 are in fact paying more than the historic costs in order to bring down the rents of those occupying newly constructed dwellings, and there is a great deal of resentment among tenants who live in older council estates when they look at these figures. Why not take the fair rent formula and then apply discount to the rent given by its application so as to account for these differences which I have quoted from Milner Holland in the costs between the public and private sector? If that were done, it would secure a uniform system of calculating rents throughout the country, which is an objection to the present system, but it would result in fair rents in the public sector which were a great deal lower than those in the private sector because of that difference in costs. I hope that I shall be able to develop this point on Committee.

The next point is that the rebates will not be taken up by all who need them: again, this point has been mentioned. I should like to refer to the evidence of Mr. Frank Field of the Child Poverty Action Group, who says that in 1975–76 about 40 to 45 per cent. of council tenants and 30 per cent. of private tenants would qualify for rebates, giving a total of from 2.5 million to 2.95 million tenants. He goes on to show that in the case of welfare foods only one-third of the eligible families claim the benefit; and with the family income supplement, in spite of a very expensive advertising campaign by the Government, which of course we welcomed, the take-up figure is 50 per cent. So that at best there will be only 1.5 million of the eligible council tenants who take up these rebates, and 1.5 million who do not claim them, for the same sorts of reasons 'that they do not claim welfare foods or family income supplement.

My next point, my Lords, is that the Bill will drive council tenants into the owner-occupation market and push up house prices still further. The Nationwide Building Society recently produced figures showing that house prices are rising at an annual rate of 30 per cent. What is going to happen if the Government achieve their objective of driving out the tenants who are earning more than £2,000 a year, of whom the noble Lord opposite thinks there are half a million? Supposing that those half a million people, looking at this Bill and realising how much more they are going to have to pay, rush round to the building societies and ask for help in obtaining an owner-occupied house, there will immediately be a mortgage famine; and immediately there will also be a very steep increase in the price of houses at the lower level of cost—where, of course, the most serious shortage exists. It is not difficult these days to buy houses costing £35,000 or £50,000, but if you come to an area like mine, you will see how few semi-detached houses are advertised at less than £10,000. Only a few months ago it was a matter of great public interest, and the newspapers had large articles about it, when we had the first £10,000 "semi" which happened to be in Petts Wood, in my former constituency. If this Bill goes through. and the noble Viscount, Lord Massereene and Ferrard, is correct, these half a million people leaving the council sector will drive up the price of semi-detached houses to £15,000 or £20,000. That would be a very serious situation indeed.

Then we have the disincentive to the householders who receive increases in their wages, or who transfer to another job where they get more pay—a point also mentioned by the noble Lord, Lord Diamond. Here again the Bill contradicts the White Paper, which says that the rebate system does not rob the tenant of his incentive to increase his income. The Child Poverty Action Group has given an example which is not, I agree, quite as good as the one quoted by the noble Lord, because in this case the marginal rate of tax is not as high as 100 per cent. But the case cites the position of a man earning £18 a week who has two children, one below school age, and who will suffer a 94 per cent. marginal rate of tax if he gets a £1.50 rise.

The next point is furnished tenants. I know that the Government say they are going to deal with this problem, but I think it highly unsatisfactory to look at the problems in a piecemeal way. It is not as though this is the first time that this problem has been mentioned. I raised it during the Committee stage of the 1965 Rent Act, when I was talking about the assimilation of the furnished tenants into the same procedures as used for unfurnished tenants. I never had a satisfactory answer from the then Labour Government as to why essentially this could not be done; and here we are, seven years later, still arguing about the problem and dependent only upon an assurance from the Minister that some proposals—which we have not yet seen—will be brought forward.

Segregation by income was raised by the noble Lord, Lord Diamond. He said that we could have one-class welfare housing. I think that the position is worse than that. Would it not happen that local authorities would naturally tend to allocate the "grottier" houses to the families with low incomes, knowing that in this way they would be able to minimise the amount of rebates they would give. Therefore, we should have ghettoes of the very low-income families concentrated in sub-standard accommodation, while the richer council tenants went into the newer properties. Therefore, we should not have one-class welfare housing, but should have a series of apartheid ghettoes decided according to the income of the council tenants.

I have two more points, my Lords, and then I will conclude. There is no proper right of appeal by the tenants against the rent determinations. I know that they can object when the local authorities first make the tentative assessment, but once it gets up to a higher level there is a specific injunction to the rents scrutiny committee that they, shall" not be required to have regard to any representations made to them with respect to provisional assessments … That is to be found in Clause 55(6). So noble Lords opposite cannot pretend that this system is the same as that embodied in the 1965 Act. Under that Act, the tenant at least had the right of appeal and of representation before the rent assessment committee. Some of us may not consider that that was a very valuable right, because few tenants were able to be properly represented at those hearings; but at least they could go before the committee and argue the case. But under this system, no tenant will be allowed to appear before the rent scrutiny committee and, worse than that, the committee is not bound to consider any representations which a tenant may submit to it.

My final point is that there is an element of retrospection in this Bill which I heartily dislike. During the Committee stage in another place a provision was inserted prohibiting local authorities which have a surplus on their housing revenue account from using that for the benefit of their existing tenants. In such cases the tenants have paid those rents and built up a surplus in the housing revenue account, but what the Minister is now saying is that that surplus is to be confiscated. He has given warning to local authorities that if they allow rent-free weeks, he will cause them to increase the rents by more than the £1 a week which is provided for in the Bill. Noble Lords opposite always say that they do not like retrospective legislation. They fought hard against the Burmah Oil Bill a few years ago, because that was for the benefit of the shareholders. Let us see whether noble Lords also agree that retrospective legislation is undesirable when it applies to council tenants. I have already spoken for long enough and those are only a few of the criticisms that I should like to make; but I intend to speak at great length at every part of the Committee stage.

4.52 p.m.

LORD HYLTON

My Lords, from a Back-Bench point of view, I rise to welcome this Bill for at least four reasons. I should like to congratulate the Government on their courage in reforming the higgledy-piggledy, lop-sided, unfair, indefensible general practice—one cannot even call it a system—of housing subsidies and finance, which has arisen at odd intervals over the years and which has had linked with it equally anomalous provisions for the control of rents. This must have been a difficult and unpleasant nettle to grasp, and I am delighted to see that steps have at last been taken to bring about a wide-ranging and logical measure of reform. I welcome the transition that is proposed from controlled to regulated status for a very substantial number of houses and which is linked with the extension of housing allowances to private tenants. Those two measures taken together will, I am convinced, do a great deal to prevent the emergence of new slums and new housing problems. One welcomes at the same time the provision that those houses which are now unfit for human habitation will remain under the old control and will not pass over to regulated status.

I welcome very much the improved arrangements for housing associations. My noble friend Lord Gage raised this matter in a debate earlier this year, and all those who took part in that debate are delighted that what was said then has borne fruit so quickly and so effectively. In particular, we welcome the improvements in mark-time rents and in the phasing of reduced subsidies for housing associations. These two points will mean that existing properties in the ownership of housing associations will not start generating deficits. We welcome also the provision dealing with new building by housing associations. Again, we have been given confidence to go ahead in the knowledge that, at any rate in the first three years, we shall not be faced with crippling deficits. I welcome very much the additional help, which has been provided outside the context of this Bill, for those associations dealing with conversion, modernisation and improvement of existing property. I think all noble Lords on all sides of the House will welcome the principle expressed in the White Paper and built into the Bill, that central Government help should be directed to those areas, to those authorities and to those people and families which are now in the greatest housing need. That seems absolutely right.

Nevertheless, in welcoming the Bill in this way I must own to having some doubts, some reservations and some criticisms to express—perhaps not so many as those expressed by the two noble Lords who last spoke, but considerable ones. The noble Lord, Lord Diamond, mentioned the share of national resources which is devoted to housing. When one considers the number of acknowledged slums which there are, the amount of overcrowding, the amount of multiple occupation, the number of houses which, though perhaps in reasonable repair, lack the basic amenities, and the acute shortage in London and in other major cities, one is forced to the conclusion that we need not the same amount or a reduced amount of resources going into housing, but a far greater amount.

A group of mothers who have had a particular experience of the effects on their own lives and on the lives of their children of housing shortage recently had this to say in evidence: Housing, or the lack of it. is probably the greatest single cause of human misery in our society. Bad housing inhibits a person's ability to deal with the outside and often hostile world. That was from a small group. Here is evidence from a much more significant and important group, the London Council of Social Service, speaking for the whole of its very wide membership. It said: Voluntary organisations within the Metropolis urge Her Majesty's Government to regard housing as the service requiring highest priority. It went on to say: We urge Her Majesty's Government to treat the problem of London's housing as an emergency. Those are just pointers which direct our thoughts to the real need for a greater share of the nation's resources to be devoted to housing. If that is not done, I fear that a great deal of public money will be spent unnecessarily. It will be spent on providing welfare services, medical services and prison services for those who are victims of housing shortage and bad housing.

My next concern in regard to this Bill is the question of poverty, which has already been mentioned. If one provides a housing subsidy, a rent rebate or a rent allowance, that is done because the income of the person receiving that form of aid is seen to be insufficient. The community at large considers that a person or a family is entitled to, and should have, a certain standard of accommodation. Therefore it makes financial arrangements so that a person can pay for that standard and size of accommodation. For many years the relief of poverty has been acknowledged to be a national responsibility and not a responsibility of local authorities. The effect of this Bill will be, I think, to take away a part—not the whole, but a part, a proportion—of the responsibility now carried by the Supplementary Benefits Commission and to transfer this to local authorities; and I cannot feel that that is a helpful or a progressive step.

The Bill provides that up to 25 per cent. of rent rebates and allowances will be a charge, first, on Housing Revenue Accounts and, secondly, on general rate funds. Surely, my Lords, we should accept that those houses now in public ownership are a national resource, a national asset. Therefore, if they generate surpluses, surely the central Government should collect those surpluses and, in return, meet the costs of all rebates, all housing allowances and all slum clearance deficits. Local authorities vary from A to Z. Their districts vary and the composition of their towns and cities varies, and to my mind they cannot be blamed if, by accidents of history or migration, or whatever it may be, their districts contain a large proportion of poor people or a large proportion of old, unsatisfactory houses.

The Government appear to maintain that it would he wrong for any subsidy in the housing context to be at the rate of 100 per cent. I must say that I fail to understand the reasoning behind that. The noble Lord, Lord Avebury, pointed out that there would be a temptation to local authorities, to put it no higher than that, to place the lower-income families, or the more high-risk families, in the oldest and cheapest properties. One hopes very much that local authorities will resist that temptation. If they yield to it, they will be compounding not only the problems of the tenants in question by the formation of something like ghettoes, but also the problems facing those local authorities themselves, particularly in the welfare and social service field. I believe most strongly that the message that should go out from this debate and from this House is that we must avoid the formation of new ghettoes, new one-class areas, and that we must aim at all times to achieve balanced communities.

The question of the take-up of rebates and allowances, too, has already been mentioned. Here I welcome those sections of the Bill which will make it obligatory for full details to be provided to tenants and for general publicity to be put out to make known the existence of rebates and allowances. But previous speakers have reminded us of the not altogether too satisfactory experience that there has been with the family income supplement, where, after £300,000, I believe, was spent on publicity, a take-up rate of only 50 per cent. has been realised. I deplore the existence of some 40 major means tests, most of them based on differing criteria; but, on the other hand, I welcome what I believe to be the Government's intention to produce one key application form which will be the passport to all welfare benefits and income supplements. It is likely to be a Herculean task to produce such a form, but I shall be delighted when it happens.

One also knows that in the course of this summer a Green Paper will be produced on negative income tax, and one hopes that the authors of that Green Paper will bear in mind the disincentive effect of housing rebates and allowances. The noble Lord, Lord Diamond, mentioned the £16 per week man, and I myself have received a Parliamentary reply dealing with the position of a married man with children who is now in the £17 to £22 per week wage band. He is the person who must, who is obliged, to put in a very large wage claim if, at the end of the day, he is to be better off in net terms. It is for this reason that I hope that the compilers of the Green Paper will bear in mind the inter action of income tax, graduated National Insurance, family incomes supplement and housing rebates and allowances.

My Lords, mention has already been made in the course of the debate of the decline of the privately rented sector of housing. I am convinced that this Bill will not reverse the trend. A fair rent is not the same thing as an economic rent. That is the fundamental reason, as I see it, why the trend will not be reversed. If any evidence is needed, one has only to look at those institutions now owning rented fiats and houses which are actively engaged in selling them off, either to their tenants or to other institutions with little or no tradition of responsible property ownership. In saying this I am thinking of, as sellers, several of the large insurance companies and some of the biggest builders. My Lords, the number of privately rented houses and fiats is likely to go on declining. The consequence of this will be that much greater burdens will be placed on local authorities and on housing associations.

LORD AVEBURY

My Lords, would the noble Lord allow me to interrupt him? Does he think that one solution to this problem is to encourage local authorities to take over any houses in the privately-rented sector which are offered to them with sitting tenants in them? If the landlords do not wish to continue with two or three properties for which they are receiving what they think is an inadequate rent, they could offer these to the local council, which could then modernise them and add them to their stock. Would not that help to arrest the decline?

LORD HYLTON

My Lords, I am inclined to agree with the noble Lord, Lord Avebury—and not only local authorities, but also housing associations. Sometimes that does happen, but to my mind it has happened far too little, and the Bill in itself does not really do anything to encourage its happening more in the future. When I spoke of greater burdens on local authorities I had in mind particularly mobile workers who move from one part of the country to another: immigrants; the families of prisoners and ex-prisoners, and all those who, for one reason or another, lack the necessary residential qualifications. The Cullingworth Report had a great deal to say on this, and one can only express the hope that it will not be forgotten and that local authorities will bear it in mind when they come to the difficult task of allocating scarce tenancies.

In London, the situation is in many ways more difficult because of the existence of 32 boroughs and because the Greater London Council does not have all the powers equivalent to those of the old London County Council. The Grieve Report drew attention to this problem and pointed out that it is all too easy for certain families and individuals to fall through the net, to move perhaps from one side of the street to the other and thus to land in a new local authority area which would not accept responsibility for them. One fears that the London Housing Action Group, set up by the Department of the Environment, and the London Housing Office, set up by the London Boroughs Association, will not be quite adequate to fulfil and implement the very precise recommendations made by Professor Grieve in his Report.

In this context of greater burdens on local authorities and of the putting into practice and the administering of a complex Act such as will emerge from the Bill before the House, the need for housing aid services becomes more and more clear. There will be a very considerable task of explaining the provisions of the Bill to the persons directly affected by it; there will be a need to explain the possibilities, the choices, the options open, to the individual with housing problems. One hopes very much that both statutory and voluntary housing aid services will act as the champions of those in housing need; that the voluntary bodies will stimulate their local authorities into the appropriate action and, where statutory housing aid services are set up, that these will lead to a re-orientation of the services of the local authority in the housing and welfare sectors for the benefit of the citizens, of the consumers, of the customers. This is something which has already begun to show itself in the case of such boroughs as Southwark who have been pioneers in the field of housing aid.

My Lords, I have one further reservation or criticism of the Bill. This concerns furnished tenancies. In the London area it has been known for a long time that real poverty has arisen, and still arises, because of the high rents of furnished premises. The Francis Report made it quite clear that a large proportion of furnished tenants are involuntary ones, that they accept furnished accommodation because they have no other option, because nothing else is available to them. In this context, I welcome the appointment of a study group within the Department of the Environment to consider how housing allowances might be made available to furnished tenants. One hopes that these allowances will start, as indicated, from April, 1973. Even if this is not possible for the totality of furnished tenants, I hope that it will be possible for families in furnished accommodation and families living in housing stress areas. The Association of Municipal Corporations and the London Boroughs Association have both offered their help and cooperation in this matter. With good will I am certain that it can be resolved.

My Lords, should it come to a Division on this Bill, I should vote in favour. I am quite confident that the Bill will be, and can be, very much improved in Committee. I hope that in the course of the rest of this debate and during the further stages of the Bill there will be drawn a distinction between those persons and families who are "houseless", who for some emergency reason have lost their accommodation, and those who are "homeless" because the housing conditions in which they live make it impossible for them to enjoy normal family life. I hope that this distinction with its rather wide ranging consequences will become quite clear and that our proceedings both now and in later stages will generate a very much greater sense of urgency on the housing question than has perhaps been known for twenty years.

5.15 p.m.

BARONESS GAITSKELL

My Lords, although I do not agree with the noble Lord. Lord Hylton, in welcoming this Bill I do agree with all the criticisms that he made of it in his interesting and humane speech. As I agree entirely with the speeches of my noble friend Lord Diamond and the noble Lord, Lord Avebury, I have done a certain amount of pruning of my speech; but if I repeat some of their arguments perhaps the difference of style will make the repetition tolerable. Despite the fact that the time is right for a serious examination of housing finance—and here I agree with the noble Lord, Lord Drumalbyn—and despite one or two welcome changes, I believe that this Housing Finance Bill is a pretty monstrous measure. It is, in the first place, of a monstrous size: 160 pages. That is four times as large as the European Communities Bill. One of the speakers on the Government side in the other place said that it was a complicated Bill and that it takes a great deal of reading. My Lords, we can say that again!

It is a fundamentally undemocratic Bill because it takes away financial powers from the local authorities and puts them in the hands of the Minister. He will have control of all the housing revenue accounts, of appointing and staffing the new rent assessment bodies; and when we come to the big reorganisation of local government, with a prospect of larger and fewer councils, he will become a veritable overlord with absolutely authoritarian powers. The Housing Minister's own words, that the council house subsidies have become "a growing burden which has become wholly indefensible" perpetuates a myth based on sheer ignorance of the facts—as both my noble friend Lord Diamond and the noble Lord, Lord Avebury, have said. The cost of the subsidies which go to owner occupiers roughly equals the council house subsidies; and so this myth is blown sky high. There has been a conspiracy of silence about its cost to the Exchequer for years while there has been great publicity about council house subsidies. I noticed that the noble Lord, Lord Drumalbyn, was silent about this to-day.

The drive to increase council house rents has forced the Government to reconsider rebates on a massive national scale because many more tenants will not be able to afford the rents. Throughout the Bill this give-and-take procedure ties the Bill up in economic knots. One instance of this is the welcome—and overdue—proposal for rent allowances in the privately rented sector. However, the financial responsibility and the burden fall upon the local authorities, who were not to blame for this injustice: it is the previous Governments who were to blame the Rent Acts were to blame.

But it is the central proposal for the so-called "fair rents" in the public sector, combined with a national rent rebate scheme and leading up to the eventual disappearance of the £300 million council house subsidies based neither on economic logic nor on social justice, that I find particularly objectionable; because this entails, as I have said, a massive transfer of housing powers from local government to central Government. We have not much information to go on from the experience of rent officers in the private rented sector, and a terrific increase in the number of these amateurs will he needed to assess the fair rents of millions of people who will become eligible for the rebate. We shall need an army of these rent officers, none of them professional. We are not to have a gradual increase in rents, but an immediate statutory increase, which will involve much hardship. In some cases the increase has already been shown to have pushed up rents above the fair rent level. As my noble friend Lord Diamond said, tenants in some houses built before 1960 already pay a rent above the cost and so are not subsidised at all. And so the anomalies multiply throughout the Bill.

In a modern society, my Lords, and in affluent countries, lower-paid workers have to be assisted with housing, and this makes it a service. This responsibility is no longer coupled with the freedom of local authorities to fix their rents, as private landlords are free to do. They are compelled to charge the full fair rent; and so far the evidence from many quarters is that these fair rents will greatly increase the rents of almost half of the nation's housing stock. Ironically, the increase in rent, despite the national rebate scheme and the eventual disappearance of the council house subsidy, will result in an accumulation of surplus on the housing revenue account. To me this is the strangest part of the Bill, and in some ways the most sinister. The intention is to take possession of the housing surpluses and not only to use them for rent allowances for the tenants of private landlords but also to allow the Exchequer to keep half of what is left. The result, as has often been pointed out, will be that in many areas council tenants will be paying large increases of rent to finance all the rebates to council tenants as the noble Lord, Lord Avebury, pointed out. They will also pay income tax, an element of which will go to assist the owner-occupiers.

My Lords, people want a decent home at a rent they can afford; this is the goal for any Government. I find this national housing rebate scheme very objectionable, and it underlines the question whether standard rents in the public sector should be at a level which workers with average wages cannot pay without a rebate. It is estimated that, by 1975, 45 per cent. of tenants in the public sector will be eligible for rebates. This complicated economic contraption of a Bill was not needed to deal with increases in council house rents where they are too low. We in the Labour Party are not against rebates, but we are not in favour of rebates as a basis for increasing rents. The list of rebates grows longer every day. We have rebates for rent and rates; for school meals and milk, and for prescription charges and dental charges. The time has come, my Lords, when every Government Bill should bear a label showing its Party of origin and stating quite clearly. "Means-tested by the Conservative Party."

5.25 p.m.

THE LORD BISHOP OF SOUTHWARK

My Lords, I have already apologised to the Minister who will he replying to the debate because, owing to an important church engagement which I made over a year ago, I cannot remain to hear his reply. He has accepted my apology and for that I am grateful, but I think that is all for which I can be grateful to the Government Front Bench to-day—Oh, no, my Lords, I had forgotten the help that is to be given to housing associations. I feel rather like the parson who was at a meal where there was nothing that he could eat. until at the very end they brought in bread and cheese, so that he could, with a clear conscience, stand up and say, "For the least of these His mercies may God's holy name be praised!" That is about the only thing I find encouraging. Otherwise it is for me just hesitation after hesitation.

This is such a very disappointing Bill. One was hoping for so much, but so little has come out of it. That is inaccurate, because I think that rather a lot has come out of it—but not the sort of things for which so many of us were hoping. Let me put my hesitations in the form of brief and simple questions. Should housing be regarded as a social service, like health or old people's welfare and education? Or should it be part of our commercial lives, like the buying and selling of meat, fish and green-groceries? I have no doubt that the Government sincerely believe that it is the first, rather than the second. And that they believe that what they are doing will, among other things, make provision for some of the poorest people. I do not agree with that. But, accepting their conviction, I would put this question to them: Is not this Bill showing a shift in emphasis, a shift away from social service to commercial service? Those points were made in what was, to me, a very convincing speech by the noble Lord, Lord Diamond, who seemed to make out an unanswerable case that there has in this Bill been a shift away from social service to commercial service.

Here, my Lords, is my second question. Allowing for the good intentions of the Government in the Bill, on what basis should a Government assist people to seek and maintain a roof over their heads? We have already heard—and I do not think it can be repeated too often, as I am sure the country as a whole does not understand—that last year Exchequer subsidies amounted to £350 million, which averaged about £30 a year for every council house tenant outside London and £35 for those inside London. The tax relief on mortgage payments—which, as has been) heard frequently this afternoon, is a hidden subsidy—totalled more than £300 million in the United Kingdom. But when you break that down it is an average of £60 for every owner-occupier who is buying a house. Indeed, if a man is in the surtax bracket, and if he wants to buy a country cottage to live in at weekends, he can borrow money at 8 per cent. and, owing to the tax relief, he will pay less than 1 per cent. in interest.

In another place the Minister said—and I am quoting it because it is really a very remarkable statement—that he regarded the Bill as one of the most remarkable pieces of practical Socialism. I would agree that the Bill is remarkable, but I should have thought that, far from its being evidence of Socialism, it is evidence of a saying in the Scriptures: To him that hath more shall be given: from him that hath little, even that which he hath shall be taken away. The Minister who is to reply belongs to the same profession as I do and may possibly put me right on one or two words in that quotation.

My Lords, let us look at the source of the subsidies. From whose pocket will the subsidies come? I know that it is thought by many people that they will come from general taxation. To a large extent the cost of rebates and rent allowances will come from the surplus profits which councils will make from charging fair rents. Councils will have to hand this over to the central Government. This means that some council tenants paying the full fair rents will carry much of the cost of subsidies to other tenants. Usually profits on fair rents will appear where housing was constructed some years ago when costs were low. Towns of mainly inter-war estates are often the worse regions of to-day. Should money be taken from these areas to subsidise housing elsewhere? Meanwhile, those living in homes of their own will not be asked to contribute and will continue to be eligible for massive subsidies in the form of tax relief on their mortgages. It seems to me that an ever-widening gulf is being drawn between the lucky owner-occupier and the less fortunate tenant.

Why subsidies? For what purpose are subsidies given? Is it a contribution towards paying a fair rent? That is what we are told. But what is meant by a fair rent? I must say that I have not succeeded, as I know the noble Baroness who spoke before me told me yesterday that she had, in attacking and digesting the Bill. I cannot pretend to have done that. But I did try to find out what is meant by a true or fair rent. Is it rent that could be obtained on the open market, if there were one? Is it rent that ought to have been demanded at the time when the house was built? Or is it the rent needed to pay off the cost of building and maintaining it? I do not know. Already four-fifths of council tenants are paying more, not less, than the historic cost. This would suggest that so far from helping the older tenants living in older property, they are themselves subsidising newer tenants in newer properties.

The fifth hesitation is: what would be the effect of fair rents on the tenants? It is assumed that many will be encouraged to buy their own houses. I think that is just untrue. It is unlikely, because in London at any rate income has to be as high, in most cases, as £3,000 a year for first mortgages. This means that the more prosperous tenants will remain council house tenants, but in better areas. This will have unfortunate consequences for those whose incomes are lower. In all probability the departure of better-off tenants would leave the depressed areas to become ghettoes for poorer families who might quickly be regarded as second-class citizens. Surely the ideal, to which all parties are dedicated, is a mixed community, preferably in blocks of flats or estates, wherever people live, but the fair rents Bill if it were to become law might well make this more difficult than it is already. I urge the Government to alter the Bill, when it is before the Committee, in such a way that it will not encourage housing managers to put the poorest tenants in the worst property. Those of us who live and work in London have evidence of people being put in substandard property and of the enormous social problems which result from that. I can think of one school where the truancy is 27 per cent. a day. I can think of another school where there have been 88 changes of staff, I think within a matter of 12 or 15 months; and so much of this results from the really poor, indifferent housing conditions in which families find themselves.

Then, my sixth hesitation: what will be the impact of the fair rents of this Bill on house building? For many, certainly for myself, the real defect of the Bill is that it is unlikely to stimulate the provision of more houses. Private builders constructing houses for sale are not affected; private landlords will certainly not be building more houses to rent as a result of the Bill; and many councils have stated that it discourages them from undertaking more building schemes. At a time of severe housing shortage any new housing finance Bill must surely be judged by the effect it has on future building. This seems even more important than its effect on existing housing.

My last point, the seventh hesitation: is the rebate scheme satisfactory, or anything like satisfactory? As we have heard, thousands of tenants will be obtaining rebates each week from their town halls. This will create difficulties and administrative costs, which, I assume, will fall on the local council. It is even more complicated for those who receive supplementary benefits, as their allowances will come from two sources—the Supplementary Benefit Commission and the local council. But there is a further objection to the rent rebate scheme: rebates are kept to a maximum of £8 a week whereas present-day costs are so high that this will be quite inadequate to cover fair rents on newer flats. This criticism could be met by annual reviews on the maximum figure for rebates. So, too, could the objection that rebates are not generous enough since they still leave poor families quite a high rent to find and can only in theory reduce rents to nothing. Obviously periodic reviews on the levels of rent allowances will be necessary if, as wages rise, more and more tenants are not to be admitted.

Those, my Lords, are my main hesitations with regard to the Bill before us. Mention has already been made of furnished accommodation. I hope that something practical will come before us soon, because I suppose, as one goes around London, one of the most distressing facts is that people, sometimes youngsters, students, are having to live two or three in a room for which they are paying perhaps £8, £9 or £10 a week. Yes, this is a disappointing Bill. Those of us who live here know that the housing problem is probably the biggest social problem in our capital city, and this Bill, we had hoped, would go some long way towards solving it. But I say, in sorrow rather than in anger, to the Government that I find it a Bill that is not going to solve these problems. It is a disappointing Bill. It is a poorly thought out Bill. It is a divisive Bill. Yes, my Lords, it is a bad Bill.

5.37 p.m.

LORD MILVERTON

My Lords, perhaps I may be permitted a word or two at the beginning to explain my attitude towards this Bill, because it may help your Lordships to understand why I say what I wish to say. In my opinion, this is one of the most important Bills that has ever come before this country, and, as we all know, it is loaded with difficulty. It is very liable to need improvement from time to time, but I should like to say at once that I am a strong supporter of giving this Bill its Second Reading without any question and letting it go to Committee, where doubtless some much-needed improvements may be made. Having said that, I would add that the Bill has been exhaustively examined in another place. and it remains substantially in the form in which it was originally introduced; and it follows the Government proposals in the White Paper entitled, Fair Deal for Housing.

The Association of Municipal Corporations and the various associations in the same position in our economy have taken a strong position in favour of this Bill. They admit that they have taken the attitude which I take: that there is much that is good in this Bill. It has originated—one has to remember this—from a group of men with wide experience in administration, and with the most honest and patriotic purposes, with the object of doing something to tackle the problem—a task which is long overdue and which has not been tackled as early as it ought to have been. The Association of Municipal Corporations, for instance, have welcomed the Government's intention to tackle the problem of housing finance, and also the preliminary consultation which enabled the Association to express their serious concern over certain aspects of the proposals, especially the inflexible way in which the increases in rents were to be imposed, and the increased rate fund burdens likely to be incurred by many authorities, often in cases where there is no existing deficit on the housing revenue account.

It is a matter of regret that the Government have not responded to the representations that have been consistently made on behalf of the members of this Association. One has to remember that there are 261 authorities in the membership of the Association. They were represented at a special meeting, and with only three dissentient voices the following motion was passed: That, while entirely accepting the need for radical reform of housing finance, the Association in pursuance of the reports by the Housing Committee now calls upon Her Majesty's Government to consider again modification of the Housing Finance Bill at present before Parliament with a view to securing that"— and these, my Lords, are important points— (a) the cost of rent rebates and allowances is accepted as a national responsibility to be met wholly by the Exchequer; (b) the withdrawal of existing subsidies is phased over a longer period: (c) a more flexible approach is adopted for the progression to fair rents; (d) any surplus in the housing revenue account is retained by the local housing authority; and (e) the payment of rent allowances can be extended to tenants of furnished accommodation as soon as practicable. Those are the terms of the resolution. They were conveyed to the Government, and it is a matter of regret to the Association that the Bill has still not been modified in such a way as to make it more acceptable to those who, after all, have the task of implementing its provisions. Only on one point set out in this resolution has there been any response from the Government, and the Association welcome the statement made by the Minister for Housing and Construction in the other place to the effect that he would be embarking on consultations with the various Associations in order to work out a scheme for extending rent allowances to tenants of furnished accommodation if a practical scheme could be devised. I am glad to say that these consultations have already commenced.

While not directly in response to the Association's representations, one amendment has been made to the Bill by the Government which, by implication, seems to concede the case for a more flexible rate of progression towards fair rents. From the outset the Association criticised the dependence of the Bill on a rigid statutory rent increase necessary to produce an average increase of £26 per annum per dwelling during 1972/73 and 1973/74 to balance the withdrawal of existing subsidies at the rate of £20 per annum per dwelling during each of the same years. This means that where a local authority legitimately delays rent increases until October 1 next, an increase of as much as £1 a week for each dwelling is required under the terms of the Bill. However, by virtue of Clause 63(4) it is now provided that the Secretary of State shall have power to direct a lower rate of increase if it appears to him that, as a result of the increases prescribed by the Bill, a total of 2 per cent. of an authority's dwellings will be brought above fair rent level. This amendment is a welcome one, but it is difficult to assess the likely extent of its application, and its uncertainty justifies the case for restoring to housing authorities freedom to decide rent increases which are more in line with their own local circumstances.

The Association again welcomes one amendment which it suggested, and which has been accepted by the Government. This relates to the slum clearance subsidy, the qualification for which has been backdated from April 1, 1968, to April 1, 1965. The Association's position has throughout been clear. The Council of the Association, and indeed the whole membership, has been kept fully informed and has fully endorsed the line adopted by the housing committee. Let me therefore say again that the position of this Association and of similar associations is clear. They have approached the Government's proposals in a constructive way, and they are with the Government in their intention to introduce a radical reform of housing finance. This is something that has been said by the Association for many years, and to a great extent the Bill now before the House seeks to achieve the objectives on which there is a great measure of agreement.

One should never forget that there is a great deal of agreement about these measures that have to be taken, but it is the way in which the Bill seeks to achieve those objectives that causes the Association some concern. It is still our hope that we may persuade the Government to meet these and to find a way of making this Bill more acceptable, or at least less unacceptable, to those authorities and their elected members who at the end of the day will have the task of implementing its provisions. In particular, what we must strive for, surely, is a far more flexible approach in the operation of the Bill and a greater freedom for local authorities to decide their own rate of progression towards fair rents, coupled with an acceptance by the Government that the responsibility for rent rebates and rent allowances should be a national and not a local responsibility. This would go a long way towards overcoming the genuine misgivings of the Association's members with regard to this Bill.

I have endeavoured to underline those sections of this legislation which seem to he inadequate, and I express a hope that at the Committee stage the Government may see their way to accept Amendments which will eliminate the apprehension of those upon whom will fall the task of implementing the provisions of the Bill. A general statement of the suggestions of these Associations was put forward. May I point out that it is not only the Association of Municipal Corporations, but the Association of Rural District Councils and the Association of Urban District Councils. Those Associations cover a large number of citizens in this country. They are almost unanimous in this matter. The gist of the suggestions put forward by them is contained in their resolution to which I have already referred.

My Lords, I support the Second Reading of the Bill but I commend these views for sympathetic action by the Government during the Committee stage. After all. this Bill is too good to be impaired by inadequacy in certain of its clauses, which are open to improvement. We hope we shall get as near to perfection as human beings can.

5.52 p.m.

LORD CRAWSHAW

My Lords, I also wish to say a few words in general support of this Bill and indeed to con gratulate the Government on their courage in introducing it. I should have thought it would commend itself to all parts of the House, for it takes up points from the previous Administration—the various Acts of the 1960s, improvement grants, home ownership and option mortgage schemes—and seeks to build on them. I am both sorry and surprised that the noble Lord, Lord Diamond, professed complete opposition to the Bill. To my mind it is a fundamental and important principle, and a matter of pride to all Parties and all people in this country, that everybody should be properly housed. I see the Bill in the context of a continuing programme for housing, and not in any way revolutionary. I hope the House will agree to it and, recognising that the football season is over, will not make political football out of housing. The fate of the steel industry should warn us against that sort of approach. I see the Bill as part of the Government's overall strategy, and a badly needed measure. For in the public sector only one-tenth of the housing subsidies has been used to help those in real need. In the private sector the system of rent control continues to aggravate the slum problem which we are finding so hard to clear. The underlying theme of the Bill is surely to devote and divert the maximum money, by rent rebates and allowances, to help those in need and to clear slums. It is not simply a question of saving the taxpayer £300 million.

To begin with the private sector, by chance—and I sometimes feel by ill chance: certainly not by choice—I am the owner of a handful of small houses in the Midlands. I believe there is a place for private landlords because private enterprise can be helpful in certain circumstances: often it is an appropriate medium for short-term letting for blocks of houses. I also believe that there is a place for the small landlord who wants to pat his savings into bricks and mortar. I started as an idealist and thought it was monstrous that people should have to live without the necessary modern conveniences of life; and I tried to do what I could to improve my properties. It was not long before I ran into the inflexible principle of rent control. With accountants, bank managers and the like breathing down my neck, it was soon pointed out to me that the rent did not even keep the houses in good repair, let alone help to improve them, and that because of the daunting procedures involved in increasing rents, rent controlled houses were a bad place for any outside money that might be available.

One instance which is fresh in my mind concerns in particular a small block of cottages—and here I am not proud of my record. Frustrated, I tried to sell them—and I think this may help to answer a point put by the noble Lord, Lord Avebury—to the local council, to anyone else who might be interested and also to the tenants; but in no case did I get a buyer. Nobody did anything, and the houses started to fall down round the occupants' ears. Eventually they were declared unfit for human habitation and were not relet. Just before a final collapse, through large grants and loans introduced at vast public expense, the houses were restored, and in fact 12 families now live in them. But I cannot help thinking how much better it would have been if, instead of this drastic "collapse and restore" policy, the houses had been kept up all along. Surely a stitch in time saves nine. Just as under the Agricultural Holdings Act a shortage of fanns to let was unintentionally created, and just as the Land Commission unintentionally created a shortage of building land, so rent control, by unintentionally creating slums, has created a shortage of houses to let. It is hardly surprising that, as the noble Lord, Lord Diamond pointed out, people do not want to rent private houses, because of the state of many of them.

I welcome the fair rent system introduced in the 1965 Rent Act. I agree with the Francis Committee that the rent officers and the rent assessment committees are doing well. I welcome the proposal in the Bill for all houses to pass from a controlled to a regulated system of tenancies, because I hope this will prevent a repetition of the situation that I have described. Finally, I welcome the system of rent allowances. To my mind this is simply an extension of an established principle in the shape of the existing help people in need can get from the Department of Health and Social Security. This is a means test which is already in existence, and to my mind we should not be squeamish about means tests. Everything in this life, from income tax to the church collection, is a means test in one form or another.

In the public sector, I would agree with the points made by my noble friend, Lord Hylton, about the blending of occupants of houses on council estates. I welcome the national rent rebate scheme, which will help all those anywhere who are not well off. Many of them will in future pay less rent than they do now. The more fortunate will pay the fair rent, introduced by annual steps, unless they take advantage of the Government's proposal allowing councils to sell houses at 20 per cent. (or 30 per cent., where a good case can be made out) below the market value. There is also the provision that there should be no eviction from a council house without a court order, and this must be on the plus side. No, my Lords, I cannot see that these people have any real cause for complaint. Least of all do I want to deny the Englishman's traditional right to grouse—I am sure people will all do that, and the best of luck to them!

But the Bill as it stands has caused some genuine anxiety among one or two sections of the community. Particularly the needs allowance has been specially drawn to my attention. Under Schedule 3, paragraph 8, special allowances are to be given to the blind. I hope that the Government may see fit to apply those special needs allowances to the chronically sick and disabled. The homebound disabled person who does not receive an attendance allowance, and the disabled person in full-time employment, may be particularly affected. The overheads, apart from rent, of disabled people are higher than for others: there are such things as special clothes, extra heating and laundry, extra transport costs, and many similar small items. It has been pointed out to me that it would be more than a pity if local authority specially designed accommodation became too expensive for the people it was designed for.

On this point, Clause 23 of the Bill deals with the Advisory Committee on Rent Rebates and Rent Allowances. I feel that the Committee should include at least one person with experience of work among, and of the needs of, the chronically sick and disabled. These points were raised in the House of Commons by my honourable friend, Mr. Woodhouse, the Member of Parliament for Oxford, but too late to be included in the Bill. However, the Minister is aware of them. I do not know whether my noble friend Lord Sandford will care to comment upon them this evening. If he can do so, and if he can give me an encouraging answer, I know that it will set many minds at rest. It is my present intention to put down Amendments at the Committee stage to deal with these points, and I hope that the Government will accept those Amendments.

Finally, I welcome the slum clearance subsidy. I know from practical experience how expensive clearance can be, especially when one does not have a profitable project in terms of cash readily to follow. This is one of the many proposals in what I think is an excellent Bill which will not only go a long way towards eliminating the squalor which surrounds so many lives, but also, by getting the housing programme on the move, will do much to alleviate the persistent unemployment problem.

6.3 p.m.

LORD FISKE

My Lords, before I begin what I want to say I should like to assure the noble Lord, Lord Crawshaw, that nobody on the Benches on which I normally sit is going to play political football with this Bill. Our motivation is entirely the social injustice which we think will arise from it. The time required to deal with the injustices that are in the Bill will be longer than is available.

When one is looking at a Bill that is before Parliament it is nice, if one can, to look first at the parts with which one agrees. I do not think that any of us would disagree on the need for a new look at housing subsidies. This is essential. That the system laid down by Nye Bevan at the end of the war should have lasted so long, largely unaltered, is a remarkable tribute. After all, the world of 1945–46 was a totally different world from that of 1972. It is for 1972 that we have to prepare. I will say something later on that. The other part of the Bill with which I find myself greatly pleased is that concerning the voluntary housing associations. I must disclose an interest: I am the President of the National Federation of Housing Societies and I am chairman of a fairly large housing association operating in the field of the elderly. I know that the association of which I was chairman when we debated this matter last in your Lordships' House, in January, would by now have contemplated going into a recess for a period of time until the dust over this new Bill could settle and we could see where we were. But the work done by the National Federation, and the great common sense shown by the Government, has resulted in a clearance of that situation; so for the next three years at any rate no society, so far as I can judge, need hold its hand. It can go full steam ahead with whatever plans it has in hand without having to think whether at the end of the day it would or would not be able to meet the obligations to which it had committed itself. This is an important change and will make a very effective alteration in the figures of houses and flats coming from the voluntary housing movement, small in total as they are.

But there I am afraid anything good I can say about the Bill stops. This is in spite of the fact that I am a great admirer of the noble Lord, Lord Drumalbyn, who always puts things before your Lordships' House with candour, lucidity and kindness. This is almost irrisistible; but this afternoon it was not quite irresistible. I thought the noble Lord introduced the Bill as though it were an unimportant measure with a general application to the whole community. Of course it is not. This to me is the most important part of my resistance to the Bill. I see the country in round, general figures, divided into 50 per cent. tenants and 50 per cent. owner-occupiers. For the tenants I am afraid the Government are pursuing a policy of bashing the poor. The Government give the tenants a good bash in the teeth and say, "We shall take from you whatever we can get". On the other hand, there are the 50 per cent. of the owner-occupiers who will continue to draw all the benefits which have been mentioned by various speakers during the debate. To me this is social injustice. This is divisive, and no Party which produces such a Bill before Parliament can any longer claim to be the Party of one nation. It is the Party of two nations. We on this side of the House have had this suspicion for some time; it has been rather in evidence. Nothing could have brought it home more clearly and more definitely underlined the figures than this particular Bill.

Was it necessary to do it in this way? I know that the noble Lord can escape most of the criticism by saying that what I am talking about is not in his Bill. But I am concerned with the effects of his Bill: not the effects in detailed pence per tenant per week, but in social consequences over many years throughout the nation, unless he can assure me that there is further amending legislation somewhere on the way. The last thing I want to see is any worsening of the conditions of the owner-occupier; I want to see a bettering of the conditions of the tenant. If you can better the conditions of one, why cannot you also better the conditions of the other?

This leads me to the other big criticism which I want to make of this Bill. I believe that no one in their right senses would call this a simple Bill. Its entire lack of simplicity makes me wonder what exactly happened in the Department. One has a feeling that the Minister probably said, "I want a Housing Bill that produces £300 million and you jolly well go away and write it"—and this is the result. In other words, it has been drafted by those people who are so expert in the drafting of complicated formulæ—the financial advisers of Government Departments.

I must say that I am a little overwhelmed by the complications of this Bill. I am also overwhelmed by this fact: if the subsidy arrangements had to be altered, was it not time to look at the whole of the subsidy system? Is the subsidy system the only way in which this could be handled? Are there no other methods? I have had no opportunity of studying this, but now that we have a negative income tax, would it not be possible to wipe away all housing subsidies, all mortgage interest allowances, and give everybody an addition to their personal income tax allowance in accordance with their family means? I know that this is an over-simplification and that the man who will suffer most is the millionaire with a £50,000 mortgage, but I think that is something we would be prepared to stomach if we could get some social justice into this housing question. I would have hoped that in a situation like this, knowing that the subsidy system needed reform, the Government would have wanted to look at the problem in much more depth, in much the same way as they are looking at the taxation arrangements and simplifying them, not complicating them.

How do I justify the fact that they are making this Bill much more complicated? I do it, from my simple mind, on figures that have been quoted here that in Government service alone 1,600 civil servants will be required—and my guess is that that number or thereabouts will also be required in local government. I should have thought, therefore, that this total engagement of new staff of something in the region of 3,000 people reads oddly against the Election propaganda which said that on all occasions there would be a reduction in the Civil Service wherever it was possible, whereas here we have an increase in public employment, even in the Civil Service itself, in pursuit of doctrinaire policy. My conclusion is that it is a bastard Bill, sired by Tory dogma out of social justice, and since it is not our practice to vote against a Bill on Second Reading, all we can do is to wish it a very short and lively life.

6.13 p.m.

LORD MERRIVALE

My Lords, I could not follow the noble Lord, Lord Fiske, in wishing this Bill a very short life. I should like to view this legislation, although not personally affected, from the point of view of the tenant. As this is a complex and lengthy Bill I may perhaps be permitted to confine my remarks to one or two aspects of it. I am particularly interested in the idea of fair rents in the private sector. As the White Paper admits, renting will always play a vital part in meeting people's needs, and if this Bill redresses some of the evils mentioned in the White Paper, namely, unfairness, neglect of people in need, dilapidation of property and waste of resources, I am perfectly prepared to support it.

One aspect that worries me is the fear of a number of people that they will not be able to afford the new rents or be eligible for reasonable rent rebates or allowances. That there is a need for change is apparent if one considers just one example quoted in the Francis Committee Report, where a controlled tenant paid a rent of £28 per annum and a regulated tenant in the same block for similar accommodation paid a rent of £115 per annum. That was in Glasgow. In fact, the Francis Committee recognises the overwhelming need for the conversion of controlled tenancies into regulated tenancies.

I should like now to consider London where, as the Francis Committee Report admits, there is excess demand for rented accommodation. It seems to me that the solution is not as hinted at by my noble friend Lord Mowbray and Stourton, on December 14 last, when he said that if one is seeking further accommodation one should look further afield. Again, the Francis Committee recognises the problem when it says: Much of the demand arises from the desire of people all over the country, and indeed all over the world, to come to London permanently or for temporary periods in order to enjoy amenities or facilities which are available in London, and not simply in the search for residential accommodation. The amenities and facilities of London therefore would seem to play an important part in people's choice of location to live.

This Bill, I feel, should contribute towards making suitable and adequate accommodation more readily available by decontrolling tenancies. In this context, I note that the Francis Committee feels that rent officers and rent assessment committees can maintain a balance between landlord and tenant and arrive at a fair rent, yet ignoring the scarcity element. This last factor, the scarcity element, seems all-important, bearing in mind the soaring prices and costs for houses and flats and the increasing shortage of them. On the other hand, I imagine that my noble friend will be aware that the Urban District Councils Association feel that in the absence of true comparables the fair rent levels will necessarily be arbitrary; and I rather tend to agree with the right reverend Prelate the Bishop of Southwark concerning fair rents—what on earth is a fair rent?

Certainly, I welcome the national scheme of help towards rent for private tenants of unfurnished accommodation. The White Paper, however, recognises that the cost of rent allowances is uncertain and that the expenses of administration will be high. I fail to see why Her Majesty's Government are prepared to meet the whole amount of rent allowances only for the period 1972–73 until 1975–76. Will that include the extra expenses incurred of administering the scheme? Secondly, after 1975–76 why should the ratepayer have to be landed with a proportion of the bill for the rent allowances? The relief of poverty, as has been said by a number of noble Lords and also by the various associations, is certainly a national obligation and not a local one. Everyone ought to recognise that fact. I feel, too, my Lords, that a lot of time and paper work will be involved in compiling the required information which is listed in Schedules 3 and 4 of the Bill.

The procedure as explained in paragraphs 4 to 9 inclusive of Appendix 2 of the White Paper may not be, I feel, readily understood by all tenants. There may also be difficulties of computation taking into account the incomes of tenant and spouse and bearing in mind the items to be disregarded or deducted. I feel that these are all areas where the tenant may not be absolutely certain where he stands. There could be a possible worry, too, for the tenant arising out of the fact that an authority may pay a rebate or allowance at any time and in any manner that they, the authority, think fit. There is, too, as I see it the question of rebate or allowance having to be gone into again after a six-month period, or earlier than that if there has been a change of circumstances. I fail to see why the period should not be longer if there has been no change of circumstances.

That brings me to the question of publicity and explanation of the rebate and allowance schemes. It seems to me doubtful that every tenant after notification of an agreed new rent or a rent officer's registered fair rent will be in a position to ascertain readily and easily what rebate or allowance he is entitled to. I know at the moment from talking to a number of people who will be affected by the Bill that they seem to be in great ignorance.

Leaving Part II of the Bill for Part IV, one can but congratulate the Government for the provisions of Clause 38 and Schedule 6 which statutorily insist that rent increases should be recovered in stages, thus alleviating hardship; but is the time allowed long enough and is there sufficient flexibility? This is a point which was lengthily and carefully developed by my noble friend Lord Milverton and I hope that Her Majesty's Government will give this matter careful consideration. My Lords, in conclusion, with these reservations I certainly support the Bill whose objects are fairness for the decent landlord and tenant alike; an improvement in our slums, and the availability of reasonable accommodation.

6.23 p.m.

LORD DAVIES OF LEEK

My Lords, I have listened with interest to the debate. I have also listened with interest to the noble Lord who has just sat down, and I agree with some of his observations. But speaking at this late hour this evening I have come to the conclusion that probably nearly 90 per cent. of what could be said in a Second Reading debate has been said already. Consequently, once again, speaking towards the end of the list, I do not intend to bore the House by reiterating what is already well known and what many experts in this House have repeated. First of all, I want to point out that so far as housing is concerned the borough treasurer of Hemel Hempstead wrote a magnificent paper on this subject, in which he said: Housing is the last great service left to the district councils. If the White Paper proposals are implemented without modification, all the reality of control will pass into Whitehall hands. The very real measure of freedom which housing authorities have enjoyed until now will be gone. This is neither necessary nor desirable. This is absolutely correct.

We were urged not to make a political football out of housing. The trouble is that the Government have done exactly that. I was grateful to my noble friend Lord Fiske who paid a tribute to Aneurin Bevan and his housing efforts and to other Ministers of that time. I had the privilege to take part in some of the Committees, and, whatever anybody may say, the conception of housing that was generated and given birth by the first Labour Government was one of the finest conceptions of housing in a civilised world for the mass of the ordinary people. For the first lime it was a breakthrough in real living. The great tragedy of the Conservative Party (once before I gave a little lecture on Lord Cecil's famous book on The Philosophy of Conservatism) is that they seem to have gone back completely to the arid, acquisitive, money-grubbing idea that was one of the worst features of the shopkeepers of England of sixty, seventy or eighty years ago. We have broken down completely the idea that the humanitarian side of that great Party looked at years ago. This is wrong.

There is another point, which is almost a Second Reading point, which I would refer to before I sit down after making my six or seven minutes speech. I should like to say that we are churning out legislation with divisive purposes without sometimes realising what is happening. Without being ruled out of order, or without ruling myself out of order, I would point out that the industrial courts and the legislation we churned out on trade unionism are now finding some fundamental snags that were in small print. Unfortunately, through my own fault and owing to another engagement, I was unable to enter into the debate on A Strategy for Pensions; but in the small print on page 40 of that White Paper, after the magnificent edifice of the great cornucopia some fifty years from now for those who enter the pensions scheme, one finds in small print that there is no guarantee that these bonuses will be paid because those private occupational pensions are not dynamite. As to the small print in this Bill, talking about being divisive I had marked something with a piece of paper containing a lovely little poem called Ora Pro Nobis, but it is in Welsh so I will not read it.

LORD SHEPHERD

Why not?

LORD DAVIES OF LEEK

Well, my Lords, certainly we shall need praying for if this is applied. Let us take Schedule 3, paragraph 5, on page 122. I happened to live through the old means test period in South Wales when the divisive element drew young sons and daughters away from their homes. Listen to this, my Lords: If some person who resides in the dwelling occupied by the tenant appears to an authority to have a higher income than the tenant, and the authority have grounds for considering that in the special circumstances of the case it would be reasonable to make their calculations under this Schedule by reference to the income of that other person and not of the tenant"— I should have put in rather better punctuation if I had dealt with this— they may treat that other person as the tenant and make such payments of rebate or allowance (if any) as ought to be made on that basis. In other words, that is a complete means test of an individual. If we consider, for instance, a married man with two children, who is earning £18 a week and living in a council house, what is this poor boy going to do now? He will be giving information, first of all, to the Inland Revenue for tax purposes. If he digs somebody's garden on the side, despite his pay-as-you-earn the Inland Revenue will want to know about it. He will also have to give information in order to claim his rent rebate allowance. In fact, he will have to have a good clerical education these days. If his children are going to school—perhaps hoping to go to a grammar school or to university or to a good comprehensive school, which often would be better—he has to give information to the school authorities if his children are to get school meals. Then, in order to obtain family supplement he has to give information in that connection. Consequently, we are now putting upon the households of Britain a terriffic burden of paper filling. I mentioned the other night that in this age of Xerography and the Xerox we are drowning ourselves with masses and masses of paper. As the noble Lord pointed out, we might find some approach that is a negative income tax. As an old land taxer myself who remembers his Henry George, I would point out that it was 1931 when the Labour Government had the courage to decide, with the sound of trumpets and banners flying, at a conference that they were going to apply single land tax to the land. The only one who ever got anywhere near it was our late noble friend Lord Silkin in a kind of round about way. Some people scoff at the Henry George concept, and it may not fit into the modern society, but there is not the slightest doubt that the densest of us sitting in this House realise that there is something wrong in the cancerous growth of land values to-day which are not returned to the community; and the basis of one of our housing problems, the cost, is this cancerous growth of land values. As Ruskin said in his famous essay Unto this Last, There is no wealth but life". Land values are generated by the life of the community, and housing, as such, should be a communal outlook.

Finally—and I promise to be short—I do not like our being accused of being divisive. I have the full copies of the minutes, and when we get down to our homework on the Bill some of us intend, to the best of our ability—we cannot completely turn the Bill back, but I think this is our bounden duty on both sides of the House, whatever our political points of view—to endeavour to improve it, since the Government intend to get it. In the hundreds of sittings that they had in the other place there is no doubt that some very strange things have been said. It has been almost like some of the daft things that are said on television, when there is trial by television and people make immediate "off the cuff" answers.

I shall have to paraphrase, but one builder, speaking during the Committee stage in another place [cols. 2834–5], still had the old-fashioned idea of the coal in the council house baths, even in this year of 1972. He said that he had been concerned for years with the condition of council houses and the lack of care and maintenance shown by council house tenants, in striking contrast to what happened in the privately owned houses. He did not qualify that. Which privately owned ones? The £28,000 houses or the £5,000 or £6,000 houses? Does he mean the slum privately owned houses? He then goes on to say that there was a striking contrast because the gardens of the council houses were in a mess, the fences were broken and linoleum was in the windows. We were being puffed up with that kind of rubbish. It was an insulting, divisive speech to those people who are still not able, because of the cost of houses, to enter into the commitment of buying a house on mortgage. We—and most people in this Chamber—have eradicated that crude idea of council housing.

Nevertheless, as my noble friend who opened the debate on this side of the House said, one of the main things about this Bill is the hidden factor that this Bill is not going to add one iota to the sum total of new houses built in this country. It is a manipulative Bill to look at the subsidies from a completely different point of view. The House will only be bored if I reiterate the old stories about these subsidies, but my noble friend's figures were absolutely right when he was interrupted by the noble Viscount. Only about 1.2 million to 1.3 million people in council houses are receiving subsidies now. Most of them by now have bought outright those pre-1960 houses. Consequently, when we have the opportunity to study this Bill in depth I hope that on both sides of the House we shall co-operate to eradicate what I consider to be some of the most vicious, divisive introductions into the Bill which I consider to be harsh and abrasive at this time in the history of this country.

LORD HYLTON

My Lords, would the noble Lord not agree that the slum clearance subsidy will in fact produce a large number of new houses?

LORD DAVIES OF LEEK

My Lords, I said that I did not want to delay the House. I was making a threnody, not writing a psalm about the Bill. There are parts of the Bill, of course, with which I agree—it would be foolish if I did not give some agreement to parts of the Bill—but so much of it is bad that it would have been better if the Government had not brought the damned thing forward.

6.35 p.m.

LORD BROOKE OF CUMNOR

My Lords, the noble Lord. Lord Davies of Leek, said that he was not going to embark on a psalm or a threnody. I hope that I shall confine my speech to logic; but I want to begin with an apology. I am sorry to say that I missed most of the first three speeches this afternoon. I trust that I have a fairly good reputation as a regular attender in your Lordships' House, but to-day I had promised to take part in a ceremony at the W.R.V.S. headquarters in honour of the late Lady Reading and I felt it was my duty not to break that promise. I have listened to the rest of the debate with very great interest.

My Lords, the whole housing situation of this country has taken on a new pattern over the last twenty years. Twenty years ago there was an overall housing shortage almost everywhere, including the villages. That overall shortage now has disappeared, and in numbers of places—though it is difficult for us in London to believe this—there is actually a surplus of available houses. However, that has made but little difference to the utterly tragic housing conditions which still exist in many big towns and cities, and it is on that aspect that we should be concentrating our future effort. So far as I can judge this Bill, it will change the situation in several important respects where, if nothing were done and if this Bill were not enacted. we should see the housing situation and the housing financial situation alike worsening.

The first point is that, if nothing were done, it would become harder and harder for housing authorities in what I may call the hard-pressed areas to continue to build at all, unless they were going to charge what would seem to the tenants to be exorbitant rents. I do not know how familiar all your Lordships are with the duties of a housing authority, but it is a very grave situation when a housing authority, whatever its political colour, seeking to do its best. finds that costs are rising against it so rapidly that it simply does not know how it can continue to build and make ends meet, despite existing subsidies and despite the charging of rents as high as it thinks the tenants can bear. That situation exists now in some large towns and cities, and in particular in places where the housing authority has a big slum clearance task to tackle and finish.

Slum clearance is perhaps the most complex and difficult part of the whole housing effort that a housing authority has to make, and I do not think any of us can be proud yet of the rate of slum clearance that has been achieved. It seems to me lamentable that we have to think of people going on living in squalid box-like homes for perhaps another twenty years because Parliament and the housing authorities together have not yet been able to overcome the slum clearance problem. Having been Minister of Housing I have seen some terrible sights which have remained in my memory ever since, and not all those slums which I can remember seeing have yet been cleared. So that is where, if nothing is done, council housing progress in some of the most needy areas—and when I say "needy" I am speaking in terms of housing need—may be forced almost to a halt.

Secondly, if nothing were done, under the legislation which this Government inherited from its predecessors the total weight of housing subsidies would increase very rapidly indeed. A figure of £350 million a year has been quoted this afternoon. That is an all-in figure. It is difficult to define exactly what one is covering when one speaks of the total of housing subsidies. But I think your Lordships can accept that in a few years' time the housing subsidy burden would be increased by a further £100 million a year if there were no change in the law. On top of this, we should have to recognise that large numbers of the most needy people (and when I say "needy" here I mean in terms of money, rather than housing need) would not be able to afford the kind of house or flat which they ought to be able to get from the council; or indeed would not be able to afford to pay the rent which would be a reasonable rent for the privately owned accommodation they were in. That, summarily, is a statement of the problems which this Government have had to face, which any Government in present circumstances would have to face, and this Bill is an embodiment of the present Government's proposals for dealing with each of those crises.

It does not seem to be right to try to solve this problem in the easy way by pumping in more and more public money. I think it is generally accepted that not much more than one-tenth of existing subsidies are going to the people who really need them. I know that one can argue about the precise percentage, but everybody who is familiar with this problem is aware that, in general under existing law, housing authorities have been spreading their subsidies over the whole field of their council housing, and spreading it too thinly to benefit sufficiently those who have the lowest incomes. So simply pumping in more public money under the present law is not really a very clever solution to put forward.

I have long believed that every local authority should adopt some kind of differential rent or rent rebate scheme. I know that a former Minister of Housing in the previous Government urged all local authorities to do that. I have some direct experience of it because I was on the housing committee of the Hampstead Borough Council. My noble relative was on the committee at the same time, and when she became chairman I thought the moment had come for me to resign and move to a different committee. But I was able as a member of the council to watch her carrying out the operation of introducing a rent-rebate scheme for the first time into that borough. All kinds of frightening things were said about it beforehand, some of which I have heard repeated on the national scale this afternoon; yet when it was introduced it went very smoothly. The opposition on the council very quickly accepted the general principle, and confined their criticisms to points of detail. None of this was surprising, if only because the first London borough council to introduce a rent-rebate scheme after the war was the Labour-controlled Lambeth Borough Council. So it can be said that local authorities of all political colours have in the past adopted, and successfully worked, rent-rebate schemes of some kind.

May I, in passing, ask the Government whether arrangements could be made to co-ordinate the tests of rent rebate and rate rebate? Rate rebate is comparatively new, and I think it is a good scheme; but it was introduced by the Labour Government, who did not at that time fear that they would be doing serious social damage by introducing another means test. But if by any chance those two tests could be combined on the same form, perhaps through the same machinery, that would be a sparing of still further complication.

At the present time there is, outside Birmingham, no kind of rent relief for private tenants. So far as I know, the Birmingham scheme, which they have introduced by Private Act, has been working well. Advantage has not yet been taken of it on a large scale, but I would judge that almost everyone who has seen it at work in Birmingham believes it to be an experiment which should be extended to the rest of the country. I am certain that many of those tenants who at the present moment are getting least value for money in relation to the rent they are paying are private tenants and not council tenants; and something should be done about that. The Government have promised that, if they can possibly work out a scheme, the plan of rent allowances will be extended also to furnished tenancies. I can foresee that it is going to be very difficult to think out a satisfactory scheme there, but I believe that all of us, in all quarters of your Lordships' House, hope that the Government will be able to come forward in the next Session with a plan to extend rent allowances to them.

As I have said, my Lords, acute housing need is now largely confined to big towns and cities, apart from relatively small slum areas in other places which have not yet been cleared. But though in the countryside there is seldom any general housing problem now, there is still, I would judge, in villages a shortage of bungalows for old people. One question that I would ask the Government is whether they are satisfied that this Bill will enable district councils (I know that they will shortly be a new kind of district council) to continue to press ahead with their building of bungalows for old people. I believe that some of these authorities are anxious about this point. The complexity of this Bill is such that I could not blame them for being anxious, and I certainly could not claim that I understand the finances of the Bill sufficiently well to express an opinion as to whether or not there is reason behind their anxiety. Here again I believe that the whole House will be at one in saying that they wish to see the building of bungalows for old people continuing, not only in and around towns but in the villages, too.

LORD DAVIES OF LEEK

My Lords, if I may intervene, I was delighted to hear the noble Lord, Lord Brooke of Cumnor, draw the attention of the House to the need of some of these rural villages. Many of the young leave the villages because the old folks still occupy some of the country cottages; and, as a result, family life in many of the rural areas is broken up. I hope the noble Lord will use his influence, which is considerable, to get the Government to look more deeply into the point he has raised this afternoon.

LORD BROOKE OF CUMNOR

My Lords, I am grateful for the noble Lord's support, and he will have observed that I have already asked the Government to look into this: I think I was the first person in the House to do so to-day. What I have in mind is that in country areas what are declared to be fair rents will be relatively low compared with those in towns and cities, and it may be that even charging the fair rents, subject to rebate, will not give the local authorities sufficient resources to go ahead. I trust, however, that my anxieties are needless.

In mentioning the district councils, may I also say how much I hope that the Government will, in their circulars and so on to local authorities, make it as simple as possible for those local government officers who have to administer the Bill. There is great strain on local government officers whenever important new legislation reaches the Statute Book. On this occasion it will be happening when there is additional strain of a different kind upon them; that is, the changes that may be happening in their own lives and careers owing to local government reorganisation. I am certain that it would be of great advantage to the Government, and to the success of any new Act affecting local authorities, if they would simplify as much as possible their guidance and directions to local government officers.

I too should like to join in thanking the Government for having amended the Bill in another place in favour of the housing associations. I believe that that problem has now been solved. I know it is a great disappointment to my noble friend Lord Gage, who has a special interest in housing associations, that he was not able to attend throughout this debate and speak, but I am quite sure that he would have expressed his thanks also. I regret that I cannot express thanks to the Government for what they have so far done, or failed to do, on behalf of student housing. I know that the student housing organisations are extremely anxious that they should be included in the category of housing societies and associations and thereby enabled to benefit in the same way from financial assistance. So far, though successive Governments have been very polite to them, they have not received very much in aid. I say "successive Governments" because the noble Lord, Lord Annan, and I, in the time of the last Government, raised this point in your Lordships' House and subsequently went along to one of the Departments to discuss it with Ministers. I understand that the attitude of the Government now is that all assistance for student housing associations is the responsibility of the Department of Education and Science, and not the responsibility of the Department for the Environment. I doubt whether this is logical; it certainly is unsatisfactory, because, so far as I can see, the Department of Education and Science, though it accepts responsibility, fails to do anything whatever about the subject. I trust that we shall be able to return to this matter in our proceedings in Committee.

As to the extent to which the burden of rent rebates and rent allowances should fall on the local authorities, I can see that the local authorities have, on the surface, a good argument here. But I should like to know whether the burden on local authorities arising out of rent rebates and rent allowances is likely to worsen as compared with the additional burdens falling on the, Exchequer in respect of subsidies. If, in fact, the Bill is going to leave the balance just the same between the two, I do not believe that the local authorities have a strong case here. At the present time the local authorities, though they now are arguing to the Government that assistance to those in need should be a national and not a local burden, are nevertheless, from their housing revenue accounts, considerably aiding those who are in need. No doubt these calculations can be worked out. My desire is to see that there should be fairness to the ratepayer and the taxpayer alike.

THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD)

My Lords, I wonder whether the noble Lord would like me to answer that point while it is in the mind of the House. In fact, the overall rate contribution will be slightly reduced, and it will be much more evenly shared between authorities.

LORD BROOKE OF CUMNOR

My Lords, I am grateful to my noble friend for saying that. I felt sure that the Government had an answer, but I could not see clearly enough through this financial maze to be able to tell exactly where we were going to come out in the end.

LORD DIAMOND

My Lords, as the noble Lord is on this point, I am sure he will forgive me for interrupting and asking him whether he is satisfied with his noble friend's answer, which did not define a date. Although his noble friend may be right as regards three years ahead, he may well be wrong, and I believe that he is quite wrong, as regards a period longer than that.

LORD BROOKE OF CUMNOR

My Lords, I felt that I was perhaps trespassing on Committee points when I raised this matter, and I hope that the noble Lord, Lord Diamond, who has brought forward another aspect of the subject, will forgive me if I do not pursue it further, because I do not think that either he or I can as yet have all the figures at our fingertips.

I was troubled by certain points in the speech of the right reverend Prelate the Bishop of Southwark, particularly when he alleged that a Bill like this would create one-class areas. I am bound to say that this has not happened, to the best of my knowledge, in the areas of the local authorities which have been operating intelligent rent rebate schemes for years. That seems to me to be more important evidence on the point than any theoretical doubt as to whether it will produce what have been called "one-class ghettoes". I do not think it will. Nor did I agree when he said that the Bill was unlikely to stimulate more housebuilding. It seems to me absolutely certain that these new subsidies, particularly in respect of rising costs, and slum clearance expenditure, will bring about more rapid slum clearance than would have taken place otherwise, and you cannot clear slums without building more flats and houses. I should have thought that the new subsidy arrangements were quite definitely going to invigorate council building programmes rather than otherwise.

In conclusion, may I say how deeply interested I was—I think we all were—in the speech of my noble friend Lord Hylton. I thought that he had a wise overall approach, and also put his finger on a number of points which needed further and more detailed examination. I agree profoundly with him when he says that good housing should be the first priority in social policy.

6.57 p.m.

LORD LEATHERLAND

My Lords, what a beneficent measure the noble Lord the Minister made this Bill out to be! So beneficent that I found myself entirely bereft of words with which to sing its praises. Of course the Bill abounds in bounties of one kind or another. The private landlord will be able to draw a weekly and regular dole from public funds; the Exchequer will get £200 or £300 million a year mainly from council house tenants. I should be surprised if that £200 million does not eventually find its way into the pockets of the surtax payers. So inadequate may my words be in praising the Bill that I think I must transform myself for a few moments into the form and identity of a Tory chairman of a Tory council housing committee. I know there are not so many of them about as there were a fortnight ago. It goes like this:

"Good-morning, Mr. Chairman", said the housing manager. "'Morning Smithers", I replied with my usual courtesy. "Is there anything about the department that I ought to know? "He says, "Yes, Mr. Chairman. I have already taken on a qualified accountant, three book-keepers, two typists and a telephonist to deal with the extra work that the Bill will throw upon us, and I am searching around for a few pensioned policemen so that they can act as means test snoopers." I said, "That is right. The more officials we employ, the more our leader will be pleased, for we know how eager he is to reduce unemployment. And", I said, "while we are about it, remember to get a few thousand forms printed. We shall want them for the means test. And that of course will increase employment in the printing industry."

"Now, Mr. Chairman", went on the housing manager, "there is one thing I don't quite understand. Under this Bill the rents are supposed to go up in April, last month, yet the Bill has not yet passed into law. It is still going through Parliament. Isn't that what they call retrospective legislation'? Isn't it supposed to be improper?" I soon put him in his place on that point. "It is only improper when a Labour Government does it. When we do it it is our new style of Government. What our leader calls his 'quiet revolution'".

"Very well", said the housing manager, "I shall have a report and a programme of action ready for our next committee meeting. But I am rather worried about whether our councillors will be able to understand the Bill. It is so long and complicated, with 169 pages." "You need not worry about that", I told him. "If Peter Walker says that the rents must go up, then they must go up and that is the end of it." "But", said the housing manager, "I thought this Government believed in giving more power to the local authorities, yet this Bill is taking away one of the most important powers that they have." "What you must remember", I said, "is that the gentleman in Whitehall always knows best."

Then we went on to discuss what would have to be done in the next few weeks. "First of all", I said to him, "you must fix a fair rent. If you find any difficulty in doing that, you must consult the Government's rent officer. He will probably say that a fair rent should be two-and-a-half times the gross value. That is the kind of decision and verdict which he has been delivering in cases for quite a long time. The present average rent is only one-and-a-quarter times the gross value, so this means that the rents will be doubled. It is as simple a calculation as that. But", I said. "you will not double these rents straight away. You will put them up 50p this year—the first year—or by £1 if you defer the increase until October instead of putting it into operation in April. Then in the second year you will put them up another 50p, and in the third year you will put them up another 50p. That means an average of £1.50 per week in average rents over the three years, and of course the Bill states that in some cases they can increase by £2.25 per week. Then, at the end of the three years, our Minister will bring in another order fixing the scale of rent increases for the following three years." Here I whispered to myself, "That is, if he is still in office."

Then I went on to say to the housing manager, "Of course, when these increased rents are fixed, you will notify the tenants. Some of them will complain, but do not worry too much about that. We have appointed a group of Rent Gauleiters. The Bill calls them the Rent Scrutiny Board and their duty will be to fix the official seal of approval to the new scale of rents. When that is done it is final and the tenants can grumble as much as they like." "But", said the housing manager, "what about those very poor tenants who cannot afford to pay an increased rent?" "Ah", I said, "that is where our leader's generosity comes in. You know that our leader is always eager to help the poor. That is why he has put up their food prices by 17½ per cent., and put up their rates and fares, and put up the price of their shoes, clothing, gas, electricity and school meals. That is probably why he took school milk away from hundreds of thousands of school children. And he is trying to prevent wages going up, because he does not want to see these poor tenants with so much money that they waste it."

Then I went on—this was becoming a monologue between the housing manager and myself—"The next task you will have is to interview these poorer tenants who want rent rebates. That is where your thousands of forms will come in. That is where your ex-policeman snoopers will start to work on the means test, because you will have to gather together all the details of the man's income —and the wife's income, too, if she goes out two mornings a week scrubbing floors in the homes of the local bourgeoisie—and of course you must get details of the children's earnings as well." "But", said the housing manager, "if these young people stay at home, will their parents' rent rebate not be reduced and will it not be rather hard if they are saving up to get married? Will they not be driven to leave home and break up the family?" "Be that as it may", I replied, "it worked all right in the 1930s and it ought to work all right again to-day ".

"Then", said the housing manager, "consider the case of the zealous workman who volunteers to work overtime. Will that not result in his rebate being reduced? Or consider the case of the lazy lout like that Stan Ogden in 'Coronation Street' who takes a day off whenever he can. Because his income is reduced, will his rebate not be increased and will all of these things not be bad for our national productive effort?" "Do not take any notice of that", I said. "If the railwaymen have to work overtime to get a living wage, why should we pamper the others?"

"Then", said the housing manager, "I understand that the tenants of private landlords are to have rebates just like our council tenants". "Yes", I said, "but these will be rather in the nature of rebates in reverse. The landlord will put up the rent, and then the poor tenant will go along to the rates collector and the tax collector. The rates collector will give him a sum of money in his hand, and he will take it along and give it to the landlord at the end of the week, in addition to the ordinary rent which he will be paying out of his own pocket". "But", said the housing manager, "does this not mean that the private landlords, the property owners, will be getting a subsidy, a dole, from public funds?" "Of course it does", I said, "but then our leader has always been in favour of a property-owning democracy.

"Then does this mean", said the housing manager, "that all of us, as taxpayers, will have to contribute towards this dole which will be paid to private landlords?" "Yes" I said, "Not only as taxpayers will we have to contribute. We will have to contribute as ratepayers as well, because part of the subsidy to private landlords has to come out of the local rates. "Oh", said the housing manager, "that means, does it not, that in addition to having to pay the increased rents which we impose upon them, our council tenants will have to pay increased rates as well to subsidise private landlords?" "Yes", I said, "and that will be in addition to the 10 per cent. or 12½ per cent. by which we have increased the local rates in the last two years since we came into office. But do not get too sentimental about this. Our leader has arranged for nearly a million men to be unemployed and they do not pay any income tax at all, so the only contribution they will have to make is through the extra rates which they have to pay."

"But", said the housing manager, "what about all these eight new subsidies which will be available in place of the subsidies which are to be swept away?" "Oh", I said, "I know what you mean" —and I read them from the Bill—"the residual subsidy, the transition subsidy, the rising costs subsidy, the operational deficit subsidy, the rent rebate subsidy, the rent allowance subsidy, the town development subsidy and the slum clearance subsidy." I could see that the housing manager was becoming impressed by this apparent generosity of the Government and I said, "You must bear in mind that our leader is a very astute man. He knows that with the rising cost of land and of building, and the fact that there will be more houses to subsidise as the years go on, the present subsidies of £200 million a year will automatically rise to £400 million a year in the next few years. If you add together the whole eight of the new subsidies, you will find that they come to only £200 million, so that there will be £200 million profit to the Exchequer, and we know where that is likely to go."

"There is just one more thing that is worrying me", said the housing manager, "and it is disturbing me very much. What will happen if our councillors decide to ignore this Bill and carry on with the present subsidies?" "Ah", I said, "We have thought of that. You remember I told you a few minutes ago about the Rent Gauleiters that we had appointed to fix finally on the increased rents? Well, we have another official in reserve. We call him the Obergruppenfuehrer or, in the words of the Bill, the Commissioner, and if the councillors think that, just because they have been elected, they can have a voice in fixing these rents, we shall march in the Obergruppenfuehrer, and he will take over, lock, stock and barrel, the whole housing administration of the borough. If the councillors get too stubborn, we can take them to court and have them fined £400, and if they do not pay that £400 they stand a good chance of being sent to gaol." "Thank you, Mr. Chairman", said the housing manager, "you have cleared my mind considerably. I can now go and prepare the papers for next week's meeting". So I left him to get on with his work and resumed my own normal identity as a Member of your Lordships' House.

My Lords, I feel that one of the prime responsibilities of any civilised society is to see that its people are decently housed by one means or another, by purchase or by rent. It is one of the things that we owe to the men who fought in the two world wars, and to the women who sacrificed and suffered. And we hear a lot in these days about pollution. What a cesspit of pollution many of our towns would be to-day were it not for these new housing estates that have been built over the last half century! These new estates and the garden cities that we call New Towns need to be subsidised, but they are increasing the sum of our national wealth and they are improving the picture of our national life. Surely there is nothing sinful about subsidies as such. We give them to rich farmers and landlords; we give them to great industrial companies; we give them to chorus girls and ballet dancers; we give them to the owners of stately homes; and we give them also to people buying their own houses. The amount we pay to people buying their own houses is twice as much as we pay in subsidies to council tenants, and they do not have to undergo a means test—and the more expensive the house they buy the bigger the subsidy or rebate we give them. Why, my Lords, must there be this discrimination?

A Government have responsibility for all their people. That is what Mr. Heath said in his General Election Address. I wish he had meant it; but, of course, we were reminded only a few weeks ago by one of his Ministers that we must not take too literally all that Mr. Heath says at Election time. I suppose we shall be told, even after this Bill is passed, that "The pound in our pocket will buy as much as it does to-day "—that is to say, 12½ per cent. less than it did when this Government came into office. But the pound will not stay in our pocket: it will be grabbed every pay night by the rent collector. I feel, my Lords—I may say I fear—that if these rent increases are imposed over and above all the other increases in the cost of living that we have had during the last two years, then the demands for wage increases will get bigger and bigger, and the Government will have only themselves to blame. My Lords, I feel that the present subsidies, along with the locally fixed rebates that operate in two-thirds of the councils of this country, work fairly well, whereas the new suggested subsidies, which take money away from the poorer section of the population and make it available for distribution among the wealthier section, have about them all the symptoms of class discrimination.

Finally, I think it was St. Mark, of blessed memory, who warned us of the dangers of trying to superimpose new schemes on old. This is what he said, at Chapter II, verse 21—and I must be accurate in quoting: No man also seweth a piece of new cloth on an old garment; else the new piece that filled it up taketh away from the old, and the rent is made worse. My Lords, fortified as I am by Holy Writ, as well as by considerations of social justice, I detest this Bill.

7.14 p.m.

LORD WOLVERTON

My Lords, in rising to speak tonight very briefly on this complicated Bill I should first like to declare my interest in the Bill. I am one of the Vice-Presidents of the Urban District Councils Association; and, having said that, I support the Bill in its main object to set up a system of fair rents with adequate safeguards of rent rebates for those in the public sector who cannot afford fair rents, and to give rent allowances in the private sector of controlled houses which are already under rent control. I have always been in favour of a standard rents system being applied by local authorities with adequate rebate schemes, and I am very sorry to hear that only 40 per cent. of local authorities have put into operation schemes on the rent rebate system.

But my fears about some of the provisions of the Bill are, first, the cutting entirely of the subsidy for houses in the public sector for general need, which is still very great in spite of the great number of houses and flats which have been built by both the public and the private sectors since the last war, because practically the entire stock of houses and flats for rent are built by local authorities with generous grants from central Government, as it does not pay the private sector to build houses and flats to rent at economic rents without a subsidy. If it is not possible for Her Majesty's Government to give some further subsidy help in the case of houses and flats for general need, I only hope that they might be willing to phase off the general subsidy over a longer period than is suggested in the Bill. Then, I welcome the provisions in the Bill to give further financial help for slum clearance, which is still so vital in this country. I also strongly welcome the provision in the Bill for Her Majesty's Government to meet a large proportion of rising costs in local authority housing, which will be most welcome in this age of inflation.

To sum up, everything possible must be done to speed up the housing programme, as the need for housing is still very great. Taking a look at the housing figures for England and Wales, I see that 307,266 houses and flats were built by all agencies in 1970, and 309,776 were built in 1971 by all agencies; that is an increase of 2,500 houses and flats. We must and we will do better, as good housing is one of the most important elements to a good Christian life.

7.18 p.m.

LORD GARNSWORTHY

My Lords, I think I have heard every speaker, although I may have missed one or two minutes during this debate. May I say that one of the things that has struck me more than anything else has been the lack of any ardent support for this Bill from the Benches behind the Front Bench opposite. Indeed, my Lords, it seemed to me that their kindest critic, the noble Lord, Lord Brooke of Cumnor—and somewhat unusually for him—found the Bill lacking. Perhaps I may say to the noble Lord that he had no need to apologise for being late. We know how diligent he is in the discharge of his duties, and if he is not in his seat we know that he has important business elsewhere. May I say, though, that the loss was really his, because he missed a speech that I think would have commended itself to him. The noble Lord, Lord Brooke, said that he would concern himself with logic. My noble friend Lord Diamond certainly was logical and factual. I cannot help thinking that if the noble Lord, Lord Brooke, had been here and had had the privilege of listening to what my noble friend had to say, he would have appreciated that the Bill is indeed very deficient.

My Lords, my task now, following so closely on my noble friend Lord Leatherland, cannot be an easy one. He was throughout not only most amusing but most informative in dealing with this Bill, almost from start to finish, and in showing in simple terms—I think in terms a child could understand—how faulty it will be if it becomes an Act without very considerable amendment indeed.

We have had one or two quite outstanding speeches and I think that all the speeches have been good. But I should like to say how impressed I am sure we all were with the speech of the noble Lord. Lord Hylton and, if I may say so, with the brilliant speech of the noble Lord, Lord Fiske, with his unrivalled knowledge and experience. We are indebted to him and pleased that he was able to be here this afternoon to give us the advantage of that knowledge and that experience. I think that probably every noble Lord who has spoken from the other side has said that if this Bill went to a Division he would vote for the Second Reading. I think that they were assured at the beginning of the debate that there was no possibility of that happening. But what impressed me much more than what they then said was what they then went on to say by way of criticising this Bill. In view of the criticisms that have been made there must inevitably be a long drawn-out Committee stage; because if the points of criticism that were made by noble Lords from all quarters of the House are to be met a tremendous number of Amendments will need to be tabled for consideration. I should have thought that there has been so much criticism and that the Bill needs so much amendment if those criticisms are to be met, that the Government would do well to withdraw it.

The Bill itself reveals profound and fundamental differences between the Government and the Parties on this side of the House: and this debate has given emphasis to the "great divide". But we are becoming used to the divisive policies of this Government and the country is learning that more and more the poorer section of our society is being placed on a means-tested basis while the Government's friends receive their favours and rewards. Perhaps for a moment as this debate reaches its close we can reflect on some of those differences. First, the role and responsibilities of local government. No one can possibly pretend that this Bill is an extension of those responsibilities. It is, indeed, the exact opposite. as has been stated by those with great association with local government. The Virtual central dictation of housing policy and finance drastically cuts the major power that the new, reorganised district councils will have and therefore removes a significant area of control from local authority discretion and the democratic process. This fact scarcely conforms with the Government's Election pledge to remove central Government from the areas proper to local control. It is the exact opposite of that pledge. It is a curtailment of the freedom that local housing authorities have enjoyed to manage their own housing finances.

Under this Bill they will do as they are told "or else". As my noble friend Lord Leatherland pointed out, a commissioner will be appointed to carry out the will of the Conservative Government. The Explanatory and Financial Memorandum of this Bill says very little of the consequences of failure to obey the master's voice; but Clause 93 gives the Secretary of State power to appoint a housing commissioner to discharge in the name of the authority, and at their expense, such functions as the Secretary of State considers necessary or expedient. The clause itself goes into considerable detail but that is the gist of its purpose. Does anyone imagine that such a housing commissioner will fail to carry out his orders? Hitherto we have relied on the local electorate to approve or disapprove the policy and administration of its council; but no longer will the ratepayers be masters in their own houses. Certainly the tenants of council houses will not be so. I suppose that after the control Mrs. Thatcher has exercised in the field of secondary education, we ought not to be surprised that the freedom of local authorities is like the freedom of purchasers of Ford motorcars in a bygone age: they were free to choose any colour they liked so long as it was black. The local authorities will be free to do what they want so long as they do what they are told. With this Bill, it is a case of doing as you like so long as what you like conforms to the Government's demands.

We on these Benches in the Labour Party hold the view, and particularly now that local government is being reorganised, that the housing authorities should continue to discharge the responsibilities that they have discharged for so long in this field and with so much distinction. To do so, they need the freedom to which they are accustomed. I think that the attitude of the Local Authorities Associations is already on record and they speak for themselves. For instance, the Urban District Councils Association say that far from encouraging more freedom and responsibility, Part V of this Bill will place them in a financial straightjacket. If this Bill becomes an Act they will become mere agents in management. This is a pretty poor reward for providing homes for nearly one-third of our people. I can only feel that this Government dislike and wish to check the enterprise that they have shown. My Lords, we shall restore their freedom, we shall give them back the opportunity they provide for initiative.

This brings me to the next fundamental difference which divides us. We view housing as primarily a social service and clearly the Party opposite view it as a profit-making enterprise. They are not content that the private sector should produce profits; they intend that the public sector should produce profits as well. For whose benefit? They aim at placing increasing burdens on the higher wage earners living in publicly-owned houses, of which they are tenants, to assist those with inadequate incomes; in other words, to levy charges on one class of council tenant to help their less fortunate neighbours; whereas, as has been said again and again this afternoon, this surely ought to be a community responsibility. We on these Benches hold the view that this is a form of social help which should properly be the concern and responsibility of us all. This Bill in this respect is inequitable, unjust and, again, divisive.

Much has been said about the numbers who will be eligible for rent rebates if subsidies are to be reduced; and this is the aim. This can only mean that rebates will increasingly come from the pockets of council tenants whose incomes are above the rebate level. Since the private sector rented accommodation is to be brought within the ambit of available subsidies, the burden is likely to become quite heavy so far as that limited section of the community is concerned. The Government estimate is, I believe, that some 2.5 million to 2.9 million people will be eligible to receive rebates or rent allowances. This figure does not include the expansion of the scheme to the private sector. As the noble Lord, Lord Avebury, pointed out, it will take an army of officials to administer the scheme. Who is to pay for the running of the scheme? Again the council tenant. As has already been pointed out by, I think, the right reverend Prelate the Bishop of Southwark, despite the Government's spending something like £300,000 on advertising the family incomes supplement, the take—up is only about 50 per cent. The noble Lord, Lord Hylton, referred to this as well. I think that possibly the figure is rather under 50 per cent., that it is something like 47 per cent.—but we will give them their 50 per cent.! I could quote other schemes where the take-up has fallen sadly below the entitlement. There is one conclusion; that is, that these means-tested schemes just do not work, and this Bill involves a means test review that takes place every six months. Having seen one of the papers sent out by a local authority to its tenants in order that consideration might be given to the need for a rebate, may I say that I think the form is bound to be very complicated, and the information sought is most objectionable.

My Lords, let us look again at the position with regard to house purchasers. They enjoy tax reliefs totalling some £302 million a year. May I draw attention to a point not made this afternoon? No means test is imposed with regard to the enjoyment of that subsidy. It is a subsidy which, as has been stated this afternoon, averages something like £60 a year. We have to bear that figure in mind, having regard to the strictures of the noble Lord, Lord Drumalbyn, on the whole of the present subsidy structure. I want the tenant to he treated no less favourably than the house purchaser. When I think of those people who are buying houses costing tens of thousands of pounds I wonder that anyone has the gall to gibe at the odd council tenant who keeps his badge of affluence in the roadside outside his house.

It has been said that it is the Government's aim to drive the slightly better—off tenants into the queues competing for houses for sale—ever more fodder for the gazumper! I have no doubt that many will think of joining the queue, since the Government seek cumulative increases and three-yearly reviews of so-called fair rents, as has been pointed out by a number of speakers. What nonsense it makes of the Government's talk of halting inflation! Rising rents and rocketing prices of houses for sale can be relied upon—again as has been pointed out, even by speakers from the Benches opposite—to spark off demands for wage and salary increases. Tenants in the publicly-owned sector will never know where they are, with the six-monthly need to reapply for rebate and the three-yearly reviews of so-called fair rents.

Nor will the Government's idea about the sale of council houses help. I read last week that the price of two—bedroomed council houses in Croydon has risen during the last nine months from around £6,000 to £7,300. So when the question arises of replacing the sold council houses, even higher rents will have to be charged than have been charged hitherto. This Government need to learn that a rent policy cannot be divorced from a prices and incomes policy. Furthermore, my Lords, it is a matter of concern that means-tested rebates, added to all the other means-tested entitlements, are a positive disincentive to greater earnings.

We have had quoted the effect in terms of possible rebates. I think that the noble Lord, Lord Drumalbyn, gave one or two instances. We need to look at the other side of the coin. A married man with three children living on £28 a week and paying a rent of £4 a week would be worse off if his wage rose to £32 a week through the effect of means-tested rents, higher school meal charges, income tax and graduated National Insurance contributions. As against his £4 increase, his losses would be £4.38. And in order to make application and to understand the entitlements from all these means tests—may I repeat what I have said before?—one needs to be a chartered accountant. There are many leaflets in the Post Office telling people what they are entitled to, but again and again they are told that they "may be" entitled. It is impossible for the ordinary man in the street to begin to understand where he stands over entitlements.

As for the private sector, this Bill threatens to speed up rent decontrol. For many this means heavy increases from January 1, 1973. The concept of fair rents as laid down in this Bill is a nega tion of the very notion of housing as a social service. It may well be that the Government have changed their minds since the Bill was first introduced in the other place. Can the Minister tell us that they now take the view that Clause 63 changes everything, and what seemed acceptable to the Secretary of State in regard to Birmingham about the time of the recent local elections is likely to apply pretty generally? I think that local authorities throughout the country will be interested in the answer which may be given. We should appreciate knowing what the Secretary of State now has in mind as a result of the Amendments made on this point.

It was not only a novel instruction to local authorities to put up rents by 50p before the Bill became law; it was, if I may say so, a very questionable initiative that they were asked to undertake. I doubt not that some authorities are now regretting their haste to conform. It has been said that when this Bill comes into operation the forecasts we have made from this side of the House about how it will operate will be proved to be unfounded. My Lords, may I put it this way: the proof of the pudding will be in the eating. and it will not be those on the Government Front Bench or those who are sitting behind them who will get it stuck in their teeth. We on this side of the House will do what we can by moving Amendments to make this Bill less objectionable, and on Committee stage we will deal with many of the points made by the noble Lord, Lord Drumalbyn, when he opened the debate. When we repeat nationally what the electorate did in the recent local elections, we on this side of the House shall enjoy restoring to local government and to the people of this country the freedom that this Bill seeks to take away.

7.37 p.m.

LORD SANDFORD

My Lords, we have had a most interesting debate which was greatly enlivened by the delightful speech from the noble Lord, Lord Leatherland. I have been fascinated to see what the tactics of the Party opposite would be, after their rather dramatic change of tactics between the Second Reading and the Third Reading in another place. But I must confess that I have been disappointed in one major respect; that is, that even after the lapse of all this time and the discussions in another place on this Bill which were so extensive, we are no nearer to hearing what is the policy of the Party opposite in respect of the matters which we have been discussing.

I have had the benefit of Mr. Crosland's Herbert Morrison Lecture of some considerable time ago, but there does not seem to be any advance on that and it is very far short of being a coherent policy. We have had considerable criticisms, not very constructive. of our proposals, but I do not propose to be unduly provoked by them. The right reverend Prelate the Bishop of Southwark criticised us on showing some hesitation. But, my Lords, within a year of coming into Office we produced a White Paper. Six months later we tabled a Bill. The Party opposite recognised that housing finance was in a muddle and a mess and needed reforming, but we have still not heard what is their coherent policy. But, far from wanting in my turn to criticise the Party opposite any further, I want to spend a moment bestowing credit upon them. The noble Lord, Lord Diamond, was either too modest or else too ungenerous towards his colleagues—

LORD DIAMOND

Too modest!

LORD SANDFORD

—to give them credit for establishing the foundations upon which we are building. The Party opposite built a lot of houses when they were in power—nothing like the number they said they would build, but a lot. They established the idea, which is now incorporated in Clause 50 of this Bill, of fair rents, and I must say I am a little surprised that the right reverend Prelate, the Bishop of Southwark, was unaware of the principles lying behind a basic concept introduced by his own Party seven years ago, and also unaware of a basic concept in a Bill which we are now debating. If I may say so in his absence, it is important to read a Bill before one starts debating it.

LORD DIAMOND

My Lords, I do not want to interrupt the noble Lord, but as he has permitted himself, as he is fully entitled to do, a critical reference to an absent Member, I think it only right to say that I imagine the right reverend Prelate takes the same view as I do, namely, that the concept of fair rents in a market situation is totally irrelevant to the situation which is introduced in this Bill.

LORD SANDFORD

That is another point we could debate. But what in fact a fair rent is and what it means is clearly laid down in our own Act and was a concept introduced by the Party of the noble Lord opposite no less than seven years ago; and we are grateful to them for it.

The idea of home ownership has been wholly embraced by the Party opposite as a prime social objective and it is nice to know that we are at one on that point. Not only is that the case, but the Party opposite in 1967 introduced the option mortgage scheme. They retained exemption from Schedule "A", and in the course of legislation to do with taxation of loan interest they left the interest on loans raised for property improvement untouched. So, I do not think there is any disagreement with us on any of those points. I have also been glad not to hear in this debate any further talk, as there was in another place, about non-co-operation in the implementing of the Bill when it has been passed by Parliament, because I am sure that that is not something we want to contemplate.

So, having made those two general points, may I now deal with some of the criticisms and comments made by noble Lords in the course of the debate. The noble Lord, Lord Diamond, and the noble Lord, Lord Davies of Leek, both spoke of the resources, or lack of resources as they saw it, being applied by us to the housing sector. We are only talking about resources being applied in the public sector in this Bill, and the fact of the matter is that so far from cutting any of these subsidies we are maintaining them—£350 million —and we are concentrating them on the people in need and the houses and the areas in need. But on top of that—and this is important if we are talking about overall resources—in 1971 £670 million was spent in private sector building compared with £550 million in 1970, an increase of 20 per cent.; and on improvements and conversions, in 1971 we were spending £180 million compared with £120 million in 1970. That is an increase of 50 per cent. So I do not think there is any question at all that we are greatly increasing the resources devoted in the housing sector.

May I turn to one or two points made by the noble Lord, Lord Avebury—but I fear not all of them. He commented on the rights of tenants under this legislation. There are two important respects in which tenants are gaining rights that they have not hitherto had. One is contained in Clause 53, which is the right to make representations about the rents assessed on their houses. Tenants at the moment have no right to make any representations, or to have those representations heard. In addition, as noble Lords will see if they read page 35 of the White Paper, there is a proposal to repeal the Small Tenement Recovery Act 1838, which gives tenants facing eviction the same rights as those in private property.

LORD AVEBURY

My Lords, I am sorry to interrupt the noble Lord, but if he has finished with this point, is he honestly telling the House that tenants' associations and others representing those who live in council houses, are prohibited from making representations to the local authority at the moment, and that any local authority in this country would refuse to consider such representations? And could he also say how many actions for recovery have been taken under the Small Tenement Recovery Act 1838, in the last year, because in my opinion this is an insignificant concession as it stands.

LORD SANDFORD

I mentioned it because it was mentioned not only by the noble Lord, Lord Avebury, but also by my noble friend Lord Crawshaw. I was grateful to my noble friend Lord Hylton, and to the noble Lord, Lord Fiske, and several other noble Lords who, speaking on behalf of the housing associations, thanked Her Majesty's Government for what they had done to meet their points and welcomed the proposals we are making. I think my noble friend, Lord Hylton, commented critically on our dislike, as I think he put it, of 100 per cent. subsidies; but in fact in this Bill we are providing 100 per cent. subsidy in support of rent allowances for at least four years and 100 per cent. support for the deficit subsidy for housing associations for at least three years.

I would agree very much with the noble Baroness, Lady Gaitskell, that this Bill is too long and with the noble Lord, Lord Fiske, that it is too complicated; and as one of the noble Lords who is responsible for handling it in the House. I am heartfelt about it. But, if we are thinking of complications, I would ask noble Lords to take a look at Schedule 7 where you will see the enactments and the subsidies which it will be possible to repeal and replace with the eight main subsidies introduced by the Bill. There are complexities certainly, but they are of a transitional kind. The system of housing subsidy in the public sector which we shall have at the end of this exercise leads to an immense simplification as well as a very desirable concentration of subsidy on the places and on the people that need them.

I would confirm in answer to the question raised by the right reverend Prelate the Bishop of Southwark, that indeed it is proposed to carry out regular reviews of the scale of rebate and allowance and in fact one such adjustment has been made since the White Paper was published, and incorporated in the Bill. My noble friend Lord Crawshaw asked me about the representation of people with knowledge and experience in the field of the disabled on the Advisory Committee. I certainly confirm that that is something we have very much in mind.

My Lords, I think perhaps now I might come to one or two parts of the Bill and just concentrate on those in which noble Lords have shown a particular interest. One point which has been made is that this Bill, which sets out to be fair in a number of respects, is not fair as between owner-occupiers and tenants. The position is that the amount of tax relief available to owner-occupiers—£300 million—is roughly equivalent to the amount of subsidy available to tenants: in very round figures, £350 million if we include supplementary benefit, £250 million if we do not. But the amount available to council tenants is spread over 5 million tenants and the amount of tax relief available to owner-occupiers is spread over 9 million of them, very nearly double the number. The average council rent at the moment is about £2.50 per week, but the outgoing, on average, by an owner-occupier is £6 a week, after tax relief. Even allowing for the fact that at the end he has an asset and the council tenant has not, I think it is impossible to substantiate that the unfairness, if it is there, is all that great.

The next point which exercised a number of noble Lords was that the relief of poverty should be a national responsibility. I would remind the House that under this Bill the whole cost of supplementary benefit remains, as it is at the moment, an Exchequer liability. The Exchequer bears the whole cost of rent allowance for four years, and at least 80 per cent. of the cost of rent allowances thereafter. The Exchequer bears 90 per cent. of rent rebates to start with, tapering to 75 per cent. in four years, but fading out altogether if the Housing Revenue Account moves out of deficit. I cannot see that it would be reasonable, as between the ratepayer and the taxpayer, that a heavier burden should fall on the taxpayer as compared to that falling on the ratepayer.

The next point, which was raised by the noble Lord, Lord Diamond, the right reverend Prelate the Bishop of Southwark and the noble Lords, Lord Davies of Leek and Lord Garnsworthy, was that in some way under this Bill council housing is being changed from a social service to a profit-making enterprise. The fact of the matter is that subsidies are remaining at roughly the present figure of £350 million, and the total surplus, which will not be reached until about 1975 or 1976, will not exceed £30 million. That does not sound to me like a profit-making enterprise. Under the present system, it is certainly true that some tenants are paying more rent under pooled arrangements than their house is worth. Together with the idea that somehow or other we are creating a profit-making service is the idea that some tenants will be paying subsidies for taxes to other tenants. This is certainly the case at the moment. But under this system the rent that will be paid by a tenant for his dwelling is fixed solely in relation to the fair rental value of the dwelling, and that is a subsidy to the tenant to the extent that fair rents discount the scarcity value of that particular property in a particular place. He pays no more rent than that. Tenants under this Bill will pay for what they get—the fair rent. They will no longer be paying for anybody else's rebate or for anybody else's house.

I turn now to the point about the freedom of local authorities under this Bill. Their freedom of choice under the present system is really an illusion. They have a choice of putting up the rents and the rates in order to build more houses, which may be very necessary, or not building any houses which are necessary and thereby keeping down the rents and the rates. If that is the kind of choice that they really want and that is the kind of choice that noble Lords are fighting for on their behalf, I must say that I am not with them. This Bill, on the other hand, by taking the subsidies as they are at present and concentrating them on the people who really need them and the places where they are needed, opens up immense new opportunities for the housing authorities that are still dealing with acute housing stress. and brings help to tenants who are in need. I cannot think that this freedom which the local authorities talk about, or others talk about on their behalf, is really a freedom that amounts to very much.

The next point that was made by a number of noble Lords was that the rent rebate scheme means a massive increase in means testing.

BARONESS GAITSKELL

Does it not?

LORD SANDFORD

If the noble Baroness will bear with me for a moment, I think I can give her the actual facts, and then the House will be able to judge for itself. Perhaps, first of all, I should mention that our information is that. based on the recent family incomes survey the average household income on a council estate in October, 1969, was £28.60 a week. From October, 1968, to October, 1971, the average income of manual workers has gone up from £23 a week to just under £31 a week. On an average council estate two in 10 council tenants at present receive supplementary benefit. Under this Bill, and without any further means testing, they will also get a rent rebate.

LORD AVEBURY

What the noble Lord is saying puzzles me, because if a person is on supplementary benefit and the rent is reasonable, then the whole of the rent is paid for by the Supplementary Benefits Commission anyway. So how can they benefit to any greater extent than they do now?

LORD SANDFORD

My Lords, that is true under the present dispensation, but as the noble Lord will see when we get further into the Bill, the system is somewhat changed. The point I am making is that under the change no further means testing is called for in respect of these two tenants who are already getting supplementary benefit, although they will get a rent rebate as well. One further council tenant in 10 gets a rebate now, and will get a more generous rebate in the future; he is being means tested already, and he has no further means test. One more tenant in 10, in need of a rebate now, but not getting one, and not getting supplementary benefit because he is in employment, will get a rent rebate in the future, and will be means tested. So this massive increase in means testing that we hear so much about in order to make the Bill operate involves one tenant in 10 on a council estate. It leaves six others who are getting subsidies of various kinds not related to their need who will in future pay a fair rent, which is not the market rent, but the market rent discounted for the scarcity in the particular locality.

LORD DIAMOND

My Lords, perhaps I may ask a question on that, because the noble Lord has made an important statement and I want to understand it fully. He referred, first of all, to the 2 in 10 who already get and will continue to get, help and they get help in the form of supplementary benefit. Are those 2 in 10 in the noble Lord's example fixed persons?—because my understanding has always been that these 2 in 10 are a moving population, and that the whole problem is that people come into and go out of need. If that is the case, it is, with respect, totally misleading to give us a picture of the same 2 people in 10 requiring help.

LORD SANDFORD

My Lords, this is certainly a matter which we shall need to go into. But the broad position is that we have 5 million council house tenants and 1 million people drawing supplementary benefit on a regular basis; but of course there are a number of people who draw supplementary benefit for short periods, and when we get into the Bill we shall see that there are separate arrangements for those who draw supplementary benefit for eight weeks or less, and different arrangements, which are the ones to which I was referring just now, for those who draw supplementary benefits on a continuing basis. The broad figures are 5 million council house tenants, 1 million drawing supplementary benefits, and that is 2 in 10.

May I now turn to the next matter of fair rents not being capable of application in the public sector. Fair rents were introduced by the Party opposite. They were applied to the private sector and 300,000 (not 200,000 as the noble Lord, Lord Diamond, said) have been registered in the private sector. The presidents of the rent assessment councils, who are the people in the best position to know, can see no insuperable difficulty in determining fair council rents, and many local authorities have already embarked on the task. There is a sufficiently broad spread of fair rents over the nation, as a result of the work on fair rents since the Party opposite introduced them, for a pattern of comparability to be developed. Even if that were not so, it was not a factor that deterred the Party opposite from introducing the idea when they did—and all credit to them. The noble Lord, Lord Garnsworthy, raised the question of our view on Birmingham's application under Clause 63. All I can say is that this matter is being considered, and I am sure he will understand that at this stage I cannot say more until that consideration has been completed.

LORD AVEBURY

My Lords, I apologise for interrupting the noble Lord, but I asked him a specific question about retrospection which has been introduced in another place regarding the surpluses on Housing Revenue Account. Local authorities are now being told that they cannot use them to avert rent increases, even though the Bill is not yet in operation.

LORD SANDFORD

My Lords, I am sorry: I did not quite get the point raised by the noble Lord, but I will look at his remarks and deal with that point by correspondence, if I may, between now and the next stage. We shall certainly have an opportunity to go into it. I apologise for not having got his point with sufficient clarity to go into it now.

LORD GARNSWORTHY

My Lords, I do not want to make it unnecessarily difficult for the Minister, but I put a question to him about Birmingham and I think it is of some urgency. Local authorities have been called upon to increase the rents of tenants. I should be grateful if the Minister could give at least some indication of when local authorities may know what the Minister has in mind. I do not think this is a matter to be left indefinitely. It seems to me that a Government who call upon local authorities to impose a 50p increase in rents from last April ought to know what they intend when they introduce Amendments to Clause 63, as I think they did about March.

LORD SANDFORD

My Lords, the basic position remains unchanged: what is called for this year is an average increase in rent of 50p. But if no increase is made in advance of October 1, an increase of £1 is then required to make the average of 50p for the year as a whole. It is a fact that Birmingham have indicated to the Secretary of State that, in their view, to act in that way would take the rents, when raised, well beyond fair rent levels, and the provision in Clause 63 enables the Secretary of State to look into that application and see whether he would be justified in making an exception to the general rule and allowing Birmingham (or any other authority which invokes this clause) to make in increase of rent of something less than that. This is being considered in respect of Birmingham and therefore I am not in a position to say any more about it.

LORD GARNSWORTHY

My Lords, I am grateful to the noble Lord. That is the point I was trying to make. Local authorities are very anxious to hear about this.

LORD AVEBURY

Hear, hear! The time is getting very close.

LORD SANDFORD

My Lords, the final point—and it is an important one—which was made by several noble Lords is their fear that this Bill will force the better-off council tenants to buy the house they occupy and leave the council estates as "ghettoes for the poor", as one noble Lord put it. I really think it depends on the good sense, the judgment and the degree to which housing authorities use the powers available to them. What they can do, and what I very much hope they will do, is to use the power they have to sell council houses to their tenants at a 20 per cent. discount. This, when they do it, will have two very desirable effects: it will increase the social "mix" that already exists on a council house estate, because in addition to all the range that already exists between tenants, it will introduce a new dimension of owner-occupiers. I would have thought that this would be wholly desirable. It will also have the desirable effect of meeting the point of the noble Lord, Lord Davies of Leek, and will put further houses on to the market for home ownership. There is a very brisk demand for housing at the moment—for which we are all very grateful—and the supply of land and new houses is hard put to it to keep up with that demand. But if some housing now let to tenants could be put on to the market for those tenants to become owner-occupiers, and those owner-occupiers were to take up the option mortgage scheme, together with all the other incentives and aids available to help them to convert from tenants into owner-occupiers, we should be meeting two very desirable social objectives in one move. I would hope, after what they have said, that noble Lords opposite as well as noble Lords on this side of the House will use their influence in those councils which are now Labour controlled to see that these objectives are met in that particular way.

My Lords, my speech has gone on much too long already. We have had a long and interesting debate. I am conscious that I have not met all the points raised by noble Lords. I will deal with the specific point which the noble Lord, Lord Avebury, pressed me to answer, and also with any other requests for information that can be dealt with between now and the next stage. Meanwhile, I look forward very much to the Committee stage and to going with your Lordships into further detail on the Bill. I would commend it to your Lordships and I hope that it may now be read a second time.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.