Rent Control

HL Deb 28 January 1987 vol 483 cc1377-404

6.8 p.m.

Lord Harris of High Cross rose to call attention to the effects of rent control on unemployment and homelessness; and to move for Papers.

The noble Lord said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper. I should like to start by saying that I am grateful to my noble friends for allocating their second Cross-Bench debate to a discussion of what I regard as the evils of rent control. I must emphasise that this does not imply any concerted view on these Benches, though I shall be looking for a certain amount of support from behind me. I think it is appropriate that those of us who enjoy the comparative safety of the Cross-Benches should give a lead in raising an issue that is still unfortunately regarded as a political hot potato

On broad issues of economic analysis and development I have before ventured the view that this House is not sufficiently backward-looking. If we are concerned with conditions favourable to economic advance we might learn lessons from the past, when Britain was in the van of progress rather than jostling in the rear. Accordingly, for encouragement and perverse inspiration I sometimes turn to the pages of Cole and Postgate's history book entitled The Common People: 1746 to 1938. I hope that that will inspire some confidence on the Labour Benches.

The authors of course provide a strictly socialist interpretation of the transformation which we loosely call the Industrial Revolution and which shows no sign, even today, of slackening. If I were asked what was the characteristic most essential for changes that were to liberate the common people from centuries of grinding poverty, I might as a first approximation offer a single word—mobility. Certainly without occupational and geographical mobility in human resources the new mechanical contrivances could not have yielded their full fruit.

Industrially, before the transformation, Cole and Postgate say: England was still hollow—a circumference of activity surrounding a central area which lived largely by self-subsistent agriculture". The density of the population was then dictated largely by the location of the woollen industry and access to seaborne trade. In 1750, outside London only Bristol and perhaps Norwich might rank in population as major towns well ahead of Manchester, Liverpool, Birmingham and the rest. Indeed, on Cole and Postgate's showing Norfolk was exceeded in population only by Middlesex, Yorkshire and Devonshire. The growth of new industry and of employment therefore depended not only on the multiplication of population but on its migration from farming to industry, from countryside to the towns, and from the South and the East to the North and the West.

My entire case in this debate is that the past transformation of wealth and standards of living would have been totally frustrated if some well-meaning 18th century crackpot had hit on the disastrous notion of controlling rents, let alone obstructing new building in deference to town and country planning regulations. Today we are faced with the urgency of a shift, not so much from agriculture to industry but from old industry to new industry and from the traditional localised manufacture of goods to the more widely dispersed provision of services—not perhaps from the South and East to the North and the West but more likely the other way.

Once again I believe mobility of labour is required to adapt to new and emerging opportunities, yet movement is severely restricted by a host of policies, including uniform national wage rates and planning restrictions. However, prominent among the obstacles to mobility is the distortion and destruction of a flexible housing market to accommodate the changing and diverse needs of our enlarged population.

There can surely be less dispute today that rent control has been the chief source of the mischief that now afflicts hundreds of thousands of homeless and others who are frozen in unemployment by the inability to move to where jobs that they could do are going begging. It was, after all, the original impact of rent control in 1915 that caused the shortage of homes which appeared to justify the building of millions of council houses. It was subsidised council house rents that then became a further brake on people moving home. Moreover, it was the discouragment of house building for rent, reinforced by tax incentives, that led millions more to become owner-occupiers rather than enjoying the flexibility, convenience and choice of remaining tenants at least for some part of their family and working lives.

It is true that professional economists are known to disagree on many issues of policy, although I notice a widening measure of support for market propositions even in recent Fabian tracts, in the speeches of Mr. Roy Hattersley and in the less sensational pages of recent copies of the New Statesman. But I think I can say—as I heard the noble Lord, Lord Robbins, say in this House—that there are few questions on which economists are more unanimous than the evil effects of rent control. As so often is the case, social and economic objectives are in total conflict. After all, rent control is only the application of price control to housing. All price control has what economists call an income effect and also an incentive effect. The income effect refers to the socially desirable result of raising the real income of the consumer or tenant by keeping the price or rent lower than it would otherwise be.

However, the lower price or rent simultaneously and inevitably has an incentive effect which is economically undesirable. For example, a married couple whose children have left home have less incentive to economise in accommodation by moving to a smaller house or flat so long as they have security of tenure at a controlled rent; and so we can predict that rent control will increase the demand for accommodation.

More seriously, at the same time the incentive effect on the landlord of a lower rent operates to reduce the supply of rented accommodation. This may come about by waiting for a protected tenant to die or offering him a cash inducement to quit so that the house can be taken out of renting and sold for the market price to an owner-occupier. Reduced supply has also come about by the decay of property on which the controlled rent, particularly in the days of high inflation, afforded the landlord an income wholly insufficient to cover the cost of repair and maintenance of the property. Even when the rent is closer to the market price, security of tenure imposes a cost on the landlord.

It follows that rent control, introduced for wholly benevolent and social reasons, inevitably has had malignant economic consequences. By increasing demand and reducing supply the politicians have themselves created the famous housing shortage. They have then exploited the resultant distress to indulge in such further mischief as the indiscriminate subsidy of council housing, the costly inducement of owner-occupation for people who would prefer the option of renting and the politically profitable confiscation by leasehold enfranchisement. All these expediencies would become unnecessary if party men would separate the social from the economic aspects of policy by allowing housing to reflect market prices and rents while topping up low incomes to enable the poor to pay.

It must be said from these Benches that all parties have contributed over seven decades to the unholy muddle and mischief which is dignified by the name of housing policy. It gives me no satisfaction to say that the Labour Party has come to play the most obstructive part by meeting every call for reform with the threat to restore full control if it is ever again in government. It thereby frightens off new building and renovation to rent by investors who think the political risk is a possibility, however remote. I look forward to hearing the noble Lord, Lord Winstanley, since if only the Social Democrats and even the Liberals would take courage to support this Government as a start in freeing new lettings from rent control, the Labour Party's electoral bluff would be called and its palsied veto on progress would go the way of Clause 4.

The Labour Party attempted to discredit the last effort on relaxation by a Conservative Government by blaming them for Rachmanism. I have spent a great deal of time rummaging through old newpaper clippings in order to establish an accurate view of that matter. I offer two clippings. One is from the Observer, which in July 1963, at the time of that controversy, said: For the Rachmans of this world, rent restrictions and controls—the solution advocated by the Labour Party—are not so much an obstacle as an opportunity.". I then turned to my favourite journal, the Economist, and I offer your Lordships a quotation from 27th July 1963: Where the solution cannot lie is in Mr. Wilson's repeated promise that a Labour government would restore and re-expand rent controls".

It continues: the re-extension of rent control would extend the area in which Rachmanism would again thrive". The gap between the controlled depressed rent and the market value of the premises without control provides the temptation even today for harsh or unscrupulous landlords to attempt to resort to efforts of eviction, against which, I am glad to say, the law is fairly strongly established.

I do not attach great weight to such precise statistics as 100,000 homeless, 1 million crude surplus of empty dwellings and perhaps 300,000 job vacancies in areas where housing is not available. But I have no doubt that a major reduction in homelessness and unemployment will be longer delayed unless we tackle the rigidity of rent control to encourage the provision of homes where people want to work and live.

So long as control in its present form survives, the form of rented accommodation most convenient to young people, to itinerant individual workers and to mobile families will continue its tragic decline. The Government would then be drawn still deeper into the swamp, with mounting costs in council house-building that might hardly dent the housing lists and would certainly not cater for the short-term needs of people moving in search of work.

Meanwhile, the very success of the Government's policy in selling off 1 million council houses has further reduced the total supply of rented accommodation from 44 per cent. in 1980 to 39 per cent. of the present housing stock, compared with well above 70 per cent. in 1950 and, in many European countries, typically 45 or 60 per cent. of all houses rented through the private sector.

I salute the courage of the present Minister, Mr. John Patten, in opening up the debate on the issue, and I look forward to hearing what measures the Government have in mind for the next session, which may turn out to be their next term of office.

6.23 p.m.

Baroness Macleod of Borve

My Lords, I am most grateful, as I am sure are other noble Lords, to have the opportunity to discuss this important subject, which is led in the usual brilliant manner of the noble Lord, Lord Hams of High Cross. I wish that I could emulate his brilliance. I shall not take very long and therefore will not bore your Lordships for too long.

I agree with the noble Lord that housing is one of the top priorities that we have to face today. It is of course part of the whole problem of homelessness and unemployment. I think that the wording of the Motion is very apposite. The Rent Act and the restriction of rent control therefore play a vital part in both these problems. For the unemployed, for instance, moving house from one area to a job in another is a great problem not only for the man and his wife but for the family. Needless to say, it is unwise to sell a home and move a family until the job is secure. Rented property for a short time is therefore essential.

I have heard that in Buckinghamshire, where a large number of jobs are going, it is difficult to find enough people to fill the jobs, and employers are going up North and bringing people down from the North to fill the vacancies. The tragedy is that there are no homes, there is no accommodation, to be rented or bought. As I have said, anyone coming to a temporary job obviously needs to rent rather than to buy as a first possibility. What they are doing now in my view is tragic. They are bussing home every Friday night and bussing back again on Sunday. What sort of family life is that? I think that something must be done.

I took part in the debate not only because I feel strongly on the subject but because I read the Written Answer that my noble friend Lord Skelmersdale gave to a question posed by my noble friend Lord Colwyn on 13th January.

At col. 542 of Hansard my noble friend Lord Colwyn asked Her Majesty's Government: Whether they will take any further steps to improve the prospects for the private rented sector, especially in London". As we are talking about London, I hope that noble Lords will not mind if I read the second paragraph of the reply by the noble Lord, Lord Skelmersdale. With reference to the Rent Act order that he was then seeking to bring into force, and of which, so far as I know, very few people have taken note, he said: The second order amends the Housing Act 1980 so as to remove the requirement on a landlord in the Greater London area who is letting a property under shorthold to register a fair rent for the property. This requirement was abolished in 1981 for properties outside the Greater London area. It will still be open to either landlord or tenant for a property let on a shorthold in the Greater London area to apply for a fair rent to be registered. I hope this will encourage owners keeping property empty in London to now let it secure in the knowledge that they will be able to obtain vacant possession". There has, I think, been a great deal of confusion, which I hope the Answer I have read clears up. I believe that it will help, as I gather from the department it has done in the country. I hope also that it will make more properties available for rent in Greater London. I know that the Rent Act does not cover lodgings, but lodgings have always been part of the housing of those going from job to job.

I ask the Government to encourage people once again to have rooms in their houses to rent as lodgings to, say, people without families and young people who have just got jobs. It was easy to obtain that sort of accommodation before the war. It is not easy now because the owners of the property are worried that they cannot get rid of the tenants. However, I understand that if the owner of the property gives the tenant one good meal a day, that is sufficient for it to be called board and lodging, and he can get rid of the tenant.

I must add one warning. In society today many widows who are unfortunately left alone have one or two bedrooms, and would like extra money and some company. I must warn every widow that should she take a man into her household, for what may be the best of reasons, she will probably lose her widow's pension because it will be thought that they are cohabiting, despite the fact that she may be a widow of 75 and the man a young man of 21. Many such cases have been brought to my attention by the National Association of Widows.

However, that apart, I am very pleased that the noble Lord, Lord Harris, has initiated this debate tonight and I wish him well.

6.30 p.m.

Lord Stallard

My Lords, I too should like to begin by congratulating the noble Lord, Lord Harris, on initiating this debate and giving us his interesting and frank opening remarks. It is not the first time that he and many other Members of your Lordships' House have debated this crucial domestic question and I dare say it will not be the last.

The arguments about rent control and the reasons for and against have gone on ever since the question was first introduced in 1915. Having listened to the noble Lord's opening remarks, I think that we are probably further away from a consensus now than we were then. He will not be surprised—and it would not be fair if I did not tell him so—that I am almost totally diametrically opposed to everything that he has said on the question of rents. Nor do I agree with his interpretation of the history of Rachmanism.

It was a period through which I lived and worked as a local councillor and I saw the effects of the policy that he glossed over. I wonder what the people who suffered under that policy would say if they could hear how lightly it has been treated by the noble Lord, Lord Harris, this evening. I speak for myself only at this moment but I think that there is a gap between the noble Lord and me which is far too wide for a short debate of this nature to do anything to close.

I ought to say at the beginning that the Labour Party, which I and others on these Benches support and represent, has always supported the case for rent control in one form or another. We have pledged that after the next election and the return of a Labour Government in a few months' time we shall strengthen rent control and security of tenure for all tenants. We shall also lay down in the private sector minimum standards which, if they are not met, will give tenants the right to require a nominated housing association, or in some cases a local authority, to buy out the existing landlord.

We shall also give tenants the legal right to temporary accommodation when repairs or improvements are being carried out, thus preventing the practice of some unscrupulous landlords who winkle out secure tenants—and my recollection goes back to only a few weeks ago when we again experienced the effects of Rachmanism. It will be a legal right to give such tenants security and the certainty of knowing that they will be able to move back into their homes.

Those who have read the true history of Rachmanism will understand the necessity for such a legal right to protect them against harassment. Anyone who experienced Rachmanism in the 1960s and 1970s will readily appreciate the need for such a legal right, because Rachmanism is far from dead. The practice still continues. I have seen instances of it in the London boroughs and read of cases in the local press only recently. It concerns mainly elderly people who are the most vulnerable individuals to this kind of situation because many of them are long-standing rent-controlled tenants. They are very vulnerable to the kind of harassment that one became used to in the days of Rachmanism. Cases are still occurring; they are being reported and mentioned in the other place.

On the other hand, as we know, the Conservative Party—and the Government—are pledged to the total abolition of rent control. They are not saying when they intend to do it. In fact, they have said the opposite. They have said that it will not happen during the lifetime of this Parliament but during that of the next. When I recall the effects of Rachmanism and its impact on the Tory vote in the 1964 general election it is certainly not difficult to understand why they do not wish to undertake such a course before the next election, as it would certainly have the same effect.

The fact that they are toying with the idea of initiating debates in both Chambers and in other places outside the Houses of Parliament in order to push the concept of total decontrol and deregulation will still have the same effect. Indeed, at this moment the Government are preparing the ground for total deregulation probably in order to satisfy their activists and to make it easier to tackle this question after the election.

The noble Baroness who spoke before me mentioned one of the statutory instruments that have recently been announced by the Minister of State. I shall cite two statutory instruments as an example of the move toward deregulation. The first one will abolish phased introduction of higher rents awarded by the rent officer, and the second will abolish the duty to register a fair rent in advance on shorthold tenancies in Greater London.

The arguments put forward by the Minister for these two measures are these. As regards phasing, the Minister has said that because inflation has fallen to such a low level there is no longer any justification for delaying full payment of any increase when it is awarded. However, the facts do not bear out this argument. In recent years the retail price index has hovered around the 5 per cent. to 7 per cent. mark but housing costs have increased quite dramatically above the RPI. In the first six months of 1986 they increased by 17 per cent. and there are examples of items increased by 100 per cent. How then is it possible to say that inflation is so low that a rent increase can be afforded in one bang instead of two when there have been increases of the kind that I have just mentioned?

We also know that included among private tenants are many of the poorer sections of the community. A lot of older people are private tenants, as are many parents with young families. In London in 1984, which is the latest period for which I have been able to obtain figures, nearly 40 per cent. of privately rented households consisted of pensioners. Moreover, 90 per cent. of new lettings were to adult sharers, such as students who rely mainly on grants. Many private tenants are not eligible for housing benefit where it exists. Certainly most students are not eligible; nor are pensioners with a small occupational pension; nor low paid part-time workers, who are often single men and women. All these people are vulnerable.

The effect of the policy as it is outlined in these two statutory instruments will be that private tenants will be forced to pay the full increase from the date of registration rather than half the increase in the first year and the rest in the second year, as would happen if matters remained as they are now. In my view it will inevitably lead to more rent arrears, which in turn will lead to more evictions and homelessness. I do not need a history book to tell me that. I have lived all my life in such circumstances and I know that that is the effect of such a policy.

The proposals for shortholds in Greater London amount as of now to effective decontrol of shorthold tenancies in London. Tenants will have to pay more rent—in many cases much more than they are able to afford—which will lead to more arrears, more evictions and more homelessness. There is no argument about it, and it should be perfectly obvious to people who live in the real world that exists outside this goldfish bowl.

Support for my argument can be found in a recent comment on these two statutory instruments made by the spokesman of Shelter, who said: These proposals mark the beginning of a new round of Government attacks on private tenants' rights. Private tenants should be in no doubt that these changes are calculated to be the first in a series of body punches which will culminate in the complete removal of rent regulation, and for new lettings the complete removal of security of tenure". The Organisation for Private Tenants said: This measure"— that is, shortholds and the statutory instrument to which I referred— will simply erode the rights of private tenants, and will do nothing to reverse the contraction of the private rented sector in London. Rapidly spiralling property prices will still make sale into owner occupation considerably more lucrative than rental. Reduced tenancy rights will merely speed up the process. Those are the facts.

The last major attempt, which the noble Lord, Lord Harris, mentioned, to end control after the Second World War was the Rent Act 1957. The Government argued then as they do now, and as the noble Lord did this evening, that decontrol would increase the supply of housing for rent, thus reducing homelessness. The facts do not bear out those assertions, because the Act hastened the loss of privately owned dwellings as landlords sold. I witnessed that thousands of times. They sold into owner-occupation. That was often done after receiving local authority grants to convert a property into self-contained units. That made the sale lucrative.

When I tried to introduce a Bill on improvement grants in the other place, I quoted example after example of tremendous increases in prices. Houses that had been bought for £4,500 were sold suddenly, after a tatty conversion, for £112,000 in the area I represented. It is always much more lucrative to sell to private owners than to improve dwellings or put them on the market for rent. That has not changed much. In parts of London it has become worse. We are not now talking about £120,000; we are talking about £300,000, £400,000 or £500,000 for a property. I should be happy to send the noble Lord, Lord Harris, copies of advertisements in my local newspapers from which he will see what obtains in London.

In 1956, before the Rent Act 1957 came into force, there were 6.5 million private rented dwellings. In 1961, four years after the introduction of that Act, there were 5 million. That is a reduction of 1.5 million. That was the Act which was to increase the availability of rented accommodation. It did nothing of the kind. No extra dwellings were forthcoming. On the contrary, they disappeared. The 1957 Act started and led to the biggest increase in homelessness that we have seen this century. It led to misery and unjustice for many private tenants and to Rachman, the most evil perpetrator of harassment.

Much more has been written about that period than the quotations given by the noble Lord. My God, books have been written about it. If he cannot find a book, I should be quite happy to sit down for half an hour and give him a verbatim report of what happened in those days. So great was the public concern that the Government were forced to set up the Milner Holland Committee to inquire into all aspects of housing in London. The Milner Holland report on London found: in areas of shortage such as London and the South East there was evidence of very high rents and evidence of abuses against tenants which could not be dismissed as isolated or insignificant. He went on to argue for the retention of a form of rent control.

Other reports reached similar conclusions. There was widespread agreement about statistics to support the fact that decontrol and high rents had increased homelessness and dramatically reduced the availability of homes for rent. The present state where thousands of our people are living in bed and breakfast accommodation or worse is directly related to the 1957 Act and policies followed since 1979. It is not related to rent control. From the statistics, we know that in 1977 out of 550,000 empty properties in private ownership only between 8,000 and 30,000 could be said to be empty for any reason connected with the Rent Acts.

I do not think that the noble Lord has produced evidence to back up his case on the first part of his Motion. On the second part of his Motion, relating to mobility, the noble Lord said that he thinks the ending of control would improve mobility. That is a fairy tale. It is impossible. Exactly the opposite would happen. What he suggests cannot happen. At one stage he seemed to be talking about government direction of mobility from the centre which would force people to move if they were living in one room too many. A worker must not have a spare room for friends; if he has a spare room, he should give it up because it is too much for ordinary folk to have; it is too much to have a two-bedroom flat for only a man and his wife.

For most people, mobility is a matter of choice. We want it to remain like that. It should not be at the whim of landlords or governments. Within reason, there should be choice. That principle is accepted in most other areas of housing.

It is ironical that a government who extended security of tenure to council and housing association tenants in 1980 intend to take it away from private tenants, if we go through with total deregulation. New tenants are often old ones moving into different homes, so the suggestion that the proposal will apply to new tenancies only will not make much difference. In industrial terms, insecurity of tenure amounts to unfair dismissal for a tenant. The people involved treat it just as seriously as we treat that matter.

I have heard nothing so far in this debate—I shall listen carefully to the rest of it—or in recent statements by the Minister and others that does anything but strengthen my view that the abolition of rent control, as envisaged by the noble Lord and government supporters, will be a disaster for thousands of old people. It will contribute nothing to the solution of our most serious domestic problem. It will lead to confrontation and hardship the like of which we have not seen since the 1950 rent riots.

I hope that we will debate this matter again soon, perhaps when we receive the report of the present major review into all aspects of housing. That may be a better time to discuss this matter in more detail and at greater length than we can tonight. In the meantime, I hope that we will think twice before we embark on the road outlined by the noble Lord.

6.48 p.m.

Lord Winstanley

My Lords, the noble Lord, Lord Harris of High Cross, has introduced a desperately important subject, and one of great complexity. Listening to him, I felt at times that I was listening to the Secretary of State for the Environment Mr. Nicholas Ridley, because their views seem so alike in so many ways. In fairness to Mr. Ridley, the last time I read one of his speeches on this subject it was one he made to the Institute of Housing conference on 13th June last. It seemed that Mr. Ridley covered his tracks and guarded his escape route rather better than the noble Lord, Lord Harris, has. Mr. Ridley said: If rents were set at market levels and there were a large number of landlords, both public and private, with a large number of properties, then a market could emerge which could clear itself at a competitive price". There are a great many ifs and buts there. I hope that at the end of the debate we shall hear a little more about the ifs and the buts. If we do no more than merely remove rent controls, we are likely merely to redistribute the limited existing stock of homes for rent to those with greater market power, while other tenants will end up more poorly housed than they are today.

At least it seems that at long last the Government's sole housing policy is no longer an increase in the percentage of home owners. That is welcome. Home ownership has now reached 64 per cent., higher than in any comparable European country. I think that it is approaching saturation point. There are signs that the Government have recognised that the principal housing need today is for homes to rent. That is wise. I think that that is a view shared by noble Lords in all parts of the House. Whatever reservations they may have about the dangers of private sector rented accommodation, it is nevertheless accepted that the real need today is for more homes to rent. Where are they to come from? That is the problem. The existing provision of rented accommodation comes from many sources. It comes from local authority housing departments, housing associations, private landlords and to a limited extent from other agencies such as housing co-operatives.

It seems to me that a variety of provisions is desirable since it increases freedom of choice for the tenant. Therefore, which of the existing providers—or what new agencies—can do what is required? I think we must accept the melancholy fact that local authorities are not widely perceived as being good landlords. For one thing, they are far too large. They became much larger with local government reorganisation, and very large organisations tend to be remote and excessively bureaucratic. In addition, there are special problems in the metropolitan areas where housing has remained, as perhaps in the Greater Manchester area, the business of the city council. Indeed that particular city council has overspill housing estates many miles away from the city. Therefore, in a sense, local democracy ceases because the councillor for whom the person votes if he lives in an overspill Manchester City housing estate in Hattersley or Marple is not a councillor on the housing authority responsible for his house. I think that there are very great difficulties there.

In addition, many have found local authorities to have a tendency towards being authoritarian as landlords. I have often found experience of that. It is a melancholy fact that the person or the family most likely to get to the top of the local authority housing list is not always the person or the family in most desperate need; it is very often the person or family who makes life intolerable for the people in the housing department. The size of the organisation tends to lead to that kind of problem.

I had some experience of authoritarianism some years ago with the rent books of 17 different local authority housing departments in the North-West of England. I recall a television programme with the late Professor Harry Street, whom many noble Lords will remember as an almost perpetual Royal Commissioner and perhaps the outstanding authority on the common law in Britain. He went through the conditions in the rent books of 17 housing authority areas in the North-West of England. When looking through the different sections he said: "That is illegal; that is unenforceable; that is all right", and so on. As a result, the housing authorities withdrew all those rent books and each and every one of them was rewritten to remove provisions which were, frankly, ultra vires and perhaps an intolerable infringement of the ordinary rights of ordinary tenants. Therefore, I am not immensely happy about looking for a vast increase in rented accommodation from local authorities.

Where else should we look? Perhaps we should look at building societies. I mentioned in an earlier debate that now that we have removed some of the restrictions from the building societies we can perhaps hope that they will revert to what they were originally set up to do; namely to build houses. I should like to see some of the building societies building some houses to rent. I have heard rumours that theAbbey National Building Society is considering doing that. However, before building societies make progress in that direction they will need to have consultations with the Government so that the Government can in some way target a part of the subsidies which go to housing towards that source so that the societies can get on with the job.

I should like to see as much assistance as possible going to housing associations, which, because they are smaller and closer to the people who depend upon them, are in many ways more accountable. I should like to see not only more housing co-operatives, but also those housing co-operatives being given more assistance.

As regards private landlords, let us accept the fact that there are no subsidies for private landlords. If there are to be subsidies for private landlords then there must be strings attached. I am not saying here and now what kind of strings, but if we are to expect private landlords to provide more houses to rent at rents which people seeking them can possibly pay, then the Government must give a great deal of thought to the whole question of housing finance.

I should like to move on to the question of how people are to pay their rents. That is one of the problems, and the time is coming when we must get rid of the extraordinary bureaucratic muddle of our present system of housing benefits, which nobody fully understands. They result in people being subjected to an intolerable kind of catechism on all aspects of their life and financial considerations. I believe that we must have modifications there.

I recollect that the National Federation of Housing Associations, which looked at the matter very carefully, took the view that all housing subsidies, including tax relief, should be phased out. That would mean that the housing costs of council tenants and mortgagors would be higher and the householders (whatever the tenure) would be protected, if their circumstances required it, by what the inquiry called a "needs-related housing allowance"—in other words, a housing benefit of some kind.

Even then there would be problems. In 1980, before the recent steep rise in house prices, about 45 per cent. of council tenants were unable to pay their rents without the help of rent rebates or supplementary benefit. I believe that the proportion is now 70 per cent. If rents are to be further increased, as is inevitable if there is to be more building but no housing subsidies, even more tenants, council or private, will be unable to pay their rents without still more help. If rents, instead of merely covering costs, are to be based on the current capital value of the dwelling, they will be higher still, as will the bill for housing benefits in some form.

The question arises: can there be any logic in rent levels which few tenants, if any, will be able to pay? Unfortunately that seems to be the unavoidable result of unsubsidised rents. Subsidies for rented housing are inescapable and are certainly a lesser evil than no subsidies if that means rents which have no relationship whatever to the rent-paying capacity of those living or seeking to live in those houses.

I take the view that we should adopt a housing allowance which would not be needs-related at all but paid as of right to all householders, like child benefits or old age pensions, with the tax system amended so that the Exchequer would recover the cost where the allowance was not needed. A system of that kind has considerable merits and warrants examination. However, whatever the system of income support, no part of the cost should fall on the locality. It should be borne by the community at large, through an income support subsidy from the Exchequer.

I should like to return for a moment to the precise terms of the Motion of the noble Lord, Lord Harris, which refers to: the effects of rent control on unemployment and homelessness". The link between rent controls and homelessness is of course inescapable and the problems of homelessness are immense. They have been mentioned over and over again in your Lordships' House. In answer to a Question which I tabled, the Government accepted that last year there were 110,000 families homeless in England and Wales, not counting Scotland. That figure is clearly an underestimate if we add to it the very large number of single homeless who are not included in it.

However, the link with unemployment is a little more tenuous. Noble Lords will remember that in our recent debate on the gulf between North and South it was made clear by many noble Lords that while the cost of accommodation remains so very high it has become impossible in London for health authorities to recruit nurses with the necessary qualities or for schools to recruit graduate teachers.

In general, it is a fact that those with jobs to go to seek houses to own rather than to rent. It is right as the noble Baroness, Lady Macleod of Borve, said, that there are young people who want houses to rent when seeking jobs which may be temporary. However, in general those seeking rented accommodation are the elderly with, on the whole, low incomes, and young, mobile people. I say "mobile" because they have nowhere to work, often because they have nowhere to live. We now have housing rules and board and lodging arrangements which compel them to be mobile, and rather more mobile than I think is socially desirable.

I seek some answers at the end of this debate and I am sure that we shall be given some of them by the noble Baroness. I know that she is familiar with some of the housing problems on Merseyside. We heard Mr. Patten saying loud and clear that we wanted "the right to rent". With the right to rent must go a right to be able to pay the rent, and I should like to hear a little more about that at the end of this debate.

Two of the main problems facing our nation today are; first, homelessness, which is a national disgrace, and, secondly, personal indebtedness. The two are very closely linked. We shall not solve one without solving the other. I hope that we solve both of those problems.

7 p.m.

Lord Seebohm

My Lords, I am delighted that the noble Lord, Lord Harris of High Cross, introduced this particular subject because I believe that bad government policy in rent restriction and in housing policy generally since the war has done as much damage to the social structure of this country as any other actions that have been taken. I do not believe that noble Lords will disagree that now there is an enormous need for rented accommodation. Anything that can be done to remedy the situation is desirable and must be looked at very carefully.

There are three categories which interest me most. The first is housing for the elderly, the second housing for the homeless and the third housing for the mobility of labour. I am not going to speak about the elderly because there are many pressure groups—Age Concern, Help the Aged and many other organisations—which are making the urgency and the need for more rented accommodation for old people so obvious that there is no great necessity for me to stress that matter tonight. Mobility has been dealt with already. Therefore, I am going to concentrate my remarks on the issue of homelessness.

There have been many debates during the last year or two on housing. We had long debates on the Scarman Report and on the Duke of Edinburgh's Report, and there have been Questions in your Lordships' House concerning this matter. I am still astonished at the lack of an adequate response from the Government to all the completely conclusive arguments concerning the state of the nation's housing.

The PSI (Policy Studies Institute), of which I had the honour to be president, has just produced a very interesting survey which I received last week called Supplementary Benefit Board and Lodging Payments. The last sentence of the report states: It is agreed on all sides that the real solution to these problems does not lie in supplementary benefit payments but in the availability of accommodation for single people. A sufficient supply of independent bedsitters or flatlets, supplemented by cheap private lodgings and hostels, would make the present expensive arrangements to put claimants up in bed and breakfast hotels entirely unnecessary.". Being a money man I am going to talk about figures and the financing of houses, although I shall not bore the House with many figures. The first figure I wish to give from the latest report I have shows that in 1985 the DHSS handed out approximately £400 million for bed and breakfast and lodgings. From rough calculations I believe that for approximately half a billion pounds (£500 million) it is possible to build a mass of small flatlets and accommodation and to improve what is at present old and inadequate accommodation. This would solve half the problems. It is quite ridiculous to continue spending a fantastic sum every year for board and lodgings when for a little capital expenditure it is possible to put a great deal of this problem right.

I have done some more calculations which I believe to be reasonably accurate. It is not possible in the South of England to build a small house adequate for modern standards which could be let commercially at under £100 per week. This is going to put a stopper on the building of new houses. But a single person in board and lodgings is given a grant of £55 per week, and so two single people occupying a house together would save the country money.

I have some figures which illustrate the point better than that. These are figures which were produced by the DHSS in April of this year. They show that for a couple with two children board and lodgings costs £10,800 per annum. It is possible to build a house for approximately £50,000, and if one considers the modern interest rate on the amount that the local authority would have to borrow, it would cost only £6,000 per year. This illustrates a saving when building a house of £4,740 for every family that has two children. These figures have been carefully worked out. This is fantastic.

Using the same figures, one sees that the saving for a couple is approximately £1,390; for single people it is roughly all square. But many single people would not necessarily have to live in a house. If hostels and flatlets were built at least two people could share a room. At university one used to do that and I imagine that young people today can do the same. It is going to cost very much less. There is absolutely no argument whatever that capital, and not an exorbitant amount, should be spent as quickly as possible to cure homelessness. It can be done.

What I cannot understand is why the Government refuse to spend this money, a lot of which is available but is being blocked. The local authorities have the money. But if the Government can get billions of pounds from the public through the privatisation of British Oil, British Telecom and British Gas, which apparently is to be given back to them in taxation, a housing loan or something of that nature, which could be advertised with as much publicity as they gave Sid, would be willingly subscribed by everybody. It would not come out of the PSBR. It would not be produced by the banks and the Treasury. It would be just like the money that was raised for buying British Gas. At the end of the day one would end up with some genuine assets on the ground and not just added personal expenditure. I cannot see the argument against that. I hope that the noble Baroness, Lady Hooper, will tell me the answer in her reply.

One of the biggest sources we can now encourage for rented accommodation is housing associations. It is absolutely criminal that we have stopped giving adequate money to the housing associations, which can be supervised by the National Federation of Housing and subject to the Housing Corporation. Such associations can be properly supervised and managed. This is probably one of the best possible ways of getting housing.

The other point I wished to raise is this. I listened with great care to the noble Lord, Lord Stallard, and never once in his speech did he talk about building more houses. If you build an adequate number of houses, every argument he made falls flat on its face. I return to the same point. We could build more houses; we must build more houses. If we do not take the steps necessary to see that within reason everybody in this country has a dry and warm home, we are not a caring society.

7.8 p.m.

Lord Marsh

My Lords, I should like to add my thanks to the noble Lord, Lord Harris, for introducing the debate. It is an extremely important and very clear issue. In a short debate, we cannot conceivably discuss the complexities of the various different solutions that may be suggested. What we are faced with is a clear difference of principle. The noble Lord, Lord Stallard, stated his party's policy clearly and with total sincerity. There is no compromise with the principles behind the policy, as I think he would agree. We are actually talking of a fundamental difference of approach.

I should like to confine my remarks to the relationship, as I see it, between the effect of the Rent Acts and unemployment. I listened with surprise and amazement to some of the remarks made by the noble Lord, Lord Winstanley. To suggest that this is not a major problem in the area of unemployment, because the unemployed, when they are fortunate enough to find a job, prefer to purchase property, I find amazing. When semi-skilled or unskilled workers have been unemployed for a year or two, relatively few of them can put together the £6,000 or £7,000 in deposit and legal fees required for even a very cheap small house. The Rent Acts have an adverse impact upon the unemployed.

In my view the policies outlined so clearly by the noble Lord, Lord Stallard, would harm those he seeks to protect more than anybody else. To put it bluntly, no one in his right mind would let private property on the conditions he has outlined. That is the problem that we have faced over recent years.

Every so often, a politician, in the course of thousands of speeches, makes one comment—sometimes a good one, sometimes a bad one—which is linked for ever after to his or her name. We can go through the list: "The wind of change"; "You've never had it so good"; "Rivers of blood". Those are just a few examples, and most Members present could indentify the authors.

And so with Mr. Norman Tebbit, a man who, despite herculean efforts to demonstrate a sensitive and lovable personality (a sort of Bishop of Durham with a short back and sides) will always be remembered, whatever else he says or does, as the man who told the unemployed to get on their bikes, as his father had done, and look for a job. It was a comment seen by many people of all parties as callous in the extreme.

However, to many of us, with the same background and from the same generation, it was a perfectly understandable remark in the context in which it was made. It was out of date at the time it was made. But it was understandable because it referred to the experience of hundreds of thousands of the pre-war unemployed who did exactly that.

My father left Swindon in the 1930s and eventually found work and re-established his family in the south east of London. How did he do it? Because, while there was poverty on a scale unknown today, there was an abundance of low-cost accommodation to rent through out the land. It is not a question of the North and the South. Men cannot look for jobs even in the next county unless there is somewhere they can take their families to live. That is the position for people of every level.

Many in this House, as children, took it as perfectly normal that we should be brought up in rented accommodation in private houses that we sometimes shared with another family—at no great hardship—and subsequently took over, later even owning our own house. Today, however, outside the public sector, there is no rented accommodation available to the ordinary working man. I repeat my disagreement with the noble Lord, Lord Winstanley. At least a contributory factor has been the spiralling price of housing accommodation which increasingly takes privately-owned houses way out of the reach of the ordinary common man.

The irony is, of course, that some will say, "We have the public sector". There, however, one encounters the paradoxical situation that before one can qualify for a council house one has to live in the area. The council will not normally produce council accommodation for somebody who does not live in the area.

We have achieved the unenviable and lunatic distinction of being one of the few countries in Europe where the unemployed cannot move to other areas where work is available and where it is known that there are vacancies, because, with the best of motives, we have legislated the only accommodation they could afford out of existence.

What is even worse, as so often happens when governments decide to solve fundamental problems, we did it by accident. It was done for the best of motives. No one from either side of the House could support the abominable behaviour of some landlords in the 1950s and 1960s. It was intolerable; it was monstrous. However, it is foolish to say that there cannot be privately-rented accommodation without accepting the excesses and the disgraceful and indefensible behaviour which Rachman signified.

The ability to move in search of a job is not a problem solely of people coming from the North to the South, though that happens. It happened in the 1930s when people came from Wales, Scotland, and the North-East. Incidentally, these are the very areas where high unemployment exists today. I wonder sometimes why, if it is so easy to solve the problem of unemployment, we have made no dent on the geographical distribution of areas of high unemployment in the last 60 years despite the efforts of every government. That is, however, a wider problem.

There are pockets with job vacancies in every region of this country—many areas of high economic activity outside London and the South-East. But lack of rented accommodation means that a worker is confined to a radius of something like 25 miles from his existing accommodation in his search for work. It is not a practicable proposition, nor can he afford, to commute much further from his home.

It is simply not true that privately-rented accommodation is inevitably vulnerable to the behaviour of a Rachman. That is rubbish. If France, Germany, the United States, and most of the rest of the world can protect private tenants without destroying the only type of accommodation they can afford, I do not believe it is beyond the wit of a British government to be able to do likewise. If one looks at the figures—I come back to the point that there is effectively no privately-rented accommodation in this country now—in France, 33 per cent. of the population live in privately-rented accommodation.

I am the chairman of a multinational company with a large office in Paris where we regularly exchange staff. All the girls in secretarial jobs in Paris have apartments which they could not begin to afford in London. Here, they are lucky if they can find a one-roomed furnished bed-sit for £50, or £60 a week. In the United States, it is the same. Over 30 per cent. of the population live in rented accommodation. In Germany 45 per cent. of the population live in privately-rented accommodation. It is not true that half the population of West Germany lives in a state of permanent exploitation and harassment. It is simply that means have been adopted to solve the problem.

It is also said that Rent Acts are not responsible for the virtual disappearance of privately-rented property. To that, I say, "Look at London". It is probably the only area in the country where there is a great deal of rented property. A visit to any estate agent in central London will confirm that there is plenty of rented accommodation, but even if individuals are willing and able to pay £400 to £500 a week to rent that accommodation, they will not obtain it if it is unfurnished because no one will let rented accommodation which is subject to the Rent Acts. All that accommodation is available only as company lets. None of it is available to individuals, even those able to pay astronomic sums.

I come back to the point made by the noble Lord, Lord Stallard. The policies he outlines make it impossible to conceive that people are prepared, as they were in the past, when their children had left home or when they had inherited a home from a deceased relative, to keep that house for rent. It is not true to say that they would always sell it. Many working people do not think in terms of the capital value of the property. What they want is cash flow over a period of time and the ability perhaps to move relatives in at some later stage.

A radical reappraisal of the Rent Acts would not end unemployment. That would be an absurdity, but I am convinced that it would provide jobs and hope. The possibility of being able even to look for a job does not exist at the moment for an unknown number of the unemployed. I do not know how many, but I am convinced that the figure would be in the thousands. A radical reappraisal of the Rent Acts would not solve the problem of the homeless. But it would encourage more people to make more accommodation available, and in some areas it might slow down at the margin the crazy spiral of house prices. I speak as somebody who profits from the fact that my house in three and a half years has appreciated by some 250 per cent. Let us not talk about the unemployed nipping round to buy a house when they find themselves a job as a London bus driver!

In the real world of politics it is not, and probably never will be, possible for the Labour Party to begin to take an objective look at this issue. Part of its charm and part of its problem is that it is trapped in a 1930s time warp. Many of its leaders are convinced that Love on the Dole and How Green was my Valley are contemporary accounts of conditions in Britain today. Its view is a very clear one and it is politically impossible or unrealistic to expect even those who take a different view—there are some in the Labour Party, I know—from the noble Lord, Stallard, who is totally in favour of it. It is not possible to have this discussion in the Labour Party at the present time.

The Conservative Party does not have those contraints. It does not have those excuses. It can speak clearly because it is an argument that is open to discussion within the party. I believe that if it commits itself to action designed to remove the obstacles to the provision of privately rented property, it will achieve every politician's ultimate dream. It will have combined political perspicacity with a long overdue abolition of measures which have in the event caused great hardship to the very people they were intended to help.

All I believe it requires on the part of a Conservative government is the political courage to do it.

7.24 p.m.

Lord Dean of Beswick

My Lords, I first join with previous speakers in congratulating the noble Lord, Lord Harris, on bringing this very topical subject before your Lordships to debate today and thanking him. But there, I am afraid, we part company because he opened his remarks by saying he was speaking strictly as an individual. However, the points he made stood well to the right of any pronouncements or of anything I have read or heard from Ministers in the Government today. Nobody has said anything approaching what he said.

I should like to quote from a document that is readily available in your Lordships' Library. It is a quite recently published paper by the research department of the House of Commons Library. It is not a Labour Party document. The main plank for people who think that rent control would be a panacea that would solve many of our housing problems in the housing-to-rent sector has been tried before in the not-too-distant past. The background paper refers to the effects of that. It says: The major attempt to end control after the Second World War was the 1957 Rent Act. This legislation was introduced by Enoch Powell, then Parliamentary Secretary in the Ministry of Housing and Local Government, who argued that there were five 'evils' which were a direct product of rent control: Under-occupation, due to households not moving to suitable small houses when members of the household left. The level of rents gave every incentive to landlords to sell the house when gaining possession instead of re-letting. Control led to immobility, because suitable alternative accommodation was not available elsewhere. Control was a major reason for low standards of repair. The whole system was unjust because of the various systems of control in operation, so that there was no relation to the size of property and its rent… The Government [of the day] argued that decontrol would increase the supply of housing". This has been said today: In fact it appears that this Act hastened the loss of privately rented dwellings as landlords sold out into owner occupation. Annual figures for this period are not available, but for example Stewart Lansley in Housing and Public Policy (1979) estimated that losses in the private rented sector between 1956–1960 averaged 200,000 a year, a rise from the 1951–56 figure of 180,000 a year"— a substantial loss which in this document is attributed to the complete removal of rent controls. The 1957 Act decontrolled tenancies in two ways: firstly by abolishing controls on houses above a certain rateable value, and secondly by removing control from all new lettings. Rents on remaining controlled lettings would be based on gross value, provided repairs were carried out. The classic study of the 1957 Rent Act, Joel-Barnett's The Politics of Legislation (1969) revealed that the Government's expectations of the consequences of its measures were inaccurate. The number of units decontrolled by rateable value proved to be about half the estimated number of 750,000 and these consisted mainly of purpose built blocks, and subdivided multioccupied dwellings, rather than the houses with gardens occupied by elderly couples envisaged by Ministers". That report in part covers extensively some of the points that have been made in the debate.

I have not heard any special pleading today, though they are part of the rented sector, for the small landlords. The Small Landlords Association, according to the report: have argued that there have been vast changes in tenure and supply and demand for privately rented housing since rent control was introduced as a temporary war-time measure. In its report; Review of the Rent Acts (February 1985) the SLA point out that the main demand for private lets is now from short-stay tenants requiring quick access to furnished accommodation. The SLA propose market rents and the certainty of repossession". I believe to go down that road would be a policy of unmitigated disaster for any social form.

I was pleased to hear the noble Lord, Lord Seebohm, mention that he regretted the Government's cuts in funding to housing associations. This was an area that was mushrooming to the benefit of many people and providing many homes. I fully concur in the belief that it was one of the worst acts of the Government relating to housing. We talk about the homeless; it was only yesterday that I quoted figures to show that, if the present percentage annual increase continues to take place, by the early 1990s as a nation we shall have between 200,000 and a quarter of a million homeless families.

I listened with great care to what the noble Lord, Lord Marsh, said regarding the mobility of labour and the incentive for people to move to jobs in other places based on the fact that houses were empty. But certainly people in the North of England could not go into private rented property in that area if it was free from rent control because we should be talking in terms of £50 to £60 a week rent and the average wages in the North would in no way be sufficient to meet that sort of housing charge.

If it were to happen in London, it would not be the £500 or £600 a week that the noble Lord, Lord Marsh, mentioned. I think there must be some very rich landlords in the private sector if they can refuse to let houses at £500 or £600 a week. I am not sure that security of tenure would dissuade them, as the noble Lord said. But according to the information I have, they are talking in terms of average lets of £100 to £160 a week rent in London for the private sector.

Can you imagine a person from Manchester, Birmingham or Leeds who was unemployed bringing the family down here and paying 150 a week rent? They would probably be lucky if they had ever seen £150 a week in wages. The only way it could be done would be by means of a government subsidy of such a monstrous size that this Government would not even contemplate it because it would completely blow a hole in all their housing plans.

This is not a new subject. It has been brought before your Lordships today so that we can debate the situation, but a debate also took place in the other place last week. I am not allowed to quote from that debate on this very subject, but I am able to refer to a resolution that was moved which would have done what the people in favour of this Motion want to do: namely totally abolish rent controls. The decision was put to the vote and it went against the introduction of the Bill by 144 to 142. The significant fact was that no government Minister voted in the Division. They were totally absent from the Lobby. The payroll vote was not used.

It is all very well Mr. Patten going to a housing conference to tell everyone what he was going to do. I am not suggesting for one moment that I should have liked the other place to vote on the possibility of that Bill becoming law. Everybody knows how the other place works and very few ten-minute Bills ever reach the statute book. But the Government were absolutly gutless even in giving their intention. I suspect that there was a large element in that abortive exercise of what the noble Lord, Lord Stallard, described. The effect of lifting rent controls would have serious electoral consequences. That the Government are not prepared to face; but they will deal with the matter afterwards.

In his contribution the noble Lord, Lord Stallard, mentioned the effect of Rachmanism. In those days I was a wet-behind-the-ears young councillor in Manchester. represented an area which according to the statistics was, funnily enough, the most populated area in Europe: the ward of Beswick in Manchester. We had a mass of tenanted houses, mostly demolished now because they were rapidly becoming slums. We had a situation of Rachmanism—not islolated cases but rampant ones—and we sent public health inspectors, not environmental health officers, to deal with it. It was like a minefield trying even to find out who owned the houses.

The worst part was that large packages of houses in Manchester and in the other major towns, as well as in the City of London, had been bought by people who did not belong there. They were financiers like Rachman who came from Belgium and Holland. The only way we could deal with the situation, because the houses were in a shocking state, was to put a CPO on them and demolish them.

Who was to blame for that? In my opinion, that is a situation which could recur. I was glad to hear the noble Lord, Lord Seebohm. I recall a short while go the excellent way he introduced a debate, in a completely non-partisan spirit, as is his wont, on the report on housing of the Duke of Edinburgh's commission. That report got absolutely total support from the Government Back-Benches and from all the parties on this side. It was acclaimed as a first-class objective document on basic housing, and the main component was more money for new house building. It did not say council house building, it said new house building.

Had that taken place in the public sector and in connection with the housing associations, we should have had over half a million more houses today, particularly if the housing cuts imposed in the public sector and the housing associations had not been implemented by this Government. I have to say that it will be a very long time, if ever, before the 500,000 or 600,000 houses lost in the last eight years will be made up.

Next Monday evening we will be debating the Archbishop of Canterbury's report, Faith in the City. The ward from which I took my name is featured heavily in that report. The report talks about disappointments and people trapped in areas for whom there is no escape. I wonder whether that report, which I expect to be acclaimed will receive support from people like the noble Lords, Lord Harris and Lord Marsh, saying that we ought to get on with a massive housing programme irrespective of what happens about the private sector.

I do not want to go on too long. I know there is a long debate to follow and quite a number of your Lordships are interested in the subject of it. However, I should like briefly to quote from a document which comes from Cambridge University. Here again this is not a document from the Labour Party and not a politically-motivated one. It is a press release regarding a research document from the Department of Land Economy at Cambridge University. It has been quite recently released and it says: Relaxing controls in the private rented housing sector is unlikely to be enough to revive the sector, according to a new study by researchers, Christine Whitehead and Mark Kleinman, Rather, its main effect may well be to speed up the shift away from the provision of long-term accommodation towards shorter term 'easy access' housing. This could lead to increased hardship for households who have traditionally found their home in the rented market, especially given the current decline in the provision of social housing. The aim of the study is to provide the sort of information about private renting which is necessary both for informed debate about its role in the housing system and for the analysis of suitable policy proposals. The study begins by examining why the private rented sector—which now houses fewer than one in eight of all households—continues to be of interest to policy makers. This is followed by a detailed examination of the way the private rented housing market operates, including both a description of conditions currently obtaining in the sector and the role which the sector plays within the wider housing system. Next a forecast is made of the probable size and composition of the sector over the next 15 years, and a description given of the economic and social factors which affect both the supply of and demand for private rented housing. On this basis, the authors predict that the number of households in the sector will decline from perhaps 11 per cent. of all households in 1987 to about 7 per cent. by the end of the century. Over this period, the proportions of elderly, single person and non-manual households within the sector will all increase. The authors argue that the private rented sector has a role in an ideal housing system. However, this role may be limited to providing for certain categories of households, for example students, newly-forming households and those seeking job-related accommodation. They conclude that changes in the control system are unlikely to solve the problems of the private rented sector. In the long term what is needed is a restructuring of the system so that private renting is provided by landlords who wish to let to those who want the desirable attributes of private renting. This must mean that those for whom it is inherently unsuitable are readily housed elsewhere. This in turn inescapably requires the provision of additional rented accommodation by social agencies such as local authorities and housing associations, however politically unfashionable a view this may be at the present time. I close by saying that a few weeks ago, just before the Christmas Recess, I attended a seminar based on the possibility of extending the private sector of rented housing. What came across quite clearly was that if anybody is to be invited to contribute huge sums of money, as I think was suggested by the noble Lord, Lord Winstanley, from the building societies towards this new venture, then to get even a reasonable return which one could obtain by placing one's money elsewhere, the astronomical sums of money that would be needed to subsidise the rents because of the wage packets that people earn today would once again have to be found by the Government. It is an inescapable conclusion to which anybody who has studied the subject comes.

Once again, I express my appreciation to the noble Lord, Lord Harris, for bringing this subject before us. But I have to say as I said when I commenced my speech, that I profoundly disagree with everything he said.

7.42 p.m.

Baroness Hooper

My Lords, we are indeed grateful to the noble Lord, Lord Harris of High Cross, for again concentrating our minds on this important issue, and indeed for his historical analysis and wide review of the social and economic factors involved. This debate has also provided noble Lords opposite with the occasion to state clearly their parties' policies in this area. It will be for the electorate to decide whether even more rigid controls will solve the problem caused to a large extent by existing controls.

The Government are sympathetic to many of the arguments raised during the debate today. We are in no doubt that rent controls have over time contributed to the decline of the private rented sector. I think that the noble Lord, Lord Marsh, put this very vividly by saying that no one in his right mind would put property on the rented market today. Be that as it may, there have of course been other factors. The massive slum clearance programmes, both before and after the war, tended very much to replace privately rented housing with local authority housing and social trends have contributed with an increasing preference over the years for home ownership.

But it cannot be denied that where landlords, because of controls, have been unable to get an adequate return on their capital there have been the inevitable consequences. Property was withdrawn from the rented sector. The harassment of tenants in order to obtain vacant possession became a serious problem. Much property remaining in the private rented sector has been poorly maintained, with consequent dangers of friction between landlord and tenant and to the tenants' overall disadvantage. There are those who argue that this decline is irreversible. The Government totally reject this view. We believe that the private rented sector has an important role to play in the housing market, as indeed it does in France, Germany and the United States, and we are committed to stimulating new investment in this area.

This debate is about the private rented sector. The noble Lord, Lord Winstanley, referred to the right to rent; that is, the freedom to choose to rent rather than to buy. He also said that there should be a right to pay. We recognise that there is a need to look at all sectors and at the ability of unsubsidised private renting to compete with other subsidised sectors. But much depends on landlords' willingness to make property available. They will not do this unless they get adequate returns, as has been said realistically by so many noble Lords this evening. So there is a good case for ending rent control on new tenancies and it is something that we are seriously looking at.

But the private rented sector is not a closed market. The housing market has to be looked at as a whole. Again, I welcome the support of the noble Lord, Lord Winstanley, for the breaking up of the monolithic local authority housing management system that has been in existence. So what is happening in the local authority sector and the owner-occupied sector has a direct effect on the economics of the private rented sector. And there are many cases where market rents alone would not bring landlords into the field, because the returns would still be inadequate. All those areas have to be looked at together and we are doing that.

However, we have made it clear that this in toto is a matter for a new Parliament. I am sure the noble Lord, Lord Harris of High Cross, will understand that I cannot give him a preview of what is intended, although I was most interested to hear from the noble Lord, Lord Stallard, that the Government are totally committed to deregulation. However, in saying that I totally refute the suggestion of the noble Lord, Lord Dean, that the Government are afraid to introduce such legislation, because they have been taking this subject very seriously and are pursuing a range of measures designed to stimulate private letting within the existing framework. I think that the noble Lord, Lord Winstanley, may be pleased to hear about some of those.

First, there is the assured tenancy scheme. Under that scheme, landlords approved by the Secretary of State can let dwellings at market rents to tenants who have a similar degree of security of tenure to that enjoyed by business tenants. Until the beginning of this year it was only possible to let newly built dwellings under that scheme, but we have now extended it to substantially renovated dwellings as well. We are confident that that will make many more projects viable for investors and that assured tenancies will now grow much more rapidly than they have so far.

The prospects for growth will be further boosted by the introduction of mixed public and private finance for housing association schemes. This also affects building societies, because it is very much aimed at such institutions and they are in fact responding with imaginative new financing proposals. The Housing Corporation has a budget for giving housing association grant at the rate of 30 per cent. for schemes attracting private finance. Perhaps this goes in some part to reply to the question raised by the noble Lord, Lord Seebohm, about the encouragement of more private finance. So these schemes together with market rents should enable a much wider range of projects to be attractive to investors. We expect £100 million worth of new housing investment from these mixed finance schemes this year.

Then there is the urban development grant, which is another mixed funding mechanism that has been used in some areas to enable assured tenancy schemes to go ahead. I am pleased to be able to confirm the immediate impact of these changes by announcing today that we shall shortly be laying before Parliament an order approving a further 12 bodies as landlords authorised to let on assured tenancies. Two of these are housing associations specifically responding to the introduction of the 30 per cent. housing association grant scheme. Three more are responding to the new scope for letting renovated property. And there has been a steady flow of further inquiries and applications resulting from these initiatives.

Another step that we have taken this month is to lay before Parliament two orders under the Housing Act 1980. These were welcomed by my noble friend Lady Macleod but other noble Lords have expressed reservations. As has been said—I think it worth reiterating—one of these orders will end the requirement that fair rents must be registered on shorthold lettings in London. In fact, this order will be debated in another place on 4th February and is due in your Lordships' House on 12th February. So in response to the noble Lord, Lord Stallard, there is no doubt that there will be further debates on this topic.

Shorthold is the arrangement whereby a landlord can let for between one year and five years with guaranteed possession at the end. It is particularly appropriate for the mobile. Yet while there are a considerable number of shortholds outside London, where there is no requirement to register a fair rent, there are very few in London itself. So we very much hope that this change will bring some of the 90,000 empty private sector properties in London on to the rental market. That is an objective which must be pursued vigorously.

The second order will end the requirement that increases in fair rents set by rent officers should be phased in over two years. This point was raised by the noble Lord, Lord Stallard. Because inflation has fallen to such a low level, there is no longer any justification for delaying full payment of any rent increase when awarded. This should bring some slight improvement on the return available to private landlords from fair rents. At the same time, tenants who are eligible for housing benefit will of course receive benefit at once on any higher rent.

These measures together, by helping to stem the decline of the private rented sector, make a valuable contribution to tacking the problems of homelessness and mobility, and I shall endeavour to deal briefly with each of those issues.

Turning first to homelessness, this is not a simple matter of housing shortages. Homelessness occurs for many reasons. Young people leave home earlier. Divorce rates are higher. Families are less willing to accommodate elderly relatives. These problems cannot be tackled solely with bricks and mortar.

In Tyne and Wear, for example, last September there were 128 households in temporary accommodation, yet there were over 6,000 empty dwellings in the area. Some of these figures have already been mentioned. Nationally there are 550,000 empty privately owned dwellings, and over 100,000 empty local authority dwellings. So there is a question of making the best use of housing stock.

There can be no doubt that reducing the number of empty dwellings is something which is being tackled by this Government. The estate action initiative is a major thrust in this area. One hundred and one schemes have already been approved at a total cost of £45 million. Eight of those schemes are specifically directed at the homeless, with a further eight in the pipeline. This year we also propose to issue a general consent to authorities to dispose of dwellings in need of repair to housing associations on five-year leases. We believe that this is providing a flexible response and that these are both areas where encouragement of the private rented sector makes sense.

The noble Lord, Lord Seebohm, emphasised the importance of tackling homelessness. We are endeavouring to do this through a wide range of measures designed both to redress the symptoms and the causes. These measures cover the local authority sector, the housing association sector and the private rented sector, as well as advice and counselling services.

I am happy to agree with the noble Lord, Lord Seebohm, in his call to get away from bed and breakfast. In this context, although I have a full list if noble Lords wish to hear it, I shall only mention the specific arrangements we have introduced under which £15 million of housing association grant is being made available to stimulate £45 million of schemes to provide good quality temporary accommodation to house families who would otherwise be in bed and breakfast accommodation.

I do not think there is any argument that greater mobility is of considerable importance both to the economy as a whole and to individuals. More than one speaker has made this point, but perhaps none more forcefully than the noble Lord, Lord Marsh. The availability of housing is a key factor in promoting labour mobility. Private renting is the form of tenure most likely to meet the immediate needs of many job movers.

All the measures I have dealt with already will help to promote mobility. There are two more I should like to mention. The first is the job movers scheme, again using housing association grant, under which we hope to provide about £15 million worth of schemes of shared housing for young job-movers in London and the South. This, with our earlier changes to make it easier for resident landlords to let accommodation, will assist a group where mobility is particularly high.

Secondly and finally, I should mention the development of shared ownership. This is where a person part owns and part rents his house, buying additional shares as and when he can afford it. Up to now shared ownership has been provided only by the public sector. The Housing and Planning Act 1986 removes rent control and disapplies the Leasehold Reform Act from new shared ownership leases where the landlord is a housing association. Noble Lords debated this recently and will no doubt remember our discussions on that particular theme. This opens the way to share ownership schemes with index-linked private finance at rents which are lower than the normal costs of house purchase.

Perhaps I may now turn to one or two specific questions which have been raised in the debate and which I have perhaps not covered so far. The noble Lords, Lord Stallard and Lord Dean of Beswick, both referred, as did other noble Lords, to the evils of Rachmanism, as a result of the 1957 Act. We believe that the tighter the rent control the greater the pressure on landlords to harass so as to get vacant possession and sell. We believe that easy rent controls reduce the likelihood of harassment. Using the 1957 Act as an excuse for inaction is putting our heads in the sand. Circumstances have changed over 30 years and we can learn from the mistakes made then. The loss of rented accommodation occurs because landlords find it more profitable to sell or to simply not do anything at all.

My noble friend Lady Macleod raised a very specific point about lodgers. I wish to reassure her on that point. As she has said, the Department of the Environment encourages householders not to be concerned that they are creating permanent tenancies if they take in lodgers, and it sees lodging arrangements as making a potentially useful contribution to meeting housing needs in certain areas. She expressed a fear about widows having their pensions affected by taking in male lodgers. I can confirm to my noble friend that a widow's pension is not affected by any income received from offering rooms to lodgers. I can also confirm that if the relationship is a genuine one of landlady and lodger, there is no presumption of cohabitation. Only if there were significant evidence that a relationship was more than that would the social services want to investigate the matter further.

The noble Lord, Lord Stallard, and other noble Lords made the suggestion that easing rent controls hits tenants who cannot afford to pay. The question is really whether or not landlords are prepared to subsidise tenants. If they cannot get an adequate return, property simply goes off the market. Events have proved this. Rents on schemes like assured tenancies may well be higher than registered rents. However, the dwellings will be there for those who want them and can afford them. This in turn could release lower cost accommodation. In addition, the housing benefit scheme can provide help with the rent for those in need, and government grants provide help for other schemes such as the homelessness and job mover schemes which I have already mentioned.

I may not have covered all the points raised by noble Lords in the course of the debate, and if so I apologise. However, I hope that I have made it clear that our policy is to stimulate the private rented sector and to reverse its decline. We shall continue to develop measures which pursue that objective. We shall continue to aid those in need of help with housing costs. We shall continue to give tenants the fullest possible protection against harassment and the small minority of irresponsible landlords. I am sure that the private rented sector will perform its valuable social and economic role with renewed vigour as a result of our policies.

Lord Harris of High Cross

My Lords, it only remains for me to thank all the speakers who have taken part in this lively debate, and particularly the noble Baroness, Lady Macleod, as the one representative of the Tory Back Benches who always brings her human touch to our discussions.

I must say I regret that the two Labour spokesmen were caught in their time warp, (from which I am delighted to say that my noble friend Lord Marsh has so wonderfully emancipated himself in recent years) and I really believe that their simple confusion is to blame the non-existent free market in the post-war years for the acknowledged abuses of landlords, which I think stem directly from controlled rents and security of tenure.

I welcome the more balanced approach of the noble Lord, Lord Winstanley, and my noble friend Lord Seebohm, who emphasised the various contributions towards rented accommodation from housing associations and building societies as well as private landlords on market terms that work in other European countries.

In conclusion, I was mildly encouraged by the positive ministerial response of the noble Baroness, Lady Hooper. I shall read all the small print in Hansard and perhaps be ready to return to the charge later, but, as other noble Lords are assembling for a possibly yet fiercer joust, I shall ask leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.