HL Deb 26 February 1973 vol 339 cc455-70

6.37 p.m.


My Lords, I beg to move that this Bill be now read a second time. I take considerable pleasure in noting two important contrasts. Whereas, when we introduced the Housing Finance Bill last summer, there was controversy between the two Front Benches and the two sides of the House on many points, I think that on this Bill, with its narrow purpose, there will be no controversy at all. In the earlier Bill, we had to deal with 100 clauses and eleven Schedules, but in this Bill there are only four clauses and two Schedules and I think that that, too, will be the cause of some satisfaction to noble Lords.

One gap in the Housing Finance Bill which we considered at great length last Session was any provision for rent allowances to be granted to tenants of furnished accommodation. It was an omission of which we were all conscious, and noble Lords opposite moved Amendments at both Committee and Report stages to enable the Secretary of State by regulation to extend the definition of "private tenant", in what is now Section 19 of the Housing Finance Act, to tenants of furnished as well as of unfurnished accommodation. We explained at Report stage that the reason why such provision had not been included in the Bill was that we were still at that time uncertain whether a practical and viable scheme could be devised for that purpose. We explained that if our discussions with the local authority associations turned out satisfactorily, the necessary legislation would be introduced and we gave an assurance that there was no intention of delaying more than was absolutely necessary the legislation for this purpose.

I am now glad to be able to tell your Lordships that we have been able to work out a scheme which we believe will be practical, and we shall have it in operation—Parliament agreeing—only four months after rent allowances have been introduced into the unfurnished sector. So this Bill fulfils, promptly and amply, the assurance that we gave during the passage of the previous Act. What this Bill does is to require local authorities to extend their existing rent allowance schemes for tenants of unfurnished accommodation, so that they apply also to tenants of furnished lettings. The Bill does not attempt to deal with any of the wider problems of the furnished rented sector. That is not its purpose. Its purpose is more limited, but we believe of great significance. And I would remind your Lordships that in making rent allowances available to tenants in furnished accommodation we are achieving something which has never been attempted before except by the City of Birmingham, who pioneered this move in the same way that they pioneered the rent allowances in the unfurnished sector—and it is something which is acknowledged by all the experts to be a difficult task.

As your Lordships will recall, the Housing Finance Act required local authorities to introduce a rent allowance scheme for tenants of unfurnished accommodation in their area not later than the beginning of 1973. This Bill provides for local authorities to amend or replace their existing schemes on April 29 so that they apply to tenants of certain furnished accommodation as well. The reason for choosing April 29 is that that is the date on which we intend to bring into effect the increased scale of needs allowances for rent rebates and rent allowances which was announced as part of the second stage of our policy for dealing with inflation. It will make matters a great deal simpler for local authorities, especially those London Boroughs and county boroughs in whose areas there are substantial numbers of furnished lettings, if the change in their rent allowance scheme on account of the new needs allowances coincides with the change they will have to make to include tenants of furnished accommodation.

Your Lordships will have noticed that the Bill is in a rather unusual form. Because its purpose is to amend certain provisions relating to local authorities' existing duties in relation to the operation of rent allowance schemes and the granting of rent allowances, the Bill is drafted in the form of a series of amendments contained in the Schedules. Schedule 1 is in the form of amendments to the Housing Finance Act in respect of England and Wales, and Schedule 2 contains a similar series of amendments relating to Scotland. I fear that this way of doing things makes the Bill a little difficult to follow, and, that being so, we have issued Command Paper 5242, Textual Memorandum on the Furnished Lettings (Rent Allowances) Bill 1972, which shows the relevant provisions of the two Acts passed last year as they would appear with the amendments proposed in this Bill made to them. I suggest that your Lordships may find reference to this Memorandum a convenient way of seeing what are the effects of certain provisions in the Bill. As I have said, the provisions relating to Scotland are precisely the same in almost every respect as those relating to England and Wales, and perhaps your Lordships with Scottish interests will forgive me if from now on I use references which apply solely to England and Wales, as I think it will be less cumbersome if I do so.

Because the Bill extends the existing rent allowance schemes of local authorities, most of the provisions of the Housing Finance Act relating to those schemes apply just as much to furnished tenants as they do to unfurnished. Thus the administrative arrangements set out in Schedule 4 of that Act for the granting of rent allowances will apply. So will the rules set out in Schedule 3 for the calculation of a tenant's entitlement to an allowance—the same scale of needs allowances, the same provisions relating to the minimum rent, the same deductions from any allowance entitlement because of the presence in the household of non-dependants. Moreover, rent allowances granted to furnished tenants will rank for subsidy at the same rate as those granted to unfurnished tenants, which means that until 1976–77 the Exchequer will meet 100 per cent. of the cost of the allowances.

There are, however, two respects in which the rent allowance scheme will differ in its application to tenants of furnished accommodation. The first concerns the amount of the tenant's rent which is eligible to be met by an allowance. I think there will be no disagreement that it would be wrong that that part of the rent which is paid for the use of furniture, or indeed for the provision of services, should count for allowance purposes. It would give the furnished tenant quite unjustified advantage over the unfurnished tenant if he were getting help in this way from public funds towards the cost of his furniture, whereas the unfurnished tenant has to meet it all himself. But it would be extremely difficult for a local authority officer, or for a rent officer if the local authority turned to one, to arrive at the appropriate proportion of the rent that should count for the purpose of assessing a rent allowance by assessing the rental value of the furniture and deducting that amount from the rent the tenant was paying. In practical terms this would be an extremely difficult imposition.

In the case of unfurnished lettings, there is provision in the Housing Finance Act (paragraph 14 of Schedule 4) that where in the case of a regulated tenancy no rent has been registered, the local authority are to base their calculation of a tenant's entitlement to a rent allowance on their estimate of the fair rent of that dwelling. But those whom we have consulted on this matter—local authority officers and members of rent tribunals—were in no doubt that if this formula were applied in the case of furnished lettings also it would be quite unfair to the tenant. The rent for a furnished letting amounts to more than the fair rent for that same dwelling let unfurnished plus the appropriate amount for furniture and services. Letting furnished property involves more work for the landlord. He provides more services, and he accepts more responsibility for repairs and decorations. There is more risk in the case of furnished lettings of bad debt, and of the dwelling being empty because lettings are of shorter duration. This clement of management risk, if I may call it that, is reflected in the rent for a furnished dwelling, and it is only right that this element should be included in the proportion of the rent on which the tenant's rent allowance is calculated.

We have therefore provided in the Bill that, broadly speaking, the rent eligible to be met by a rent allowance in the case of a furnished dwelling is to be the local authority's assessment of the fair rent for that dwelling if it were let unfurnished plus 25 per cent. The relevant provisions in the Bill are paragraphs 17 and 26 of Schedule 1, which is at the top of page 5, from line 9 onwards. They appear in the Bill to be rather complicated, but the effect is as I have just described. However, this formula of the estimated fair rent plus one-quarter is subject to two ceilings. The first is any rent fixed for that dwelling by the rent tribunal, and the second is the rent actually paid by the tenant. If either of these is less than the local authority's or the rent officer's estimate of the fair rent increased by one-quarter, then that is the amount on which the rent allowance entitlement has to be calculated.

We believe that this formula is the best that can be devised at the moment, and we have taken the best advice we can get in order to arrive at it. But we recognise that when we have some experience of the scheme we may find that a 25 per cent. addition is too much or that it is too little, or we may find that it is too much in one part of the country and not enough in another. We have therefore provided in the Bill, at paragraph 19 of Schedule 1, that this percentage may be altered either generally or for a group of local authorities, and we will not hesitate to make use of that power to make adjustments if the facts seem to merit it. That is the first difference. The second main difference between rent allowances in this sector and rent allowances in the unfurnished sector is that in the application of the rent allowance scheme to furnished tenants we think that the allowances should be concentrated, at any rate initially, on certain categories of furnished tenants who are especially in need of help. The Bill is therefore drafted in terms of a scheme applying to "qualified persons" among furnished tenants—this is paragraph 10 of Schedule 1—and the categories of tenants to be eligible are to be prescribed in regulations. In addition, local authorities are to have a duty to grant rent allowances at their discretion to any other tenants who they consider would suffer hardship if they did not get them.

The reason why we believe that this concentration of help is necessary is that, as many noble Lords will know, the pressure upon the furnished sector of housing, especially in London and one or two of the other big cities, is intense. For us to make rent allowances available to every furnished tenant would further intensify the pressure. What we are therefore seeking to do is to concentrate our help in the furnished rented market on those tenants whom we consider to be most in need of help; and, in particular, we want to give help to established families, to old-age pensioners, to the severely disabled and to the handicapped. We also want to help older single people and older couples who have no children. Many of these people do not have the opportunity to move to other areas and in the area where they are there is no alternative to furnished accommodation for them. These are the people we particularly want to help. It is for this reason that we seek powers to concentrate help.

There are other groups of people whose problems are different: young single people and young couples without children. Many have come to London or to the centre of other big cities as a matter of choice. They come because they are attracted by the desire for independence, the style of living and the opportunities for work. They know they are likely to have to pay quite heavily for furnished accommodation, but they make this choice, and they are free to make it, deliberately and in that knowledge. Moreover, the great majority of them can afford to spend a relatively high proportion of income on rent; and, because single people in that group can club together and four or five can share a flat, they can afford the higher rent because they can in that way reduce the amount they spend individually on rent.

It is on considerations of this kind that our selective strategy is based. Under the Bill, our proposals will have to be put before the Advisory Committee on Rent Rebates and Rent Allowances, a statutory body (which was provided under the Housing Finance Act which my right honourable friend intends to set up shortly. We shall take good note of the Committee's advice and of any views which are expressed in Parliament. But subject to such views, the groups of people we have in mind to prescribe in the regulations are: families with dependent children, including single parent families who have been resident for six months in the local authority's area; old-age pensioners or tenants whose wife or husband is of pensionable age or whose household includes a pensioner and again who have been resident for six months in the local authority area; single tenants and couples with no dependent children or pensioners living with them with a longer qualifying period of residence in a local authority area and probably an age limit and tenants who are registered under the National Assistance Act as handicapped or who have such a person living in their household.

In addition to these categories, as I have mentioned, the Bill places a duty on local authorities to grant an allowance to any furnished tenant whom they consider would suffer hardship if he did not get an allowance. In forming their opinion as to whether a tenant would suffer hardship or not, the authority are to act in the light of guidance given by my right honourable friend. What my right honourable friend proposes to do is to provide guidance in a circular on the kind of tenants who in his view should or might be regarded as cases of hardship. There will be consultation with the Department of Health and Social Security and with the Local Authority Associations before this guidance is issued. But I should like to make it clear that no restrictions regarding length of residence, or age, or family composition will apply when a tenant's case is being considered under this head. I should also like to make it clear that the authority have a duty to grant an allowance to such a tenant if it is their opinion that he would suffer hardship otherwise.

We are not seeking to tie local authorities' hands by issuing guidance in this way but are doing it because it was asked for by the Local Authority Associations themselves when they realised that if it was not provided there would be wide variation between one authority and another in the interpretation of what was hardship, and this would be undesirable and possibly unjust.

It is difficult to estimate how many furnished tenants will be eligible, under our proposals, for a rent allowance. On the best estimate we can make, there are about 600,000 furnished tenancies in England and Wales and a further 28,000 in Scotland. Of these 600,000, about 120,000—less than a quarter—are in receipt of supplementary benefit. Of the remainder, we expect something like a quarter to be eligible. Noble Lords should bear in mind that a significant proportion of tenants in furnished accommodation stay only a short time. Moreover, large numbers of them are young people who, as I have explained, we believe should not be included in the scheme at the outset. We are extremely concerned that all those eligible should know that they may be entitled to an allowance and should apply if they think they are. We are concerned that there should be a high level of take-up. We know that it will not be easy to achieve this, but we intend to mount an extensive publicity campaign and we should welcome any suggestions from noble Lords during the stages of the Bill to ensure this high take-up.

We are glad that it has proved practicable to respond to expressions from every side of the House last summer. We were proud then to introduce rent allowances for the first time in the privately rented unfurnished sector and are proud now to be introducing them again for the first time into the privately rented furnished sector. I commend the Bill to your Lordships and invite you to give it a Second Reading.

6.55 p.m.


My Lords, I should not want to detract from the credit due to the Government for the promptitude with which they introduced this measure. The noble Lord said he thought it would be non-controversial. I hope that my remarks will be taken, at least, as being intended to be helpful and constructive, but perhaps some aspects of the measure would appear to be somewhat different as seen by us compared with the manner in which the noble Lord, Lord Sandford, put them. It is a commonplace to say that everybody needs somewhere to live. The satisfaction of that need is met in a variety of ways. Some people are able to satisfy their needs by purchasing accommodation. The State (and let us not forget it) gives a very considerable subsidy by way of tax relief on interest to those who purchase by borrowing. Others rent unfurnished accommodation from their local authority, from housing associations and from private landlords and, as the noble Lord said, we recently spent some time considering legislation which the Government introduced which brought the element of profit-making into what they wished to have called "fair rents", rents which local authorities now are called upon to impose on their tenants. Recognising, as the Government must have done, that these rentals will be exorbitant for many of the tenants, having regard to their earnings, the Government detailed a rent rebate scheme to alleviate undue hardship that would otherwise ensue. They also introduced a scheme of rent allowances for the private sector related to income.

The Minister has explained the purpose of this Bill at some length and in some detail. I know the House will wish to thank him for the care with which he has presented the case in its support. As he indicated, the purpose of the Bill is to bring under the umbrella of help the payment of rents which leave to those tenants who rent furnished accommodation too little to live in decency. On this side we welcome the intention as we thank the noble Lord the Minister for his explanation, but I think we have a duty to see whether the Bill meets the position, as the noble Lord put it, amply and adequately, and to ask, "Does it match the need? Is good intention enough?" It is as well always to remember that the road to hell is paved with good intentions.

I do not doubt the Government's intentions as I did not doubt them—gravely mistaken though I thought them to be when the Housing Finance Bill was passing through Parliament. The total of furnished lettings in England and Wales has been given this evening by the Minister and was given in the other place by Mr. Paul Channon, Minister for Housing and Construction, as some 600,000. I shall use the Government's figures although they seem on the conservative side. There are those who have studied housing seriously who consider that the figure may be as high as 700,000. Let us say that it is somewhere between those two figures. That constitutes some 10 per cent. of all local authority and privately-owned accommodation. Undoubtedly the largest proportion of furnished tenancies is in London. A large number of them are occupied by single persons. I am not at all sure that the noble Lord did not lightly dismiss the circumstances which have brought some of those tenants to London.

I recall that the Francis Committee stated that in London there were something like 96,000 furnished lettings occupied by families of varying sizes. As Mr. Channon put it in another place on January 23: About a quarter of all furnished tenancies are occupied by families. Among, these families are some of the poorest in the country. They live in furnished accomodation because that is the only type of housing they can get."—[OFFICIAL REPORT, Commons. col. 228.] Of the 600,000, something like 120,000 receive rent allowances from the Supplementary Benefits Commission. That leaves roughly half a million tenants of furnished accommodation not at present covered by the provisions of the Housing Finance Act and not receiving any allowance. This Bill defines certain categories within that half a million which will become eligible for a rent allowance. I do not think that there was any dispute during the Third Reading debate in another place—and the noble Lord has confirmed the figure which was mentioned then—that this would be limited to some 120,000 of the half million. I am using the figure used in another place which was not seriously challenged. This means that 380,000 are left out of the scope of this Bill. Little wonder that Mr. Channon said that, if we pass this Bill, all we are doing is to set up an initial system. The fact remains, my Lords, that 380,000 out of half a million tenants of furnished accommodation will not qualify to receive a rent allowance. The estimated financial effects of this Bill are calculated to result in an annual charge of between only £5 million and £8 million which indicates its limitation. For a great many there will be nothing, and for others there may be very little.

My next point is that the allowance which will be paid to anyone of the 120,000 will be based not on the actual rent paid but on a fair rent fixed by the local authority for the premises viewed as unfurnished accommodation, plus 25 per cent. of that figure to cover the furnishings. If a fair rent is fixed at £4, then £1 is added and the figure on which allowances are based is £5. In all too many cases the actual rent will be considerably in excess of the fair rent figure but the allowance will be based on the fair rent figure plus that 25 per cent. To give an example which has been put to me, a man with a wife and one child living in Lambeth who has an income of £25 a week and who lives in two rooms pays an actual rental of £5.50 a week. The fair rent is likely to be about £2. If the allowance is based on the provisions of this Bill, taking account of the recent £3.50 addition to his needs, the allowance would be £2.62. In fact, his allowance, based on the fair rent plus 25 per cent. would come to only 82p.

To get the allowance the tenant has to contact the local authority and the authority must send someone to assess a fair rent. This involves the risk that the landlord will discover that an allowance is being sought and he may demand an even higher rent so that the allowance will go into his pocket. It is foolish not to recognise the possibility that this may happen when we recall all that has happened regarding housing in London. I think we need to take note of the lack of any real security of tenure for a tenant of furnished accommodation. Often there is no rent book when there ought to be one, because that is where the tenant should be able to read his rights and find the address to which he should apply for a possible entitlement to a rent allowance. If the tenant is not very careful his tenancy may be at grave risk.

I have mentioned that one of the greatest weaknesses in this area of rented accommodation is the lack of security of tenure. Another is the matter of controlled rents about which we cannot be happy. We cannot be satisfied that the provisions for securing control work satisfactorily. To put it in a nutshell, we are dealing with a situation not of fair rents, but we ought to be bearing in mind the problem of market rents in a situation of acute shortage, extreme urgency and very limited protection for the tenants.

My Lords, I should like to turn to another point mentioned by the noble Lord, Lord Sandford, and that is the position as to residential qualification in regard to entitlement to claims for allowances. He mentioned the categories of persons who will be eligible for allowance as of right: families with dependent children, including single parent families, old-age pensioners and those who have a registered handicap or hardship. I think we need to take seriously this business of the residential period of qualification being six months. Surely that is too long. I should have thought that a month, or even less if the local authority could do it in a less period, would be sufficient. This was a matter that was pursued on Third Reading in another place and I want to ask the noble Lord whether further thought has been given to lessening this period.

We have noted that guidance is to be given to local authorities in the discharge of their duties under this Bill. The noble Lord made some point of their freedom to deal with cases of hardship, but he said that they would be given guidance. Indeed, I should think guidance is necessary if we are to get any degree of uniformity in the treatment of this matter. I have also appreciated that the Minister in the other place laid stress on what could be achieved by way of orders. Accepting that this indicates a degree of flexibility in regard to the provisions of this Bill, I think that many Members of this House are becoming increasingly concerned whether this is the most desirable method of making progress in this field, among others. Circulars giving guidance do not automatically come before Parliament for approval, and orders when made cannot be amended, even if it is desirable that they should be. One begins to wonder to what extent Parliament is going to be able to cope with the growth of the orders and regulations that are such a marked feature of so much of the legislation that we are getting from the Government recently.

I turn now, my Lords, to means testing and take-up. Apart from school meals—and here I think we have to recognise the oversight which teachers can give with effect, which shows that individual attention secures infinitely better results than advertising—the take-up of means test benefits by any yardstick, with possibly one or two exceptions (I think the noble Lord selected Birmingham with great care, because other instances could be quoted where the take-up is lamentably low), falls so far short of the desirable as to make a nonsense of so-called selective benefits. It will be surprising if the percentage take-up of allowances in this field exceeds the take-up of other social benefits. I should like to ask the noble Lord what the Government propose to do by way of securing effective publicity for this measure.

I have referred to the school meals service. It seems to me that, in so far as personal attention can be given, greater success is likely to be the outcome. This is among the very real problems in this field. How can we ensure that those who really need help get it? It is not enough to say that if people want, and need help, they can get it. I believe that that is the point at which means testing fails, because it does not, and cannot, allow for the sense of pride and dignity which causes people to keep to themselves their inability to earn an income adequate to their needs. I can understand their sense of pride and dignity. There is a point where in a democratic society concerned with decent standards we need to provide adequately in this matter of housing. It really comes down all the time to a matter of supplying adequately to meet the need. All the time that there is shortage, it seems to me that we need to control the cost of necessities—and housing is a necessity—and to give a reasonable security of tenure to the person renting a dwelling place. This Bill, as the noble Lord said, is but a beginning. In that it is a beginning it is welcome, but I feel that it is, and time will show it to be, inadequate. As the noble Lord indicated, it may be the means for continued study, and we may be able to find a better answer.

Finally, my Lords, I would say that objection must be registered to the burden that this Bill will place on local authorities. As the noble Lord reminded us in regard to the Housing Finance Act—and of course this measure is bound up with it—they are to be saddled with the cost of administering these provisions, and after 1975–76 they will carry part of the burden of the cost of these allowances. Why? How can that be justified? I believe it to be wrong. I consider it is quite indefensible that relieving poverty should be a charge on rates, which is the most regressive form of taxation imposed. The Government ought to continue to carry 100 per cent. of the cost of these proposals. I believe that they have given us no good case for avoiding doing so.

My Lords, with those reservations, which I hope I have expressed with moderation, on behalf of those who sit on this side of the House I give the Bill a welcome, and I give the promise that we will do nothing to delay its passage other than what may improve the measure. We expect not too much from it, but what good it may do we shall encourage. It would, in turn, be agreeable if the Minister could indicate that some improvements to meet the points I have raised may be contemplated by the Government for introduction at Committee stage, or alternatively, if he could give us some idea of the extent of the use that will be made of regulations, letters of guidance and orders. Meantime, we shall not oppose the Second Reading.

7.19 p.m.


My Lords, I am grateful to the noble Lord for his welcome of the Bill, and I have no complaint that he regards it as merely a beginning, because, as I have said, it is indeed a beginning. It is breaking entirely fresh ground in the furnished sector only four months after we were breaking fresh ground in the unfurnished sector by providing rent allowances right across the board for the first time in the history of this country. The noble Lord mentioned, in passing, that the Bill defines the eligible categories. That is not so. The categories will be prescribed and defined by regulations. That is provided for in this way so that we can advance as we gain experience. But I would stress again the point I made before: that over and above the eligible categories to which the general provisions of the Bill apply, the local authorities will have discretion (subject only to the guidelines which my right honourable friend is going to lay down at the request of the Local Authority Associations) to go outside these categories in order to meet the plight of those who would suffer hardship if they were not to get a rent allowance. I confirm that we shall reconsider both the regulations and the guidelines in the light of experience, but with no experience at all to go on I do not think there is anything else we can do at present.

The noble Lord mentioned that, if we take away the 120,000 we expect to be eligible under the general framework that we propose to start with, and when we take away the tenants who are in receipt of the supplementary benefit, there will be 380,000 left who are not in receipt of rent allowances. The noble Lord seemed to imply that they should be. Maybe some of them should be, and maybe in the light of experience we can broaden the categories to embrace them; but I am sure the mere fact that you happen to be in a furnished letting ought not to entitle you to a rent allowance, and I do not suppose the noble Lord really intended that it should. The figure of 628,000 furnished lettings is the sum total.

The noble Lord then asked about the calculation of the amount upon which the rent allowances will be based. I would confirm again—I think I did mention this—that the 25 per cent. increment above the fair rent to arrive at the figure on which the rent allowance should be based is the figure which, on the best advice we have been able to get, seems to be the fairest in all the circumstances, and particularly fair as between one tenant in a furnished letting and another tenant in an unfurnished house. However, I confirm once again that this figure can be adjusted upwards in the light of experience, either over the whole country or in a particular place or for a particular group of local authorities. I believe those specialised ways of doing it will prove to be the most practicable and just in the circumstances.

I was expecting the noble Lord to raise the question of security of tenure. He knows we have carefully considered this issue as regards furnished accommodation. We said we were doing that during the passage of the main Housing Finance Act and especially in the light of the majority recommendation of the Francis Committee, which was against increasing this security of tenure for reasons which I will not go into again now. Nevertheless, I confirm that although this point is not dealt with in this Bill, it has not been in any sense overlooked by Her Majesty's Government. I also confirm that it is a subject which we are still actively and carefully considering.

In answer to the noble Lord's point about greater publicity, I agree that this is an important feature of any Bill of this kind. We shall be running a big advertising campaign from April in both the national and the local Press. We shall produce an explanatory leaflet for wide-scale distribution by all the media at our disposal, and I will certainly send the noble Lord a copy of it. We are seriously considering a suggestion made by his right honourable friend Mr. Crosland in another place that we should employ a handful of field officers who would publicise the allowances on a personal basis. If there are any further developments in regard to which I can respond to the suggestion made by the noble Lord that no opportunity of extending this publicity should be lost, I will let him know of them during the later stages of the Bill.

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