Lords Sitting of 29 January 1986

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.

Falkland Islands: Forces' Swimming Pool
Lord Tordoff: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they will take to ensure the provision and maintenance of a swimming pool for the use of Her Majesty's Forces at Mount Pleasant, Falkland Islands.
The Minister of State for Defence Support (Lord Trefgarne): My Lords, swimming pools are not usually provided at service establishments from public funds, but consideration is being given to providing one at Mount Pleasant in view of the special circumstances of the Falkland Islands.
Lord Tordoff: My Lords, I am most grateful to the Minister for that reply, which is far more helpful than I expected. I reinforce my point by asking the Minister whether the Government are aware of the difficulties in regard to rest and recreation in the Falkland Islands because of climatic conditions, and also of the fact that the senior officers there would very much welcome the provision of swimming facilities for the troops.
Lord Trefgarne: My Lords, we shall have to take into account the likely cost of such a pool, but the noble Lord may be reassured to know that there are already planned five football pitches, six squash courts, an indoor tennis court, two gymnasia and a running track.
Lord Alport: My Lords, may I ask my noble friend whether it would be a heated pool?
Lord Trefgarne: My Lords, I think it would have to be.
Lord Boston of Faversham: My Lords, will the Minister accept that he has also taken the wind out of the sails of these Benches as well by his his very encouraging Answer? Will he accept that those of us who have had the privilege of seeing the development at Mount Pleasant Airport through arrangements made by the noble Lord, Lord Trefgarne, have found it very impressive? Although there are the facilities for recreation that he has mentioned, is he aware that none would be more useful nor, I suspect, more used than that to which the noble Lord, Lord Tordoff, has referred? The reply is encouraging. Will the Minister continue to press for that development to take place at the earliest possible date?
Lord Trefgarne: My Lords, I should not wish to go further than the Answer I have already given, except perhaps to say that it will be a question of finding the necessary funds.
Lord Pender: My Lords, does my noble friend the Minister agree that a cutback in the helicopter facilities for R and R would call for alternative recreational amenities?
Lord Trefgarne: My Lords, I am aware of the problem to which my noble friend refers. We are currently looking into this rather complicated matter to see what we can do about it.
Lord Tordoff: My Lords, finally may I ask the Minister whether he is aware that people are not seeking an Olympic-size swimming pool or over-elaborate facilities? They require simple facilities, which, provided that they are there and are maintained, would be of the greatest possible use.
Lord Trefgarne: My Lords, I note the noble Lord's point of view.
Lord Gisborough: My Lords, can my noble friend say whether these facilities will be open to the residents and also to visitors?
Lord Trefgarne: My Lords, the facilities are being provided primarily for the use of the servicemen down there. There are very few dependants, as my noble friend will know. I see no difficulty in making them available to local people, although I should perhaps add that very few local people live close to Mount Pleasant.
Lord Leatherland: My Lords, did I hear the Minister correctly? Did he say that this pool was for officers? What about company sergeant-majors?
Lord Trefgarne: My Lords, no, I did not say that. I do not think that would be at all proper.

Macaulay Institute for Soil Research
2.40 p.m.
Lord Kirkhill: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the rationale behind the proposals to transfer the Macaulay Institute for Soil Research from Aberdeen to Edinburgh.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, the proposals related to the future of the Macaulay Institute for Soil Research, and the rationale behind them, were set out in the paper published in December last year by my department entitled Strategy for Agricultural Research and Development, copies of which are available in the Library.
Lord Kirkhill: My Lords, I thank the Minister for that reply. Will he keep in mind that in Aberdeen there are six research institutes (perhaps the most internationally-famous of which is the Rowett research institute) which are multi-research disciplines which interlock, and by the proposed removal of one the impact of the other five is affected? Will he give to the House his justifications for the proposal that approximately 250 members of staff of the Macaulay Institute for Soil Research be transferred to join the hill farming research station at Edinburgh which has approximately 70 members of staff? Logistically, I should have thought that the reverse direction would be more appropriate.
Lord Gray of Contin: My Lords, I fully appreciate the depth of feeling which exists in Aberdeen over the proposals in the strategy paper; but I must point out to the noble Lord that the paper has been widely interpreted as announcing the closure of the Macaulay Institute. Nothing could be further from the truth. The paper suggests that consideration at or close to the hill farming research organisation at Bush Estate, Edinburgh may—and I repeat "may"—prove to be the more productive option, and a study will be carried out into the feasibility of achieving this. The benefits and the traditions of the Macaulay Institute are fully acknowledged and the feasibility study will take all aspects of the merger into account. I should emphasise that the merger has been widely welcomed on all sides, including within the Macaulay Institute, but not surprisingly, the bone of contention is the location of the new Macaulay.
Lord John-Mackie: My Lords, I hope that the noble Lord will pay attention to the depth of feeling which exists in regard to this matter, because it is very high indeed in Aberdeen. I was there last weekend and the feeling is very high indeed. May I ask the noble Lord: what is going to happen to Craigiebuckler and the grounds? That property was left by Mr Macaulay to an institute. It is run by trustees. Does the noble Lord know whether the Macaulay family still have any interest in it? I hope the Government will not get their grubby privatisation hands on the grounds and house of the Macaulay Institute.
Lord Gray of Contin: My Lords, I can assure the noble Lord, Lord John-Mackie, that the future of the Macaulay Institute properties and premises will be one of the considerations given attention by the feasibility study.
Lord Mowbray and Stourton: My Lords, is not sending outlying departments back into a capital city, when they are in a provincial city, going against what is usual Government policy? I thought defusement of manpower had always been a point aimed at by all good government.
Lord Gray of Contin: My Lords, my noble friend makes a fair point. However, perhaps I may remind him that we need to develop research programmes which both respond to and anticipate the changing circumstances in which agriculture is practised, and in particular the relationship between agriculture and the environment. In this, we have had full regard to the
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report of the House of Lords' Select Committtee on Science and Technology on agriculture and environmental research. The new institute which we intend to establish under the name of the Macaulay Institute is designed to provide a powerful new focus in this area. It is for very careful consideration where the most suitable location within Scotland might be.
Lord Ross of Marnock: My Lords, can the Minister give us any indication of how much longer this study will continue before a decision is reached? Will he consult with his noble friend as to whether or not this House will have an opportunity to discuss the matter? There is very considerable interest in it and, indeed, personal concerns, including my own.
Lord Gray of Contin: My Lords, I can tell the noble Lord, Lord Ross of Marnock, whose interest in agriculture I fully appreciate from his former incarnation as Secretary of State for Scotland, that the study has already begun. Two meetings have been held of the steering committee which is chaired by an official of the Department of Agriculture and Fisheries in Scotland, and comprises the directors of the Macaulay, the HFRO and the SCRI, and the director general of COSAC, together with the department's scientific adviser, Dr Raven.
On the question of timing, the noble Lord will appreciate that this is a very important and in some ways delicate matter, and I cannot put an actual date on when the feasibility study report will be received. However, all concerned are aware of the urgency of the matter, and they have this aspect very much in mind. As to whether your Lordships' House will have an opportunity of discussing this matter, this of course is not for me: this must be for the usual channels.
Lord Kirkhill: My Lords, does not the Minister think it amazing that DAFFS have even made the suggestion that the Macaulay transfer to Edinburgh?
Lord Gray of Contin: My Lords, no, I do not think it is amazing at all; and I have little doubt that if the decision were that the activities presently carried out at Bush Estate in Edinburgh were to be moved to Aberdeen, we would have had similar representations from Edinburgh.
Lord Kirkhill: Yes, my Lords, but my earlier point is surely relevant, namely, that there are only approximately 70 staff at Edinburgh, as against 240 in Aberdeen.
Lord Gray of Contin: My Lords, that point will be undoubtedly taken into consideration by those examining in the feasibility study.
Lord Dulverton: My Lords, is my noble friend aware of the feeling of dismay in some parts of the Northern Highlands that the Macaulay is possibly being moved to Edinburgh, whereas, as some have noted, Aberdeen itself is very strong in feeling? However, I think the feeling goes much wider than Aberdeen, and extends throughout the Northern Highlands, who feel that Aberdeen is in touch with them and their affairs, whereas Edinburgh is a little remote.
Lord Gray of Contin: My Lords, I am grateful to my noble friend for his comment and I can confirm to him that I am fully aware of the feeling in the Highlands of Scotland regarding this matter, although it is not all in the one direction. However, as an aside, perhaps I may suggest to him that as a result of the improvements which have been made on the A9 northwards, one can now be in the Highlands of Scotland as quickly from Edinburgh as one can on the A96 from Aberdeen.

Retirement Age: Cost of Reduction
2.49 p.m.
Lord Winstanley: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what would be the cost to public funds of reducing the statutory retirement age for men to 63 if it is assumed that consequential vacancies are filled by persons presently in receipt of unemployment or other benefit.
Baroness Hooper: My Lords, the cost of so reducing the pensionable age for men would be about £400 million for a full year at 1983–84 benefit rates. It is, however, extremely unlikely—as recent French experience shows—that all those retiring would be replaced by someone currently receiving unemployment or other benefit, so the actual cost of making such a change would be considerably higher.
Lord Winstanley: My Lords, while I thank the noble Baroness for that informative, if not wholly welcome, Answer, may I ask her whether she will persuade her advisers to do their sums again and to bear in mind, in so doing, the fact that if we are all to have more leisure as a result of new technology, which surely will be welcome, it is better for the nation that that extra leisure should come at the end of the working life, when people have acquired the maturity and experience to make profitable and fulfilling use of it, rather than that we should have compulsory leisure at school-leaving age, which does not lead to fulfilment but leads to resentment and frustration?
Baroness Hooper: My Lords, the Government are well aware of this particular consideration but, as I have said, the actual cost of bringing down the retirement age as suggested would in fact be much higher. A more likely estimate of cost is about £900 million at the 1983–84 benefit rate, which assumes a two-thirds replacement. But it could be about £1,500 million if no vacancies were filled. I think the Government would welcome any suggestions that might meet the costs involved.
Lord Renton: My Lords, is not a very high proportion of the total population now in retirement and, therefore, partly supported by the working population; and if the recommendation of the noble Lord, Lord Winstanley, were to be accepted, would not an even higher proportion of the population thereby have to be supported?
Baroness Hooper: My Lords, I think that the answer to that is, yes. In fact, on current figures we understand that something like half the male population between the ages of 60 and 65 are currently out of employment.
Baroness Jeger: My Lords, as the Government's White Paper of December suggested that the Government were trying to move towards a decade of retirement, can the Minister tell us what would be the age for the beginning and the age for the end of the decade; or is that not leakable?
Baroness Hooper: My Lords, I think that a full explanation has been given of the Government's intention in this respect. My right honourable friend the Secretary of State for Social Services put forward in last June's Green Paper on the reform of social security the idea of a decade of retirement whereby individuals could choose when they wished to retire between the ages of 60 and 70. Views were then invited on how the problem of costs might be overcome. Unfortunately, because no such views were sufficiently helpful it was not possible to take this forward in the recent White Paper.
Lord Simon of Glaisdale: My Lords, has the noble Baroness any figures to show what the net cost might be if the retirement age or pensionable age for women were raised to 63 at the same time?
Baroness Hooper: Yes, my Lords. The estimated cost of equalising pension age at 63 for men and women is available. It depends on the assumptions one makes about how many job vacancies and jobs created would be filled. If one takes the optimistic view that all the vacancies would be filled, it has been estimated that there would be a saving to public funds of some £200 million. However, unfortunately a more realistic estimate is a cost of some £600 million, on the assumption that only two-thirds of vacancies would be filled.
Baroness Phillips: My Lords, bearing in mind the supplementary question asked by the noble Lord opposite, is it not a fact (if it is, will the Minister confirm it?) that those at pensionable age now have paid towards their pensions before they retired and are certainly not a burden on the working population?
Baroness Hooper: My Lords, yes; the noble Baroness is correct in saying that. I referred earlier to the French experience when, in 1983, the pensionable age was reduced to 60 overall. It has been found that because the contributing period was less they are running into real difficulties in meeting the demands, and some consideration is being given to putting back the age to 67 or indeed to 69.
Lord Glenamara: My Lords, does not the noble Baroness agree that it is becoming increasingly obvious that no significant reduction can be made in the present tragic level of unemployment because of the growth in technology except by sharing out the work that has to be done much more equitably than at present, and that one means of doing that must be to have a shorter working life? Will not the Government look at that if only as a longer-term objective?
Baroness Hooper: Yes, my Lords. The Government would like to do a great deal in this respect, but whichever path we pursue the costs cannot be ignored.
Lord Winstanley: My Lords, with regard to the point raised by the noble and learned Lord, Lord Simon of Glaisdale, is the noble Baroness aware that many women's organisations and, I believe, the Equal Opportunities Commission are of the opinion that women would support the raising of the statutory retirement age for women as a hesitant, small step towards the elimination of this piece of sex discrimination, which adds to the the discrimination that already exists as a result of the fact that women on average live about eight years longer than men?
Baroness Hooper: My Lords, I am aware of this point of view and of the facts quoted by the noble Lord. The Government are considering all aspects of this matter and would like to do a great deal, but no immediate action is foreseen.

UN Security Council Resolutions: Implementation
2.55 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to what extent United Nations Security Council Resolutions 242 and 425 have been implemented.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, Egypt has signed a peace treaty with Israel. Efforts to agree arrangements for wider peace negotiations are continuing with our full support. A United Nations peacekeeping force has been deployed in Southern Lebanon since 1978 but has been unable to carry out its full mandate.
Lord Molloy: My Lords, I am grateful to the noble Baroness for that reply. Does she not agree that, despite the reply she has given, in reality very little has been achieved? Is she aware that recently there have been words of encouragement from the Israeli Prime Minister, Mr Shimon Peres, when he indicated that Resolution 242 could be a basis in regard particularly to the occupied territories, and that in return Mr Arafat has said that such an attitude would help him to advise that full recognition of Israel should be made? My final point is this. Is the noble Baroness aware that, of the Western powers, Britain is probably thought of more highly in the Middle East than any other and that we have a very useful role to play so as to take full advantage of both those statements?
Baroness Young: My Lords, what I would like to say on the visit of the Israeli Prime Minister is that useful and constructive discussions were held. We agreed on the need for an early negotiation and settlement of the Arab-Israel dispute and we welcomed the positive development of common ground between Mr Peres and King Hussein on negotiations within an international framework. We have also been in touch with Ambassador Murphy, who saw both King
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Hussein and Mr Peres in London last week, and we support his search for agreement on arrangements for peace negotiations.
Lord Molloy: My Lords, I am grateful to the noble Baroness for that reply. Is it not therefore logical to seat all these people on one side to talk about the developments and that there should now be some indication made to Arab representatives for them to have an opportunity to make their submissions to this country, for which, as I have said, both sides in this terrible dispute still have high regard?
Baroness Young: My Lords, I hope I made plain in my original Answer to the noble Lord's Question that King Hussein paid a private visit to London. He met with my right honourable friend the Prime Minister on 16th January. We support his efforts in the peace negotiations.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Gray of Contin will, with the leave of the House, repeat a Statement that is to be made in another place on, Paying for Local Government: the Scottish Approach. He will be followed by my noble friend Lord Long, who, again with the leave of the House, will repeat a Statement on, Paying for Local Government: the Welsh Approach.

British Housing Inquiry: Report
2.59 p.m.
Lord Seebohm Lord Seebohm rose to call attention to the Report of the Inquiry into British Housing chaired by the Duke of Edinburgh; and to move for Papers.
The noble Lord said: My Lords, I beg leave to move the Motion in my name. The report that we are about to debate is, to my mind, the most important contribution to housing policy, certainly in my lifetime, and possibly since the Royal Commission on the Housing of the Working Classes in 1885, one hundred years ago. Our very special thanks are therefore due to His Royal Highness the Duke of Edinburgh who chaired the inquiry and to the distinguished members of his team. I must also make special mention of the contribution made by Mr. Richard Best, director of the National Federation of Housing Associations, who acted as secretary to the inquiry.
In the introduction to the report the following words appear:
"We were aware, of course, of the political overtones of our subject matter—all electors have some interest in housing and votes can be won or lost by granting or withdrawing housing privileges. As economic circumstances change, housing may be seen to present an opportunity sometimes for stimulating the economy, sometimes for tackling inflation. We are also aware that 'a week is a long time in politics' and that governments last only a limited time,"—
and I am sure this will also be appreciated—
"while individual Ministers often stay in post for even shorter periods.

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"For these reasons we have consistently tried"—
this is the point I wish to stress—
"to stand outside the arena of party politics."
I hope this afternoon that the many speakers who have put down their names to participate in the debate will follow the same principle and not waste a rare and important occasion with political crossfire or recriminations, or attaching blame to any one party for the tragic deficiencies in our stock of housing. We are all to blame.
Before discussing the proposals in the report, I should like to establish what I believe to be the two fundamental principles of housing policy which I have long held and which must be the basis of any long-term housing policy. The first is that for a substantial proportion of the population—perhaps as much as 30 per cent.—housing always has been, certainly is now and probably always will be, a social service. Ever since the Royal Commission in 1885 attempts have been made to build houses for the working classes that would yield a more or less commercial return on cost. They have never succeeded. I would quote only two examples out of many. At the beginning of this century Joseph Rowntree decided to use some of his wealth in doing just this, and he engaged the help of two brilliant architects, Raymond Unwin (later Sir Raymond Unwin and adviser to the Ministry of Housing) and Barry Parker. They made several attempts to achieve this by eliminating all frills and extravagances. Joseph Rowntree said he did not want this to be a rich man's hobby, and he required the return on cost to be the same as the yield on consols at that time, in all conscience, very cheap at 3 per cent. They never achieved this, even though they increased the density of houses to 14 to the acre and provided no indoor sanitation, baths or hot water systems. After the First World War no further attempts were made.
The second example is described in Professor Adela Nevitt's book, Housing, Taxation and Subsidies, which she produced in 1966. In 1902 the town clerk of Shoreditch, giving evidence to the Select Committee on Repayment of Loans by Local Authorities, said that out of 533 families displaced by a slum clearance scheme only one family could afford the new rents which had been set. He went on to say,
"I believe that this is the same proportion as the county council experienced in their boundary scheme. I know they rehoused 11 families only, out of something like 5,000 whom they displaced."
We can all guess where the rest of the 5,000 ended up. I could quote other horror stories but have no time. But what is still true today is that rented housing cannot be provided for poor people to produce a commercial return, and some sort of subsidy is always going to be needed.
The second basic principle, which is the natural corollary of the former, is that subsidies must be on people and not on buildings. In the dozens of housing Acts since 1885 the attempt to cheapen rents has been by lowering the cost of houses by direct capital grants or by annual subsidies over the assumed life of the building. We all know that this form of subsidy has failed to provide houses of an acceptable standard for the low paid, the aged or the handicapped, and at the same time it has created subsidised rents for the many
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who could well afford a more commercial rate. In other words, those who needed help most missed out and were compelled to live in old, substandard dwellings and often in hopelessly over-crowded accommodation.
Those are my two basic principles, and I therefore turn to the Duke of Edinburgh's report to see whether they are relevant. The committee naturally start their report by analysing the problem. The horrific state of affairs they describe is already widely known and I will not weary the House by repeating it all today. I must, however, remind your Lordships of one or two important points that justify the adjective I have just used. Almost 25 per cent. of all English dwellings need major repairs costing over £2,500 per house, according to the 1981 survey on the condition of housing, and the situation has deteriorated further since then. Fewer than 200,000 houses are being built each year and public spending on housing has declined by 54 per cent. since 1979 and is now being further reduced. This is the only major item in the Budget that has not actually increased in real terms.
Secondly, the AMA in their evidence to the committee estimate that owing to this neglect, £25 billion is now required to meet the repair bill, £10 billion to remedy construction defects and £15 billion to meet actual shortage of houses: a total of £50 billion. This is the kind of figure we are handing on to future generations owing to cumulative neglect in the past.
Thirdly, no private sector institutional money—that is, pension funds, insurance companies or building societies, uniquely in Western Europe or the United States of America—finds its way into housing for rent. Government policies since the Rent Act of 1915 have steadily destroyed private sector investment in private rented property, which has declined from 90 per cent. before World War I to 9 per cent. today.
Fourthly, the condition of many public sector housing estates is so poor that even those in urgent need reject it. Deficiencies exist on a grand scale in respect of tens of thousands of council properties built in the 1960 and 1970 period; many are badly designed or badly built or have proved unmanageable. All the evidence that the inquiry received showed the great need for more rented accommodation for the growing number of homeless families, particularly where there are many children, but also for the single homeless. The Department of the Environment estimates are that 53,000 homeless households in 1978 had risen to 83,000 in 1984, and would probably reach 90,000 in 1985.
Having described the problem, the report then gives what it believes should be the objectives of any housing policy. It states:
"Every householder shall be able to occupy a dwelling of a size, type, standard and location suitable to its needs, free from nuisance, harassment or arbitrary eviction and should have a free choice of tenure (freehold, leasehold or other)"—
short-term or whatever—
"without prejudging its mobility or its rights to financial aid, equality under the law or status."
This, of course, is an objective over time and the report therefore recommends several areas of priority. First, there must be sufficiency of adequate housing,

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and action to remedy this must start now if it is to be achieved this century. Secondly, means must be found to introduce a plentiful supply of private sector investment in rented property. Thirdly, there must be redirection of support now provided by central and local government so that those with lower incomes can afford the housing they need, rather than by subsidising buildings. Fourthly, the householders must have more say in the management and condition of their homes and environment through tenants' associations, housing co-operatives and similar bodies. Fifthly, there must be an avoidance of segregation in order to avoid ghettoes of poor and disadvantaged people.
My Lords, we now come to their proposals. We all know the benefits that accrue to the owner-occupier, of which the major items are freedom from capital gains tax and full deductibility of mortgage interest. He pays no tax on the imputed income from his investment in his house since Schedule A was abolished in 1963. It is estimated that the tax relief on mortgage interest alone cost the Exchequer £3·5 billion last year. This benefits the top taxpayer to the tune of £850 per annum and will exceed £4·5 billion, it is estimated, this year, while the lower income groups get no benefit. This tax benefit is equal to 4½ pence on income tax.
All tenants, however, I admit are now eligible for housing benefit. This is administered by local authorities; it is extremely complex and there are many delays in payment. It is means tested in contrast to mortgage interest relief for owner-occupiers, and costs £2.6 billion as opposed to the £3.5 billion given to owner-occupiers. The private rented sector has been subject to rent control since 1915 and even now under the fair rents control does not attract investment.
There is no time to describe the local authority system of finance which is complex, incomprehensible to most of us and, in many ways, illogical. It is further complicated by Treasury accounting conventions which appear to me to be absurd. The committee conclude after a detailed discussion of the present financial framework that change is essential, being inequitable in the treatment of different groups of householders, ineffective in meeting identified housing needs, preventing the growth of private rented housing, constraining individual choice and inhibiting rational planning.
The main recommendations are intended to make a gradual shift—and I stress the word "gradual"—to fiscal neutrality between owners and tenants, by means of removing over a 12-year period, which really means to the end of the century, mortgage interest relief, which I know will be most unpopular, and to replace all current personal housing allowances by a single needs related housing allowance, probably administered by the DHSS. The removal of mortgage interest relief is, to everybody's surprise, supported by the CBI. It is also supported very strongly by Faith in the Cities, which is the latest document on this subject which I have read.
The appropriate level of income attracting the maximum allowances would vary regionally, such allowance to taper off as income rises. But the poorest householders could receive full eligible housing costs.
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Although this would be expensive, the cost is unlikely to be more than the present range of housing subsidies as those on higher incomes would lose out. But the relief would be targeted on those most in need. I know that this will no doubt be bitterly opposed by the better off, but to me it is a sine qua non if we are to rationalise benefits.
The next recommendation is concerned with rent control which is quite revolutionary. The proposal is to value all rented dwellings on a vacant possession basis calculated on recent sales of similar properties, and to fix the rents on a commercial rate that would attract private investment. This is part and parcel of the proposals to bring private institutional money into the provision of rented accommodation. More resources must be made available if the problems of homelessness and sub-standard housing are to be removed.
The system of rent fixing that I have just described could be attractive at a comparatively low initial rate of interest if it is indexed by biennial valuations. The initial rate therefore becomes a real rate and would be comparable to the Government indexed issues, subject to an "add on" to cover the administrative costs and the small commercial risk. The present real rate on Government indexed bonds is just under 4 per cent., so that this could be quite a cheap way of financing housing. The rate could well be under 5 per cent.
Private sector money could also be made available to local authorities for specialised property for, say, single people, the disabled, the elderly and families with special needs. The local authority would take a head lease from the developer at the market rate and be indexed according to the RPI or some similar index. At the same time, the private investor must be able to get a commercial return on his investment in order to bring some of the 660,000 empty properties back into occupation.
It is worth looking at the housing provision in Germany, which had to face an appalling shortage after the mass destruction in the concluding phases of World War 2. The Anglo-German Foundation has recently produced a comparative study on housing conditions in our two countries which I find most interesting and constructive. Germany has continued a high level of housing investment and produced a ratio of dwellings to households far superior to Britain. Incidentally, this has produced a more efficient industry and workforce and hence a better quality of housing stock.
This investment has come from a very different direction than in Britain. There has been a political consensus in Germany on encouraging the market system to work and intervening only to overcome inertia or special situations. Subsidies go principally to individuals, so they can pay rents provided by a much larger private sector, including housing associations. Rents in Germany are about 50 per cent. higher than in Britain—that is, about 12 per cent. of income as compared with only 8 per cent. here—but the houses are of higher quality and are kept in good repair. A final point is the richer social mix in cities, with fewer ghettoes of working-class stereo-typed buildings.
Vital lessons are to be learned from the Duke of Edinburgh's inquiry and, as I said at the beginning, I pray that we can achieve an all-party consensus on the

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present catastrophic situation in the country and the need to adopt entirely new methods of overcoming the problem. A start must be made now and if the recommendations made in the report are not largely implemented, then I am sure that most of your Lordships will want to know the reason why. The costs may be high, but the savings on the present administration of misery may well result in net saving.
I remember being told by children's officers, when I was chairing the committee on the local authority personal social services, that probably half their time was spent on problems caused by crowded, unhealthy and inadequate housing. I recommend this report from the Duke of Edinburgh's Committee as, for many, compulsive reading and, for many more, compulsory reading. My Lords, I beg to move for Papers.
3.16 p.m.
The Minister of State, Department of the Environment (Lord Elton): My Lords, the House will, I am sure, wish me to thank the noble Lord, Lord Seebohm, for providing, with this Motion, an opportunity to discuss a subject of very considerable importance. He speaks, of course, with the special authority of the principal author of his own Seebohm Report on the reorganisation of the social services.
The inquiry into British housing was instituted by the National Federation of Housing Associations to mark two occasions. The first was their own jubilee and the second was the centenary of the publication by the Royal Commission on the Housing of the Working Classes of their own report on very similar matters in 1885. On their jubilee, the federation certainly deserve our congratulations. Their members indeed deserve grateful thanks for the essential and beneficial work that they have for so long been performing.
Our gratitude is also due to the committee which the federation appointed to conduct the inquiry. Whatever our view of their conclusions, they carried out a penetrating review of a range of issues too rarely considered together and almost never considered impartially. Their chairman was His Royal Highness The Duke of Edinburgh, who we may think has a special concern with jubilees. They preserved impartiality, not only between the interests of the federation and the other agencies working in this field, but between the political parties as well.
It is, if I may respectfully say so, a mark of very skilful chairmanship that a body embracing such a wide spectrum of interests was able to deliver a unanimous report at all, let alone one that contains so much in the way of opinion and recommendation. I look forward to all of your Lordships' views and, in particular, to the contribution of the right reverend Prelate the Bishop of Southwark, who was a member of the committee and doubtless has an additional insight into its work.
The reasons for a politically neutral approach are set out in the first chapter of the report, to which the noble Lord, Lord Seebohm, has already referred. Impartiality between the parties is always desirable when one is seeking a truly valid exposition of any contentious subject. It becomes more so when not only
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are those parties political parties but when, as in this case, the timescale of one's subject extends over the prospective life of several successive future Parliaments. Then it is, of course, particularly attractive, because in those circumstances the only durable solutions possible are those that commend themselves to all political parties, whatever their colour. They cannot be arrived at from any position that is exclusive to a major party's philosophy.
The way in which the committee achieved impartiality is summed up in their fourth paragraph:
"…the only sources of evidence which we have consciously omitted are the political parties. It was our view that we should avoid the dilemma of being forced either to accept or reject strongly-felt but opposing opinions placed before us by politicians."
They went on to say:
"This means that we are prepared to suggest remedies to housing ills which do not accord with present-day political opinions or even, necessarily, with current economic circumstances."
That gets one into a certain difficulty. I have emphasised these early passages in the report because I think they form an essential context for this debate. Our discussion is after all taking place in a Chamber actually built to take account of the strongly-felt but opposite political views of its Members, as part of the machinery of government. In this House there is of course room for those of mature judgment who own no political allegiance. Here they sit on the Cross-Benches and sometimes, I may say, elsewhere! But in another place there is room for no such aloofness. The political balance there is not just part of the machinery of government. It actually determines which party shall deliver the Government and dictates, at only one remove, what the policy of that Government shall be.
Government is determined by politicians and they are put in power by the electorate. One ultimate constraint on any government's policy is the will of the electorate. Another is the economic circumstances of the day. Economics may not be so immediately effective, but it is sufficient that a government who ignore it may have to recall their Chancellor of the Exchequer, after he has left for Heathrow, so that he can come back and face reality. I would have said that regardless of the party to which the Chancellor belonged. Politics and economics between them set the limits on what it is possible for government to achieve.
Although the committee was prepared to recommend,
"remedies which do not accord with present day political opinions or even necessarily with current economic circumstances",
it follows that it is likely that not all its recommendations will be acceptable to politicians or their parties.
Indeed, your Lordships will already know that a principal recommendation—the end of income tax relief on mortgage interest payments—does not commend itself either to my party or to many other politicians. Given that more than 60 per cent. of all dwellings are now owned by their occupants and that more than a third of all householders are paying interest on mortgages, that is not altogether surprising. The change, illustrated on page 23 of the report, from 10 per cent. owner-occupation in 1913 to 60·2 per cent. in 1983 is one of the most striking movements of the 20th century. It has been fired by the natural and

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instinctive wish of most British people to own their own homes and fuelled by mortgage finance, largely provided by the building societies movement, to whose valuable work this country owes a very great deal. Growth in home ownership still continues, I should add, and by 1985 had risen to 64 per cent. in England. Over the past six-and-a-half years we have seen the fastest growth in home ownership in our history. The number of owner-occupiers has increased by 2¼ million. In that period 900,000 flats and houses have been sold by local authorities including new towns, and housing associations. More than 800,000 of those were to sitting tenants.
The financial environment has been a vital factor in this. Most important has been the building societies' ability to keep up the necessary flow of mortgages. Of course this has meant charging market rates of interest, but most people agree that a mortgage with a fluctuating rate of interest is better than no mortgage at all. We have encouraged building societies to be more competitive in the rates and services they offer because more competition can only be for the benefit of their consumers. On the fiscal side, apart from maintaining mortgage tax relief we have both simplified stamp duty and reduced its impact.
We are also proposing, in the Housing and Planning Bill, a number of new measures designed to encourage the sale of more council properties, and particularly flats. Most sales so far have been of houses, and research has shown that tenants considering buying their flats have often been concerned about the service charges that they will have to pay. From some of the cases which have come to the department it seems that their fears are justified and that they are sometimes given misleadingly low estimates of repair costs.
The Bill will make the purchase of flats by sitting tenants much more attractive. Under it, we propose that there will be 10 per cent. extra discount on flats sold under the right to buy and to reduce from five years to three years the period of liability to repay discount if a council home or flat is resold. In addition, service charges in respect of repairs over the first five years of the lease on flats sold under the right to buy will be limited in accordance with estimates given before the sale. We also propose that leaseholders of flats bought under the right to buy should have the right to a loan from the landlord in respect of service charge for repairs.
I have heard it said that people are buying in haste to repent at leisure. That is not our experience. Research in 1983 showed that 94 per cent. of people who had bought under low cost home ownership initiatives felt they had made the right decision and that virtually all of them intended to go on being home owners. It is also suggested that buyers are being tempted out of their financial depth. It is true that the number of cases of mortgage arrears has increased, but less than 0.2 per cent. of mortgages are more than 12 months in arrears. I believe the causes of those lapses are far wider than the increasing level of home ownership.
We believe firmly in increasing home ownership, but can this growth continue? I believe not only that it can but that it will. The Building Societies' Association carried out a survey in 1983. Of all the people aged from 25 to 34 whom they interviewed, nearly 90 per
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cent. said that they wanted to be home owners within the next two years. Those young people's hopes are a motor force in both the economy and in the body politic. I accept and welcome the fact that the committee, like the Government, want those hopes to be fulfilled. To try to achieve that, in today's circumstances, without continuing mortgage interest relief does not seem to us to be practical politics.
I have put some emphasis on that point because of the rules of the game set out for us by the committee in its report. It presents its recommendations,
"as an overall framework in which the components hang together.… as a unity, not as a checklist from which particular points can be lifted".
I am going to break those rules because it would, I think, be absolutely wrong to throw away this report and all the valuable and painstaking work that has gone into it simply because one of its conclusions is not, in our view, politically or economically workable.
Let me start by recognising that, however successful we are in creating a property-owning democracy, a substantial proportion of the population will go on needing rented accommodation for the foreseeable future. This will be either because they cannot afford to buy or because renting suits their particular circumstances for some other reason. It is our firm view that private renting has an important role to play in meeting that future need. With great respect, I cannot accept the assumption of the noble Lord, Lord Seebohm, if I have it right, that the whole of this sector which he estimates, I think, at 30 per cent. should be provided as a social service, if that means provision by local authorities and the public sector. Indeed, I believe that the inquiry itself suggests elsewhere that that should not be the restriction.
The Government therefore welcome the positive approach adopted in the inquiry report towards the role of the private rented sector in future housing policy. We also endorse its view of the importance of finding a way to attract new investment into rented accommodation so that the supply expands. Here we do indeed see the value of the committee's impartiality. It has recognised (and on page 23 it has illustrated) the sharp decline in the private rented sector for almost the whole of this century. In part that has been the result of a growing preference for owner-occupation, and that is natural and desirable. But private renting still has many attractions, particularly for the young and mobile who do not want to take on the responsibilities of home ownership. These needs will continue. It is therefore important to see that the private sector plays a full part in maintaining a good supply of accommodation to rent.
We have done something towards this already with the Housing Act 1980, and shorthold and the assured tenancy scheme in particular, but I believe we can and should do more. There is scope for further legislative change and I should like to take this opportunity to assure the House that in considering what those changes can best be we will look carefully at what the report has to say on the subject and that will be an input into our considerations. We also agree with much of what the report has to say about the role of public sector housing. The report calls for a new approach to the housing functions of local authorities. It states that the aim should be to,

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"strengthen the comprehensive, strategic role of local authorities, increasingly as enablers and co-ordinators, as opposed to their role as providers".
The Government share the view that local authorities should move away from being the direct providers of general purpose housing for rent.
I in no way belittle the achievement of local government. Indeed, an understanding of that achievement does much to explain the strength of the municipal tradition that the stature of a local authority is in some way to be measured by the number of the houses and flats it owns and that it plans to build. The normal needs arising from social history were enormously increased—were they not?—by the devastation of the last world war in London and other major cities, as well as in Germany. I saw that devastation as a child; I remember over how many empty blocks the willow herb nodded every summer afternoon after the Blitz.
But I had no conception of the scale of that devastation until I became responsible, amongst other things, for the Royal Parks and discovered that in over 55 acres of Regents Park the grass is growing on up to 12 feet of rubble, spread over it from bombed housing. That is a cubic measure of the damage that was done, and of the repair and replacement that had to be undertaken in 1945 and the years that followed. So I take my hat off to the local authorities for a magnificent achievement.
Bombs exploded during the war and the population exploded after it. Building had to be swift, and inevitably it was partly experimental. Equally inevitably, we are paying the price today. The creation of huge municipal estates, and the use of some types of industrialised systems have left us with a formidable legacy of problems—problems of both management and decay of which the inquiry was acutely aware. The emphasis in future must therefore be on improving the condition and the use of the existing stock of local authority houses, rather than adding to it. New public sector building should be limited to providing for those in the greatest housing need, who are unable to meet their requirements in the private sector. Here I am on common ground with the noble Lord, Lord Seebohm.
The report has much to say of interest about the condition of the housing stock. It acknowledges the progress that has been made in reducing the number of dwellings without basic amenities but expresses concern about problems of disrepair in public and private sectors. As noble Lords will know, the Government published their own proposals for private sector improvement in a Green Paper last year. There is a good deal of common ground between the proposals set out in the Green Paper and those in the report. We are at present studying the responses to that Green Paper. The recommendations in the report of the noble Duke's inquiry will certainly also be very much in our minds as we decide how to take forward our proposals in the light of the comments we have received. It was, I repeat, valuable work, and is input that will result in Government consideration.
I note the committee's reference on page 34 of the report to the "rate of clearance" as being inadequate. This is in connection with getting rid of unsatisfactory stock, and it does have a certain irony in a report
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marking the centenary of the Royal Commission report. For the Royal Commission, reporting in the wake of the Torrens and Cross Acts, found that clearances of one sort and another were responsible for a great deal of the shortage of housing stock into which they were inquiring, and not least amongst them were clearances to make way for improved stock. I shall quote only one brief instance of that from the earlier report:
"In St. Luke's the district has never yet recovered from the pressure which was caused by the pulling down for the building of what is known locally as Peabody Town".
We must be careful—must we not?—to see that that wheel does not turn full circle. Provision must be made—as it was not made then—for the people who move out of the houses one pulls down to live somewhere else.
That provision need not necessarily be in the form of new accommodation. I am acutely aware that in April of last year, 1985, in the midst of all the misery of homelessness there were over 100,000 local authority dwellings empty; and one-quarter of them had been empty for more than a year. Those figures speak for themselves. More can and must be made of those resources. But nevertheless we need to build as well as to renovate houses. And here I must recognise, as Minister for Planning, our duty to do it without squandering our open spaces and without plundering our countryside.
Your Lordships will be aware of the highly effective urban development grant programme by which we are encouraging building and development by the private sector within existing urban areas, and may also have noticed a recent interesting statistic, recorded by the Ordnance Survey, which shows that in recent years about half of new housing is built on land that has already been developed in the past.
Homelessness is a subject to which we shall return in this debate and it is a significant factor in determining the capital allocations made by the department and by the Housing Corporation. The Government's hostels initiative has resulted in a major expansion in the provision by housing associations of small, modern hostels. Nearly 14,000 of them have been approved since May 1979 and this has been a valuable way of improving provision for single homeless, including those outside the priority need categories of the Housing (Homeless Persons) Act, who are in particular difficulties.
In the public sector, we have recently extended eligibility for housing association grant to short-life council dwellings, and further guidance was issued to authorities in July on how the number of empty dwellings could be reduced by improvements in management practices.
I turn to the stock we already have—the dwellings that have already been built, and I have to say that we are very concerned about the condition of the local authority housing stock. We recently undertook an inquiry into the condition of this stock, and published the result. We undertook it to gain a better understanding of the problems faced by local authorities; it was the first comprehensive inquiry of its kind undertaken by any government in this country. It showed us that there is a very large backlog of repair work indeed. Not all of it is equally urgent or

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important and we expect authorities to continue their present efforts to identify priorities and to tackle the most urgent work first. However, we have increased the resources available to local authorities for capital expenditure on housing by £200 million compared with last year's provision. Those increased resources, together with the increased emphasis we expect authorities to place on renovation of their own stock, should allow authorities to make inroads into the backlog of their repair works. But the problem will not go away and it is exercising us.
Money is not the only factor. I do not, I repeat, belittle the achievements of some housing authorities, but all of us know of some instances where they are so bad, so remote, so separated from their poorest tenants by so deep a hierarchy of bureaucratic committees that they have actually broken the spirit of the communities that live there, in a wilderness of disrepair. The key to better management is to have a system that provides quick, flexible and sensitive responses to local needs as they arise. That is a need clearly recognised in another report: the report of the Archbishop of Canterbury's commission; Faith in the Cities. I look forward to hearing the right reverend Prelate the Bishop of Liverpool, who was a distinguished contributor to that report. We share their concern.
The Priority Estates Project started by my department has shown how conditions can be radically improved when estate-based management is introduced. We are now reinforcing that approach through the Urban Housing Renewal Unit, which has been set up to advise local authorities on how to tackle the problems of their run-down estates. It will encourage local authorities to consider the full range of options before them. Among those options are partnership schemes with private developers—perhaps involving the transfer of empty dwellings to developers for refurbishment and sale—the encouragement of tenant co-operatives, and community refurbishment schemes.
That new unit has been widely welcomed by local authorities, and one of its particular aims will be to maximise funding opportunities in both public and private sectors, with the assistance of a team of outside consultants—making the money able to be spent. The Government have earmarked £50 million of the Housing Investment Programme allocation total for distribution to local authorities for schemes identified by the unit, in consultation with those authorities. Wherever possible the schemes will result in a diversification of tenure, which we also regard as highly beneficial to the character of a community.
Another way in which we are helping to stimulate private sector involvement in solving housing problems is through the Building Societies Bill. It will enable building societies to play a wider role in the housing market. For example, it proposes to give to building societies an opportunity to own and develop land as a commercial asset. Until now, shared ownership has been achieved through housing associations or local authorities. Building societies have, of course, been involved in many of those projects as providers of finance. In future, they will play a more direct role as owners of the rented portion
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of the house. That new concept will appeal, I believe, to the inquiry committee. The Bill will also give building societies the power to offer agency services advising owner-occupiers on the improvement of their homes. We also want to encourage building societies to become much more closely involved in the revitalisation of run-down council estates, which are a matter of great concern.
To conclude, my contribution must be as yet incomplete. We are still only at the beginning of an interesting and, I think, important debate. I have sought to provide both a commentary on some aspects of the report and a summary of some aspects of Government policy. I need no reminding that these are matters that demand our urgent attention.
Your Lordships will have noticed the common ground between the inquiry and the Government, as well as the differences. Your Lordships will also have noted that the report itself—which will be strengthened, may I say, by the eventual publication of two technical volumes which we expect in May—will be taken into full consideration in the development of various aspects of Government policy.
I look forward with great interest to hearing in the next few hours other comments that may be of material help in preparing the ground for further progress. I am grateful to the noble Lord, Lord Seebohm, for this opportunity to do so and, with the leave of your Lordships, I will give a preliminary reply to what I hear this afternoon at the end of the debate.

"Paying for Local Government": The Scottish Approach
3.42 p.m.
Lord Gray of Contin: My Lords, with the leave of the House I shall now repeat a Statement being made in another place by my right honourable and learned friend the Secretary of State for Scotland. The Statement is as follows:
"With permission, Mr. Speaker, I think it would be helpful to the House if I made a short Statement on specifically Scottish issues arising from yesterday's publication of the Green Paper Paying for Local Government.
"The general lines of the proposals were explained by my right honourable friend the Secretary of State for the Environment. The Government are ready to deal with the manifest defects of the present system of paying for local services and we plan to introduce legislation which will replace unfair domestic rates by a community charge; will bring reasonable protection to shops and businesses; will set up a fairer and simpler grant system and remove the need for the present system of penalties against local authorities. We have invited comments on these proposals by 31st July.
"In Scotland experience of the last few years has shown conclusively that existing domestic rates are wholly unacceptable to a very wide range of the population. We recognise this and are therefore at present planning for early legislation in the coming Parliamentary Session to abolish the domestic rating system in Scotland. The Green Paper

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envisages that all domestic rate bills in Scotland would be cut by 40 per cent. with effect from 1st April 1989 and would be finally abolished at the end of March 1992. It will follow that there will be no further revaluation of domestic property in Scotland.
"The proposed community charge will, we believe, be fairer than domestic rates. Those who have been used to contributing nothing from their earnings to the revenue raised by domestic rates may regret this new charge, but most will accept that it is not unreasonable that we should discontinue a system that imposes the full burden on a minority of the public including some of the poorest members of the community.
"Shopkeepers and businessmen who have had taxation without representation will now be protected from the effects of an unfair system and increases in their rates will only occur on the basis of a national index. Business in both rural and urban areas will find this far preferable to the Scottish system.
"Scottish local authorities will, we hope, welcome the end of the present system of penalties that has not helped the relationship between central and local government.
"For some time the Scottish public, and ratepayers in particular, have called for effective action. These proposals represent a fair and reasonable response and we look forward to hearing the views of ratepayers and others affected by them."
My Lords, that concludes the Statement.
Lord Ross of Marnock: My Lords, we are all grateful to the Minister of State for the short Statement he has made on the changes that are proposed to the rating system in Scotland and in the Government financing of services in Scotland. Having said that, there is very little I can say that is going to be flattering to the Government.
We have been here before. In fact, we had a White Paper—I happen to have a copy here—in August 1983, which was followed by a Bill the following year and by another Bill just last year, the basis of which was that the rating system is basically sound but needs improvement. However, all that was done was something in relation to reed beds and caravan parks. The Government then had another thought—a thought after a very wild Tory Party Conference. It is barely two years ago since that conference. Of course, the Prime Minister went to that and trouble was ahead for the Scottish Office; and certainly there was no promotion on that occasion for the Secretary of State for Scotland.
The position has not improved since then. So here is a system which is now claimed to be fairer than anything we have had for all these generations, but was discarded in the Government's own White Paper in 1983 which, of course, followed a Green Paper. How does something that was bureaucratic, unfair and difficult to control now become the centrepiece of fairness? The Minister read the sentence,
"will replace unfair domestic rates by a community charge".
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I hope he is not telling us that he is replacing something that is unfair with something that is fair.
We have had the advantage that the Statement was made elsewhere yesterday in a much fuller way. Indeed, the Scottish Minister held a press conference in Scotland yesterday while we were tied to the delights of salmon fishing. But we have the advantage of what happened in respect of that. It is interesting to see what the Glasgow Herald said. We do not read of an overwhelming welcome. It states:
"A recipe for administrative disaster and worse in many ways than the existing system".
It also says:
"A flat rate tax is regressive".
The demand for reform will not die down, but there is no point in going from a bad system to a worse one. The Scotman states:
"It is much less fair than the existing system—it will bear down most heavily on those least able to afford it."
In fact, with this new domestic rate system the people who will be better off are the wealthiest in Scotland. There is not a Scot sitting here who is a resident in Scotland, and who pays rates for it, who will be worse off. Every one of us here will be better off. But what about the ordinary Scots? They will be worse off.
Of course we are all concerned about the rating system in Scotland and about the unfairness of it. But the fact is that the basic weakness of the present rating system is the narrow base. Over the years governments have put on to this narrow base more and more heavy responsibilities, and not all of them are local. I do not consider education to be a local responsibility, yet the heaviest burden on that narrow base is education. The police, fire services and help for the handicapped are not local services; they are services that are national. The more one puts on to this narrow base the more dangerous it becomes from the point of view of crumbling.
This is what has been happening in recent years. The Government have been reducing their share of payments in respect of these national services, leaving the heavier burden on this narrow rate base, and that has brought it to the brink of crumbling.
Why? We have this position in Scotland and we shall have until 31st July to look at it. It will not be changed, because we are told in the Statement which has just been read that we are moving speedily to legislation; that is in the early part of the next Session of Parliament, which will probably begin in November. I see Ministers sitting in front of me, including the Secretary of State for Scotland. There are three of them who are connected with the drawing up of legislation. How long does it take to draw up a major Bill? This is not a Green Paper; it is really a White Paper, because the Government have made up their mind. Because of pledges that were made to the Tory party conference it will be carried out and it will be accomplished before the next election. So, we have the hysteria of the Tory party conference followed by the haste to do something in Scotland.
I am the last person to say that we should not go in advance in Scotland, but that is done when everybody is in agreement about it; and no one has agreed at all about this proposal. When you look at this question of

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a poll tax (call it what you like) of course it will fall most heavily on the urban areas and on those with the biggest families, who are not always the poorest. Who is going to cope with all this?
Let us also remember that we are racing into it in Scotland. The system will be in operation in Scotland in three years' time. There is no timetable for it in England and Wales. The interim period will be 10 years, but we do not know even when it will start. If it starts in Scotland in three years' time then we shall have two systems working. The system in respect of the non-domestic ratepayers will remain the same in Scotland, with a suggestion that it will contain something as a safeguard against inflation. A national charge in respect of non-domestic ratepayers cannot be introduced until it is introduced nationally in England. I said that it was a recipe for disaster; it will be a recipe for chaos.
Then there is the drawing up of the rolls. It will not be the electoral roll but a special and indeed a costly one. There will be a new offence created because people must register and if somebody moves house he will have to re-register. What will happen as regards students? Who is to be held responsible for payment? Will it be the head of the household? These proposals bristle with difficulties and the suggestion that this system will be better and fairer does not bear examination. I shall be well off under this system, but what about the poorer people in Ayr? Let us remember that 52 per cent. of the people will be worse off.
The only solution is to have a proper look at it and obtain an appreciation by the Government of their responsibility. If the Government are to load on to local government national and costly responsibilities, they should meet the charge nationally. To the extent that they are increasing their grants, the proposal comes nearer to the viewpoint of a local income tax. It cannot be suggested that young people do not pay anything at all. Young people pay consumer taxes—they spend at the shops, which are glad of it, and they pay VAT on everything—and young people do not get tax concessions as do married people. Young people make their contribution.
This proposal means that the poorer households will pay more and the richer households will pay less. How can the Government justify that? There may have been an outburst from certain Tories and businessmen in Scotland at the Tory party conference, but the general public in Scotland will not accept this proposal. It is a recipe for disaster, but the trouble is that it is only a recipe. We do not start to eat the cake that the Government are making until 1989 and we do not consume the whole thing until about 1990.
I hope that the Government will think again but I fear that they will not. I never thought I would see in a so-called Green Paper:
"The Government will not tolerate any delay beyond the minimum necessary".
That is not the language of a Green Paper. It is rather the language of the Prime Minister. I think it must be her reaction to her reception at the Tory party conference which took place in the middle of a rates row. Certainly I cannot claim that there is any welcome for this Statement on this side of the House.
Viscount Thurso: I too thank the noble Lord the Minister for repeating the Statement made by his right honourable and learned friend in another place, but I am afraid I have to cease my kind words at this point because I think that this is a two-faced Statement.
I notice that the unfair domestic rates are to be replaced by a community charge, but the community charge, in the view of both parties on these Benches, is equally unfair and to be regretted. There is no element in it which covers the particular cases that require to be dealt with and it will fall heavily on those who are most unable to bear the burden. It is said that it will bring reasonable protection to shops and businesses but it is also said—and the noble Lord the Minister will correct me if I am wrong—that the present high revaluation of shops and businesses will be indexed so that it continues at that level. What it then says is that the effect of taxation without representation will be removed from shopkeepers and businessmen, but the Minister does not indicate how they are to obtain any representation whatsoever. At the moment he has indicated how they will be taxed but not how they will obtain representation.
There is a curious anomaly which I should like to ask the Minister to explain. In the printed paper which was given to this Front Bench it is stated that the rates will be determined by reference to some rational index. The noble Lord the Minister said that the rates will be on the basis of a national index. I wonder which he means and I wonder which nation's index will be used. Will it be an index based on the whole of Great Britain or an index based on Scotland alone?
In this connection I remind the Minister that yesterday from these Benches the noble Baroness, Lady Stedman, asked how the needs element will be decided between authorities. I think that this question is even more pertinent in the case of Scotland, where the difference in needs between, say, oil-rich Aberdeen and the poor, remote areas of Achiltibuie and Altnabreac is indeed very much greater than some of the differences in other parts of the country.
It is said in the Statement that a fairer and simpler grant system will be set up to remove the necessity for the present system of penalties against local authorities. Penalties against local authorities are to be removed by the Government because they are an invention of the Government and a "fairer and simpler grant system" really has nothing to do with the matter. They then go on to say that comments on these proposals are invited by 31st July. By the time the comments are collected and collated the legislation will be in draft, and we in your Lordships' House will have had no real chance to debate or argue the case which has been put by those who wish to comment. Indeed, in no place will real discussion take place on these important matters before the legislation comes in front of us. I should like to know what opportunities will be given to discuss these matters on the basis of the information that is already in our hands if not on the basis of the comments which have been asked for by 31st July.
I agree that the present rating system is unfair. It was unfair to revalue in Scotland when that did not happen in England and Wales. It is even more unfair then to index that and change it without giving people time to

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comment and discuss the changes. Does the Minister agree that government control will be increased, and that local income tax would provide better accountability, reduce local government dependence on central government and reduce even the government-imposed income tax?
4 p.m.
Lord Gray of Contin: My Lords, I am grateful to the noble Lord, Lord Ross of Marnock, for his comments and to the noble Viscount for giving the view of the Alliance parties. I did not expect either of them to give the Statement a word of welcome; indeed, it is their duty as the Opposition to pick holes in it as much as they can. The noble Lord said that we had been here before; when I heard his speech I too realised that. It was the speech that we hear from time to time: a general resume of what the press says, a general condemnation of the Government and a further rehearsal of what we have done in the past. What he failed to say is that, while we may have been here before, we have never followed this route, which is precisely what we were condemned for not doing in the past.
Lord Ross of Marnock: No, my Lords.
Lord Gray of Contin: Oh, yes, my Lords. We gave a pledge that we should find something to replace the present rating system. We did not come up with anything and for that were taken to task vigorously during the last election campaign. We have looked again at the situation and have come up with a scheme that we believe is better and more fair than the present system, and which will benefit a great many people. It is strange if the noble Lord or the noble Viscount can defend a scheme under which a poor, widowed pensioner pays the same amount if she happens to live in a similar house to a married couple with three sons, all of whom are working. I am sure that they do not really believe that.
Lord Ross of Marnock: My Lords—
Lord Gray of Contin: My Lords, the noble Lord has made his speech, and he asked one or two questions which I shall try to answer. He is a pensioner and appears to be happy with the situation, but I assure him that plenty of single pensioners in not nearly such comfortable circumstances will be a lot happier.
Single parent families will also benefit. There is to be a shift in the burden on taxpayers from householders to non-householders who will be brought into local tax for the first time. It is only fair and just that the people who live in the community, use its services and can afford to pay for them should be asked to make a reasonable contribution. Most important of all, the fact that they are making a contribution in the community will introduce a degree of accountability. In other words, if they live within a high-spending local authority they will want to know why that is so when they are making a positive contribution.
I was surprised that the noble Viscount introduced the question of local income tax. If he is dissatisfied
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with this scheme, let me assure him that the complexities and difficulties of local income tax would cause him even more concern. We have 56 district authorities in Scotland. With a local income tax each would be responsible for its administration. Each would fix its own level of tax.
Lord Ross of Marnock: Not necessarily, my Lords.
Lord Gray of Contin: My Lords, it means that there could conceivably be a wide range of taxation within Scotland. I hardly imagine that that would be popular.
The noble Viscount also asked about the national index. The ultimate intention is that there will be a national index from which the non-domestic ratepayer will be taxed at an agreed percentage. The noble Lord, Lord Ross, talked of the difficulties that he envisaged. He spoke about the register, but I cannot see that that is a major difficulty. He referred to a poll tax, but this is nothing to do with a poll tax. It will have nothing to do with the register of electors. There will be a separate register altogether which may contain the names of foreign nationals living in this country. Everyone living in a dwelling house in this country will appear on the register. It will be the responsibility of the householder to fill in the return of those who live in the house, and if he or she does not it is a chargeable offence. So there does not seem to be a great difficulty about that.
A degree of simplicity will be introduced. Those who pay will understand why they are paying what they are paying. Changes in tax bills should directly reflect councillors' spending policies and will not be obscured for complex grant reasons.
The noble Viscount mentioned taxation without representation. If we leave aside the contribution from national taxes and focus on rate income alone, the domestic ratepayer with the vote pays about 31 per cent., while those with no direct voice at local elections pay more than twice as much at 69 per cent.
Viscount Thurso: My Lords, can the noble Lord explain how a shopkeeper will suddenly be enfranchised—
Lord Gray of Contin: My Lords, at the present moment 3·9 million Scots have the vote. I want to develop this because this was a point that was raised. About 1·9 million are householders and thus liable to pay rates. The other 2 million are not billed directly and do not personally have to make any payment to their local authority. A proportion of those are spouses of ratepayers, but many of them, and the bulk of the other members of ratepayers' households, may have little idea of the cost of local services.
Furthermore, there are income related rebates financed almost entirely out of national taxation. Of the 1·9 million householders, only 1·1 million pay full rates. About 0·4 million receive some form of financial assistance in paying, and the remaining 0·4 million pay no rates at all. In effect, the last group know that they can safely vote for the more expensive local services without having to pay a penny towards them.
The local shopkeeper, businessman and industrialist contribute a large amount under the rating system and yet have no voice whatever locally for their

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contribution. We feel that that is wrong, and that is why we want to see the situation improved. The reduction in the rates will be balanced by the amount which is raised from the community levy—the community tax.
The new grant system was also mentioned by the noble Viscount. The Government aim to give councils grants which will allow them to provide similar levels of services to local residents at a similar community charge. There are two new main elements of grant. The first is needs grant, which will compensate authorities for the difficulties created in the cost of providing a standard level of services in the different areas of Scotland. It will be paid to each authority to meet the difference between its own expenditure need per adult and that of the authority in Scotland with the lowest assessed need per adult.
The second is the standard grant representing a uniform level of contribution from the national taxpayer to the cost of local services. It will be paid at a flat rate per adult to all areas. I did say that there was a six-month period for consultation. It is the hope of the Government that there will be wide consultation on this paper and that suggestions and comments will be forthcoming from a wide cross-section of those living in Scotland. With those remarks, I do not think that I need say more at this stage.
Lord Campbell of Croy: My Lords, I too should like to thank my noble friend for repeating this Statement drawing attention to particular factors affecting Scotland. I do not need to ask my noble friend whether he is aware that any alternative to the present rating system is bound to run into objections and difficulties. He has already heard some of them this afternoon, although some may be based on misapprehensions of the new scheme announced yesterday. But is my noble friend aware that none the less, there will be a widespread welcome in Scotland for this confirmation that domestic rates are to be abolished there, and within the life of this Parliament?
I should like my noble friend to confirm my understanding of the two Statements, yesterday and today—that it is proposed that domestic rates will disappear in Scotland before that happens in England and Wales. Is my noble friend aware that the new scheme proposed will be examined closely, I am sure, in all parts of your Lordships' House and also in detail in Scotland? Is he also aware that when the legislation eventually comes forward, we shall all of us be looking for ways in which we can improve the Government's scheme and, if possible, make it fairer to all parts of the population in Scotland?
Lord Gray of Contin: My Lords, I am most grateful to my noble friend who, of course, had great experience of the whole question of rates when he was Secretary of State for Scotland. Yes, I can confirm to him that it is the Government's intention to legislate in the forthcoming Session of Parliament—the Session, as the noble Lord, Lord Ross of Marnock said, that will start presumably in November this year. We envisage that from the end of the passing of the legislation there would be a phasing-in period of three years. I can confirm that also to my noble friend. I am
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grateful to him for the welcome that he has given the Green Paper. I hope that he may consider giving us the benefit of his experience in our deliberations upon it.
Lord Carmichael of Kelvingrove: My Lords, while thanking the noble Lord for making the Statement, may I ask him whether he can clear up the question of the timetable? The noble Lord says that we shall have until the end of July for consultation. So comments which are bound to be fairly voluminous and many of them expert, will only have been received by that time. After that, the Government will need to consider them. Is the noble Lord suggesting that a Bill will be presented early in the next Session? If so the problem arises that the Bill cannot be very thorough. We have had a number of pieces of Scottish legislation in respect of which new clauses have been written while the Bill is going through the House as the Government re-think their policy. On the other hand, the Bill cannot, surely, be left until too late in the Session because it will be an extremely controversial measure. Is the noble Lord aware that it will take a long time in the other place and, I am sure, a long time here? The Government would seem to be very optimistic if they believe that they can get a proper Bill out of what I consider a botched Green Paper within the proposed timetable.
Lord Gray of Contin: My Lords, as I indicated earlier, the Government have not just suddenly started thinking about this. The Government have been thinking about it for many years. They have not proceeded until now because there have always been difficulties and objections to the solutions which were being canvassed. It is only after great thought that the Government have been able to come forward with this proposal. So a great deal of the thinking has already been done. But the noble Lord is perfectly correct. There will be a great deal of effort needed from the end of the period of consultation and during the period when representations are being considered by the Government before a Bill can be finalised. I have little doubt, however, that the Scottish Office, with its usual keenness to get on with the job and having some excellent draftsmen available to it, will produce something in plenty of time for us to see it go through during the next Session of Parliament.

British Housing Inquiry: Report
4.15 p.m.
Debate resumed.
Baroness David: My Lords, I should like to thank very sincerely the noble Lord, Lord Seebohm, for initiating the debate. This is a very important and a very challenging inquiry. After many years in which the subject seems to have been accorded very little or only casual notice, this report has brought into sharp focus the lamentable state of housing in Britain. It has come out almost at the same time as the Department of the Environment's inquiry into the condition of the local authority housing stock, the Royal Institute of British Architects' Decaying Britain, and, also Faith in the City. Their effect has been cumulative and constitutes a damning indictment of government housing policy, or rather the Government's lack of

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housing policy, in spite of the supposed impartial nature of the inquiry.
The members of the inquiry were deliberately chosen not on any party political ground but for the individual contributions that they could make. My only criticism of the make-up of the committee is that it was short on local authority representation. But the report from this very varied group of people was unanimous. It was also short. I should like to thank and to congratulate most warmly the members, the Duke of Edinburgh for chairing the inquiry—it would have been very nice if he had been here today—and the National Federation of Housing Associations for initiating it.
The report has been welcomed and praised in almost every quarter, the exceptions being the Tory Daily Telegraph and Daily Express with surprising and unwarranted personal atacks on the Duke. The praise must have given great satisfaction to the members. They deserve the praise because whether or not one agrees with all the recommendations they have forced everyone involved in housing affairs to take a fresh and radical look at the multiple problems that exist. New solutions have been proposed. The diagnosis of the problems no one can disagree with. There is an acute housing shortage with fewer houses being built—below 200,000 a year in the 1980s compared to over 400,000 in the late 1960s.
The housing stock is deteriorating in every tenure. The number in serious disrepair is increasing; slum clearance is slowing down. There is a lack of choice. One must agree that the administrative and legislative framework is rigid and inflexible. Housing is increasingly compartmentalised into sectors and tenures that deny choice, mobility and diversity, which are of course what modern conditions demand. Social divisions result. We are in danger of having two classes, the owner-occupiers and the council tenants, who will find themselves, after the better council houses have been sold, increasingly welfare tenants concentrated in second-rate housing in a deprived tenure and carrying, as the report says, the stigma of failure. I was concerned to hear what the Minister said about the social obligations of local authorities in providing housing. It sounded to me as if he was prepared to go along with that sort of situation.
Again, we can go along with the reasons that the committee gave for the housing shortage. One is the lack of capital investment both overall and in the public sector. The Government's expenditure plans, as the noble Lord, Lord Seebohm, said, show a decrease of 54.6 per cent. between 1979–80 and 1984–85 in real terms. And now it is more. Everything else has increased, albeit education by only 1 per cent., except for environmental services, reduced by 6.3 per cent., and one can link those with housing.
A second reason is the lack of private investment in rented housing; and a third is the inadequate investment in improving and maintaining the existing stock, both owner-occupied and owned by landlords, private and public. According to the DoE's own figures, £19,000 million is required now for renovation of the local authority housing stock.
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The Minister mentioned £200 million for repairs but one has to take that in relation to the overall reduction in the allocation for housing. We would agree that the current financial framework is thoroughly unsatisfactory and contributes to the imbalance between owning and renting, the decline in the privately rented sector, the constraints on development in the public and housing association sectors and the inadequate maintenance and improvement levels in all sectors. Where we do not agree in all respects with the report is in the way to break out of the acknowledged straitjacket.
I shall tackle the thorniest problem first, and the one which has had the greatest publicity—mortgage interest tax relief. This has to be looked at and radically reformed. I suggest that the members of the inquiry were perhaps a little politically naive to think that it could be abolished even if by degrees and over a period of 10 to 12 years. With 64 per cent. of households owner-occupied there are too many to offend and frighten.
A system of help to home owners is likely to be with us as long as income tax remains, and the Labour Party has announced that it will not abolish MTR but will reform it. In the housing document Homes for the Future, published last autumn, it says:
"The intention of financial help with mortgages must be to direct assistance in accordance with housing need, income levels and housing costs. It is unfair that those on five times average earnings receive so much more in relief than poorer families. Therefore we will limit tax relief to the basic rate of 30p. In addition, to help first-time buyers in the early years of a mortgage, we propose to restructure the system and make available index-linked mortgages to those who need lower initial payments".
These proposals will go some way to removing the anomalies, inequities and complexities of current assistance with housing costs.
Limiting tax relief to the basic rate should save a very substantial sum, which can be redirected towards a new package of help to first-time buyers and for maintenance and repairs for those owners without the necessary funds to keep up their property. Reform of this sort should have the effect of preventing house and land prices rising so fast. They have been rising in most areas much faster than inflation.
As a postscript to this discussion of MTR I ask, is it fair, is it right, that the limit a married couple can claim is £30,000, whereas if an unmarried couple are living together they can each get a mortgage of £30,000?
The treatment of owner-occupiers with MTR is only one of the ways in which they benefit from the present tax system. They have to pay no capital gains tax on real capital gains realised on their homes. And the removal of Schedule A—which the noble Lord, Lord Seebohm mentioned—has exempted them from paying any tax on the benefit of living in their property.
Four EEC countries tax this benefit. I wonder whether, if harmonisation of EEC taxes comes about, it could mean a return to Schedule A taxes. The Labour Party is currently undertaking a review of the benefit and tax system as they are very much aware of the unfairness that exists in the differential treatment of tenants and owners. There is means testing if tenants are helped. There is none for owner-occupiers.

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What we want is equality of treatment between those who rent and those who buy. There is certainly no equality now.
A few further criticisms of MTR, as it now is, are these. It provides no stimulus to new house building or modernisation or maintenance. As the report says:
"Loans that attract tax relief can 'leak' out of housing into the purchase of consumer durables, holidays and current expenditure. Rather than borrowing from any other sources, many home owners find ways of borrowing on the security of their homes and obtaining tax concessions from the Exchequer. The Bank of England estimate that some £7 billion may have been withdrawn from the private housing market in 1984".
That £7 billion could have built quite a lot of houses. I should also like to ask why MTR is not shown as Government expenditure on tables of local and central government support for housing.
I turn to the state of the housing stock. The older owner-occupiers often have great difficulty in finding money for repairs and maintenance and it should be possible for them to borrow and get tax relief for this purpose. Another way of encouraging owner-occupiers would be to allow repairs to be set against tax. Improvement grants should continue but the system itself needs improving because it has not, as the report says,
"been fully effective in reaching the poorest and most vulnerable occupiers, nor does it always reach the worst properties. This is partly because of the complexity of the system, partly because of the amount of effort the occupiers themselves must make in getting a grant and organising the work, and partly because of the financial contribution the owner must make".
It is also important that the improvements should be done by areas. On that point the report says that whole areas should be tackled rather than individual properties, and that local authorities can help by,
"encouraging the improvement and repair of the privately-owned housing stock through the administration of area policies and the grant system, and through the establishment or encouragement of agency services".
The Labour Party has said that VAT on improvement works should go; it has helped the cowboys—and householders and reputable house builders need protection from them. The report makes a number of sensible suggestions to help in this area and agency services to advise and protect could be useful.
As for improving and modernising council houses, financial restraints by government have made this very difficult indeed. But I shall not go further into the finances of housing, as my noble friend Lord Dean is to deal with this when he winds up.
I want to float just one idea. Many noble Lords will remember the Public Loans Board, where the local authority borrowed at subsidised rates of interest. I wondered whether any thought had been given to this recently.
We would agree with the report that the financial help should go to the tenant, the occupier. If a needs-related housing allowance can be satisfactorily managed, that would be good. One has uncomfortable memories of the appalling difficulties and delays that were encountered when housing benefit was introduced. If a simpler system that would be understood by those wishing to make use of it were created and if there could be minimum bureaucracy, that would be good.
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I turn to rents. The suggestion of rents based on capital value is radical and interesting and should be looked at. We do not, however, want to move towards free market rents. There is no doubt that rent fixing in this country is in a complete mess. The sheer jumble of arrangements means that the subsidies via the DHSS and DoE are just as haphazard and undirected as the other subsidies such as tax relief. The new government proposal to force everyone to pay 20 per cent. of their rate bill adds yet another complication. The fair rent system is not working as it should. Local authority rent fixing is part of the mess. We can find identical homes in the same road built at the same time housing similar families with massive variations of rent if there is a local authority boundary down the middle of the road. The one factor which such homes have in common is a current capital value; and to use this figure as a basis for rent fixing would be fairer. The rents would reflect popularity. Some rents would fall. If the same basis of rent fixing was used by all sectors, this would increase equity between tenants and provide better opportunities for movement within the rented sector. It would help in the formulation of a coherent, universal housing allowance, which is what the report recommends.
I see a danger, however, that there might well be areas where few would want to go, where rents would be low, and where all the difficult and more impoverished people would collect. We do not want ghetto housing. If capital value rents were to be introduced in the public sector, it would take away from the freedom of the local authority in formulating its housing plans. Local authorities are democratic and accountable to the electorate and, therefore, to their tenants; private landlords and housing associations are not. So long as housing committees base their rents on historic and current costs, and the housing revenue account is in balance, there is something to be said for allowing them to run their own affairs and to enjoy the experimentation and diversity that would result. Noble Lords will see that I am a little ambivalent on this matter.
I turn to the private rented sector. Everyone regrets its decline; everyone wishes for there to be greater choice. Many people—the young, the elderly and the mobile—prefer renting to purchasing. It is also undoubtedly wiser for many people to do so. Indeed, 10 per cent. of families accepted by councils as homeless in the first nine months of last year defaulted on their mortgage payments, adding to the number of families living in bed and breakfast accommodation, at enormous cost to the local authorities. There were 7,200 such families at the end of 1984.
Even if owner-occupation caters for 74 per cent. of households by the year 2,000, that will leave a significant minority needing to rent. The report estimates that 107,000 new houses for renting may be needed each year. Current building since 1980 has averaged 58,000 a year, and it has been almost entirely carried out by local authorities and housing associations. The report suggests that, with capital value-based rents and some certainty of a stable situation, major institutions may be willing to invest, if not themselves providing and managing the properties. Approved landlords, housing associations, housing co-operatives and building societies would

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take on that role. I hope that the members are right. However, I confess to grave doubts about this possibility in spite of the presence of the chairman of the Midland Bank and the general manager of the Nationwide Building Society among the members. I fear that there will be a continuing decline in the private sector. That means that the local authorities and the housing associations will be the major providers of rented homes.
However, the local authorities will need to make major changes in housing management to provide the service which tenants want and to move away from an outdated paternalistic role. Tenants should have a far bigger say in the management of their homes and environment and in their design. The report encourages that. It sees a more flexible role for the local authorities with very much more spread in the management of estates. Co-operatives of tenants are suggested as one solution.
The report recognises the need for a strong democratic base for housing policy, but sees the local authority in the future more as a co-ordinator and enabler than just a provider. It must remain responsible for the homeless and the more vulnerable in our society, and we would agree and hope it can be brought about that:
"The homes to which homeless people have access must be sufficiently numerous, varied and geographically dispersed to prevent the build up of ghettos and stigmatised housing where the poorest and most vulnerable are concentrated with very little hope of escape".
While speaking of the vulnerable, let me say that local authorities should be supported in their efforts to keep the houses they have for the elderly. The tough policy of refusing large numbers of exemptions applied for by local authorities—the policy currently being followed by the DoE—makes it very difficult for them to look after the vulnerable, and this at a time when authorities are denied the funds to build new homes. The Government's dogmatic belief in the hallowed right to buy and owner-occupation shows little sympathy with the problems which local authorities face in housing the old and frail.
Another role which the local authorities must perform is to ensure that minimum standards are met and they must take enforcement action. That is important if property in all sectors is to be well maintained. The environmental health officers play the main part here; and I agree with them, and the report, that it is not right that they cannot issue enforcement notices on the council when the council is the landlord. That should be changed.
Housing has been a major responsibility of the local authorities since 1919. It will go on being a major responsibility and the authorities will, without doubt, be the main providers of rented housing. Local councillors and their officers are the right people to decide on the needs of their area, and to decide where and what to build. But the freedom of local authorities has been deliberately curtailed by this Government. By their control of their finances they have prevented them from being able to plan ahead for a number of years rather then having to cope with annual budgeting forced on them by the Treasury.
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I hope that this debate will alert the Government to the appalling crisis in this country and stimulate them to some action. Nothing is more important than to have a home that is safe, warm, in good condition and in an area and an environment where you want to live. The Government, with their emphasis on home ownership, do in part recognise that, but thousands and thousands of families do not have that home, either because sufficient houses do not exist or they are in the wrong place or their owners and local authorities cannot afford to maintain them. Housing has always had to be subsidised, as the noble Lord, Lord Seebohm, said in his opening speech. Are the Government going to have any change of heart?

"Paying for Local Government": The Welsh Approach
4.36 p.m.
Viscount Long: My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Wales on Paying for Local Government—the Welsh Approach. The Statement reads as follows:
"With permission, Mr. Speaker, I should like to make a Statement.
"The Government's proposals for a fundamental reform of the way in which we pay for local government were presented to Parliament yesterday by my right honourable friend the Secretary of State for the Environment.
"While the Government's objectives and the principles underlying the proposals for reform apply to the whole of Great Britain, the structure of the reforms has been tailored to the particular circumstances of each country.
"The major differences between the proposed package of reforms for Wales and those for England are as follows. The relatively low level of domestic rates in Wales, and the fairly small variation between authorities, will allow rates to be eliminated earlier in Wales than in England. It should take only six years. And in half of Wales they are likely to be phased out within three years.
"The smaller range of domestic rates in Wales also allows us to consider two options for the transition to the community charge. The first—a common percentage reduction in rates—is the same as in England. The second involves using the community charge to cut rates by a standard cash sum within each district area. We are seeking views on these two options.
"The relatively compact range of non-domestic rate poundages might make it possible to move to a uniform non-domestic rate in Wales in only three years.
"The smaller variation in average non-domestic rateable values in Wales also offers the prospect of allowing Welsh local authorities the freedom to 'top up' the yield of the uniform business rate by—at some stage—10 per cent. in Wales, rather than the 5 per cent. flexibility proposed for England.

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"On the capital expenditure front, the Green Paper suggests that the control regime need not be exactly the same as that in England. My preference—at present—is for authorities to continue to have direct access to their capital receipts, within a thoroughly overhauled control system.
"Chapter 9 of the Green Paper sets out these proposals in more detail".
My Lords, I have lent my copy of the Green Paper to the Opposition, but I have it in Welsh! The Statement continues:
"A Welsh language version of the chapter is available from my department on request.
"The need for councils to be made fully accountable for their decisions has been dramatically highlighted by the succession of reckless rate increases proposed by county councils in the last week or so. The Government's proposals would significantly reduce the risk of such irresponsible action. They would ensure that authorities would need to go to their entire electorates to find extra cash, not just to the minority who now pay domestic rates. Furthermore, industry and commerce would be secure in the knowledge that they could not be used as a milch-cow for excessive spending.
"The Government hope that the Green Paper will be carefully considered and commented on not only by the major interests and representative bodies in Wales but also by individual tax and ratepayers; those whose contributions actually pay for local services.
"The consultation process provides a unique opportunity for all those who feel aggrieved at the present unacceptable situation to make their views known in writing to my department. I urge them to do so."
My Lords, that concludes the Statement.
Lord Prys-Davies: My Lords, Carwn ddiolch i'r Gweinidog am ail-adrodd y datganiad.
We thank the noble Viscount the Minister for repeating the Statement made in the other place by his right honourable friend. I do not propose to invite the House to embark on a third debate on paying for local government services. It has been said that the Welsh Office has been one of the power houses behind this Statement. If that is so, I find it odd because I am not aware of any great demand in Wales for the reform of the rating system. I should have thought that the Welsh Office might have addressed itself to more relevant issues for the Principality. Because the Statement foreshadows changes which are unwelcomed and uncalled for, it obviously has great significance for the Principality.
I should like to ask the Minister five questions: first, will he confirm that the Welsh county councils have not embarked upon a succession of reckless rate increases, so that his Statement has no relevance whatsoever in the Welsh context? Next, given the eagerness and the keenness of the Welsh Office Ministers to design a new rate formula for England, Wales and Scotland, can he assure the House that their keenness will not be allowed to affect their judgment as
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to whether the formula is to the advantage or to the disadvantage of Wales when the round of consultations is completed?
Thirdly, will the Minister assure the House that any new rating system that will emerge will not be applied in Wales before it is applied across the board in England and Wales? I ask that question because three times in this short Statement the Minister has suggested that it might be possible to introduce the new scheme in three years' time. We have no wish for the reforms to have a trial period in Wales.
Fourthly, the new uniform business rate represents an enormous piece of centralisation. We in Wales have an ancient attitude of looking suspiciously at centralising forces. So in determining the business rate will the Minister assure the House that full regard will be paid to the particular and to the distinctive social and economic needs of Wales, even if that should mean the introduction of a separate uniform business rate for Wales?
Finally, will the Minister confirm that all the Welsh local authorities, including the community councils and their associations, will be given adequate opportunity to present their views to the department and that the Secretary of State himself will meet their representatives if a meeting is requested to discuss the proposals? Will he give the assurance that there will be time for consultations, that the consultation will be genuine and that there will not be created an impression on the lines of: "Look, this represents our thinking. This is the way it will be. We have made up our minds and we are sticking to it"?
4.45 p.m.
Lord Tordoff: My Lords, it may come as a bit of a surprise to noble Lords to see me rising to deal with Welsh rates. I regret that none of my Welsh colleagues is here. The only claim I can have is that I am a Mancunian and one of the greatest Welshmen of all time was born in Manchester; a former Leader of the Liberal Party, David Lloyd George.
I apologise to those people who are taking part in this important debate that we keep interrupting. I look forward as much as anybody to hearing my noble friend who will speak next, but there are a couple of questions I should like to ask the Minister. First, on the industrial rate, as the noble Lord, Lord Prys-Davies, has said, this appears to be a centralising measure. Is there any way in which distinctions can be made in the future between what might be described as industrial green-field sites, or the newer industrial areas, and the older derelict areas in Wales? It seems to me that this system will impinge unfairly on the older and more rundown areas of industrial Wales.
Secondly, I noticed yesterday that in another place the right honourable Minister was able to give my honourable friend the Member for Bermondsey some specific figures of the impact of local income tax on people who live in his constituency. The Minister was apparently unable to give any figures for the impact of this system on the English counties. Now that the Government have had another 24 hours to think about it, can we have some idea of the differential impact upon various Welsh counties of the proposals that are made? I cannot believe that these figures are

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not somewhere in the Ministry. If they are, can we have them on the table here and now?
What compensation can be given to those areas of Wales where the local authorities have sparse populations, because it appears to me that they will be unduly affected by these measures?
Finally, on a subject which was also brought up in this House yesterday, are the Government yet able to say whether students will have to pay the community charge and, if so, whether there will accordingly be djustment to student grants?
Viscount Long: My Lords, I am most grateful to the noble Lords, Lord Prys-Davies and Lord Tordoff, for welcoming this Statement and appreciating that the Government are trying to deal with certain of the problems.
Lord Stoddart of Swindon: My Lords, my noble friend was not giving it a welcome.
Viscount Long: My Lords, perhaps I may continue with my reply. First, the noble Lord asked me four questions, if I may refer to them. He first challenged me to say which the reckless spending counties were and asked whether there were any in Wales. I have to say, "Yes". An increase of up to 28 per cent. has been proposed. Such rises are totally unjustified and newspaper reports suggest that one authority is responsible, South Glamorgan. The noble Lord might care to look into that. He will undoubtedly find that that is true.
The noble Lord then asked me about rating. Rating will go right across the board and will be a standard rating. Therefore both the domestic and the industrial side will know which way they are going. The system will be governed by the Secretary of State for Wales and not from England. It will go towards the different authorities in Wales.
The other point to which the noble Lord referred was the business side in relation to industry. The noble Lord, Lord Tordoff, mentioned this subject. The fact remains that industry at this stage is being revalued for valuation in the future. Therefore I cannot give a comment on what will be the outcome of that. The industrial authorities and other bodies will be consulted. However, what has been asked by the Secretary of State is that all bodies should now go away for six months, find out what they require in the new Green Paper, and then report back. This will take approximately six months and then at a later stage the Government will be able to know what they need.
The noble Lord, Lord Tordoff, mentioned students. Again, as the noble Lord would know, there is an allowance in students grants for housing costs. In addition, local authorities receive payments from universities in respect of students living in halls of residence. Students who live in private rented accommodation contribute towards rates in their rent. Students who live at home may or may not contribute to their parents' rates bills. The precise arrangement for dealing with this aspect of the community charge will need to be fully explored during the consultation period. I hope I have been able to answer those questions.
Lord Tordoff: My Lords, with respect to the noble Viscount, I do not think he has answered my question on the differential impact on the Welsh counties.
Viscount Long: My Lords, I apologise to the noble Lord. The areas of the highest unemployment, mid-Glamorgan and Clwyd, will benefit from the move to a uniform rate.
Lord Prys-Davies: My Lords, two of my questions are outstanding. I asked whether there ought to be a uniform business rate for Wales, specifically for Wales. I asked that question. I also asked for an undertaking or an assurance that the reform will not be introduced in Wales earlier than it will be introduced in England.
Viscount Long: My Lords, I am so sorry. I quite agree with the noble Lord. Yes: eventually, over the time, Wales will have its own administration on all these matters. Thus the answer to the noble Lord is yes.
Lord Parry: My Lords, it is possible that the noble Viscount the Minister read too much into the Welsh sentence with which my noble friend began his address. He did not in fact welcome the Statement; he commented on it and indeed specifically remarked that there was no welcome for it in the valleys or in the hills of Wales because there had been no demand for it.
It is therefore important that it should be said in this debate that there has been going on in Wales for the past 25 years a social, industrial and indeed almost diplomatic revolution. This has changed the nature and the face of the economy and indeed the domestic towns of Wales. If the noble Viscount on the Front Bench knew the degradation of some of the communities at the heads of the valleys in Wales, and if he knew the effect that there was now on the small market towns of Wales as a result of changing agricultural patterns and the effect of the EC upon them, he would realise that Wales and those who administer Wales—because we have now had a Secretary of State for the entire period that he has been in the Government and subsequently in the Cabinet—have been concerned to bring about as rapidly as possible a change in the basic economy. There has been some success but the communities have paid the price.
There has been a strenuous effort from the Welsh Office under successive administrations. There has been a strong and determined effort by the industrialists in Wales to head off the decline. However, there has also been a specific contribution by the local governments, knowing their own areas, knowing the necessity for investment within them, and a very strong participation in the change that has been taking place. I say almost apolitically that it has seemed to us that the ability of local government in Wales to recognise the changes and to participate in, for example, the redevelopment of tourism, the specific investment in tourism, to take up some of the slack that has fallen out from the industrial economy—
Noble Lords: Oh!
Lord Parry: I should like to finish this because I am not entering into a debate here.
Noble Lords: You are.
Lord Parry: My Lords, believe me, I am not entering into a debate. What I am saying here—and saying it with a Welsh accent, speaking for Wales for a moment—is that I want it to be understood that there is this considerable discrepancy. The Statement says in regard to Wales that at least partial reorganisation of its rateable base can take place within three years under an administration that does not have three years to run. The Minister then says, in answer to my noble friend, that he wants us to go away and consider it for six months. Thus six months of those three years are taken up. Indeed, the local authorities at the moment are under considerable pressure to measure up to their own burdens. I shall sit down because I am giving notice of my intention to follow this very carefully in subsequent reports to the House.
Viscount Long: My Lords, I am very happy to hear that the noble Lord is going to follow it up and I am very unhappy to hear that he is very unhappy about it. But he has not offered me or the Government any suggestion of any better form of rates at the moment. Perhaps I may inform the noble Lord that the ratepayers in Wales are as strongly in favour of a fundamental change as their counterparts in England and Scotland, particularly the hard-pressed business people.
Lord Sefton of Garston: My Lords, may I ask the Minister whether or not he can give us examples of the reckless spending to which he referred previously; or, like the rest of the Government, does he rely on newspapers as evidence of the need for change?
Viscount Long: My Lords, I have already done it.
Lord Sefton of Garston: My Lords, I am sorry. I did not hear.
Lord Cledwyn of Penrhos: My Lords, with great respect to the noble Lord, with regard to the Statement and its reference in particular to reckless spending in Wales, we understand that the noble Viscount was repeating a Statement made by his right honourable friend in another place and therefore is not responsible for it. However, will he tell the House that the evidence that he has produced of reckless spending does not support the contention? He named one county council out of eight county councils in Wales. Is he aware that the known reputation of Welsh county councils is one of very careful spending indeed? Will he now concede that to the House and assure the House that he will discuss this with his right honourable friend as soon as possible? Otherwise, the people of Wales will be less civil to the Secretary of State than they have been over the last six years.
Viscount Long: My Lords, perhaps I may say to the Leader of the Opposition that I shall take on board the latter part of his remarks. I am challenged on naming. I named one body and I apologise that I have not named more. However, I shall take it on board for the Secretary of State.
Lord Sefton of Garston: My Lords, I tender my apologies if I did not hear the Minister correctly. However, I checked with my noble friends and, like me, they did not hear any examples of reckless spending. They heard the Minister mention South Glamorgan and then go on to refer to newspaper reports on reckless spending. Does the Minister have any examples of reckless spending other than South Glamorgan?
Viscount Long: My Lords, I have just answered, so far as I can, the noble Lord the Leader of the Opposition.
Lord Sefton of Garston: My Lords, then, with all due respect, may I point out that it was not a very satisfactory answer?

British Housing Inquiry: Report
4.59 p.m.
Debate resumed.
Lord Crawshaw of Aintree: My Lords, on behalf of myself and my noble friends on these Benches perhaps I may express our gratitude to the noble Lord, Lord Seebohm, for the opportunity of debating what is a most interesting and vital report. It is not merely a report on housing, because the very basis of this is something that could destroy our society as we know it; and I say that advisedly.
There is not the slightest doubt that over a number of years many people, particularly in our inner cities, have lived in circumstances that have been a disgrace. If I may refer to the former Minister for the Environment, Mr. Michael Heseltine, he is on record as having been to Liverpool and said that he did not know that people lived in such circumstances. What is said in this report is quite right: we shall not solve the problem by throwing money at it. Money has been thrown at the problem. What has not been done is to think through how that money is to be spent to the best advantage. I think that this report highlights some of the ways in which that can be done.
In the other place this past week we have had several last war examples: Dunkirks, Alameins and so on. To me this is Operation Overlord getting our troops into Europe. Anything else after that had to be planned in detail. This is a report which highlights different categories of people and I want to say that what impresses me is that the emphasis is on what is fair between one class of person and another. I thought that until I heard the argument that was going on over the Dispatch Boxes this afternoon as to what is fair and what is not fair; and I came to the conclusion that I was a little naive in thinking that normal people knew what was fair. I do not think it is fair to change the rules of the game when people are in the middle of it. Therefore, if there is hardship to be suffered, obviously one has to take those things into consideration, because the money has to come from somewhere.
What I am more concerned about is that, assuming we get the money, assuming we can build, we have highlighted the different categories of people we have to take into consideration—home-owners, the elderly

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owners of property, rented property and so on. But after the last war and in the 1950s and 1960s we did pour money into houses, and I for one must take blame for what happened in Liverpool because I was on that housing committee for seven or eight years along with my noble friend Lord Sefton. We built monstrosities; we built slums; we built units; we did not build houses; we built estates; we did not build communities; and that is what we are suffering from in the inner cities today, because the people who were the lifeline in those communities in our inner cities have been sent to outlying estates where they do not know anybody, where there was no provisions made for shopping or adequate facilities for recreation and so on.
We destroyed communities. We destroyed so much in our generation. We say that young people today have no sense of responsibility because we as parents have failed to give them responsibility. Sanctions have gone from children; they have gone from them at home, gone from them at school. But there was a sanction. There was a sanction of a community. Lord help anybody who was caught breaking those sanctions; because if the parents did not know about it they soon would know about it! Now we have people living in areas who do not even know their next door neighbours. What terrifies me is that we are going to think out easy solutions to these problems and we are going to finish up in another 20 or 30 years with exactly the problems that we have today. Therefore when I say that this is the Overlord operation, what I believe ought to happen now is that there should be other committees of inquiry set up to find out exactly what sort of accommodation these different people want.
If public life has taught me anything it has taught me that I do not know the answers. Officials do not know the answers. Surprisingly enough, the people who know the answers are the people who are going to live in the houses. These are the ones we never ask what they want. If we do not ask them we are going to finish up in the same situation. Another encouraging thing from that is the co-operation that has to be given and the taking into confidence of the people who are going to be there. To that extent, I believe that it is a good report.
What is going to happen in regard to local authority housing? The suggestion is given that we are going to build more and more. If you look into any local authority housing system, it is almost inhuman. That is not a criticism of the people who are trying to carry it out. It is impossible to deal with individuals as individuals when you are dealing with thousands of people and when every day in your rooms you have callers saying, "I've got this fault; I've got this complaint and I've got this that wants repairing". I think we would be going down the wrong lane if we did that.
We already have the ideal thing—and here again I must declare a vested interest—in the voluntary housing associations. It may well be that they may be marginally more expensive to run. Housing associations have shown what they can do. I go round different properties owned by the association to which I belong, I cannot tell them from private property
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because the standard is kept up on them. Why is that standard kept up? It is because the associations are mostly small ones in which volunteers are giving their time to ensure that that property is run properly. I want to pay tribute to people who do much more than I ever do on these associations, people who spend days and days in the course of a week dealing with one committee after another. But I can tell your Lordships this: every month, through the main committee, the names of everybody who owes rent come before the committee. The names are known and people sit and ask why they have not paid the rent. They ask whether there are any problems within the family that could be helped. Everyone is an individual.
What used to appal me—and I never made any headway with this when I was on Liverpool council—was that I used to say, "Well, we are building these blocks of fiats and we are leaving all the doors open." They are just becoming public playgrounds, with all the vandalism that is going on. Would it not perhaps pay us to engage commissionnaires and have doors fitted and let people come in and out? Would it not be repaid over the course of a year? When you see some of what we have had to pay on some of those blocks of flats in Liverpool, it is clear that we could have paid a whole troop of commissionnaires to sit down there to make sure they were looked after. Such places would not be built for the executive class in London without putting commissionnaires down below. Why should it be done for anybody else?
Those are the things that I am interested in. We know what the problem is. All governments have not spent enough money on housing to make sure that it was right, and the money that has been spent has been spent in many cases in the wrong way. That is the problem. And what about rented property? Of course there is a need for rented property; although I believe that nine out of 10 families, given the opportunity, would wish to own their own home. This is an argument that I used to have when I was a member of the Labour Party. For many years I could see that there was sense in people being home owners. It gives stability to our society. The argument that I used to put forward was this: "What do you really believe you are giving these people whom you are so kindly looking after? They pay high rents. They cannot get the repairs done". When I was in the other place I did not mind taking housing cases for people in private property because I could do something about it. I could go to the medical officer and get an order put on the house and if the landlord did not do what was necessary then the corporation did it and charged the landlord. You could make progress.
However, with council property you could send in reports of things that wanted doing by tenants in that property; and if they ever got done it was because they became so dangerous that they had to be done. I used to say, "This is what you are doing to people you are putting into these places. What do you think you are giving them? They will die eventually and they will not even own a brick of that property". To me, there was sense in selling up council property. And what was the argument against it? The argument of course was that if you sell off the property you will not have a stock with which you can accommodate other people. That makes sense. But I never thought that we would be

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blessed with a government who would let you sell off council property and then retain the money and not allow you to spend it to buy new property. Never in my wildest dreams did I think we would ever have a government who would do that.
What is the sense in it? There is no reason why you should not sell off your property as long as you augment it with the returns you get. But the Labour Party has been proved right, for the wrong reasons. It is the Government who have proved them right—because now what are we left with? All the good council property has been taken up and the other is property that nobody even wants to live in, never mind buy. When the noble Lord talks about the number of houses in this country, we have more than we need—you could not give them away in Liverpool. We are talking about homes: the noble Lord is talking about units. There is a difference between the two, and until we appreciate the difference between them and realise what impact bad housing conditions are having on our social life we are going to store up for the future more and more trouble.
Is there any reason why two estates in Merseyside are being subjected to police investigation for drugs week in and week out?—it is because they have become the centres of drug trafficking. These are the problems we are building up. I have been responsible for building them up myself; but it is an arrogant sort of councillor who says that the planning people do not know best. They tell you, and unless you are very arrogant you accept what they say. It takes 20 or 30 years for you to find out that they were wrong.
I turn now to rented property. It is suggested that certain people should be allowed to have rented property which we should create. The memories of Rachman are too keen in my memory ever to want to go down the lane of allowing people to inflict high rents on tenants. And not everybody is a Rachman: quite kind people can be Rachmans. It is circumstances that drive them into it. As a person gets older he might have a property he is living in and so he lets it off. Circumstances get worse for such people and they turn round and say, "I'm not getting a very good return and I will put the rent up". Let us be very wary about going down the lane of private landlords unless that is done under the strictest supervision.
There are suggestions here as to how it might be done. For example, why not have housing associations? Why not have them so that every 1,000 or 1,500 houses have a committee which will investigate, week in and week out, how the people are faring in those properties? They will be able to investigate whether they are being looked after and so on. I believe that is the way it has to be done, because we do need a fund of rented property. I believe the way it could be done is for the Government to underwrite these associations, as they do other voluntary housing associations. If they underwrote them and did as the report suggests—guaranteed a 4 per cent. return index-linked—I believe that many pension funds would invest in them and we could build up a large store of rented property. When all is said and done, that is a vital need in many parts of this country, because people are becoming more mobile as the years go on. What is the alternative? If you move from the North
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and get a job in London, you sell your house in the North, and it would not buy you a garage down in London. So there is a need for rented accommodation.
Then we come to owner-occupiers. Much of the poverty in this country is behind lace curtains and it is in the houses of people who are owner-occupiers and now elderly—perhaps the breadwinner has gone and they are eking out an existence on a pension. The report says that those in owner-occupied houses—I think it is 67 per cent.—are getting no more than £82 a week, and some of the repairs run into hundreds of thousands of pounds. Thirty-seven per cent. of them would require three times the income they get at present in order to do the repairs that are required. These are the houses that are going from bad to worse—houses which at the present time, if somebody had the foresight and the ability to do it, could be renovated and would make ideal homes for families. But that would require making reasonable rented accommodation available for the people who gave up their houses.
We welcome this report and it is a very important one. It outlines what is wrong with our society as regards housing. I do not think it answers all the questions, but one would not expect it to. I want to see these other reports coming forward, saying what variations of rented property we should have and what variations for elderly people there should be—the sort of thing perhaps which is done by the housing association that I belong to. We provided quite a large number of homes in sheltered accommodation. You go round there and everything looks perfect, but gradually as you go and take part in various social activities with the people, as we do from time to time, and get to know the people personally, you realise the fear that is in most of their minds.
Because it is only sheltered accommodation and does not make any other provision apart from the sheltered accommodation, their fear is that if they become ill beyond a certain stage they will have to go into an old people's ward in a hospital. That is the fear going through the minds of people day after day. So what has the housing association done now? Because we realised that this was a problem, we took over or built two or three places and they give a certain amount of medical support and so on—of a basic nature—and when these people become incapacitated to such an extent that they cannot remain in their sheltered accommodation, they can move to the other accommodation where they will be coming across people who have been with them in accommodation before. These are just instances of what can be done, if it is done at low level, if the individual is considered.
Yes, it is going to cost a lot of money. I have not gone into the figures as to how many houses need to be built: they have been given. I think all the figures in the book have been given this afternoon. They are all impressive figures; but whatever the government in power they will have to face this problem if they are going to try to save our society. I should like to feel that this Government were going to do it. We are in a state, in Liverpool and other places, where unemployment is so high, where building workers have been on the dole for year after year and where so much requires to be done in housing. All right: nobody is asking for extra money. All we are asking for is some of the money that

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has been kept back and which came from selling corporation houses. That is all we are asking for. I think that if in fact the Government were to do that one thing, people might be more convinced that this Government intend to deal with the problem.
I finish with the words of Beveridge. When asked about the scheme which he put forward: "Can the country afford to do it?" his answer was, "Can it afford not to?"
5.19 p.m.
The Lord Bishop of Southwark: My Lords, in 1933, Cyril Garbett described the housing situation in our country, with 3½ million people in overcrowded or substandard accommodation, as
"a practical denial of the fatherhood of God."
Cyril Garbett was Bishop of Southwark before he became Bishop of Winchester and then Archbishop of York. He was a somewhat authoritarian, conservative figure, with a sharp mind for matters theological and moral. He was quite clear that the Gospel has to concern itself with fundamental human needs, such as adequate food, clothing, housing and education; and so, of course, was William Temple, his predecessor at York and author of Christianity and the Social Order.
I mention these two men, because Garbett's deep concern about housing in particular arose partly from his time as Vicar of Portsea before the First World War, and partly because as Bishop of Southwark he lived in Kennington. I am glad to be able in some small measure to continue his concern, because though the problem has undoubtedly changed, it most certainly has not gone away. William Temple will still be remembered by many here as a Christian leader who helped a whole generation to understand more clearly the dimension of justice in our national life. Both men stood in a long tradition of social concern, especially about housing, going back to the almshouses of the Middle Ages. It is from within that tradition that I want to speak today.
It was a very great privilege to be asked to serve on the inquiry into British housing chaired by the Duke of Edinburgh. The experience has considerably extended my knowledge of housing matters and finance, though I am well aware that there are still many gaps. At times, it was a disturbing experience as we began to grasp the full and growing extent of housing need and of poor living conditions, which many people in this country still face, and the facts about such things as the steady deterioration of the housing stock, some of which we went to see for ourselves.
But I should like as well to record my gratitude to the other members of the inquiry, with whom it was a great pleasure to work, to all those who gave evidence for the time and the care which they gave and which really did a lot to make the report as substantial as it is, and particularly, as the noble Lord, Lord Seebohm, has said, to our secretary, Richard Best—our indestructible and indefatigable secretary, I want to say—a man with a great flair for extracting the best from others and helping them to work effectively. The result of our endeavours is, of course, this report which your Lordships are debating this afternoon and the major recommendations which it contains.
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Your Lordships have already heard some of the first-hand evidence which tells us what is actually happening and the consequences of decisions, many of which were taken many years ago. We have heard this set forth by the noble Lord, Lord Seebohm, and the succeeding speakers with great care, and I do not want to cover much of the ground again. But I should like to expand and perhaps illustrate a little certain of the points which they made and which I believe still need to sink deeper into the public consciousness.
First, the private rented sector is declining more and more rapidly, apart from the luxury end. What does that mean in human terms? It means that there is now very little slack or flexibility in housing, whereby, for example, a young couple can get somewhere to live for a few years before they are in a position to buy their own house or to be offered long-term rented accommodation. That is a very great loss, and many of us must be only too well aware of what it is doing to people in that position.
Less clearly understood in the country at large, also, is the fact that the housing stock as a whole is in decay, especially much of it that is privately owned, and, as the noble Lord, Lord Crawshaw, reminded us eloquently, much of it above and around the lace curtains of the elderly. In such cases, housing improvement grants, though they are much greater than they were, are not enough, and the rate and extent of decay is getting larger every year. To renew or replace large parts of the housing stock, especially in our cities and towns, now needs very large sums of money, as your Lordships have heard, and it is, if you like, a wasting asset. It does not stand still.
Those of us who have any experience of trying to care for buildings will know that the cost of repairs compounds the longer you leave it. More particularly, most deck access and tower blocks are not only a disaster to live in, especially if you have children; they are a disaster for local authority housing, because they, in particular, most unexpectedly in view of their relatively short existence, need vast sums of money spending on them. As we have heard, this is estimated conservatively at about £19 billion to £20 billion and may well be a good deal more.
Again, how well is it known that the payment of housing benefit is still proving beyond the capacity of some local authorities to cope with promptly and accurately? I could tell your Lordships some both sad and amusing stories about what that has meant in human terms, with old people literally going without food and then, eventually, finding themselves with enough money to take a continental holiday. But that, surely, is not the point of the exercise.
This in turn—and I want to stress this very strongly—has compounded the problems of rent arrears, which are now horrific in some places, and weak management in some large municipal housing authorities, thereby aggravating the frustration of tenants at the lack of proper maintenance and control. So one might go on.
But as everyone knows—and as we knew very well on the committee—it is always easier to analyse problems than to suggest new ways forward, especially in a time of financial stringency. When we turned to that part of our work, I think we all had that written,

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as it were, over our heads, that we were not in the business of simply proposing the spending of vast new sums of public money. We therefore set ourselves to look at what was actually happening to the money which was already flowing into housing in one way or another, to see whether that money could be used more effectively to meet the problems we had now discovered and discerned accurately and, indeed, to see whether we could attract new money into housing from non-governmental sources as well. Again, the report sets this out in considerable detail.
But—and I want to emphasise this very strongly—it was clear to us, too, from the start that any solutions we proposed must be reached with justice to all in our society. I suppose that was one of the major reasons why we came to agree on what we have called a
"'needs-related housing allowance' available to all those with low or limited incomes to enable them to pay for the housing they require."
That is a very radical proposal because it applies to the possibility of purchasing your house, as well as to the possibility of renting it—not, please note, the housing that they or any of us might want in our more extravagant dreams, but housing with adequate space for sleeping, eating, relaxing, cooking and washing in terms of the size of the family that we might have or, if we are single, in terms of that. This, we said, must ultimately replace housing benefit for tenants, mortgage interest tax relief and the housing ingredient in supplementary benefit. There was political uproar, of course, from all sides. We knew that would happen; in the nicest of ways it has happened again today. I should like just to comment on that a little more.
First, may I draw your Lordships' attention to the title of chapter 8 of the report, which is simply called "Changing attitudes". We regarded ourselves essentially in the business of changing attitudes. We were not, I believe, being naive, though we knew very well that these proposals would not be very popular. Perhaps I may just pick up the point made by the noble Lord, Lord Elton, when he said, and I hope I quote him correctly:
"Politics and economics … set the limits on what it is possible … to achieve".
Yes, I understand that—we understood that—but I want to say that what is currently the received wisdom about politics and economics may not be the received wisdom in a year's time, or five years' time, or whatever it may be. So there is a value in setting goals which we are well aware may not be attainable immediately. Anyone who has read the report will recognise that we are very clear about this and that we speak in terms, if I remember rightly, of taking 20 years—to the end of the century and more—to get to where we believe finally we need to be. We hope very much though that we may have provided the ingredients for a consensus which will reach increasingly widely and firmly across the current party political lines.
We make the point that our proposals will of course mean that some people do have to make sacrifice in the name of justice for others—we are not trying to deny that for one moment—but we are proposing that many people who currently buy their houses with the aid of mortgage interest relief will in fact continue to receive help. There are some important figures about
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this on page 18 of the report which suggest how this may well benefit some, but clearly not all. The noble Baroness, Lady David, was offering a kind of compromise solution which may well be an interim way forward and is an important part of the debate, but we were talking about goals and about, I think, an overall simplicity of approach which I believe to be a very important part of this whole inquiry and its recommendations.
A gradual phasing out of mortgage interest relief has the support of a great many people drawn from very varied positions in society. This year the estimate is that it will run at the rate not of £3½ billion, which I believe is the figure in the report, but something like £4.750 billion. That is a very large sum of money and it is a very rapid increase in the amount. How much further do we want to see it go? How much further can we afford to see it go?
The archbishops' commission on urban priority areas Faith in the City has made the same sort of proposal, and again it is couched in very gradual terms. But how in the name of justice can you justify a flat rate benefit to all house purchasers regardless of income, which sometimes means nearly £1,000 a year, and yet argue that, for example, child benefit is wasteful because it is a flat rate benefit and must be replaced by a complicated and expensive-to-administer means test? There seems some inconsistency here.
We were also clear that there is a need for a secure, good standard rented sector. We are most likely to achieve it by paying a housing allowance which will go a long way to meeting the economic rents which are related to the capital value of a modest but sound property. I hope that the noble Lord, Lord Crawshaw, need not be too scared of going down this road when he bears in mind that our rents are limited or restricted by the capital value—that is an important part of our proposal—though we do recognise (and perhaps did not deal with this in enough detail) that London will need to have special subsidies of some kind because of its high land values and particular circumstances. We believe, too, that the rented sector needs a variety of landlords, and there is evidence of an optimum size, above which it is very difficult to sustain a satisfactory level of personal, efficient and well motivated management.
As a bishop of what is, in effect, South London and East Surrey, I suppose that I am quite well placed to recognise the sheer scale and complexity of the London housing scene, especially in some of the inner London boroughs south of the river. Side by side are two boroughs, Lambeth and Wandsworth, about which I want to say a word. They focus some of the issues most sharply. Lambeth has a vast stock of municipal housing, operates a generous policy towards the homeless, puts the provision of housing high on its list of priorities and feels desperate about the progressive and large cuts in Government funding that have taken place over the past few years. At the same time its financial control, its maintenance service, its handling of empty properties, in short its management, is in great difficulties. I hope that the just announced new Housing and Planning Bill mentioned by the Minister will help a little with this last problem at least.

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Wandsworth, with a smaller stock of housing by contrast, has gone all out for the sale of council houses and flats, backed of course by the substantial discounts available. It has achieved financial managerial efficiency and the result is impressive. A lot of maintenance work and improvement work is being done to their properties. Yet already Wandsworth is a borough to avoid at all costs if one is homeless. Last year only 400 families out of 1,200 accepted as homeless—that is a pretty strict definition—actually found their way into permanent accommodation. Transfers were extremely difficult to get, however urgent the need. Council flats are being sold to a very wide range of people, including, I understand, some outside the borough. Single homelessness there, as in every part of London, remains an actute problem. When the noble Lord, Lord Elton, says that 14,000 units have been provided since 1979 for special need housing, we have to recognise that that is for the country as a whole, that a lot of the old-fashioned types of hostel have been closed and that this is not going very far to meet an enormous area of need.
The cumulative effect of a policy such as that of the borough of Wandsworth in London, if it continues, will, I fear, be to make the plight of the tenant or the would-be tenant worse and worse. There is a real danger that many will purchase not out of choice but out of necessity, and will then fail to maintain their property and possibily to keep up their mortgage payments. This is what happens if the scales are weighted too heavily in favour of ownership and against tenancy. I just want to say today that our report tried very hard to be even-handed as we looked these sort of problems in the face.
We are not for or against any particular kind of tenure; that must be underlined. We want as many people as possible to have a real choice. That is a very difficult judgment for Government or anybody else to make. Under our present distorted system of housing finance and restrictive tenancies, many people do not have that choice. I fear that they never will, unless we can agree to make good housing for all a matter of justice and national concern.
I believe that I speak for fellow members of the commission when I say that we shall all feel very well rewarded for our efforts if Members of your Lordships' House and many others will continue to study our report; will refine the arguments and improve the recommendations; and then use the report as a lever to achieve the sense of urgency about housing matters that this country so desperately needs.
5.41 p.m.
Lord Orr-Ewing: My Lords, I should like to endorse what others have said. What a wonderful service to this House the noble Lord, Lord Seebohm, has done in making time available to discuss what is a very good, informative and constructive report! The right reverend Prelate who has just resumed his seat made one of the best, most measured and most constructive speeches that I have heard in this House for a very long time, which reflects how good the report is and how well the right reverend Prelate summarised it.
I myself take the view that the challenges have to be met. It is no use going on patching. We must accept the
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challenges that are set out in the report. I am very attracted to a needs-related housing allowance. I believe that we must get away from rent restrictions on bricks and mortar and help people—flesh and blood—rather than a particular house.
I want to accentuate my belief that the Rent Act, which was originally started in 1915, has had a very distorting effect, and a very sad one, over a whole area of housing. We really must pick up the thread again and try to phase out the Rent Act. We could start with the more expensive property or with new property coming onto the market. I remember that when Henry Brooke was Minister for Housing, he started at the top end and then moved down so that the rented sector at least began to be freed from rent restrictions. Unfortunately, he also had a vast number of constituents in Hampstead who lived in rented property and so he lost his seat in the House of Commons. That programme, which was very moral and courageous to undertake, trickled into the sand and stopped. I feel that the present Government ought to pick that programme up again, for reasons that I shall explain in the few words I intend to say.
It is an amazing thought that when I was born in 1912, 90 per cent. of the people in this country lived in rented property. Now that figure is less than 9 per cent. What a tremendous change that is! I pay credit of course to the Government policy that has achieved something like 64 per cent. home ownership. That is good for the care of houses and for the morality of many of the people who live in those houses. However, that still leaves 30 per cent. or more of people who want to move into rented property.
I remind my noble friend, who made a very good opening speech, that in our manifesto we laid down the importance of the individual having a choice in all areas of life and that such was our philosophy. We said that it was true of schools; that parents should be free to send their children to the schools of their choice. We said that people should live where they wanted to. We have always opposed any direction of labour, and we said that we wanted people to be able to choose their jobs as part of their freedom. If all that is true in those other respects, is it not desperately true of whether people should be able to rent or buy their living accommodation?
It is the inflexibility of the present system that is worrying many of us in all parts of this House. After all, and as has been so rightly said, every family's housing needs change throughout life. The young, particularly when they are seeking jobs, want, on the whole, to rent. When their children are born and grow up, then people will, if they possibly can, with the help of building societies and with other assistance, want to buy. When the time comes that the birds leave the nest and the parents find themselves with surplus bedrooms, they may want to rent out some of their accommodation. However, they will wish to do so in the security that they will have reputable tenants who will behave and who, if the need should arise, will not prevent them from gaining repossession of those extra bedrooms. Later still, there may come the time when the house owners will want to sell their property and move into a sheltered home, in the last phases of their lives.

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All through our lives there is a changing need for housing. We have to achieve flexibility so that people may choose, at different phases in their lives, to move. I underline a point that is not made very strongly in the report, nor in this debate so far; that, above all, when jobs for the young men are so desperately important, we must make it easier for students to move to places where they may improve their education, and for young people to move to areas where jobs are available. We have at present an arthritic society, with people locked into the areas where they live and unable to move elsewhere. That cannot be good for our economy, and certainly it is not good for the moral standards of all those who suffer from that immobility.
I notice from the report that the Institute of Housing estimates an annual demand for 100,000 homes to rent. I rather hope that the Government will take that statistic on board. If one is to have flexibility, then there will always be some people moving in and out. One cannot achieve a precise balance between the number of people who want to live in houses and the total population. Just a balance is not good enough—one must have some slack in the rope and the flexibility that that provides.
The need is to double the rate of provision of houses. I hope that the Government will grasp all the good and constructive points in this report, shake them, and try to persuade people to implement them. They should not look for difficulties but instead say, "This is a good proposal. Please come up with a way of putting it into effect and suggest how we may achieve some of these admirable concepts".
Such will not be achieved unless the Government have a plan to increase the remuneration and safety of private sector landlords and to attract other landlords into the private sector as well. After 80 years of rent control there are some staring cases of injustice. I heard of one such case in my own area—and I confess to living in Chelsea. It concerned a lady who decided to rent a well-furnished flat in a good area. I believe that the going rent was £150 per week. That is high, but she said that it was a holiday let and she wanted to rent it for just a short period. She then sat fast and asked the rent officer to fix the rent.
The rent officer, serving the local council, is compelled to act on his remit. His remit is to consider what rent is being charged for other unfurnished property in the area. If he were looking for hen's teeth he would find more of them there than he would unfurnished accommodation. So one is trying to set a standard that is not a standard. The sort of standard that rent officers come up with is that £30 a week is a fair rent. It is not. That is a wretched way of dealing with the matter. Even given the flaws in the scheme that has been put forward, I personally would bet that the capital value is a far better guide than the present guide from which rent officers have to suffer.
We return to the fact that although 64 per cent. of the population now own their own homes, and even if that figure increases to 70 per cent., we must consider the 30 per cent. of the population remaining; that is, the 8½ million people who are looking to the rented sector. Please may the Government now concentrate on that area so that we can achieve the essential flexibility whereby people can choose whether or not
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they want to buy, whether or not they want to rent, and, above all, by which the young can move to areas where they will have a possibility of finding a job.
5.49 p.m.
Baroness Denington: My Lords, I, too, express my great thanks to the noble Lord, Lord Seebohm, for initiating this debate, and to those who sat on the committee and produced this report. My thanks go also to the secretary, who, I imagine, did so much, if not all, in writing the report. It is a very clear, readable and direct report.
I think it very significant that this report followed so very closely on the heels of the Archbishop's report, Faith in the City. It is significant, too, that both of them express concern about the deteriorating and sad condition of our national housing in so many fields. Year by year those who are concerned with housing, and who work in housing now, are feeling more and more desperate about the problems that they are trying to solve. Those people who live in run-down housing feel that they are trapped and have to live in conditions that many of them positively hate. That is a recipe for social unease and is nationally very serious.
There are then those wretched people who truly have no home of their own, through no fault of their own. They are not being adequately dealt with because the facilities for dealing with them are not available. Decent places in which they could be housed do not exist.
Those are very serious problems, but I do not intend to talk about them over the general field. I feel sure that other Members of your Lordships' House will do so. I am sure we are all deeply indebted to the right reverend Prelate the Bishop of Southwark for his excellent speech. I will restrict my remarks to topics that I have come across while working in the housing association movement: the provision of social housing to rent through the introduction of private finance, which I think is very important, and management problems.
There is a very great need, as the report highlights and as has been stated this afternoon, for the private sector to help finance social housing. A number of housing associations have been working on this for the past four or five years, but progress has been very slow indeed. I have found that institutions are reluctant to lend, and that is partly due to the lack of consensus on housing finance and subsidy. The present Government have been unwilling to match private investment with public subsidies, and this lack of political support does nothing at all to encourage the institutions.
Over the past 18 months two building societies have offered to raise finance to fund fair rent schemes. However, they are not prepared to finance them 100 per cent. The housing association on which I serve had a case where a leading building society was prepared to finance 48 per cent. of a fair rent project. We approached the Government, and after 18 months of sitting on it they refused to help. All we were asking for was the balance of 52 per cent. That scheme fell by the wayside.
While pension funds, life insurance companies, co-ops and banks have not been prepared, as far as I can tell, to help finance housing schemes, some building

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societies have. However, in my view it is quite unrealistic to expect the building societies to meet the full cost of schemes. The Government must now come in and provide a degree of subsidy for these much-needed fair rent schemes or admit that they are not interested in the provision of fair rents at all, either through housing associations, whose allocations have been cut, or local authorities, or even, apparently, through finance. I hope that the noble Lord, Lord Elton, will deal with this point in his reply, because we all think that it is important.
I now turn to the subject raised in the report concerning the importance of tenants' involvement in the management of their homes. Nothing is more important if council tenants are to be content and if the property they occupy is to be respected. In my view and experience the best way to achieve this in local authority housing is by the establishment of a tenant management organisation. I shall use the term "tenant management co-op" as the most appropriate.
This means that each housing block on an estate, or group of blocks—or of houses, if they happen to have houses—forms its own management co-operative. The Secretary of State has to approve each management agreement. Each co-operative employs its own manager, cleaners and so on. If it is small enough, the tenants can do the job themselves, if they are willing to do so. They will be responsible for the maintenance of the block and its surroundings. In this way they can ensure that they live in homes of which they can be proud, which is not, alas, the position today. These co-operatives can be a mixture of owner-occupied properties and rented properties. The occupants meet together and have a committee. They fix the service charge together. Their interests are identical in having somewhere nice, decent and happy in which they are glad to live.
Of course, tenants need considerable tutoring before they can embark on such an enterprise. Experience has shown that it takes from 12 to 18 months of solid work by one worker to get them ready to take over themselves. It is essential that the property should be put into a proper state of repair before it is handed over, or that the money is available to the co-op if they want to get the job done themselves.
I notice that there was a very short debate on this subject in the other place just before Christmas. It was initiated by one of the Liberal Members. I was pleased to see that Sir George Young was very forthcoming on the matter in his reply. I have also seen a letter which the Department of the Environment sent out in November to all national housing bodies. I quote from it. It is headed:
"Innovative approaches to the management and ownership of local authority housing stock—Proposals for legislation".
The letter then goes on:
"The Government plans to introduce legislation to:

(i) enable local authorities to delegate their housing management functions to a range of local management organisations, subject to the Secretary of State's approval.

(ii) enable housing management start-up, training and education grants to be made to encourage better and more innovative management."

I very much welcome that.
Progress towards the establishment of co-ops has been very slow, as it has on the other matter I
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mentioned. This is partly because tenants fear that they are being conned and that the motive is for the council to push their responsibilities on to the tenants. On the other hand, there is great reluctance on the part of some councils to part with control of their empire and council officers may see the move as one that will deprive them of their jobs. I say that it should free the officers to concentrate on those tenants who will not form co-operatives, who find it difficult to manage their own affairs and who need much more support, help and attention. The circular from which I quoted may also be taken as evidence that the ploy is to push local government entirely out of its housing role. I am being perfectly frank about this because I think it is very necessary to be frank. I hope that at the end of this debate the noble Lord, Lord Elton, will make it quite clear that this is not the case.
As this report which we are discussing makes clear, its authors believe (and I am certain of it) that there is an important continuing role for local authorities in the housing field as regards provision and management, and that they should have a wider role of co-ordinator and enabler, as the report envisages. But for the success of this new initiative to establish housing co-operatives where people are managing their own affairs—which I think is important—several matters are really of vital concern. There are five which I wish to enumerate.
First, the Government must mount a promotional exercise to explain and put across the idea and benefits of belonging to a management co-operative. This has to be wholehearted; it has to use the media—television, and so on—and it has to be sustained by the Government just as firmly as their campaign for owner-occupation. Secondly, the finance provided for the management start-up, training and education grants must not be skimped. Thirdly, the local authorities must have the finance to put homes into proper order before they are handed over. Fourthly, in the legislation the tenants must be given the right to form co-operative management groups, just as they have been given the right to buy. This right is just as important. Fifthly, steam must be put into this fresh approach so that when enthusiasm has been generated it does not subsequently die because of frustration and delay.
I think that good or anti-social communities are largely the product of their environment and social conditions. In this new approach to housing management I see hope where now there is darkness and despair. I trust that the Government will press on with their initiative and not stint the necessary finance, and that local authorities will co-operate and do their utmost to bring about this very basic change.
6.3 p.m.
Lord Marshall of Leeds: My Lords, the National Federation of Housing Associations is to be congratulated on initiating this inquiry into British housing and on producing this report, as is the noble Lord, Lord Seebohm, for introducing the debate today. I think that we are fortunate to have with us a member of the inquiry team, the right reverend Prelate the Bishop of Southwark, who I thought made a quite outstanding contribution to this debate.

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I fear that it is anachronistic—or maybe "inopportune" is a better word—that the report should be recommending the phasing out of mortgage interest tax relief, when on more than one occasion the Government have already made it clear that they have no intention of doing any such thing. Perhaps this is hardly surprising when the existence of this tax relief is an inducement to all aspiring owner-occupiers, whom Government, and I think the Opposition, wish to encourage, and whose expectations in this regard they would hardly be intending to frustrate. Just think of the financial impact that such a change would bring to the 900,000 worthy people, 800,000 of whom were sitting tenants, who have bought their houses or flats from local authorities or from housing associations! They would feel, would they not? that the Government have let them down. So would all the people who are currently buying their houses on mortgage.
Since 1979 the number of owner-occupiers has grown by no fewer than 2¼ million, as my noble friend Lord Elton pointed out. So at the present time no less than 62 per cent. of the totality of housing in this country is owner-occupied. A cursory reading of the report might give the impression that there were grave, general and irreparable housing problems in this country today which few had noted, but that supposing central and local government had noted it, neither of them had begun to provide a solution. This may be going a little too far; it is certainly not true.
Nevertheless I think it is apposite to remark that Government have increased the planned level of capital spending by local authorities by £200 million for the year 1986–87. They have also set up the Urban Housing Renewal Unit to advise local authorities on the full range of options open to them in dealing with run-down estates, which includes a greater role for the private sector. In the current year, 1985–86, about £500 million will be spent on home improvement grants in England. This compares with only £90 million in 1978—so, £500 million compared with £90 million.
Similarly, the English local authorities' capital expenditure on public sector repair and renovation has increased greatly since 1979. It is now £1 billion a year plus a further £1 billion out of revenue on repairs and maintenance. That 87,000 local authority dwellings in England were renovated in 1984, which is a higher figure than in any year since 1973, is certainly no cause for complaint; but the unwillingness of Government to abolish the mortgage interest tax relief means that the assumption of the report, that money thus "saved" by the Exchequer would help to pay for the needs-related housing allowance, becomes invalid.
The recommendation of the report on the provision of rented housing is that 100,000 new units a year are required. If evidence of voids is anything to go by, one would have thought that this is a substantial overestimate and that 65,000–70,000 is much nearer the mark. After all, the private sector completed 154,000 new dwellings in 1984, and that was the highest figure since 1973. So far this year starts are running at 17 per cent. higher than last year.
Of course, everyone will cheer the hope of the inquiry that the private sector should be encouraged to
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assume an increased role in the rented area. We all have that hope. But let us turn to rents, because this is relevant. Turning to capital value rentals as recommended by the report, one fears that the report greatly underestimates the level at which rents would settle when set according to the recommended formula. There would be bound to be wide geographical discrepancies and special problems in London which, I would hazard a guess, would throw up capital value rents twice as great as those in the North of England, and for obvious reasons—for example, high initial capital cost, including high land costs, and much more expensive repair, maintenance and management costs in London particularly, but also in the South generally. That would make a significant difference.
That would imply that the needs-related housing allowance advocated by the report would be likely to make quite unacceptable demands on the Exchequer. In any event, it is certainly unrealistic to suggest (as in the box appearing on page 21 of the report, headed "Effects on Council Rents") that, on the basis of the report's figures, a change from present arrangements to capital value rents to provide a yield of 4 per cent. would lead to rents, on average, rising by 14 per cent. That again represents a too optimistic estimate and understates the case. It seems more likely that average rents would have to rise by almost 20 per cent., and in certain cases by up to 25 per cent. One doubts the enthusiasm of the private sector to become involved unless a reasonable and a reasonably safe yield was assured throughout a guaranteed minimum term of years.
I turn now to the management recommendations. I thought that I detected a certain lack of confidence, to put it at its lowest, concerning the public housing sector. No doubt a great deal of that received wisdom—and we have heard of some received wisdom previously this afternoon—arises from examples where certain local authorities, particularly certain London boroughs and Liverpool, as the noble Lord, Lord Crawshaw, confirmed, have had management problems in the past, and have them now, with difficult-to-let estates, where perhaps the management system has been bureaucratically over-centralised and is therefore too remote from tenants. That has obviously given local government a bad name, but we must be careful not to make sweeping generalisations. We must remember that local authorities currently house some 18 million people in Great Britain and re-house at the rate of 300,000 families each and every year.
I was privileged to serve on the housing committee, and later for some years as leader, of the city council in Leeds. In my opinion we were an eminent—I would not dare to say "pre-eminent"—and enlightened housing authority, as, I think, Leeds always was. In the 1960s we had over 26,000 people on the waiting list, with thousands of cases of gross overcrowding. We had 80,000 Industrial Revolution, back-to-back houses, a symptom somewhat peculiar to Leeds, I think. We were demolishing 3,000 houses a year and building a similar number. There was a great sense of urgency engendered by a great and pressing need. Yet I was not so single-minded after all, because in 1967, as leader of the council, I advocated selling council houses, and in 1967 we sold 1,000 houses to sitting tenants.
But to return to the theme, currently in Leeds the

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housing director, Mr. Glover, is carrying on a long tradition of taking management to the tenants, with 38 de-centralised area housing officers, each responsible for the management of about 2,500 dwellings. That provides a quick, flexible and direct response to individual tenants. In addition, he deploys 12 housing welfare officers who conduct intensive welfare work in cases of deprivation and in stress areas within ethnic minorities.
Although I think that Mr. Glover gave evidence to this inquiry, there is (perhaps understandably) no mention that Leeds is an exception to the rule, with rent arrears by far the lowest of any big city in the kingdom. They are just £1 million, of which 70 per cent. represents cases of tenants owing less than £70 or the equivalent of three weeks' rent. Noble Lords may ask, what about empty houses or voids in the public sector in Leeds? The report cites a figure of 37,700 public sector houses vacant in the greater London area, or 3.9 per cent. In Leeds, the figure is 0.6 per cent., compared with the national average of 2.3 per cent. in the public sector. That says much for a more de-centralised, less bureaucratic and more personal style of management.
But I have grave doubts about local authorities handing over management, and perhaps ownership (as the report suggests), to co-operatives and tenant management associations. Too often we have seen that type of body first infiltrated, and then controlled and ultimately dominated, by political extremists and hard-liners.
It should have been plain to members of the inquiry that local housing authorities have at all times acted as co-ordinators and enablers, exercising their statutory duty under the Housing Act 1957, which requires them to consider:
"the housing needs of the district".
They have had all along to exercise a strategic role which has been supported by the sort of research and monitoring that the report seems now, for the first time, to be advocating for them in the future.
But the local housing authorities have also had to be responsible for the elderly, the mentally ill, the handicapped and the homeless, including the single homeless, of which the non-public agencies mentioned in the report can have had little, if any, concern, let alone experience. It is significant that at page 143 the report is almost over-anxious to recommend that local authorities must continue to have the responsibilities under the Housing (Homeless Persons) Act. Local authorities have not been slow either to encourage and assist non-public agencies like housing associations not only to build new dwellings but to re-vamp the old.
I fear that this debate will become more depressing than it should be as time goes on—particularly after your Lordships hearing me! There is no cause for alarm or great despondency. There is a challenge. But I fear that the inquiry has looked at the warts; what it has not looked at is the achievements. It has not appreciated that over the years local authorities have had to tackle enormous problems which would never have been within the capability of the various agencies whose interests the report seems now so anxious to promote.
Just because there are always some examples of
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degradation and squalor, it is not safe to assume that the whole local authority housing canvas is uniform. It is, in my view, therefore unwise for the report to conclude:
"The more the day-to-day management of its estates devolves to bodies such as co-operatives, the more the local authority's management function will consist of giving advice, monitoring, nominating, and, where necessary, enforcing agreed lettings arrangements and minimum standards of management and maintenance".
If that is how the inquiry sees the future role of local authorities, I despair. To write down in this way the current role and functions of the local authority housing sector which manages some £100,000 million worth of public assets in England alone, without advancing any valid, cogent or compelling reason, I regret to say, for me, devalues this part of the report. I want to say that the record of public sector housing is a good one, an honourable one and one that is worth defending. Its case needs to be put if only to reassure the millions of families whose homes the public sector has already provided and the many who will have to look to the local authority to provide them with a home in the future.
I merely wish to say, in finishing, that I hope that I have not been too critical in pointing out what I regard as some of the weaknesses in the report. I am full of admiration for the National Federation of Housing Associations and in particular for the noble Lord, Lord Seebohm, for putting down this marker, if I may so call it, which is a beginning that will, one hopes, take forward the thinking behind the report.
6.21 p.m.
Lord Shaughnessy: My Lords, I, too, along with other noble Lords, acknowledge our debt to my noble friend Lord Seebohm for bringing this important report of the National Federation of Housing Associations to the attention of the House, and also for his very articulate summary, in his introduction, of its content and purpose. The report is both comprehensive and incisive. Furthermore, as stated by other noble Lords it could be considered a model in its form and in the language in which it has been presented. I endorse the congratulations to the committee and to the staff who produced such a cogent document.
A number of the conclusions and recommendations of the report will undoubtedly be controversial. But the purpose of the inquiry was, I believe, to stimulate action. Without an element of radical thinking, it is perhaps unlikely that any worthwhile action would be forthcoming. I intend to confine my remarks to the privately rented sector, which the report states is working badly. As my noble friend Lord Seebohm pointed out, in Britain, unlike North America and some parts of Western Europe, private investment in dwellings for rent by institutions, pension funds, building societies and private investors is minimal. The report states that,
"finance for homes to rent is almost exclusively the province of the State".
This imbalance has a particular effect on the growth of available rental housing at the medium and low cost levels. The principal reason for this situation, in my view, is that the return on investment to the private sector landlord is far too low. In a paper submitted to the inquiry by Mr. C. J. Benson, it is stated that the

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return to the private landlord is as low as 2 to 3 per cent. on his capital investment.
There are, of course, a variety of factors that bear on the lack of private funds flowing into the rental housing market. One of these, as pointed out by the noble Lord, Lord Orr-Ewing, is rent control, which has been in place since 1915 in one form or another. Another major factor is the body of laws and regulations governing security of tenure, which tends to discourage investment by private landlords. It is, of course, unrealistic to contemplate a sudden dismantling of the rental control system. That would create hardship in the short term, which would be socially unacceptable. I agree, however, with the noble Lord, Lord Orr-Ewing, that a start should be made in the direction of decontrol with the object of creating some market for rental housing that would offer the tenant a wider choice of accommodation and also—and this is quite pertinent—a degree of mobility in respect of where he may want to live, or have to live, neither of which is available now.
Similarly, the problem of achieving a fair balance in security of tenure that adequately protects the tenant and, at the same time, removes some of the inhibitions of the private investor is a vexing problem that will require considerable ingenuity to solve. The inquiry proposes a number of possible remedies to alleviate these negative factors. I have no doubt that, if implemented, these innovative proposals, such as the concept of capital value rents and the needs-related allowances, would have a beneficial effect. I submit, however, that the overall objective should be to remove the economic straitjacket that now binds the market for privately financed rental housing. For it is in the private sector that the best opportunity for the expansion of the stock of available dwellings for rent exists.
I fully appreciate the comments of the noble Lord the Minister about the restraints upon the Government dictated by overall policy. I would submit, however, that if any success is to be achieved it will require an approach that transcends political dogma and partisan opportunism. So long as housing policy is subject to radical changes of direction as the political complexions of Governments change, there will be no incentive for increased private investment in the rental housing field. As the noble Lord, Lord Crawshaw, remarked, I believe, in part of his speech, the private investor will not put up his money if he thinks that the rules are going to be changed in the middle of the game. What, possibly, most Governments could agree upon, however, is that in an affluent society the right to adequate shelter is fundamental, just as the right to education and health care, and, some would say, the right to work, are also fundamental. Surely, then, the time has come when the full force of our technical, financial and political skills can be marshalled in a non-partisan programme to achieve this end.
6.31 p.m.
Lord Sandford: My Lords, terms like "all or nothing" and "take it or leave it" are themes which appear in the preface of this report, which seem to me to detract a little from its immediate usefulness, particularly when one of those integral parts is the
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proposal to abolish mortgage interest tax relief. The right reverend Prelate the Bishop of Southwark has since explained why the committee of inquiry reported in that sort of way. But he ended his remarks by reminding us that we have an urgent problem, particularly relating to the condition of our housing stock, on our hands, and that it is therefore important that we have reports presented to us on which urgent action can be taken.
However, this particular point with which I have started does not detract at all from our sense of gratitude to the noble Lord, Lord Seebohm, for having found time for this debate, particularly as we can also spend a little time, I hope, on the Green Paper on housing improvement which was issued by the Government in May. Those to whom it was addressed were given a couple of months, until July, in which to comment. Since then, six months have elapsed, giving the impression that the Government have put that report on the "back burner". If it is not on the back burner, perhaps my noble friend on the Front Bench, when he replies, could tell us a little more than he did in his opening remarks as to where the report is, what will be done, and when we might see the next steps.
In connection with that last report I wrote in my capacity as chairman of SERPLAN to the Minister expressing the views of the housing authorities of London and the South-East. SERPLAN is a conference which provides a forum for authorities in the whole of the South-East—all 12 Home Counties, and those in London—to put their minds together on matters of this kind.
On that occasion I had to say the following on their behalf to the Secretary of State:
"Figures for the South-East in the 1981 English House Condition Survey revealed that only about 3 per cent. of the dwellings sampled in the region had renovation work in progress, whilst 38 per cent. were judged to require renovation or clearance".
In the next paragraph I say:
"In London, it has been estimated that the elimination by 1992"—
that is, in six years' time—
"of the backlog of dwellings in poor conditions and the prevention of other dwellings from falling into this category would require rather less than a threefold increase in public spending over recent levels".
It is in that context that one has to judge whether the recent £200 million increase which the Secretary of State secured from the Treasury is anything like enough.
I entirely agree with the noble Lord, Lord Seebohm, when he says that market forces applied to this problem cannot possibly do it all. There is a huge role left for the housing authorities and the housing associations. But, as the noble Lord, Lord Shaughnessy, said just before I rose, market forces can do a very great deal. The Germans have shown us (in the illustration that the noble Lord, Lord Seebohm, gave us) just how much they can do; and we are not getting anything like as much as we can from them.
In that connection I wrote to the Secretary of State on behalf of SERPLAN in the following terms last autumn, saying that conference considers it essential that the Government,
"find means to provide financial incentives, by fiscal devices or otherwise, both to encourage homeowners to carry out repairs (and

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especially preventive maintenance) and to encourage the private sector to provide funds"
—and the new legislation for the building societies will of course help there—and
"to do more to encourage the private sector to undertake conversion of dwellings, to increase the stock of smaller dwellings and at the same time to reduce the burdens which the maintenance of overlarge dwellings places upon their owners, especially the elderly"
—a point that my noble friend Lord Orr-Ewing was making earlier—and thirdly and finally:
"to redress the current balance of financial advantage which new house-building has over renovation, both for owners and for builders; in this regard Conference notes that the recent imposition of Value Added Tax on housing improvements is widely regarded as a retrograde step".
I shall come back to that in a moment.
The right reverend Prelate said that one of the objectives of his report—the report of the inquiry of which he was a member—was to change attitudes; and that certainly is necessary. But it is also necessary to change the balance of financial incentives. As the noble Lord, Lord Shaughnessy, was just saying, builders and developers will inevitably go to where profits can be made and yields achieved. They would be out of business at once if they did otherwise. Just look at the South-East and London, and see the effect at the moment of this imbalance. We have a large consortium of builders at present engaged in appealing against the decision of the local planning authority and seeking permission from the Secretary of State to put 600 houses at Tillingham Hall, right in the middle of the Essex Green Belt, whereas we would greatly prefer to see them busy refurbishing the back streets of Wapping.
The balance of financial inducements is not working in the right direction. It is therefore necessary to do what Governments are constantly saying that they want to do: namely, to "lift the burden." The particu-lar burden here, I believe, as I said on behalf of SERPLAN, is VAT on improvements, conversions and repairs. If the Government cannot wear that, if that is asking too much of the Treasury, let us at least consider the removal of VAT in respect of improvements, conversions and repairs either for designated categories of work—work, for instance, which is being done with the help of the improvement grant—or in designated areas, or both. I hope that I can persuade my noble friend to say when he winds up that he is at least exerting as much influence as I know his colleagues were this time last year on his right honourable friend the Chancellor of the Exchequer to try to put this matter right when we come to the Budget.
This alone, I believe, would achieve more than almost any of the things about which we are talking, if not all of those things put together. I believe that without this change much of what we are discussing is a waste of time.
6.39 p.m.
Lord Pitt of Hampstead: My Lords, we are grateful to the National Federation of Housing Associations for initiating this inquiry and to the Duke of Edinburgh and his team for producing this report. We are also grateful to the noble Lord, Lord Seebohm, for giving us this opportunity to debate it. We are also very grateful to the right reverend Prelate the Bishop of
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Southwark for giving us an insight into the thinking behind the committee's recommendations.
The report is an effective demolition of the housing policies being pursued by the present Government. It identifies a number of major housing problems facing Britain today. These include a shortage of housing with inadequate levels of new building to overcome it. That is one of the major problems. Then there are deteriorating conditions in both public and private sectors. Those are made worse by constraints on public investment. There is also the question of the increasing social divisions in housing which are exacerbated by the inequalities in housing subsidies. Those matters have all been highlighted in the report.
The report criticises a single-minded emphasis on owner-occupation. We heard examples of that in several of the speeches which have been made this afternoon. The report rightly identifies mortgage interest relief for home owners as a major priority for reform. By supporting the retention of improvement grants, it basically rejects the Government's proposals for home improvement policy which were set out in the 1985 Green Paper. It calls for councils to be given greater freedom to invest in housing.
The report is radical in its approach to many key housing issues. It points to major areas for debate, some of which have been dismissed or ignored in the past. Questions, such as the reform of housing finance—which is an issue that I raised in your Lordships' House when I initiated a debate on housing in the last Session—the housing role of local authorities and private sector investment, clearly need to be discussed.
However, while the report points to the failure of present policies, some of its own recommendations need additional investigation. Those proposals both in principle and in detail need to be explored further. For example, it is proposed that housing benefit and mortgage interest relief should be replaced by a needs-related housing allowance. There would be a maximum allowance, dependent upon household category and area, and it would be reduced as income rises.
At first sight, that proposal seems to abandon the principle that people on the poverty line should have their housing costs met in full. That principle, which has been accepted since Beveridge, has recently been confirmed by the present Government in their review of the social security system. Because there are wide variations in housing costs over which people have little control, any housing allowance would need to be related to costs as well as to income. If a flat rate scheme were adopted, as suggested by the inquiry, people in high-cost housing could find that the maximum allowance did not cover the rent, and that would lead to arrears and homelessness; whereas people with low-cost housing could find themselves with money in hand after paying the rent.
The present housing subsidy system is inequitable but it does not seem right to replace it with a scheme which may also be inequitable. The proposal seems to me to be too blunt and will need to be refined. Although housing costs vary from area to area, they also vary within areas. We hear a great deal about London. I can assure your Lordships that the cost of

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housing varies considerably throughout London. Merely to say, for example, that in London the needs-related allowance should be so much would not meet the case at all. There would be people in London who would be well-off as a consequence, and there would be people in London who could not meet the rent. Therefore the proposal needs to be very carefully refined.
The difference must be taken on board because otherwise we shall find that we have problems such as those we have with RAWP and its effect on the health service. It is because RAWP is a blunt instrument that we have problems at places such as UCH and Middlesex which are having to close wards in order to save money. Unless the proposal is very carefully refined we could have the same type of problem. If it is not carefully refined it will not meet the objective because people would suffer hardship and we would be back where we started with an inequitable system. Therefore it is absolutely necessary that the needs-related housing allowance should be carefully refined to meet the objective. In addition, the principle that people on the poverty line should have their housing costs met in full should be reiterated.
It is also proposed that rents in both the private and public sector should be based on a formula which allows the landlord a 4 per cent. return on the vacant possession value of the property, together with an addition for management and maintenance costs. That would establish a new basis for calculating registered fair rents and would extend the fair rent scheme to council housing in much the same way as the Housing Finance Act 1972 attempted to do. According to the report, this would mean an average increase in council rents of 15 per cent. I am afraid that rent increases in the private sector were not discussed.
Calculations made by Shelter, however, suggest that council rent rises would have to be much higher to achieve that rate of return. The figure of 15 per cent. suggested by the inquiry report is based upon an assumed average value for a local authority dwelling of £12,750 in 1983–84. However, government figures contained in the housing and construction statistics of March 1985, based on council house sales, suggest that the average market value of a local authority dwelling is £20,800. That would imply an average rent of nearly £22 a week for council tenants, compared with about £15 a week which is the present average level. Your Lordships will appreciate what a high increase that would involve. Again, that will not matter if the needs-related housing allowance is adequate. We must be quite clear about that point. If the needs-related housing allowance is adequate, it will not matter.
The report suggests that these new higher rent levels are needed to encourage investment. However, many councils are already generating profits from their housing. The problem is that public spending constraints imposed by the Government prevent them increasing investment—for example, spending more of the £6 billion that has accumulated from the sale of local authority land and dwellings. They have it in their possession but they cannot spend it; the Government will not let them do so.
I turn to the question of the possible effects of the inquiry's proposal on the private rented sector. The
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studies carried out by the Department of the Environment suggest that in many parts of the country landlords are already achieving returns of 4 per cent. to 6 per cent. on capital values while charging registered fair rents. Yet those returns do not seem to be stimulating investment, as the report suggests they should.
On the other hand, where returns on capital values are lower, for example in London because of higher property prices, tenants could face twofold or threefold increases in rents to generate a 4 per cent. return. I repeat what I said earlier on this relationship with needs-related rents allowance. There will be need for very careful correlation between the means-tested housing allowances and rent levels. If there is not, we shall find ourselves creating hardships.
The new basis for rents is designed to stimulate the provision of private finance for rented housing. That, the report suggests, would be done by seeking to guarantee financial institutions such as banks, building societies and pension funds a return of 4 per cent. on investment in housing. That investment would take place through approved landlords, envisaged as housing associations, building societies, housing co-operatives and property companies. Approved landlords would have to abide by a code of guidance to be monitored by local authorities.
The inquiry should be complimented on seeking ways of increasing investment in housing. However, it is unfortunate that the report should concentrate exclusively on the private financing of rented housing. The report itself says that it was decided,
"not to examine in detail the possibilities of advocating a major increase in public sector investment"
—although it admitted that that was a clear option. However, in presenting its key recommendations the report gives the impression that private financing is the only way forward.
The omission is unfortunate for two reasons. First, it can be argued that bricks-and-mortar subsidies, which have been the main form of subsidy in the public sector, are more economically efficient than the income support subsidy proposed by the inquiry. In the public sector, subsidies tend to be fixed, either as capital grants or as reductions of loan charges which end when the debt is paid off. An income support subsidy, however, continues to be paid after the landlord has cleared all debts; it rises with inflation and can artificially increase profits. The opportunity for an important debate about the most efficient way of subsidising housing has therefore been missed.
Secondly, there are important questions about the way subsidies operate in the public sector that need to be answered. Originally council house subsidies were designed to lower the cost to tenants of newly-built homes and a relatively simple system was devised to do that. Now, as much council housing ages and needs large-scale capital expenditure to repair and improve it, the subsidies system has grown more complicated. It would have been useful if the inquiry had looked at that problem.
The report suggests that in future local authorities should be seen as enablers of housing activity at a local level. Local authorities would seek more to help other agencies in providing housing rather than seeking

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mainly to provide housing itself. Indeed,it is suggested that local authority estates should be handed over to housing associations, tenants' co-operatives and other types of landlord. But could local authorities carry out their statutory responsibilities, for example to the homeless, if they did not own and manage properties? Would housing associations or approved landlords be any more sensitive and democratic in the management of rented properties than local authorities? No, my Lords. Local authorities need to play as important a role as providers as they do as enablers or co-ordinators. They need to play both roles.
The report makes a large number of sensible and worthwhile suggestions about details of housing policy. But its general strategy must give cause for concern. Its principal aim is to encourage private sector funds to invest in rented housing. From that aim came the proposals to increase rents to provide a suitable rate of return on investment and to redirect housing subsidies partially to meet those higher costs. That is how I see it. Such a strategy might encourage investment in housing for rent for middle income groups—those who at present tend to move rapidly into home ownership.
If renting became more economically attractive (as it would under the report's proposals) such groups might prefer to rent for longer periods before deciding to buy. But while middle income groups might be able to meet the higher housing costs implied by this strategy, would the same be true of lower income groups and the unemployed? Historically the problems of homelessness, overcrowding and poor housing conditions have been concentrated on those whose low income prevents them buying a decent standard of housing on the private market. Public sector housing was intended to break the link between poverty and poor housing. We have to ask ourselves whether a strategy based on increasing the provision of housing through the private market can really deal with such problems. That is the question we must ask ourselves.
The inquiry has been useful in highlighting the problems. It has recommended a strategy for tackling them. As it stands it leaves a lot of questions still unanswered. The most important of them is whether this is the right strategy. There has been no political input into the inquiry. I throw out my suggestion that a Select Committee of your Lordships' House should try to do this, because if we are to move in that direction there is need for cross-party support. It cannot work unless it is generally accepted as a strategy. Whatever method is adopted, I hope that there will be an attempt to carry the inquiry further. I repeat that a decision needs to be made on whether the strategy suggested is the right strategy to meet our present needs.
6.58 p.m.
Lord Elliott of Morpeth: My Lords, I wish at once to join others who have spoken in paying tribute to the work of the committee under the chairmanship of His Royal Highness, and to Lord Seebohm for introducing this very useful debate. It was appropriate that the Royal Commission's report of 1885 should be commemorated in this useful way. I greatly
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appreciated the speech of the right reverend Prelate the Bishop of Southwark. I believe that the report is good; it sets out the problems which face us at present fully and adequately, and although one may disagree with some of its recommendations, it is a useful report. As the preface states, housing conditions when that Royal Commission sat, over 100 years ago, were appalling. Since that time there has been a continuous battle—I emphasise, a continuous battle—to achieve the highly desirable aim of every family having a decent home of its own. That battle continues today and is still a very tough one indeed.
My earliest association with it was when I was at school in the 1930s and my father was the chairman of a local authority housing committee. I know full well that in his long public experience—and he had a long time in public life—nothing gave him more satisfaction than being involved in the very substantial slum clearance programme of the 1930s. Here, I should agree with my noble friend Lord Marshall that we can concentrate, as indeed we probably should, on all that is wrong. However, great efforts have been made in the past. That slum clearance programme just before 1939 was doing very great work indeed, and of course the coming of the war was a tremendous check to the battle of housing.
My next personal association was when I became a Member of another place in 1957. One of my earliest duties on being elected was to tour some of Newcastle-upon-Tyne's sub-standard housing. I feel my reactions must have been very similar indeed to those of members of the Royal Commission 100 years ago. I was utterly appalled, and I shall never forget that tour. I had not until that time appreciated what dreadful housing some people had in which to live their lives. Happily, the worst of that, in the Shieldfield and Scotswood areas of Newcastle, is now swept away. In one of those areas I was asked in the early 1960s to open a block of high-rise flats. I think we all appreciate now that that was not one of the most successful forms of housing of the post-war period. However, I remember saying in my opening speech on that occasion that those who were to live at a high level would at least be able to enjoy fresh air, rather than know the awful stench of rotting homes which had so recently been on that very site.
I was particularly interested in the report and anxious to take part in this debate because when I was in another place I represented a constituency which comprised solid housing. I used to say that the only industry I had was the local brewery and our famous football team, Newcastle United. Otherwise it was housing; large housing and small housing; old and new, publicly owned and privately owned. Thus, over a considerable number of years I had many problems to deal with in relation to housing.
The inquiry brought out, I thought, to my interest and the interest of others, the steadily increasing need for homes for single people of one kind or another. This brought me to the realisation that, although there are 50,000 fewer people living in the city of Newcastle than when I first became a Member of Parliament there, there is nevertheless at this time an estimated need for 5,000 extra dwellings by 1991. There are 21,000 houses in Newcastle-upon-Tyne which were built before 1919.

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Here again, I should suggest that my noble friend Lord Marshall was right in suggesting that much has been done that is good and that we should be pleased about and grateful for. Most of those 21,000 houses have been revitalised, and that revitalisation programme of the 1970s was a very good one indeed. I should seek to suggest that we should encourage a continuation of revitalisation of older property with every means in our power. Here, I should agree with my noble friend Lord Sandford that if VAT could be removed from house repair and house revitalisation, it would be very helpful indeed.
Forty-two per cent. of the city's housing in Newcastle-upon-Tyne is council owned; 4 per cent. is housing associations, and 54 per cent. is privately owned. It is rather a commentary on the continuing battle that, when I first became a Member of another place some 27 years ago, we had a council house waiting list of 14,000 people. Our council house waiting list today is 13,800 people. Thus the battle continues; it does not become any less difficult. There is an increasing demand for housing accommodation by an increasing number of single people, many of them pensioners; but not only pensioners, other single people, too.
There remains a considerable need for renovation in both the public and private sectors. Council housing—and this is an alarming fact in the case of Newcastle-upon-Tyne—some of which was construc-ted as recently as the 1960s, is in urgent need of repair and upgrading. I am informed that there are over 2,500 dwellings at this time, most of them with flat roofs, which were built in the 1960s, which are in urgent need of very expensive repair. The housing department from which I seek advice suggest to me that the enormous financial pressure which they know within the housing sphere in general is very heavily caused by the need to upgrade and repair. One wonders whether it can be right, and what kind of architectural advice we had about flat roofs or about anything else in the 1960s. It seems quite deplorable that houses built as recently as in the 1960s are representing, in the continuing battle, as big a problem as they do at this time.
Looking at the report I fully understand the theory of a needs-related housing allowance, but I must confess that I personally dislike very much the suggestions of the withdrawal of mortgage relief. Having had a good deal of housing experience, I find it very difficult indeed to believe that there are not a very large number of people who have the understandable aim of owning their own homes. I therefore plead for a continuance of the tax system, supporting the formation of capital within families.
The report quite rightly also emphasises the need for the greater encouragement of rented accommodation. I listened with interest to the speech of the noble Lord, Lord Shaughnessy. How right it is that there should be a sufficiency of rented accommodation, for all kinds of reasons. However, in an industrial city such as Newcastle, there is need for this kind of housing because we have a steady flow of those who are not with us permanently but are passing through. The proposal in the report on rent fixing seems to suggest a continuance and possibly an extension of rent
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control. It has always seemed to me, having had a great deal to do with particularly old rented housing, that the existence of controls of one kind or another has been most detrimental to the maintenance of particu-larly old houses.
As I see it, and as others have seen it today, the urgent requirement is the need for all involved to recognise that private investment is there if it can be encouraged; and private investment can be encouraged only if there is a possibility of a reasonable return on it. I believe that we should do everything possible to encourage the private sector to be involved in the continuance of the battle on housing.
On local responsibility, the inquiry states—and I think it is a very good suggestion indeed—that authorities should steadily become, as the report states, "enablers and co-ordinators", rather than providers of housing accommodation. That is an excellent suggestion and one which I hope can be developed. There must be a substantial part of the answer to the housing problem in greater co-operation of all bodies involved. Building societies have in the main provided the money for the purpose of council houses, and in the future perhaps building societies can do more than that. Cannot this kind of capital be involved in the all-important and essential renovation which is still required in such old cities?
The city of Newcastle has also co-operated in a joint scheme with a building firm for the improvement and the sale of 170 flats. This is an urban development grant scheme. It was the largest of its kind approved in the country. Again, I suggest that such schemes are highly desirable. I know the city is at this time attempting to develop further schemes.
Finance in all spheres is of course the key to greater speed of provision. I think the report reasonably suggests a relaxation of existing controls on capital receipts on the sale of council houses. I understand that there is a certain release of such receipts in the year of their being received, and I understand also that the capital sums which build up should to some degree be regulated. But there seems to me to be common sense in the suggestion in the report that this money could be immediately used to enormous advantage in relation to the immediate problem.
I would conclude by referring to the speech of the noble Baroness, Lady David. In ending her speech, she said that adequate houses which were safe and warm in an area in which people wished to live are desirable. How right that is! In the experience which I knew of a city being cleared of sub-standard housing, those who had lived in the centre of the city found increasingly distasteful to be moved out on to virgin land on the outskirts when new houses had been built.
I should like to commend to your Lordships a scheme in Newcastle-upon-Tyne which has been proved to be highly successful, and it is right bang in the middle of the city. It is an unusual development. It is called the Byker Wall, and the Byker Wall is a continuous stretch of housing, which looks most peculiar. When it was opened, because it was so unique—and it was opened by His Royal Highness the Duke of Edinburgh—and was strange architectually, with a startling colour scheme, when His Royal Highness mounted the platform to perform the

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opening ceremony, he looked at it, and began by saying, "Good gracious!"
I commend this type of urban development, in that the people who are living in the Byker Wall were largely born and brought up in the area in which they are now living and they so much prefer it to going on to the outskirts of the city. I hope that the noble Baroness will find that interesting, and if ever she has a chance that she will visit that particular development. Those who live in it are happy in it, which is very important. Again I commend the report while differing from some of its recommendations. It is a contribution, a good one and a substantial one, in the long and worthwhile struggle to provide every family in the land with a decent home.
Baroness David: My Lords, to make clear that the noble Lord understood, what I said was an environment that the people should like. I hope that he did get that clear. That is what I wanted: not only the general good environment, but something the people liked.
7.13 p.m.
The Lord Bishop of Liverpool: My Lords, I take note of the warning of the noble Lord, Lord Elton, about political reality but he perhaps will not be so surprised that I am still willing to have a tilt at some windmills. I am very grateful to the noble Lord, Lord Seebohm, for bringing this report, published last summer, back to public debate. The two things that I want to talk about are finance and the homeless. I want to return to the inquiry's very important proposals about housing finance. This has touched a raw nerve in the public debate by calling in question mortgage interest tax relief. One senior Minister recently dismissed that questioning by saying that mortgage interest tax relief had been proved overwhelmingly popular. He did not ask whether it was just and equitable. Nor did he ask in what part of the population it was overwhelmingly popular.
I believe that the answer to that is that it is overwhelmingly popular in marginal constituencies. That makes it very difficult for any political party to look at the issue on the basis of justice and equity. For example, I think I am right in saying that the Labour Party in 1974 was committed to taking away mortgage interest tax relief but that commitment soon became watered down in the interests of our friend "political reality".
This raises real questions about democracy, our democracy. We have often supposed that one person, one vote, makes it possible for those who are disadvantaged to bring about change. An old illustration shows that this does not work. We have wrongly assumed that all societies are shaped like a pyramid with the largest numbers towards the base of the pyramid. For a long time, for generations, British society has not been shaped like a pyramid but like a diamond in which the majority are in the middle. When a policy is overwhelmingly popular to those in the middle but is against the interests of the poor, how can a democratic nation like ours properly consider their interests?
Perhaps it is a particular responsibility of your Lordships' House, where we do not have to win re-election, to make sure that unpopular policies gain
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good currency. I believe that it is certainly the responsibility of the Churches to speak up on behalf of those who have very little political clout. I was very glad to hear Lord Seebohm's lead—and Lord Shaughnessy followed—in the appeal for a way to be found between all the emphasis on public and all the emphasis on private. Is it too much to hope that a basic need such as housing could be withdrawn from the arena of political confrontation?
I believe the inquiry of His Royal Highness the Duke of Edinburgh shows a way forward which should gain good currency and on which political parties could dare to find that dreaded word, "consensus". I am sure that members of the inquiry would not want the figures attached to their proposed needs-related housing allowance to be looked at on a take-it-or-leave-it basis. It would certainly need to be refined, as the noble Lord, Lord Pitt, was saying.
I have a little more to say about how our democracy works and the damage which confrontational approaches do to great human issues. Robust debate should not include misrepresenting what our opponents say. All of us need to question ourselves about that. On this subject, some have been quick to appeal to voters' fears. The noble Lord, Lord Marshall of Leeds, whose experience and opinions I respect very greatly, speaks about frightening off aspiring house buyers or frightening those who are commited to buying on mortgage; but we really ought to take great care to read what the inquiry is saying.
It is talking about a very gradual phasing in—20 years was mentioned; a long time. The table on page 18 in the inquiry report is done on the basis of redistributing the monies which are already coming in subsidy from the Government. If I read those tables aright—and I think that I have got it right—anybody who is earning up to £10,000 a year now would not receive less by those proposed arrangements than he receives now by mortgage interest tax relief. The difference starts to happen on a sliding scale as earnings rise.
As I say, the inquiry is showing us a possible way forward and not a fine-honed proposal. This proposal is not about abolishing government help to those who are buying their own homes. It is about replacing a system which offers increasing state subsidy according to the scale of a mortgage: that is to be replaced, it suggests, by a sliding scale of state subsidy to people's housing which relates to the scale of their need. Postwar governments sometimes exaggerated what council housing could achieve, as the noble Lord, Lord Crawshaw, was rightly sharing with us. At present, I believe there is a danger that we exaggerate what home ownership can achieve. Personally, I am strongly in favour of the right to buy, which is bringing more mixed communities into the nicer housing estates—I emphasise, the nicer housing estates. I am delighted when more people can own their own home, provided they have not been attracted into it without having the means to maintain mortgage payments and good repairs—and that point has been made.
The noble Baroness, Lady David, made the point that not all can maintain payments and repairs. I make this point as an enthusiast for home ownership. We need to get firmly on the table what the inquiry says about the need for a healthier rented sector both public

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and private. The highest estimate of what home ownership will be in the year 2000, we have been reminded, is 72 per cent. That takes my mind back to the idea of the shape of society being, so to speak, like a diamond. At least 28 per cent. will not be home owners by the year 2000. The noble Lord, Lord Marshall, made a robust defence of local authorities. I do not believe the inquiry was quite so dismissive of those achievements or of the skills, and I certainly do not believe that we should be.
My right reverend friend the Bishop of Southwark has told us how disturbed members of the inquiry were at what they saw and heard during the inquiry. If I may just underline that, having served for two years on the Archbishop of Canterbury's Commission on Urban Priority Areas, we too saw for ourselves the decaying housing stock. We, too, looked at the figures, which showed a critical backlog of renewal and repairs; and we support what this inquiry has to say in that regard.
I strongly support governmment efforts to bring the private sector into the rented market, and building societies will need tenants to be able to afford economic rents. That brings us back to some new way forward like a needs-related housing allowance. But until private sector involvement is shown to be possible, you must not expect us to look elsewhere than to increased public investment in local authority housing, housing co-operatives and housing associations.
Perhaps I may give what I think is a very important example. I know Stockbridge Village quite well, where a crucially important experiment is taking place between the borough of Knowsley and the private sector. It will be very important for this not to fail and it will be important to monitor honestly the number of tenants who have been decanted from Stockbridge Village to Huyton and a nearby estate and how their housing needs are being met, as well as what is happening in Stockbridge Village.
Perhaps I may pick up one more brief point from the inquiry. That is a proper concern for the homeless. I could indeed wish that the inquiry had gone rather further and pressed the needs of single homeless people. It is my belief that the Housing (Homeless Persons) Act 1977 should be amended, that its priority categories should be abandoned and that the Act should be extended to cover all who are homeless.
When I worked in East and South-East London, I remember the stigma which was placed on homeless persons among London boroughs. A Southwark councillor once approached me after a service at which he had been present and said in a condemning tone, "You are in favour of the homeless." It was said as though that was a very wicked thing to be. The background to that was the widely-held belief that other authorities did not provide for the homeless and gave them their fares to come to London—and indeed that other London boroughs were giving them their fares to go to Southwark, or Westminster or Tower Hamlets, which did make provision for them. That Southwark councillor resented such demands and assumed that homeless persons would always be feckless, blameworthy and so wicked as not to have been born in the Borough of Southwark.
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People are homeless for many reasons. If I may take one example, when I visit mental hospitals I find that those whose counterparts in earlier generations would have been institutionalised throughout their lives are now increasingly expected to live in the community. That is all right, provided that good housing and good support are there for them. We are saving a lot of money by that change in mental care. Are we putting sufficient money into making proper provisions for a very vulnerable section of our community?
One well-tried and successful way of housing the neediest—the point has been well made by the noble Lord, Lord Crawshaw, and the noble Baroness, Lady Denington—has been through housing associations. I very much regret the cut-backs in public housing money in this regard. It means that housing associations, which were providing 40,000 new homes a year at the end of the 1970s, now have a programme which is only half that size. The Liverpool housing associations face a further reduction of 30 to 40 per cent. this year. My hope is that the Duke's inquiry may be put firmly on the table of public debate and kept there, and that the five splendid objectives with which the report begins will really be considered by each of us.
7.24 p.m.
The Earl of Selkirk: My Lords, I think we have all very much enjoyed hearing the right reverend Prelate speaking with knowledge, as he does, of an area where this subject is of the gravest concern, as we all know. The views on this have been pretty sharply divided: indeed, they reflect to some extent what came out in the papers. The Times said it was a craven example of vested interests—more nonsense could hardly be found—and the Guardian said that it was sanity in chaos. I think there is a great deal in that second description.
The inquiry tried to disentangle the very mixed problem which faces us. It is perhaps not unnatural that a non-political examination should have a good go at the sacred cows of, if I may say so, both political parties. That is not strange: indeed, I think it is right. Sacred cows should be taken out and washed every now and again, and then they may be put away again. But I think a number of questions have been raised which should very properly have been raised.
There is one thing for which my noble friend has not thanked this inquiry sufficiently. They did not ask for any more money. With every body of people which gathers together—whether it be the BBC, universities or the Arts Council—the first thing they do is to say that they want some government money. This inquiry did not do that. They said, "Let us see what we can do with the money available."
If we look in this very interesting book called Social Trends we see the sum of £10 billion which the Government are claiming to give to support housing. I know it covers a great many aspects of housing, but I think it is a sum that we should look at. Are we sure that the use being made of it is as good as it should be? There is a lot of talk about mortgage interest, but the fact is that there is fairly good evidence to show that some mortgage relief payments are not wholly what

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they were intended to be. I do not know how many there are, but some certainly fall into that category, I think.
Another problem is the fact that Parliaments are only for five years, and no housing policy can be got going in five years. That is a very real difficulty so long as the two main parties, in major aspects, are opposing each other. I am bound to quote Mr. Crosland, who picked up the Tory Act in 1974 and produced an Act which has been extremely productive, dealing with housing associations. That is an example which, with a little wisdom, I very much hope can be followed on both sides.
I should like to recall for one moment the Royal Commission of 1885. As has been said, it revealed the most abominable situation. It had among its members Sir Charles Dilke, Cardinal Manning, Lord Salisbury and a number of others of a similar character. They saw what was the debris of the Industrial Revolution. People had poured into the cities without any provision of any kind at all. Commonly, there were 11 or 12 people living in one room, with no laid-on water, and if they died they lay there until someone buried them properly. I will not go on about that; but the point I want to make is that the report of that commission was pretty thin. Why was it so thin? I would put it simply in this language: the political philosophy of that time did not really permit of a proper solution.
We can go on, if we like, to when we started again after the First World War, in the 1920s, when the philosophy had changed. There were 8 million houses with the most appalling congestion, averaging 6 or 7 persons per house, in the whole country. Since then we have gone on to the present time, when there are, roughly speaking, 22 million houses. That gives what is a perfectly reasonable statistical presentation of about two and a half people to a house. But, of course, practically, that is quite wrong, because there are many holiday homes, many empty houses and many unfit houses: not all of the houses are being used. We must get a higher number than that—perhaps 23 or 24 million—and that is why I personally think that a major factor in producing these houses must continue to have full support. I mean building societies.
The building societies have been our salvation in this century, and they have changed the quality of society. For the first time in our history the majority of people own a piece of land and a house. Let future historians—the noble Lord, Lord Blake, maybe—tell the story of what is the greatest development in the 20th century. I believe that this will mark a very high-level point indeed. I would hesitate, at any rate for the time being, about any change in the mortgage rate. It is the most successful aspect of our housing. Let that success continue. That is why I hesitate about change. I shall not talk about the future, though there may well be changes which will take place later.
Our main problem is that of maintenance. I want us for a moment to cast our minds forward 10 or 20 years. This problem will continue. As soon as a house is built, it starts to deteriorate. I should like to quote a very sensible statement by the chairman of the Anchor Housing Association, who said:
"Housing is never critically urgent."
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The dry rot is no worse this week than it was last week, but it ought to have been treated last week. That is the problem.
The Government have produced two papers on improvements, and they are very interesting. I was very glad to see that they make two points in particular; first, the drawing in of private money, and, secondly, simplicity. Heaven knows, my Lords, the simplicity of the housing benefit payment could be improved! There are 40 pages of close print. It is not right for the public. I do not know whether or not it is fair, and I doubt whether anyone in this House could say whether or not it is fair, because people do not know. But it is quite stupid. It is no doubt nobly thought out and worked out mathematically, but it is not good enough. I think the plan which the Government have put forward will work. It appears to be a very good plan. But I have no idea whether it will work widely in practice.
I believe that a house is a national asset, and it is the duty of somebody—probably the local authority—to keep the situation going. Maybe these agency centres which have been spoken about should keep observation, not only to help competent repairers to be introduced but also to note when a start should be made, because if you pick up a problem at the beginning it is cheap, whereas if you wait a fortnight or even a year you pay a fortune to have something done.
I shall now come to another point which seems to me of vital importance. I do not want to be discourteous, but it is a disgrace to Parliament that tenants' houses have been destroyed. That is the work of parliamentary legislation. Have no illusions, my Lords: that is what it is. It is now Parliament's business to set things right again. We know that tenancies are wanted. Why do we not have them already? We have reached this position. With a shortage of tenanted houses you cannot take off control, but as long as you have control nobody will build houses for tenants. That is the fact of the situation. How are we to get round it? We must get round it. We have to break this shell at any price.
I am going to suggest a way. We have in the other House at the present time the Building Societies Bill. Five per cent. of their total assets can be spent on buying land. Up to now they have not been able to hold land. What I suggest is that if they built rented property on that land they would not be subjected to regulated procedures. That is a big step forward and it is very bold, but it is the only way that I can think of to break the tangle around us in regard to regulated property. Regulated property was essential in the 'twenties and the 'thirties, but it is a disgrace to this country that we still have regulated property. We should have enabled the economic system to work matters out, which would have made this unnecessary. The proposal of needs-related payments might have been a way around the problem, but we must get rid of this practice and make the economic system work, which would be to everyone's advantage.
The hour is late and I shall make just one more point. If we are to do something of this sort, we must get agreement between the parties. I know how difficult that is, but no one will disagree that it is a disgrace that at this stage of our civilisation, when we go to the moon, we cannot even build a house, where

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people can live, which has a proper lavatory and hot water. We should have devised ways and means of doing what is wanted. The basis of civilisation is a good home, and in addition to education and health people need sound homes to live in.
7.36 p.m.
Lord Ezra: My Lords, there have been many reports on housing and there will be many more, but I believe that the report which we are considering today is of exceptional scope and importance, and it has been remarkably presented to us by the noble Lord, Lord Seebohm, and by the right reverend Prelate the Bishop of Southwark. I believe it would be true to say that after unemployment the need for improved housing is the most important social priority in the nation, and it is right that we should be devoting quite a bit of our time today to considering this issue.
There have been many achievements in the field of housing, as the noble Lord, Lord Marshall, indicated. But the problem—and we are still faced with a problem—has changed progressively over the post-war period. In the early 'fifties the basic issue, as the report indicates, was one of absolute shortage and that was put right by some very vigorous house building measures at that period. Today, there is not an overall shortage of housing, although there is a shortage in certain areas to which the report refers. But the fundamental problem that we face at the moment, to which many noble Lords have referred, is the condition of the housing, the quality of the housing; and I believe that that is something on which we need to concentrate above all other aspects.
The housing condition survey of 1981, which is to be replaced by a more up-to-date survey later this year, showed that one in four of the total number of houses then extant required repair, and the Government's own report, to which the noble Lord, Lord Elton, referred in his earlier remarks, has shown the magnitude of the renovation job required in public housing, which amounts to something in excess of £18 billion. So I believe that the first issue that needs to be faced is whether the present expenditure on housing will be adequate to deal with this problem even over a number of years. I feel that here it is not unreasonable to ask the Government—and perhaps the noble Lord, Lord Elton, will comment on this—whether they are reviewing the funding of housing in the light of their own report.
There are many ways by which this can be dealt with. For example, local authorities could be progressively authorised to use more of the funds that they have acquired from the sales of houses, home improvement grants could be extended and there is the recommendation of the noble Lord, Lord Sandford, about VAT on home improvement. I hope, in the light of the report that we are considering this afternoon and in the light of the Government's own estimates of the problem that the country faces in the way of home improvement and renovation, that there will be a review of these various financial measures.
But, in addition, emerging out of today's debate, I believe there is a feeling that this goes way beyond action by government and that there should be more and more schemes in which the public and private
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sectors come together. A number of such schemes have been referred to. I should like to refer specifically to the scheme introduced by the National Home Improvement Council, with which I am connected, known as the neighbourhood revitalisation service. This was started a year or two ago and is intended to co-ordinate the use of public and private funds to improve housing in specific areas. I am glad to say that there are four projects now in operation—in Sheffield, Oldham, Bedford and Gloucester—and work is being done with support from both public and private sources to move into other areas. I believe that measures of this kind can bring home, perhaps more than just direct government expenditure, the need to take action in this area.
There is an aspect of this whole question of the physical renovation and repair of houses that also needs emphasising. I refer to job creation. It has been estimated that for every £5 million spent on home improvement 290 jobs are created on-site and a further 96 jobs in factories producing building material and equipment. That is a quite significant contribution to further employment and to wealth creation. What I should like to plead for arising out of our debate on this very important report is that we look at all ways of stimulating effort in home improvement at the present time involving government, local authorities, housing associations, joint public and private schemes and the private sector. I believe that this report has brought home more than anything else the very great social challenge that the condition of housing presents to us at the present time.
7.43 p.m.
Lord Coleraine: My Lords, my noble friend Lord Selkirk started his speech by quoting from the press, and in particular from The Times, as being against the report. He is perfectly correct in saying that an article in The Times did say that this was a craven example of a vested interest urging that new restrictions and regulations should be introduced so that it can spend more of other people's money largely to further its own sectional interests. As a reader of The Times I should put the record straight although my noble friend has been called away for the moment. In the same issue of The Times there was a very balanced view of the report in the leader column and it finished with these words:
"Even jaded Ministers should be propelled into looking again at the rather threadbare garment which is current housing policy".
This report comes as a package of proposals designed to solve among other vexing problems what I might perhaps call the problem of inner city housing distress. It comes with the clear message that the whole report must be taken as one dose and swallowed with nothing omitted. We are offered housing for all and considered proposals for arresting and turning back the terrible deterioration which has affected our country's housing stock. The report offers the prospect of choice, so that a householder can decide whether he buys and so accumulates savings in the bricks and mortar of his home; or whether he rents and accumulates in some other way—and if the decision is to rent, whether it is to rent on a municipal estate or privately.

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I find convincing the analysis in Chapter 2 of the report of the mess that housing is in today. I refer particularly to the highlighting by the report of what the inquiry refers to as lack of choice and the factors which cause it and the positive priority given by the report to making private rented housing viable again. I am not speaking against unsatisfactory council estates if I say that I should have preferred to see some positive commitment by the inquiry to the gradual rolling back of the municipal sector. Twenty-eight per cent. of all houses in the hands of local authorities in 1983, with some local authorities owning almost the entire housing stock in their area, is surely too much when compared with the 11 per cent. owned privately or by housing associations.
The preface to the report tells us that it represents the collective views of the members of the inquiry. There is no indication in the sections which I have studied closely that there was much if any dissent among the members of the inquiry. All seem to have been agreed on what was necessary. I find it remarkable that there was no indication that any of the recommendations represented the views of only a majority—there was nothing to suggest that any member had any reservations on any particular point. For that reason I feel a little sceptical about the report and I must confess that I cannot take it as a whole—I can take it a la carte. I fear that the report leaves a certain amount unsaid.
It seemed to me when reading the report that there were a number of thorny issues carefully left to one side and untouched by the inquiry but without there being provided any clear indication that the issue had been left to one side because the inquiry could not reach agreement; or any indication as to what the arguments dividing the inquiry might have been. I would instance a section headed "Security of tenure" on page 26. This section deals with the provision of rented housing. The report says:
"Too much security discourages landlords from letting, or induces them to find loopholes which deny the tenant any security at all. Too little creates a situation of constant uncertainty and threat for the tenant".
There in a nutshell is one of the big housing problems: how to satisfy the reasonable requirements of two groups when those requirements are basically irreconcilable. The report goes on:
"We are well aware of the dangers and pitfalls involved".
I think we know about pitfalls: they are generally to be avoided, as the report does here, and not filled in. The report discusses the situation and finally lets us down by concluding:
"On the precise nature of security arrangements we are less clear, and feel that there is a need for widespread discussion on the subject".
The inquiry also calls for further research and debate. To my mind the inquiry has undoubtedly avoided the pitfall but at some loss of persuasiveness.
I would ask one question concerning mortgage interest relief which has been so interesting to us this afternoon. I noted the intervention at Question Time in another place on 16th January by the right honourable Roy Hattersley. He said quite category-cally that there was no question of the next Labour Government abolishing mortgage interest relief. This
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has been repeated this afternoon by the noble Baroness, Lady David. Throughout the report there are proposals the implementation of which would require a political consensus on housing such as we have never known before, clearly implying that the lamb has got to lie down with the lion. But how could it be here where the lion and the lamb have learnt to lie down together with mortgage interest relief—then along comes this report and tells them not to lie down together?
I referred to this question of mortgage interest relief only to point to the general unworldliness of the report. Perhaps it is best epitomised by the fact that it would take well into the next century for the report to be implemented. The right reverend Prelate the Bishop of Southwark referred to the value of setting goals. I know that Rome was not built in a day but we are not building Rome now, and neither was Rome a Westminster-style parliamentary democracy in a very fast-moving world.
I wish to mention the needs-related housing allowance. This will be paid by some body—the report is not clear which of two bodies—to public and private tenants and owner-occupiers alike. It will be financed by clawing back something like £3½ billion of mortgage interest relief and adding that to the £2.6 billion already distributed in 1983–84 by means of the rent rebate and rent allowance elements of housing benefit and supplementary housing assistance—which currently provides practically all the housing expenses, including rent and rates for tenants on supplementary benefit and mortgage interest for owner-occupiers in a similar position.
That will produce something like £6.1 billion to be distributed as a subsidy. However, I can find precious little in the report to suggest that such an amount is an appropriate sum with which to fund the needs-related housing allowance. Nor, looking at the problem from another angle, is there much attempt to quantify the extent to which the existing needs-related subsidies fall short of the unquantified sums that the inquiry would like to see redistributed.
I myself find it very difficult to resist reaching the conclusion that the inquiry has been led by its disapproval of mortgage interest relief to appropriate for its own purposes the £3½ billion that it happened to find in that corner—simply because the money was there and the inquiry felt that it could be put to good use.
I happen to share in a modified way the inquiry's disapproval of mortgage interest relief in its present form. However, I share only one of the inquiry's grounds for disapproval. I do not agree that housing finance should be a pawn in redistributive politics, but I object to the fiscal distortions that the present form of relief creates. I share also, and for the same reason, the inquiry's reservations about the desirability of capital gains tax relief on the disposal of homes.
I suggest that in the case of mortgage interest relief at least, it would be far better to reduce the fiscal distortions not by restricting the relief but by extending it to borrowings for other forms of expenditure. It would surely be better to provide relief for repairs as well as for improvements, especially when "improvements" are allowed to include expenditure on the construction of swimming pools.

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I would myself go further to liberalise mortgage interest relief, if only because the figures showing leakages of tax relief from housing make it clear that relief is already being unofficially liberalised to a considerable extent. That matter is one that ought to be examined carefully.
I have one further point to make about mortgage interest relief. The list of key recommendations that appears at the beginning of the report kicks off with a reference to a needs-related housing allowance. It says a good deal about what that allowance would achieve for all in need but not mentioned there is the limiting factor called eligible housing costs. They make their appearance later, on page 17.
To obtain the full needs-related housing allowance, the tenant or owner-occupier would have to have equal or greater eligible housing costs. The effect of that seems to be, broadly, that if a tenant's rent is less than his needs-related housing allowance then he would not receive the full allowance. He would therefore be advised to consider moving into somewhere more expensive, where the additional rent would be paid to him. For the owner-occupier under that regime, the lesson would seem to be that if he has no mortgage then he should get one so that the interest may be paid to him.
Why should a family who have paid £30,000 for their house, for example, be relatively penalised as against another family with the same household income, and falling into the same size and composition category, who happen to have bought a better, £40,000 house with the aid of a £10,000 mortgage the interest on which is paid by a needs-related housing allowance? That is just one distorting element that the inquiry itself would introduce.
I thank the noble Lord, Lord Seebohm, for giving the House this opportunity to debate a most important report. I beg the noble Lord not to be too pessimistic. Did he really say that for 30 per cent. of the population, housing will always be a social service? That is what my note says. However, if we throw unlimited subsidies into housing we shall certainly create a truly servile state. I am convinced that that is not necessary in this innovative and affluent day and age, and that careful consideration and selective implementation of the report will help to ensure that it does not come about.
7.56 p.m.
Baroness Fisher of Rednal: My Lords, it is late in the evening and the noble Lord, Lord Marshall, is just leaving the Chamber. I intended to follow up the point he made that one should not divide the achievements of local authorities. The noble Lord can leave now that I have mentioned that, and knowing that I support him.
Many millions of people have been given, and are still being given, the opportunity of decent housing by local authorities. We must accept that. After all is said and done, it was local authorities who pioneered many of the provisions that have been taken up by housing associations. I acknowledge also that local authorities are not perfect; I accept that that is so, because I was chairman of the housing committee in Birmingham before I became a Member of another place. However,
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although we are not perfect, the fact that we were doing some good work is shown by the fact that people are now taking the opportunity of buying properties on the estates that were then created. They must think that they are all right; otherwise they would not make those purchases: for having purchased those properties, they remain living in them. Therefore those estates built by local authorities must have been of a high standard for people to choose to continue living there.
I was very interested in the observations made by the noble Lord, Lord Elliott, about the Byker Wall development. I do not know Byker Wall; it sounds an awful nomenclature, but nevertheless it is evidently a very good development. I say to the noble Lord, Lord Elliott, that for a very long time I represented on a local authority what was known as a central area. The houses there existed cheek by jowl with the local gasworks, which I suppose was one of the largest gasworks in the country before the introduction of natural gas. That area was devasted by enemy action. It contained the most appalling slums, with houses not just back-to-back but back-to-back-to-back-to-back.
It so happened that the city decided that it should be the first area chosen for redevelopment. Flats were built to provide as many homes as possible, bearing in mind that most of the large cities had what one might call a corset around them. No green belt wants any of the people from the central area to go and live there because they are considered not to be the right kind of people. When those flats were built there was no problem because, as the noble Lord, Lord Elliott, observed, the tenants were people who had already lived in the area. They moved into those blocks of flats and created a community. There were no problems at all. For the first 10 years, children were brought up in those blocks of flats, which had nursery schools at the bottom of each one.
Then of course Birmingham said that it wanted some more land and the government at that time looked at little pieces round the city and they gave us pieces. We started to build housing on that land. All those people who were so happy in the blocks of flats and who had lived in them for 10 years said, "We have lived in the flats for 10 years. We ought now to have our chance". So there was this policy for people who had lived in flats for a long time to be moved out. As soon as one did that of course one destroyed all of what the noble Lord, Lord Elliott, referred to. Therefore in choice being given to one group of people it was perhaps destroyed for others. It is a point worth considering because some people said "Tut-tut" when they went to live out on periphery estates. That is not what most people say, because they have often chosen, when offered a house, to move out to them.
I must also say that I can remember some of the things mentioned in the report taking place in Birmingham when I was chairman of the housing committee, when we built our estates on the periphery of the city in the 1960s. We were building houses for sale on a shared ownership basis, with the local authority taking responsibility for a half share and the tenant having responsibility for the other half. These were built specifically for those tenants on the housing list who said they wanted to purchase. That was before any government scheme of selling.

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I was interested in what the noble Lord, Lord Crawshaw, said about not being able to get a tap fixed, and so on. With all due respect to him—and I thought he made a most excellent contribution to the debate—we had a debate yesterday in this Chamber on science and technology in local authorities. Science and technology—especially technology—is now working in the housing departments of all the large local authorities. I can give examples in the cities, because I have visited them, where one can see housing details on computers, showing what the people have asked for, and so on. If the noble Lord, Lord Elton, wants to know why certain properties lie empty on certain developments I feel sure that he will get some observations from the housing director in Birmingham because such details are tabulated on the computer. The reason is given why a certain piece of property has not been taken up after half-a-dozen or 10 people have seen it. After officials from the housing department have seen it, normally it is found that it is not the property that the people are turning down. It is usually for some very personal reasons.
Large local authorities, as in Birmingham, are decentralised and so are doing the things that housing associations are doing. They have their housing offices and in many cases the DHSS has asked for accommodation in those offices so that it can be helpful at the same time, with the whole process working together. There are terminals on the computer linked direct to head office should there be any problems. It is the job of those housing officers who are working in the districts to encourage tenant participation and try to get tenant committees going.
Everyone is saying that housing decay will not go away and that something must be done about it. I shall give figures which I think are important. Between the years 1978–79 and the expected outcome in 1985–86, spending by the Department of the Environment on housing will have been cut by 59 per cent. That means, in simple terms, that for every pound spent on local authority housing in 1979 just 30 pence is available today. There is not very much that one can do with 30 pence these days. It is important to remind noble Lords that many local authorities—in fact the majority—are receiving no grant subsidy from the Government. Most are not receiving that direct government subsidy and that automatically has an effect upon what a local authority can do.
I am interested in this aspect. Local authorities owe millions of pounds and every year pay out millions of pounds in debt charges for the money they have borrowed. I should like the noble Lord, Lord Elton, to tell me into what kitty that money goes—all the millions of pounds which the council house tenants are repaying—because it is coming out of their housing. Into what kitty do the debt charges go? Is there some kind of (if I may use a fancy word) bookkeeping which the Treasury uses?
Like other noble Lords, I believe that more resources must be made available. Those resources are available from the profits that have arisen from the sale of housing. Local authorities should be entitled to recycle the accumulated and accruing housing capital receipts into areas of acute housing need. This is no different from the system that currently operates for
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housing associations, which use the housing corporation as the recycling vehicle. There should not be any difference between the two.
In talking about fairness we should consider the tax relief on mortgages. It was £4·75 billion in 1985–86 compared with £1·1 billion in 1978–79. Compare that with the Government's social security Bill, which we shall be having later in the year and which aims to cut about £0·5 billion from housing benefit. Is that fair when an increased amount is going to mortgage tax relief and being pulled away from another form of housing benefit? The noble Lord, Lord Coleraine, spoke about fiscal distortions. I consider that to be a fiscal distortion. It is to me, though I talk about fiscal distortions as being fair or unfair; but perhaps the noble Lord, Lord Coleraine, is an economist, which I am not.
On housing benefits, I can tell your Lordships that 78 per cent. of the people living on council house estates in Birmingham are receiving or awaiting housing benefit. I understand from the housing corporation that last year it did a survey which showed that the majority of the persons it was helping were people in full employment but earning less than £60 a week; so they also were housing benefit cases. I shall not go into the question of the disadvantaged, such as the homeless, to which other noble Lords have referred. We are all aware that homelessness is now on the increase as a result of domestic violence as well as other reasons which all show a trend in society. However, I want to make a point about the frail elderly because it affects housing associations. How sad it is that the Government have seen fit to make reductions in the DHSS allowances to residents in accommodation for the frail elderly. Those cuts will put some of the schemes in jeopardy.
Perhaps I may briefly refer to Servite, which charges £135 a week in one of its homes for the frail elderly. The housing person in charge says that the maximum the DHSS will pay is £120 a week. That means, he says, that he can see their residential care homes deciding that they have no option but to refuse people on benefit and to take only those who can pay privately. What a sad thing it is for a housing association which is trying to do something for the frail elderly, to have to say that! I go along all the way with the report, which recommends that local authorities should work on rehabilitation in conjunction with housing associations, co-ownership schemes and private builders.
I think that we also must understand, as many noble Lords have said, that there are certain persons who will want rented accommodation. For all kinds of reasons these people do not become owner-occupiers. Of course one cannot really become an owner-occupier if one is unemployed; that is almost an impossibility. A mortgage cannot be obtained on unemployment pay. It may be that the Government ought to consider very seriously the fact that if money were spent on housing, more people would become wage-earners because they would be employed in the building industry, and these people may thus be enabled to become owner-occupiers instead of remaining unemployed. This would give a real uplift to that group of people.

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I think we are all grateful to the association for bringing to us the report of the inquiry which was conducted under the able chairmanship of His Royal Highness the Duke of Edinburgh; but I also think it is important to recognise that housing associations work through the Housing Corporation. It is the Housing Corporation which lend money to housing associations.
In his introduction to their annual report, the chairman, Sir Hugh Cubitt says:
"Our own analysis [of what they are doing] suggests that we are now unable to support many projects which we ought to fund, even to keep pace with the most urgent needs—which include those of the elderly; those arising from inner city decay; those of ethnic groups; and of people with other very special problems".
This statement is from the chairman of the Housing Corporation, which really have to help out housing associations. He is saying that the amount of money they receive, though it has been much more generous than that given to local authorities, is not sufficient. In his long final paragraph, he says:
"I would be shirking in my own responsibility—vested in the Corporation by Statute—for promoting and developing housing associations, if I failed to put on record our considered view that housing for those in the most dire need, for whom we provide, is now seriously under-funded".
Coming from the Housing Corporation as well as local authorities, such statements clearly show that the Government must take note of what has been said today.
I am concerned with the Housing and Planning Bill, which I know we shall be discussing in this House. Like the noble Lord, Lord Marshall, I think there is concern that selling off large council estates can cause severe problems. What concerns me most of all is that if we do this, we may be leaving council housing as an undesirable type of tenure, one which is confined to those who have the least choice in the housing market. Poor environment and social surroundings have been widely researched and everyone knows that low income, poor health and pessimism, poor household management ability, inability to handle stress, things which in social terms are called "the cycle of deprivation" are the result. As the noble Lord, Lord Crawshaw says, from these cycles of deprivation will follow serious consequences.
I apologise for speaking for so long, but in conclusion I should like to say that I think the report has clearly offered solutions. They are not cast-iron solutions, as I think the right reverend Prelate who was a member of the inquiry said; they are solutions which are suggested for discussion, and maybe better ones can be found. What the noble Lord, Lord Seebohm, has done this afternoon in introducing this Motion to the House is to make sure that housing returns to the agenda. That is a start. As the noble Earl, Lord Selkirk, has said, what we in this House must do is to ensure that housing in its broader sense maintains a higher profile on the Government's agenda.
Lord Marshall of Leeds: My Lords, perhaps I could ask the noble Baroness whether she possibly misunderstood what I was saying, becaause I do not remember saying that to sell off large housing estates would be detrimental to this, that or the other. It is not the sort of remark I would make anyway, so perhaps
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the noble Baroness has mixed me up with another speaker.
The Bishop of Southwark: My Lords, may I add a word of explanation about the Byker Wall as the noble Lord, Lord Elliott, was not present in the Chamber, and as I was the Bishop of Newcastle? People might have got the impression that it was all wall. The bulk of the development is low-rise housing and the wall represents quite a small part of it. The consequences you feared, of people wishing to move out of flats into houses is not likely to arise in that particular development, which is a very interesting one.
Lady Fisher of Rednal: My Lords, I am most grateful to the noble Lord and to the right reverend Prelate.
8.16 p.m.
Baroness Macleod of Borve: My Lord, like other noble Lords, I am most grateful to the noble Lord, Lord Seebohm, for bringing to our attention today something which plays a vital part in our lives in this country; namely, housing. This is an enormously comprehensive and interesting report which has considerably enlightened me. I am one of the few people in your Lordships' House who have never been a member of a local authority. However, I do a certain amount of work outside this House on matters which are pertinent to housing.
As tail-end-Charlie almost, I have been putting pieces of paper away and using my pen as much as possible. A feeling has emerged from this debate which I have felt for a very long time, which is that we simply must have more flexibility in housing and more houses and dwellings available in the rented sector. I think I said in the debate on the Queen's Speech that 30 per cent. of those who want dwellings, want houses to rent.
We are living in changing times. People are changing their jobs, which very often means changing their homes. Unfortunately, people are also unemployed, which means that they have to travel to find employment. If they cannot find employment with homes, or if there are no homes in their area, then they cannot take up the employment. Therefore, it is very important that we look at the graph on page 23 in which we see that, in 1913, 90 per cent. of private dwellings were for rent, but that in 1983 the amount was reduced to 9 per cent. As the report has said, diversity and opportunity of choice in the housing market is essential and the aim should be that 60 per cent. of the population should own their own houses. This again is shown on the graph.
There is nothing wrong with wanting to own one's own house, but, as other noble Lords have said, in this difficult period in our country's history it is not often possible for people under, perhaps, the age of 30 to have enough money to take out a mortgage; and so we need property to rent. I am sure that that point has been covered adequately and the Government will take it under their belt.
Very little has been said this afternoon about the Government's capital expenditure on repairs and renovations in the public sector. There has been an enormous increase since 1979. Now £1 billion a year

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is spent, plus another £1 billion out of revenue. In 1984, 87,000 town dwellings in England were renovated. This is the highest number since 1973.
Like other noble Lords, I listened with intense interest to the right reverend Prelate the Bishop of Southwark. He has immense knowledge, not only from his diocese but because he was a member of the commission. This morning I did a little bit of homework on the inner London boroughs, which have a name for not building up to requirements. I came up with these facts. In Lambeth rent arrears are £7·3 million, or 16 per cent. of the total; in another borough they are £13·6 million, or 13 per cent. of the total; and in Camden they are £6·9 million, or 16 per cent. of the total.
As has already been said, if there was more effective housing management by the boroughs, millions more pounds would be available to be spent. Many of the unemployed tenants should be persuaded to claim their rent from the DHSS and get housing benefit. I grant that it all comes from the national pocket, but at least the money would go to the local authority for it to spend on housing.
The noble Baroness, Lady Fisher of Rednal, raised this point, and I hope that she will forgive me if I reiterate it. In the report very little mention is made of the ageing population. Every home that an elderly person vacates will be available for someone else. I am sure that all noble Lords know and admire the Abbeyfield Housing Association. The 1981 census showed that there were 383,291 people over the age of 71 living in Greater London, and 361,167 pensioners living alone. Apart from the fact that those people are perhaps lonely and are also probably taking up housing by remaining in homes in which they have brought up their families, it would alleviate the housing problem if they could be persuaded to enter an Abbeyfield or similar home. That association has 7,300 residents, and the average age is 82. The housing association grant for new buildings and conversions is nowhere near sufficient, but the Abbeyfield hopes to expand in order to fulfil a great need.
I know that we want to conclude the debate, but let me say finally to your Lordships that houses are homes, whether in private or public ownership or rented. The people of our country need and deserve suitable homes. I appeal to the Government to provide them.
8.26 p.m.
Viscount Buckmaster: My Lords, it gives me great pleasure to support my noble friend Lord Seebohm and to congratulate him on his admirable introduction of this important report. I wish to speak on two areas of great concern to me: ethnic minorities and children. Neither comes directly within the scope of the report that we are considering, but I submit that both are important in the general housing context.
However, I hope that your Lordships will forgive me if I start on a personal note. I was brought up in the days of the slums, which have now been replaced by the tower blocks. I remember so well those cramped, inadequate, insanitary and over-crowded little slum houses, but yet what splendid spirit there was among
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the people who lived in them! I remember particularly as a child the courage, the cheerfulness and, above all, the camaraderie of some of the poorer inhabitants of North Kensington, where housing conditions were just as bad as those in the East End. It was there that my aunt worked tirelessly to try to improve those conditions. She gave her time, her money and ultimately her life for the poor of North Kensington, dying in her thirties of a disease which could easily have been cured today.
That was in my childhood, some 10 years before the First World War. I then spent most of the next 45 or 50 years in public service abroad, and it was only last year, some 55 years later, that I had my next experience of public sector housing. That was on a tour in which several noble Lords took part, among whom were the noble Baroness, Lady Denington, and the noble Lord, Lord Graham, who I hoped would be speaking today, but we are not to hear him. It was a tour of various GLC housing estates. It was a revealing experience, but also a saddening one.
Who would have dreamt that those living in housing immeasurably more comfortable than that of the 1920s or 1930s, with fitted carpets, central heating, televisions and so on, could be for the most part so querulous and unhappy, which they were? The reason is surely that those tower blocks, built 20 or 30 years ago, incorporated several basic design defects. Of those, by far the most important was the overhead walkways, which is a point that I do not think has been touched on in our debate this evening. Those are found on many estates, and they were the subject of universal criticism among the tenants to whom we spoke on our visit.
The original concept was laudable. It was to promote good neighbourliness, camaraderie and so on among the different groups. The idea was that Mrs. Smith from Southwark could be pally with Mrs. Singh from Bengal, and so on; but, of course, it did not work. It did not work because one has to accept, I am afraid, that it is not really possible to mix ethnic minorities in such close proximity with the white inhabitants. Such a concept would have been admirable in a desert encampment or in an African village, of which I have had much experience. These are environments where everyone comes from the same tribe, clan or extended family. But, of course, it does not work in London.
These walkways have become dirty, smelly and crime-ridden. They are escape routes for gangs of muggers, for children playing irresponsibly and for teenagers doing what teenagers do—and I need not go into too many details there. So they are thoroughly unsatisfactory in every way. The Westminster and Southwark councils have accepted that these walkways and other design defects are the prime cause of vandalism. What is the solution? I just do not know. Improvements would be very difficult and very expensive. I am told that it will cost about £4 million to remake the 30 walkways on the Mozart estate, where criminal damage costs approximately £110 per flat per year. However, on the Lisson Green estate, crime and vandalism were halved when the walkways were removed.
There are, of course, other defects on these large housing estates. Some are touched upon in Chapter 2 of the report, but, in my opinion, not in enough detail.

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Among these defects one can note inadequate heating systems, poor sound insulation, large open spaces for which the tenants have no responsibility and inadequate drainage.
I turn now to ethnic minorities. I wish to deal briefly, in view of the lateness of the hour, with three aspects: racial discrimination and harassment, housing allocation and bed and breakfast accommodation. All would agree, I believe, that in the 1950s and the 1960s there was a great deal of racial discrimination. One would see notices in shop windows, "Room to let: no coloureds accepted". The situation has improved considerably since the passing of the Race Relations Act 1976. But there are still some pockets of discrimination, and these are very hard to assess. Harassment, too, I am glad to say, has declined, but it is still noticeable in some areas, particularly in the London borough of Newham.
Now to housing allocation. Two very valuable reports, published in the last two years, give a most interesting insight into this aspect of the problem. The first was a study conducted by the Commission for Racial Equality entitled Race and Council Housing in Hackney, dated 1984. Secondly, there was the report of the Association of Metropolitan Authorities, Housing and Race, of April 1985. These two reports revealed that in Greater London as a whole—I am afraid that I must confine my remarks to Greater London—the ethnic minorities, particularly West Indians and Asians, are undoubtedly worse housed than the whites. I should like to quote just a few of the findings of the Hackney survey. This found, inter alia, that black families on the council waiting list were three times less likely to be offered a house, rather than a flat or a maisonette, than white families in similar circumstances; secondly, that white families were over eight times more likely to be offered a new property than black families; and, thirdly, that black families, on the other hand, were three times more likely to be offered pre-war property.
I turn now to bed and breakfast accommodation. It is important here to stress that a surprisingly high proportion of the homeless in London and elsewhere are from the ethnic minorities. A large number are obliged to stay in bed and breakfast hotels. How horrible these are! I would elaborate, but time does not permit. For example, 58 out of the 104 homeless households placed in bed and breakfast accommodation by Haringey Council were of black and ethnic minority origin. In Tower Hamlets, unfortunately, the situation is even worse: more than 90 per cent. of the bed and breakfast families are believed to be from the ethnic minorities, with a high proportion of Bengalis. Such ethnic minorities appear to suffer more from stress in such circumstances than white families by reason of the disruption and the unfamiliar environment in which they find themselves.
There has been far too little research on all this. But we must accept the excellent work being done in the housing and other spheres by the Ethnic Minorities Unit of the Greater London Council. The noble Lord the Minister will doubtless remember the inter-ventions and I made at the Committee stage of the Local Government Bill. I would ask him what is to happen to this Ethnic Minorities Unit. I went there the
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other day—in fact, I spoke to them only yesterday on the telephone—and they still do not know what is to happen. I greatly hope that if the boroughs are to take over, as indeed they will take over, there may yet be some sort of overall co-ordinating body.
I turn now to children. Here, as we all know, it is the noble Baroness, Lady Faithfull, who knows infinitely more about children and their needs than I or anyone else in your Lordships' House. It was John Masefield who said:
"And he who gives a child a home
Builds palaces in Kingdom come".
But, of course, a home means not just the bricks and mortar of the dwelling-place. For, with children, love is more important than luxury, and compassion is more important than comfort. Thus a child can be happy in a hovel but miserable in a mansion.
What are children's basic needs? Your Lordships will, I believe, agree that, apart from food and clothing and reasonable shelter, these are room to play and room to express themselves. It is here that they suffer so gravely in bed and breakfast accommodation. A recent survey conducted by Shelter revealed that the number of homeless people placed in temporary accommodation by London local authorities this summer was the highest ever recorded. In June 1985, nearly 8,500 households in London were in temporary accommodation. Unfortunately, very little information is available on the numbers of children involved, their reactions to these conditions and their special needs. But where such information is available—a great deal more ought to be available—it makes disturbing reading. For example, 485 homeless households placed in bed and breakfast hotels by Camden Council in April 1985 included 274 children living with single parents and 396 children living with two adults or more. No less than 60 per cent. of the children placed in these hotels were aged five years and under.
I conclude with two recommendations, both of them stressed in the report. One is that tenants must always be consulted over design planning, bearing in mind—this has to be faced—that most tenants have little aesthetic sense. It was Sir Hugh Casson who said that as a race, we are "visually illiterate".
The second recommendation, it seems to me, is of vital importance. Here, if I may, I should like to quote from an article in the Observer dated 5th January dealing specifically with housing estates in Manchester, although it applies to the whole country. I quote:
"What is wrong with all these random estates is that they were planned with no thought for what makes a pleasant environment. There was no idea of the need for overall order, of continuity, of human scale, or of what is meant by character and quality. In short, they were simply run up by teams of people with no sense of aesthetic responsibility whatever".
Surely, this is one of the vital points to be stressed in future planning. Such plans must reflect the totality of the concept, with due regard for overall order and, indeed, a measure of beauty, continuity and, above all, the needs of the inhabitants.
8.40 p.m.
Lord Belhaven and Stenton: My Lords, an advantage of taking part in a long debate like this in

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your Lordships' House is that one learns a very great deal, particularly if one listens to a number of speakers and reads the report upon which the debate is based.
In my view the report is a very good and balanced one and not at all what I expected having read the accounts of it in the press and seen discussions on television. It seems to me that the press and television tend to emphasise the sensational points and do not bring out the report as a whole at all.
It is not necessary to agree with the report's recommendations but I think it is fair to say that it makes a brave effort to cover a very difficult subject and an extremely important one. It also makes an effort to come to terms with the balance between security of tenure and availability of rented accommodation—a matter which has worried me ever since I was a farmer, although I am not one any longer. In this case they have rather neatly passed the buck on to the Government; and of course they are quite right to do this.
At present the balance is too heavily weighted in favour of the tenant. As I know, it is extremely difficult to get rented accommodation, particularly in big cities and in London, at any sort of reasonable rent. This is to a very large extent due to the fact that nobody with his head screwed on would let a house or flat if he ever wanted it back again. To my mind this is a ridiculous situation, I am surprised that nothing has been done about it for all these years particularly when we have had a Conservative Government since 1979.
Another point already dealt with by the noble Lord, Lord Crawshaw—but I should be grateful if my noble friend explained it—is the question of money obtained from sales of council houses and why the councils are prevented from using this money. It seems quite extraordinary to those of us who are not in local government, but I have no doubt that my noble friend will give us a very good reason.
Turning to a general point, we have had in my lifetime one purely beneficial piece of legislation. That is the Clean Air Act. This was brought to my mind on a visit which I made to Poland at the beginning of this month and to the beautiful Polish city of Cracow, which is very heavily polluted by aluminium works nearby. It reminded me of my childhood in the long, dark streets of London and Glasgow, when normally one could not see more than 300 yards. When one travelled in the buses one also saw the respiratory diseases and so on which people had. Nowadays with the Clean Air Acts—I shall not say that that is all wiped out—the improvement is enormous. I do not think that young people realise how enormous it is.
Speaking as a layman on the subject it seems to me that the next thing that ought to be done should be the encouragement at every level of housing of central heating, double glazing and insulation, and to a smaller extent soundproofing. However, the greatest enemy of housing is damp; and central heating, so far as I have seen, is the best cure for that, although not the only one.
Perhaps my noble friend could tell the House what efforts the Government are making to encourage this dry, warm housing and particularly the spread of central heating and insulation. In my view every penny spent on it is well worth while; and it will reduce costs
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of the National Health Service if it saves nothing else.
My noble friend Lord Coleraine talked about the tax relief on mortgages. Perhaps there could be tax relief on installation of central heating in people's housing. That would be a very good idea. I put central heating into a house about 15 years ago and about two months later my rates went up. This seems to be a rather counterproductive way of dealing with the matter, particularly as I paid for it and not the council.
Finally, on a personal level, I should like to make a plea for common sense and humanity in dealing with some housing problems which I have seen. I know of cases where neither humanity nor common sense has been exercised, as I am sure that most of your Lordships do. I know a lady who was evicted from her flat and made homeless so that her flat could be bought by a society which houses homeless people. That lady is still homeless. The society which bought her flat will not let her have it back. They have very kindly put her at the bottom of their list, having admitted the paradox involved in putting her out—and thereby making her homeless—in order to house a homeless person.
I know of another case where, due to negligence on the part of an insurance agent, a young widow was left with a huge mortgage after her husband's premature death in a motor accident and with hardly any means to pay the interest. She has been hounded quite mercilessly by the building society for 18 months. The building society is now suing her for repossession although the building society knows that the flat is for sale and the widow is negotiating the conveyance with the buyer at this moment. Unfortunately there is too much of this sort of thing going on. For that reason I make no apology for troubling your Lordships with two cases which I know of personally, because I believe that this ought not to happen in a civilised society.
8.48 p.m.
Baroness Faithfull: My Lords, every point that I was going to make has already been made, which makes me think that great minds think alike in your Lordships' House. I shall therefore confine myself to just one sentence on four of these points and develop the fifth.
First, I thank the noble Lord, Lord Seebohm, for initiating this debate and congratulate the National Federation of Housing Associations, and Richard Best, upon this very excellent report.
My first point, very briefly, is one which the noble Lord, Lord Crawshaw, made; that money should be spent to the best advantage. I have two examples of interdepartmental non-co-operation. I can think of one authority which built houses where there was no work. I know of an authority at this very moment which is building a factory when it has 7,000 people on its housing list: if they build the factory, where will they put the people coming to work at that factory? I therefore make a plea for interdepartmental co-operation.
My second point is on empty houses. I went to a London borough last week and there were two streets with blocked-up lovely little Victorian, solid houses—three rooms up and two rooms down. I

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therefore marched into the Town Hall and asked why were they blocked up. They said, "They have been blocked up for 15 years because we are waiting for redevelopment". I cannot imagine why it would not have been possible to put them in minimum order and have licensees in the houses so that those houses could have provided homes for families for 15 years.
Many noble Lords have spoken on the subject of rented accommodation. May I make a plea for the single person? We talk so much about families, and rightly so; but I come from Oxford, where we have students, young teachers and young secretaries quite unable to get any accommodation at all. I wonder whether we should not think very seriously about the single person.
May I take up the point that the noble Viscount, Lord Buckmaster, made on the subject of bed and breakfast? The bed and breakfast scheme is most cruel because it means that people are tipped out after breakfast and wander around the streets all day. I know that in my own authority we have opened a day centre for such families, but this is no way to bring up children. I am grateful to the noble Viscount, Lord Buckmaster, for having spoken about the needs of children.
The final point, upon which, with your Lordships' permission, I shall speak a little longer, is that made by the noble Baroness, Lady Macleod. On page 32 of this challenging report I draw your Lordships' attention to the recommendation. I quote:
"We suspect that the future direction for housing management in local authorities, housing associations, and all other large landlords will be towards decentralisation of decision making and executive action (rent collection and arrears chasing, lettings, repair services)."
More staff will come into contact with tenants if there are the small offices from the housing department in various areas, as outlined by the noble Lord, Lord Marshall.
I wish to speak on the intractable problem of rent arrears. That subject has recently been much in the news. I would submit that, on the one hand, serious rent arrears betoken poor management and that, on the tenant side, arrears betoken a disregard not only for the landlord but for fellow tenants. Rent arrears are sometimes explained on the grounds of unemployment, and rising costs of living. Those arguments are untenable.
Let us look at the rent arrears figures for 1983–84. I shall quote but a few. I ought to point out that the figures which I shall give are arrears as a percentage of gross rent collectable. For Brent the figure is 35.51 per cent; Haringey, 23.52 per cent; Southwark, 18.48 per cent. and Islington 15.58 per cent. On the other hand, not far away Tower Hamlets has precisely 6.4 per cent. and Newham 8.6 per cent. Why is there this big discrepancy between boroughs in London? In the Greater Manchester area, Bolton has no arrears and Wigan has 1.99 per cent. In Merseyside, St. Helens has 5.52 per cent., and I should point out to the right reverend Prelate the Bishop of Liverpool that Liverpool, despite all its problems, only has 12.62 per cent. Rotherham has no arrears and Durham, where there is very high unemployment, has 0.42 per cent. We must ask ourselves how it is that there are such wide variations.
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Secondly, the families in receipt of unemployment and/or supplementary benefit are entitled to a housing subsidy. That also includes those who have low wages. I must confess that I am not quite sure about what the report says in this area because I have found the housing subsidy to be very effective. However, if as the right reverend Prelate the Bishop of Southwark says, there have been difficulties over the housing subsidy, then I would say that it is due to bad management and poor administration rather than just the principle of the housing subsidy.
Thirdly, housing association tenants do not show serious rent arrears. I would therefore submit that where there are high rent arrears there is bad management and that tenants i arrears do not hold to the concept that with the right to rented accommodation comes the duty to pay the rent.
There is a third sector and that is those tenants with personal family problems—drink, drug-taking and just sheer incompetence—which result in non-payment of rent. Eviction is a drastic and expensive solution in terms of human happiness and cash. Part of the solution must surely be in decentralisation of housing departments. I agree with the noble Baroness, Lady Denington, that there must be tenant involvement in management. I do not think that I would go so far as the noble Baroness over housing co-operatives, but there should be much more of a partnership between the tenants and the landlords.
Realistically, there are some families where eviction is the only sanction. For such families I would submit that there should be a close liaison with voluntary organisations—for example, the family service units and others which I could name. There should also be residential family units such as are run by some local authorities and voluntary organisations. For example, Birmingham Corporation is extremely good in this respect, as is an organisation called ATD. With such a service, families in trouble could be given a supportive and a rehabilitative service.
In dealing with the reduction of rent arrears, dignity, justice and compassion will only be achieved if there is efficiency in management, if there is a local service, if there is tenant participation and where there is partnership with the voluntary organisations.
8.55 p.m.
Lord Dean of Beswick: My Lords, first I should like to join with all other previous speakers in thanking the noble Lord, Lord Seebohm, for the opportunity to have this very important debate. I should also like to thank him for the very impartial and informative way in which he has led the debate. I should like to pay tribute to the people who were on the committee chaired by His Royal Highness the Duke of Edinburgh, and to thank them for the work which they have done. Having spent a lifetime, in some respects, in the public housing sector, and with a very close interest in it, I can appreciate the detail with which they have looked into the matter, where they have had to go and the questions which they have had to ask. Obviously the areas which would receive most of their attention would be the very high-problem areas. It is a little difficult to follow the line taken by the noble Lord, Lord Seebohm, and to try to keep the debate completely non-political because there are in some

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respects political decisions to be made along the line regarding the expenditure of public finance and so on.
I am glad that the right reverend Prelate the Bishop of Southwark put one matter right. I was suffering under a slight misconception regarding the aims of the report. He put the matter in its right perspective when he said that it was to start people thinking about the situation. The report did not propose instant cures, but it wanted a change in attitudes to begin. That is completely relevant to the problem which we are experiencing. There must be changes in attitude.
Going back to the noble Lord, Lord Seebohm, in his speech he referred to the fact that local authority housing finance was a mess, that it was bad and out-dated. That is not the fault of any particular government, be it this Government or any other. We have grown up with it.
Having made those two points, let me say that if we are to begin to deal with the problem, the Minister made it clear that there would be no intention of interfering with mortgage repayment income tax rebates. My noble friend Lady David clearly stated our party's position: we would not be a party to its removal but we would consider some significant adjustments. It is a fact which is coming through from a variety of non-political bodies that there is some urgency about, if not removing it, at least reviewing it to see where the anomalies lie in order to make better use of that which is available.
If there is to be no clawback of finance from income tax rebates on mortgage payments, from where can the money come? Some blame has to be laid at the door of the Government for the situation in which we find ourselves. I took the trouble to contact the AMA to see what the financial support from the Government was when they took over in 1979, and what it was currently. With your Lordships' leave, I shall refer very briefly to the answer which I received from the Association of Municipal Authorities. It said that the difference between a continued level of net local authority housing capital expenditure from 1979–80 to 1985–86, minus the actual equivalent expenditure, is, allowing for inflation, £11·5 billion, which is a tremendous sum.
I know that other sums have been made available by the Government in a variety of ways. In fact the noble Lord, Lord Elton, referred to them in the publication entitled New Land, Old Homes. If we take the items listed together with the £200 million which he mentioned earlier in his speech, which is the sum which has been made available to the local authorities as additional finance, it falls just short of £3 billion. If one deducts that from the sum mentioned by the AMA, that means that £8 billion has been withdrawn from local authorities since 1979. Therein lie the seeds of some of the troubles and the rapid deterioration that we experience today.
That is not the only facet that is affected. At the same time there has been a reduction in rate support grant from 61 per cent. to 46 per cent. That may not be of any consequence to some authorities, but historically a large number of authorities have provided support for the housing revenue account from rate poundage. My breeding ground in housing was as housing chairman in Manchester. We aways provided
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a penny, tuppenny or threepenny rate towards the housing revenue account to share the burden of our massive slum clearance programme. However, that has been cut now. The rate support grant has been cut and the big cities of the north such as Birmingham, Manchester and Liverpool, do not have enough money to spend on maintaining services; so the first thing affected is the repair to or renewals of the fabric of such houses. So that, too, has had an adverse effect.
The Minister will recall that only last week I questioned him on making larger sums of money and more finance available from the £6·5 billion sale of assets that local authorities hold, but are prevented from spending because of the monetary policy of the Chancellor of the Exchequer. I believe this is at the rate of 40 per cent., but most is reduced to 20 per cent. which further restricts the councils' own capacity to use that money. Numerous speakers from both sides of the House have supported the philosophy that finance is needed quickly. Housing as it exists now cannot wait for this report to mature. The situation is too urgent to wait for some of the ideal things that are in this report to mature. Action has to be taken now.
Various figures have been mentioned about what is required, from £18 billion in certain quarters to £19 billion in the Government's own report. The sum of £25 billion has been quantified by the AMA, but I am not too sure of that sum as I believe that includes dealing with deck access and industrialised buildings that were built and now require serious attention. We are asking the Government to make an absorbable amount available from that £6 billion. I am not suggesting that it all should be made available because I would question the building industry's capacity to mop it up effectively. All one would achieve would be overheating of the building industry with all the adverse effects, and no one could support that point of view.
I have discussed this with the private big builders and their representatives and organisations. I have discussed it with the people who maintain the public sector, with the local authority building departments, and they said they could put it to pretty good use in absorbable amounts fairly quickly. However, the noble Lord, Lord Ezra, asked what number of jobs could be created by inputs of multiples of billions of pounds. I hope that the Government will heed this.
The report makes out clearly that the deterioration is gathering pace. This is happening not only in the public sector. It is alarming when we are told that 64 per cent. of the housing stock is now owner-occupied, but even that is deteriorating. We must have some action. I do not think it can come from the private sector. It never has before, and as it is so urgent this action must come from the Government.
So many people have spoken on the report. They have put forward so many contributions that I, like the noble Baroness, Lady Faithful], find it difficult to find a new dimension to inject into the debate, but I believe this report will have a tremendous value. I hope that people will read not only the report, but the debate that has taken place, because, irrespective of the political standpoint, it contains a mass of information and points of view from a variety of people, like the people who made the report.
However, I take issue with the noble Lord, Lord

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Crawshaw, on some of his observations, though I agree with many of them. My recollection of housing is that some of the best housing built in the public sector was built just after the war. Where things started to go wrong was in the late 1950s or, more likely, in the early 1960s when, to try to inflate the building programme of about 300,000 houses, the Government of the day—my own party was guilty at that time—initiated a building programme of industrial housing. Those of us who were involved in housing at the time were bitterly opposed to it. This is what we are left with.
One previous speaker spoke about deck access flats. I can tell your Lordships a little story about when Manchester carried out the biggest continuous slum clearance programme in Europe. It concerned the notorious Moss Side/Hulme area, where a new city was to be built within the city of Manchester to rehouse 30,000 people. It was such a huge programme that our own city architects' department could not handle it. We commissioned two of the most highly regarded architects in the country at the time—a company known as Wilson and Womersley. Hugh Wilson has been responsible for designing some of the postwar universities, and Lewis Womersley made a tremendous name as the city architect in Sheffield with Gleadless Valley. But what did they produce in Manchester? They produced four horseshoe blocks of flats which they had the cheek and the impudence to name after Nash. Those of us who were opposed to the scheme were beaten on the vote.
I will tell your Lordships why we were beaten on the vote—and here again I disagree with Lord Crawshaw. It was not the councillors of the day who were at fault because the subsidy structure was altered, yardsticks were imposed and we had to build within those yardsticks. Councils just could not build the type of accommodation they wanted. They were told that they could build what they wanted as long as it cost so much. Also, schemes that were submitted at one period had to contain 30 per cent. high rise accommodation, or no subsidy was forthcoming. There is no point in blaming councillors because, as I have said, many of us are on record in the big cities as being opposed, but we lost the argument.
Again I must be a little critical of the Government's response. That is because two years ago, after I had raised a debate in another place on the industri-alisation Bill, the first that was raised, they brought in a housing defects Bill, which became an Act. At first, there was included in that one group of houses, where people had bought council houses at very handsome discounts and found that they were then defective. Various measures were brought in. I have not the strictest details but it means this. In the eventual outcome of the houses not being put back in good order—and nobody wants to buy them if they are not in good order, once there is a doubt about them—the local authorities who have already sold such houses at a discount have to buy them back, with all that that means to their own revenue accounts and their rates support grant; and they have no say in the matter.
I should like to say this. If the Government are prepared to help people who have bought council houses at discounts, and then go in for a further refund
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because they have made a mistake, why are they being so uneven-handed towards people who have still to live in these houses, and local authorities? There is still 90 per cent. of that kind of property in the local authority pool. Why are they not being given the same treatment?
I should like to deal with a couple of other points. As I said, the noble Lord, Lord Seebohm, talked about re-jigging, or having another look at housing finance. I wish to make a special plea for one group of people who are not mentioned in the report, and about whom nobody has spoken. I am talking about the group of people, who, in my opinion, have been more victimised than anybody by this Government through their housing policy. I am talking about the (I think the average national figure is) 35 to 45 per cent. of council house tenants who have had to bear the full brunt of every increase in council house rents imposed by the Government, not by the local authorities. These increases have had to be imposed on the instructions of the Government.
I can tell your Lordships that the percentage increase in council house rents since 1979 is 135 per cent. It is not bad going for a Government who believe in keeping down costs. However, what it means is this—and this is where we have the unfair treatment as against the owner-occupier. Fifty-three per cent. of every council house rent collected is paid out in debt charges. The average council house rent in the country today, before rates are charged, is £15·50. If that council house tenant was paying out that money on purchasing a house, he would attract £8 a week for rebate in tax repayment but, because it is in the public sector, he does not get back a sausage. Such people are actually differentiated against. As I say, I am not blaming this particular Government. It is something that we have grown up with, but it ought to be looked at.
In the same information that I have from the Association of Municipal Authorities, it said:
"According to the Chartered Institute of Public Finance and Accountancy, … the forecast expenditure by local authorities in 1985/86 on loan charges from the Housing Revenue Account is £3,138m—which is 53% of total [Housing Revenue Account] expenditure".
In relation to that sum of money, if they do not give the rebate back to the tenants, if the local authorities were allowed to use the equivalent of discount as if they were paying mortgages, there would be a further £1 billion available to spend on the housing revenue account, whether they wanted to build more houses or to repair them.
Incidentally, the sum of money that I read out first, the difference covering the cut that the local authorities have suffered in housing finance since 1979 I am told is the equivalent of building half a million houses, or building many more houses and carrying out many more repairs, renovations, modernisations and that kind of thing.
I do not wish to speak any longer because I think it is too late in the night. There is no question but that the only possible way of dealing with the situation is as the report makes quite clear. It is the last of quite a few reports, but I have no doubt that it is not the last report that we shall debate here because I think we shall soon be debating the report of the most reverend Primate the Archbishop of Canterbury. However, these reports

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all started 18 months ago when the Institute for Policy Studies came out with a similar matter. Then there was the RIBA, the Local Government Audit Commission, and even the CBI. Every known organisation, not politically motivated but containing expertise of which we should take notice, came along with the same conclusions as this report.
I think that as a nation we have to grasp this nettle and deal with it; we cannot run away from it for ever. And we know that, in building, a penny spent today saves tuppence tomorrow. I should like to ask the Minister to take back to the Chancellor of the Exchequer this plea from I think all sides of this House: not necessarily to make available some of the Government's own finance immediately, because it looks as though they are going to be in serious trouble; but to let the authorities have access to their own money, to spend how they want in the interests of providing good homes, safe homes and a better society for the people that we represent.
9.15 p.m.
Lord Elton: My Lords, by your Lordships' leave, if I may speak again, I have spent the last six hours manufacturing replies to points made and discarding them. I have manufactured more than I have discarded but I fear that although I have discarded some answers to noble friends who deserve an answer verbally and I shall have to give it in writing, I may still have more than I can deliver. I will try to deliver the goods nonetheless.
Your Lordships were fortunate to have the opportunity to hear the right reverend Prelate the Bishop of Southwark because I believe that he demonstrated far better than could the written word the integrity and concern of the committee whose report we are considering. He also provided an admirable summary of the report itself, of its analysis of the problems, of its search for a solution and its perception of political difficulties that any solution would meet. I take his point that political circumstances change; and that implies, I hasten to add, not necessarily a change of government but of the attitudes of society as a whole.
Therefore, I see the point of flying kites or putting forward proposals that may look out of fashion today but might be more fashionable another day. However, I am a politician and I must reply as a practising politician and a member of the Government. I can only therefore answer for the present, and the answer on mortgage interest tax relief must remain as I have already given it. Showing it as government expenditure would make no difference, I must tell the noble Baroness, Lady David, either to its impact or to our perceptions of it. The cost is justified—and she can read it tomorrow—by its economic and social benefits and it is, I should add, available for housing improvements.
But I have also shown that there is much common ground between us. This, again, I sought to establish in my opening speech. What I found particularly impressive in the speech of the right reverend Prelate the Bishop of Southwark was his evident understanding of the practicalities of this problem. He gave a number of examples and I am grateful to him for them. I agree with a great deal though not
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absolutely all of what he said about the boroughs of Lambeth and Wandsworth and certainly about the management abilities of the two boroughs. The right reverend Prelate is right to say that in a housing authority incompetent but passionate management is every bit as hard to live under as efficient but heartless management.
As he has said, the fact is that some housing authorities have simply ceased to cope and that is reflected in the arrears figures which my noble friend Lady Faithfull quoted in an exceedingly useful speech, if I may say so, and also reflected in the progressive decline in the environment of some estates and the alienation eventually of the tenants. The answer must be in many respects decentralisation. I agree with what has been said on this on all sides of the House and will turn immediately to the noble Baroness, Lady Denington.
Management should have a face and it should be a human and recognisable face, not a piece of paper flapping on a draughty notice board. I am grateful to the noble Baroness, Lady Denington, for her recognition of what we are doing to try to achieve this and for her recognition of the work being done by my honourable friend Sir George Young, including work to facilitate the formation of tenant co-operatives which can be an admirable way of giving a householder a proper interest and say in the running of his home.
The noble Baroness asked a little about our proposals. I should say that in the Housing and Planning Bill, at present in another place, the Government are seeking wider powers for local housing authorities to delegate management function to bodies approved by the Secretary of State. I err; it has actually come up the corridor and is sitting somewhere in this Box, I believe, until next week. Apart from seeking to provide powers for the local housing authorities to delegate management functions to bodies approved by the Secretary of State, it is seeking power for the Secretary of State to make grants to bodies taking on housing management functions or—and here we chime in with, I think it is, page 32 of the report—providing education, training or other services related to housing management. That is something which the Committee wanted.
The department will be considering how these powers can be best used to promote tenant co-operatives in the way suggested by the noble Baroness. I ought, however, to utter a word of caution. The Government are not persuaded of the appropriateness of giving a statutory right for tenants to form co-operatives against the wishes of the housing authority, because such bodies can be successful only with the goodwill of the authority and because of the difficulty of defining the precise area that a co-operative should cover if it did have a statutory right.
Many of your Lordships showed a proper and understandable concern about the poor condition of local housing stock and, indeed, some private stock. My noble friend Lord Sandford won the approval of the Opposition—which is sometimes a dangerous thing to do—when he said he wanted us to take value-added tax off improvements to houses. His motives, as always, are impeccable, and even if that had been in doubt it would no longer have remained in doubt

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when he was joined in the request by the noble Lord, Lord Ezra. But I have to say that I doubt whether such a move would have quite the dramatic impact that they would hope. Value-added tax has only been charged on improvements since the 1984 Budget, and if progress since then is anything to go by we should note that they have actually increased by 2 per cent. since that time. But that does not mean we do not want to encourage refurbishment and improvement.
There is a trend which I think I ought to put before your Lordships. From 1975 to 1979 the number of repair and improvement grants paid by English councils averaged 67,000 a year. Since then the number has risen, and it reached 230,000 in 1984. Again, in the four years 1975 to 1978 councils in England improved an average of 39,000 of their dwellings per year, Between 1980 and 1984 councils improved in average of 72,000 of their houses and flats each year. That may not be anything like sufficient in view of the problem, but the number has increased, and that is a step in the right direction.
May I also say to my noble friend that the report on home improvements—the home improvement Green Paper—is most certainly not on the back-burner, if that is the phrase he used. The Government have received a very large number of responses to the paper, and these are being considered and analysed at the moment—actually, I mean analysed and not considered, because they have to be analysed before simple souls like myself and my colleagues can consider them.
As I said, there is some common ground between the inquiry's report and the proposals that were set out in the Green Paper. We shall consider the points put forward in the report in the light of those comments, and I will ensure that my noble friend's comments on the balance of financial advantage between improvement or refurbishment, on the one hand, and new build, on the other, is taken into account at that stage.
The main concern of the report is of course to consider how to target assistance from public funds on those owners who cannot afford repairs themselves. That will also be of interest to the noble Baroness, Lady David, because it is a question of targeting on people and not on bricks.
My noble friend Lord Elliott of Morpeth pointed out that the bad condition of stock arises very often from the experimental system building of the 1950s and 1960s, to which the noble Lord, Lord Dean of Beswick, was good enough to refer. That is too true, my Lords. I am responsible, among other things, for new towns—and they have a lot of it. I am very much aware of the problem; but we are taking steps to prevent a repetition of substandard products. As it happens, I addressed earlier today the Partitioning Industry Association—an important body within the building industry—and I was able to refer to the considerable progress made since our 1982 White Paper on standards and quality. There are now over 100 British Standard Institute kite-mark schemes in the construction field. The British Board of Agrément now has over 600 operative BBA certificates, and there are a number of independent certification schemes, some of them organised by the BSI. There
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are also encouraging signs that the intractable problems arising from poor design and site procedures are being tackled by the NHBC, the Building Economic Development Committee and the BSI, among others.
These advances do have an impact on the people who live in the houses, and they are not just padding for my winding-up speech, because they are protection for people, if you like, against condensation, cracks and the 2 a.m. screaming of the baby next door.
I was greatly interested by the speech of the noble Baroness, Lady David, and I can agree with her on at least one point—that is, the undesirability of polarisation in society. It is fair to say that until I came to London to live I did not know what the word meant. I was brought up in the country in one village and spent my early working life in another. There was every variety of tenure in them and being somebody's neighbour did not tell you anything at all about his economic circumstances, his relationship with the council or his occupation. It was in London that I first found a place divided up into chunks, with an upper middle-class chunk here, a lower middle class chunk there, a class which thought it was lower middle-class but was upper middle-class there and so on. There were all these invisible divisions between them, and that in itself I regard as a weakness in society.
But the real fault line is the divide that runs between a large council estate and the rest of the community. The noble Lord, Lord Crawshaw of Aintree, put it in a nutshell. He said that we did not build communities, we built estates. The effect of the priority estates plan is to bring management of these estates down from the distant administrative tower and in among the people on the street. That is a start and it works. But it is not the only answer and I would expect the noble Baroness, Lady David, to recognise the virtue of breaking up these awful social and economic monoliths, letting the tenants buy, getting the private sector to renovate, breaking up the uniformity of tenure and destroying the polarity.
I heartily welcome the support of the right reverend Prelate the Bishop of Liverpool for achieving mixed tenure, as being itself one way of starting to salvage a threatened society. He said, with emphasis, that this is something for the nicer estates, and I understand exactly what he meant. But he will also, I am sure, recognise the exciting potential now being realised of getting rid of the hard-to-live-in estates, and indeed the impossible-to-live-in estates, to private developers, who have proved that they can turn them into very agreeable places to live in. It is better—is it not?—than boarding them up even in goodish conditions which, as my noble friend Lady Faithfull has shown, is the tragic alternative.
I repeat what I said in my earlier speech: that we want to bring building societies further into the field of renovation and renewal. I greatly welcome the support which my noble friend Lord Selkirk gave to the fantastic work and the enormous contribution which the building society movement has given. It has contributed to the great silent unviolent revolution of the 20th century and the building societies deserve the credit which he gave them.
The noble Lord, Lord Crawshaw of Aintree, speaks from great experience and therefore speaks also with

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great authority. But I ask him not to believe, as he appears to believe, that we do not know the difference between a house and a unit. He suggested, first, that we must consult the customer—a very good principle—and surely the best possible way to test the customer is to offer him a property or a service. The private sector already does that in houses to buy, and now, thanks to Conservative laws, the public sector is doing so, too.
With the committee of His Highness the Duke and the right reverend Prelate the Bishop of Liverpool, we also think that the private sector ought to take a bigger hand in the rented market, too. I am glad of their support in this. I assure the noble Lord, Lord Crawshaw of Aintree, that when we look at proposed legislation affecting this sector we shall seek to strike a just balance between the landlord and the tenant. We have, I agree, to lock Rachmanism out of the system, but we must leave sufficient economic freedom to give the landlord an incentive to let; otherwise, there still will not be any property to let.
I cannot promise my noble friend Lord Orr-Ewing legislation at the moment, but I can promise concentrated and constructive thought. I remind him and the noble Lord, Lord Pitt, that we have a comprehensive housing benefit system to help people who cannot otherwise afford their housing costs. Yes, it is complicated and, yes, I can tell my noble friend Lord Selkirk that we will simplify it. I refer him to our social security White Paper of last December for the details. But it is paying out £4 billion a year, and that, again, is subsidising people, and not bricks.
I note in passing the brave support of the noble Baroness, Lady David, for capital value based rents, brave not just because it is likely, as the inquiry and the noble Baroness no doubt recognise, to result in higher rents, but also because her party's published policy statement Homes for the Future said:
"In many areas council rents are now too high and we will ensure through the subsidy system that they can be reduced or frozen".
It is pleasant to see other people's difficulties on occasions.
Baroness David: My Lords, I think that our policy is rather fluid in this matter at the moment.
Lord Elton: My Lords, the policy of the noble Baroness's party, if it is not as she thinks it should be—I am closer to her perhaps then she is to her party, which is a dangerous statement for both of us so I hope I do not make too much of it—seems to be to ignore economic facts just as much as the inquiry did explicitly. The noble Lord, Lord Seebohm, quoting the example of Germany, seemed to me to be much nearer to the mark. With my noble friend Lord Marshall of Leeds, I wonder if even the inquiry has fully appreciated the size of the increase that this change would produce.
The noble Lord, Lord Ezra, asked if we had considered the findings of our own stock condition inquiry when we made our financial calculations. The Government did indeed take account of these findings when they decided that public expenditure provision for local authority housing should be £200 million higher in 1986–87 and in encouraging local authorities to switch resources into renovation. The Government have also put forward in the Green Paper published
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yesterday proposals for a fundamental revision of the whole system.
I must say that if there is a superfluous sentence in this speech it is that, because your Lordships all know that we put forward a fundamental proposal for the revision of the system for controlling local authority capital expenditure on all services. Even so, the resources of the public sector are unlikely to be sufficient to eliminate this problem in a reasonable timescale. That is why we have to mobilise private sector funds to help in the process. Perhaps I may add that if public expenditure is allowed to rise significantly above planned levels, that would cause increased inflation and the result would be reduced economic growth and fewer jobs.
That really brings me round to the noble Lord, Lord Dean of Beswick, who was kind enough to signal the punch twice—
Lord Sandford: My Lords, perhaps I may interrupt my noble friend before he goes off on to another tack. On the question of the resources for dealing with the housing stock, it is not that local authorities do not have the resources—we are not being allowed to use them. That is the complaint. Whether we have the resources or not is a question which we have not reached yet because we are not allowed to use the resources that we have.
Lord Elton: My Lords, my noble friend gave me a breathing space at exactly the turn of the page that brought me to the answer to his question. Whether that is some psychic power or the fact that he was sitting two and a half feet behind my right shoulder when I was writing the note, I do not know.
The purchasing power of the accumulated receipts, to which the noble Lords have both referred, is about £6 billion. If that were released in one tranche it would have a very considerable effect on the public sector borrowing requirement. Noble Lords know the critical inportance of interest rates and inflation for the economy, and they cannot expect Her Majesty's Government to ignore that threat or leave it uncontrolled. The answer is to release the purchasing power gradually. This, I have to repeat—and I have said it before—is what we are already doing at a rate of 20 per cent. per annum. I am not certain that either the noble Lord, Lord Dean of Beswick, or indeed the inquiry fully recognised that this 20 per cent. is available not just in Year One but in the subsequent years, year on year, until it is exhausted. So you have 20 per cent. of your sales receipts in the year you sell; you have 20 per cent. of the remainder in the year thereafter together with 20 per cent. of what you sold in that year; in the third year you have 20 per cent. of the third slice of the first year and of the second slice of the second year and of the first slice of the first year. There is an accumulation of money which is known as the cascade effect, for reasons which I hope I have made obvious.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for giving way after that very detailed exposition. He will recall that up until, not last year's Autumn Statement but the Autumn Statement the year before that, local authorities were allowed to use 40 per cent. of their revenue. The figure was then cut to 20 per cent. Is the Minister trying to make out that a cut of 20 per cent. is an increase?
Lord Elton: My Lords, I am doing nothing of the sort. I am not talking about amounts; I am talking about modalities. If we wish to talk about amounts then we must consider what we want to do. One can produce an enormous number of houses, possibly from a heated private sector, as the noble Lord, Lord Dean of Beswick, warned that we might do, by letting all the money go at once. What would that do to the economy? It would spoil the economy; reduce employment; increase the cost of housing; reduce the number of jobs; increase the cost of unemployment benefit; and reverse the downward spiral of inflation that all our discomforts over the past six years have achieved. That would be a mistake.
It would be very agreeable in the interim, and lovely as a Minister of the Government, to have my senior Ministers telling me, "Spend, spend, spend!". Think of the speeches that I could make, and think of the applause I would get! But then the chickens would come home to roost.
I apologise for the change of metaphor. They would come home to roost in two, three, five or seven years—no doubt after a general election. We have all seen that happen before. It did not happen last time, and that was a very unusual departure in politics. That was because we believe that the long-term benefits to this country are more important than the short-term benefits to a political party. In that, I am speaking the same language as that of the authors of this report, who are looking forward to the life of several Parliaments. I will not be driven off that path by friend or foe.
Lord Sandford: My Lords, if I may intervene just once more, my noble friend is putting up an enormous smokescreen to disguise one simple fact. It is that £200 millon is nowhere near enough to deal with the condition of our housing stock. We all know that my noble friend is absolutely hamstrung by the Treasury, but for heaven's sake let us encourage him to do all that he can to do even better.
Lord Elton: My Lords, the Government are a seamless robe and, except on a few unfortunate occasions, the tensions within it are not revealed.
I will go on, if my noble friend will allow me, and curtailing the rest of my speech, to say that in 1984–85 the basic HIP allocation was £1,850 million; but I will say to my noble friend Lord Elliott of Morpeth, who is interested in this matter, that, thanks largely to the system that I have just been describing, actual expenditure was £3,130 million. So it is not true that the Government have either taken the money into themselves or have denied it to the authorities. Instead, the Government have staged its use.
We have spent long enough on that subject, so I will move on to a point raised by the noble Lord, Lord Dean of Beswick. If it does not sound too patronising, I should like to congratulate the noble Lord on a very workmanlike speech. If he had made his speech at the beginning of the debate then I would have answered it better, but by the end one is busily writing out answers to all the other speakers. The noble Lord was kind enough to share the blame, and so he will understand
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that there is nothing unfair in the pot calling the kettle black.
We are talking about reductions in public expenditure, and the noble Lord is beating me around the head—and he has my noble friend elegantly to assist him—for having done it. Cuts have been necessary in the housing programme in order to secure our primary objective of controlling inflation and achieving sustained economic growth. That is another way of saying what I have said already. However, public sector investment in housing fell by only 19 per cent. in real terms between 1979–80 and 1984–85, whereas over the period 1974–75 to 1979–80—and I will not name the brand—it fell by 46 per cent.
There are a number of points to which I have not the time to reply. I apologise, and I will write to noble Lords. In the last moments I should like to say that for me this has been an enormously interesting and instructive debate. It is true to say, I think, that that part of the country which looks at the debate and reads it will find it equally enormously interesting and instructive to Her Majesty's Government.
We do not agree with everything, and we cannot do everything at once. The noble Lord, Lord Crawshaw of Aintree, pointed out that if we did everything in a rush we would be in the same damn muddle again in 20 years' time as we started with. We must get it right.
We are taking our precautions. We recognise the size of the problem. There is no immediate, discrete, complete and final answer to our housing problems. We are in a better shape now to face them than we were before because we have a better perception of what they are. I have a wonderful passage in my notes, which I regret not using, giving all the concrete and constructive things that the Government have done since 1979. It grieves me not to use those examples, but this is not a political debate. There is progress. We do have the problem in our sights. It is very big. We do not have an immediate solution. The committee chaired by the noble Duke, and so ably manned, has given an inestimable service in suggesting some things which will work and some which I regret might not.
9.41 p.m.
Lord Seebohm: My Lords, I am glad to be able to say that it is not customary for the proposer of a Motion to make two speeches, and I shall not do so. However, I must thank all the Members of your Lordships' House who have spoken in what became, to my mind, a very important debate—in fact, far better than I thought it would be.
I want only to stress why I believe this housing problem is so important, apart from my many years of interest in housing. For hundreds if not thousands of years the top priority for the creation of wealth, which admittedly is human happiness, has been board and lodging. We seem to have cured the board problem for a long time. There has been enough food, at any rate in the northern part of the world, for a long time. Why not concentrate now on the second priority, which is lodging? I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Energy Research
9.42 p.m.
Lord Ezra Lord Ezra rose to ask Her Majesty's Government whether they are satisfied with the level of energy research and with the balance between the various programmes.
The noble Lord said: My Lords, I have posed the question of energy research because I found, somewhat to my surprise, that the very excellent report prepared by the Energy Committee in another place, dated July 1984, had not been specifically debated. I feel that in the present state of affairs in the energy market, which has re-emphasised the changing nature of the energy scene, it is timely to ask one or two questions about the state of energy research.
We are, of course, as a country benefiting from the resources we have in the coal industry, the North Sea, our nuclear expertise, and in other ways. We are a surplus producer, particularly of oil, and that has benefited us to the tune of £8 billion in overseas earnings. The counterpart to that felicitous situation is that in periods of plenty one tends to forget about the future and not prepare for it. We must be ever vigilant. Situations change.
The Secretary of State for Energy recently emphasised that the Government's energy strategy was to keep options open. One can keep options open in a valid way or in an invalid way. The only valid way of keeping options open is to make sure that the research and development is done so that when the time comes to exercise the option there is something that can be exercised. There is not much point in trying to exercise options which remain ideas on paper. That is why this whole question of research and development is of such importance. It leads to the two simple questions that I pose tonight: namely, is the general level of our R & D in energy sufficient; and is there a proper balance between the different programmes?
In considering the first question I think we must start by deciding what is the level of our energy research. That was referred to in a recent debate in another place by a colleague of the noble Lord, Lord Gray, as being of the order of £1 billion, which represents some 3 per cent. of the overall value of the energy consumed in this country—estimated as being £35 billion, which in turn I suppose, is roughly 10 per cent. of our GNP. So that sets out the order of magnitude.
The question that we have to ask is: is this £1 billion enough? It is very difficult to answer that question unless one has some comparative figures, and the only comparative figures that one can use relate to what other countries do. So I have looked at other major industrialised countries—Germany, the USA, France and Japan. Their research proportion in relation to energy consumption, which I think is a fair way to look at it because of climatic conditions and so on, is in all cases higher than ours.
So one is bound to ask the question: are we doing enough? On the whole, I think we should err in doing rather more than rather less, not only because of the uncertainties of the future but because we have an
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innate expertise in this country. Also, many of these projects can lead to very successful export operations. So we are not merely having to concern ourselves with what we might be doing here, but we could be researching things in the energy field which could usefully be developed abroad to our advantage. So I suspect that on the whole we probably are doing rather less than more overall.
But what is a much more interesting question is the balance within the total. Here, I think we need to refer back to the Select Committee's report of 1984, which drew attention to the gross imbalance between expenditure on the supply side R & D and demand side R & D. It indicated that according to the 1984–1985 Estimates the Government intended to spend only some 4 per cent. of the total amount which was spent on energy research on the demand side; that is, on stimulating efficiency in use. That was one point which was made, and I think it is fair that we should ask the noble Lord the Minister to comment on that; to let us know whether and to what extent that imbalance has been corrected.
When the programme is examined in more detail we see that continuing throughout recent years there has been a massive concentration of research on nuclear. It may be argued that there has been quite a spin-off from this in the success of our earlier nuclear plants and in the by-products to which that has given rise. Nonetheless, taking into account the R & D expenditure of government, which is about half the total—namely, £500 million—it does look as if nuclear accounts for rather more than half of that. On the face of it this seems to be out of proportion with the remainder. I think it is fair to address another question to the noble Lord and ask what are the plans for the future. Will this situation continue or are we progressively going to redress the balance in that connection?
In view of my past association with the coal industry I was naturally very interested to note that at long last the coal liquefaction project at Point of Ayr has been agreed. I think that this is something which we started talking about 10 to 15 years ago. However, what rather disturbed me about the project which is now agreed is its very small scale: two-and-a-half tonnes a day. Recalling my previous connection with that project, it did not seem to me that this would really get us much further beyond the laboratory stage already reached. But maybe the noble Lord will be able to reassure me on that point. Looking ahead and knowing the enormous reserves of coal in this country this raises the question whether we should not be doing rather more in taking coal forward into other conversion projects.
Next, I should like to raise the question of how much we are spending on what could be called the newer areas of energy research. They are three: renewables, the environment and efficiency. In all three we are probably not doing as much as we should be. Let us take renewables. There was an important debate in another place on that subject on 25th October which was most instructive. There has evidently been a major change of emphasis by the Government in that they have moved away from wave energy, which was previously considered a desirable

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subject for investigation, and from active solar energy, to what is known as passive solar energy and to the use of waste materials. Those two appear to be the renewable resources on which the Government are particularly concentrating at the moment, although a certain amount of work is being done on geothermal and wind power.
In the debate in another place the question of the virtual cessation of work on wave energy was raised in view of what is reported as having been the fairly successful experiments in Norway. The Norwegians seem to be getting somewhere at the very time when we seem to be giving up. Is that correct, or not? I think that we ought to have an answer to that. Overall we are spending a relatively limited amount on renewables even now, although it has gone up a bit. Ought we not to be spreading the net a bit wider and going into this more thoroughly?
On the environmental side of research, there is a major job to be done to try, once and for all, to settle the question of acid rain. I do not think that we can go on ad infinitum with that problem hanging over our heads and making life difficult abroad, and indeed increasingly at home. It may be something that cannot easily be resolved, but nevertheless we have to take up a position sooner or later. After all, we are a country that led the way in getting visible pollutants out of the atmosphere. The clean air legislation of the early 1950s was remarkable. I think that we must be equally in advance of the pack in dealing with invisible pollutants, once we have clearly identified the problem.
Energy efficiency is the third of the newer areas. Here I think that everyone would applaud the vigour with which the Secretary of State for Energy is pursuing his energy efficiency campaign, getting up at the earliest hours in the morning, persuading British management to do the same and putting out impressive advertisements in the newspapers. I think that by now everybody is aware that this is Energy Efficiency Year.
However, the question has been raised in another report of the Select Committee on Energy in another place as to whether this might be a similar experience to those which we have had so often in the past on energy efficiency; namely, to have a real go one year and then forget it in the succeeding period. We need to be sure that what we are initiating this year will be of continuing importance. One way to secure that is to enlarge the number of research and development projects. I know that they are not easy to identify, but I believe that more effort needs to be made if the laudable enterprise of trying to stimulate energy efficiency is to have a lasting impact.
A report in the Financial Times the other day which was devoted to this subject indicated that the number of fuel efficiency projects was declining. I do not know whether that is correct, but that information is alleged to have been contained in the Fuel Efficiency Office report of November 1985. If that is so, it is a sad commentary.
I should like to conclude my brief remarks by stating, first, that we need to be assured, so far as one
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can be in these matters, that the absolute level of our research is right. I believe that it is probably a little on the low side by comparison with other countries. Secondly, and more important, there is the question of the balance between the programmes. I have raised specific points on that, and no doubt other noble Lords will do the same. Finally, I should like to make this proposal. In the Select Committee's report of 1984, to which I have referred, it was recommended that there should be regular and comprehensive reviews of priorities and expenditures in energy R and D. What was not made clear is how frequent these should be.
I believe that we would gain if there was an annual review of energy R and D. A lot of information is put out about this. In preparing for this short debate, I read the reports of the OECD into which there is a United Kingdom input, various reports of the EEC, Select Committee reports and so on. It is possible, if you have the time, the energy and the capacity, to put all this together. But not everyone has this on this subject.
It would be of great assistance to this House and to the other place if the Government could prepare, on this vital topic, a report annually on the progress achieved during the past year and the emphasis that is to be put on energy R and D in the ensuing year. I assume that this is an exercise that they have to do themselves. So why cannot we all share in it? Then we can, perhaps more frequently, debate this question in the House.
9.57 p.m.
The Earl of Halsbury: My Lords, I am grateful to the noble Lord, Lord Ezra, for giving me the opportunity to express what is on my mind. For, however satisfied the Government may be in an affirmative answer to the noble Lord's Question, I am not satisfied. I am not satisfied that we are doing well in distributing R and D expenditure. The simple answer is that we have not got the mechanism for doing it. In order to substantiate this statement, I have taken the trouble, with nuclear power as the subject, to draw up a list from 1945 to 1985 of all the top level personnel responsible for decision making—all the Prime Ministers, all the Ministers and their Permanent Secretaries in all the Ministries that have been responsible at one time or another for nuclear power on the one hand, and fuel and power on the other; all the chief executives of all the quangos and all the nationalised industries involved in it. If one looks at this large chart—a sort of super chess board—with the years going downwards and the Ministries going across, there were only four years in which there was not a hiccup due to someone at top level being replaced by someone else. That is no kind of a system at all for getting things right.
Let us see how it responded to the problem set by nuclear power. In 1955, the first nuclear power programme was set down. In 1956 came Suez. And in 1957 came panic when we multiplied that programme by three. In 1960, three years later, we were recovering from panic and divided it by two. Four years later, there was a change of government coinciding with what was called the Oyster Creek breakthrough by Westinghouse, who announced that they had the final

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solution to a well engineered nuclear-powered power station. They actually quoted a price list which was pure fantasy. Others, such as Babcock and Willcox and General Electric, got on to the bandwagon and produced their own price lists. One year after the change of government, we assigned the contract for the first of the AGRs, Dungeness B, to the least competent of the five consortia then in operation, it being in very bad trouble indeed over Trawsfynydd.
In 1973, there was another panic when OPEC put up the oil price. We were panicked into believing that we wanted 32 reactors by the end of the century. Since we were manifestly incapable of building them without assistance, we started talking about using the Westinghouse PWR which appeared the only possible practical solution. That built up what I might call the Westinghouse PWR lobby, which continues to exhibit obstinacy although the need for these 32 power stations has completely evaporated.
In 1978 I warned this House that some form of nuclear incident was going to happen because there were too many of these PWR reactors in too many unskilled hands; and in 1979 it happened—Three Mile Island. This is the sort of atmosphere of uncertainty in which this non system has had to operate.
Let me now come to the present and deal with the AGRs. There was no such thing as an AGR. There were three original designs for an AGR. Design No. 1 was a very bad design and led to a shambles in which the fifth consortium engaged ceased to exist, and the Central Electricity Generating Board took it over and tried to make something of it. Design No. 2 is the one installed at Hartlepool and Heysham, and that is still not giving satisfaction. Design No. 3 was the one installed at Hinckley Point and Hunterston B and is performing splendidly, giving up to 106 per cent. load factors from time to time. Design No. 3 Mark II (one might call it)—the fully developed successor to design No. 3—has incorporated all that has been learnt with design No. 3. That could be called design No. 4 if you like. That is the one which is going in at Torness and Heysham II. All ought now to be well. We believe that we have a design which works.
But alas!—the evil genius of this nation has exploited the obstinacy of the PWR lobby. If I talk of that "evil genius" I must describe its features as too many cooks permanently stewing too much brew, a lack of straight line command in many cases, multiplication of committees, dislike of clearcut decisions, and the inability to start something and to carry it through to a successful conclusion, without becoming faint-hearted and starting something else on the road.
Currently Britain has four options: coal, oil, gas and the nuclear option. France has no coal, no oil and no gas. She has only the nuclear option and has exercised it, and built up a very large, highly competitive machine for producing in large numbers the Westinghouse design of PWR. But that design is becoming commercially obsolescent. No-one is ordering them in the United States. They are waiting for the new MOX-based Westinghouse design; and so are the Japanese. MOX stands for mixed oxide reactor and arises by substituting plutonium for uranium 235 in the form of an enriched fuel.
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The PWR proposed for Sizewell is a revamped version of the commercially obsolescent Westinghouse design revamped to British safety standards. We shall never export it because the basic design is commercially obsolescent. We shall never build another AGR if we build the PWR. The AGR team will disperse beyond any chance of reassembly. What we could export is the perfected AGR in which we manifestly have confidence because we are adopting it ourselves. In fact, when Torness comes on line some time this year, 60 per cent. of the South Scottish Electricity Board's power will be generated by nuclear power stations.
When we must next have a new station will emerge from the Sizewell inquiry. If it is not wanted immediately, it would be criminal folly to build a PWR until Torness has shown its paces, which it will begin to do in the course of this year. It will be completed perhaps in May; and go critical perhaps in October or something like that.
There are many other matters upon which I should like to touch in support of what the noble Lord, Lord Ezra has said, but time is brief. I must resume my seat. Why is time brief?—because of the 18 Back-Bench speeches in the previous debate only eight speakers obeyed the Back-Bench rule on confining their speeches to 10 minutes. Ten of them exceeded that limit, and of those 10 five spoke at greater length than the noble Lord, Lord Seebohm, when he moved the Motion which stood in his name.
10.5 p.m.
Viscount Hanworth: My Lords, this debate is very timely at the start of the year, because the Secretary of State for Energy has designated 1986 "Energy Efficiency Year". Almost everyone agrees that more efficient use of energy is very cost-effective and important in conserving our North Sea oil and gas reserves. In fact, it is sometimes referred to as the "fifth fuel". In 1983 the Government set up an Energy Efficient Office which provides advice to industry. I gather that further increased funds are being made available to extend its activities.
The eighth report of the parliamentary energy committee published in October last year makes many useful recommendations in this field. Unfortunately Britain is at present near the bottom of the energy efficiency league and it is estimated that if we could get to the top of the league there would be a saving of around £7 billion in energy costs. Government-owned properties and establishments are important energy users and it is hoped that capital will be made available to effect the necessary improvements in their energy use and show the way to others. I wonder if that will ever happen? It should do so.
For many years I have campaigned for better insulated houses. The Government have improved the mandatory building standards, but much higher insulation is cost-effective and can pay for the initial cost in a very few years. It is no good saying that the marketplace can be left to decide on insulation levels, because the public are only dimly beginning to realise that it is worth paying, say, another £200 for high insulation in a new house. With the exception of roof insulation and, to a lesser extent, cavity wall filling, it is difficult and expensive to improve the insulation of

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existing houses. Our standards in today's new houses will therefore affect future generations to whom insulation is likely to be more important with the expected rise in energy costs. I should like the Government to commit themselves to a further improvement in insulation standards in, say, three years' time.
There is one very important lacuna in the present requirements, and that concerns floor insulation. Up to one-third of heat loss can occur through the floor. In addition, a room with a simple concrete floor can take a very long time to warm up. It then stays warm when the heat is not required, which is of course in itself very wasteful.
I turn to alternative energy sources. Nothing dramatic has happened in the last few years. I am in favour of research and exploiting, where applicable, alternative sources of energy. But in my view only the Severn Barrage, costing in the order of £8 billion, can make any really significant contribution to our electrical energy generation, and it would then be about 6 per cent. At present, large windmills of three megawatts are proving unreliable. They have a blade diameter of around 90 metres and have to be sited at distances of something like half a mile to prevent interference. Bearing in mind that they will often work at much less than full-rated capacity and sometimes not at all, at least 500 such windmills would be needed to equal the output of one modern 1,000 megawatt power station. For environmental and other reasons, I personally do not foresee that any very large development is likely, although I know that some others disagree with me on that point.
Combined heat and power when used for district heating has been estimated to have an ultimate theoretical potential of providing 22,000 megawatts of heat, with a saving equivalent to 14 million tonnes of coal a year. Without an existing district heating network the development of large combined heat and power schemes present several practical problems. Digging up the streets and persuading enough householders to accept a new form of heating imposes delays in bringing any system into full operation. Nevertheless, I believe that we must embark on at least one medium-sized scheme as soon as possible. If the local authorities which are now interested cannot finance any such scheme the Government should help.
The question arises as to how limited funds for research and development should be allocated for alternative energy projects. I believe that there is often no direct relationship between the importance of a subject and the amount of money which should be allocated. Other nations will be researching on many of the projects in which we may be interested. In some cases it may be sufficient to keep a relatively small team in being ready to expand when others have done the research work. The Japanese owe their success to doing just this.
Sooner or later we are likely to want to produce gas and petrol from coal because of shortages of natural products, but at the moment it would be very uneconomic to do so. At present South Africa is doing a great deal in this direction for political reasons. We shall most certainly learn from their experience, and perhaps we need not be leaders in this field so long as
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we continue with research and development of small-scale prototypes. Winning coal or its derivatives without mining is a very attractive idea, but in spite of considerable research and trials it still seems impractical on a commercial and large-scale basis. However, bearing in mind our coal reserves, we must carry on very actively research into trying to burn coal without taking the sulphur out and not producing too many nitrous oxide products. This may be important for the future in giving us other options apart from nuclear ones.
I am sure we must continue with nuclear power for the foreseeable future. On the evidence, I personally—I disagree with the noble Earl, Lord Halsbury, on this—favour the PWR reactor. I have said this on the evidence as I know it today. I do not think a really sensible conclusion is possible until we have had the benefit of reading the report. The disposal of nuclear waste, provided we take all sensible precautions, is in my view not a major problem. The frightening development in the nuclear field is the extension of nuclear capability for smaller and less stable nations. Uranium can be obtained fairly easily. The plant for enrichment by gaseous diffusion was a major engineering feat; the use of centrifuges less so, but not if now it is potentially much easier using lasers. This makes proliferation of nuclear capability much easier and perhaps undetectable.
10.14 p.m.
Lord Stoddart of Swindon: My Lords, I, too, welcome this debate and should like to thank the noble Lord, Lord Ezra, for raising this important issue at this time. I have to say to him that I agree entirely with what he said. I shall say some of the same things in my own way during the course of my remarks.
Perhaps I may also say that I welcome the remarks of the noble Earl, Lord Halsbury. When he speaks we always know there is going to be some original thought, and I sincerely hope that the Government will take particular note of what he said about the mechanism of handling our research and development programme. I think that is a very important point which ought to be taken on board.
I could not help warming to the noble Earl when he mentioned the AGR and, indeed, confirmed my own view of the AGR, that there is nothing inherently wrong in the technology. Indeed, there never has been anything inherently wrong in the technology: it was the project's management and the bad labour relations which made those earlier schemes seem not viable and costly. I maintain the view that the AGR is a good technology which should be applied in this country, and that if it is applied properly, as the noble Earl said, it has an exportable potential.
The noble Lord, Lord Ezra, has asked two questions: whether the Government are satisfied, first, with the level of energy research, and, secondly, with the balance between the various programmes. No doubt the noble Lord, Lord Gray, will answer "Yes" to both questions and will try to justify his answer. However, in my own view and that of the Labour Party the Government may be able to sound convincing about the level of research, although I doubt it, but they really cannot defend their record as to the balance between the various programmes.

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I say this because it is patently obvious that the Government simply do not now have, nor have they had since 1979, any cogent energy policy which would achieve the vital objectives of securing security of supply, of conserving the finite indigenous energy resources of coal, oil and gas, and of developing to the full the potential of renewable energy resources. Indeed, until recently their whole approach to conservation has been through the price mechanism, and they have not hesitated to interfere in the most clumsy way in the pricing of gas and electricity in particular, causing, by their actions, difficulties for industrial consumers and hardship for many consumers. Such a policy never had any rational basis and could make little real contribution to a positive long-term energy policy for this country, and its contribution even to conservation is questionable.
It is quite true that of late—and this has been mentioned by the noble Lord, Lord Ezra, and the noble Viscount, Lord Hanworth—the Government have embarked upon a concerted publicity campaign aimed at conservation. Of course, this is to be welcomed, and we wish from this side that it has every success. However, I am bound to say, and indeed I agree with the noble Lord, Lord Ezra, that this one-off operation will be no good unless it is pursued. I am also bound to say that the Government somewhat undermined their "Monergy" programme in advance by their withdrawal of house insulation grants and by failing to recognise that a theoretical pay-back on investment and energy saving will not be a sufficient incentive to consumers, particularly domestic consumers, who generally lack the capital resources to instal energy-saving devices.
However, the Government's "Monergy" programme is an isolated and inadequate response to the real need to preserve our indigenous energy resources for use over the longest period of time. The profligate depletion of our North Sea oil reserves has, apart from reducing the period of self-sufficiency, had several baleful effects. Our manufacturing base has been eroded, with consequent ill effects on employment. Over-production has had an adverse effect on oil prices, and even over the past days and weeks we have seen what a bad effect that has had on our own economy.
Coal, of which we have plentiful supplies, seems to be seen only in the context of burning to provide electricity. Yet, when the oil runs out, we shall need that coal for other purposes, for conversion to oil and to provide the by-products now gained from oil refining. But all that the Government are doing in the matter of producing oil from coal is, as the noble Lord, Lord Ezra, remarked, to support a small pilot plant involving about 2½ tons of coal per day. Similarly with regard to combined heat and power, the Government have shown no urgency about proceeding with the lead city schemes recommended by W. S. Atkins and Partners, although such schemes would save fuel, provide many jobs and, in financial terms, show a proper and real return on capital employed. But, of course, the Government will point to the nuclear programme and say that that is the real way to conserve fossil fuels, ignoring the fact that there are real limitations upon the number of nuclear power stations that can be built in this country and ignoring
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the environmental and waste disposal problems, which, frankly, I have to say to the noble Viscount, Lord Hanworth, have not yet been solved and are not likely to be solved in the very near future.
These problems have to be overcome—not to mention the finite nature of the uranium resource. It is this nuclear tunnel vision which leads the Government to spend directly £197 million a year on nuclear research and a contemptible, miserly £14 million a year on renewable energy sources research. In Japan they spend £127 million per annum on renewables; and in the Federal German Republic £55 million a year is spent on research into renewable energy. Clearly, this country's effort is niggardly compared with those of other industrial countries.
The Government, of course, defend their niggardly attitude by saying that they only want to back winners. The language of the racecourse is hardly appropriate to energy research but, in any event, any professional punter will tell the noble Lord that the only way to pick winners and make money as a punter is to embark upon a great deal of research and analysis. That is what they do if they are going to win money. But one wonders whether the Government know a winner when they see one.
I have already mentioned CHP as a certain winner, backed by many other nations, but, instead of putting their shirt on it, the Government are still pussyfooting around with feasibility studies. Then there is tidal energy. The Severn Barrage has been talked about and investigated for years. But it is as far away from becoming a reality as it ever was. Such is the nature of this Government that they can decide on a scheme for building a Channel tunnel, a scheme of, in my view, doubtful validity and having enormous environmental consequences, in a matter of months. But even after years of consideration we are no nearer to building a Severn Barrage which would bring massive economic benefits and huge savings in fossil fuel. Perhaps the noble Lord, Lord Gray, would bring the House up to date with regard to the Severn Barrage scheme and say whether the Government favour at least one of those projects at present under discussion.
There is one horse in the renewables stable that the Government virtually owned, trained and developed; but they gave it away. I am referring to wave power. There is a potential 120,000 megawatts of wave power around Britain's coasts, a good part of which could be harnessed to provide energy for an infinite period of time at no fuel cost. Estimates of the usuable potential vary but, even on the Government's own pessimistic estimates of between 6,000 megawatts and 13,000 megawatts, the contribution of wave power to energy supply could be significant. Indeed, on the Government's own estimates wave power could save the capital cost of building between six and thirteen Sizewells at £1,500 million each—if we are lucky.
Great strides were made in this country in the development of devices to harness the energy from waves. Indeed, from reports from a number of sources it appears that electricity from wave energy could be produced at a cost well below 5 pence per unit. Indeed, according to an article by Anthony Tucker, unpublished figures from Harwell suggest that, given equal support, wave energy could produce electricity more cheaply than either coal or nuclear power.

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Perhaps the noble Lord will confirm that. Yet, at the very moment when success was at hand, the Government decided to withdraw their support from wave energy projects. But the Norwegians persisted and, using largely British-developed know-how, have built a wave energy machine which is expected to produce electricity at 3·4 pence per kilowatt-hour. The noble Lord, Lord Ezra, is quite correct. There is an export potential here but we apparently export our know-how, our expertise, free of charge for other countries to use. I think that is a disastrous policy and I hope the Government will give an account of themselves tonight.
What sort of skulduggery went on to convince the Government to withdraw support from wave energy just at the moment when success was to hand? Did the nuclear industry, sensing a threat to its dominance, move in to kill the project by ensuring that costs were deliberately inflated and performance underrated to fool poor, innocent, unscientific Ministers into abandoning support for wave energy? Or were Ministers themselves culpable because they were desperate to save money and did they decide that wave energy, with its low public profile, was the easiest target for their cost-cutting mania? Perhaps we shall never know the truth; but my advice to the noble Lord and the Department of Energy is to look closely at wave power again, since I believe that it is probably the renewable with the best long-term potential.
Of course, we welcome the steps which the Government are taking with wind power and indeed we welcome the news that the CEGB are to build another installation at Richborough. Can the noble Lord tell me what is happening about vertical-axis wind machines? They, too, have a potential, particularly around our coasts, perhaps sited in the waters of the East Coast. Perhaps the noble Lord will give us the Government's view on that.
The Government are not doing nearly enough to develop renewable energy. Indeed, their view is that renewable sources are peripheral and, for that reason, their renewables programme remains minute, lethargic, lacking in boldness or imagination and completely overshadowed by the massive funding of conventional energy sources and nuclear power. The electricity supply industry and the nuclear industry, aided and abetted by the Government, have sought to persuade the public that the absence of nuclear power means a return to the Stone Age. Nothing could be further from the truth, since a good, well-balanced, properly and adequately funded and staffed renewables research and development programme would assist in providing the nation's energy needs at lower cost and in a safer manner and at the same time would help to preserve the precious stock of fossil fuel.
In conclusion, I would say that I support very strongly the suggestion made by the noble Lord, Lord Ezra, for regular and comprehensive reviews of energy R & D. I think those reports will be of value only if we do have them annually so that we can discuss them and keep the Government up to the programme, and indeed advise them how they should proceed.
10.30 p.m.
Lord Gray of Contin: My Lords, I too should first like to join others of your Lordships who have
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participated in this debate in thanking the noble Lord, Lord Ezra, for giving us this opportunity to debate research and development, and I shall in the course of my remarks try to deal with at least some of the points which he raised.
I should also like to thank the noble Earl, Lord Halsbury, for again giving us the benefit of his vast experience in this area. My goodness! if only other Members of your Lordships' House would follow his example of presenting in such a succinct form the knowledge which we all know he possesses on this subject. I have every sympathy with him in the length of speeches which were predominant in the last debate. Indeed, that debate was no exception, so frequently do we endure these very long speeches in this House. It is a great shame. I should also like to thank the noble Viscount. Lord Hanworth, for his contribution and, again, I shall try to answer some of his points.
I shall not be led down the path of political knock-about, which the noble Lord, Lord Stoddart of Swindon, tried to entice me into doing this evening. Indeed, I felt that his speech, although it contained a lot of very interesting and useful statistical information, was not really one of his best. He probably found the style of it suitable in another place, but I think it was rather out of place in the House of Lords. Nevertheless, I thank him—
Lord Stoddart of Swindon: My Lords, I can assure the noble Lord that it was not a question of political knock-about. The financing of R & D programmes is a political matter and I approached it in that manner. The reason the research and development programme is not satisfactory, so far as I am concerned and so far as the Labour Party is concerned—and I speak here for the Labour Party—is that the Government are under-financing the programme. I am sorry that the noble Lord should feel that it is political knock-about. He should not be so sensitive. Perhaps he is smarting from last night and his bout with—
Lord Gray of Contin: My Lords, I have given way to the noble Lord and I see that I should not have given way to him at all. He is the one who is sensitive. If one cannot make criticism of his contribution, it is a funny old House. But I shall not follow that path and I shall perhaps refer to one or two of his points in the course of my remarks.
I take the view that the Government have a very good record in research and development, and this debate provides an opportunity to describe the programme and how the Government see it moving in the future. There is one possible implication only in the noble Lord's Question to me which the Government would reject: namely, that of complacency, which is inherent in the verb "satisfied". I can assure him that there is no question of complacency, so far as the Government are concerned, and that we are constantly looking to ensure that we are getting value for money in our energy research and that that research is aimed at worthwhile objectives.
The programme is not static, as I hope to show later in this speech. The Department of Energy has estimated that total expenditure on energy research and development in the United Kingdom is about £1,000 million of which, as the noble Lord, Lord Ezra,

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remarked, about £500 million is financed by the public sector: namely, Government departments, nationalised industries, research councils, etc.
But now let me address myself to the size of the public sector programme on energy research and development. This programme consists principally of expenditure by the Department of Energy, the United Kingdom Atomic Energy Authority and the energy nationalised industries—the British Gas Corporation, the National Coal Board and the electricity supply industry. We should not forget that other Government departments have programmes in this field. For example, the Department of the Environment's R & D programme has an energy content both in its work on energy efficiency, radioactive waste management and acid rain, as well as in other areas. In addition, the Research Council funds useful work—often basic research—in the universities and polytechnics and in its own institutes which contributes towards longer term developments in energy production, distribution and use.
I shall concentrate here on the programme of the Department of Energy and on the UKAEA as it is set out in the 1985 Annual Review of Government-funded R & D published in December 1985 (copies of which are in the Library of the House). The review shows expenditure by the Department of Energy to be £32·1 million in 1982–83 and an estimated £40 million in 1987–88, but remaining stable in real terms over this period. At the same time Government-funded spend by the UKAEA is expected to fall from some £212·4 million in 1982–83 to some £177 million in 1987–88. As those noble Lords who have participated in recent debates on the Trading Fund Bill of the UKAEA will be aware, the basis on which the UKAEA will be funded in the future will change (subject to the passing of the legislation) on 1st April 1986 from a grant in aid to a trading fund. However, the general downward trend of the Government's expenditure on the UKAEA included in the figures I have quoted above show firstly the effects of the review of fast reactor policy in 1982, including the moves towards collaboration with European countries, and a general shift of responsibility for expenditure to those who will ultimately benefit from the R & D; for example, the generating boards.
Taken together, expenditure by the department and the UKAEA represented 5·4 per cent. of Government expenditure in 1984–85, and this is the third largest civil research and development programme after the Department of Education and Science expenditure on university research and the DTI. This is a measure of the importance that the Government attach to energy research and development.
The noble Lord, Lord Ezra, made a comparison with what other countries are doing. The International Energy Agency has estimated that of its 21 member countries the United Kingdom comes sixth after Italy, Germany, Japan, Canada and Sweden in the Government's expenditure on energy research and development per unit of gross domestic product. Again, the IEA estimates that growth in government-funded spend on energy R & D in the United Kingdom was 2·4 per cent. between 1977 and 1983 against a total growth for IEA countries of only 0·5 per cent. So by international standards the United Kingdom would
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appear to have a very respectable record of which we can be justly proud.
Before I turn to the question of balance which the noble Lord raised with me, I should like to stress that one should not expect to see comparable amounts of expenditure on every element of the energy research and development programme. There are obvious reasons for this. Some programmes may be at a relatively early stage involving only modest expenditure, while others are at the more expensive stage of large-scale demonstration. The noble Lords, Lord Ezra and Lord Stoddart of Swindon, made reference to the wind programme. Taking the wind programme as an example of this, the Department of Energy spend has grown from £0·3 million in 1978–79 to forecast expenditure of about £6 million in 1985–86, most of the current expenditure being on the construction of wind turbines on the Orkneys and at Carmarthen Bay.
Secondly, one has to look at the expected contribution that a technology is expected to make to the United Kingdom's energy economy. One would not expect to see the Government spend as much, say, on geothermal aquifers, which is likely to have very limited application to the United Kingdom, as they might on nuclear, which already supplies about 18½ per cent. of electricity generated in the United Kingdom.
Thirdly, we should not examine the Department of Energy's and the UKAEA's programmes in isolation. The department seeks to complement and not to duplicate the R & D activities of other energy industries—both in the private and in the public sector. The three nationalised energy industries all submit their annual R & D programmes to the Secretary of State, who asks his Advisory Council on R & D for Fuel and Power (ACORD) for their views on the balance of their programmes. As the Government's annual review of R & D shows, the British Gas Corporation spent some £68 million on R & D in 1984–85, the electricity supply industry some £123 million, and the NCB some £43 million. We would not expect to see the Department of Energy funding similar programmes to duplicate this work, and so the department's programmes in those areas were relatively modest. In the case of longer-term research in the nuclear field, Government funding has regard to its potential contribution to meeting the country's long-term energy needs.
Similarly, in looking for "balance" in the oil sector, the department takes into account the vast resources spent on oil and gas exploration and production and related industries. The department does not attempt to second guess those commercial companies who are active in this field, but aims to concentrate on those areas necessary to ensure that the maximum oil and gas is recovered in the most cost-effective way to the benefit of the United Kingdom economy as a whole.
In addition, the department has a responsibility for the natural environment in which offshore work is undertaken and for the safety of the methods used in offshore exploration and production. It also needs to have an intimate knowledge of the geology offshore and onshore of the United Kingdom, and to this end it commissions work from the BGS. Finally, the Government are supporting the R & D work of

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offshore supply companies in developing the technologies necessary to enable them to operate competitively at home and world-wide.
Together, those examples show that the department seeks to take account of activities elsewhere in the United Kingdom and to ensure that a programme is undertaken that seeks, without duplication, to meet the medium and longer-term energy requirements of the United Kingdom.
The noble Lord, Lord Ezra, suggested at the beginning of his speech that the Government should consider an industry spend in total, and not the spend of Government alone. That is very important because there is a danger that, when talking about research and development, we may tend to look at Government spending in isolation. That would be a great mistake. I have tried to illustrate with some of the figures I have given that we should really consider the broad picture and total expenditure on R & D for the whole country—and not just Government expenditure by itself.
I believe also that it is better to bring research and development spend per unit of consumption into line with other countries by reducing energy consumption rather than by increasing research and development spend. I am grateful to the noble Lord, Lord Stoddart of Swindon, for his encouraging remarks—and I did note some encouraging remarks in his speech—about our efforts so far as that aspect is concerned.
The noble Lord, Lord Ezra, also referred to the Point of Ayr. The same point was raised by other noble Lords. The Government have made it clear that they will contribute 10 per cent. of the cost of a two and a half tonne liquification plant at Point of Ayr, subject to participation by the private sector. This has been made clear for some time. This size of plant was seen to be the optimum size to ensure that the process could be fully defined and demonstrated to the satisfaction of potential users.
The noble Lord also asked about acid rain. I can tell him that both the CEGB and the National Coal Board have substantially increased expenditure in relevant research and development over the past year or two. I accept the importance of understanding the strange phenomenon which is involved here, to the answer to which we have not yet been led. I am sure that in due course we will find an answer to it, but the research is going on at an increased level.
The noble Earl, Lord Halsbury, made a very interesting comment on nuclear power and referred to AGRs and PWRs, as did the noble Lords, Lord Stoddart and Lord Ezra. It was interesting to note that even in a debate in which the participants are few in number we found that we were not all of a mind so far as the AGR is concerned. I thought it was very useful that the noble Viscount, Lord Hanworth, should have expressed his view in favour of the PWR because I think that is reflected as a true picture of the general impression among those who are interested in the future of nuclear reactors at present. There is a very strong body of opinion—I do not deny it for one moment—which favours the AGR and I must admit that, having recently visited Torness, it is a very impressive operation indeed; of that there is no doubt.
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It is the culmination of all the years of effort which have gone into the AGR.
But it would be foolish to suggest that that is the only option. The PWR is being considered at present in the Sizewell inquiry and the success which it has already achieved cannot be denied. It has, of course, been used in a great many parts of the world. We shall have to wait for perhaps some time before we hear the verdict of the Sizewell inquiry, which has considered the evidence given on behalf of AGRs as well. We shall see what the report has to say about that. As regards nuclear expenditure, the proportion of Government expenditure on energy R & D devoted to nuclear power is tending to decline, as I indicated in the figures I have given.
The question of wave power was raised by the noble Lord, Lord Ezra, and also by the noble Lord, Lord Stoddart. Of course, the noble Lord would not expect me to accept his criticism of the Government in this respect. Let me just say, however, that the Department of Energy's wave energy programme was ended because a detailed assessment showed that it would be uneconomic in large scale use for United Kingdom electricity supply. The programme established the feasibility of extracting energy from waves and assessed the size of the resource. Unfortunately the detailed cost analysis concluded that there was only a low probability of any wave design achieving a cost generation of less than 8p per kilowatt hour. A report on the programme has been published and copies are in the Library of the House. Norwegian experiments on wave energy are on a very small scale and benefit from favourable local physical features. This is unlikely to yield energy on a sufficient scale to be significant in the United Kingdom, I am afraid.
The noble Viscount, Lord Hanworth, raised the question of combined heat and power district heating schemes, etc., as did the noble Lord, Lord Stoddart. I can tell them that the Government have pursued a programme of studies of CHP district heating since 1975, culminating in the publication of the Atkins Report on feasibility studies for nine major cities. The Government then encouraged the formation of consortia consisting of private sector industries, fuel industries and local authorities, to prepare prospectuses for schemes. Three consortia are receiving £0·25 million each in government grant toward the cost of examining schemes for Belfast, Edinburgh and Leicester. Sheffield is also pursuing studies with aid from the European Community; and Newcastle and London are also maintaining their interest. So things are moving in that direction, even if they still have some way to go.
The noble Lord also mentioned wind power, and I think I have dealt with that point already. The question of tidal energy was raised by both the noble Viscount and the noble Lord, Lord Stoddart. The United Kingdom has access to a substantial tidal resource, and a number of sites have potential for tidal power. While the technology is not a particular problem the economics still remain uncertain and are very much site specific. The Severn estuary, about which the noble Lord asked me, is one of the best potential sites in the world, owing to its exceptionally high tidal range, and we are providing support for a study of a private sector tidal energy barrier scheme in

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the estuary. We have also supported a preliminary evaluation of a smaller but nonetheless potentially attractive scheme for a Mersey barrage and we are carrying out further work on smaller-scale tidal schemes.
In conclusion, I think that I should take the point which the noble Lord, Lord Ezra, made about the Government producing an annual review regarding an omnibus of research and development expenditure. The noble Lord, Lord Ezra, was very fair and said that there were a number of areas from which this information could be obtained, but I do not know if he has actually seen the annual review of government-funded research and development which does, I think, collect all the information very usefully indeed. I take the point that he has made.
Lord Ezra: My Lords, may I briefly intervene and confirm that I have seen that publication, but of course as it deals with the whole effort of R & D throughout the country it really is rather brief in any particular subject, and I did not think that it was adequate for the purpose I had in mind.
Lord Gray of Contin: My Lords, I am glad that the noble Lord has seen it, at least, because I think it is a useful publication. I have some doubts as to whether he has made a case to justify an annual publication of the kind he has in mind, in view of all the information which is already available, but I undertake to pass on to my right honourable friend the Secretary of State for Energy the suggestion which the noble Lord has made, and no doubt energy Ministers will look at it and give it consideration.
Finally, may I again thank the noble Lord, Lord Ezra, for giving us this opportunity to have a short but very interesting debate, and I should also like to thank
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those of your Lordships who waited until this late hour in order to take part in it.
House adjourned at five minutes before eleven o'clock.