HOUSING RENTS AND SUBSIDIES (SCOTLAND) BILL

HL Deb 25 March 1975 vol 358 cc1108-47

3.1 p.m.

Report received.

Clause 1 [New system of rents for public sector housing] :

Lord CAMPBELL of CROY moved Amendment No. 1:

Page 2, line 10, at end insert— (" .( ) A local authority shall not increase the income receivable from the standard rents of all houses to which their housing revenue account relates so that the average rent increase for those houses is more than £26 in any period of 12 months.")

The noble Lord said: My Lords, before moving this Amendment I should like to draw your Lordships' attention to the five pages of Government Amendments among the others on the Marshalled List. I should like to say that because of the difficulties of distribution occurring before the weekend—and I am glad to see these have now ended—we have had some difficulty, as no doubt other noble Lords have, in being able to consult those concerned outside this House about the Amendments. Most of the Amendments represent new material and are not simply meeting points raised earlier. I realise that on the whole they are not contentious, but there are now two new clauses at Report stage and they follow 19 pages of Government Amendments a week ago at the Committee stage, which the noble Lord, Lord Hughes, thought might have been put in the Guinness Book of Records. As a result, when the Bill leaves your Lordships' House it is likely to be more than twice as long as when it arrived, and it will have two added purposes to the Title.

The noble Lord, Lord Hughes, kindly wrote to me over the weekend and did his best to explain the new Amendments and why they were being introduced at such a very late stage in the passage of the Bill through Parliament. But it has given us very little chance for detailed examination, and certainly no Committee stage is possible for the Amendments being considered today. Also, virtually no opportunity has been given to persons affected by the Amendments to learn of them out-side this House or to comment on them. Therefore, I thought that at the outset today I should make it clear that we shall be giving our first reaction and that it is impossible to have had consultations or to have received full representations from people likely to be affected.

I should like to suggest, in view of the consideration of these Amendments and of the necessary manuscript Amendments we have had to make today—because there is one completely new version of an Amendment on the Marshalled List today —that, perhaps, the Government might hold in reserve the Third Reading of this Bill which they may wish to proceed with today. In order to tidy up and make sure that all the consequential of amended Amendments can be considered before the Bill goes to the other place, if it is convenient to hold a Third Reading on some day other than today, I hope the Government will bear this in mind. Otherwise the Bill may go to the other place with defects, even though they may be only drafting defects; and I am sure your Lordships would not wish to do that.

I now beg to move Amendment No. 1. This Amendment is similar to one which was moved at the Committee stage, which ensures that a local authority can increase its average rent by gradual steps each year. It sets a limit to the annual step by which an average standard rent can be raised. This is the limit in the 1972 Act, which is now operating. Unless it is continued in this Bill, the limit of the increase a local authority can make to its average standard rent will be £39—a good deal more than the £26 in the 1972 Scottish Act—that is to say, 50p per week rather than 75p per week.

It appeared to the noble Lord, Lord Hughes, when we considered this at the Committee stage, to be an Amendment worthy of further consideration by his right honourable friend and the Scottish Office. The noble Lord suggested that the Amendment ought more appropriately to be in Clause 1 rather than in Clause 2, where we had put it at Committee stage. At that stage we suggested it should be in the same clause as the limit of £39 for each individual house, per year. Following the advice given, we are now suggesting it should be moved to Clause 1. This is a safeguard, so that the tenants may be assured not only that no individual house can have its standard rent increased by more than £39 a year but that a local authority is not expected to put up its average standard rent for all its houses by more than £26. That is the present position, and even under this position there was considerable alarm when the 1972 Act was first being brought into effect—an alarm which was not justified—that rents were to be steeply increased. The 1972 Act made quite sure that could not happen, and we believe this should be continued in order to give that reassurance of a safeguard to tenants in Scotland. I beg to move.

3.8 p.m.

The MINISTER of STATE, SCOTTISH OFFICE (Lord Hughes)

My Lords, I do not think the noble Lord, Lord Campbell of Croy, attributed correctly the remark that I would consider this Amendment. If I remember rightly, what I said was that the Amendment caused me a certain amount of difficulty, in that it appeared to be imposing a different kind of freeze. It is a temptation to accept the Amendment, but it is a temptation I shall resist, because it would be in conflict with the primary purpose of the Bill, which is to restore to local authorities the right to decide the level at which their rents are to be fixed, having regard to the circumstances in their area. Obviously, circumstances can vary enormously from one district to another. The situation will be more aggravated than it is at the present time, because, in the new districts, different housing authorities are to be gathered together, and, in some cases, there will be a combination of a number of housing authorities in a new district. The new authority will obviously have the task of trying— either immediately or through a staging process —to assimilate one group of rents into the other.

The effect of this Amendment is to bring us back to the 1972 Act situation, with one important difference. The 1972 Act compelled local authorities to increase their rents by an average figure of £26 per year, whereas this Amendment would prevent them increasing their rents by more than £26 a year on average. My objections to this are fundamental— although, as I said, I was tempted by it — because it is as much an interference with the right of a local authority to determine what is a proper level of rents to charge to say to them: "You must increase your rents by a certain amount" as it is to say:" You must not increase your rents by more than a certain amount."

It is true that in the Bill we limit the power of local authorities in one direction only; and that is to limit the increase which can be put on an individual house to £39 a year. As I said on Second Reading and at Committee stage, this provision is purely a counterinflationary measure. There is provision for the figure of £39 to be varied by order. There could be a situation when, if inflation were to continue, £39 might have to be replaced by a higher figure. There could, conversely, be circumstances where, inflation being brought into check, there was no need to have any such restriction at all. It is for that reason that there is an order-making power in relation to that. But the effect of the proposed Amendment would be that until and unless another Act of Parliament were put on the Statute Book to vary this figure no local authority could increase its average rent by more than £26.

If I am arguing for the freedom of local authorities to determine matters for themselves, I am willing to concede that that freedom should enable them to fix rents at an average of less than £26 or at an average of more than £26, if that is what is proper to the circumstances. The arguments against the 1972 Act, the arguments which so many authorities and so many individuals put forward, were not against the amount which was charged, because, as the noble Lord himself stated then, and as was stated in your Lordships' House in consideration of this Bill, that amount of course varied enormously from one individual to another, depending entirely on the incidence of rent rebates. The objection was to the principle of denying to the local authority the right to take decisions for themselves. If I were to accept this Amendment, I should be going back to the 1972 Act principles by saying to the local authority: "You are not to have the right to determine it". I should have preferred it if we could have had the Bill without the £39 individual limit included, but I am persuaded that in existing circumstances, having regard to the different steps that are being taken by the Government in many directions to help to mitigate some of the worst effects of inflation, this is a desirable restriction at the present time. But it is not intended to be a permanent restriction and can be altered by order. For these reasons I cannot advise your Lordships that this is an acceptable Amendment.

3.13 p.m.

Lord CAMPBELL of CROY

My Lords, to take up the points which the noble Lord has just made, I must make clear that this Amendment would not oblige local authorities to raise their rents by a certain amount, which of course the 1972 Act did. We have had our difference of opinion about that at the Committee stage. This Amendment is one which simply deals with the limit; it does not in any way detract from the right which is being given in this Bill to local authorities to decide on their own rent increases. It has a lower average annual limit—one that is also in operation now under the 1972 Act—than the one proposed in this Bill. So we are not at this stage arguing about making it obligatory for local authorities to put up standard rents. This question is simply" about the limit which an average rent should go up each year. It is by the reassurance of gradual rent increases that one can obtain the confidence of tenants in those authorities where the housing accounts are well below balancing. There are other authorities in Scotland where for some time those responsible have made sure that their housing accounts are almost in balance. Of course, they would not be affected.

The curious fact is that the maximum annual increase permissible under this Bill is considerably greater than the maximum written into the 1972 Act. That much maligned Act provided for an average increase of standard rents of not more than £26. As the noble Lord said, this did not affect questions of hardship because the rebate scheme introduced by the 1972 Act dealt with personal circumstances, and therefore cases of unemployment and hardship for other reasons are not affected by the standard rent. In an unguarded moment during the Committee stage the noble Lord, Lord Hughes, said, at col. 665 of the Official Report, of 18th March that this comes close, not to imposing a rent freeze permanently, but to doing something of the same order. I found that statement astonishing when he made it, and I do now, because it was this maximum of £26 which was the cause of many rebellions which occurred when the 1972 Act came into operation. The noble Lord is shaking his head, but I can assure him that it was brought to my attention, and I attended many meetings at which many people were speaking of the "iniquitous Tory Housing Act" as something that was going to put people's rents up through the ceiling and very steeply. Eventually we managed in various ways through the media to get over the fact that this was not the case. Many who thought that their rents were going to be put up steeply found that in fact their rents came down owing to the rebate scheme.

I wish that some of the councillors who refused to carry out at first the modest rent increase of £26 in 1972 had a week ago been present to hear the noble Lord saying that this maximum was tantamount to a rent freeze. I am sorry that the noble Lord feels unable to put this Amendment into his Bill. We think it would have been an improvement. But in view of what he has said I do not intend to press the Amendment and beg leave to withdraw it.

Amendment, by leave, withdrawn.

3.18 p.m.

Lord HUGHES moved Amendment No. 2: After Clause 4 insert the following new clause:

Agreements for exercise by housing co-operatives of local authority housing functions

" .—(1) A local authority may make an agreement with a society, company or body of trustees for the time being approved by the Secretary of State for the purposes of this section (in this section called a " housing cooperative ")—

1. (a) for the exercise by the co-operative, on such terms as may be provided in the agreement, of any of the local authority's powers relating to land or any interest in land held by them for the purposes of Part VII of the Housing (Scotland) Act 1966, and the performance by the co-operative of any of the local authority's duties relating to such land or interest; or
1114
2. (b) for the exercise by the co-operative, in connection with any such land or interest, of any of the local authority's powers under section 140 or 141 of the said Act of 1966 (powers to provide furniture, board and laundry facilities).

(2) An agreement to which this section applies may only be made with the approval of the Secretary of State, and the terms of any such agreement shall be approved by him.

(3) The Secretary of State's approval to the making and to the terms of such an agreement may be given either generally or to any local authority or description of local authority or in any particular case, and may be given unconditionally or subject to any conditions.

(4) Without prejudice to any power to let land conferred on a local authority by any enactment, the terms of an agreement to which this section applies may include terms providing for the letting of land to the housing co-operative by the local authority for a period not exceeding 20 years.

(5) Houses on land included in an agreement to which this section applies shall continue to be included in the local authority's housing revenue account; and neither the fact that the authority have made the agreement nor any letting of land in pursuance of it shall be treated as a ground for the reduction, suspension or discontinuance of any Exchequer contribution or subsidy under section 58 of the Housing (Financial Provisions) (Scotland) Act 1968.

(6) A housing association which is registered under Part II of the Housing Act 1974 shall not be entitled to a grant under Part III of that Act in respect of land for the time being comprised in an agreement to which this section applies."

The noble Lord said: My Lords, I beg to move Amendment No. 2 and to associate with it as consequential Amendments, Amendments Nos. 10, 11 and 14. It is sometimes one of the difficulties facing a Scottish Minister that he lays himself open to the charge that he is just slavishly following something that has already been done by the English. I believe I could be so accused, but in following the initiative taken by the Minister for Housing and Construction in another place at the Report stage of the corresponding English Bill I believe we are seeking to follow a good example. These Amendments provide essentially enabling powers which will constitute a framework within which we can develop policies on housing co-operatives and co-operative management schemes to enable tenants to participate collectively in decisions affecting them.

At present the public authority tenant has little or no say in, or responsibility for, housing management decisions about his home and its environment. In Scotland now over 50 per cent. of all households are public authority. This contrasts very sharply—I think I would prefer to say "too sharply"—with the situation of owner occupiers, the next largest group at just over 30 per cent. We think that not only is it desirable in principle to allow tenants greater responsibility in the management of their house than they have now; it is necessary to involve people more in the solution of management problems, if we are to succeed in containing the growing burdens on housing managers who are being called upon to exercise their skills in an ever growing area of responsibility, and to show greater sensitivity to social issues, such as those which were high-lighted by the Morris Committee on Links Between Housing and Social Work.

The framework provided in the Bill is deliberately broad at the present formative stage. The Minister for Housing and Construction has received a Report from the Working Party under the chairmanship of Mr. Harold Campbell on ways in which the Government, local government, housing associations and other bodies could sponsor housing co-operatives and cooperative management schemes; and this is being discussed on a consultative basis with a number of national associations prior to a wider circulation and debate. In Scotland, too, we have commissioned a research project to be undertaken by staff of Edinburgh University. The twin objectives of this project are, first, to examine the scope for developing various schemes for securing tenant co-operation in the management of housing owned by public authorities in Scotland; and, secondly, to introduce experiments in these forms of co-operation in different areas, in collaboration with selected authorities. Although the full project will be spread over three years, preliminary work has already begun and will begin to yield useful material within a year. We expect that this work will stimulate experiments in tenant co-operatives in some form or another, and it therefore seems desirable now to remove possible financial obstacles to such experiments. This is the primary purpose of subsection (5) of the new clause, Amendment No. 2, which is the heart of these Amendments.

The new clause provides for housing co-operatives to be set up by means of agreements between a local authority and a society, company or body of trustees, subject to the approval of the Secretary of State; while the Amendments to Schedule 3 make consequential adjustments to existing legislation. The clause is drafted so as to ensure that the Secretary of State has an adequate range of controls over what will be essentially experimental activity; these may be relaxed when experience has been gained or a body of guidelines— perhaps model agreements—has been drawn up in the light of experience. The financial key to the new arrangements is that houses which are subject to an agreement between a local authority and a co-operative will remain on the local authority's housing revenue account and will continue to attract the normal Exchequer subsidies. In practice, this will mean that the rent charged for houses taken over by a co-operative can be kept broadly at the same level as those charged for similar local authority houses. No additional public expenditure will be involved.

Turning now to the consequential Amendments, the amendment to the Rent (Scotland) Act 1971 ensures that where the interest of the landlord under a tenancy belongs to a housing co-operative the tenant shall not be a protected tenant under the Rent Acts. It is intended to preserve for the tenants of a housing co-operative, through the terms of the agreement, a position broadly similar, in regard to security of tenure and rent, to that which is available to ordinary tenants of a local authority.

Amendment No. 11 deals with two points. Section 16 of the Housing (Financial Provisions) (Scotland) Act 1972 is amended so that the tenant of a co-operative shall—if he qualifies under the normal rules—be entitled to a rent allowance rather than to a rent rebate. It is impracticable for a body which is not the landlord—and therefore does not collect the rent—to operate a rent rebate scheme, of net rents, which involves collecting a smaller amount of rent. The obvious course, therefore, is for qualifying tenants of co-operatives to be granted rent allowances. Secondly, the adjustment to Section 78 of the Housing (Financial Provisions) (Scotland) Act 1972 is simply a technicality. The number of houses on the housing revenue account is a factor in subsidy calculations. The Amendment ensures that the number used in these calculations includes those houses which are the subject of any agreement for the time being in force between a local authority and a housing co-operative. The final Amendment makes an adjustment to the Long Title of the Bill to take account of the new provisions.

My Lords, I have spoken at some length on these provisions. It may well be that the noble Lord, Lord Campbell of Croy, and others of your Lordships will wish to read, if printing permits, the Report of what I have said. For that reason, the suggestion of the noble Lord —namely, to defer the Third Reading of the Bill—is appropriate. If it is acceptable to your Lordships, we shall take the Third Reading on Thursday; it will be the last business on that day. I think it is important that we should dispose of the Bill this week. I hope the noble Lord will accept that this is at least a step towards co-operation, so as to enable him to consider more carefully what I am saying about co-operatives for tenants. My Lords, I beg to move.

3.28 p.m.

Lord CAMPBELL of CROY

My Lords, on the question of procedure, about which the noble Lord has spoken in response to my suggestion, I, for my part, would be glad to take the Third Reading on Thursday, even though it is the day of adjournment for the Recess. But I cannot, of course, answer for other noble Lords who may find that day inconvenient to them. I hope that it will be merely a tidying-up stage and that no further massive Amendments will then be moved by the Government. On the basis that it will be a useful tidying-up operation, I myself agree to what the noble Lord has suggested.

As regards Amendment No. 2 which the noble Lord has moved and the Amendments which are being discussed with it, I do not criticise the fact that a system which has been adopted in England should be suggested for application in Scotland, provided that it is a good one with which we can agree. I am all for looking at what others are trying or have proved by use in order to see whether their system can be applied in Scotland. However, I am surprised that we should have heard about this Amendment so late in the passage of this Bill. Similar provisions were added to the Bill for England and Wales; namely, the Housing Rents and Subsidies Bill, which passed through this House some weeks ago. Therefore, I am a little surprised that we have not seen this Amendment earlier.

Lord HUGHES

My Lords, I should have explained why this Amendment has been introduced so late in the passage of the Bill. Unfortunately, we have been badly handicapped because of the illness of the draftsman, which has delayed matters. As the noble Lord knows from his past experience, if there is one Department of the Scottish Office which is not overstaffed it is that of the draftsmen.

Lord CAMPBELL of CROY

My Lords, I am sympathetic. For all our sakes, I hope that the draftsman has a very quick recovery.

Lord HUGHES

My Lords, the draftsman is back.

Lord CAMPBELL of CROY

My Lords, I am glad to hear it. Certainly, very good Scottish draftsmen are scarce, and we need to look after them as well as we can; I know that if one is short of draftsmen it makes life difficult. However, that is why we are having to look at this Amendment so quickly. It was generally welcomed when it was introduced for England and Wales. I myself welcome tenant co-operative schemes, provided they are likely to work.

If I may ask a question about interpretation—because it is the wording covering the bodies to be brought in which raises questions—in line 2 of the Amendment it is an agreement with a "society, company or body of trustees". Presumably, a company is covered by company legislation, but what is a society for the purposes of this Bill? It is a society to be approved by the Secretary of State, and my question is: does it cover any body which calls itself a society? Is the interpretation of a "society" as denned in some overall legislation, or is it qualified as any body which calls itself a society of which the Secretary of State has approved, or "approves at the time", as the clause states? At the same time, can the noble Lord give some indication of the scope? He has given us a brief explanation, but it would be helpful if he could tell us a little more about the bodies which can come into these co-operatives. If the noble Lord cannot give us an answer now, then we might wait until a later stage. But I am prepared to give this new clause a welcome without having had very much chance to study its consequences.

Lord HUGHES

My Lords, speaking off the cuff, and therefore at the risk of being totally wrong, I suspect that "society" would, for instance, cover a housing association and it may well be that it is a term which is defined in other places in housing legislation. However, if it should turn out that a more detailed explanation is necessary, and if it does not emerge during the course of our proceedings, I will write or telephone to the noble Lord to ensure that he knows the answer before Thursday. With regard to the second point, I would wish to defer consideration of that until I have studied the matter. Incidentally, if the answer should emerge during later proceedings I do not suppose your Lordchips would mind very much if I were to put myself out of order by answering the right question at the wrong time.

On Question, Amendment agreed to.

Clause 6 [Phasing of rent increases where rent for dwelling-house under regulated tenancy is registered]:

3.32 p.m.

Lord HUGHES moved Amendment No. 3: Page 3, line 35, at end insert (" and to section (annual limit on private sector rent increases) of this Act,").

The noble Lord said: My Lords, I beg to move Amendment No. 3 and to associate with it Amendments Nos. 4, 5 and 8. The main Amendment is Amendment No. 5—the new clause—and this Amendment, Amendment No. 4 and Amendment No. 8 are consequential Amendments.

The new clause contained in the main Amendment, No. 5, closes certain loophopes in the provisions preventing rent increases of more than £1.50 per week in any one year. These provisions in Clause 7 and Schedule 2 impose the restriction of £1.50 per week on increases in the normal situation where a rent agreement or a registered rent is in force in a particular year. They do not, however, cover the situation where a new registration or rent agreement replaces an existing registration or rent agreement. It would therefore be possible for one large increase to be made under the old registration or rent agreement and, less than a year later, for a second large increase to be made under the new registration or rent agreement. The two increases together might well be more than the equivalent of one increase of £1.50 per week over a period of a year. The new clause relates only to such cases where two increases take place within a year. In those cases it provides that the second increase shall be limited, if necessary, to an amount lower than Clause 6 or Clause 7 would otherwise permit. The second increase is not to be more than the amount which will bring the total increase in rent for the year in which the two increases take place to £78, which is the equivalent of one increase of £1.50 per week over the whole year.

The effect of this is that the transition from the old registered rent or rent agreement to the new registered rent or rent agreement will take place more smoothly. It is estimated—and inevitably this cannot be other than a broad estimate —that this might affect between 2,000 and 3,000 tenancies. It is provided that the figure of £78 shall be variable by order to keep it in line with any change in the maximum weekly increase of £1.50 per week in Clause 7 and Schedule 2. The remaining Amendments are minor consequential Amendments inserting references to the new clause in Section 31 of the 1971 Act, which will allow the tenant to recover any rent paid in excess of the amount allowed by the new clause and by Clauses 6 and 7 of the Bill. I beg to move Amendment No. 3.

Lord CAMPBELL of CROY

My Lords, I think it is at this stage that I should speak to the manuscript Amendments to Amendment No. 5. My reasons for having to produce manuscript Amendments, which I understand have been circulated, are those that I gave at the beginning; namely, the very short amount of time in which we have to consider Amendment No. 5 and receive any representations about it, owing to the combination of the distribution difficulties up to the weekend and the length of these Amendments. What I want to do in due course is to move, as an Amendment to Amendment No. 5, in subsection (2) of the proposed new clause, in the second line of paragraph (c) to leave out "in force before or" and insert "entered into".

I think it might be for convenience if I were to read out the Amendments at this stage because although they have been circulated not every noble Lord may have a copy. In subsection (2)(c), in the fifth line of the proposed new clause, to leave out the words "(before or after such commencement)".

I understand that the Government have been trying to remove anomalies, but as drafted Amendment No. 5 would produce an anomoly. I have been able to receive this advice only within the last three hours but I will try to explain the anomaly to the noble Lord. Subsection (1) states that the rent in the relevant period shall not be increased by more than £78 over the rent payable in the preceding rental period. Subsection (2)(c) defines "relevant period under rent agreements" as the period of 12 months beginning with the date when the last increase took effect under that agreement. These two parts of the clause can have a serious unforeseen effect; namely, where under a controlled rent in 1973 the rents are put up, the rents could then go up in the first year by £100, in the second year by £170 and in the third year by £240— those are the amounts of rent paid by the tenant—producing a total over three years of £510; but where a landlord offered an agreement for three years the amount paid could amount to considerably less—£465; the agreement would be approved by the rent officer, and the tenant would no doubt receive advice from elsewhere that the agreement with the company owning the houses would be beneficial to him. From the figures I have just given, that would be good advice.

Because of the provisions that I have just read out this agreement could be beneficial to the tenant and if the increase had been phased no one increase would have exceeded £78 a year; but because it was not phased this Amendment would make the situation worse for the tenant who had signed an agreement. For this reason, and to eliminate this anomaly, we suggest that this redrafting should be carried out as set out in this manuscript Amendment. I thought it was more convenient, even at this short notice, to produce it in writing, and I ask for the understanding of your Lordships' House. I would certainly not have done this if it had not been for the shortage of time. We believe that if the wording were changed in this way the anomaly which I have described would not occur. If the Government find it difficult to consider this Amendment now on Report, I hope that it will be considered again on Thursday on Third Reading.

Lord HUGHES

My Lords, I certainly could not undertake at this stage to accept these Amendments to the new clause. On the basis of the information which has come to me so far, this is another variant on Amendments 7 and 7A, both of which are alternative ways of dealing with the Western Heritable situation. I am informed that there is no anomaly created by these Amendments. That paragraph of the subsection relates to the total allowable limit of £78 over one year to the date of the last increase under a rent agreement. It does not affect any past rent increases. While I have said that it is related to the Western Heritable situation, I would not wish to complicate matters by referring now to what I want to say when Amendment No. 7 comes to be moved.

The effect of these Amendments would be to except Western Heritable from this limitation of £78 for a period of 12 months. It would be to allow these cases to have rents registered and thereafter to be increased by £78 within 12 months of the previous increase under the rent agreement. Obviously this runs counter to the intention of the Bill which includes a counter-inflationary safeguard. On the first Amendment the noble Lord, Lord Campbell of Croy, was anxious to protect the tenants of council houses from an average rent increase of more than £26 a year, excepting that no individual tenant would pay an increase of more than £39 a year. But the effect of these Amendments would be to subject the tenants of this particular company—and it is not confined to that company—to a possible increase in excess of more than twice the amount which he himself subjected to some criticism in the local authority field.

Lord CAMPBELL of CROY

My Lords, I have never tried to compare what was done by Conservative and Labour Governments in the private sector in Scotland to the situation in the public sector. It was the last Labour Government who started the system—and we continued it—under which the private sector rents which had been controlled, or in some cases stayed at a certain level because of subsidy received, have then been allowed to go up to a fair rent over a period of three years. My point is that what the tenant minds is how much he pays over the three year period. If in total he pays less in three years, he does not particularly mind whether there is a bigger increase in one year or another. If he knows that at the end of three years he is going to pay less under one system than the other, he is more interested in the one where he pays less than whether there is a higher increase in one year than another.

Lord HUGHES

My Lords, I am certain that the noble Lord, Lord Campbell of Gray, is not attempting to blind me with science, but I can assure your Lordships that he has succeeded in doing so. If I accept the Amendments it will be possible for the tenants to have an increase within 12 months, not of £78 but perhaps of twice as much as that. That is not something which I could lightly accept. I should like to look at the noble Lord's argument and take advice on whether this makes it possible for the rent over the period to be less in total. I am not at present able either to concur or to disagree with what he is saying. At this stage I would much prefer that my Amendments should remain in the form in which I tabled them and I hope your Lordships will agree to that.

Lord CAMPBELL of CROY

My Lords, I do not expect the noble Lord to have been able to follow all the figures I gave when I was describing these two Amendments, but I can assure him that I was drawing attention to the anomaly of the tenant being asked to pay more rent in total under this Amendment in the three years while the rent was going up than he would otherwise pay under the agreement which he has signed. That is the important point which I was making. I am sorry that I did not make it clear enough for the noble Lord to recognise this on the first round. I can only say that I understand that his position is rather similar to my own—we are coming to this at very short notice. I am grateful that he is prepared to look at this. Certainly that is the burden of my message. It is in those cases where the tenant will find himself paying more than he otherwise would that this anomaly can arise. I hope that before the next stage the noble Lord will be able to examine this with that in mind.

Lord HUGHES

My Lords, there is one further point. In a period of inflation the tenant would be paying the bigger amount in good pounds and getting the benefit perhaps later on in pounds of less value, because even the most optimistic on either this or the other side of the House do not expect inflation to be eliminated in the present year. Perhaps the way is now clear for us to decide whether we are to accept the first of these Amendments, the new clause as it stands.

On Question, Amendment agreed to.

Clause 7 [Limitation of rent increases under rent agreement where no rent is registered for dwelling-house under regulated tenancy]:

Lord HUGHES

My Lords, I beg to move Amendment No. 4.

Amendment moved— Page 4, line 32, at beginning insert (" Without prejudice to section (annual limit on private sector rent increases) of this Act,").—(Lord Hughes.)

On Question, Amendment agreed to.

Lord HUGHES

My Lords, I beg to move Amendment No. 5.

Amendment moved—

After Clause 7 insert the following new clause:

Annual limit on private sector rent increases

.—(1) Notwithstanding any registration of a rent, or any rent agreement, which (in either case) permits the rent of a dwelling-house to be increased above the existing amount payable under a registration or rent agreement, nothing in section 6 or 7 of this Act or in Schedule 2 thereto shall enable the rent to be increased in a relevant period by more than £78 above the amount which was payable for the last rental period beginning before the relevant period.

(2) In this section, "relevant period" means—

1. (a) in a case where the rent previously payable as aforesaid was in respect of a rent registered on or before the commencement of this Act, the period of 12 months beginning with such commencement, or any subsequent period of 12 months beginning with the anniversary of such commencement ;
2. (b) in a case where the rent previously payable as aforesaid was in respect of a rent registered after such commencement, the period of 12 months beginning with the date of such registration, or any subsequent period of 12 months beginning with the anniversary of that date;
3. (c) in a case where the rent previously payable as aforesaid was payable under a rent agreement in force before or after the commencement of this Act, the period of 12 months beginning with the date when the last increase (before or after such commencement) took effect under that agreement, or any subsequent period of 12 months beginning with the anniversary of that date.

(3)This section shall not affect any increase in respect of a service element within the meaning of Schedule 2 to this Act.

(4) The Secretary of State may by order substitute, for the sum of £78 mentioned in subsection (1) above, a sum other than that sum.

(5) An order under subsection (4) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament, and may be varied or revoked by a subsequent order made under that subsection.

(6) Any notice of increase under section 21(2)(b) of the 1971 Act or any rent agreement which purports to increase the rent payable at any time above that permitted at that time in terms of this section shall have effect to increase the rent to the extent so permitted but no further.

(7) Section 7(9) of this Act shall apply for the interpretation of this section as it applies for the interpretation of that section.—(Lord Hughes.)

On Question, Amendment agreed to.

Clause 11 [Continuation of right to recover excess rent, etc., under CounterInflation Orders]:

Lord HUGHES moved Amendment No. 6:

Page 8, leave out lines 29 to 32 and insert— (" (3) Section 38(2) of the Interpretation Act 1889 (effect of repeals) shall apply in relation to the said Orders, as continued in effect by virtue of this section, as it applies in relation to an enactment which is repealed by another Act.")

The noble Lord said: My Lords, this is a purely drafting Amendment. The purpose of this subsection is to provide that the CounterInflation (Residential Rents—Private Sector) (Scotland) Orders 1974 shall remain effective for the purposes of any proceedings to recover excess rents which are before the court when these Orders (as extended by Clause 11) expire. It is doubtful whether the wording as presently drafted achieves that purpose. I beg to move.

On Question, Amendment agreed to.

Schedule 2 [Phasing of rent increases where rent for dwelling-house under regulated tenancy is registered]:

3.50 p.m.

Lord LYELL moved Amendment No. 7:

Page 12, line 22, at end insert (" or, in the case of a rent registered before the date of commencement of this Act and where the rent payable has remained the same or less for all rental periods between 25th July 1969 and such date of commencement, then the previous rent limit may be calculated by reference to the following formula: R+l/5 (RR-R) where R is the rent payable during the year ending at such date of commencement and RR is the registered rent; the previous rent limit calculated by reference to this formula may then be substituted for PRL in Paragraph 3 of this Schedule.")

The noble Lord said: My Lords, the main purpose of this Amendment follows on that of Amendment No. 5A, the manuscript Amendment which my noble friend Lord Campbell of Croy was discussing. This Amendment may appear to attempt to dazzle the noble Lord, Lord Hughes, with science—it began to dazzle me—but I think it is relatively simple, and I hope your Lordships will bear with me while I try to guide the House on it.

We have already agreed that £78 is the maximum annual rent increase which can be asked for in any one year. We have heard the very eloquent words of the noble Lord, Lord Hughes, as to why this should be so. But as I am sure the noble Lord is still aware, there remain some anomalies concerning the private housing sector. We are considering here not merely where increases start from very low rents, but where they start from somewhat ridiculous, and absurdly low rents. If we take the case of several houses in Glasgow and elsewhere in Scotland, we find an interesting example. There exists a controlled rent of £30 per annum, which is a controlled rent agreed more than five years ago, prior to 1969. Recently, a registered rent has been agreed—and the rent officer may or may not have been concerned in fixing it— and both the landlord and the tenant seem to be in agreement that this is a fair rent. By this Amendment we hope to raise this base figure from what we regard as an absurdly low rent to what we hope is a low rent. It is a start in raising the base figure.

The formula, which we see as R+⅕ (RR—R), takes me back a little to elementary algebra. But the way in which it works is that where the controlled rent appears to have been £30, and this has been the rent for more than five or perhaps six years, we are allowed to increase the base figure by one-fifth of the difference between the new registered rent and the old controlled rent. In several cases that we have considered, we found an average registered rent which has been agreed between the landlord and tenant, with or without the concurrence of the rent officer.

To take an example of about £270, this is a fair step up from £30, yet both parties seemed to be in agreement. This mathematical formula is not merely something with which to dazzle lawyers, or anybody else. Given this formula, we hope to achieve this reasonable starting point. Taking a controlled rent of £30, and the new registered rent of £270, the formula allows one-fifth of the difference, which is £240, between these two figures. If we divide by five we get £48, which is the figure allowed to be added to the £30 controlled rent. Thus we get a combined total of £78. This is the starting point for the new rent increases which can be charged in any one year.

Let us remember that both the landlord and the tenant have agreed that the new and reasonable rent should be £270 per annum. Yet under the legislation we are now discussing, the maximum rent that can be charged in this first year, 1975–76, would be of the order of £156, because the starting point for the increase is £78 and the maximum for which any tenant can be asked is £78. So that in the first year he has to pay only £156, and not until just into the third year will the tenant be paying anything like the agreed registered rent. This we believe to be unfair on landlords who, for the last five or six years, for various reasons, have voluntarily kept their rents at a low level, possibly because they have not been able to carry out repairs in order to bring the property into the state of repair and order which they would wish.

Nevertheless, having been fair and having carried out such repairs and alterations as they deemed fit, and having agreed what the tenant considers to be a fair rent, they are now precluded from being allowed to charge the fair rent to recompense them for their outlay. They will be near to the figure in three years' time.

We have heard from the noble Lord that it might be wishful thinking to expect to eliminate inflation on its present scale in three years. However, let us hope that in three years' time the rate of inflation will be less than now. But this is the crux of the matter. Even with this mild Amendment we will achieve a starting point which is marginally higher than it would have been. It seeks to alleviate some of the hardship, if one can call it that, some of the financial loss which will accrue to landlords, who, over the last five or six years, have been reasonably generous and have voluntarily acted on a fair basis towards their tenants. My Lords, I beg to move.

Lord HUGHES

My Lords, may I first correct the noble Lord, Lord Lyell, in what he said with regard to my remarks about inflation. I did not say that it was optimistic to expect that inflation would be reduced from its present level within three years. I said that no one would expect that inflation will be eliminated this year, but that I hope that long before three years from now inflation will be reduced very much below its present level. I do not think any of us in this House would contemplate with any degree of equanimity the present state of affairs continuing for another three years.

My Lords, I must congratulate the noble Lord, Lord Lyell, on the way in which he presented the Amendment. At least, one can now understand it more readily, now he has given an example, rather than having to look at the formula R + 1/5 (RR—R). The Amendment would apply almost exclusively to rents registered during the standstill, and to that extent would apply to the group of tenancies where it has been said an anomaly exists. Although I am sure it is not the intention, this Amendment would run very much wider than Western Heritable's 50 or 60 tenants, who are the ones intended to be affected. The obvious category of tenancies affected by this Amendment—although by no means the only one—is controlled tenancies converted by the 1972 Act. No fewer than 13,500 of these have so far had rents registered during the freeze and this Amendment would apply to all of them.

I can appreciate the desire of the noble Lord, expressed on more than one occasion, to relate rents payable by the small minority of 60 or so tenants of Western Heritable to what is paid by the great majority. But to put at risk 13,440 other tenancies in order to do this for these 60, is certainly not a price that the 13,000-odd would consider worth paying. In addition, there are other rents which have not changed since 25th July 1969 for one reason or another, although it is difficult to estimate their number. The numbers affected are out of all proportion to the main purpose of the Amendment. The Amendment would, however, affect more than 14,000 tenants, for the sake of 50 or 60 tenants of that single company, or, rather, for the sake of the company which has those 50 or 60 tenants. So much for the scope of the Amendment.

There are, however, three main reasons why I must resist it. One of the main purposes of the private rents provision in the Bill is to allow rent increases in the post-freeze period to be increased— where they have to be increased—evenly and progressively. The effect of this Amendment, as the noble Lord indicated, is really to drive a horse and cart through that. After all, according to the example that he gives, the Bill would permit the rent to go up from £30 to £108. He is proposing that it should go up to £156, an increase in the first year of £126, and in any proposal which has counter-inflationary effects that cannot be accepted. I would remind the noble Lord, Lord Lyell, that his noble friend Lord Campbell of Croy, in speaking to the first Amendment, spoke about the advantages of having modest increases that people could accustom themselves to. Even if one accepts that the rent is at an unreasonably low figure, one cannot accept that an increase of that order could be regarded as a modest one, when £39 on the local authority side was considered as being a high one.

The tenants affected will mostly be paying very low rents, as the noble Lord, Lord Lyell, has said. It may be valid to argue in principle that they are too low and should be increased, and I am not prepared to argue to the contrary. In fact, the Bill is permitting a level of increase in this field very much higher than is permitted in the public sector, and part of this is to take account of the fact that rents have in many cases been exceptionally low in the private sector. But we must allow tenants to adjust gradually to what may be, whatever the rights and wrongs of history, a substantial change in their budgeting for family expenditure. This is the tenor of much recent legislation on rents. In the Bill we are trying to achieve a gradual and even movement to fair rent levels.

The effect of this Amendment is to replace phasing in three progressive stages, each of one year, by stages of seven fifthteenths, four fifthteenths and four fifthteenths. I am quite certain that the effect of that initial very big jump would be to make the tenants' attitude to the increases much more hostile than it would be if they were being made in three equal stages. It is in the interests of the landlords to reach their objective in three years, in the way suggested by the Bill, rather than, perhaps, imperil the whole process of a reasonable approach by the tenants by attempting to get too much at this first bite.

My second reason for resisting is that the Amendment would also result in large increases in rent at the worst time, immediately after the freeze. In the case of tenants who have had very large total increases, the Amendment would result in increases of almost £3 a week. Even where the total increases are more modest this Amendment would result in increases of more than the maximum £1.50 a week permitted by the Bill in well over 2,000 cases.

Thirdly, this Amendment makes an arbitrary division which would result in this large group of cases being treated differently from other rents registered during the freeze, as well as rents registered before and after the freeze. This different treatment may be presented as an initial jump which is trying to remedy a situation of very low rents, and that in fact is how the noble Lord presented it. It is, however, really a disguised change in the pattern of phasing, and as such is an anomaly which will persist for all of two years after the commencement of the Bill. To have one registered rent treated differently from another is contrary to our whole attempt to achieve a reasonable consistency in the complex field of private rents.

I think it is important to remind ourselves that we are not dealing with any hypothetical situation where it is academic whether or not we say that the previous rent is higher than it is; we are dealing with people whose rents are certainly going up. There is no doubt about that. We want the rents to go up evenly. We think that we have gone very far towards being fair to landlords in allowing them to increase rents by £78 a year.

This Amendment makes a very sudden leap and a big leap in the first year. The Amendment, which I think is intended— I am being fair to the noble Lord—to deal with a very small number of cases, unwittingly undermines much that the Bill tries to do. It goes against the principle to which the noble Lord, Lord Campbell of Croy, and the noble Lord. Lord Lyell, have both subscribed; the desirability of reaching a reasonable objective by acceptable steps. It makes it even worse because it is creating special categories which are foreign to this principle. I hope, therefore, the noble Lord, Lord Lyell, will find it possible to withdraw this Amendment.

4.8 p.m.

Lord LYELL

My Lords, I should like to thank the noble Lord for the courteous way in which he received what I was trying to put over; this mathematical formula. He did mention 13,440, and, I think, a total of 14,000 other cases, which he said would be put at risk. I should be interested to know about those, because we have no knowledge that there are so many cases to be affected. If the noble Lord believes that this Amendment is to affect such a large category, I think he may be reading a little more into it than we did. But, nevertheless, this is legal interpretation, and we should probably accept it.

The noble Lord has been stressing the point that my noble friend Lord Campbell and myself were pressing in the first Amendment, which was that we felt that rent increases should not be more than £26 in any one year, but I am sure the noble Lord is aware that this is for public sector housing. This brings many other factors into the discussion. If we come back to the private sector, which is what I am discussing at the moment and the House is concerning itself with, there are rent officers. In all these cases, certainly all the 60 or so the noble Lord mentioned, and I would hope in the 14,000 others he said would be put at risk, the rent officers are available, for both landlords and tenants, to see that the rents are not unreasonable. In the anomalies I have been pointing out, between the absurdly low rent and the new registered rent, the registered rent has been agreed by both the landlord and tenant and if there is a dispute on either side the rent officer is available to act as final arbiter. I wonder therefore whether the noble Lord is not making too much out of this.

As for the three points on which the noble Lord resisted the Amendment, per-haps I did not express myself sufficiently clearly. If I did not, I trust that he will forgive me, remembering that he has pointed out before that I am a member of a professional body which should concern itself with the clear and precise presentation of the facts. As I have understood the position, the rent would go up in the first year from £30 by the maximum of £78, which would bring it to £108 and not £156, which I agree would be a fair leap; but this is only an extra £48 over the permitted increase under the Bill and would not be £126, the figure which I think the noble Lord had in mind.

Lord HUGHES

My Lords, I may not have understood the noble Lord. I understood that under the Bill as drafted the rent could go up from £30 by an extra £78, but that his Amendment would assume that the starting rent was £78 to which £78 would be added. Thus, it would in the first year go up to £156, so that the increase would be £126 rather than £78. In other words, it would be £78 plus the £48 which would be added by his formula.

Lord LYELL

My Lords, that is what I had in mind, but I was thinking that that would be in year two and not in year one; but possibly, I skipped a year and, if I did, I apologise.

Lord HUGHES

Rather an important skip!

Lord LYELL

I concur with the noble Lord. The noble Lord pointed out that these are fairly large increases in rents straight after the freeze, that these rents were registered during the freeze and that there were various anomalies. I stress again that in all these cases there are rent officers who attempt to act as final arbiters if anomalies arise. Where there are virtually the same houses in which some tenants have accepted agreements for registered rents, with the rent officers' concurrence, the Amendment at least tries to bring in the tenants who have not agreed the register rents and seeks to bring these tenants, a mere 60 of them, on to the same basis as the tenants who have signed the agreement. However, we would not wish to pursue the matter at this stage and I will, with the leave of the House, withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule 2 [Phasing of rent increases where rent for dwelling-house under regulated tenancy is registered]:

4.13 p.m.

Lord CAMPBELL of CROY moved Amendment No. 7A:

Page 14, line 6, at beginning insert— ("In the case of rents registered after the commencement of this Act,").

The noble Lord said: My Lords, this Amendment, although circulated last week, was omitted from the Marshalled List today but I understand that copies have been distributed separately. The Amendment has been encouraged by the noble Lord, Lord Hughes, who, when this point was discussed in Committee a week ago, suggested that I reserve my position and raise it again. It deals with an anomaly and perhaps I may say, arising from the debate we had on the previous Amendment, that of course we agree with the noble Lord that what we are aiming for, where rents are having to be increased, is to put them up by even and equal stages if that is possible. But as the noble Lord said when we first discussed this part of the Bill some time ago in this House, it is difficult to deal with all the anomalies that arise. Many of the Amendments which the noble Lord has moved in this sector of the measure are designed to eliminate anomalies that have been spotted, and the difficulty is to find a way of dealing with this one because it is clear from what the Government have said that they would like to see this anomaly disappear, although it seems to be difficult to do it without raising others.

My noble friend Lord Lyell has an advantage over many of us in being a chartered accountant and he in the last Amendment was dealing with a formula and hoped that that might help the Government to deal with the anomaly. The noble Lord, Lord Hughes, said that this would upset the situation for many thousands of tenants and of course if we can we want to avoid any effects of that kind. I must therefore ask the Government whether they have been able to find a way of dealing with the situation, because I presume that they encourage agreements between tenants and land-lords or, as in the case we have in mind, a company; and in this case the company's 3,000 tenants in virtually identical houses all, except 57, signed an agreement and were encouraged to sign it by the rent officers and advisers. The 57 who, for one reason or another, did not get round to signing the agreement were then treated differently by the accident of the timing of the freeze and, contrary to all previous belief, foresight and pre-diction, find themselves in a better situation than the nearly 3,000 who signed the agreement.

That is the anomaly, and it means that at the end of the three-year period there will be less enthusiasm for signing agreements. Indeed, we may find many fewer prepared to sign, not because they were badly advised—they were well advised— but because of this anomaly that has occurred. That cannot be something which the Government would wish to happen, and I should be glad if the noble Lord would confirm this because it simply means the imposition of a huge burden on the rent assessment system. Many thousands who may not wish to go to rent officers and appeal committees may be doing so in the next two or three years because they distrust the agreement, although at the time the agreement seemed the best course for them, and they were so advised.

I do not think that in principle there is any difference between the two sides of the House. In Committee the noble Lord said at col. 692 of the Official Report that his Department was working at that that moment on an Amendment which might replace this one and he invited us to wait for it and in the meantime reserve our position. That is what I have done, but we have not seen on the Order Paper an Amendment which we could identify as the alternative, and I can only assume that the noble Lord has found it impossible so far to produce an alternative to eliminate this anomaly. We are not concerned simply with 57 cases. In itself, the amount of money is negligible. It is the principle with which we are concerned and the fact that the whole system of agreements could be undermined and distrusted by tenants, wrongly and un-justifiably, if this kind of anomaly which has occurred by chance is allowed to continue the arguments adduced so far by the Government concern the difficulty that other anomalies would be created. I know it is a difficult situation, but I hope that the Government will go on pursuing this matter to see whether they can solve this problem without creating others. I beg to move.

Lord STRATHCLYDE

My Lords, may I ask at this juncture in our proceedings what is the reason for rushing this Bill through the House in the way it is being rushed? It is perfectly obvious from the fact that only three noble Lords have taken part in the debate so far that many others who normally one would expect to take part simply do not know about and have not seen the Amendments which are being debated, and it seems to me that we are rapidly approaching the position of absolute farce. Would the noble Lord tell us the reason for rush- ing the Bill through the House in what is, so far as I am concerned, this quite unjustifiable way?

4.20 p.m.

Lord HUGHES

My Lords, this Bill was a major part of the Government's commitments at the General Election and is part of a programme of legislation which it is essential to get through in the present Session. If noble Lords wish to be so involved that we take our time, we shall be sitting until the middle of August or the first week of September. Of course, we can carry on in a leisurely fashion, but the Bill as it stands has not been rushed. What has happened is that, at the last stage, there were an enormous number of Government Amendments, including one of extraordinary length, which gave the impression of totally changing the character of the Bill. However, they did not in fact do so. It was accepted then and, in the interval which has since elapsed, it has been confirmed that the Amendments in question did not change the character of the Bill at all. Your Lordships should remember that we are dealing with a situation in which the rent freeze comes to an end on 15th May next, so that time is important in this matter.

My Lords, the timetable of the Bill is not something which I arranged, though it is something to which I assented. To use a hallowed phrase, it was arranged "through the usual channels". It has been complicated by printing difficulties and the other difficulties under which we have been working, but I have done my best. The noble Lord, Lord Campbell of Croy, expressed a perfectly reasonable point of view in relation to Amendments and asked that we should not conclude the Bill today. I accordingly put back the Third Reading for two days. I do not think that I can be accused of acting unreasonably in relation to the Bill, but it is important for the Bill to be put on to the Statute Book in time for the new authorities, which will be taking up their duties on 16th May, to know where they are.

My Lords, I do not know that that will make the noble Lord, Lord Strathclyde, any more happy about the content of the Bill, but perhaps he will acquit me of being unreasonable in relation to the timetable.

Lord STRATHCLYDE

My Lords, if I may interrupt for one moment, I should never accuse the noble Lord of being utterly unreasonable, but the fact is that the proceedings on the Bill are being carried on in a very unreasonable way. I do not suppose that that is the fault of the noble Lord at all but, on the other hand, ought we really to be going ahead and discussing Amendments which many of us have never seen and which, cer tainly, most of us have had no time to consider?

Lord HUGHES

My Lords, the noble Lord has made his protest and I have answered it to the best of my ability. I shall therefore proceed now to reply to the remarks made in moving the Amend ment by the noble Lord, Lord Campbell of Croy. I found Amendment No. 7 unacceptable for the reason that it put at risk some 14,000 people for the possible advantage of one company and of some 60 tenancies. This Amendment is similar to the last one, but it is simpler. It is another way of dealing with the anomaly of the small minority of the Western Heritable Company's tenants. However, again, it has wider effects. I said at the Committee stage that it was not only that company's tenants who would be affected by a general counter-inflation safeguard. It is possible to argue about the precise numbers, and I can assure your Lordships that I did not acquire the knowledge of the number of tenants by going to Scotland and personally counting them. The information came to me from my advisers and from the records which are available to them, and I am satisfied that the figure is as accurate as can be. It is conceivable that it might fall short by, say, a thousand. If anything, my advisers will have erred in a possible understatement of the numbers rather than the other way round.

The noble Lord referred to what I said at Committee stage about an Amendment but, if he would read a little further on in my remarks, he will see that I said that I knew that the Government were working on an Amendment in this direction but that I did not know whether, from his point of view, it would make the position better or worse. In fact, no Government Amendment on the Marshalled List has affected the situation with which the third of these Amendments deals. I think it is simply because we have come to the conclusion that it is impossible to produce an Amendment which would affect these 50 to 60 people without adversely affecting the interests of an even greater number. The last Amendment affected many thousands. The present Amendment does not, but it does affect some hundreds of people—that is, substantially more than the number for whom the relief is intended. Any tenants with rents registered in 1972, 1973, 19T4 and the first four months of this year could be affected by the Amendment. We know definitely that the number of rent registrations in 1974 which will be affected is 157. That suggests, therefore, a total for the three years of something approaching 500, which is eight to ten times the number of affected tenants in the Western Heritable Company. It is a big difference from 14,000, but we should still be accepting an Amendment which would affect around 500 people.

My Lords, I must emphasise that any disadvantage to the tenants who signed rent agreements is the result of various circumstances. The noble Lord, Lord Campbell of Croy, referred to the advice which was given to these people to sign rent agreements—advice which seemed good at the time. As it turned out, as a result of the rent freeze, the minority who did not sign found themselves in a better position than those who signed. We must accept that, in the ordinary course of events, the justification for signing a rent agreement is because the people who sign can be persuaded—as were the great part of the 3,000 Western Heritable tenants—that it is to their advantage to have an agreement rather than a registered rent. The noble Lord, Lord Campbell of Croy, expressed the fear that, if we did not do something about the 60 tenants, we should put the future of rent agreements at risk and place a much greater burden on rent officers. I do not think that that fear is justified because of the fact that this anomaly arises from one particular circumstance and there is no guarantee that it will ever be repeated. It arose because of the rent freeze imposed last year.

It is well known—and I shall not attempt to conceal the fact—that the rent freeze was intended to affect all these tenants. However, because the Western Heritable Company went to court and got a decision in its favour that the way in which the rent agreement was drawn up would enable them to avoid the effects of the freeze, their rents went up by £140 a year during the freeze when the Government thought that the effect of the Order would be to stop rent increases taking place during that period. What we are being asked to say is that the company— and I freely admit that they were within their rights because they won their case in the courts—having gone to the court, and frustrated the Government's intention of imposing a rent freeze on the rents of 3,000 tenants should be permitted to increase the rents of the other tenants. What is being said and the effect of these three Amendments is that the way to establish fairness is to permit an increase of rents to the 60 tenants who did not sign rent agreements and managed to get the benefits of the rent freeze so that their rents can come up at this stage.

My Lords, I could suggest that if the company had been really generously minded it did not need to go to the court. It could have accepted the intention of the Government and frozen the rents of all 3,000 of its tenants. I am quite certain that that would have been accepted as a very commendable move by the tenants. But the company thought —as it turned out, rightly—that it could get its rents increased, notwithstanding the effects of the order of March of last year. I cannot therefore think that there is any justification, having failed to do what we intended to do for the majority, for saying to the minority, "We will make everybody equal. We will treat you as if we had failed in respect of you also." We did not fail in respect of the 60. I do not see any reason why, at this stage, we should attempt to undo that, simply because we failed in our objective of doing it for the great majority.

My Lords, in effect, the Amendment asks the Government to reverse their own intention in imposing the rent freeze by allowing the rents of the tenants who exercised their choice to have a registered rent increased more steeply. Whether it was because of deliberate intention, because they were dilatory, or because they waited too long to do it, I do not know. But the effect would be to permit their rents to be increased by up to £4.50 a week, at one step in some cases. Such large increases, coming immediately after the freeze, are a problem which the Bill specifically seeks to avoid. I agree that there is an anomaly, but the noble Lord, Lord Campbell of Croy, has very fairly indicated that it is not the 50 to 60 people he is concerned about, but rather the possible future effects. A situation of this kind could arise again only if there was a rent freeze at some future time. If another freeze were to be imposed—and there is no such intention—your Lordships can take it for granted that the next order would not suffer from the defects of the last one.

Lord CAMPBELL of CROY

My Lords, from what the noble Lord has just said, we are all aware of the haphazard complications that can arise when a freeze is announced suddenly. The noble Lord was speaking earlier about the rate of inflation being such that the amount of rent between one year and the immediately following year could be greatly affected simply by that one factor. But I sincerely hope that we shall not find inflation becoming even worse than it is at present, thus necessitating more freezes.

With regard to what happened in the interpretation of the Government's order, this is one of the complications of the matter. The Government clearly intended one thing, so far as the 3,000 houses were concerned, but—following what the noble Lord said—the court interpreted the Government's Order in a different way. But surely the purpose of the courts is to establish what the law is, whatever the intention may have been. I am sure that the noble Lord cannot criticise citizens or bodies, when there is ambiguity, for seeking an interpretation by the courts of Government orders or of Statutes of Parliament. What the noble Lord narrated was of interest, but once the interpretation by the courts of a Government order is established that is surely the end of the argument. We then have to try to deal with any anomaly that arises from that part of the freeze.

As the noble Lord accepted, it is the future of thousands of tenancies with which I am concerned. The noble Lord did not answer me directly on the question of the burden on the rent assessment system in Scotland. He simply expressed the hope that there would not be a burden as a result of this, and he said that tenants would realise that there was one special reason for this anomaly. But I do not think that people can follow all the particulars of cases like this. They will know merely that about 3,000 tenants, who were persuaded for good reasons to sign an agreement, ended up by wishing they had not done so. That, I fear, will be bad for the future of agreements in Scotland, but that is the way these things happen; and it would be a pity if agreements were not used in future in the way they have been success-fully used in the past. I am sure that this Government were glad when agreements were reached, because it saved the whole machinery of the rent assessment system and rent officers from having to deal with thousands—perhaps tens of thousands—of cases.

I fear that if the Government cannot produce an Amendment to deal with this anomaly, it must be a confession of failure, not only from the Government but also from us on this side of the House, who have been doing our best with two or three Amendments to try to meet the situation, but we have been shown that they do not completely cover the case. I inquired whether the Amendment which the noble Lord said was being prepared a week ago could be identified, but from his reply it sounds as though it has not appeared on the Marshalled List at all. Therefore, we have not been able to see the alternative Amendment which he told us the Government were trying to draft a week ago. I was sorry to detect, as I thought I did in the noble Lord's last intervention, a note on the lines that as the company concerned had taken its case to court the Government were not particularly concerned about trying to resolve this anomaly. I am sorry that the noble Lord should have appeared to adopt that attitude, because the court's decision was something over which none of us had any control, and the anomaly was created by an accident of the timing when the freeze occurred. None the less, I hope that the Government will try to find a formula by Thursday—because that is what it amounts to. Both sides admit that there is an anomaly here. If by Thursday we can find a formula which will deal with this anomaly without creating others, I hope that we can have a Third Reading Amendment which might put the matter right. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Lord HUGHES

My Lords, I beg to move Amendment No. 8, to which I spoke when Amendment No. 3 was dealt with.

Amendment moved— Page 16, line 43, leave out (" 6 and 7 ") and insert (" 6, 7 and (annual limit on private sector rent increases) ").—(Lord Hughes.)

On Question, Amendment agreed to.

Schedule 3 [Miscellaneous and consequential amendments]:

4.36 p.m.

Lord HUGHES moved Amendment No. 9:

Page 18, line 15, at end insert—

("The Housing (Scotland) Act 1969

In section 62 (increase of rents of houses belonging to certain authorities without notice of removal)—

(1) For existing subsections (1) and (2) there shall be substituted the following subsections—

"(1) Subject to subsections (2) and (3) of this section, where a house belonging to an authority to which this section applies is let for any period, it shall be an implied term of the tenancy that the rent payable to the authority under the tenancy may, without the tenancy being terminated, be increased with effect from any day of the tenancy by a written notice of increase given by the authority to the tenant not less than four weeks before that day.

(2) Where an authority to which this section applies gives under subsection (1) of this section a notice of increase which is to be operative as from any day and the tenancy continues beyond that day, it shall be an implied term of the tenancy that the notice shall nevertheless not have effect if the tenancy is terminated by a notice of removal given by the tenant, and—

1. (a) the notice of removal is given before the end of the period of two weeks following the date on which the notice of increase is given, or such longer period as may be allowed by the notice of increase; and
2. (b) the date on which the tenancy is made to terminate is not later than 4 weeks after the date on which the notice of removal is given;

and the tenant shall be entitled to give a notice of removal in conformity with paragraphs (a) and (b) above notwithstanding the provisions express or implied of the tenancy.".

(2) In subsection (6), for the words "section 379(1) of the Local Government (Scotland) Act 1947" there shall be substituted the words "section 235(1) of the Local Government (Scotland) Act 1973.".")

The noble Lord said: My Lords, I must begin with an apology to your Lordships for tabling the starred Amendment which is in place of the Amendment I tabled earlier. In particular I apologise to the noble Lord, Lord Campbell of Croy, to whom I had given notice of the earlier Amendment. But I hasten to assure him and your Lordships that the revised version is designed to tackle precisely the same point—but more correctly and more succinctly. Section 62 of the Housing (Scotland) Act 1969 enables local authorities, the SSHA, and New Towns to increase the rents of their houses by sending their tenants a notice of increase without having also to terminate the tenancy by a notice of removal. Noble Lords may recollect that until that was done there was unnecessary fear and alarm created when the local authorities and others, in order to alter rents, had to issue to their tenants notices to quit, and then follow those notices up by the proposed new rents. That procedure was eliminated by what was done in this section. Representations have been made to the Secretary of State that the provisions do not operate satisfactorily in relation to long-term tenancies, that is, where authorities have adopted a policy of granting a lease of their houses for a period of 12 months or more. In such cases authorities can be prevented from obtaining an increase until the end of the period of the tenancy.

The intention of the provision was to enable local authorities (and the other bodies concerned) to increase rent from the beginning of any rental period by giving four weeks' written notice of increase before the beginning of the rental period in respect of which the increased rent is to be paid and for the tenants to be able to terminate their tenancy by a similar period of notice. This works perfectly well in the more usual cases of weekly or monthly lets. There are, however, two sets of circumstances which these Amendments have been designed to cover. First, where the tenancy is for a year or more and the rental period is the same; and, secondly, where the tenancy is for a year or more and the rental period is one of four weeks. The Amendment as originally drafted covered the former but not the latter. The new Amendment has therefore been drawn in terms which comprehend all the various situations which can arise and are in substitution for the original subsections (1) and (2) of Section 62.

New subsection (1) ensures that it shall be an implied term of the tenancy that the rent payable under it may be increased with effect from any date by four weeks written notice of increase. New subsection (2) provides for the tenant in such cases the same right to serve a counter notice of removal. Finally, the Amendment also updates the reference in Section 62(6) of the 1969 Act to Section 379(1) of the Local Government (Scotland) Act 1947. This has been superseded by Section 235(1) of the Local Government (Scotland) Act 1973. The need for this Amendment was drawn to our notice by the corporation of one of the New Towns and the Amendment which was first tabled was to give effect to the points to which the development corporation had drawn to the attention of my Department. But hardly had we tabled the Amendment, when they wrote another letter dealing with the second point; so that, in fact, having accepted that they had drawn our attention to a situation which required to be remedied, we felt under an obligation to complete the remedy—which was the reason for the second starred Amendment which I am now moving.

I hope that at least noble Lords opposite will not suspect any devious motive in our producing this at the last stage. As the noble Lord, Lord Campbell of Croy, will know, one of the disadvantages of the process by which we work—that of consulting the people concerned in every case in legislation of this kind—is that, having consulted the people concerned, when they produce a valid point we are under an obligation to do something about it. It does not often require us to produce two separate Amendments in as many days. I beg to move.

Lord CAMPBELL of CROY

My Lords, this, as the noble Lord, Lord Hughes, said has reached us in its latest form only today, but there appears to be no change in the substance. I sympathise with the remarks made earlier today by my noble friend Lord Strathclyde about the difficulties of noble Lords in being able to keep abreast of the Amendments, some of them very long, which have only become available today and yesterday. I made a statement about this myself at the beginning of the Report stage and, in case noble Lords were not here, I was glad that the noble Lord, Lord Hughes, agreed to my suggestion that the Third Reading be postponed until Thursday. It has been difficult even to get copies of some of these Amendments; far less being able to consult with outside bodies or persons about them. This proposal seems reasonable and sensible. I know the problems about notice to quit which the noble Lord mentioned. I see this as a very reasonable improvement which I would support.

Lord WALLACE of CAMPSIE

My Lords, as chairman of the East Kilbride New Town I would respectfully associate myself with the Minister's words and endorse what he has said to your Lordships.

On Question, Amendment agreed to.

Lord HUGHES

My Lords, I have already spoken to this Amendment, No. 10, when dealing with Amendment No. 2. I beg to move.

Amendment moved—

Page 18, line 16, at end insert—

(" .In section 5 (cases excluded from protected or statutory tenancies), after subsection (5) the following subsection shall be inserted: — (5A) A tenancy shall not be a protected tenancy at any time when the interest of the landlord under the tenancy belongs to a housing co-operative, as defined in section (agreements for exercise by housing co-operatives of local authority housing functions) of the Housing Rents and Subsidies (Scotland) Act 1975 (agreements for exercise by housing co-operatives of local authority housing functions) and the dwelling-house is comprised in an agreement to which that section applies or in a similar agreement between the co-operative and the Scottish Special Housing Association.".")—(Lord Hughes.)

On Question, Amendment agreed to.

Lord HUGHES

My Lords, Amendment No. 11 is also consequential upon Amendment No. 2. I beg to move.

Amendment moved—

Page 18, line 20, at end insert—

(" .In section 16 (rent allowances), after subsection (5) the following subsection shall be inserted: — (5A) A person is also a private tenant if he occupies a house let to him by a housing co-operative, as defined in section (agreements for exercise by housing co-operatives of local authority housing functions) of the Housing Rents and Subsidies (Scotland) Act 1975 (agreements for exercise by housing co-operatives of local authority housing functions) and his tenancy would be a protected tenancy but for section 5(5A) of the Rent (Scotland) Act 1971.".

.In section 78(3) (houses to which the housing revenue account relates), after the word "accommodation" there shall be inserted the words "(including houses subject to an agreement between a local authority and a housing co-operative under section (agreements for exercise by housing co-operatives of local authority housing functions) of the Housing Rents and Subsidies (Scotland) Act 1975)".").— (Lord Hughes.)

On Question, Amendment agreed to.

Lord HUGHES moved Amendment No. 12:

Page 20, line 6, at end insert— ("(2) This section shall come into operation on 16th May 1975.").

The noble Lord said: My Lords, the intention is that the provisions in the new Schedule 10A should come into force on 16th May 1975, when the rest of the Bill is intended to come into force. Since, however, the new Schedule is being inserted in the Housing Act 1974 specific action is needed to achieve this. That is accomplished by this drafting Amendment. I beg to move.

On Question, Amendment agreed to.

Lord HUGHES moved Amendment No. 13:

Page 32, leave out lines 24 to 29 and insert— ("(10) In this paragraph, "prescribed" means prescribed under section 197 of the Housing (Scotland) Act 1966, and the references to that Act in that section shall include references to this paragraph.").

The noble Lord said: My Lords, as the Bill stands, it will be necessary to make two statutory Instruments—regulations under paragraph 13(2) and an order under paragraph 14(10)—to prescribe the forms required. This Amendment will enable all the formes to be prescribed in one Instrument.

On Question, Amendment agreed to.

Lord HUGHES

My Lords, I beg to move Amendment No. 14. I spoke to this Amendment when dealing with Amendment No. 2.

Amendment moved— Line 5, after ("1974;" insert ("to provide for agreements for the exercise by housing co-operatives of local authority housing functions ;")—(Lord Hughes.)

On Question, Amendment agreed to.