HOUSING RENTS AND SUBSIDIES BILL

HL Deb 11 February 1975 vol 356 cc1231-328

3.58 p.m.

Baroness BIRK

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(Baroness Birk.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Earl of LISTOWEL in the Chair.]

Clause 1 [Rents for public sector dwellings] :

Baroness YOUNG moved Amendment No. 1: Page 1, line 19, leave out "from time to time" and insert "at least every three years

The noble Baroness said: I have put down three Amendments to Clause 1, which effectively repeals the 1972 Housing Finance Act and puts in its place new proposals on reasonable rents which this Bill enunciates. The three Amendments, to which I shall be speaking separately, in no way go against the principle of the Bill but I hope that they may at least be improvements to Clause 1.

Clause 1 states simply in subsection (2)(1A): A local authority shall from time to time review rents and make such changes, either of rents generally or of particular rents, as circumstances may require. My Amendment asks that instead of "from time to time" a local authority shall review its policy at least every three years. This would bring the review into line with the triennial review of fair rents proposed in the 1972 Housing Finance Act. It even has a quite modern look in that it is a kind of phasing, or perhaps one should say indexing, of rents. It meets a very practical difficulty which councils face. Anyone who has been in local government knows that it is very difficult to decide at which moment to put up council rents. This time inevitably comes, and whenever it comes it is always a difficult experience for whatever Party happens to be in control of the local authority at that time.

There is always a conflict between what the Housing Committee wants to do and what the Finance Comittee wants to do; and the latter of course is responsible for looking at the level of the general rate. The money for the housing revenue account must be raised either by the tenants, through rents, or by the ratepayers, through rates. By applying this time limit, the council would get over the difficulty of suddenly having to review rents, but as part of the procedure it would review them at least every three years.

Without such a regular review, in these highly inflationary times the housing revenue account would go into deficit very quickly indeed. If, for example, we consider the rate of inflation with regard to repairs and maintenance—and as I understand it there is, under the Bill, no longer to be a separate account for maintenance and repairs as there used to be before the 1972 Act—councils will find that they need to look at their rents quite regularly. So it will not be suggesting to them anything other than the kind of thing they will almost certainly have to do, because they will not get the extra income that is needed except by increased rents or rates.

Apart from all this, it seems to me that a review would be very helpful, especially in the housing action areas which were provided for by the Housing Act last year. It is hoped that there will be a real improvement of property in these areas, and this presumably means a fairly regular review of rents to meet the vastly improved standard of accommodation which will be applied. I do not know whether this matter was ever discussed with local authorities and whether they are quite happy to leave Clause 1 as it stands, but I should think they might be very glad to have this statutory review. As I say, I do not believe it goes against the principle of the Bill. I think it would be helpful to local government and I therefore hope that the Government will feel able to consider it. I beg to move.

Lord MELCHETT

The effect of this Amendment would be to require local authorities to review their rents at least every three years rather than from time to time. The purpose of the Amendment may either be to require that rents are reviewed at regular intervals to ensure periodic consideration of their reason-ableness or it may be designed as a measure to provide some stability at a time of rapidly rising prices, on the lines of the three-year review of fair rents in the Housing Finance Act. I rather gathered that it was intended to serve both purposes, from what the noble Baroness said.

Whatever may be the purpose of the Opposition, to require local authorities to review rents at rigid, set intervals would be contrary to the policy of returning the whole responsibility for rent fixing to them. Under the provisions of Clause 1, local authorities will have to review rents as occasion arises. This gives them a considerable measure of flexibility but at the same time it ensures that rents are kept in line with changing circumstances.

In practice, a review may well be necessary once a year, at least, when authorities prepare their annual estimates; but it is quite unnecessary to make this a mandatory duty. Some authorities prefer to make rent increases once in two or three years only. Moreover, the provision in this clause is almost identical to that in Section 113(4) of the Housing Act 1957 which was repealed by the Housing Finance Act, because of the latter's provision of a three-yearly review. The 1957 provision had previously worked satisfactorily and had attracted a certain amount of case law. There is no good reason to alter this provision, which was part of the 1957 provision which this Bill is restoring.

The Earl of KTNNOULL

Before my noble friend replies, may I ask the noble Lord whether he thinks it is really fair that local authority tenants should face the uncertainty of a rent increase every year whereas private tenants know full well that they will not have a rent increase for three years? It seems very unsatisfactory when tenants of local authorities at the present time do not know what "a reasonable rent" will mean, as compared with what was "a fair rent". I hope that when the noble Lord replies later on for the Government he will be able to explain what effect "a reasonable rent" will have on existing rents of local authorities.

Lord MELCHETT

May I just say that I hope I did not imply that there would have to be a rent review every year. I said merely that this would be a matter for local authorities and that it would be for them to decide.

The Earl of KINNOULL

With respect to the noble Lord, he has not replied to the question I put to him, which was: do the Government think it is fair for local authority tenants to be faced with a possible annual rent increase, when tenants in the private sector are protected for a three-year period? In times of inflation this is very important for local authority tenants.

Lord MELCHETT

I am not entirely clear whether the noble Earl is saying that what we are doing is unfair to local authority tenants or unfair to tenants in the private sector. We are not saying there will be any regular review of local authority rents, but, as the noble Earl has said, in times of inflation it will no doubt be necessary for local authorities to review their rents regularly, which quite possibly would mean once a year. This is a matter for them to decide. There may be authorities which do not want to review their rents at one-yearly intervals, but this is a matter the Government will leave for local authorities to decide for themselves.

The Earl of KINNOULL

I am sorry the noble Lord still does not understand my point: it is very simple. The private tenant knows where he stands for three years as regards his rent. His rent is a very important factor of his income. The point I am putting to the Government is this: is it fair for local authority tenants not to know whether their rents are going up every year, or will be considered every year, when a tenant in the private sector knows full well that it will be three years before his rent is reviewed?

Lord MELCHETT

Even if there is a review every year, there is no guarantee that rents will go up. I do not see what certainty that is going to bring into the life of a council tenant.

The Earl of KINNOULL

I must pursue this just a little further, if I may. With inflation running as it is, it is not beyond the bounds of expectation that the rents will go up. In such times, should not the Government consider the possibility that in the case of local authority tenants there should be a three-year mandatory freeze, so to speak, before the next rent review is considered? This is very important when one looks at Clause 2 of the Bill, because there one finds that the Government are taking full powers over rent authorities as to what rent they should charge.

Lord MELCHETT

I think the noble Earl is now raising an entirely new point. He is suggesting that there should be a three-year rent freeze for local authority tenants and that the rents should be reviewed only every three years. That is quite unacceptable to the Government. The Government are saying that the powers to review rents must be left to local authorities. It is quite an extraordinary suggestion, if I may say so to the noble Earl, and it might well be grossly unfair to ratepayers if rents were not increased for three years in some local authority areas. This must be a matter for decision by the local authorities.

Baroness ELLIOT of HARWOOD

Speaking as a chairman of a housing committee of a local authority and as one who has spent many years in local government, I would only say that one of the most difficult things in the world is to put up rents. It is extremely unpopular because nobody wants to pay more if he can help it. If, as in some cases, people in urban areas, say on a new housing estate or where there are a great many council houses, are elected, they are very reluctant to put up the rents, because the people who elected them will naturally take a dim view of what they are suggesting.

If a councillor is on the housing committee, for instance, it will jeopardise his interests with the local electors. It is extremely difficult to do—I have tried it and I know how difficult it is. It is still very difficult, even when there is heavy inflation and the housing revenue account is in deficit. It would be much better if the tenants knew that every three years their rents would be reviewed. They need not necessarily be put up. They could possibly remain the same. But it would mean that no one was put in a difficult situation as a member of the housing committee, elected largely, if it is an urban area, by the people living in council houses; and we should not get the situation which has arisen in many areas where for years and years the rents have not been put up. Sometimes in the past Governments have had to take over and insist that rents were put up.

This is something which does not apply to members of any particular political Party; it applies to all political Parties. Whether it is a Labour, Conservative or Liberal area it is still extremely difficult to deal with this matter. I much prefer the proposal made by my noble friend Lady Young, that every three years there shall be a review and, if necessary, the rents will be put up. People then know where they are. It is not a matter of a councillor either dodging the difficulty, which is great, or having to introduce an increase and then feeling (because of course nobody likes putting up rents) very —I was about to say, "embarrassed"— reluctant. It would be much better if it was simply stated in the Bill that at least every three years council tenants will have their rents reviewed. I repeat that that does not mean that they will necessarily be put up; they may even be put down —who knows? In any event, they would be reviewed. I wholeheartedly support this Amendment.

Baroness YOUNG

We have had an interesting discussion on this point. I can understand the view of the noble Lord, Lord Melchett, in wanting to give complete freedom to local authorities under the Bill. Of course, in fact he will not give complete freedom to local authorities under the Bill as one can see by simply turning to Clause 2 and indeed to other parts of the Bill which will severely restrict the room for manoeuvre that local authorities have. It is most unfortunate that once again there will be this great division between council tenants and the rest of the community. That will be the effect. This Amendment is on a relatively narrow point regarding review of rents, but under the Bill as a whole council tenants will revert to being a quite separate group of people in the community. They have a right to know how often their rent is likely to be reviewed, and I ask the Government to look at this point.

I do not know whether the noble Lord, Lord Melchett, or his colleagues have ever had to attend a meeting of tenants to explain to them that one is about to put up their rents. I can assure him that it is not an easy undertaking. Although the case may be absolutely cast iron, the person taking the chair and making the points at such a meeting will not get anything but a very stormy reception. The Bill will simply encourage the continuation of this position. We all know perfectly well that at intervals, unless the economy of the country changes completely from its present position, rents will have to rise. All I am suggesting is that there should be a time limit after which they are reviewed, so that a tenant, as my noble friend Lord Kinnoull put it very well, knows where he stands. This provision would be of benefit to the tenant; it would be of benefit to local authorities, and I cannot see that it goes against the principle of the Bill. I hope very much that the Government will consider it.

Lord MELCHETT

May I first answer a point the noble Baroness, Lady Young, put to me earlier on about whether local authorities had expressed any opinion on this clause. The answer is that they have been consulted and no suggestion came from them that a three-year review would be desirable. The Government axe resisting this Amendment because it serves no useful purpose. Indeed, it might have the side effect of suggesting to local authorities that they should review their rents only at fairly long intervals. It could therefore in a period of sustained inflation have the effect of transferring burdens from tenants to ratepayers in an unsystematic way. That is a point I have already made to the noble Earl. I think this could hardly be the intention of noble Lords opposite. It is not the intention of the Government.

Local authority rents should not rise unless it is necessary, but when it is necessary the question is not: "Should this additional income be raised?" but is: "From whom should it be raised, the tenant or the ratepayer? " The Bill will leave authorities entirely free to decide for themselves when to ask the question, as well as the answer to be given. In practice, as we know, the question will ask itself each year as each new year's estimates are framed. I should like to say something further to the noble Baroness. Of course, I have not been in the position where I have had to attend a meeting as a local authority member when rents are being raised. But the Government's intention is to restore to local authorities power to fix rents. With power go responsibilities, and local authorities will have to take responsibility for the actions we are giving them power to take.

Baroness YOUNG

This is not a matter I shall press today. I am sorry to have heard the reply of the noble Lord, Lord Melchett, although I suppose one should not be altogether surprised. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.17 p.m.

Baroness YOUNG moved Amendment No. 2: Page 2, line 1, leave out "may" and insert "shall".

The noble Baroness said: This Amendment, to subsection (3) of Clause 1 seems to me only a practical precaution to take. Subsection (3) says: A local authority may make provision for a working balance in their Housing Revenue Account", and my Amendment would change the "may" to "shall"—"shall make provision". There is one short reason for this which I should have thought would be self-evident to everybody. No one can see into the future to know what the next years are to bring us, certainly not in an inflationary era such as we have at the moment.

Therefore, it is only reasonable that a local authority should keep a working balance in its housing revenue account. If it does not do so it will find itself in great trouble because it will have no money at all to meet any unexpected expenditure. In these inflationary times unexpected expenses on repairs, on maintenance, and on management will have to be met—and this in a situation in which local authorities are to be asked to buy as many properties as they can lay their hands on. It is quite extraordinary that the Bill should say simply that a local authority "may" make provision for a working balance. I do not know what is to happen to a local authority that decides not to make provision for a working balance.

The noble Lord, Lord Melchett, quite rightly said on my previous Amendment that of course a local authority must consider when it is to review rents because otherwise it will have to ask the ratepayers to pay. It will not have to review rents regularly, and when it gets into trouble one does not know how far the deficit must go before it decides that it must raise its rents. The ratepayers will undoubtedly have to stump up if it has made a mistake in its calculations. I am afraid I cannot understand why this particular subsection should have been drafted in this way. I have no doubt the answer we shall get is that once again this is an opportunity for local authority freedom and they may not wish to have a working balance.

This matter, however, raises an important issue—a much wider one than the narrow point of council housing and council tenants. I believe that one of the greatest social problems in this country today is the future of our cities and particularly of our inner cities, where too often there are a very large number of poor people with a multiplicity of problems, and possibly just a few very rich people as well. One of the contributory causes of the plight of some people has been very high rates in city centres. It is not the only contributory cause, but it is one. I believe that if local authority housing revenue accounts are allowed by law to run very large deficits—which must inevitably be made up by the rate-payers and to a certain extent by the taxpayers—we shall have the situation we are already beginning to see in some of our major cities of business where other people move out because they cannot and will not pay the rates. This problem is increasing.

It is a very big issue, and this has just a slight bearing on the matter. I think it is such an important issue that I hope the Government will consider the matter carefully before saying that they will not look at what the consequence of subsection (3) could be, not just for council tenants and council housing but for the character of towns. I hope that the noble Lord, Lord Melchett, will say whether he thinks there should be any limit upon what a housing revenue account deficit could go to before the district auditor is called in to have a look at it and whether, under these circumstances, the Government would con-template any kind of Government intervention if the sum became too large. As I have already said, I think that it is a matter of considerable concern not only to council and municipal housing authorities but to the whole of the problem of inner cities. I beg to move.

Lord MELCHETT

I can assure the noble Baroness that this matter has been considered carefully and that we have already looked at her Amendment with considerable care. A working balance on a housing revenue account is regarded by some authorities as a useful means of covering unexpected fluctuations in income and expenditure. Also, it can meet the situation where work—for instance, repair work—has been budgeted for in one year but, through circumstances beyond the authority's control, has been delayed until the following year. It may also be useful to an authority whose cash flow is such that at certain times payments which are substantially in excess of the income received have to be made. However, many authorities manage without the working balance in the housing revenue account—in a sense keeping their reserve centrally. There are no arguments to compel an authority to follow one course or another. No Government finance hangs on the choice.

During the period of operation of the 1972 Act system, authorities could keep a working balance but they were not obliged to do so. Some did so; others did not. Since the whole philosophy of our proposals is to return freedom to local authorities wherever possible and to recognise their ability to manage their affairs in the light of their own local circumstances, we are satisfied that the choice of whether or not to make provision for a working balance should be theirs. If they decided that in their circumstances such a balance was unnecessary, there would be no point in adding to the pressure on rents and rates by compelling them to provide one. What we have done is to provide that the balance should not be larger than is reasonably necessary. To provide an excessive balance would amount to making a profit from local authority housing, which is what the Government are committed to avoiding.

Baroness YOUNG

having read the remainder of subsection (3), I quite appreciate that the Government are committed to making quite sure that no profit is made from local authority housing, but that is not the point at issue. We are talking about whether or not a local authority shall have a working balance and whether or not it is likely to make a loss. I am wondering whether the noble Lord would care to comment on the question of a loss and what the Government propose if a local authority decides neither to have a working balance nor to keep large enough balances generally to be able to meet any unexpected repairs that may come their way.

Anybody who owns or is attempting to buy his own house knows that one of the most terrible things that can befall him is unexpected expenditure. For instance, the roof starts to leak and has to be repaired. That is the kind of experience which everybody has. To take my own authority which owns slightly over 10,000 council houses, nobody could wish for some disaster to befall them but nobody can say that something will not happen. Therefore, what advice will the Government give to a local authority on the matter of deiicits if, exercising its freedom under the terms of the Bill, it does not have the money to meet some unexpected occurrence? Will they produce something from the taxpayer, or will they say, "If you have done that you must levy a supplementary rate"?

Lord MELCHETT

As I understand it, what we are talking about is an accounting point. It is the way that local authorities choose to run their accounts. Whether or not one keeps a working balance does not alter the actual expenditure. The final deficit has to be met from the rates, whether or not a balance is estimated. There is no statutory limitation other than "reasonable". In other words, reasonable rents will go with no more than a reasonable deficit, and it is the case law on "reasonableness"— which existed before the Housing Finance Act and of which there is a long history —with which, as I am sure the noble Baroness knows, local authorities are familiar. It is that statutory limitation which will control the size of the deficit.

Baroness YOUNG

I am bound to say that I find the reply of the noble Lord, Lord Melchett, somewhat unsatisfactory. In fact, it is not really a reply to my question because all that he is saying is that the Government expect local authorities to keep a reasonable balance. My question, however, is this: what do they do if they decide not to keep a reasonable balance? I entirely accept his definition of what is a reasonable balance, because it comes from the 1957 Act, has been in use ever since, and is generally understood in that sense. However, circumstances in 1975 are very different. Quite honestly, if that is the advice which the Government are to give to local authorities they would probably do better just to exercise their own judgment, because I do not think that advice will be very helpful to them. However, at this moment I shall not press the Amendment any further, but I shall consider what the noble Lord has said. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.28 p.m.

Baroness YOUNG moved Amendment No. 3: Page 2, line 3, leave out from ("circumstances") to end of line 5.

The noble Baroness said: I beg to move Amendment No. 3, although I have little hope that I shall get any other reply than the one I have already had to my two other Amendments. I was very interested to hear the noble Lord, Lord Melchett, say in answer to both of my other Amendments that the reason they could not be accepted is because local authorities must be free to decide what it is that they have to do. I put down my third Amendment because it says in subsection (3) that, far from being free to decide what they shall do, local authorities are not free to make a surplus. This seems to me to be rather inconsistent. If we are to have the principle of local authority freedom, local authority representatives—who were so eloquently described by the noble Lord, Lord Melchett, at Second Reading that I almost felt I recognised myself in his description of these democratically elected people who are conscious of the needs of their local society—ought, if they so wish, to be able to make a surplus.

I wonder whether the noble Lord could explain to us how he squares the principle of freedom of local authorities with the fact that they do not have the freedom, if they so wish, to make a surplus. I have the uncomfortable feeling that this is because the Labour Party decided in 1892 or thereabouts that no money should be made out of housing and that they have decided ever since that this should be so. They have decided, therefore, to write it into the Bill.

On a much more serious point, when the noble Lord, Lord Melchett, replies I hope he will bear in mind that earlier on in Clause 1 there is the provision for rent rebates for all council tenants. It is a mandatory provision in all local authorities. Therefore no tenant who is unable to pay the rent need suffer, because he will be eligible for a rent rebate. I hope we shall increasingly improve our publicity on rent rebates, so that the difficult problem of take-up will be overcome. Therefore I hope that on the principle of local authority freedom, and because in any case tenants will not suffer, the Government will consider my Amendment. I beg to move.

Baroness ELLIOT of HARWOOD

I should like to support this Amendment because here again we are in exactly the same position. The Government say that this is in the hands of the local authority. If the local authority are of good conscience and do not want the ratepayers to have to meet the deficits on their housing revenue account, surely it is well worth while to encourage them to make a surplus, which probably will not be large but might just make the difference between having to charge extra rates on the general public, as opposed to those living in council houses which, on the whole, are pretty good. In any case, they are kept up to date by most local authorities, with all the modern amenities we like people to have.

But if a local authority cannot meet the deficit, what does it do? It puts the extra few pence on the general rate. There are people paying rates who may be living in their own houses—I am not saying they are council houses or houses of private landlords—where conditions are not nearly so good, where they have been for a long time, where the houses are old and where the tenants can ill afford additional rates to help those people who live in good council houses and should be paying a larger rent. This happens a great deal in urban areas, particularly in large cities. I am sure many noble Lords know of conditions in large cities. I know one or two large cities fairly well, and I know that this is what happens. When the housing revenue account does not balance, when the money has to be taken from the rates to pay for the council houses, then it is the people living in lesser houses who have to meet that deficit. It is inconsistent to say, on the one hand, that everything should be in the hands of the local authority, and, on the other hand, if the local authority is clever enough—and it would be a jolly clever local authority who could do it—to have enough money to pay for repairs, renewals and so on which they have to do on council estates, they shall not be allowed to make any profit in order to spend it on that kind of work, which may not arise in 1975, but it will in 1976. So one is not really making a profit in the sense of putting something into the kitty against the current year, but one is taking stock of the future and saying, "We will not allow ourselves to run into debt; we will provide enough money". It should come from those benefiting from good council estates and the good council house. It is quite inconsistent to say otherwise, and I hope the noble Lord will consider this matter again.

Lord MELCHETT

As the noble Baroness, Lady Young, has said, the purpose of the Amendment is to remove from local authorities the requirement that they shall not make provision for a surplus in the housing revenue account. The recent origin of this provision in the Bill was in the Election Manifesto of the Government, which contained a commitment to restore to local authorities the right to fix rents which do not make profits out of their tenants. The right honourable gentleman the Secretary of State, in his Second Reading speech in another place, defended this provision on the lines that The authors of the 1972 Act envisaged a situation where many councils would make an actual profit on their housing—a profit on housing which contains an important social service element. That concept—the generation of profit out of socially necessary housing— is one which we on this side of the House reject, and which this Bill will make impossible." — [Official Report, Commons; 18/11/74; col. 906.] My honourable friend the Under-secretary of State said in Committee in another place: We do not regard it as right that council house rent should be not only a rent but a kind of general tax which should pay not only for objectives within the housing revenue account field but also for street lighting, education and such things. That is what rates are for. Under the Housing Finance Act there was a specific obligation for the paying over of the surplus to the Treasury and the Treasury refunding half of it in certain circumstances. One of the things we were specifically against in that Act was the idea of taxing the poor through their rents to subsidise the poor in other ways. As the noble Baroness, Lady Young, has kindly pointed out, the Government have taken an absolutely consistent line on this matter for a long period of time. We are fundamentally opposed to the concept which would be introduced by this Amendment.

Baroness YOUNG

In fact I do not think that my Amendment does go against the concept that the noble Lord, Lord Melchett, has enunciated. He is saying that local authorities shall not make a profit out of housing. All that my Amendment says is that if local authorities do not choose to do so, they need not do so. On every other Amendment so far, the noble Lord has argued that local authorities should have freedom. All I am saying is that if a local authority should make a surplus out of its housing revenue account, it should be free to do so. I cannot accept his statement that by doing so, if a local authority wished to do so (I may not be quoting him exactly), it would be taxing the poor through their rents. I do not know quite to whom the noble Lord is referring. Although there are some very poor council tenants, the average earnings of council tenants, on the whole, I think I am right in saying, are higher than the average earnings of tenants of private housing. Many council tenants are very well off indeed. Therefore, to suggest that if they are paying a higher rent one is automatically taxing the poor because they happen to be living in council houses—particularly as I believe it is to be Government policy that everyone shall live in a council house if they do not own their own house, and I cannot believe they think half the population is as poor as that—seems to me a very strange statement.

Baroness BIRK

I do not know whether my noble friend Lord Melchett understands this point better than I, but could the noble Baroness, Lady Young, give me some evidence of her rather extraordinary statement that the income of people living in private accommodation —the noble Baroness seemed to be taking the whole sphere—was lower than that of council tenants? Then there were the other statements that she made. I do not know whether I misunderstood it, but her argument did appear to me rather extraordinary.

Baroness YOUNG

My statement was that, if you look at it, you will find some of the poorest people are in the worst accommodation, with private landlords.

Baroness BIRK

That is not what was said by the noble Baroness.

Baroness YOUNG

I am sorry if I did not make myself clear, but that is what I meant by my remark that many of the tenants of private landlords are some of the poorest people in the community. All the statistical evidence on incomes and rents goes to show this. This is the great case for rent allowances which we have all supported. Many tenants in council houses—I have ever said more than this —are considerably better off. It was the noble Lord, Lord Melchett, who made a statement that local authorities would be taxing the poor through their rents. I think it is quite incorrect to describe all council tenants as poor. Some are, but a great many are not.

Lord MELCHETT

May I make it quite clear that just as the noble Baroness, Lady Young, did not mean to say that all council tenants were rich, I certainly did not mean to say that all council tenants were poor.

Baroness ELLIOT of HARWOOD

I do not know whether my experience is different, but I have been chairman of a housing committee for quite a long time. When we built council houses we used to take tenants from the old, poor houses —the slums, if you like—in preference to anyone else, in order that they should go out of their bad housing and into new. Although this has been going on for a great many years, there are far too many slum houses still existing, alas!, and these are houses in which, generally, rather poorer people are living than the people who have moved into the council houses. As the noble Baroness, Lady Young, says, when these people are moved to council houses they can claim rent rebate if their income is not sufficient. A great many do not, because they are often people who are well able to afford to meet the rents of these new houses. But the point that I feel strongly about is that if the housing revenue account does not balance or have a small surplus, as we were suggesting—not something which one can put against lighting or some other service provided by the local authority, but some small surplus which would mean that when charges arise on council houses they can be met—one then has to raise the rates on all the other people living in the area, far more of whom are probably living in very old houses and are not nearly so well off as those in council houses. They are paying for the good houses. We have always thought that was a great mistake and very unfair.

I hoped very much that we were getting away from that, and getting to the point where any housing legislation which was passed recognised that the rents paid on council houses should meet the deficit; that there should be a balance or, if not a balance, a small surplus. This is putting the whole thing back again, and saying that if there is a deficit it shall go on to the general rate. That has been happening for years and in big cities it is one of the scandals. I am very much opposed to that, and am extremely sorry that it should still continue under this Bill. It is the greatest possible mistake and a great unfairness on the general ratepayer in any city or county.

Lord HAWKE

I am rather disturbed by the wording of this clause. Somebody has to interpret it, and how does one interpret, … which is no larger than is reasonably necessary having regard to all the circumstances"? I should have thought that in an inflationary age it would be desirable to keep the largest possible balance in the housing account. Each year houses will cost a lot more than in the year before, and the Government will probably not produce the necessary subsidies to balance the books. I do not like the phrasing of the whole subsection. I should have thought the words, "A local authority may make provision for a working balance" on housing account would be quite enough, and leave it at that.

Lord HYLTON

I should like to try to bring this discussion down to ground level, as one might say. If local authorities were not absolutely prohibited from making a modest surplus and if this Amendment were accepted, they could do many things which they do not now do or do only very slowly after many years of pressure. They could, for example, provide a meeting place for a tenants' association; they could plant an extra tree on a spare piece of land at one corner of an estate; they could immediately improve a single house which they acquire, instead of waiting to buy up the whole street. I hope that the Government will think again on this amendment.

Lord MELCHETT

I wonder whether I might ask the noble Lord, Lord Hylton, a question. Could he explain exactly how local authorities would be able to spend surpluses on these facilities in any way which they are not able to do at the moment? If they budget for them and raise the necessary revenue from rents or rates, they can provide these facilities. There is no need for a surplus. Furthermore, under the Housing Finance Act of noble Lords opposite, any surplus would not have been available for these facilities but would have been paid over to the Treasury.

Lord HYLTON

If modest surpluses on housing revenue accounts were allowed, many desirable things could be brought in over and above the basic provision of new dwellings or improved dwellings. That is the case I am trying to argue.

Lord DRUMALBYN

I think we should get clear who is to be the judge of what is "reasonably necessary having regard to all the circumstances". Surely the purpose of having a surplus is to avoid going into deficit at some future date. This is essentially a matter of judgment. Does this subsection mean that the Department will supervise all the balances and say at what stage the surplus is larger than is reasonably necessary, having regard to all the circumstances? If not, what does it mean? If it means simply that a sur-plus is not to be accumulated with a view to being transferred to the general rate account or something of that kind, why does the Bill not say that? To my mind, unless the Department is to supervise in the way I have suggested and tell local authorities that they are accumulating more than is reasonably necessary, having regard to all the circumstances, the last sentence should be left out because it is quite redundant.

Lord FOOT

May I follow what the noble Lord has just said? We are involved here, first, in a question of semantics, and following that an important question of principle arises. A local authority may make provision for a working balance, but is prohibited from making provision for a surplus. When does a working balance become a surplus, and when does a surplus cease to be a working balance? The matter is of some consequence, because if some councillors—the reverse of the people at Clay Cross—were to be so misguided as to make provision for a surplus when they thought they were making provision for a working balance only, might they not be subject to a surcharge at the hands of the district auditor because they had offended against the provisions of the Act? Surely councillors will be at great risk if, in trying to make provision for a working balance which is reasonable under all the circumstances, they overstep the mark and fall into the abyss of a surplus. I think the Government are in some difficulty about this point. I think there is a great deal in what is suggested by the Amendment, because things would be made much clearer if these words were simply omitted.

Lord RHODES

I think the Government should think again about this. Those of us who are experienced in this kind of matter over a long time in local government, who were members of rate and rent arrears committees and saw the heartbreak that there was, can now see some of the signs of a return to those conditions. This Amendment has a lot of common sense in it, in that it should be made quite clear in the Bill that prudence should be given an opportunity in the finances of our housing committees.

Lord MELCHETT

If I may first deal with the question of reasonableness, in this Bill we are returning to the basis which local authorities used for many years—50 years or so, in fact—before the 1972 Act was passed. It was got rid of in that Act in a desire for a uniform basis, disregarding the fact that it had worked satisfactorily for so long and in a period, indeed, when subsidies were both absolutely and relatively lower than they have to be nowadays. There was some case law to guide local authorities, which stressed that a principal factor was the need to strike a reasonable balance between the tenants and the ratepayers. That is where the concept of reasonableness comes in. There is no need to fear that to return to this well-tried formula would have any disastrous consequences, in the Government's view. I have already said on a previous Amendment that the concept of a reasonable surplus on the housing revenue account, or a reasonable deficit for that matter, was governed by this relationship between reasonable rents and burdens imposed on ratepayers. There is nothing new in this provision; it is something which worked for a great many years before the Housing Finance Act was passed.

If I may return to something the noble Baroness, Lady Young, said earlier on, in moving the Amendment she scored a debating point in referring to the fact that the Government are very keen to restore to local authorities powers which were removed under the Housing Finance Act. It seems to me that it ill behoves the noble Baroness to say that her Amendment would now restore freedom to local authorities when the Housing Finance Act of noble Lords opposite did nothing of the sort. It imposed fixed, rigid increases in rents on local authorities, regardless of whether or not they were needed. It imposed a rents system which was decided by people who were arbitrarily appointed and had nothing to do with elected local authorities. It seems to me slightly disingenuous for noble Lords opposite to claim that they are now proposing something which will give freedom to local authorities, without reminding your Lordships that their own Act substantially took this freedom away.

4.50 p.m.

Baroness YOUNG

I should like to thank all noble Lords who have taken part on this Amendment. It is always useful to have the points made by my noble friend Lord Drumalbyn and the noble Lord, Lord Foot. They have raised a very important matter both of drafting and of judgment on when a balance becomes a surplus. The situation today is not the same as it was before the 1972 Act, in that we live now in an era of inflation. Whereas, previously, generally speaking, local authorities knew that they needed to put up their rents at intervals —but not at very frequent intervals—in order to keep a working balance if they chose to do so, the situation now, with escalating costs, particularly on repairs and maintenance, is very different. Therefore I do not think that local authorities are going to have anything like such a straightforward task as they had even five years ago. As there does not seem to be much evidence that the pace of inflation is slowing down, they could find themselves in a very difficult position indeed.

I was also grateful to the noble Lord, Lord Rhodes. The point that he made about prudence was one that we should all take to heart. The situation in which we live at the moment is a serious one, and all public authorities, national or local, ought to bear in mind his wisdom on this matter. The noble Lord, Lord Hylton, raised a very real point about what could be done with the surplus. Local authorities are under great difficulties at the moment to make ends meet. Every local authority is having to put up the rates to a very large extent. Each day we hear of another vast rate increase.

All the services—education services, social services—even if not cut back, are certainly being kept without any improvement on the levels of service provided last year. Therefore, it seems to me that if a local authority should wish—only if it should wish—to make a surplus and perhaps put the money to some other good objective that it has in mind, it should be able to do so. It is for that reason that I move this Amendment.

Lord MELCHETT

Would the noble Baroness care to tell your Lordships' House just how many local authorities made a surplus when, under the Act of noble Lords opposite, they had the chance to do so?

Baroness YOUNG

I have not got the figures, and it may well be that none of them did. Suppose none of them did; let us take that argument. That does not mean that none of them will want to do so in the future. The situation five years ago was very different from the situation today. Every local authority is having terrible difficulty in maintaining its standards in education and social services, quite apart from the environment or any other of the desirable things that we should like to see. All I say is that if local authorities chose to do this, I think that they should be entitled to; that is all.

4.54 p.m.

On Question, Whether the said Amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 116; Not-Contents, 59.

CONTENTS
Aberdare, L.	Cromartie, E.	Gladwyn, L.
Allerton, L.	Daventry, V.	Glasgow, E.
Amherst of Hackney, L.	Davidson, V.	Goschen, V.
Barrington, V.	Denham, L. [Teller]	Gowrie, E.
Beaumont of Whitley, L.	Derwent, L.	Grenfell, L.
Belstead, L.	Drumalbyn, L.	Grey of Naunton, L.
Berkeley, B.	Dudley, E.	Gridley, L.
Bethell, L.	Dundee, E.	Grimston of Westbury, L.
Birdwood, L.	Dundonlad, E.	Hailsham of Saint Marylebone, L.
Bolton, L.	Ebbisham, L.
Boothby, L.	Elliot of Harwood, B.	Hankey, L.
Byers, L.	Elton, L. [Teller.]	Hawke, L.
Caccia, L.	Emmet of Amberley, B.	Hereford, V.
Chelwood, L.	Essex, E.	Hornsby-Smith, B.
Clifford of Chudleigh, L.	Exeter, M.	Hylton, L.
Clitheroe, L.	Ferrers, E.	Hylton-Foster, B.
Coleraine, L.	Foot, L.	Inglewood, L.
Cork and Orrery, E.	Fortescue, E.	Killearn, L.
Courtown, E.	Fraser of Kilmorack, L.	Kilmany, L.
Cowley, E.	Gage, V.	Kilmarnock, L.
Cranbrook, E.	Gainford, L.	Kimberley, E.
Crawshaw, L.	Gisborough, L.	Kindersley, L.
Kinnoull, E.	Newall, L.	Strang, L.
Lauderdale, E.	Nugent of Guildford, L.	Strathclyde, L.
Long, V.	Onslow, E.	Strathcona and Mount Royal, L.
Lothian, M.	Platt, L.
Luke, L.	Rankeillour, L.	Strathspey, L.
Lyell, L.	Rochdale, V.	Swaythling, L.
Macpherson of Drumochter, L.	Rochester, L.	Swinton, E.
Margadale, L.	St. Aldwyn, E.	Tenby, V.
Masham of Ilton, B.	St. Helens, L.	Terrington, L.
Massereene and Ferrard, V.	St. Just, L.	Thurlow, L.
Mersey, V.	Saint Oswald, L.	Tranmire, L.
Middleton, L.	Sandford, L.	Tweedsmuir, L.
Milverton, L.	Sandys, L.	Verulam, E.
Monck, V.	Seear, B.	Vivian, L.
Mowbray and Stourton, L.	Sempill, Ly.	Wakefield of Kendal, L.
Moyne, L.	Sharples, B.	Wigoder, L.
Netherthorpe, L.	Stamp, L.	Young, B.
NOT-CONTENTS
Ardwick, L.	Fisher of Rednal, B.	Melchett, L.
Bacon, B.	Gaitskell, B.	Pannell, L.
Birk, B.	Gardiner, L.	Phillips, B.
Blyton, L.	George-Brown, L.	Popplewell, L.
Brockway, L.	Gordon-Walker, L.	Rusholme, L.
Bruce of Dorrington, L.	Goronwy-Roberts, L.	Segal, L.
Burntwood, L.	Greenwood of Rossendale, L.	Shepherd, L. (L. Privy Seal)
Castle, L.	Hale, L.	Slater, L.
Champion, L.	Hamnett, L.	Stow Hill, L.
Chorley, L.	Henderson, L.	Strabolgi, L. [Teller.]
Crowther-Hunt, L.	Hoy, L.	Stewart of Alvechurch, B.
Darling of Hillsborough, L.	Jacques, L. [Teller.]	Taylor of Gryfe, L.
Darwen, L.	Janner, L.	Taylor of Mansfield, L.
Davies of Leek, L.	Leatherland, L.	Wells-Pestell, L.
Donaldson of Kingsbridge, L.	Lee of Newton, L.	White, B.
Douglas of Barloch, L.	Lloyd of Hampstead, L.	Willis, L.
Douglass of Cleveland, L.	Longford, E.	Wilson of Radcliffe, L.
Elwyn-Jones, L. (L. Chancellor.)	Lovell-Davis, L.	Winterbottom, L.
Evans of Hungershall, L.	MacLeod of Fuinary, L.	Wootton of Abinger, B.
Fisher of Camden, L.	Maelor, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

Clause 1, as amended, agreed to.

Clause 2 [Reserve powers to limit rents].

5.4 p.m.

Baroness BIRK moved Amendment No. 5 : Page 2, line 26, at end insert— ("(4A) The Counter-Inflation (Private Sector Residential Rents) (England and Wales) Order 1974 and the Counter-Inflation (Private Sector Residential Rents) (England and Wales) No. 2 Order 1974 are revoked, and the standstill period under the first order (which was extended by Article 3 of the second order) shall terminate on the coming into force of this subsection. (4B) Notwithstanding the revocation of the orders—

1. (a) Article 5 of the first order (recovery of excess rent) shall continue to have effect, for the purposes of both orders, so as to enable a tenant to recover rent at any time during which he would have been able to recover it if the orders had not been revoked, and
1254
2. (b) Article 8 of that order (jurisdiction of the county court) shall continue to have effect, for the purposes of both orders, in respect of any proceedings commenced before the expiry of a period of two years from the date of the revocation.

(4C) Paragraphs (a) and (b) of subsection (4B) above shall continue to have effect during the periods specified in them, whether or not Part II of the Counter-Inflation Act 1973 (under which the two revoked orders were made) is in effect. (4D) Notwithstanding the revocation of the orders, the rent recoverable under a regulated tenancy of a dwelling-house in respect of a contractual period beginning before but ending after the revocation shall not exceed the amount which, by virtue of the orders, was the counter-inflation limit for the dwelling-house immediately before the revocation. (4E) Section 38(2) of the Interpretation Act 1889 (effect of repeals) shall apply in relation to the orders as it applies to an enactment which is repealed by another Act.")

The noble Baroness said: I beg to move Amendment No. 5. With the leave of the House I will speak also to Amendments Nos. 6, 36 and 56. For the sake of clarity, again with the leave of the House, I shall not move Amendment No. 6 with Amendment No. 5. These Amendments, with the exception of Amendment No. 6, incorporate in Clause 2 the provisions which bring the rent freeze to an end by revoking the Orders which imposed it with some savings to safe-guard and to preserve rights acquired under those Orders. The savings are the operation of Article 5, which deals with the recovery of excess rent, and Article 8, which grants jurisdiction to the county court. The provisions, with certain differences, are now contained in Clause 3 of the Bill, which would be deleted by these Amendments.

Amendment No. 6, the transposition of Clause 2 to after Clause 11, is proposed simply for the sake of the logical arrangement of the Bill. Now that it covers both the public and private sectors, Clause 2 should not come in the middle of the public sector clauses. Amendments Nos. 36 and 56 are purely technical. They add the Counter-Inflation Orders, revoked by Clause 2 of the Bill, to the Schedule of Repeals. I beg to move Amendment No. 5.

On Question, Whether Clause 2, as amended, shall stand part of the Bill?

Baroness YOUNG

I am grateful to the noble Baroness, Lady Birk, for explaining the Amendment which we have just agreed, which is now to become part of Clause 2. As I understand it, this is largely concerned with bringing all rented property under counter-inflation legislation. I am concerned particularly with Clause 2, and I have studied the Bill as thoroughly as I can. I believe local authorities are equally concerned that this Order might be brought in and they would have no guarantee that the losses that would come from rate income as a result of the Order being introduced would be made up by way of subsidy. As I understand the present position, when the rent freeze was introduced at the end of last March, broadly speaking 80 per cent. of the loss was covered by the rising costs subsidy under the 1972 Act.

As I understand it, the Secretary of State has power under the clause, without consulting local authorities, to bring in a rent freeze as a method of counter-inflation. Whatever the merits or otherwise of that might be, it is bound to have serious consequences for local authorities. I should like an assurance from the noble Baroness, Lady Birk, that the Government have some method of meeting this situation. I may have misunderstood the Bill, but one of their new subsidies, which takes the place of the 1972 Act subsidies, will make up the difference. Perhaps she will explain to us what it is that local authorities are expected to do in those circumstances. I consider this to be a serious point.

The second point takes us back to the issue of local authority freedom. I think local authorities are concerned that such an Order might be introduced without consultation, and obviously this could be done very quickly if it was needed to meet some inflationary situation. I was surprised to see it, because I was under the impression—perhaps mistakenly—that the Government intend to rely on the Social Contract to defeat inflation and not on Statutory controls. But here we have Statutory control being written into a housing Bill. I do not understand why local authorities and, of course, private landlords, are being singled out in this way with the power of the Secretary of State to introduce, quite suddenly, a rent freeze, as I understand it, to counter inflation. I hope that the noble Baroness will be able to reassure the Committee on those two points. I beg to move.

Baroness BIRK

First, may I say that on this first part of the Bill, taking what has gone on earlier this afternoon on Clause 1, the whole attitude of the Opposition in the Amendments which they have tabled, and in what has been said so far, underlines a fundamental difference in approach between the noble Baroness, Lady Young, her Party, and the Government This runs through all the Opposition's Amendments to the Bill and is as relevant in its approach to Clause 2 as it is to Clause 1. What the Opposition is attempting to do is to delete the clause altogether. The clause is necessary and, as has been made clear, the main purpose of the first part of the Bill is to return to local authorities the freedom to fix rents for local authority housing. The Government are sincere and determined in their aim, which they see as being of major importance in the re-establishment of local responsibility for housing. But no-one can deny that in the difficulties and inflationary climate of today a great deal of uncertainty surrounds many areas of public and private finance. It is for this reason that the clause establishes a reserve power for the Secretary of State to regulate rent increases and rent levels.

In answer to the first point made by the noble Baroness, it is not technically possible to define the necessarily lost income. The Government will bear local authority losses in mind if an order is made and will decide on the basis of the circumstances at that time. There has to be—as there has to be under all these arrangements where we are restoring freedom to local authorities, but where, at the same time, central government have to keep an overall supervision of various areas—a great deal of flexibility. This is not inconsistent with the basic principles underlying the Bill. The general freedom of local authorities to fix rents will in no way be limited by the establishment of the order-making power. It is a simple matter of caution and good sense.

The noble Baroness referred to the need for this power and to the social contract, but, after all, the counter-inflationary measures were brought in by the Conservative Government. The difficult economic situation and the need to deal with inflation have remained and would have done so whichever Government was in power. It makes far greater sense for the provisions relating to housing to be in a housing Bill, particularly as the Counter-Inflation Acts are coming to an end. Keeping the power is a simple matter of caution and good sense, and I have no hesitation in saying that it would be quite irresponsible not to include such a clause in present conditions. Hypotheses have been put forward both in another place and by the noble Baroness as to the condition in which the power might be exercised, but it is really not relevant to speculate in this way. A reserve power is entirely what it says it is. It is a precautionary measure necessitated by good sense, by the requirements of the counter-inflationary policy and the housing policy, and it would be irresponsible to omit such a power.

One has only to think back to the circumstances in which the Government took office a year ago, in a situation of great tension. The need to take steps to combat the industrial and inflationary crisis was paramount. The rent freeze then imposed within a very few days of the Government's taking office was at that time an essential element in the strategy to cope with the existing situation and to show that, in housing as well as in other essentials, they were determined to contain inflationary pressures. A reserve power is necessary to guard against general increases in rents which clearly go against the general economic interests of the nation, or threaten to destroy the main aims of housing policy.

There is nothing new about this concern. Rents are an important price. They have certainly been recognised to be a price over which some influence was required since the Prices and Incomes Act, and, as I have already said, that was recognised by the previous Government in the Counter-Inflation Act 1973. The present power is broadly modelled on the power in that Act. The Government have every confidence in the good sense of local authorities. They expect that increases in rents will be no more than are made necessary with the generous subsidy system provided under the Bill, a balanced approach to the distribution of costs between rent and rates and a rigorous economy of expenditure. This is a reserve power and, as with all such powers, the Government hope that its use will be unnecessary.

The power is also limited. In the public sector, the words of Clause 13(5) make it clear that it is there to set general limits to increases, not to move against a specific authority. That is the proper role of government in this matter. Government must set general boundaries, not intervene in individual cases.

The power is proper to the present Bill, because it is a power over rents and, as such, should be found in the law on rents. Furthermore, it goes beyond the Counter-Inflation Act because it does not expire on a set date. We cannot say when the need for such a power would expire, and therefore it is of indefinite duration, which I consider to be right. To do anything else would imply that the Government's interest in rents would cease at some point in time which could now be clearly foreseen. The clause does not unreasonably limit local authority freedom, any more than if one said to a driver, "If you go too fast, there will have to be a speed limit on this road". It is right to begin dealing with local authorities in a spirit of confidence and trust.

The clause applies also to the private rented sector of housing and here, broadly speaking, the same arguments are relevant. But, again, the power cannot be applied to individual dwellings. It may apply only to specified classes of dwelling, and since rents in the private sector are subject to regulation and control and will, if the later provisions of the Bill are enacted, be subject to general rules covering the phasing of rent increases, there is little likelihood of a need arising for the exercise of the reserve power. However, it would be unwise to omit the private sector from the scope of a general and over-riding control of this kind and, therefore, the Government have thought fit to propose a general power covering both the public and private sectors.

The clause is necessary and has been framed in the most reasonable way compatible with achieving the necessary end. Both sides of the House have from time to time recognised the need for such a power and, therefore, I resist the Amendment to delete the clause from the Bill. The clause should stand part of the Bill.

5.18 p.m.

Baroness ELLIOT of HARWOOD

I should like to ask the noble Baroness one or two questions. I was very interested in her speech and I appreciate what she has said, but there is a difficulty. A rent freeze is imposed: who then meets the charges which are inevitable for anyone who owns property, whether it be a council or a private owner? Property has a habit of running up charges ; one cannot help it. For instance, a roof may begin to leak or something else may happen and the owner is involved in having to repair it. The repair is done, but the tenant cannot be charged any more and, therefore, the local authority has to find the money from somewhere else. Somebody else has to pay what should have been paid by the tenant living in the house which has been repaired.

Exactly the same thing would happen with private property. Houses are alive. They are just as alive as human beings and they have a habit of needing many repairs done to them which the owner does not know about until the need arises. One can very often be severely caught out. If this rent freeze were operated— and I understand from the noble Baroness that it would be operated only very rarely or in very severe economic conditions—what would happen if it were impossible for the rents being paid by tenants, whether council or private tenants, to cover the charges for which the landlord was responsible? The landlord cannot say, "I can't put up the rent, so I can't do your repairs." Will the tenant say, "We will take you to court, because you have agreed under our tenancy to do certain repairs"?

This applies to private as well as to council houses. Where does one get the money from? Do the council have to find the money from somewhere else? Is it not simply robbing Peter to pay Paul?— because what will happen is that if there is very heavy inflation, one will have to raise the rates, or the private individual will have to find the money from his own resources. But he may not have any, in which case the repairs will not be done, and we are back again to square one. It seems to me to be terribly shortsighted, and I should like to know what the Government intend will happen if there is a rent freeze imposed in a time of severe inflation. What will happen under the Landlord and Tenant Act legislation—or under whatever arrangements are made between the county or the city and its tenants in order to meet repairs?

Lord HAWKE

I wonder whether I have misread the Bill. I can see that there is provision for an order for restricting or preventing increases of rents, but I cannot find in the Bill a corresponding provision that an order may be made calling upon local authorities to increase rents. I can well imagine a situation when such provision might be necessary. Suppose North Sea oil goes wrong, with the result that at some time within the next few years the purchasing power of the entire British people has to be very drastically reduced. Would that have to take place purely by large increases in taxation—income tax and so on—or would rents possibly play some part in it? I should have thought that if Clause 2(1) is to exist in the Bill there should be some corresponding provision for Central Government to call upon local authorities to increase rents as well as to stop increasing them.

Baroness BIRK

I note the point made by the noble Baroness, Lady Elliot of Harwood. There could be a time, which we hope we will not have to see again, of a rent freeze, or of very severe inflation. When the noble Baroness said it was like robbing Peter to pay Paul she was looking at one point of view, but I would look at the situation from another point of view. There is a certain limit to the funds which could be used, and whether they come from local authorities or from Central Government, if a squeeze is on, a squeeze is on. With the retaining of Clause 2 it is possible to look at this from a wider point of view because the Government would have a reserve power, and there would be means by which the situation could be helped, either through the rate support grant or other means. When this Government came into power this time, they found that there was an awful mess in the public sector, and they immediately made £350 million available out of public expenditure in order to try to improve the situation in the public sector.

I must repeat what I have just said— that this is a reserve power. It will not make any difference to the day-to-day running of the local authorities. I can understand the noble Baroness's anxiety, as well as the anxiety generally about the question of rents and the problems of local authorities, particularly in times of high inflation. But taking away this reserve power is not going to make things any better at all. At least you have at the end of a very loosely-held rein or piece of string the opportunity, if necessary, for the Government to take action.

The noble Lord, Lord Hawke, talked about the question of increasing rents, but this is really going back to the rents for public sector dwellings in Clause 1. I do not want to go over this again in this clause, because this deals with the way in which a reasonable rent is arrived at. This was discussed at some length by my noble friend Lord Melchett in the debates on the various Amendments relating to Clause 1. The clause we are discussing at the moment is specifically concerned with the reserve power to limit rents. I can only repeat what I said in answer to the noble Baroness that a reserve power is a reserve power, and it would in my view in, and it were made even more specific. sponsible for any Government not to have that power written into a Housing Bill of this kind. One hopes that with the good sense and the good management of local authorities it will remain as a reserve power.

Baroness YOUNG

Before the noble Baroness sits down, may I ask her one further question? If I understood her correctly, she said in reply to the noble Baroness, Lady Elliot of Harwood, that if the Government had to implement this reserve power, then they could help local authorities either by the rate support grant or by some special sum of money which they would make available. Would she tell the Committee whether the Government will undertake to make money available to local authorities by one means or another, should they introduce this reserve power, and would she say whether the Government would under-take to look at the Bill to see whether they should write in at an appropriate place some such guarantee, because this I think is the concern of local authorities.

I do not think that the noble Baroness answered the question I put to her about whether or not local authorities have been able to manage in the current rent freeze, because the 1972 rising costs subsidy applied automatically as costs went up, and costs clearly go up when rents are frozen. I therefore think I am right in saying that 80 per cent. of the cost was covered by Government subsidy, which made a great deal of difference to local authorities. I wonder whether the noble Baroness would confirm whether that was right, and whether or not the Government will undertake, by whatever means they consider to be most appropriate, to reimburse local authorities should they use this reserve power.

Baroness BIRK

In answer to the point which the noble Baroness has just made, this of course would depend on the circumstances—national, general and local —at the time. But in the way the Bill is drafted now, it does not apply to individual local authorities. What it does is to give the Government the opportunity to look at the matter. I really cannot see that by writing anything different into the Bill this could be improved upon, because if anything different were written and in the Government's view be irrewe should immediately get the response: "Ah, but you are now tying the Government or local authorities down too much ". To leave it as a reserve power seems to be finding exactly the right level for it.

When the Government came into power, as I said in reply to the noble Baroness, Lady Elliot of Harwood, they had to make £350 million available—well, they did make it available—to the public sector in order to deal with some of the more grave financial problems which had arisen in that area. With regard to taking long-term future plans into consideration, which I think the noble Baroness is concerned with, the Government have announced, and are undertaking, a review of housing finance which will include, which must include, the points she has raised. Her points are financial points and are now on record. These are some of the matters —the whole question of housing finance— which the Government will be concerned with in their review. But this reserve power at the moment—without again saying all I have said already—is there as a long stop which is necessary as a precautionary measure.

Baroness YOUNG

I do not think this discussion is progressing very far. I will, of course, read what the noble Baroness has said. I do not feel that she has quite seized the point I am making and about which local authorities are concerned. I hope that she too may read what we have both said and that perhaps she could write to me on the matter if on reflection, she feels she could make more specific proposals to meet what will undoubtedly be the very considerable difficulty in which local authorities will find themselves should this reserve power be used.

Lord DRUMALBYN

Before the Amendment is withdrawn, may I ask one question? I apologise for not having been here at the start. May I draw the attention of your Lordships to what I think is called the Henry VIII provision in subsection (4)?— Upon the coming into force of this section, the power to make orders under section 11 of the Counter-Inflation Act 1973 (General Power to make orders restricting or preventing increases of rent) "— it is also in subsection (2)— The supplemental and incidental provisions that may be made by an order … may include provisons excluding, adapting or modifying any provision contained in or having effect under any Act … This is legislated by order, and also, by order, only subject to annulment by the Negative Resolution procedure. Can the noble Baroness say how far this is precedented in housing legislation? It is one thing to make such provision under the Counter-Inflation Act, because that was of limited duration ; but taking these powers under the Housing Act, which is not of limited duration, is surely a very different matter.

Baroness BIRK

As I understand it— and if I am wrong I will let the noble Lord know—this is not a new procedure. We are taking the Counter-Inflation Act into the Housing Act but, as he will appreciate, in only a very minor degree. It is just the particular point about a reserve power. If there is anything further that I can say about this matter and on the point he has raised about the order I will let him know. It is rather a technical financial matter. Referring to what the noble Baroness said, I will certainly write to her about it. From our information in the Department, so far as this is concerned we have hardly had streams of representations from local authorities about it. While she may have evidence that one or two have raised it, it seems to be generally understood that this is a reserve power and very much in the background. We hope it will not be used, and it is accepted in that way. If I may say so, it comes rather oddly from the Opposition to take up the side of local authorities against the reserve power, when the 1972 Housing Finance Act took away all the freedom and powers of local authorities and put them on to central Government.

Baroness YOUNG

I shall be very glad to have a letter on the matter from the noble Baroness, Lady Birk, and also on the very important point raised by my noble friend Lord Drumalbyn. I think at this stage we must study what has been said and return to the subject on Report. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 2, as amended, agreed to.

Baroness BIRK

I beg to move Amendment No. 6.

Amendment moved— Transpose Clause 2 to after Clause 11.— (Baroness Birk.)

Clause 3 [Revocation of Counter-Inflation Orders] :

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

Baroness BIRK

I beg to move to leave out Clause 3.

Baroness YOUNG

Am I understanding correctly that Clause 3 is to be left out because the new Amendment, No. 5, is to be inserted in its place in Clause 2?

Baroness BIRK

Yes. This matter is rather complicated. When I moved Amendment No. 5 I took a number of Amendments together. It was because this point is concerned with bringing counter-inflation measures into this Housing Bill. I was moving to leave out Clause 3 because the private and the public areas come into the same section. Previously this part was within the Counter-Inflation Act.

Clause 4 [Housing Subsidy] :

On Question, Whether Clause 4 shall stand part of the Bill?

Baroness YOUNG

On Clause 4 and Schedule 1, to which I think we are speaking at the same time, I should like to raise three points on subsidies. Turning first of all to Schedule 1, I understand that the supplementary financing element in Clause 4(2) covers the refinancing of loans, because since the time when the loans were first raised interest rates have risen so rapidly. It will be a great help to local authorities by enabling them to continue to borrow the money. I am wondering whether or not this will take into account other costs, including repairs and maintenance. This is something which greatly affects local authorities and it would be helpful to them to know whether those items could be covered in this refinancing loan. As I understand it, this was allowable under the 1972 Act, and it would be very helpful if the same principles could apply under this Bill.

The second point is one which I raised on Second Reading, and as there still seems to be some uncertainty about it. I should be grateful if the Government could give an assurance on the high costs element subsidy, which again is in Clause 4(2) and on page 15 Schedule 1, paragraph 7(2) reads: The Secretary of State shall determine the basis for the calculation of the high costs element, and in particular for determining what expenditure is relevant and whether it exceeds the standard level. I should like to know whether this will apply to authorities other than London. The impression certainly seems to be given that only London is likely to get it. As the Secretary of State has to determine this matter (presumably it is to be laid down by Regulation) we do not know what it means. If I could have an assurance on that point I should be grateful.

I should also be grateful if the Government could give any indication when the Secretary of State is likely to bring this provision in. As I am sure all noble Lords appreciate, there is a long time lag between the time when an authority first thinks of building a house and the time it gets the house. Therefore it is necessary for it to know well in advance whether it is going to get the subsidy. If, for instance, it is hoping to put in a large building programme this year, the houses will not appear, ready for occupation, for two years or more. Therefore, it would be helpful to local authorities to know at some time in the course of this year whether or not they are likely to get this subsidy. This is a very technical matter and if an answer is not immediately avail-able perhaps the noble Lord will write me on both of these points.

The third point is another general one on subsidies. It is on the capital cost element of the subsidies. I understand that this will be paid at the rate of 66 per cent. on admissible costs. This creates some difficulties, because I think it takes the place of the. old rising cost subsidy which was at 75 per cent. On re-reading the Second Reading debate, I see that the noble Lord, Lord Castle, made the point that his authority of Islington will, as a consequence of this subsidy, be worse off. I do not believe that this is the intention of the Bill. I suspect that it is because the subsidy works as a flat subsidy to all authorities regardless of their housing needs and their building programme. It is probably on each house. Therefore, because the other subsidies worked slightly differently, local authorities find themselves worse off. If this is so, it is not helpful to many authorities in areas of housing stress and I wonder whether the Government could explain how they see this subsidy working and whether they feel that it meets adequately the needs of those authorities with large housing needs and housing programmes. Again this is a technical matter, I appreciate, and if the noble Lord would prefer to write me on any of these matters before Report stage I should be happy with that procedure.

Lord MELCHETT

I will try to answer as many of the points put by the noble Baroness as I can. If there is any-thing with which she is still dissatisfied, perhaps she will indicate so and I shall write to her. Her first point was about the subsidy which the Government are to introduce which will help local authorities meet the rising costs of loans. Most of local government is financed with loans and the interest rates are rising fast. The new subsidy will subsidise the increased cost of loans by 33 per cent. This is broadly the same level of assistance that an owner-occupier receives in the same situation. I think it would be true to say that the Government are not financing new repair costs and maintenance costs because this has been found to be extremely time-consuming and pettifogging and has caused a great deal of trouble to the local authorities. As the noble Baroness said, the new subsidy on interest rates will be of enormous assistance to local authorities and particularly so to those who have borrowed for a short period in the hope that the interest rates might go down and who now find the interest rates which are high are still continuing to increase.

The noble Baroness raised the question of the high cost element which is the new subsidy that the Government are framing. As I said on Second Reading —and I will now repeat it—this subsidy is not limited in any way specifically to London. It might be helpful to give an outline of the Government's views of the purpose of this subsidy. The Government's concern is to direct the subsidies carefully, and this is the reason why the high cost element will not be paid for next year. This is a subsidy intended to give assistance to those areas where housing costs arc, and always have been, highest. But these areas, mostly the great conurbations, and particularly, but not only, London, are internally varied and divided into local authorities with different problems and the same problems in different degrees. To frame a high cost subsidy that will do exactly the job we seek to do will be a task of some difficulty, and rather than rush into proposals that were defective, the Government decided to hold it over for consultation and consideration, replacing it for this year by the special element subsidy. The answer is that it will be coming into effect after this year.

The noble Baroness also mentioned the point that my noble friend Lord Castle made during the Second Reading debate. I repeat that the Government do not entirely accept the figures that my noble friend put forward. It is extremely diffi-cult—not to say, so far as I am concerned, impossible—to compare the results of the previous subsidy system under the Finance Act with the system under this Bill. The noble Baroness rightly said that the subsidies are complicated. To try to compare the hypothetical results of the old system with the new subsidy system is impossible. During the Second Reading debate I said that although the costs to which my noble friend referred were going up, the subsidies are increasing by a greater percentage. I believe I may have answered all the points put forward by the noble Baroness, but if that should prove not to be the case I shall be happy to write to her.

Clause 4 agreed to.

Schedule 1 [Rents and Subsidies]:

Lord MELCHETT moved Amendment No. 7:

Page 14, line 6, at end insert— ("(2A) Subject to sub-paragraph (2B) below, the Secretary of State shall have power to determine that the whole or any part of any rent under a lease payable by a local authority or a new town corporation and debited to their Housing Revenue Account or housing account shall be treated for the purposes of this paragraph as reckonable expenditure attributable to admissible capital costs. (2B) The Secretary of State may not make a determination under sub-paragraph (2A) above in respect of rent under a lease if a whole year's rent under it was debited to the Housing Revenue Account or housing account for a year previous to the year 1975–76.")

The noble Lord said: The effect or this Amendment is to give the Secretary of State power to subsidise rent as part of the new capital costs element of housing subsidy. The power does not apply to rent under a lease if a whole year's rent under that lease was debited to the Housing Revenue Account or Housing Account before the year 1975–76. Such rent attracts the basic element of housing subsidy; that is, the subsidy paid as it was under the previous Act.

Most land acquired for housing purposes is freehold, but there are occasion-ally circumstances in which land may be acquired for long-term use under a long lease. It is also sometimes convenient for a local authority to acquire property on a short lease ; for example, short-life property to help deal with homelessness. Premiums paid on a grant assignment of a lease of such property attract the new capital costs element of housing subsidy. It is therefore right that rent should also do so.

This is not a new idea. There was, for example, a provision for subsidising leasehold property in Section 19 of the Housing Subsidies Act 1967. A com-parable statutory provision was not included in the Housing Finance Act 1972 but similar arrangements for subsidising leasehold property were made in the administrative arrangements under that Act. It is intended that the Secretary of State should determine how much of the rent under a lease should be reckonable expenditure for the new capital costs element. Where the rent, taken with any premium payment, is within the market value as certified by the district valuer, the whole cost falling on the Housing Revenue Account will normally qualify for subsidy. I beg to move.

Lord MELCHETT moved Amendments Nos. 8 to 16. Page 16, line 13, after ("authority") insert ("or new town corporation") line 16, after ("a") insert ("housing") leave out line 22 and insert ("with a local authority—") line 34, at end insert ("and agreements with a new town corporation for the exercise by the co-operative, on such terms as may be provided in the agreement, of any of the corporation's powers under the New Towns Act 1965 relating to land in which they have a legal estate ") line 35, leave out ("section") and insert ("paragraph ") line 40, after ("authorities") insert ("or new town corporations") line 41, after ("authority") insert ("or any new town corporation or description line 44, after ("authority") insert ("or new town corporation") line 46, leave out ("co-operative by the local authority") and insert ("housing co-operative by the local authority or new town corporation").

The noble Lord said: With the leave of the Committee I should like to move Amendments Nos. 8 to 16 en bloc and at the same time to speak to Amendments Nos. 40 and 42. The Amendment at page 16, line 35, is merely a drafting Amendment to correct an inaccurate reference to a " section " of the Schedule.

The remaining Amendments in this batch have two purposes. The first is to enable New Town corporations, as well as local authorities, to transfer property to a co-operative under the terms of paragraph 9 of the Schedule. The new housing subsidy system applies to New Town corporations as well as to local authorities, and the Government are anxious that New Town tenants should be able to enjoy the advantages of these proposals. The second purpose is to identify these co-operatives specifically as housing co-operatives. I beg to move.

Baroness PHILLIPS

I should like to ask—as in similar cases I have asked of other Governments and have not usually had an answer—if this Bill has been through another place (and I assume that that is the case for it is not identified as a House of Lords Bill), why nobody has spotted this before: or, is it a change of policy?

Lord MELCHETT

In contrast to the situation on previous occasions, I am happy to be able to give my noble friend Lady Phillips an answer. This reference to co-operatives was inserted late in another place, not because the Government considered it an unimportant provision but because it was a radical departure. Given the fact that the main provision was introduced in another place, it is understandable that some tidying up was necessary.

Lord LEATHERLAND

It may be that, during the last two weeks, the other place has been very busily engaged with very controversial questions.

5.52 p.m.

Lord MELCHETT moved Amendment No. 17: Page 19, line 25, leave out from "The" to end of line 28 and insert " regulations may authorise a local authority or new town corporation to consult, in connection with the determination of any such question as is mentioned in sub-paragraph (3) above, the president of the panel drawn up under Schedule 5 to the Rent Act 1968 (panels for the constitution of rent assessment committees) for any area in which there is situated a dwelling to which the determination will relate. The regulations may also—

1. (a) authorise the local authority or new town corporation, in the case of the president's absence or incapacity, to consult the vice-president or, as the case may be, one of the vice-presidents of the panel ; and
2. (b) authorise the president or any such vice-president to consult, with regard to any matter submitted to him by an authority or corporation in pursuance of the regulations, any of the panel's other members and any of the panel's staff."

The noble Lord said: In moving this Amendment I should like to speak to Amendment No. 41 at the same time.

Lord DRUMALBYN

I wonder whether the noble Lord, Lord Melchett, would mind not going quite so quickly as it is a little difficult to follow him at this speed.

Lord MELCHETT

I am sorry. I was taking the previous Amendments, which were drafting Amendments, rather quickly because I know that the noble Baroness, Lady Young, does not wish to stay here all night and I share that view. These Amendments relate to the contents of the regulations which the Secretary of State may make under paragraph 15 of Schedule 1 to deal with the granting of rent refunds by local authorities and new town corporations where there is neither a first report nor a final determination by a rents scrutiny board.

Paragraph 15(4) as at present drafted proceeds on the basis that, a person or authority other than the local authority or new town corporation", may be empowered by the regulations to determine a person's entitlement to a refund and the amount of any such refund. We envisaged that in certain circumstances, where the local authority or New Town Corporation considered that it could not reach a decision on a refund, they could refer the matter for a decision by the president of the rent assessment panel for the area. On further consideration we now think it would be preferable for the final responsibility for all decisions on refunds to remain with the local authority or New Town Corporation, while enabling the president of the rent assessment panel to be consulted. The first part of Amendment No. 17 provides accordingly.

The inserted paragraph 4A extends this provision by making it possible for the vice-president or, as the case may be, one of the vice-presidents of the panel, to be consulted in the absence or incapacity of the president; it also makes it possible in turn for the president or vice- president concerned to consult any of the other members of the panel or any of the staff.

Amendment No. 41 merely enables the members of the rent assessment panels to receive remuneration and allowances for any work arising out of the granting of refunds, and for panel staff to be employed on this work. It is not a question of employing additional staff, but merely of ensuring that existing staff can undertake this work. I beg to move.

Baroness YOUNG

I should like to thank the noble Lord for his explanation of this Amendment. To make quite sure that I have understood the point, may I ask whether it applies only to an authority whose rents have reached fair rent level and which may presumably wish to reduce the rent and the amount of refund? Is that the situation where it is envisaged that this would apply? If not, will the noble Lord tell me what is the situation to which it would apply?

Lord MELCHETT

This is a complicated matter, but I understand that under the Housing Finance Act all local authorities were compelled to charge fair rents, and that was done before the rent assessment panels had reached any conclusions as to what the fair rent assessment for the area might be. We are saying that in those areas where the rent assessment board either fixed, or would have fixed fair rents below the levels of rents being charged to tenants those tenants should have refunds. It is not a question of taking only the authorities where the rent assessments boards have come to a conclusion, but of looking at what the fair rents would have been if fixed by the board and saying that if the local authority tenants are charged more they should have refunds. I think the Government view is that this would not apply in many cases.

Baroness YOUNG

I am grateful for that explanation. Was the noble Lord saying that some local authorities would have rent levels above a fair rent level and only in such cases would there be provision for a refund?

Lord MELCHETT

I think I am right in that, but, if I am not, I shall write to the noble Baroness. I think that is the situation.

Lord MELCHETT moved Amendment No. 18: Page 21, line 14, at end insert "and an order which provides for the application of paragraph 9 above to any such association may provide that paragraph 22 above shall have effect in relation to the association subject to such exceptions and modifications as may be prescribed.

The noble Lord said: This Amendment is concerned with a housing association to which paragraph 23 of Schedule 1 to the Bill applies. In practice the only such association is the North Eastern Housing Association. The Amendment covers the provision which may be necessary to deal with rents in any case where the North Eastern Housing Association transfers property to a housing property. This has also been introduced rather late, as deals with housing co-operatives.

As the Bill is at present drafted, the rents for houses belonging to the North Eastern Housing Association are to be fixed by the local authority for the area in which the houses are situated. In fixing these rents they will be subject to the same requirements and limitations as apply when they fix rents for their own houses. In addition, the association are under a duty to charge the rent fixed by the local authority. In the event of North Eastern Housing Association houses being transferred to a co-operative, this situation would need to be modified. Tenants would remain within the reasonable rent system, but the rent-fixing formula would need to accommodate the arrangements which were reached between the North Eastern Housing Association and any co-operative, and be embodied in an agreement approved by the Secretary of State. It would also be necessary to relax the duty on the housing association to charge the rent fixed by the local authority, since the actual charging of the rent would be done by the co-operative. I beg to move.

Schedule 1, as amended, agreed to.

Clauses 5 to 7 agreed to.

5.58 p.m.

Lord MELCHETT moved Amendment No. 19: After Clause 7 insert the following new clause:

Eligibility for housing association grant and revenue deficit grant

". The fact that a housing association is a society registered under the Industrial and Provident Societies Act 1965 and that its rules restrict membership to persons who are tenants or prospective tenants of the association and preclude the grant or assignment of tenancies to persons other than members shall not render it ineligible for housing association grant under section 29 of the Housing Act 1974 or for revenue deficit grant under section 32 of that Act."

The noble Lord said: Once again if I may I shall speak to two other Amendments while moving Amendment No. 19. Those Amendments are Nos. 53 and 57. The effect of the new clause is to remove certain restrictions imposed by Section 29 and 32 of the Housing Act 1974 on the payment of grants to housing associations registered with the Housing Corporation. These restrictions prevent grants being paid to those associations, defined in Section 18(l)(b) of the Act, which have full mutuality between tenants and members. This means that their rules restrict membership to people who are tenants or prospective tenants of the association, and preclude the grant or assignment of tenancies to people other than members. Amendment No. 53 makes two minor consequential Amendments in Schedule 6, which remove the references to Section 18(1)(b) from Sections 29 and 32 of the Housing Act 1974, and the Long Title of the Bill is amended (Amendment No. 57) to take into account the contents of the new clause.

The new clause is essentially a parallel piece of legislation to the Amendments already introduced in Schedule 1, which for the first time provide statutorily for co-operative housing. Hitherto local authorities have been unable to make agreements providing for the transfer of functions to a co-operative without the loss of housing subsidy. Schedule 1 now changes this so that co-operatives are for the first time feasible within the local authority sector.

The Government are very keen to encourage the growth of co-operative housing in this country, because there is a real need to bridge the gap between the status of owner occupiers and that of tenants, and to involve people more actively in the decisions which affect the running of their homes. I do not want to return to old battles, but I think this belies what the noble Baroness said earlier about this Government forcing everyone who is not an owner occupier to live in a rented council house.

This new clause will ensure that co-operative housing is not confined to the local authority sector. Some of the most important initiatives in co-operative housing are likely to come from the housing association movement, which is in a particularly good position to sponsor new co-operative schemes and also, in appropriate cases, to transfer existing housing to co-operatives. The purpose of this new clause is to put co-operatives sponsored by the housing association movement in substantially the same position as those sponsored by local authorities. As a result, the co-operative housing movement in this country will be able to go ahead on a wide and balanced basis. The need for the new clause stems from the terms of Sections 29 and 32 of the Housing Act 1974, under which housing associations with full mutuality between tenants and owners are not eligible for housing association grant or revenue deficit Such associations are also excluded from fair rent controls.

The purpose of these restrictions was originally to prevent the payment of grant to co-ownership housing societies, which are already subsidised through option mortgage subsidy or individual tax relief. But the definition used to achieve this also prevents these grants being paid to other co-operatives whose constitution involves a full mutuality of tenants and members. The Working Party on Co-operative Housing, set up by my honourable friend the Minister for Housing and Construction under the chairmanship of Mr. Harold Campbell, will shortly be producing its first report, and the removal of this impediment to the payment of grants to co-operatives will leave the Minister free to consider the Working Party's recommendations. In a later report, the Working Party will also be dealing with the future of co-ownership schemes, and other forms of tenure in which tenants are given an individual financial stake in the equity of their homes. The new clause will open the way for the Working Party and the Government to consider in due course whether it would be right to grant-aid such schemes.

The new clause covers both housing association grant, which meets the deficit on a new project, and also revenue deficit grant which is designed to deal with overall losses arising from more general factors outside the control of a registered housing association. The new clause makes co-operatives eligible for both forms of grant, because even though such an association would be free to charge more than fair rents in order to cover rises in costs, we must be able in extreme cases to help where costs arise which clearly cannot be met by the co-operative. Of course the co-operatives which we are grant-aiding in this way must be housing associations registered with the Housing Corporation, and thus subject to all the controls (for instance, on disposal of assets) included in the Housing Act 1974. I beg to move.

Lord HYLTON

The voluntary housing movement greatly welcome these Amendments and they are very grateful to the Government for the care which has been taken to work out appropriate arrangements for co-operative schemes.

Baroness YOUNG

I, too, want to thank the noble Lord, Lord Melchett, so that he does not think I am constantly critical. In respect of the other housing Act, I raised with the Government the question of co-operatives and co-owner-ship, to which the noble Lord referred. As I understand the provisions of Schedule 2, they are entirely concerned with grant-aid—not the details of the co-operative proposals which we shall look forward to seeing and possibly debating at a later date when the Government have reached their conclusions on the Working Party's report. Just to clarify this point, may I ask the noble Lord to confirm that what the Government are proposing is that co-operative housing societies, which I think were introduced during the Report stage in another place, will be eligible for grant, as are other housing schemes under the auspices of the Housing Corporation.

Lord MELCHETT

Yes, that is the position.

Baroness PHILLIPS

I should like to raise a small point, and perhaps some of your Lordships may know the answer to it. What is "mutuality"?

Lord MELCHETT

As I understand it, a housing scheme to which "mutuality"—which I find an impossible word to pronounce—applies is one where all members of the scheme are either tenants or prospective tenants. In other words, it refers to people who are either living in the houses or are just about to do so.

Clause 8 agreed to.

Schedule 2 [Phasing of rent increases]:

6.3 p.m.

The Earl of KINNOULL moved Amendment No. 20: Page 22, line 8, leave out " £0.40 " and insert " £0.50 ".

The noble Earl said: I think the Committee will accept this Amendment as one of the simplest in the Marshalled List, and I suspect that is why my noble friend Lady Young asked me to move it. Schedule 2 contains a rather complicated formula for phasing rent increases, but this Amendment deals with the part of the Schedule which comes under the heading Interpretation. In fact, this interpretation is an amendment to Schedule 6 of the 1972 Act, which set out the phasing arrangements, and under Schedule 6 to that Act, a 50p minimum was set.

This Amendment was discussed in another place, and I do not wish to go over old ground. However, I am advised that the Government's reply then needs a little further investigation. I understand that under the 1972 Act the 50p was a mandatory figure for the private sector, but a minimum figure for the private sector. So although the 1972 Act is very complicated and hard to understand, everyone appreciates that in a phased rental increase the minimum is 50p. It is somewhat confusing suddenly to find that the minimum increase is now going down to 40p, and is particularly hard to understand in view of the present rate of inflation. I further understand that the 40p really derives from the 1969 Act, when the phased minimum increase was 7s. 6d. I hope the Government will be able to reconsider this simple Amendment, and allow the figure of 50p to replace the 40p which is proposed in the Bill. I beg to move.

Lord MELCHETT

These Amendments would have the effect of increasing the minimum rent increase (where the registered rent exceeds the previous rent limit by at least this amount) from 40p per week to 50p. The minimum rent increase allowed by the Housing Act 1969 and the Rent (Control of Increase) Act 1969 was 37½p, and we see no reason for building the effects of inflation into the Bill to any greater extent than by rounding up this amount to 40p. The present Government were of course opposed to the automatic rent increase of 50p which the Housing Finance Act imposed in the public sector, and we could hardly be expected to accept a 50p minimum increase in the private sector.

The Earl of KINNOULL

I am afraid that that is a very unsatisfactory reply. With respect, the equation with the Act of 1969 is quite inconceivable when dealing with inflation as it now is. I am not sure whether my noble friend would wish to speak on this Amendment, but I would ask the noble Lord to look again at it, because with an increase of, say, £1.40 the minimum first phase increase would be 50p if this Amendment were accepted. If the increase was £1.60, the first phase would again be 50p, so it would not go beyond that figure. This seems to me rather unsatisfactory, and I am afraid I do not quite understand the noble Lord's argument bringing in the 1969 Act, when one really has to look at the 1972 Act.

Lord MELCHETT

All we are talking about is the limit at which phasing starts, and I do not agree that if the Amendment were accepted no rent would be increased by more than 50p, whereas under the Bill's proposals it would be 40p. That is merely the level at which phasing starts to bite. Increases beyond that level will be phased in accordance with the provisions of the Bill, so there is no question of the eventual rent increase not taking into account inflation and its effects, which I agree with the noble Earl has been particularly bad during the last few years. All we are doing is restricting the level at which the phasing starts to bite to 40p. The rent increase will be recovered by the landlord in the long run, but it will merely take a year or two to get it, depending on the amount of the increase.

Baroness YOUNG

That may very well be, as the noble Lord, Lord Melchett, says, but surely the point is that fair rents, instead of being introduced when they are registered, will now be phased. As I understand it, they will take two years to come into force. This in itself is a departure from the previous method of registering fair rents, and, of course, it makes it just that much more difficult for the private landlord to be able to recoup any of the losses he might have on any of the essential repairs or redecorations he feels he has to do. This Amendment does not go against the principle of phasing, which we on this side of the Committee do not like as a principle, but at least it makes a more realistic minimum start—the 50p rather than the 40p. Now that we understand that the 40p is based on the 1969 Act, we can say it is ludicrously out of date in 1975. [ think that from the point of view of understanding for the tenant, and a degree of fairness for the landlord, this was an Amendment that the Government might have considered was reasonable in that it is not going against their principle but instituting fairness as between landlord and tenant at the early stages of phasing.

Baroness ELLIOT of HARWOOD

May I ask a question about a point on which I am not quite clear? Under this arrangement the council could put up their rent by 50p or 70p, or anything they liked, as I understand it, and this provision is simply a restriction on the private landlord.

Lord MELCHETT

Let us get this straight. The council under the pro-visions of the Bill will be allowed to charge only reasonable rents. It will be up to any tenant to take a council to court if he feels that the council are not charging reasonable rents. So it is not true to say that a council can raise rents to any level they want.

Baroness ELLIOT of HARWOOD

I am sorry that I used a rather loose phrase. What the Government are doing in this Bill is to make it far harder for the private landlord, who may well want to carry out repairs and bring houses up-to-date, and so on. He has to do so under local authority statutory rules. They can come along and say: "We want you to instal a lavatory", or a bathroom, or whatever it is. To do that today costs a great deal of money—about three or four times what it cost in 1969. The private landlord will then be able to recoup on the basis of only 40p a week. Is that the situation?

Lord MELCHETT

No; there is a misunderstanding here and rather more has been made out of this Amendment than is justified. All that the 40p and 50p argument is concerned with is the limit at which phasing starts. Under the Bill as it stands, if a rent increase is below 40p it is allowable upon the coming into force. After that level, phasing starts to bite, and then there are extremely complicated provisions on phasing, about which I shall be happy to write to any noble Lord but to which I should prefer not to commit myself at this point. That is what we are talking about—the stage at which phasing starts. There is no question of landlords not being able to recoup a fair rent or of not being able to carry out repairs. It is merely that this Government are deter-mined to ensure that tenants are not faced with unacceptably large increases in rent, and the rent is to go up only once a year.

The Earl of KINNOULL

I am afraid that I am not satisfied with the noble Lord's answer. There is another practical point. An enormous number of forms have been printed, I believe literally millions, with " 50p " on them. All these forms will have to be reprinted or abandoned and new forms will have to be provided stipulating " 40p". This is not a simple Amendment which can be dismissed lightly. I myself would not be inclined to withdraw it.

Lord MELCHETT

I was not aware of "50p" being printed on a large number of forms as applied to the private sector. I shall certainly undertake to look at the point and to write to the noble Earl about it.

The Earl of KINNOULL

I am grateful for that assurance.

Lord MELCHETT

Perhaps the noble Earl will make it clear whether or not he is withdrawing the Amendment..

The Earl of KINNOULL

I thought I told the Committee that I did not see that one should withdraw the Amendment. It can of course be negatived, but I am suggesting to my noble friend, if she agrees, that we do not withdraw the Amendment.

On Question, Amendment negatived.

The DEPUTY CHAIRMAN of COMMITTEES (Lord Strang)

If Amendment No. 21 is agreed to, I shall not be able to call Amendment No. 22

Lord MELCHETT

Amendment No. 21 is a purely drafting Amendment. Some doubt has been expressed as to whether it was absolutely clear that the "specified sum" in the second year of a period of delay during which a rent is being placed was 40p plus 40p, that is 80p. The revised wording makes this absolutely clear. I beg to move.

Amendment moved— Page 22, line 10, leave out "a further £0.40" and insert "£0.80 per week".—(Lord Melchett.)

6.17 p.m.

The Earl of KINNOULL moved Amendment No. 23: Page 22, line 13, after ("above,") insert ("the first year of").

The noble Earl said: I again rise to discuss this complicated phasing arrangement. I think that these two Amendments, Nos. 23 and 24, could by leave of the Committee be taken together. It is perhaps easier to explain these Amendments by giving two examples. Under the Bill as it stands where a rent was registered in, say, April 1974 the first phased increase of that registered rent would not operate until a year after the passing of the Bill, which we might assume is 31st March of this year. Thus we see that the first phase would not operate until the 31st March 1976. We then should have to wait another twelve months, until 1977, before the second phase would come into operation. By this time the registered rent, which had been registered, one recalls, in April 1974, would of course have expired ; and there-fore the rental increases would never catch up. This matter is pertinent to the last amendment which we did not withdraw.

The amendments we put down try to alleviate this position. One understands the problems that arise with phasing, such as the problem of causing the tenant unnecessary financial hardship by having phasing which is too frequent. What we propose in these amendments is simply that there should be an arrangement whereby, if we take again this example of a rent having been registered in April 1974, the latest the first phase of the registered rent could occur would be 12 months from that date or six months from the passing of the Bill ; and of course in that case it would be a six-months period. I think that that is reason-able. It would allow the landlord at least to catch up under this phasing ; otherwise he will not. I hope that the noble Lord will be sympathetic to the purpose of this amendment.

Lord MELCHETT

The effect of these amendments would be to accelerate the phasing process for rents registered during the standstill period. As I understand if, the amendments are designed to allow landlords who have been prevented from recovering increases of rent during the standstill period to recover two of what would otherwise be annual instalments in the first year after the end of the freeze. The second year of the period of delay in these cases would commence either on the anniversary of the date of the registration of the rent or six months after the coming into force of the Bill, whichever is the later. A tenant would therefore pay the second increase at some point not less than six months after the first instalment becomes recoverable.

The Amendment would of course put tenants who have had rents registered during the freeze at a disadvantage com-pared with those tenants who have rents registered after the ending of the freeze, in that the former would be faced with paying two rent increases in a single year. It is, of course, true that where rents were registered during the freeze, land-lords' attainment of the full fair rent will be delayed for up to 12 months beyond the date at which it would have been reached if phasing had been in operation when the rents were registered. How-ever, it will only be delayed; it will not prevent landlords from reaching the fair rent level at the end of the phasing process.

The Earl of KINNOULL

If I may interrupt the noble Lord, that is the crunch of this Amendment. What one is saying in practice is that in a number of cases the phasing will never be reached because the new rent register will have occurred by then. Could the noble Lord answer me on that point?

Lord MELCHETT

I think I can. If a rent is re-registered during the period of phasing, what will happen is that the phasing will start as from the level which has been reached at the date of the new registration. Phasing will then apply to the difference between that rent and the new registered rent. Therefore there will be no question of the new fair rent not being reached. All that will happen is that the increase in rent that has already taken place under phasing will be taken as the base level. If the increase is subject to phasing beyond that, phasing will then come into force ; and as the rent will be re-registered within a period of three years, phasing, whatever the size of the increase, will have brought the rent up to the fair rent level within three years. There is absolutely no question of the landlord's being deprived of the fair rent in the long run and there is no chance, as I think the noble Earl has suggested, of this going on and on and the fair rent never being reached. I hope that will clear up the matter and that the noble Earl will see fit to withdraw his Amendment.

The Earl of KINNOULL

I appreciate that this is a complicated affair. I do not want to hold up the Committee but I still have not quite got the point. If we take a rent which was registered in April 1974 at £8, and if, say, by 1977 we have reached Phase 2 of the phasing increase and the landlord has reached only £6 and the new rent register makes the then market fair rent £9, at what point in 1977 will the landlord revert to £9, or will it be phased on the £6?

Lord MELCHETT

I am finding the noble Earl's figures very difficult to follow. However, my understanding is that an increase in rent of £8 is suggested over the figure of the rent actually being charged in April 1974, but that by 1977 we have got only to £6. For the sake of argument, I agree that that may be possible, but I cannot work it out in my head. The rent is then re-registered. From the rent, whatever it is, plus £6, the phasing would then start, so that by the date of the next registration, which would be three years after 1977, the fair rent, however large an increase was involved, would have been reached. May I say that if I have got any of this wrong I will write to the noble Earl before the next stage.

The Earl of KINNOULL

I agree with the noble Lord that perhaps it would be simpler if we dealt with this by correspondence before the next stage. I am sure that the noble Lord gave his explanation with great clarity, but I am still puzzled. With the permission of my noble friend I will withdraw this Amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

The Earl of KINNOULL moved Amendment No. 25A: Page 22, line 35, leave out ("not less than 5 per cent.") and insert ("not less than £26 per annum or 10 per cent., whichever is the greater,").

The noble Earl said: As the noble Lord knows, this Amendment deals with the service element of the registered rent. Again it is somewhat complicated. As the Government will appreciate, the ser-vice element in registered rents can vary enormously, depending upon what services are provided within that rent. It can go from one end, where only the lighting of perhaps the common parts in a block of flats is included, to the other end where hot water, central heating and so on are included. Under the Bill, a new and highly complicated calculation table has been framed which I think terrorises many landlords. As we see it, under the Bill many of the registered rents with service elements will be incorporated in this new calculation. The purpose of this Amendment, which has been drafted with the assistance of professional advisers who are concerned from day to day with this very work, is to try to make simpler the working of this part of the Bill.

The practical advice which I have received is that the major concern in service element issues is where the service element is substantial. If one takes the case of service flats where hot water, central heating and so on are supplied, it is within the knowledge of a number of valuers that the service element will exceed 15 per cent. of the rent. Under the present drafting of the Bill, it seems that the Government are aiming to catch all the multi-occupation lettings where the landlord perhaps provides no more than the cleaning and lighting of the common parts. This Amendment is meant to be a helpful element and I hope that the noble Lord will view it in that light. It is designed to provide exemption where the service element is worth not less than ten shillings a week, or 10 per cent. I beg to move.

Lord MELCHETT

The purpose of this Amendment is to raise the minimum percentage amount for service cost increases which are to be exempted from phasing from 5 per cent. to 10 per cent., this having been the percentage used in the Rent (Control of Increases) Act 1969, and to add to it a minimum monetary amount so that increases in the cost of providing services may be exempted from phasing only if service charges exceed both 10 per cent. and, as I understand it, the monetary minimum of £26.

The Government are opposed to this Amendment because we think it is unfair to landlords. The effect of the Amendment would be that where services amounted to less than £26 a year, or 10 per cent. of the rent increases which arise from increases in the cost of pro-viding the services, they would not be exempt from phasing. We agree that there should be a point below which ser-vice costs should be disregarded for the purposes of exemption of increases in them from phasing, and we have fixed this at 5 per cent. of the rent, with no monetary minimum. We must remember that this Bill introduces permanent phasing, that the provision of services involves continuing expenditure at current costs, and that some of the costs which have been involved in providing services have recently risen steeply and may do so again. Denying the landlord the right to recover at their current level service costs which he is having to meet and which have increased since the rent was last fixed is, in our view, acceptable only where the total of the service charges is so small a percentage of the whole rent that we can expect the service cost increases to be absorbed within the first stage of the phased rent increase. This can reasonably be expected with a percentage minimum of 5 per cent. of the total rent ; with a minimum of 10 per cent., or of £26, it cannot. To make such a change might make life easier for rent officers and rent assessment committees, but the Government consider that it would be unfair to landlords pro-viding a small number of services, who may be the smallest private landlords, and that it would discriminate against them. Therefore I must resist this Amendment.

The Earl of KINNOULL

I am grateful for that reply. 1 hope that the noble Lord will accept that if the main cases are unfair to landlords it shows that the Opposition has a great heart for tenants as well as for landlords. Before I ask leave to withdraw this Amendment, may I ask whether the Government have consulted the professional institutions, or the rent officers, or whoever the people are who are involved in the day-to-day work? I ask that only because the Amendment was drawn up from this source, the professional bodies, and I would be loath to beg leave to withdraw my Amendment if no consultation had taken place.

Lord MELCHETT

I am afraid I am unaware whether or not any consultation took place on this particular point. I imagine that the answer is, " no ", but if the noble Earl would like me to, I will write to him on this matter before we reach the next stage of the Bill.

The Earl of KINNOULL

While I am grateful to the noble Lord for that reply, I imagine the answer is that no consultation has taken place.

Lord MELCHETT

Perhaps it would be better if I said at this stage that I just do not know and I will write to the noble Earl before the next stage.

The Earl of KINNOULL

With that assurance, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule 2, as amended, agreed to.

Clause 9 [Certain amenities to be disregarded in determining fair rent]:

The Earl of KINNOULL moved Amendment No. 26: Page 7, line 7, leave out ("paragraph") and insert ("paragraphs").

The noble Earl said: This Amendment brings the Committee to a new clause which was inserted into the Bill at Third Reading in another place. The purpose of the clause was to add yet another aspect to the problems that face valuers and, indeed, rent officers; that is, how one values scarcity value from a fair rent. One understands that the purpose of the clause was to try to take into account deterioration and, indeed, one particular case was put forward in another place. I think the purpose of the Amendment is fairly simple to under-stand. It is simply to allow valuers to take into account that if the amenities of an area have gone down through no fault of the owner of that property, this will be taken into account when fixing a fair rent. I beg to move.

Lord MELCHETT

As the noble Earl, Lord Kinnoull, has said, the object of this Amendment is to add any deterioration in general amenity to the matters that rent officers and rent assessment committees are to disregard in assessing a fair rent. This would be as well as improvements in neighbourhood amenities now required by Clause 9 to be disregarded. I would imagine that the addition has been moved on grounds of equity. If landlords are not to benefit from improvements to which they have not contributed, neither should they suffer for deterioration for which they are not to blame. However, it is not quite as simple as indicated by the noble Earl when introducing this Amendment. The Amendment is defective in that—unlike the disregard of improvement provision— it does not require that what is to be disregarded is deterioration since the material date. Hence, rent officers would be required to disregard deteriorations leading indefinitely into the past. I know the noble Earl is concerned to make things a little easier for the professional people involved, but I think the Amendment as it stands gives those professional bodies a quite impossible task. Of course this may be an oversight.

As to the principle behind the Amendment, it is open to question whether deterioration of amenities is, in general, likely to be as identifiable for disregard purposes as provision for improvement of them. Even where an identifiable amenity disappears—for instance, when an open space is built over—its loss is frequently balanced by the provision of some other benefit, such as improved public services to the area. Here again, the noble Earl may be claiming he is doing one thing and yet end up doing quite another. While I accept that the clause as it stands will not be all that easy to interpret, I think the noble Earl will accept that his Amendment will make life a lot more difficult for the people involved in making these assessments. On those grounds perhaps the noble Earl would like to consider withdrawing his Amendment.

Baroness YOUNG

Before the noble Earl, Lord Kinnoull, does consider with-drawing his Amendment, I appreciate that the Amendment may not be correctly drafted. This is always the fate of anyone who is not a lawyer and not a Parliamentary draftsman, who attempts to draft an Amendment. But I wonder whether the Government would consider looking at this. We on this side of the House are not very keen on Clause 9, which was added on the Report stage in another place. Its effect is that if there is a new amenity next to a house—a playground, or whatever it may be—that has not been put there by the landlord, but by the local authority or some other organisation, this shall be discounted. Therefore, it is bound to have an effect on what could have been the fair rent which is bound by the terms of the fair rent provision to take into account the character of the locality.

Of course, this is altering the basis of the calculation of fair rent. I should have thought in equity that if one is going to agree to this—and we are not going to oppose the principle of the clause at all —it is only fair that if the area does deteriorate this, too, should surely be taken into account. We can all think of instances where, through no fault at all of the landlord, there has been some deterioration in the amenities of the area ; it may well be road-building or alternatively demolition of a lot of property and an empty site remaining for years. This is what the Amendment is asking. I do hope the Government will consider it.

Lord BURNHAM

May I just say that these cases can arise. In particular, I have in mind provision by local authorities of gypsy sites, which can remarkably reduce the amenities of an area. It seems that if there is any concept of fairness in the Bill, it would be grossly unfair to the landlord that his return should be affected by an action which he is unable to control.

Lord MELCHETT

Certainly I can-not accept that the provision of permanent sites for gypsies would necessarily or automatically lead to a deterioration of the neighbourhood. That may be the view of some ; certainly it is not my own personal view. I think there is a difficult point here. To many people it seems unfair that tenants living in an area which has gone badly downhill should continue to have to pay a rent fixed when the area was in a quite different state. However, I am prepared to concede that there is an important point of principle raised by the Amendment of the noble Earl, Lord Kinnoull. Should he wish to beg leave to withdraw it now, I would undertake to look at this again before the next stage.

The Earl of KINNOULL

While I am most grateful for that assurance, may I again ask the noble Lord, Lord Melchett, as it is a fairly vital part in assessing the fair rents principle, what consultations have taken place between the Government and the professional bodies? What consultations have taken place with anyone concerned in the day- to-day operations of the fair rent system? I suspect that no consultations at all have taken place, which I think is quite incredible.

Lord MELCHETT

I do not want to push the point because, as the noble Baroness, Lady Young, said, it is unfair to pick on technicalities. But leaving aside the technical deficiencies in this Amendment, the Amendment of the noble Earl is only going to make life more difficult for the professional bodies. I would ask the noble Earl whether he him-self has asked them about it before putting down his Amendment.

The Earl of KINNOULL

Yes, I did. Within reason, I always consult people before putting down an Amendment, because I do not wish to waste the time of the Committee. Equally I am trying to improve the law. It is unsatisfactory if the Government go ahead with a housing Bill and we find that on large parts of it there was no consultation whatever. I suspect that a great part of this Bill has been framed in this light.

Lord MELCHETT

That is most un-fair. I have not conceded that large chunks of the Bill have been drafted without consultation. I only said that I was not sure of the answer, and that I would write to him. That is as far as he can expect me to go if I do not know the answer. I am being quite honest in saying that.

The Earl of KINNOULL

I am very grateful for that assurance, and am happy to withdraw the Amendment on that undertaking.

Amendment, by leave, withdrawn.

Lord MELCHETT moved Amendment No. 27: Page 7, line 15, after ("landlord") insert ("or a predecessor in title of the landlord or a superior landlord").

The noble Lord said: This is a technical Amendment. Its purpose is to make clear that improvements in the amenity of a neighbourhood at the expense of a predecessor in title of the landlord or a superior landlord are not to be disregarded in the determination of a fair rent. A predecessor in title is a previous owner of the interest which now belongs to the landlord. If the previous owner spent money on improving the amenities of the neighbourhood, then the present owner should not be denied a rent reflecting this. I beg to move.

6.40 p.m.

On Question, Whether Clause 9, as amended, shall stand part of the Bill?

The Earl of KINNOULL

I wonder whether I could detain the Committee for a brief moment on Clause 9 generally, particularly in view of the kind assurance by noble Lords that before the next stage of the Bill we shall be discussing Clause 9 and the Amendment which I withdrew. I understand that it is felt by a large number of people outside who have day to day experience of the fair rents system, that this clause will have very little effect indeed. If it is the intention of Parliament that it should have an effect, it should be looked at again.

I would draw to the attention of the noble Lord a recent High Court case concerning the American School in St. John's Wood. This American school was built and the pupils were to be exclusively American children. The rent assessment committee considered that the immediate locality was affected by this school and a lot of Americans came to live close to it, so a scarcity value arose. The High Court decided against the rent assessment committee's view, on the ground that the locality was too narrow and that when considering scarcity value one should take a greater area. I think this decision is very pertinent to this clause, and I hope that when one has a chance to discuss this clause one will look again at the drafting.

Lord MELCHETT

According to my memory, I undertook to take away the Amendment of the noble Earl and look at it. I would not like to feel that I necessarily committed myself to having discussions. I undertook to have a look at it and to take advice as to whether the Amendment raises an important point of principle. I am not sure that I entirely follow the point the noble Earl makes, and exactly why he is claiming that Clause 9 will have very little effect. I take the point about the court case, of which I was not aware, that according to the legal definition the area in which scarcity conditions are felt to operate has to be fairly large. But, of course, when we are talking about the deterioration of general amenities, I should have thought it would be understood that a reasonably large area would be affected. I am not an expert on this; I would not know exactly what sort of area. But I do not understand why the noble Earl says that Clause 9 will not have any effect at all.

The Earl of KINNOULL

The advice I am given is that the interpretation of Clause 9 would be very difficult to put into practice. When assessing an amenity, whether it be in a new cinema, a public baths or whatever it may be, it would be difficult to know to what degree it should affect the rent.

Lord MELCHETT

That makes me ask the noble Earl why he is compounding the difficulties by introducing a further Amendment. Would he accept that he is compounding the difficulties?

The Earl of KINNOULL

What I would accept is that the whole clause is difficult to interpret. What we were trying to do by the Amendment which was subsequently withdrawn was to make the clause fairer.

Clause 9, as amended, agreed to.

Schedule 3 agreed to.

Clause 10 [Termination of decontrol of tenancies by reference to rateable value] :

On Question, Whether Clause 10 shall stand part of the Bill?

Lord MIDDLETON

I declared to your Lordships such interest as I have in this matter at an earlier stage in your Lordships' House. The case for converting controlled into regulated tenancies seems to us to be overwhelming. This was the firm conclusion of the Francis Committee that was appointed by the Labour Minister of Housing and Local Government in 1969 to review and report on the operation of rent regulation. That Committee recommended that all controlled tenancies should be converted into regulated tenancies without preconditions. They further recommended that the con-version should be effected in stages defined by reference to present rateable values. These recommendations were put into effect by the 1972 Housing Finance Act.

This conversion process started in January 1973 and went on until it was halted by the last Government in March 1974. The £35 to £25 rateable value band was not due for conversion until July 1974, so that tenancies of properties below a £35 rateable value remained controlled, and Clause 10 will see to it that they continue to remain controlled. This Bill will, of course, still permit conversion on application providing a rent officer is satisfied that the house is up to a certain level of repair and contains the standard amenities. A controlled rent is limited to twice the gross value obtaining in November 1956, plus 12½ per cent. of the cost of any improvements. As your Lordships know, these 1956 gross values were very low indeed, and the Francis Committee had something to say on that. The rent under a regulated tenancy can be agreed between the parties, but it is subject to assessment on a fair rent basis by a rent officer.

The Government's case for arresting the conversion process was put by the noble Lord, Lord Melchett, at Second Reading, as follows: … it is quite indefensible that a tenant should pay more than the controlled rent where his dwelling does not have the standard amenities for his exclusive use. Clause 11 will enable a landlord to recover a rent increase of 12½ per cent. of the cost of repairs and this will pro-vide an incentive to repair and improve. The noble Lord, Lord Melchett, recognised the basic problem when he said— and it could not have been put better: We accept, of course, that it is in the interests of the tenant and necessary for the preservation of our older housing stocks that landlords should be encouraged to carry out repairs and improvements, even though they are, for a variety of reasons, unwilling or unable … to improve their properties to the qualifying standard."—[Official Report, 27/1/75; col. 362.] With this no one could possibly disagree. The point at issue is therefore this. Will it, or will it not, encourage the proper repair and improvement of substandard houses in the lower rateable value bands, if the tenancies of these houses remain controlled and their rents are therefore tied to a wholly out of date scale of rateable values?

When this clause was discussed in Committee last December in another place, Mr. Michael Latham quoted this passage from the Official Report of 10th February 1969: Let me remind honourable Members what controlled rents are. They are basically twice the 1939 letting value of the house. They have Hot moved at all since 1957, while costs in general, and repair costs in particular, have been steadily moving up.

Lord STRABOLGI

I am sorry to interrupt the noble Lord, but is he quoting from the speech of a Back-Bencher?

Lord MIDDLETON

I believe I am.

Lord STRABOLGI

I am afraid the noble Lord is out of order. He can quote from the other place only from Ministerial speeches.

Lord HENLEY

The noble Lord may well be out of order, but it is perfectly in order for him to make a statement of fact, which is what he was trying to do.

Lord STRABOLGI

I think I am right in saying that the noble Lord, Lord Middleton, was quoting.

Lord MIDDLETON

I was quoting and I beg your Lordships' pardon. I lake the point. May I go on to say that at that time it was pointed out by the noble Lord, Lord Greenwood of Rossendale, that controlled rents are basically twice the 1939 letting value, and they had not moved up. He went on to compare the increase in the rate of male earnings. The noble Lord, Lord Green-wood of Rossendale, who was then a Minister, went on to refer to studies that had been made of landlords. Talking about the studies of landlords, he said: I can perhaps summarise them best by saying that they show a range of individual landlords owning one rented dwelling as being between 61 per cent. and 78 per cent. of all landlords. And the proportion of individual landlords who are elderly ranges from 39 per cent. to 63 per cent. In these circumstances it is clear that there are real difficulties for many landlords in the way of getting the necessary repairs done and thenceforward keeping the property in a good state."—[Official Report, Commons, 10/2/1969 ; col. 972.] I make no apology for quoting, while I am in order to do so, this passage, because it seems particularly apt.

We are then looking at the problem of unimproved properties in the lower rateable value bands and looking largely at those owned by individual landlords, often elderly, who own one rented dwelling. Are we, in 1975, going to get these houses improved by tying the rents to 1939 letting values, even with a concession that we are to hear about in Clause 11? It can be helpful to look at actual cases and figures. I have done this in my own county of Yorkshire, where there are houses in urban areas under the £35 rateable value level, the tenancies of which, if this clause remains, will remain controlled.

The 1956 average gross value of these houses is about £14, so the rent limit will be double that, £28 a year ; that works out at about 50p per week. In these same areas one can let a garage without light or water for 75p without any difficulty. On any fair rents basis these houses, where they are lacking part or all the basic amenities, would be valued by the Rent Officer at a rent of about £1.85 to £2 per week. In the rural areas the figures work out at about 40p a week, and on a fair rent basis at about £1.75. If one looks at actual cases I really do not think that this level of fair rent is indefensible, especially with the present system of rent allowances. The difference between controlled rents of 40p to 50p a week and fair rents of £1.65 to £2 a week is not great, but it would do something to encourage individual landlords to get on and do their repairs, and start thinking about bringing their houses up to standard. It is because ridiculously low rent limits have obtained for so long that these landlords have given up hope, with the result that there is now far too much substandard housing.

I turn now to the argument that under Clause 11 a landlord could add 12½ per cent. of the cost of repairs onto the controlled rent and that this would pro-vide sufficient encouragement. I do not think that anyone who is familiar with these matters would disagree that this example of a repair bill is typical for this kind of house. Exterior painting, £60 ; some pointing, £50 ; guttering repairs, £50 ; replacing some tiles, £20 ; rewiring and putting in some points. £120 ; total £300. Now 12½ per cent. of £300 is £37. If a house is in the £35 to £25 rateable value band, its 1956 gross value would be £14. Double that gives a controlled rent of £28 and, if one adds £37, the controlled rent limit would be £65 or £1.25 a week. But a fair rent would be about £2. Furthermore, one could not borrow £300 and allow for repayment at 12½ per cent. Of course 12½ per cent. will do something, but it would be quite inadequate as an incentive.

The Government's case for inserting Clause 10 does not stand up to scrutiny. Far too many privately rented houses in the lower rateable value bands are falling apart, and it is becoming increasingly difficult to find a private landlord willing to relet. The process of conversion to regulated tenancies, begun in 1973, must be allowed to run its course. I beg to move.

6.56 p.m.

Baroness BIRK

By this Amendment the noble Lord, Lord Middleton, and his colleagues opposite are seeking to frustrate the Government's intention to ensure that no tenancy should become automatically decontrolled at a particular date simply because of its rateable value. Therefore, this Amendment hits at one of the basic principles of the Government's Bill. The noble Lord referred to the Francis Committee. I am glad that on this occasion he did not refer to it in the same way as he did on Second Reading when, unfortunately, I was ill and unable to be here. He referred to it as the Labour Government's own Committee. As he is obviously aware, it was set up by the Labour Government, but Governments do not set up Committees of Inquiry on the basis that they will pre-empt and make a decision on behalf of the Government. It was a very distinguished Committee that was set up, but it was set up as a Committee of Inquiry, and it was up to the Government to accept or reject its recommendations. It did a splendid job and much of its work is reflected in what successive Governments have done since. However, this Government think, on the point in ques-tion—on which the noble Lord has been speaking—that the Francis Committee were misguided.

As the Opposition themselves acknowledge, there can be no significant role in the long term for the private rented sector, which has been steadily declining for years. I think that the noble Lord, Lord Middleton, and his colleagues will agree that, in the White Paper of April 1973, Widen the Choice: The next Step in Housing, the previous Administration showed that they did not believe that the private sector had a significant role for the future. Indeed, the White Paper itself said: The privately rented sector continues to decline, and the decline in their number is unlikely to be reversed. Ultimately most of the dwellings concerned will come into social ownership, and this also has been accepted. In fact, the Tory Government talked about housing associations and also social ownership.

However, while they remain in the private sector the Government are deter-mined to protect tenants, and particularly those who are least able to help them-selves. Above all, the old and the poor who represent a large part of those who live in controlled dwellings. We are not opposing decontrol absolutely, nor, as I shall demonstrate in a moment, are we disregarding the problems of the landlord. But we appreciate, and we made it quite clear in our Manifesto, that houses without basic amenities will not be taken out of control, and this commitment we shall maintain. We are not prepared to see the automatic change from rent control to rent regulation regardless of the state of repair of the dwellings in question, and regard-less of the amenities provided.

We think it utterly wrong that the tenants—many of them, as I have said, not well able to fend for themselves—should face rent increases perhaps amounting to several hundred per cent. for a dwelling which is without the " standard amenities " as they are called. Let us be clear, standard amenities represent a very basic level and they may be in bad repair. When I say standard amenities, I mean amenities which every home should have—a fixed bath or shower, a wash-hand basin, hot and cold water to supply them, and a W.C. for the sole use of the tenant and his household.

The policies of this Government since coming into Office last March have included concern for the needs of tenants in both private and public sectors. Those who live in controlled tenancies axe a diminishing group, and a very special group, whose needs we believe deserve particular attention. But as I have said, this does not mean that we disregard the problems of landlords. It is not the Government's intention that controlled property should never move into regulation and into the fair rents system. Some, of course, will change because the tenant moves or dies, which is what has been happening over the last 18 years. In others, the tenancy may be converted to regulation if the landlord improves the dwelling so that it is in good repair and he successfully applies for a qualification certificate. But for the majority of dwellings which will remain controlled we intend to provide additional incentives to maintain these properties in good repair.

The noble Lord mentioned Clause 11, to which we come next. This clause goes further than any previous Government have gone in making it possible for those who repair controlled dwellings, as well as those who improve them, to get a return on their expenditure. We have accepted, partly as a result of representations by Members of the Opposition in another place, that some landlords have put their property into a better state of repair already, in the expectation of general decontrol. So an amendment in my name to Clause 11 offers a significant concession in backdating the new provision, a form of retrospection which I am sure noble Lords opposite will be as pleased about as those on this side of the House.

We also deal in Clause 11, although I will not pre-empt the discussion too far now, with the amount of 12½ per cent. which we will discuss when we reach that clause. We cannot accept that tenants, frequently among the poorest members of our society, should be forced to pay enormous rent increases to landlords who have frequently either acquired the property long ago at a derisory figure, or more recently at a speculative price which reflected little more than the value of the controlled rent, but perhaps with some small addition to reflect the possibility of the windfall gain represented by the ending of the controlled tenancy. I hope that in the light of the changes that we have already accepted, on lines which I believe the Opposition wished, that the noble Lord, Lord Middleton, will realise and appreciate the importance which the Government attach to the principle of Clause 10, and that he will not press its deletion from the Bill.

7.3 p.m.

Baroness YOUNG

I am sure that we are grateful to the noble Baroness, Lady Birk, for setting out the Government's reasons for including this clause in the Bill. But I think she will accept that she has not answered all the points raised by my noble friend Lord Middleton who, I thought, made out an excellent case for deleting the clause. We have come to accept, as I said earlier in the discussion, that it is the Government's intention that there will be no more private landlords and that they wish to speed up this process as rapidly as possible. Be that as it may, there are still in existence private landlords, and in this clause we find our-selves in what amounts to a circular argument. The fact is that because the rent is so low houses are not repaired. If I understood the noble Baroness, Lady Birk, correctly, she is saying that these houses will eventually be bought by councils and improved. But will they? She knows, as well as I, the restraints on local government expenditure, and, indeed, the circular emanating from her Department specifically asks local authorities to restrain expenditure on housing repairs and maintenance. So how they can be expected to restrain expenditure on repairs and at the same time buy up property and repair it, I do not know.

What is going to happen is that a large number of houses will simply deteriorate until they fall down, something which no one wants to see. It pinpoints a real problem in housing today, one that, to a certain extent, has been helped by improvement grants and by the great efforts of local authorities in certain places. But the fact remains that the number of houses that fall into disrepair and have to be pulled down every year continues at the same time that the housing need is so very marked. We believe that if this clause were removed from the Bill there would be an incentive to convert such houses, and I entirely accept that the five basic amenities are very basic indeed. But surely it is the aim of all of us that the poor houses should be improved. They should have the five basic amenities and should be brought up to a reasonable standard ; and if the private landlord cannot do so when he is getting such an incredibly small amount in rent (and I think it exceedingly unlikely that local authorities will be able to undertake any more repairs and improvements over and above the number of houses they already have) we are left with a problem on our hands. That is the main issue and why we on this side of the House are so concerned.

One reason for not putting up rents was because tenants would not be able to afford a large increase. But of course all these tenants can apply for rent allowances, so there is not the argument that they would be unable to afford an increased rent. Although I realise that the difficulty with rent allowances is that the take-up is very poor, we could surely between us find a way of advertising this aid for those in this particular need who would be affected. That seems to me a much smaller matter. But I hope that, as we are all agreed on the need to improve these poorer houses, we will consider what my noble friend Lord Middleton has said: that the Government will consider this matter very carefully and realise the merit involved on behalf of the cause that we all want to see ; that is, the improvement of poor houses.

The Earl of KINNOULL

Briefly I would support my noble friends Lord Middleton and Lady Young. I have points on two issues which the noble Baroness, Lady Birk, has raised. One concerns the qualification certificate. On many occasions in another place it was said that the Government were not stopping the conversion of controlled tenancies to regulated tenancies because they could always do it through the qualification certificate. As I understand it, the majority of those tenants physically could never have available, not only the standard amenities which we all agree are essential, but those standard amenities for their exclusive use, because so many of these dwellings are not houses ; some are fiats and so on, and physically there would not be the room to provide such amenities. That is my first point.

Secondly, what happens to these tenants under Clause 11? Personally I do not wish to spoil our next Amendment on Clause 11. I am unhappy about what happens under this clause to tenants; there is no rent-conceding control. The landlord can apparently go on repairing properties and charge a percentage on those repairs, and the rent can well go above even a registered rent and nothing can be done. Yet the landlord gets no percentage for improvements, only on repairs. I think that is very unfair on tenants. With those brief words, I support my noble friends.

Lord MIDDLETON

I find the reply of the noble Baroness, Lady Birk, disappointing, and, I am afraid, predictable. With regard to her comments about the private sector being in decline, it is in decline due to this extremely inflexible system of the laws regarding protective tenancies, which are becoming more and more complicated, and which have reigned so long. If a house is in a bad state on conversion, it will be taken into account by the rent officer in fixing a fair rent. As the noble Baroness, Lady Young, has said, if a tenant is badly off and can-not afford even a modest increase, he can take advantage of the national scheme of rent allowances. I welcome the remarks of the noble Baroness, Lady Birk, about back-dating the effect of the 12½ per cent. on repairs under Clause 11. But it does not alter my argument that this 12½ per cent. will not be sufficient to provide enough incentive to repair. If the Government persist in ignoring the advice of the Francis Committee, if the Bill goes through with this clause in, and if noble Lords opposite achieve their declared object of bringing into social ownership all privately rented tenancies, (and they cannot persuade me that this will take anything but a long time) then all they will get will be many rundown slums. I feel very strongly about this and I must press the Amendment.

7.10 p.m.

Baroness BIRK

Before the noble Lord makes his decision I should like to have an opportunity to answer him, as well as the noble Baroness, Lady Young, and the noble Earl, Lord Kinnoull. The question of speeding up the diminution of the private sector is a difficult matter to decide. It is a question of the rate, because it is declining in any case, and the 1974 Act not only gave special money for improvements but also a considerable amount of finance to the housing associations, so that in this area something is being done. I have taken the trouble to try to find out whether, when decontrol took place in 1957 and once landlords were not under the restriction of control, there was a great burst of repairs and improvements to property. From discussions with people in the field—not politicians, but people concerned with housing and social work in various areas and particularly in the London area—I have found that there is certainly no great evidence to show that as soon as decontrol takes place there is an improvement in the condition of property.

When the noble Baroness referred to rent allowances she said that she knows as well as I do that the take-up is extremely low and that it is not working for the people who need it. Though this is not something that one could blame on any single Government, I sometimes think that when people have to fill up rent rebate or rent allowance forms they seem to need to be some sort of advanced mathematician. In addition, though there is, as the noble Baroness has said and as many of us have said before, the suggestion that we should find ways of encouraging people to do this, I am becoming more and more doubtful about this. I am not sure that this is the right way to go about it and I feel that the way we are going about it in the Bill, where we say that the tenants are there and should stay there as controlled tenants until the property is improved to the extent where it receives a qualification certificate and becomes a regulated tenancy, may be better.

The noble Earl, Lord Kinnoull, asked what would happen if the amenities could not be installed because in some buildings there was not room. I can only say that if there is not room for the amenities and if people cannot receive the amenities to which they would be entitled if they became regulated tenants, they should not be expected to pay what would be an increased rent. Therefore that does not seem to me to be an argument for decontrolling. Frankly, one could go on all night on this question, making points of arithmetic and producing statistics, but all we can throw into the arena can only add up to the basic argument. This is, once again, a basic question of policy, and the Government's policy is, as I said in my first answer to the noble Lord, that these properties should not be decontrolled until they reach the standard which we have already discussed. I shall not there-fore repeat the arguments. It is fundamental to the Government's Bill that the clause should remain in the Bill. I should also point out that one reason why the Bill is being speeded up is in order that the legislation should be completed so that local authorities will be able to get on with their plans, as they are anxious to do for their own planning and on behalf of their tenants as quickly as possible. If the noble Lord intends to press the Amendment—I hope he does not, and this is why I am intervening at this stage—it would mean a further delay to the Bill, and the responsibility for that delay will rest squarely with the noble Lords opposite.

Resolved in the negative, and Clause 10 disagreed to accordingly.

Clause 11 [Increases of rent under con-trolled tenancy permitted towards costs of repairs] :

7.23 p.m.

The Earl of KINNOULL moved Amendment No. 28A: Page 8, line 4, after ("repairs") insert ("costing not less than £50 in total in any period of twelve months beginning on the previous 1st April")

Lord MIDDLETON

I have no more to say. If the clause remains in the Bill, these houses will not be brought up to standard. I must press the Amendment.

On Question, Whether Clause 10 shall stand part of the Bill?

Their Lordships divided: Contents, 39 ; Not-Contents, 76.

CONTENTS
Bacon, B.	Hall, V.	Peddie, L.
Balogh, L.	Hamnett, L.	Phillips, B.
Beswick, L.	Henderson, L.	Popplewell, L.
Birk, B.	Hoy, L.	Resholme, L.
Blyton, L.	Jacques, L. [Teller.]	Segal, L.
Champion, L.	Janner, L.	Shepherd, L. (L. Privy Seal.)
Cooper of Stockton Heath, L.	Leatherland, L.	Slater, L.
Darwen, L.	Lee of Newton, L.	Stewart of Alvechurch, B.
Douglass of Cleveland, L.	Longford, E.	Strabolgi, L. [Teller.]
Elwyn-Jones, L. (L. Chancellor.)	Lovell-Davis, L.	Taylor of Gryfe, L.
Gaitskell, B.	Maelor, L.	Taylor of Mansfield, L.
Gordon-Walker, L.	Mais, L.	Wilson of Radcliffe, L.
Goronwy-Roberts, L.	Melchett, L.	Winterbottom, L.

NOT-CONTENTS
Aberdare, L.	Essex, E.	Pender, L.
Allerton, L.	Exeter, M.	Penrhyn, L.
Amherst of Hackney, L.	Ferrers, E.	Rankeillour, L.
Arran, E.	Gainford, L.	Redcliffe-Maud, L.
Belstead, L.	Gisborough, L.	Redesdale, L.
Berkeley, B.	Glasgow, E.	St. Aldwyn, E.
Bolton, L.	Goschen, V.	St. Davids, V.
Broadbridge, L.	Gowrie, E.	St. Just, L.
Brougham and Vaux, L.	Greenway, L.	Saint Oswald, L.
Burnham, L.	Hanworth, V.	Sandford, L.
Campbell of Croy, L.	Harmar-Nicholls, L.	Seear, B.
Chelwood, L.	Henley, L.	Selborne, E.
Clifford of Chudleigh, L.	Inglewood, L.	Stamp, L.
Coleraine, L.	Killearn, L.	Strang, L.
Colville of Culross, V.	Kilmarnock, L.	Strathclyde, L.
Cowley, E. [Teller.]	Kindersley, L.	Strathcona and Mount Royal, L.
Crawshaw, L.	Kinnoull, E.
Cromartie, E.	Lindsey and Abingdon, E.	Swaythling, L.
Cullen of Ashbourne, L.	Long, V.	Teviot, L.
Davidson, V.	Lyell, L.	Thorneycroft, L.
Denham, L. [Teller.]	Macleod of Borve, B.	Tranmire, L.
Derwent, L.	Massereene and Ferrard, V.	Trefgarne, L.
Drumalbyn, L.	Middleton, L.	Vivian, L.
Elliot of Harwood, B.	Monck, V.	Windlesham, L.
Elton, L.	Mowbray and Stourton, L.	Young, B.
Emmet of Amberley, B.	Nugent of Guildford, L.

The noble Earl said: I beg to move the Amendment standing in my name, and together with that Amendment I should like to speak to Amendment No. 28B as well. We come on to Clause 11 which the Committee will realise is a new clause and is part of a package of the controlled tenants. The purpose of this Amendment is basically to try to tighten up the clause to benefit the tenant. At the present time, I understand the landlord would be able to claim an increase of rent for every £5 or so he spent on the property. Indeed, he could claim it, as I understand it, quite frequently and it could even become a form of harassment.

The purpose of the Amendment is clear and the Amendment itself is clear. Its purpose is to put down a minimum repair figure ; namely £50, which would have to be spent within a period of 12 months in order to qualify. Pitching the figure at £50 would ensure that no demand for a rent increase could be less than 12p per week, which one feels is sensible. The second Amendment, which is consequential on the first, is to cover the situation where the cost of repairs is to be apportioned between two or more dwellings. With that brief explanation, I hope that the noble Baroness will look upon these two Amendments with sympathy. I beg to move.

Baroness BIRK

The noble Earl spoke to the two Amendments together and so I will, with the permission of the Commit-tee, reply to both Amendments at the same time. Despite the very lucid explanation by the noble Earl, I still do not find these Amendments very clear. The first Amendment, to subsection (1), would appear to limit the entitlement of a landlord to increase a controlled rent by 12½ per cent. of the cost of repairs to or benefiting the dwelling to cases where at least £50 had been spent on repairs in the year.

The second Amendment repeats the limitation for subsection 3(b), which applies only to cases where the repairs are not to the controlled dwelling but benefit it, in which case the amount on which 12½ per cent. is charged is that proportionate to the benefit to the dwelling. I hope that is right. That is the way I understand it at the moment. Whether it is the noble Earl's intention that the limitation should apply to all entitlements to increase controlled rents in respect of repairs (as the prior Amendment suggests) or only to those coming in the latter group (as the second Amendment suggests), the Amendments are unacceptable in principle.

The Amendments are unacceptable be-cause, in the Government's view, they are unjust to landlords—which makes it all the more astonishing that they should come from the side of the House which is constantly accusing the Government of a vendetta against private landlords— and could bear very harshly on the poorer landlords. Fifty pounds is a large sum in terms of controlled rents ; the average controlled rent in England and Wales outside Greater London is £42 a year.

It was because we recognised the difficulty landlords faced in keeping dwellings in repair on such rents that we are introducing this right for landlords to increase controlled rents by a percentage of the money they actually spend on repairs to or benefiting controlled dwellings. We cannot agree that this entitlement should be eroded—perhaps actually eliminated for landlords who have no resources other than the rents—by denying it to landlords who do not, perhaps cannot, spend more than a given amount in any period of 12 months. Therefore, I am resisting the Amendment, I must repeat, on behalf of landlords.

The Earl of KINNOULL

It is very healthy that the noble Baroness resists the Amendment on behalf of landlords. That certainly did not seem to be the theme of the argument in Clause 10. I am grateful to the noble Baroness—

Baroness BIRK

I hope that the noble Earl will forgive me, but we cannot let that pass, because we are talking about two entirely different matters. Clause 10, which has now been deleted for the time being from the Bill, gives an entirely wrong slant to the whole situation. These are much simpler Amendments, but we think perhaps the noble Earl's intention is not expressed in them.

The Earl of KINNOULL

I do not wish to press the Amendment; indeed, in a sense it was a probing Amendment to see how the noble Baroness was thinking on this clause. It is after all a new clause, a new concept in housing Bills, and this probing Amendment has been of value. I do not reject the view that £50 is a great sum to spend on a property. Nowadays if one approaches a builder to ask him to repair one's window one finds that there is not much change out of £25. Therefore I fully accept that it is right and proper to pre-serve a fair balance between landlord and tenant. It would not be my wish not to preserve that balance. But I repeat that the purpose of my Amendment was to consider the situations where a rent increase could be made quite frequently, as I understand it, under the Bill, which could lead to the unhappiness of the tenant. However, in view of the assurance of the noble Baroness, I am quite happy to withdraw the Amendment.

Amendment, by leave, withdrawn.

7.30 p.m.

Baroness BIRK moved Amendment No. 30: Page 8, line 32, leave out ("or") and insert ("unless they were completed on or after 6th April 1973. ( ) This section does not apply to repairs").

The noble Baroness said: This Amendment has been put down following Opposition representations and discussions in another place. It was pointed out that some landlords would have undertaken repairs to their property in anticipation of decontrol under the general programme of decontrol in the Housing Finance Act. It was accepted by my honourable friend that landlords who had repaired their property in this way should be entitled to some recompense for their expenditure. Subject to the introduction of a provision to enable tenants to seek evidence in respect of which the 12½ per cent. increase is claimed, my honourable friend expressed in another place his willingness to make the provision retrospective for one year. In response to further representations from and after correspondence with a spokesman of the Party opposite, the Government have decided that they will accept retrospection to the beginning of the tax year 1973–74, this being a date from which it can reasonably be expected that documentary evidence of the cost of repairs will be available if required. The effect of this Amendment, therefore, is that repairs to property which is let on controlled tenancies which have been completed on or after the 6th April 1973 will come within the 12½ per cent. rent increase provision. I beg to move.

Baroness YOUNG

May I say at once how grateful we are for this Amendment. As the noble Baroness, Lady Birk, has said, it fulfils an undertaking given in another place, and also rights what could have been seen as unfairness to those who had repaired their property under the 1972 Act expecting it to become a regulated tenancy and now finding that it does not. We are therefore very glad to see this Amendment. May I add one further point? Nothing could be more unfortunate for housing, which is such a serious matter in which I think no political Party has been as successful in its policy as it would have liked to be, to feel that we must necessarily divide on land-lords and tenants. It is certainly not my wish or that of my colleagues that we should line up on one side or the other in this matter. There are faults on both sides. I am glad to be able to say of this Amendment by the noble Baroness, Lady Birk, that the Government have , done something which will help landlords, and we are glad to acknowledge that.

On Question, Amendment agreed to.

Baroness YOUNG moved Amendment No. 31: Page 9, line 8, leave out ("124½") and insert ("15").

The noble Baroness said: On behalf of my noble friend Lord Kinnoull, I beg to move Amendment No. 31. It is quite a straightforward Amendment and would increase the appropriate amount per annum which could be calculated for expenses from an increase of 12½ per cent. under subsection (3)(a) to 15 per cent. This is a relatively small increase in the amount, but it is designed to help to deal with the problem, which we all acknowledge, of houses which are in a very poor state of repair. No one wishes them to become complete slums or simply to fall down, which has been the fate of some of them, or to be served with notices of unfitness by the local authority. This Amendment is designed to make it easier for landlords to repair the properties, and I hope, because that is its purpose, that the Government will look at it sympathetically.

Lord BURNHAM

In supporting this Amendment I speak with a certain amount of experience of improving controlled houses. Nobody in their senses does so with money borrowed from the bank, because you cannot get money from the bank at 12½ per cent. Therefore there is no incentive whatsoever to improve the houses, because the greater the improvement you carry out the bigger the loss will be.

Baroness BIRK

Clause 11 is in itself a substantial new provision which goes further than any previous Government have gone to help landlords who are public spirited enough to carry out re-pairs to their property. As I said on earlier Amendments on the discussion of Clause 10, there have been further worthwhile concessions which the Opposition certainly ought to welcome. This proposed Amendment is, however, in a rather different category. The figure of 12½ per cent. has, in another but rather similar context so far as improvements are concerned, stood since 1961. The possibility of altering it was discussed in another place. I must remind noble Lords opposite that when we are talking in this context about helping landlords, as we are doing, we are also considering whether what we are doing would be a disadvantage to tenants. I agree with the noble Baroness that one does not want to turn it into a football match, but it is true—and it would be quite wrong of me to pretend that it is not true—that on the whole the predisposition of members of the Party opposite has been for the protection of landlords who, over decades and even centuries, have been in a much better position to fend for themselves than the tenants. Here I am taking a wide historical spread.

A change from 12½ per cent. to 15 per cent. would mean a further burden on those who would be paying. I cannot accept that the cost of borrowing money to do the work should necessarily always be a major factor in deciding the level of rent increases to be allowed. In any event as I think noble Lords know, interest rates at the moment are starting to go down. In answer to the noble Baroness and to the noble Lord, Lord Burnham, may I say that a great deal of repairs done by individual landlords and by companies is not done on borrowed money. They do not all have to borrow money. The impression that has been given when this matter has been argued, not only here but in another place, is that every landlord who has undertaken repairs has had to do it on borrowed money, and this is manifestly untrue.

Nor do I believe that an acceptable case has been made out for replacing the figure by one supposedly reflecting current interest rates, which may well be temporary and, as I pointed out, are in fact going down. It would not be possible even to get a figure that was fully defensible on these grounds, certainly as interest rates, by their very nature, change. The choice of a rate which is consistent with another similar one has a great deal to recommend it in this situation, and since we have the rate which refers to the improvement grant, my honourable friend would I think at this moment be very reluctant to change it. I suggest that Members opposite should rather count their blessings in this area. We have gone much further so far as repairs are concerned than has ever been put forward before. The House has just accepted a Government Amendment which gives a retrospective date for increases for repairs, and I hope that Members opposite will be satisfied with that. I resist the Amendment.

Baroness YOUNG

I am sorry that the Government should take this attitude to this Amendment. I accept entirely that we are glad that the Government moved Amendment No. 30 and glad to see in Clause 11 some provision for alteration of rent when repairs are done. This entirely meets the point that we all, I think, have been agreed upon: that many houses are going to become completely unfit and, I suspect, ruined before long. I should have thought that this was a completely reasonable suggestion because, although I accept that it would result in an increase of rent for the tenant, I come back to my original point that all tenants can apply for rent allowance. I am sorry to see the example of this exceedingly complicated form on rent allowances; but I have never believed that if the principle was right one should allow administrative complications to stand in the way of implementation. That is an administrative complication ; and I think we should all be glad to see some improvement on it. The beneficiaries of the rent allowance scheme are the tenants.

Baroness BIRK

May I emphasise the point that when I talked about the principle, I meant that we have tried in all areas to encourage people—and over this both the noble Baroness and I are of similar mind ; and Governments of both Parties have done this—to take up the allowances that are their due, whether they be welfare allowances, the social ser-vice allowances or rent allowances. The complicated form is only part of it. It seems to be against the nature of many people to ask for their dues. The same thing happened when the Government of Members opposite tried to (shall I say?) "flog" the family income supplement. The take-up there was low. One must ask oneself whether this is, in fact, the right way to go about helping people. Simplifying the form is not the answer. Person-ally, I have come to the conclusion that this is probably not the right way. When we are talking about rent, the right way is to have the sort of rent that people can afford to pay and not to have to supplement it by rent allowances.

Baroness YOUNG

I think that this is certainly a point of view ; but, with respect, it is not part of this Bill. The provisions under the Bill assume that the rent allowance scheme continues. We could debate at length the whole question of take-up. I can only say that the answer to the question from my Party's point of view would be in the tax credit scheme which would have helped all these people automatically. What we are concerned with here is getting these proper-ties repaired. I am disappointed with the answer from the noble Baroness. However, I feel that this is not a matter to pursue now and that we may return to it on the Report stage. In the meantime, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

7.43 p.m.

Baroness BIRK moved Amendment No. 32: Page 9, line 18, at end insert— ("(11) If—

1. (a) the landlord serves a notice of in-crease of rent by virtue of this section, and
2. (b) the tenant requests him in writing, not later than three months after service of the notice, to supply him with information showing how he has calculated the expenditure on the repairs,

it shall be the landlord's duty, not later than one month after the date of the request, to supply the tenant with copies of such accounts, receipts and other documents as are reasonably necessary for that purpose. (12) A request under subsection (11) above shall be deemed to be duly made to a land-lord if it is served on any agent of the land-lord named as such in a rent book or other similar document, or on the person who receives the rent on behalf of the landlord ; and it shall be the duty of a person on whom a request is so served to forward it as soon as may be to the landlord. (13) If any person without reasonable excuse fails to perform any duty imposed on him by subsection (11) or (12) above, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding £200.").

The noble Baroness said: These new subsections are designed to give the tenant from whom a 12½ per cent. a year increase on account of repairs has been demanded the right to require documentary evidence of the costs on which the increase was calculated. They make it an offence for a landlord or his agent not to comply with his duty to provide this information.

The new subsection (11) provides that if the landlord serves a notice of increase under the 12½ per cent. provision and within three months the tenant requests him in writing to supply him with information showing how he has calculated the expenditure on the repairs, it shall be the landlord's duty, within one month of the request, to supply him with copies of any accounts, receipts and other documents which are necessary for that purpose.

Subsection (12) provides that if a request under subsection (11) is served on an agent of the landlord or on some-one who receives the rent on behalf of the landlord, it shall be deemed to be made to the landlord. It also makes it a duty for anyone on whom such a request is served to forward it to the landlord. Subsection (13) provides that if anyone fails to perform any of the duties laid upon him by subsection (11) or (12) he shall be guilty of an offence, and liable on summary conviction to a fine not exceeding £200. I beg to move.

Baroness YOUNG

With regard to this Amendment, I should like to comment that there is really a great deal to be said for everybody knowing how much repairs cost—particularly in this inflationary time. No doubt for many people it will be an eye-opener to see how expensive even the small repairs can be. If it creates better feeling between landlord and tenant so much the better.

The Earl of KINNOULL

May I ask the noble Baroness whether this £200 fine on summary conviction is in line with fines for similar offences?

Baroness BIRK

Yes, it is. This pro-vision reflects a principle introduced in Section 90 of the Housing Finance Act 1972, which concerns service charges for flats. Section 90 gave the tenant required to pay service charges a right to see documentary evidence of the cost of providing the services. The penalty for failure to comply with the requirement to provide information is the same as in that section.

Lord DRUMALBYN

May I ask the noble Baroness whether the kind of case where the repairs are done by the land-lord's own estate workers is adequately covered by the wording of the clause? Will she be kind enough to look at it?

Baroness BIRK

It sounds like one of these technical points. I should rather be sure that I am right than to make a guess at the moment. I shall look at it.

On Question, Amendment agreed to.

Clause 11, as amended, agreed to.

Schedule 4 [Provisions supplementary to section 11]:

Baroness BIRK moved Amendment No. 33: Page 28, line 6, at end insert— 4. Where an offence under section 11(13) above which has been committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of that offence and be liable to be proceeded against and punished accordingly. 5. Where the affairs of a body corporate are managed by its members, paragraph 4 above shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.

The noble Baroness said: This is an Amendment consequential on the second Government Amendment to Clause 11 (tenant's entitlement to evidence of the cost of repairs) to provide for the personal liability of individual directors, et cetera, and officers of corporate bodies which commit offences under Clause 11 of the Bill. These provisions are well precedented. A criminal liability on directors et cetera, of bodies corporate similar to that under paragraph 4 is imposed by Section 35(3) of the Rent Act 1968, which requires a landlord to supply on request a statement of the contractual rent land under Section 20(3) of that Act, and by subsection (10A) of Section 90 of the Housing Finance Act 1972 (inserted in that Section by Schedule 12 to the Housing Act 1974).

Paragraph 5 follows subsection (10B) of Section 90 of the Act of 1972, which was also inserted in that section by Schedule 12 to the 1974 Act.

On Question, Amendment agreed to.

Schedule 4, as amended, agreed to.

7.50 p.m.

Baroness BIRK moved Amendment No. 34: After Clause 11 insert the following new clause:

" Extension of Part II of Housing Finance Act 1972 to almspeople

. After section 19 of the Housing Finance Act 1972 there shall be inserted the following section: —

' Allowances for almspeople

19A.—(1) Subject to subsection (2) below, it shall be the duty of every local authority, on and after such date as the Secretary of State may by order made by statutory instrument appoint, to treat as private tenants, except to the extent that regulations under subsection (4) below provide to the contrary, persons who occupy as their homes almshouse accommodation in the authority's area, and accordingly to make provision in their allowance scheme for granting them allowances, calculated in accordance with the scheme by reference to their needs and their resources, towards their alms-house contributions.

(2) Section 25 below shall not apply in relation to such persons, and in Schedule 3 to this Act ' rent which is eligible to be met by a rebate or an allowance' means, in relation to such persons, the amount of their almshouse contributions.

(3) Regulations made by the Secretary of State with the consent of the Treasury may provide:

1. (a) that any enactment contained in this Part of this Act, other than this section and section 25 below, and any instrument made under any such enactment, and
2. (b) any enactment contained in Schedule 3 or 4 to this Act and any instrument made under either of those Schedules,

shall have effect, so far as the Secretary of State considers appropriate for giving effect to this section, subject to such exceptions or modifications as may be specified in the regulations.

(4) Regulations under subsection (3) above shall be made by statutory instrument and shall be subject to annulment in pursuance of a resolution of either House of Parliament.'".

The noble Baroness said: With the leave of the Committee, I should like also to speak to Amendment No. 44.

This is a new clause and its purpose is to enable persons who occupy almshouse accommodation as their homes to become eligible for allowances under Part II of the Housing Finance Act 1972 towards the contributions they pay. These persons are not eligible at present, because the 1972 Act requires, broadly speaking, that the grant of a rent allowance can be made only to persons who are tenants of the accommodation they occupy as their homes and who also pay rent for that accommodation. Occupants of almshouse accommodation— "almspeople" as they are called, but I would rather use the expression from Trollope, Bedes people—are neither tenants nor do they pay rent as such.

An almsperson is a beneficiary of an almshouse charity and as such he occupies his accommodation as a licensee and not as a tenant. Secondly, he normally makes a "contribution" towards the maintenance of the almshouses of the charity, including essential services therein, and does not pay rent. This contribution is not related directly to the accommodation occupied by the alms-person, but in virtually all cases the con-tribution will not exceed the fair rent level of the accommodation occupied. This is because the Charity Commis-sioners who approve these contributions in practice require consultation with the rent officer first. They approve a maxi-mum contribution up to which the charity may charge. Virtually all existing aims-house accommodation is provided by housing associations who are registered with the Charity Commissioners. How-ever, provision is also being made to include residents of those few almshouses where the charity is not required to be registered with the Charity Commissioners.

In view of rising costs and of contributions, many almspeople may now be at a considerable disadvantage financially as compared with tenants with similar incomes, paying similar amounts in rent. Of the estimated 25,000 occupants of almshouse accommodation in England or Wales, we estimate that about 5,000 are paying contributions in respect of which they might be eligible to claim allowances under this new clause. The remaining almspeople have lower incomes or resources and so are eligible to receive help towards their rents from supplementary benefit.

Because of the need to adapt the existing legislation for rent allowances to the particular situation of almspeople, who make contributions rather than pay rent, this provision is basically a two-fold enabling power. First, it provides for the Secretary of State to make the necessary adapting regulations. Secondly, it provides for this extension of eligibility for allowances to almspeople to come into force on a date approved by the Secretary of State. This will allow the necessary time to prepare the regulations and lay them before Parliament, where they will be subject to negative resolution. The new clause also provides that the aims-house contribution on which the allowance will be payable does not exceed the maximum contribution approved by the Charity Commissioners. The allowance will be calculated only on the contribution actually paid.

I apologise to noble Lords for the late tabling of this Amendment, but it is an extension which we believe is only right in order to help needy persons with their accommodation costs. Since this extension requires primary legislation, we considered it desirable to seize this opportunity to make the necessary provision since there is no other suitable legislation envisaged this Session. I beg to move.

Baroness YOUNG

I should like to welcome this new clause and its provisions. My noble Lord Crawshaw regretted very much that he could not stay long enough to speak on this Amendment, and told me how pleased he was that it was being moved.

Lord MIDDLETON

As an almshouse trustee I, too, welcome this Amendment. I think it is extremely good.

On Question, Amendment agreed to.

Baroness BIRK moved Amendment No. 35: After Clause 11 insert the following new clause:

Abolition of Central Housing Advisory Committee

". Section 143 of the Housing Act 1957 (provision for appointment and functions of Central Housing Advisory Committee) is repealed, and the Committee shall accordingly cease to exist."

The noble Baroness said: With the leave of the Committee, I also wish to speak to Amendments Nos. 51 and 52. This is another new clause which repeals Section 143 of the Housing Act 1957, which imposes on the Secretary of State for the Environment a duty to appoint a Central Housing Advisory Committee. My right honourable friend the Secretary of State gave careful consideration to the alternative courses by re-constituting the Committee and relying on advice from other bodies outside and this course appeared preferable.

I take the opportunity of placing on record the Government's gratitude to pre-sent and former members of the Commit-tee for the contribution they have made to the formulation of housing policy over many years. The repeals of Section 79 of the Housing Act 1957 and of part of Section 10 of the Chronically Sick and Disabled Persons Act 1970 are consequential on the repeal of Section 143 of the 1957 Act. This was set out in a Written Answer given by my honourable friend the Minister of Housing in another place.

Baroness YOUNG

I do not intend to oppose this Amendment but it gives me an opportunity to thank the noble Baroness, Lady Birk, for the very useful letter she sent to me explaining various Amendments proposed to the Bill. How-ever, I wish to ask her, since the Committee is to be wound up and the Government are clearly going to put their faith in consultation—formal and informal, I understand—whether we could have any assurance that there will be regular consultation with all people involved in housing.

If I may, I will give two examples of where this does not appear to have happened. When we were debating the Rent Act last summer, I specifically asked the Government whether they had discussed that Act with any members of rent tribunals who are, after all, responsible for operating the fair rent provisions, and I was told that they had not discussed it with them. They had, in fact, called them to London and explained the Bill to them. Also, when my noble friend Lord Kinnoull asked whether rent officers had been consulted about the provisions in Clauses 8 and 9 with regard to alterations of the fair rents, the Government did not know.

I am raising these not as debating points, but as extremely important matters of public policy. If there is one thing we all believe in, I think it is consultation; and government can proceed only by a degree of trust and understanding. I do not believe that consultation means agreement. Many people think that when they consult they will get agreement. They do not, but they should at least have an opportunity to express their professional opinion about these matters. I believe in this very strongly. In the difficulty in which housing finds itself, and the difficulty in which we find ourselves in debating a Bill such as this where the division between the Parties is so great, it is very hard to find any points of agreement and consultation with outside experts then becomes all the more important. It may be that in that way we shall find points of agreement which we would not otherwise find. So that although I do not in any way oppose the new clause, I should like to have a further explanation from the Government of how they see the consultation process being carried out.

Baroness BIRK

Although, as the noble Baroness said, this point is outside the clause, I will tell her briefly that my honourable friend is extremely eager to consult and, in fact, is constantly doing so. It seemed to me that the noble Baroness brought two different strands into this discussion. There is consultation between different bodies concerned with housing, such as Shelter; and there is also consultation, to which the noble Baroness referred, with people who are administering certain Acts. I do not make any judgment on that or say that there should be no consultation, but it seems to me these are two quite different things and should be recognised as such.

There are probably other ingredients as well, because when you are consulting with the people who are administering something it is necessary to get the facts from them. This is what the Government do, as I understand it, and they have statistics. Consulting with agencies or various voluntary bodies is a different thing. But on the main principle, there is no doubt that consultation is going on all the time and one of the reasons for the winding up of this body was that it was not relevant in the consultative field today. I would make the point that if we think consultation of this sort will bridge the gap between entirely different approaches, that go right across the social, economic and political fields and concern the basic philosophies of political Parties, we are wrong. What consultation can do is help one to work out in the best possible way one's basic policies, and get advice to be able to deal with problems in times of difficulty.

There is certainly a great case for consultation, and I can assure the noble Baroness that the Government are extremely aware of the need for it. Speaking as a Departmental Minister in this Chamber, I would say that I certainly use every opportunity for consultation that is available in the fields in which I am interested.

Baroness YOUNG

I should like to thank the noble Baroness for that reply. I do not believe that consultation will solve political differences, but there are times when consulting people who are involved in administering complicated legislation reveals a number of facts. I do not intend to pursue this point, but I should be grateful if the noble Baroness would perhaps write to me and set out a list of the organisations which are consulted by the Government as a matter of course on housing matters.

Baroness BIRK

I really do not think I can give an undertaking of that sort at this stage. What the noble Baroness is asking me to do is to hand over a whole lot of Departmental material, and I should have to discuss that with my honourable friend in any case. I have given an assurance that we do consult. I will go back and discuss this with my Ministerial colleagues, but I cannot go any further at the moment. Certainly, I will help the noble Baroness as far as I can, but I cannot give a " blanket" under-taking of that sort.

Baroness YOUNG

I should like to thank the noble Baroness for offering to do that.

On Question, Amendment agreed to.

Clauses 12 and 13 agreed to.

Clause 14 [Interpretation]:

8.4 p.m.

The Earl of KINNOULL moved Amendment No. 35A: Page 10, line 16, leave out "18(1)" and insert "38(1)".

The noble Earl said: This is a small, but I hope a cheerful Amendment, because if one looks at the Bill with the care that it has received from these Benches one sees that "Section 18(1)" of the Rent Act 1968, should, in fact, read "Section 38(1)". If one looks at Section 18(1), one finds, rather astonishingly, that the section refers to a court making an order for possession, which has nothing to do with the contractual period. I hope that with that explanation the noble Baroness's hard Ministerial approach may soften for one moment, and that she will be able to accept this Amendment. I beg to move.

Lord MELCHETT

I am afraid that the noble Earl will have to be content with the softening of my hard facade and not that of my noble friend. If noble Lords opposite had spent rather more time concentrating on useful Amendments like this, rather than attacking the basic political philosophies that lie behind this Government's legislation, we might have ended this Committee stage with a much more useful Bill. Having said that, I must tell the noble Earl that he has discovered a drafting error which has been there since the Bill was first drafted, and we are very grateful to him for drawing our attention to it.

On Question, Amendment agreed to.

Clause 14, as amended, agreed to.

Clause 15 [Citation etc.]:

Baroness BIRK moved Amendment No. 36 : Page 12, line 14, at end insert— ( ) The orders specified in Part V of that Schedule are revoked to the extent mentioned in the third column of that Part.

The noble Baroness said : The Committee may remember that I spoke to this Amendment at the same time as Amendments Nos. 5 and 6, which have already been agreed to. I beg to move.

On Question, Amendment agreed to.

Lord MELCHETT moved Amendment No. 37 : Page 12, line 15, leave out from beginning to ("together") in line 16 and insert— ("(6) The following provisions of this Act, namely— section 1; section 2, except subsections (4A) to (4E); subsections (7) and (10) below; Part II of Schedule 1, together with sub-section (3) above so far as it relates to that Part; paragraphs 13, 22 and 23 of that Schedule; paragraphs 3 and 5 of Schedule 5;")

The noble Lord said : With the leave of the Committee, I should like to move Amendment No. 37 and to speak at the same time to Amendment No. 38. These Amendments deal with the commencement provisions of the Bill and their effect is to add a number of minor provisions to the list already in the Bill which will come in, of course, on Royal Assent instead of two weeks later. I beg to move.

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 38.

Amendment moved— Page 12, line 18, after ("6") insert ("and the repeals in section 25(2)(c) of the Housing Finance Act 1972 and of section 80 of that Act contained in Part IV of that Schedule ") —(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT moved Amendment No. 39: Page 12, line 31, leave out from (" Act") to end of line 33 and insert (" extends to the Isles of Scilly, except— section 2 ; sections 8 to 11 ; Schedules 2 to 4 ; together with subsection (5) above so far as it relates to the repeals contained in Part III of Schedule 6")

The noble Lord said: I beg to move Amendment 39 and should like at the same time to speak to Amendment 45. These Amendments deal with the application of the Bill to the Isles of Scilly. They add to the list of the Bill's provisions which extend to the Isles without the need for an Order, to take account of the additional private sector provisions which were added to the Bill during its Report stage in another place. I beg to move.

On Question, Amendment agreed to.

Clause 15, as amended, agreed to.

Schedule 5 [Minor and consequential amendments]:

Lord MELCHETT

I beg to move Amendment No. 40. I spoke to this Amendment with No. 8.

Amendment moved— Page 28, line 15, after ("a") insert ("housing")—(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 41.

Amendment moved— Page 28, line 19, at end insert— (". The following paragraph shall be added after paragraph 9 of Schedule 5 to that Act (rent assessment committees):— 10. Any reference to remuneration, salaries or allowances in the foregoing provisions of this Schedule includes a reference to remuneration or, as the case may be, salaries or allowances, in respect of functions conferred by regulations under paragraph 15 of Schedule 1 to the Housing Rents and Subsidies Act 1975; and the reference to expenses in paragraph 9(c) above includes a reference to expenses incurred in the discharge of such functions."")—(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT

I spoke to Amendment No. 42 when I moved Amendment No. 8. I beg to move Amendment No. 42.

Amendment moved— Page 28, line 24, after ("a") insert ("housing").—(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT

This Amendment merely clarifies an ambiguous reference in paragraph 2 of Schedule 5. Section 5(7) of the Rent Act is of course the new subsection which is added by paragraph 1 of Schedule 5. I beg to move.

Amendment moved— Page 28, line 28, leave out ("that Act") and insert ("the Rent Act 1968").—(Lord Melchett.)

On Question, Amendment agreed to.

Baroness BIRK

I have already spoken to Amendment No. 44 with Amendment No. 34 to deal with the almshouses. I beg to move.

Amendment moved— Page 28, line 31, at end insert— (".—(1) In section 26(1) of that Act (interpretation of Pan II) the following definitions shall be added after the definition of "allowance scheme":— almshouse accommodation" means accommodation in an almshouse provided by an almshouse charity ; almshouse charity" means a housing association which is either a charity of which particulars are entered in the register of charities established under section 4 of the Charities Act 1960 or an exempt charity ; almshonse contribution" means a contribution—

1. (i) which is payable to an almshouse charity by a person provided with aims-house accommodation, and
2. (ii) which does not exceed the maximum contribution that the Charity Commissioners have from time to time authorised or approved for the almshouse charity as a contribution towards the cost of maintaining the charity's almshouses and essential services in them;

(2) The following definition shall be inserted in that subsection after the definition of "authority":— exempt charity" has the same meaning as in the Charities Act 1960;").—(Baroness Birk.)

On Question, Amendment agreed to.

Lord MELCHETT

I spoke to Amendment No. 45 with Amendment No. 39. I beg to move Amendment No. 45.

Amendment moved— Page 29, line 24, leave out from ("to") to ("section") in line 30 and insert ("the following provisions of the Housing Rents and Subsidies Act 1975, namely— section 2 (reserve power to limit rents); section 8 and Schedule 2 (phasing of rent increases for private sector housing) ; section 9 and Schedule 3 (certain amenities to be disregarded in determining fair rent); section 10 (termination of decontrol of tenancies by reference to rateable value); section 11 and Schedule 4 (increases of rent under controlled tenancy permitted towards cost of repairs); together with ").—(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT moved Amendment No. 46: Page 31, line 14, after ("payment)") insert— ("(a) for paragraph (d) of subsection (1) there shall be substituted the following paragraph: — (d) the carrying out of any improvement to the dwelling or of redevelopment on the land by a housing association which has previously acquired the land and at the date of the displacement either is registered or falls within section 18(l)(a) of the Housing Act 1974 (housing associations specified in orders under section 80 of the Housing Finance Act 1972 or paragraph 23 of Schedule 1 to the Housing Rents and Subsidies Act 1975): (b) at the end of subsection (2) there shall be added (but not as part of paragraph (b)) the words " and in a case within subsection (1)(d) above, unless the displacement occurred on or after 31st July 1974 (on which date the Housing Act 1974 was passed) " ; (c)")

The noble Lord said: By leave of the House I will move Amendments Nos. 46 and 47 en bloc and speak also to Amendments Nos. 54 and 55. These Amendments widen the scope of the home loss and disturbance payments which are to be made by registered housing associations when they displace tenants in order to carry out redevelopment or improvement projects. The Land Compensation Act 1973 provided for home loss payments in Section 29 and disturbance payments in Section 37, and these were extended to tenants of registered housing associations for the first time by Amendments contained in the Housing Act 1974. The effect of the 1974 Act Amendments was to provide for payments in respect of displacements which took place at a date when the association was registered and also on land which had been acquired at a time when the association was registered. It was not our intention to confine payments to land which was acquired at a time when the association was registered, and we now wish to remove this limitation.

Amendments Nos. 46 and 47 achieve this by introducing new provisions, as in new paragraph (d) in both Sections 29(1) and 37(1) of the 1973 Act, in place of those originally provided by Schedule 13 to the 1974 Act. The registration of hous-the 1974 Act. Accordingly, displacements which took place before 31st July 1974, ing associations by the Housing Corporation was provided for by Section 13 of the date on which the 1974 Act was passed, will not qualify in any circum-stances, and this was achieved by the Amendments to Sections 29(2) and 37(2) of the 1973 Act. I beg to move.

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 47.

Amendment moved— Page 31, line 15, at end insert— . In section 37 of that Act (disturbance payments for persons without compensatable interests)— (a) for paragraph (d) of subsection (1) there shall be substituted the following paragraph : — (d) the carrying out of any improvement to a house or building on the land or of re-development on the land by a housing association which has previously acquired the land and at the date of the displacement either is registered or falls within section 18(l)(a) of the Housing Act 1974 (housing associations specified in orders under section 80 of the Housing Finance Act 1972 or paragraph 23 of Schedule 1 to the Housing Rents and Subsidies Act 1975); (b) at the end of subsection (2)(c) there shall shall be added the following paragraph:— (d) in a case within subsection (1)(d) above, unless the displacement occurred on or after 31st July 1974 (on which date the Housing Act 1974 was passed) . In section 87(1) of that Act (general interpretation) the following definitions shall be inserted after the definition of " dwelling ": — housing association" has the meaning assigned to it by section 189(1) of the Housing Act 1957 ; registered", in relation to a housing association, means registered in the register of housing associations established under section 13 of the Housing Act 1974 ; "—(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT moved Amendment No. 48: Page 32, line 29, after ("payment") insert ("in respect of a relevant contribution").

The noble Lord said: With the leave of the Committee I will speak to Amendments Nos. 49 and 50 with No. 48. These three Amendments relate to the new subsection (2A) to be inserted into Section 79 of the Housing Act 1974 by paragraph 13 of Schedule 5 to the Bill. They make it clear that the payments to which the new subsection relates are payments in respect not only of improvement contributions under the 1974 Act but also of contributions towards the cost of improvements, including the provision of standard amenities, which were payable under the Housing Act 1969 or any similar contributions under earlier legislation. The effect of the provision is that if such payments had commenced before 1st April 1975 they will continue to be made until the end of their normal term under the appropriate legislation. But if payments had not commenced before 1st April 1975, no payment in respect of relevant contributions will be made, and reckonable expenditure in respect of the improvements for which payments would have been made will count instead for the new capital costs element of housing subsidy under the Bill. I beg to move.

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 49.

Amendment moved— Page 32, line 39, after ("payment") insert ("in respect of such a contribution").—(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 50.

Amendment moved— Page 32, line 40, at end insert ("and in this subsection "relevant contribution" means an improvement contribution, a contribution under section 18 or 19 of the Housing Act 1969 or a similar contribution under any enactment repealed by that Act or under any enactment which was replaced by an enactment so repealed.").—(Lord Melchett.)

On Question, Amendment agreed to.

The DEPUTY CHAIRMAN of COMMITTEES (Lord Amherst of Hackney)

There is a misprint in Amendment No. 50A. It should read at the beginning: "Page 33, line 42"—not line 43.

Baroness YOUNG

I do not move Amendment No. 50A.

Schedule 5, as amended, agreed to.

Schedule 6 [Repeals]:

8.17 p.m.

Baroness BIRK

With the leave of the Committee I beg leave to speak to both Amendments Nos. 51 and 52, which are consequential to Amendment No. 35 which has already been carried and concerns the Central Housing Advisory

("1957 5 & 6 Eliz. 2. c. 56.

The Housing Act 1957.

Section 79. Section 143").—(Baroness Birk.)

On Question, Amendment agreed to.

Baroness BIRK

I beg to move Amendment No. 52.

("1970 c. 44.

The Chronically Sick and Disabled Persons Act 1970.

In section 10, the words from "Central" to "of the" in the third place where those words occur").—(Baroness Birk.)

On Question, Amendment agreed to.

Lord ELCHETT

I spoke to Amendment No. 53 with Amendment No. 19. I beg to move Amendment No. 53.

		("In section 29(1), the words" other than associations falling within section 18(l)(b)"of this Act".
		In section 32(1), the words "or paragraph (b)"").— (Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT

I spoke to both Amendments Nos. 54 and 55 with No. 46. I beg to move No. 54.

Amendment moved— Page 35, line 39, column 3, after ("38") insert (", in sub-paragraph (1), the words in paragraph (b) from "and at" to the end of paragraph (b), and in sub-paragraph ").—(Lord Melchett.)

On Question, Amendment agreed to.

PART V ORDERS REVOKED
Reference	Title	Extent of revocation
1974/380.	The Counter-Inflation (Private Sector Residential Rents) (England and Wales) Order 1974.	The whole order.
1974/1928.	The Counter-Inflation (Private Sector Residential Rents) (England and Wales) No. 2 Order 1974.	The whole order."

The noble Baroness said: This Amendment is consequential on Amendments Nos. 5, 6 and 36 which have already been carried. It is a purely technical Amendment which adds the Counter-Inflation Orders invoked by Clause 2 of the Bill to the Schedule of Repeals. I beg to move.

On Question, Amendment agreed to.

Schedule 6, as amended, agreed to.

In the Title.

Committee. I beg to move Amendment No. 51.

Amendment moved— Page 35, line 15, at end insert—

Amendment moved— Page 35, line 15, at end insert—

Amendment moved— Page 35, line 28, column 3, at beginning insert—

Lord MELCHETT

I beg to move Amendment No. 55.

Amendment moved— Page 35, line 40, column 3, at end insert ("and paragraph 39(l)(c)").—(Lord Melchett.)

On Question, Amendment agreed to.

Baroness BIRK moved Amendment No. 56: Page 35, line 40, at end insert—

Lord MELCHETT

I spoke to Amendment No. 57 with Amendment No. 19. I beg to move.

Amendment moved— Line 5, after "subsidies" insert "to render certain housing associations whose rules restrict membership to tenants or prospective tenants and preclude the grant or assignment of tenancies to persons other than members eligible for housing association grant and revenue deficit grant under the Housing Act 1974;".—(Lord Melchett.)

On Question, Amendment agreed to.

Title, as amended, agreed to.

House resumed: Bill reported with the Amendments.