HL Deb 11 July 1988 vol 499 cc596-681

3 p.m.

The Earl of Caithness

My Lords, I beg to move that the Bill be now read a second time.

The Bill is the Government's measured response to the need for change in the rented housing market. It seeks to stimulate choice and competition in a vital area of housing which has for decades been in decline. The market for private rented housing exhibits the classical symptoms of any market which is subjected to price controls. We have shortages. The goods on offer are often of poor quality. At the margins there are many landlords operating outside the law. Responsible landlords have left the market in droves because they simply cannot obtain a reasonable return on their investment. Even since 1971 the sector has shrunk from about 17 per cent. of stock to less than 8 per cent. Many private properties are either left vacant or not fully occupied.

So we face a position in which many people who would like to rent in the private sector—for example. so that they can move to a new area to find work—cannot do so. We cannot expect simply to continue the status quo: to do nothing means not that private landlords will continue to provide 1½ million homes as they do now, but it does mean that in 10 or 15 years the sector will be reduced to an unrecognisable rump.

In the public sector past pre-occupation with mass local authority housing has left us with many problems. There are many badly designed and maintained homes. Over 112,000 council dwellings are empty, yet still it is difficult for tenants to move and to exercise any real independence.

So the central aims of our policy are to increase choice, stimulate competition and, wherever possible, involve the private sector in meeting housing needs. Therefore, major elements of the Bill are measures to encourage private renting, expand the role of housing associations, give council tenants the right to seek a new landlord of their choice, and establish housing action trusts to improve conditions for tenants on some of the worst council estates.

There will be some further amendments to consider in Committee, but almost all of this major piece of reforming legislation is now before your Lordships. Together with the Housing (Scotland) Bill it will secure improvements in rented housing throughout Great Britain.

Part I of the Bill marks a fresh start for the private rented sector. The main underlying principle is that if landlords are again to provide the rented accommodation that we need they must be able to charge market rents. Noble Lords will be familiar with that principle from our consideration of the equivalent Scottish legislation. We are not so unrealistic as to believe that the sector will revive overnight, but we do believe that the supply of accommodation will increase if we provide a statutory framework which is fair both to landlords and tenants, housing benefit to enable people to afford market rents, and tax concessions for investors through the business expansion scheme.

Under the assured tenancies introduced by Chapter I rents will be freely negotiated between landlord and tenant. There will be long term security of tenure, and to back it up a a statutory mechanism for fixing rent increases where there is no rent review mechanism in the contract. Chapter II introduces the shorthold variant of the assured tenancy regime. Shortholds will be for a fixed term of at least six months but the landlord will have a right to possession at the end of the fixed term if he wants it. Under Clause 22 the tenant will have a right to apply to the rent assessment committee at any time to reduce the rent if it is significantly above the prevailing rent level for similar tenancies elsewhere in the area. That new regime will appy to future housing association tenants as well as to private tenants, though associations will usually pitch their rents below market level. I shall say more about that subject later.

Chapter III provides for a variety of assured tenancy for certain lettings, to be known as an assured agricultural occupancy. We have recognised the special position of farm workers in tied cottages, but I can reassure your Lordships that there should not a be a major upheaval in rural communities as a result of this Bill.

All these proposals will of course apply only to future lettings. I want to emphasise most strongly that the rights of existing tenants, in respect both of rents and security, will be protected. The Bill does, however, amend the succession rights under existing Rent Act tenancies, which in our view are very unfair to landlords.

The Bill also removes most of the remaining restrictions on lettings by resident landlords. There are a lot of householders who have spare accommodation in their homes and would welcome the extra income from letting. They no longer need fear entanglement with the Rent Act; and, where they share accomodation with the tenant, will be able to ask him to go when the agreement ends without needing a court order. We believe that there is a large demand for such accommodation.

But we are equally determined to provide adequate safeguards against harassment and other had behaviour by landlords. We are, for example, providing in Chapter IV for far-reaching changes to the civil and criminal law on harassment and illegal eviction, changes which we shall back up by issuing advice to local authorities about the use of their prosecution and compulsory purchase powers. We shall be bringing forward amendments to strengthen local authority powers to get repairs done, through, for example, being able to act earlier in undertaking necessary works which are in default, and being able to recover expenses more easily. Failure to comply with a repairs notice will become a criminal offence. We have promised to consult local authorities about streamlining, in a future Bill, their powers to bring multi-occupied housing up to standard. There will be a more powerful array of measures against had landlords than any Government have previously presented.

We recognise that if we are again to have a buoyant private rented sector, many tenants will need help to pay market rents. We have therefore undertaken that housing benefit will be available to support the market rents which emerge from our new policy. But we must also have effective measures to guard again exploitation of the system by landlords and tenants. The scrutiny of housing benefit subsidy claims by rent officers- -provided for under Clause 117—is designed to deliver this.

Turning to Part II, this broadens the permissible powers and objectives of registered housing associations, provides a more flexible framework for their financing, and assigns to the Housing Corporation responsibilities for grant-giving and so on which have hitherto been for the Secretary of State. The Bill also provides for the establishment of Housing for Wales to carry out the same tasks as the Housing Corporation will perform for England, strengthens the corporation's powers of supervision over registered housing associations, and empowers it to issue enforceable guidance to registered associations on housing management matters.

Housing associations currently account for only about 3 per cent. of the national dwelling stock, compared with 24 per cent. in the case of local authorities and new towns. However, their output of new and rehabilitated dwellings for rent is now beginning to outstrip that of local government, and we see them as the major providers of social housing for the future. That is what Part II of the Bill is really about.

Associations must still receive government grant, because their most important task is still to provide for lower income groups and people with special needs whose requirements cannot be met elsewhere. But the financial regime which was created for the 1970s now needs to be re-cast to give associations the freedoms and responsibilities they have earned.

Chief among these is the right to set their own rents. Of course there must be enough grant to enable associations to do their job and enough controls to ensure proper public accountability. Within that framework the association itself should decide what to spend and what to charge, taking account of tenants' views.

In this way, we are seeking to harness the disciplines of the market to a social purpose. That also goes for the sources of loan finance. There will always be a proportion of worthwhile housing association projects which cannot attract private funding and which will need loan support from the Housing Corporation or a local authority. Increasingly, as associations and financial institutions get to understand each other better, the presumption must be in favour of private finance. That is the way to get the maximum number of new homes from the available public resources.

So much for associations' role as providers of new housing. We have always envisaged another potentially important function for associations and others as alternative landlords for local authority tenants who would like a different landlord. But what we had not expected was that local authorities themselves would start to come to us with plans for the voluntary disposal of their entire housing stock. We expect the majority of new landlords involved to be housing associations, either already established or newly created for the purpose. That is why we are giving the Housing Corporation powers to issue enforceable guidance on housing management. This "tenants guarantee" will ensure that the best traditions of the movement as providers of new housing are maintained and carried over into the management of estates transferred from others, and that tenants contemplating a transfer proposal are given the clearest possible assurances as to what to expect.

Concern for tenants is central to the proposals contained in Part III of the Bill, which provides the framework for the establishment of housing action trusts. These will be short-life, single-minded bodies devoted to the regeneration of areas dominated by major concentrations of council estates. We are currently planning to invest an extra £125 million over the next three years to tackle the problems of those areas and improve the situation for those whose housing prospects are otherwise pretty bleak.

My honourable friend the Minister for Housing and Planning is today announcing in another place that, subject to the approval of both Houses of Parliament of the Housing Bill and of the necessary designation orders, he proposes to establish housing action trusts in Lambeth (Loughborough and Angell Town estates); Southwark (North Peckham and Gloucester Grove estates); Tower Hamlets (Solander Gardens, Shadwell Gardens, Berner, Boundary and Holland estates and part of Ocean estate); Leeds (Halton Moor, Seacroft South and Gipton estates); Sandwell (Windmill Lane and Whiteheath Estates); and Sunderland (Downhill, Townend Farm and Hylton Castle Estates). Maps have been placed in the Library today showing the areas which my right honourable friend the Secretary of State has in mind might be covered by the HATs. He will be appointing consultants shortly to advise him on this further. Final decisions on the areas to be designated will be taken in the light of the consultants' studies and of local views.

My right honourable friend the Secretary of State has chosen these areas taking account of the matters listed in Clause 60(5) of the Bill now before your Lordships. The combination of problems associated with the council housing in these areas is such that a radical approach is necessary to give tenants decent housing, better services and more choice. It will therefore be the job of each HAT, in consultation with the residents, to carry out a major programme of renovation to bring empty council properties back into use, to improve the way estates are looked after, and generally to help improve the economic, environmental and social conditions of the area.

The creation of HATs provides an opportunity to target resources on some of the areas where major concentrations of poor quality public sector stock create very intractable problems. I therefore hope that the local authorities concerned will co-operate fully in setting up HATs so that tenants can gain as soon as possible from the benefits they will bring. My right honourable friend is writing to the leaders of the councils concerned today about his proposals. He is also writing to all local residents who may be affected.

Moving on to Part IV of the Bill, this gives the statutory basis for the scheme we call tenants' choice. It broadens the choice open to secure tenants by giving them an effective right to seek a new landlord for their homes. It is intended also to give tenants better services, whether through a change in landlord or through the effect of competition on existing landlords; and to open up public housing stock to healthy diversity and the influence of best housing management practice.

The details are fully spelt out in the document Tenants' Choice, which was issued by my department last month and is available in the Printed Paper Office. Much of what is in the Bill concerns the identification, valuation and terms of sale by existing landlords to new ones. But very strong safeguards will also be provided both by the Bill itself and in the secondary legislation and administrative arrangements.

The Housing Corporation and Housing for Wales will be empowered by the Bill to give tenants advice and assistance, including assistance with legal proceedings in special cases. No landlord will be able to acquire property under the scheme unless approved by the corporation to standards which will be set to require high levels of probity and viability. It will be a condition of approval that applicant landlords keep tenants informed and that they offer a tenant's guarantee, including a core of guaranteed tenancy terms, on all fours with the principles of the guarantee we have announced for all housing association tenants.

Tenants will have to be made a full and binding offer of terms by the applicant before an acquisition proceeds; and the whole process, including the regulations governing the vote, will be carefully designed to ensure that each qualifying tenant can reach and express a fully informed decision. Finally, property may not be disposed of after acquisition without the consent of the Secretary of State, whose expectation will of course be that tenants' choice landlords remain in the long-term business of renting housing to those who need it.

There are strong safeguards at all stages. Moreover, it will be tenants' views that are decisive. Early on, the corporations will, wherever possible, set up an informal consultative exercise involving more than one potential applicant where there is tenant interest in transfer. Only the applicant that tenants prefer will be given clearance to make a formal application. Tenants' votes will decide collectively whether an application goes through, and if it does go through, tenants' votes will decide individually whether they transfer to the applicant or remain with their existing landlord. No secure tenant will have to transfer against his or her will.

The scheme is one more in a series dating back to 1980 of enhancements of public sector tenants' rights and opportunities and I believe that it will commend itself to your Lordships.

I turn to Part V of the Bill, which contains a number of miscellaneous provisions. Clause 123 clarifies the Secretary of State's powers to give consent to voluntary disposals of council housing. Authorities can already dispose of property, but only with the Secretary of State's consent. As mentioned earlier. many authorities have been asking whether we would allow them to dispose of the whole or a substantial part of their housing stock and, if so, on what terms.

We are sympathetic to the idea in principle, and issued guidelines about a month ago. Among the main criteria we expect to operate, the new landlord must he fully independent of the council; tenants must be properly consulted, and a transfer cannot take place if a majority oppose it; the transfers must not perpetuate large housing monopolies; the local authority must make arrangements to fulfil its continuing statutory duties, in particular to deal with homelessness; and we would expect the sale price to be tenanted market value, subject to allowance for catching-up repairs.

These disposals will be taking place under existing powers. However, it is not entirely clear that they enable the Secretary of State to adopt all the criteria which he believes important. Clause 123 therefore simply clarifies our powers so that we shall be able to consider any proposals properly.

Another area in which we have been making valuable progress is that of measures to prevent racial discrimination in housing. We have extended the general duty to eliminate racial discrimination and promote equality of opportunity in housing, which used to apply only to local authorities. Clause 56 extends it to the Housing Corporation and Housing for Wales, although I must emphasise that this does not imply any criticism of the corporation, which has been giving an excellent lead in race relations. Clause 63 extends it to housing action trusts as well.

We also intend to bring forward later an amendment to give the Commission for Racial Equality a power to produce codes of practice on housing. We want this power to cover all housing sectors but I am advised that problems of relevance prevent us going that far in the present Bill. I understand, however, that we should still be able to cover housing that is rented, leased or occupied under licence, and to take in agencies such as building societies and estate agents in so far as they deal with these kinds of accommodation. So, in the case of ordinary private sector landlords, such codes would supplement the new anti-harassment provisions; and we aim to extend this power to the rest of the housing field when a suitable opportunity arises, which we hope will be in the next Session.

Returning to proposals already within Part V, there are a number of changes affecting tenants' right to buy. We also intend to bring forward amendments which will deal with the long delays which many tenants, particularly in London, face in exercising the right to buy. We propose that tenants should have the right to have the rent set against the purchase price when the sale is completed. To help landlords deal efficiently with right to buy applications, another amendment will allow local authorities to use the proceeds of sales to cover the administrative costs.

Finally on Part V, Clause 122 introduces a specific power for local authorities to give cash incentives to help their tenants get other accommodation, if the authority puts Toward a scheme which is approved by the Secretary of State. We envisage such schemes will be used primarily in areas with serious homelessness problems. The experience of some authorities has shown that such schemes can be effective in freeing vacancies for reletting to the homeless or those on the waiting list.

The Government are very concerned for the homeless. This has been much on our mind in preparing this range of measures to improve choice, quality and competition and to stimulate the provision of rented property. We recognise that the numbers of homeless people are rising sharply. That is why in the last seven months we have made available an extra £74 million to help local authorities with the greatest problems.

Of course primary responsibility still rests with local authorities. We are particularly concerned at the excessive use of bed and breakfast accommodation, especially in London. Whereas only 36 per cent. of homeless acceptances are in London, 80 per cent. of the households forced to use bed and breakfast are in the capital. This sort of accomodation is a heavy burden on the ratepayer, and unsuitable for families. It is important to note that some authorties manage their affairs without it.

Let me link this concern with one about empty properties. Effective housing management remains crucial. Authorities have more than 112,000 empty properties; 28,000, or, in other words. a quarter have been empty for more than a year. That total is nearly three times the number of homeless households in bed and breakfast. If the Audit Commission's advice about reletting timetables were accepted generally, 20,000 extra properties would be ready for use. We must make the best use of our stock if we are to help the homeless.

This Bill in general provides a valuable stimulus. There are also more specific measures, such as Clause 70, which imposes on HATs a duty to co-operate on homelessness with local authorities. And I have already mentioned cash incentive schemes under Clause 122. We are also reviewing the homeless provisions in Part III of the 1985 Housing Act to ensure that they provide a sensible basis to help those in greatest need. But we are still some way from bringing forward proposals. We shall be looking also at other work currently in hand including the study by the Audit Commission due to be reported in the autumn, and my own department's research, the results of which will become available over the next few months.

I believe it is self-evident that these are not easy problems we are tackling here, but long established failings in the systems we inherited in 1979. The Government have to do more than offer more of the same recipe of local authority provision and controls that have failed in the past. Some of your Lordships may also have new proposals. We shall certainly listen carefully to any positive ideas your Lordships put forward.

Since 1979 we have been freeing our economy from the mass of obsolete controls and outdated thinking which imprisoned British enterprise. If we are ever to tackle this country's housing problems effectively we must adopt a fresh approach which goes to the heart of those problems. Our coherent policy, reflected in the current Housing Bill, provides this new approach, and I beg to move.

Moved, That the Bill be now read a second time.—(The Earl of Caithness.)

3.21 p.m.

Lord Dean of Beswick

My Lords, I have listened carefully to what the Minister said in moving the Second Reading of this Bill. My mind goes back over the past three or four years since I was privileged to enter your Lordships' House and I recall the number of debates that have taken place. We have had debates on reports on housing published by totally independent bodies. I believe that the first one was a report by the Duke of Edinburgh's Commission on housing. The debate was opened by the noble Lord, Lord Seebohm, who I believe is present. That was subsequently followed by the debate on Faith in the City which was produced by the Archbishop of Canterbury's Commission. The reports were by experts drawn from a wide variety of sections within the community who understood housing. All of them pointed to the fact that the housing situation in this country was deteriorating rapidly.

I should like to be able to take the view that what the Minister has revealed today will go a long way towards assisting the situation; but I see no signs of such help within his speech. It seems rather strange that all the independent bodies that deal with housing— bodies which, as I have said before, are not politically motivated—take the same view. They may say good things about little parts of it. However, on the main thrust of the Bill, the Institute of Housing, the AMA and the housing associations take the view—and the latest report from the Policy Research Institute stated this only last week—that the situation is deteriorating still further. I therefore cannot accept what the Minister has said.

I take exception not only to this Minister, but to Ministers generally using local government housing as a whipping boy for all the failures that have taken place. I take some pride in the fact that for a period I was the chairman of housing in Manchester. Since the war that great city, and others such as Liverpool and Sheffield, have demolished 80,000 to 85,000 slums. The overwhelming number of those tenants have been rehoused in good standard housing.

The Minister talked about badly designed houses. I had the impression that once again he was blaming local government for this. Ten to 15 years ago, there was bitter protest from local authorities at the housing that they were being forced to build by successive governments—both Labour and Conservative—such as industrialised, semi-industrialised, mid-rise deck access flats. We warned them at the time that they would be social disasters and would raise the slums only from street level to above floor level. It is rather naughty to hear local government strictured for something that was not its doing.

The Minister referred again to 112,000 properties being vacant. My noble friend brought this point out in a Question last week or the week before. I am not excusing empty local authority houses. However, if one takes a percentage of housing associations property, and government-owned housing property, a far bigger percentage of the Government's property is empty than that of the local authority. In fact it is more than double. It is a good job that the Government are not publishing the football honours at the end of the season. By their standard we should have the bottom of the First Division collecting the championship cup. The situation seems strange to me.

I must remind the Minister that only last week I posed a Question on the withdrawal of money from the public sector of housing since the present Government took office. The information that I had from the AMA was £15 billion in real terms. The figure was not challenged by the Government; I must therefore accept that it was correct. Today the Minister trots out that they will fund the housing action areas with £176 million. The first estimates, going back three or four years, of the sum of money that would be required to set the public sector housing stock at a reasonable standard, was a minimum of £15 billion. What is the Minister expecting f176 million to accomplish in housing action trust areas when some of the big cities have suffered as large a cut as that in almost three years? It is a nonsense. It is rather unworthy of the Government to assume that that item will be swallowed.

I do not suggest for one moment that local authorities have done everything right. Some are better than others; of that there is no question. However, I maintain that if the cuts had not been inflicted on them, if they had been given a far larger proportion of their capital receipts to spend—which Members of your Lordships' House from all sides have requested—the situation would not have reached the current level. I believe that as regards that particular facet of the situation the Government are on the wrong course and ought to come off it. People involved in housing know the situation.

I am a former chairman of housing. Another distinguished former chairman of housing sits behind me. The noble Baroness, Lady Fisher, was chairman at Birmingham. If one proceeds with this kind of exercise, one will end up with the poorest sector of the community being looked after solely by the local authority. Every other sector will move outwards and away. The local authorities will be left with the residue, with all the tremendous demands that that will make on the rates, and so on. It is a little unfair of the Minister to talk in such terms.

Part of the Bill talks extensively about freeing the private landlord as though he has never been freed before. I remember him being freed in 1957 by the housing finance Act. That Act had started to affect the tenants in the private sector when I became a very young member of Manchester City Council. In the area of Beswick, from where I came, we traced houses, in blocks of 400 to 500, that were not owned by people in this country. They had been bought by people in Belgium and the law as it applied here could hardly touch them. The only way the problem could be overcome was by moving them out in a clearance programme. I have not heard anything about that from the Government today. I accept that existing tenants will receive the full protection of the law.

If the Government believe that by tilting the balance quite decisively in this new Bill—the tilt is not marginal, it is quite decisive—towards the landlord it will not adversely affect tenants of the future they are whistling. What happened after the 1957 Act was that as soon as the landlords could get occupation of the let premises they did not let them again. Most of the buildings were improved and sold off. I do not believe, and nor do the associations dealing with this problem believe, that the Government's proposals for the private sector will provide any extra houses for tenants.

While we are talking about the Government's crash programme for housing, it has been calculated that the cuts in the public sector have cost the country roughly half a million houses since 1979; houses that could have been built for letting in the public sector. I resent this badgering and harping on local authorities as though they have not done a good job. Overwhelmingly they have done so. Some have fallen by the wayside, but I know that the overwhelming percentage of council house dwellers, nine out of 10 at least, if asked whether they have enjoyed living in a council house for most of their lives will unhesitatingly say "Yes", that they have been reasonably well housed despite some of the grumbles that they have had. So we should forget about that.

As regards private tenants, the Minister said that most new tenancies would either be assured or shorthold tenancies. The result will be higher rents and less security of tenure. Landlords will find it easier to evict tenants. I heard the Minister say that some landlords are already acting outside the law— I believe he used that phrase. What does he believe will happen if the Government loosen the legal shackles on landlords? Does he believe that even the best of the private landlords will go in for a programme of self-denial? I do not see that happening, certainly not in the housing sector.

The role of the housing association will be diminished. In my opinion housing associations have been worthy supplements to local authority housing in providing for people in some cases with special need, but for those mostly at the bottom end of the social scale. I believe that the present proposals contained in the Bill, will operate against that and reduce the worthy role that the housing associations have carried out over the years.

The Minister said that he was surprised at the number of local authorities that had requested the Government to take over local authority housing stock. Perhaps when he winds up, if there are any such authorities, he will tell us who they were and how many properties they have. Some figures have been published. A few weeks ago outside your Lordships' House I received a small delegation of middle-aged people from Trafford in Greater Manchester, which is part of the metropolitan borough of Trafford. They brought me a petition of over 1,700 signatures showing that 90 per cent. of them wanted to stay with the local authority as landlord. Even with all the warts they thought that they were better off with the local council than with anyone else. There have been other examples. As regards Peterborough and the new town transfer, an overwhelming majority of tenants—faced with the choice between the local authority, which had been the managing agent for the new town corporation for some time, and a consortium of housing associations —voted for the local authority.

A MORI poll conducted in Telford New Town revealed that at least two-thirds of the new town tenants wanted their homes transferred to the local council. A survey in Basildon revealed that 98 per cent. of tenants wanted the council to take over. A recent Gallup poll for the National Consumer Council found little evidence of council tenants wanting to transfer to private landlords. Another recent MORI poll in Manchester found that 88 per cent. of council tenants preferred to remain with their local authority. Need much more be said about where most local authority tenants feel that their future lies?

If there has to be a ballot for an estate, a block of flats or a section of a housing estate to be taken over by a private developer or a different form of housing management, will the Government treat the local authorities similarly to the way they have treated the trade unions in their legislation on ballots and ensure that no change whatsoever will take place unless over 50 per cent. of tenants on the estate require such a change? If the minority do not want to change will the Government give them a chance to opt out?

All these tenants went into council houses on the basis of having a landlord for life. The Government gave them the privilege of buying themselves out, as some wished to do; and about 1 million have bought their homes so far. I do not believe that the Government will find the answer they are seeking and that there will be a mass lemming-like dash from the care of local authorities towards other forms of existing landlords.

There is a heavy list of speakers. I do not want to go on much longer and take up too much time. The Bill is not only flawed, but for dealing with housing as it is seen by so many, other than with the blinkered view of the Government, it is a fraud. There is nothing in it for the homeless. Figures have recently predicted that in the foreseeable future 35,000 homeless people a week will be sleeping on the streets of London, which is the New York dimension. Those predictions have been made by independent people dealing with the situation and not by people with an axe to grind. The number of homeless families has mushroomed upwards at an alarming rate and will continue to do so. If the Government believe that the Bill will stop that swelling throng sleeping at night on the streets of London and in our other inner cities they are living in cloud-cuckoo-land.

We all accept that it is not the right of your Lordships' House to vote against the Bill, but I am sure, having regard to the debates that have taken place in the Chamber over the past three or four years, that it is the responsiblity of your Lordships to examine and wherever possible amend the Bill to help where help is needed most.

3.39 p.m.

Lord Ross of Newport

My Lords, I start by readily acknowledging that this is a much improved measure when compared with the first published version. For that I am sure that much credit is due to the Minister of Housing himself—certainly not to his boss—who has been prepared to listen to the critics and to introduce sensible amendments and concessions that go some way towards alleviating our worst fears.

To suggest, as was the case at the outset when the Bill was published, that HAG— that is, housing association grant—could be cut to about 30 per cent. was beyond belief; as was the view that the private rented sector would be seriously interested in the mammoth task of providing for the younger generation and those on average and less than average income homes that they can afford. Even the Secretary of State has now acknowledged the fact that the tenants' choice proposals in the Bill will not bring about a revival of the private landlord. "Social housing"—which is the in-phrase—will comprise the third sector in the housing provisions. Rents will be very much below the market level. The Secretary of State said that recently, and I believe that his statement should be welcomed and recorded for posterity.

I should like to take up the Minister in respect of his quotes about empty houses. There may be 112,000 empty houses and I agree that that is a disgrace. As has been rightly said by the noble Lord, Lord Dean, the government department is a darned sight worse. The right honourable gentleman used to be a Minister in the Home Office department responsible for prisons. He visited my constituency, where there are three prisons and a vast housing estate. At one time over 100 of the houses were empty. I pleaded with his predecessor that they should be licensed to the local authority so that they may be occupied but I was refused point blank and they were slowly sold off. That was a disgrace because it could have helped the housing situation. That can be repeated all over the country. There are empty houses galore belonging to the Ministry of Defence, the Coal Board, and so forth.

I support the attempt now being made to resurrect the role of the private landlord, but certainly not at any price. I have never believed that it can be achieved at one attempt on a nation-wide basis. The present circumstances of a massive, uncontrolled property boom is probably the worst time to try to revive the private landlord sector.

In that respect it was interesting to read the report in yesterday's Sunday Times about the Treasury's wish to reintroduce Schedule A or capital gains tax on the sale of housing. If the balance between rent subsidies and mortgage tax relief is to be redressed, action along those lines is necessary. It is time that both main parties in both Houses face up to that because we cannot continue as we are. We are now to have the disappearance of domestic rating, which will push up house prices still higher. The only alternative is ever-higher interest rates and that is not the right answer. We have seen a rise of 2 per cent. over the past few weeks.

If only we had a regional structure of government in this country, for which we on these Benches have consistently pressed—and I am pleased to say that welcoming noises are now emanating from the Labour Benches, which are showing an interest; and that is good—it might be possible to phase out rent control and try to revise the role of the private landlord with new lettings on a regional basis. There are a few parts of the country where housing is in surplus and where demand would be unlikely to force rents through the roof. It would bring on to the market the kind of properties which we all wish to see let: empty flats over shops and accommodation which lies empty (despite the fact that we have assured tenancies) because landlords are scared stiff of letting.

I have never believed that one can decontrol the market in London, certainly not in present circumstances. The outrageous activities of Mr. Nicholas Hoogstraten, so vividly depicted recently on Granada Television, totally reinforced me in that view. Regrettably, I suspect that there are many like him who are waiting for the opportunity to exploit some parts of the Bill. He said as much on the television programme. Anything that can he done to restrict their activities and bring the worst offenders to court must he written into the Bill before it leaves your Lordships' House. I concede that the Government have gone a little way towards that in introducing regulations about harassment and illegal eviction and in tabling amendments in this House dealing with repairs. They are welcome but we must do a great deal more if we are not to hear dreadful stories in the years ahead.

I am a founder member of a local charitable housing association and I am on its management committee. Recently I attended two meetings of the national federation's western region, of which we are a part. The vast number of us who give our time voluntarily to the movement are more than willing to continue to provide that service on the condition that our original aims and objectives—to provide decent homes at fair and affordable rents for those priced out of the market-place—are allowed to continue.

However, if the Government are determined to encourage the creation of a limited number of massive housing associations with the long-term intention that they should replace the former bad, large-scale landlords, and if it is their further intention to renounce the associations' charitable and voluntary status and look to the City for future funding of the private sector, I would rather that they said so now. Such things are now happening in housing. If that is to be the case in the future we who have volunteered our services can resign. I do not want to be there if that is what will happen in the housing association movement. I do not believe that the vast number of people who give up their time without pay wish to do so either. However, I suspect that that is the way things are shaping up, and in present conditions it can lead only to exploitation and yet more distress.

Even with 60 per cent. to 70 per cent. HAG funding rent increases in the western region—an area of low wages; lower than in the North-East—will be substantial. I cannot quote them because they are confidential, but I have seen them. In borderline cases where qualification for housing benefit is in doubt the increases will be almost impossible to meet. Local management structures in local housing associations may be able to help because they will fix their rents on the new lettings. At least they will be able to show considerable sympathy. However, distant executives, such as some in the bigger housing associations which have bought a great deal of GLC property and are dealing with it from a distance, cannot know the local situation. I believe that the tenants in those properties are likely to be worse off.

As has been revealed to the House, the average income of the current tenants of housing associations in the western region is of the order of £74 a week. Two-thirds of those tenants rely on state benefits of one kind or another in order to meet their rent. Therefore, I should like to reiterate what has been said elsewhere on many occasions. First, in the housing association movement the rents for our tenants must he affordable. Secondly, the level of risk to which management committees are exposed must be minimal. Why should they take on desperate financial responsibilities when they are not being paid for the job and are being forced into the situation by government policy?

Thirdly, local authorities should still be able to fund housing association schemes in addition to the Housing Corporation's. I believe that concessions have been made but I should like to hear them confirmed. Surely with their massive, if frozen, receipts from house sales that noble Lord, Lord Dean, our tenants should continue to he protected under statute so as to avoid different standards. Some will have their rents restricted because they are controlled. However, those transferring from one association to another will come under a new regime and that cannot be right. Their rents can go sky-high. The different rents will he complicated for housing associations to deal with. That is the situation at present but I do not believe that it is right. I totally support the point made about the 50 per cent. voting.

As is usual in modern legislation, too much has been left to regulations and departmental circulars. Today there has been an announcement from the Housing Action Trust and presumably appointments to various bodies will follow, no doubt made from the list of the good and true. In Committee we must seek more assurances of the definition of' affordable rents. There must be a firm commitment to meet and maintain the extra demand which will fall on housing benefit. Will the Government meet the cost of that, because it will be enormous? The voting procedures for council house tenants who wish to transfer is highly suspect and the terms of the tenants' guarantee does not go far enough or wide enough. I am sorry to see the role of the rent officer diminish. When Richard Crossman introduced the provision I believed it to be a sensible idea. The officer has played a useful role over the past 20 years and was more than able to continue to do so. It is strange that his knowledge and experience will not he used statutorily in fixing new rents.

I also support the views expressed by the National Consumer Council that many tenants should have the opportunity to seek free. competent, independent information and advice as many will not know about or comprehend the extent of the changes in the whole rented sector which may suddenly be thrust upon them. Matters are moving very quickly. Councils are negotiating at this very moment; Torquay is one such example. Anglesey has come up with a rather good idea, which I am not sure will be acceptable to the Government, which will involve 49 per cent. of the tenants in its own management. That seems to me to be a rather good idea. However, these matters are happening very quickly indeed and many tenants will not know what is going to hit them.

The only real answer to our housing problem is vastly more publicly-funded housing provision, whether through housing associations, co-ops or the much maligned I local authorities, which incidentally 30 years ago built some of the finest rural housing which still exists in this country. The current statistics on house starts in the public sector are an absolute disgrace. We are hack to the situation of the early 1920s and this draft is here for all to see.

One or two-bedroomed flats, maisonettes and modern hostels managed and run to decent standards are most urgently required. They should be built in the urban or inner urban areas and not by spreading vast housing estates over Berkshire and other beautiful counties. That will not solve the housing problem for those most in need. Those houses will be available at exorbitant prices and will be affordable only by people on large salaries. If the HATs scheme can achieve this regeneration in our inner cities and provide those sort of properties, that is all to the good. However, they are non-elected, undemocratic and arbitrarily appointed bodies responsible only to the Secretary of State. I do not believe that that can be right in what is supposed to be a democratic nation.

Perhaps I may finish with the problem of the homeless because, for my sins, I put the Homeless Persons Act through Parliament when I was a Member in another place. We read that it is under review yet again. In 1979 it was threatened with review by the then Secretary of State. The whole process was gone through and I am glad to say that the Act came through unscathed. Is it really being seriously considered that we should now alter that Act so that even the very limited number of people who receive protection under it may be at risk? I sincerely hope not. I ask the Minister to leave it well alone. It may not be perfect but it provides some hope for those most in need. As statistics published today show, this is a disgrace particularly in our cities. I do not wish to see children and families begging in the streets, and we are now coming very close to that situation.

3.52 p.m.

The Lord Bishop of Southwark

My Lords, I notice that the explanatory memorandum to this Bill begins with a declaration of intent. The Bill is: aimed particularly at transforming the rented housing market That was slightly paraphrased by the Minister as "the need for change in the rented market".

Those delightfully neutral phrases invite the obvious question: for whose benefit is it to be transformed and to what end? That there are serious problems in the rented housing market in this country is surely not in dispute by any of us. That point has already been made strongly by the Minister and the two other noble Lords. Nor can there be any doubt that we need a rented housing market. There will never be a time when everyone in this country can afford to buy their own house or flat. In any case many would dispute the desirability of that, even if it were remotely possible. The present variation in house prices in this country and the complications of buying and selling certainly make mobility much more difficult.

Even more serious is the scale of the homelessness, especially in London and the South-East, and especially as it affects single people or childless couples, who make up an increasing proportion of the population. It is all too easy t6,become numbed by the statistics and photographs of people sleeping rough or families with children in bed and breakfast accommodation. There are a great many of those in south London where I come from.

These represent only the most visible and pressing reason for trying to find a more effective way of providing more appropriate rented accommodation for those who need it and who will use it responsibly. Any Bill which attempts to improve that situation must be welcomed in principle. I gladly acknowledge the very serious efforts which the Government are making to face some of those intractable problems head-on.

Before coming to more detailed criticisms of the Bill, I believe that it is important to stress two major background problems which legislators of all political parties face in the housing sphere and of which the members of the national housing inquiry became increasingly aware as we pursued our research and reflections in 1984 and 1985. The first may seem an obvious point but is constantly overlooked by the better off in society. Adequate housing in a relatively cold and wet climate is so expensive that the market alone cannot provide it for everyone who needs it at prices which they can afford.

I say "adequate" because this is a matter of standards. We no longer live in a society which accepts one room per family, a cold tap and an outside loo as adequate for the less well off. That was how the problem was dealt with when there was no such thing as social housing. Therefore, people on low incomes, for whatever reason, have to be assisted either in person or through a subsidy on the building or both. It cannot be left to charity in a modern urban society as if private almsgiving could provide private housing for 10 million people today. Nor should we ever forget that the house purchaser today receives a handsome subsidy from the state through mortgage interest tax relief and sometimes, in addition, through the substantial deductions given to sitting tenants on the price of council accommodation.

This Bill appears to come down in favour of subsidising people rather than buildings; for example, by allowing most rents to rise in future and by emphasising the need for mixed funding for housing associations. However, it does so hesitantly, for understandable reasons. If we were to rely entirely on housing benefit subsidising people in an entirely competitive open market, the amount required in some places of acute housing shortage would be enormous. I have not heard the Government suggest that they are prepared to meet that. Since housing benefit is still the responsibility of another government department and is scarcely mentioned in this Bill, except at the point where rent officers may be required to cap it, there is a dangerous flaw in the underlying philosophy and thrust of the Bill which I believe we must address in this House in the coming months.

The second general point is that when the provision of rented housing is also a source of income for the provider, as in running a business or owning stocks and shares, there is always the possibility, nay the probability, of exploitation and unjust treatment of tenants especially at a time of shortage, buoyant house prices and high interest rates. Hence there has to be a balance between the need to keep the market in housing flexible and free, thereby avoiding unnecessary voids, disrepair and sometimes real injustice to small landlords, and giving the tenants reasonable security against harassment or homelessness.

As has already been pointed out, it is a very difficult balance to strike, as the struggles over this Bill in another place have already demonstrated. The one matter which is certain is that the best and just solultion will be a balance. It cannot be found in total deregulation without safeguards nor can it be found in the sort of legislative stranglehold which fosters the sort of housing blight existing in many parts of the inner urban areas of this city and others.

There are three elements in this Bill about which I should like briefly to say something. Parts I to III deal with changes in the laws about tenancies, the function of housing associations and housing action trusts. The question we must surely all be asking ourselves about these proposed changes—some of them radical and far-reaching—is whether they will produce enough good low-cost rented accommodation for our present and future needs. We are not talking simply about bringing back a few empty properties into use; we are talking, I hope, about the next 20 years. By low-cost, I mean accommodation which families on a below-average wage can afford and which those on low wages or no wage at all can afford with the help of housing benefit.

As has already been pointed out, quite justly I think, local authorities and housing associations have not only tried but have succeeded in providing this accommodation hitherto in very large measure. It could be argued that, compared with the position in almost any other country, they have been remarkably successful in doing so. The performance in the United States is much less impressive.

I recognise that in the process many people have had no choice of tenure and indeed no choice of landlord. There have been inefficient and impersonal forms of management, particularly in some of the larger housing authorities. It now seems that the councils are to be progressively taken out of the role of providing housing, or they will choose to relinquish it voluntarily. Instead, their place is to be taken by a variety of social landlords, many of them new housing associations of a somewhat uncertain character. Instead of housing association grant, sometimes aided by local authority assistance, there is to be mixed funding, which includes commercial investment. However, money from building societies or other investors must have a reasonably competitive return, which means that rents are inevitably set to rise, as we have heard.

As for the private sector, this will have little effect on the total supply of accommodation, except at the top of the market. How can it, when house prices are so high and it is more profitable to sell and avoid the hassle of management? Management is a hassle. Why bother with it if you have no need to and can get as good a return, or better, elsewhere.

I should like to ask the Minister whether his department has figures which tell us how many people receive housing benefit at present; how many are on low wages but just above the cut-off point; how many are on the national average wage; and so on. If mixed funding is to be the order of the day—but in varying proportions—who will ensure that the social landlords, in the country overall but especially in London and the South-East, will be enabled to provide enough housing at affordable rents for those on housing benefit or for those on below-average or even average wages at the rate the Government are prepared to pay? There is an equation here which somebody must monitor very carefully. It is imperative that this is not left to chance.

Family life for many people' is at stake. Children only grow up once. Single homeless people often turn to crime out of desperation. Housing associations are for the most part committed to providing such low-cost accommodation. I know from many in my diocese that they want to continue doing this. They do not want to be forced up-market, standing by helplessly as they have to turn away people who can neither afford the new economic rents required by mixed funding nor qualify for sufficient housing benefit to close the gap.

I can see the wisdom of beginning a process of change in the long-term provision of rented housing, hut, as Anne Power has pointed out in her book Property before People, the housing associations can only cope with so much change at a time. Change needs to be slow and steady. Housing associations must be enabled to continue their primary role if something very precious and important is not to disappear from our national life.

Secondly, it is important that, if new social landlords are to take the place of local authorities, there must be a proper social housing code or tenants' guarantee within the Bill. I do not believe it is enough to say that tenants can always seek redress in the civil courts which can be a very daunting and very expensive business for most people. It is the reason, I think, why polls have shown that such a high number of people want to stay with councils. I understood from the Minister that the Housing Corporation was to have some role here. I do not think it appears on the face of the Bill and I should be grateful to hear a little more about it.

The Minister asked for positive suggestions. Is there not also a place for an ombudsman of housing whose task it would be to ensure that all landlords and tenants carry out their responsibilities under the law and who would have power to prosecute in cases where the law was being broken?

The National Consumer Council, among others, has pointed out that there needs to be provision in the Bill to enforce contractual obligations without requiring tenants—we are talking often about the less well-off tenants—to pursue their landlord through the courts. Without such a provision the law can, and I am afraid will, be broken with impunity, as happens now. Advice agencies and MPs' surgeries are already overwhelmed with requests for help which they cannot easily meet.

Thirdly, Part IV of the Bill deals with proposals for changing landlords if one is at present a tenant in the public sector. Speaking from a south London viewpoint, one can see the force of this proposal in some places. Tenants' choice, like the right to buy, seems an idea whose time has come. However, great care is needed. There are powerful arguments for caution. Should such a major decision be possible on what may well he a small minority vote? "Pepper potting" would he impossibly difficult, especially in large blocks of flats. Managerial skills are in short supply. Is it really wise to disperse them rather than try to improve them within an existing framework which has often worked well in the past and which may provide more accountability to the local community?

If municipal housing disappears within a particular local authority, I do not understand how the authority's obligations to house the homeless will be carried out. It is one thing to have a working arrangement with housing associations to nominate certain places against the background of one's own existing stock of housing which one is also using for this purpose; it is quite another to depend completely on the goodwill of other organisations to meet statutory requirements. Is there not a need for some provision in the Bill to indicate how a local authority will continue to do this effectively?

These are some of the concerns which I have been asked to express on behalf of many in south London. I hope that we can amend this Bill to meet these concerns as it passes through our House.

4.8 p.m.

Baroness Young

My Lords, I congratulate my noble friend Lord Caithness on introducing this Bill so clearly. The Bill provides for the deregulation of new private sector lettings, for the strengthening of the law against harassment, for the increasing of tenants' choice, and for the introduction of housing action trusts—all policies foreshadowed at the time of the last general election. I welcome the Bill.

When the history of the past nine years comes to be written, I believe that one of the outstanding achievements of this Government will be shown to have been the policy of the sale of council houses, a policy fought every inch of the way by the party opposite and, to a certain extent, by the Liberal Party. Many of us will have been asked at some time in our political life what we regard as one of our achievements. I was asked that about my time in local government. In Oxford, between 1967 and 1971, we sold some 10 per cent of the council's housing stock to sitting tenants and when I consider what those houses are now worth I believe that to be one of the most valuable things we could have done. It provided many families with a stake in the community and a capital investment which is now a valuable asset to pass on to their family. Therefore, I greatly welcome the proposals in this Bill which will further increase the opportunities for families to buy. It is a matter for congratulation that about 1 million families now own their own council homes for the first time.

As good as that policy has been, it is clearly not right. I believe that the country is still divided between owner occupiers—about 64 per cent. of the population—and council tenants. Of the rented accommodation, some seven out of 10 tenants are council tenants. I share with the noble Lord, Lord Dean of Beswick, a regard for housing authorities; after all, I was a member of a housing authority for 15 years. Unquestionably, local authorities have done some very good things. I accept, with the noble Lord, Lord Ross, what has been done particularly for council houses throughout the country. Some of the slum clearance policies in the cities were successful. There have been a great many difficulties, but it is not my intention to go into those.

What is true about council tenants is the fact that they are immobile. It was the Member of Parliament, Frank Field, who once described council tenants as being in a similar positions to medieval serfs. They have that similarity in that council tenants find it extremely difficult to move to another authority unless they can effect a direct exchange. Moreover, if a person moves to a local authority it is extremely difficult to become a council tenant because no authority will take in people who have not been living in the area for some time.

Therefore, we are confronted with a very real problem. The noble Lord, Lord Dean of Beswick, said that everyone says that there is a housing problem. I agree, but they have been long on analysis and exceptionally short, in my view, on positive suggestions as to what should be done. It is because this Bill offers some positive suggestions that it is greatly to be welcomed. It is, after all, worth looking at the decline and the extent of the private letting market in the United Kingdom. There has been a fall of over 50 per cent. in the past two decades alone. Excluding housing association dwellings, the private rented sector provided 70 per cent. of the housing stock in 1971 but that figure is now under 8 per cent. If the present trend continues there will be no private lettings, or virtually none, within a foreseeable length of time. This compares with 43 per cent. of the housing market as private lettings in the Federal Republic of Germany and 35 per cent. in France. It does not seem to be an impossibility to manage that. It seems obvious that we face housing problems that are unique in many respects to the United Kingdom; housing problems into which to a certain extent we have legislated ourselves.

To be fair, some of the relative decline in rented housing is due to the dramatic success of home ownership policies, but much of it is not. I believe that it is essential to encourage and develop a vigorous private rented sector. Other prosperous countries such as Switzerland have one. The private sector will help to stimulate the public sector to greater efficiency. It will provide a measure of relative performance and increasingly should be able to provide housing where the public sector cannot.

Surely one of the terrible legacies that we have inherited at this time is the fact that we have, side by side with homelessness, some 550,000 empty private houses and about 112,000 empty council houses. If there are empty houses owned by the Government I do not in any way think that that is right and we should also address that problem.

We therefore have this incredible situation with empty houses and homeless families. It is one of the most tragic situations in this country today. No one can believe it to be right that families should be in bed and breakfast accommodation. We have had many debates in this House calling attention to the awfulness of that situation and to the undesirability of children growing up in such circumstances. I congratulate the Government on attempting to deal with what is a very real problem indeed.

To reverse the decline of the private rented sector will be difficult. It is difficult to make any great change and reverse a trend which has existed for a long time. Not surprisingly, a great many anxieties have been expressed; some by the right reverend Prelate. I have received much correspondence on the subject and I have no doubt that in the course of the debate a great many more anxieties will be expressed. Quite properly, the Government are not going into uncontrolled deregulation. This is not a 1957 Rent Act; it is entirely different.

Quite properly the Government have introduced into this series of measures a number of safeguards. Among those that I have identified is the fact that there will still be housing benefit for those who need it. There will be a greatly strengthened law against harassment, racial or otherwise. There will be a new compensation right provided for people who are illegally evicted. As my noble friend said in his opening remarks, that is to be backed up by advice. The powers of local authorities will be strengthened to enable them to have repairs carried out and so bring more houses back into the market. Above all, the Bill applies only to new lettings. Surely that must be one of the major differences between this Bill and the Rent Act 1957. I am glad to note the emphasis placed on that point by my noble friend. A tenant will therefore know the terms that he is entering into and it will be on the basis of either an assured tenancy, as defined under the Bill, or a shorter tenancy.

I should like to touch briefly on the other aspects of the Bill which I consider important. First, I refer to the housing action trust areas. Here I feel that the Government are basically saying that they are intending to put millions of pounds of extra money into helping make people's homes and surroundings a better place in which to live. Housing action trust areas must include representatives from the residents.

I believe that once the message really sinks in we shall find a number of areas asking for housing action trusts. I was interested to hear in my noble friend's opening remarks that already a number of areas are to be designated.

Part IV of the Bill—relating to tenants' choice—will allow local authority tenants to choose a new landlord should they wish to do so. We have already discovered over the past nine years that increasing choice is not only fundamental to economic efficiency but that it is also what people want and have been shown to want. It is not altogether surprising that the Leader of the Opposition in another place has already indicated, by his apparent conversion to some of our tenants' choice proposals, that we are on to something that people want. I believe that making local authorities more responsive to the needs of their tenants will be popular and at the same time give a boost to the housing association movement, as well as reviving the private rented sector.

It would he important not to believe that this Bill is an attack on local authorities. What local authorities must do—and there are encouraging signs that some are already thinking along these lines—is to see themselves in the future as stimulating, guiding, enabling and assisting others, rather than merely being the major providers of rented housing. Indeed, in some areas the massive local authority estate management problems have clearly prevented authorities from taking a more general view on their local housing problems.

As I said at the beginning, this is a Bill to deregulate private rented housing and to bring hack private housing into the market giving a much wider choice to tenants. I believe that it is only through the policies contained in the Bill that we have any hope of providing what a vigorous market can offer to people at all levels of income, that is, an adequate supply of housing. That can never be done simply by building more houses as has been suggested by noble Lords on the Opposition Benches.

Perhaps I may give an illustration from one experience in my life. When I entered local government in Oxford in 1957, the council housing waiting list stood at some 3,500 families. I was appalled. When I left 15 years later the council had built well over 3,000 houses, but the list remained at exactly the same length as it was before. I believe that that example teaches us a number of lessons, but I do not intend to go into detail here. Simply building houses is not the absolute answer to the problem; it is a question of managing the houses that one has. Of course, councils need to build houses and no-one is saying that there should be no more council houses. They need to be properly managed. We need a flourishing private rented sector particularly for those who are young and mobile but who cannot move. Some of the most tragic instances concern those who are locked into unemployment in parts of the North and who cannot move to areas where there are jobs. We need the housing associations. We need a great deal of variety. We do not need to be locked into various forms of housing like a straitjacket from which it is impossible to get out.

At the end of the day we should use our existing housing stock as efficiently as we can. I believe that the Bill represents a major opportunity to try to reverse a long-term trend. It is carefully balanced and it gives safeguards to the tenants. It is not total deregulation.

The Bill offers more and better quality rented accommodation; more choice to tenants; a real opportunity to help the homeless and it is the only positive suggestion which has been made. It also gives an increased opportunity to buy. These policies will take time to come to fruition, but the sooner we start the greater the chance of bringing them to a successful conclusion.

4.22 p.m.

Lord Jay

My Lords, despite the Minister's soothing words, I believe that the Bill. unless it is drastically amended, is likely to make an already bad housing situation even worse that it is already. If there is one thing of which 30 years as a constituency Member of another place convinced me, it is that had housing probably produces more hardship in the large cities in this country than any other factor. Incidentally, a great deal of that hardship falls upon growing children who are in no way responsible for their plight.

It seems to me that the Bill is largely founded on an economic misjudgment; namely, that one can decently house the greater part of a large population by relying on market forces. Experience throughout the world shows that one cannot. Even the richest countries have failed to do so. To understand that one has only to visit New York and Chicago, just to mention two large cities. In the great cities of South America where market forces rule and reign, one will find in every great city half a million people living in shanty towns. The only countries in the world that have housed their whole population in decent conditions are the Scandinavian countries. They have done it by large-scale public and collective housing and subsidised rents. This Bill will move in precisely the opposite direction. It will diminish still further the proportion of low-rented houses owned by public authorities which are accountable to the public.

Of course we need the private sector and the public sector, housing associations and private home ownership. We need all of these, but the whole population can only be properly housed by a large expansion in the number of houses available at low rents. And that can only be achieved by public authorities having adequate resources. I believe that we are all in favour of the expansion of home ownership, but that does not require the destruction or reduction of council housing. That is the mistake under which the Government labour. An increase in home ownership can be achieved without reducing the supply of local authority houses, first, by new building in the private sector for sale and, secondly, by helping council tenants, as sitting tenants, to buy their own homes if they wish—but on the condition that they can only sell back to a public authority which can still meet public needs.

I say in particular to the noble Baroness that that safeguard would have been included by any government which were really caring about the welfare of council tenants. The fact that that has not been done will strengthen the conviction of those who believe that the real motive behind a great deal of the Government's housing policy is not the welfare of tenants but simply party political prejudice. The Bill will intensify that suspicion. Why else do we have a repetition of the Government's favourite legislative swindle; namely, that the tenants, by right, can opt out of the local authority sector but not opt back. They can opt out on the basis of a majority so small as to be almost derisory.

The main thing wrong with local authority ownership and its housing stock—and I agree that certainly some things have been wrong—is that although that stock grew steadily in the 30 years after 1945, there was not enough money spent on maintenance and on the provision of proper caretaking staff on council estates. If in those days as much had been spent on council housing as is normally spent on private blocks of housing, today we should have a far more satisfactory stock of council houses.

Basically, the Bill seeks to revive a privately-financed rented sector. I think we all agree that that is its object. I do not believe that it can succeed. No doubt the housing associations, the housing action trusts, will all do their best, as many of these associations do now. But they are only on the fringe of the problem. They will find themselves up against an economic tide which they cannot resist. They will be unable to charge a rent low enough for the neediest families to afford unless housing benefit is increased on a huge scale. At present I see no sign of this increase.

In the present conditions in the United Kingdom that tide is inevitable for two reasons. First, there is the taxation system which almost no-one has mentioned today; and in particular the mortgage interest relief to home owners. That is making it uneconomic for any private landlord to let rather than to sell. That is why the proportion of private rented houses has declined. I believe that some years ago the total loss of public revenue from mortgage interest relief was something like £200 million a year. It has now risen to £3 billion or £4 billion. It may be that the Minister can tell us whether that is correct. I am told by my noble friend that it is over £4 billion.

We have piled three huge tax concessions on top of one another to the pampered owner-occupier. First, there is the abolition of Schedule A; secondly, the exemption of private houses from capital gains tax, and, thirdly, the mortgage relief—now almost a scandal. One or other of these tax subsidies might have been justified on its own; but the three together have made inevitable the collapse of the private rented sector.

Secondly, the shortage and the high cost of land in all the areas of the country where the demand for housing is high will also make it impractical for private landlords to provide low-rented housing for those with small incomes because the cost would be too great. Nothing in this Bill, so far as I can see, will alter those basic facts. With the present level of interest rates it is even less likely. The great private housing boom of the 1930s was based on a 2 per cent. bank rate lasting for ten years. I am afraid that there is singularly little co-ordination between the policy of the Chancellor of the Exchequer, who has been raising interest rates to unheard-of heights, and that of the Secretary of State for the Environment who wants to revive the private rented sector.

At the same time local authorities are not even allowed to spend 75 per cent. of their capital receipts on building new houses to rent. What on earth is the reason for that? The Prime Minister has just declared her conviction that everybody should be allowed to spend their own money as they please. I wonder why local authorities should not be able to spend more than 25 per cent. of their own money as they please.

I am afraid that this Bill, no doubt despite some good intentions, is the product partly of economic doctrinairism about market forces, partly of political prejudice and partly of the Prime Minister's almost obsessive hatred of any organisation which is elected by the public and not appointed by herself. As it stands, the Bill will worsen a very bad situation. This House will be performing an invaluable national service if it drastically amends the Bill in the next few weeks.

4.32 p.m.

Lord Goodman

My Lords, it is some years since I had the privilege of addressing your Lordships' House in formal debate. I wish to assure your Lordships that I shall not regard myself as being entitled to the time I have lost in the meantime. I think that I have some special qualifications which entitle me to speak on this subject. I was for some years chairman of the Housing Corporation. I was chairman of the National Building Agency, which is a related office. I am president of the Rent Officers' Association; I can claim to have invented that character.

I should like to pay tribute to the rent officer because this Bill is likely to reduce his function and he may be feeling a little unhappy and a little neglected. They are a splendid institution. Each year I address their annual meeting. It is my only function. I assure them how well they serve the community, how important they are and how pleased I am to see that they have multiplied. I think that they have served a very important social function. When one thinks of the amount of litigation that has been avoided because of the existence of rent officers, it is very difficult to exaggerate their social value. I do not wish to consider what their revised function will be under the Bill, but certainly in relation to housing corporations it will be rather less. The fact remains that they have done a very good job and it is a great pleasure to me to have an opportunity of testifying to that fact as their established president. How long I shall remain as such I do not know because, apart from the fact that the Almighty determines these matters, there is also the question of how long the rent officer will be there. I think that he has performed a very valuable function and I am very pleased to be able to record the fact.

When I arrived at the Housing Corporation, I recognised immediately, as any sentient human being must do, the urgency of the housing problem. I do not believe that it has abated in the slightest degree since I was there. It may be that it is more severe and more gross than it was in those days. I should like to make a purely practical observation. This Bill comes in this year. The present Government will, last another four years unless there is some cataclysm, either hoped for or deplored. I do not want to be too discouraging to the gentlemen on my right but there must be a reasonable prospect of their re-election. It may well be that this Bill will have to survive for 10 years before it can be substantially amended. Therefore it is futile to utter pious hopes about what we would like to see. It is important to make this Bill as good as we can at this moment in time, accepting that it has an enduring value that some of us may deplore and some of us may applaud. The fact remains that it is a fact. That being so, I should like, and hope most earnestly, to play some little part myself in the Committee stage of the Bill by making some suggestions.

I have conferred, as one might expect, with the Housing Corporation. The Housing Corporation in general terms welcomes this Bill. Housing associations in general terms do not welcome the Bill. There is an unfortunate division between the corporation as the governing body and a great many of the associations that they are governing. They are anxious on a number of scores. I do not wish to enter into a debate about whether housing associations do better for housing than local authorities. My own experience was that local authorities were so uneven in quality and approach, that it was quite impossible to arrive at any conclusion. Certainly when I arrived at the Housing Corporation many local authorities were greatly suspicious of housing associations. I think alas, that that suspicion remains to this day. By the time that I departed that situation had to some extent abated. I do not attribute that to my skill of negotiation but I attribute it to the determined effort of the immensely skilful staff of the Housing Corporation.

I am quite sure that during my several years with the Housing Corporation I never arrived at a solution to the problem or even began to think what the solution was. However, I disagree profoundly—and this is a rare instance--with the noble Baroness, Lady Young, when she says that the solution does not lie in building houses. Building houses cannot be bad. It is certainly a solution and it is a very necessary solution to build as many houses as possible.

Our problem exists because great numbers of our houses are petrified. It is no use pointing to empty houses on a national total because most of them are disqualified from occupation because the tenant is not there. The tenant is somewhere else and wants to be somewhere else. That is a very serious part of the problem. An even more serious part of the problem is the Government's obsessional belief that the sale of houses will solve the problem and that private ownership of houses will be a solution. I think that that is an obsessional belief; unfortunately it is a totally sincere belief.

The Government believe in what they call a property-owning democracy. A property-owning democracy in which some under-paid young man is striving to purchase a house on a heavy mortgage but who has not the slightest possibility of paying the maintenance costs, is not my idea of a property-owning democracy. I do not think that that is the way to solve the housing problem.

Baroness Young

My Lords, if the noble Lord would forgive me, I did not say that we should not build houses. I said that building houses by itself is not only the solution to the housing problem.

Lord Goodman

My Lords, the last thing in the world that I would do is engage in a debate with the noble Baroness, for whom I have such a profound admiration that, even if I thought that she were wrong, I would not say so.

The fact remains that there is an obsessional notion that by selling houses to people the problem will be solved. What has been said already is absolutely true. What is needed is a blended situation in which there are some houses for sale and some houses to be let. What is certainly required— and this is something that I earnestly hope the Government will address their attention to in this Bill—is close supervision to regulate both rents and prices. We are living in an era when prices have gone totally mad, in consequence of which great numbers of people cannot afford to buy houses. Very often the choice in connection with buying a house or not buying a house is whether the family has a baby or whether a child is sent to a better school. It is not as easy as saying that a person has the money to pay the mortgage. It is a conception that is extremely erroneous and mistaken and which can lead to disastrous consequences.

I entirely agree with the noble Lord, Lord Jay, when he says that the housing problem has been solved only in Scandinavian countries. When I was at the Housing Corporation I paid a number of visits abroad. The only countries where I felt that the problem was firmly under control were Sweden, Norway and Denmark. The United States not only had nothing to offer us but presented the picture of a hideous shambles. Certain it is that in what is the freest and most affluent democracy in the world the housing problem is worse than our own. So attaining that sort of capitalist prosperity is not the beginning of a solution.

I venture to mention my noble friend Lord Lloyd in regard to my interest in the housing problem. Some years ago—100 years ago, almost—we used to sit as a poor man's lawyer in the East End of London, at a place called the East End Mission in the Commercial Road. Three of us used to go down there—my noble friend Lord Lloyd, who was not Lord Lloyd then; Professor Gower, later Vice-Chancellor of Southampton University and the man who produced the Government's plan for investment security; and myself. We were not inadequately trained to provide free legal services. But what I learned there more than anything else was the crucial importance attributed to security of tenure and the certainty of having a home. Old people—older than I am today—came week after week for reassurance that they could not be evicted. I venture to say to your Lordships that the crucial consideration in regard to this Bill is that one should restore the social security of people having homes.

Very offensive things have been said about the rent restriction Acts. Since 1915, however, they have created one social certainty. I believe that the absence of serious social unrest in this country is to a large measure attributable to the rent restriction Acts enabling people to know that their homes were safe. Not everyone had a home. But great numbers of people knew that their homes were safe and that their rents could not be increased.

The Bill has some excellent features. I am not proposing to analyse it here as that would mean being on my feet all night. The Bill gives great encouragement to housing associations. It gives them a better status. They will be able to make a grant as opposed to monitoring it. There will be much greater flexibility in their tenancy arrangements.

There are a lot of good things in the Bill. But the one alarming feature is the seemingly greater ease with which people can be evicted. Nothing causes more social disturbance and more local disturbance than the possibility of people being evicted. I have seen this with my own eyes. I urge the Government to give the closest supervision to the situation.

The one thing that I wish to say—and I can say it from this Bench, though nobody can from the other Benches—is that everyone in the House shares my wish that we should solve the housing problem. I do not think that that is a political wish in any sense. I think everyone wishes to do it. And the way to do it is to work in a team so far as that is possible.

I believe that housing associations have a great contribution to make. So often what is done most effectively in this country is done by volunteers. A housing association is very largely an organisation of volunteers. This we should exploit to the utmost; so any encouragement that can be given to housing associations is desirable. It does not follow that there should be discouragement of local authorities. My own experience of local authorities has been that if successfully wooed they co-operate magnificently.

Two factors seriously aggravate the problem. One is our planning requirements. The lunacy of our planning regulations, whereby a man or an organisation can buy a piece of land and hold it for three, four or five years, paying large interest costs to add to the ultimate cost of the house, is something that needs to be tackled. Another problem, although there may have been an improvement since my day, is the appalling bureaucracy relating to approvals from the Department of the Environment. The lunacy was that a housing association could spend as much money as it liked on the land. It was subject to the district valuer who did not have a divine infallibility. But when the question was the cost of a door knob, it would be analysed and regulated by 30 civil servants. I do not know whether that lunacy still prevails. I forget what it was called.

Lord Dean of Beswick

My Lords, it was the cost yardstick.

Lord Goodman

My Lords, I am grateful to my noble friend. In addressing ourselves to these self-evident problems, which have no political background at all, no one wishes to maintain a destructive cost yardstick. All one wishes is to build houses. I do not have an expert knowledge, but I have slightly more expert knowledge than many of the factors which make it extremely difficult and expensive to build houses and they need more regulation than the question of whether a local authority is of a particular political colour. While we go on debating that aspect, we shall never have any houses.

I welcome the opportunity of speaking here today. We are addressing ourselves to the major problem of our time. That may sound ridiculous, but it is, I believe, true. In the last few days, I have had the privilege of hearing the House debate two matters that are absolutely common. One is the Education Reform Bill; the other is the Housing Bill. The two are inter-related. Your Lordships would be horrified if I detailed my experience of visiting housing associations. Time and again, when I visited houses run by associations and owned by respectable and decent people, there was not a single book in them. Your Lordships may think that that is rather far removed from this debate. It is not. The two matters are closely related. To restore a good quality of education, you must restore a good quality of housing. That is my final message.

4.46 p.m.

Lord Moyne

My Lords, I desire to say a few words in support of the Bill from which so much is hoped, though I realise much is also feared. I am encouraged by the words of the noble Lord, Lord Goodman, on the importance of this subject about which he knows so much and about which he has spoken so eloquently. It is to be hoped that the fears can be removed as we proceed, whether by explanation or amendment.

My personal approach is as a trustee of the Guinness Trust which, like many other housing trusts and associations, hopes for great things from the prospect of drawing in, from private investment, capital which the Housing Corporation, by the nature of things, has not been able to produce as fast as we would have wished. But the trust, like other trusts and housing associations, is anxious naturally over making both ends meet in planning the new kind of development. In obtaining private capital, the confidence of investors is an important factor. It is only through confidence and security that private capital will invest in something that will not bring in high returns. Housing benefit and other factors figure in the equation but private capital can only be drawn in to help join the ends together if there is confidence and security.

It is in this context that I should like to draw your Lordships' attention to Clause 55. At first sight, I have to confess that I was dismayed by its lack of precision: it could mean anything or nothing. On consideration, however, I have come to see that in navigating the sea of our housing troubles the pilot, who is the Secretary of State, should be allowed wide freedom of manoeuvre in this particular channel.

We on this side of the House obviously have confidence in our present Minister and in his attitude. But it would be churlish not to have confidence in the intentions of a future Minister from an opposition party; perhaps, after all, with the same permanent officials advising. However, that might be bringing things forward too much; they might by then all have retired. The noble Lord, Lord Goodman, made the point that this party might be in office for another 10 years. If so, this party, as much as any other party, will seek to bring in another Bill to improve what has been done.

Therefore, I do not grudge the freedom of manoeuvre given by Clause 55. An assurance would however be welcome that the Minister will use it to put the grant redemption funds, or clawbacks now to be called rent surplus funds, in full at the disposal of the associations that have created them in using the housing corporation grants. The clawback will not apply, I know, to the new assured tenancies, but it applies, and will apply, to surpluses arising from existing tenancies created out of housing association grants.

As an example of the magnitude of this aspect, I am told that the Guinness Trust had to pay back £800,000 last year and will have to produce something like £1 million this year. If such sums were retained rather than cycled up and down, they could, I am told, he turned into bricks and mortar within months. However, they would be even more invaluable at present in providing a sinking fund for major repairs and as a reserve to give confidence and attract private capital into social housing. I am told that other European countries are successful in this and that sometimes they even seek investment for their social housing from the London money market. I believe that the Danes have done so.

Apart from this practical aspect, I am mindful of the Parable of the Talents. The housing corporation grants may he likened to the talents that were made to fructify by the efforts of the faithful servants—efforts made by staffs with experience built up out of our own charitable enterprises. It is surely only just that the fruits of those efforts should he allowed to be retained for the nourishment of new enterprises.

Therefore I support this far-reaching Bill. I hope that the Government may be able to give some assurance that they will exercise the wide powers given to them under Clause 55 to allow housing associations to retain their supluses in full, not only as sinking funds for major repairs but as reserves to facilitate the raising of private capital.

4.52 p.m.

Baroness Ewart-Biggs

My Lords, having listened to some very interesting speeches covering different aspects of the Bill, I wish to speak about one particular implication for the interests of women. I shall be speaking from information received from the Women's Organisations Interest Group which formed a sub-committee to look particularly at the Bill. Its members have expressed extreme concern. Perhaps I may emphasise that the groups making up the Women's Organisations Interest Group represent women of all backgrounds and of all political persuasions from both rural and urban areas. They total literally millions of women throughout the country.

As the director of the NCVO has said, never in her experience has there been such unanimity of concern about a piece of legislation than that expressed by this interest group regarding the Bill before us. There is little doubt that women in general are more economically vulnerable than men. Because of their relative poverty they are disadvantaged in access to housing which depends on income, such as owner occupation and the private rented sector. As a result of the Bill's proposals, both these sectors are expected to grow at the expense of social housing provided by local authorities and housing associations.

The categories of women who cannot depend on a regular wage are in general those who are going through a breakdown of their relationship or their marriage; single parents, black and ethnic minority women; women caring for dependent relatives and older women. Many will be responsible for children. This renders their need for good housing paramount, as the interest of the child is totally hound up with that of the mother. If the mother has good housing, the child will too.

I want to mention the women who are carers. It is estimated that one in five women over 40 are responsible for a dependent relative. The Government have quite rightly a care in the community policy. But the carers who arc practically always women badly need support. The Bill will have the devastating effect of either denying carers the right to succeed to a tenancy unless they have been living with the tenant for the previous two years instead of the present six months, or, where the tenancy began after the Bill becomes law, the carer will have no right of succession at all.

Apart from the sheer injustice of this, since many women have given up jobs and their own houses to move in with elderly relatives, the new proposal will strike at the heart of the Government's care in the community policy. Should this proposal remain in the Bill, many women fearing eventual homelessness will not dare move in with elderly relatives. As a result, those elderly relatives will have to be taken into institutions. I must stress the number of women who leave their own houses to move in with relatives and who little by little have to give up their jobs as the relatives need more and more care. Then, on the death of the relatives they are left with no job and no house. This is not a way of rewarding those selfless women who take on that role time and time again.

The other category of woman obviously very vulnerable is the head of the single parent family. Nine times out of 10 that person is female and also suffers poverty. There is the initial problem of finding rented accommodation which allows children. In addition, the Bill will increase risk of eviction for a landlord is given the right to repossess if a tenant were to be in arrears of three months' rent or to have persistently delayed paying rent.

It is a fact that many women, particularly lone parents, are in receipt of housing benefit and maintenance payments. In both cases, difficulties can arise when payments are delayed. So some of these women could be evicted through no possible fault of their own. Even under present circumstances, single parent families are disproportionately represented among the homeless. For example, in the first 4 years after the operation of the 1977 Housing (Homeless Persons) Act, one-parent families accounted for 52 per cent. of all families housed.

As drafted, the Bill may not only lead to more of these families becoming homeless, but, through the provisions legalising premiums, they are likely to spend longer in unsuitable homeless accommodation such as bed-and-breakfast, while they try to find accommodation that they can afford. Again, I must stress that the interests of children are closely bound up with these families. The kind of housing in which they are brought up means that children can experience a terrible start to their lives.

Next, through the policy of allowing rents to increase to market levels, only those one-parent families who can get help with the rent through housing benefit will be able to take out new tenancies in the private sector. The Government have given repeated assurances that on account of their continued housing benefit eligibility, low income tenants will be able to share equally in the greater choice of housing that is expected to result from the new Act, as the Minister has pointed out.

However unless the present loopholes in the rent provisions are closed so that private sector rents are payable from day one of occupation, one-parent families will be among the largest groups to be denied access to this sector and left with less choice in housing than at present. The restrictions on applications to the rent assessment committees on both assured and shorthold tenancies and the failure to outlaw premiums or key money will further exacerbate the problem for those particular families.

Another very vulnerable group are elderly women. The Women's Organisations Interest Group expresses great concern that most of the residents in sheltered housing for the elderly are women. A reduction in housing grants and the higher rents that will be required in new tenancies will mean that more elderly women will live in substandard accommodation which is totally unsuited to their needs. Older women have, after all, all their lives been victims of low wages and exclusion from occupational pension schemes. Therefore, if they face increased rents they will be forced to cut expenditure on food and heating to a dangerously low level.

There are also worries about harassment. The proposals in the Bill to control harassment by landlords is a tacit admission that such harassment may well increase under the new proposals. Women are subjected to certain types of harassment more readily than men. There is little doubt about that. But the particular concern of the interest group is for elderly tenants in protected rented accommodation, the majority of whom are women. The possibility of landlords evicting such tenants is significantly increased by the possibility of re-lets at market rents or sale into owner-occupation. The profits to be made by that, particularly in the South-East, create the environment for a whole breed of new Rachman-like landlords. The Bill further aids that process by the new right of landlords to move tenants to suitable alternative accommodation. Theoretically a landlord could move elderly tenants from flat to flat as blocks were gradually decontrolled. That is seen as a very real danger.

The last vulnerable group are women who suffer violence in the home. That group includes not only battered wives but also teenage daughters suffering sexual abuse. It has always been enormously difficult for them to escape from that situation. Any further reduction in low-cost accommodation will have a particularly drastic effect on the lives of that group of women, especially when taken in conjunction with the new social benefits rules.

Young women wanting to move from the parental home to seek employment or to escape from overcrowding are particularly vulnerable economically. The outcome of this Bill in higher rents and easier repossession, on top of the strict housing benefit rules governing young people, will put that group at even greater risk.

I have tried to put forward the points of view of women's organisations who fear very much that the most vulnerable elements among the groups they help will be disadvantaged by the proposals in the Bill. I believe that the Bill does not respond to the true need which exists in this country which is a requirement for low-rent accommodation. It is the lack of that which has created a crisis in the lives of so many people in this country who are at the bottom of the heap. I hope that the Bill will be heavily amended in Committee.

5.4 p.m.

Lord Winterbottom

My Lords, I am the chairman of a small housing association. It is for that reason that I only recently took advice to speak today. I have come today more to learn than to impart information. I look forward to reading the wisdom and knowledge of my colleagues when the debate has finished. However, I have several points to make.

I regret that the noble Lord, Lord Goodman, is not in his place because I wish to thank him personally for his kind words about the kind of person who handles housing associations. As regards my housing association, none of the people who are responsible for it is paid. There is also another factor which makes our association a little different perhaps from many others. It is completely free of any finance from government sources. All our funds are raised from building societies, our bank and from some local authorities— but only on the basis of a joint operation.

1 have three questions to put to the Minister. First, will he explain why Housing for Wales is split off from the Housing Corporation? I do not think that that was made clear in the Minister's opening speech. I should like to know why those two organisations are divided. I am interested in the sense that my small association always stands on its feet and does not receive the kind of support that comes from the Housing Corporation.

Secondly, can my association as an entirely independent organisation expect the same favourable treatment that may be granted to the Housing Corporation and Housing for Wales when the Bill becomes law, and its improvements which must come in Committee—are applicable? There is a certain resentment among associations such as mine that they do not seem to benefit as they might be able to do if they were not so determined to maintain their freedom.

Thirdly, to what extent is land price brought into consideration within the Government's examination of the problems of housing? The price of land determines so much when staff within my association set out to find sites on which to build a group of houses. The noble Lord. Lord Ross of Newport, made a remark with which I agree—that public funds are required. But he then went on to infer that the prosperous areas of Britain, such as Wiltshire, as a whole do not really need this assistance. That is just not so. The cost of land in prosperous areas such as Wiltshire or similar counties is so high that we in Wiltshire are finding it extremely difficult to build starter homes for young people. That is something that I shall wish to expand on in Committee. Otherwise, this Bill is of value. It should be comparatively free from conflict during its passage through the House and I wish it well. I look forward to hearing the wisdom of my colleagues.

5.9 p.m.

Lord Shaughnessy

My Lords, the Bill before us today represents the Government's proposals to inaugurate radical changes in housing policy designed to eradicate some of the anomalies that cast a wholly undesirable shadow upon an otherwise affluent society. In a prosperous and expanding economy homelessness remains a festering social problem, a wide disparity in the cost of housing in different regions continues to restrict the mobility of the work force; and above all, the spectacle of old and infirm people condemned to live in dilapidated and often unheated accommodation persists.

In July 1985 the inquiry into British housing which was conducted by the National Federation of Housing and chaired by His Royal Highness the Duke of Edinburgh examined the condition of housing in the nation and made a number of recommendations on how it might be improved—recommendations which were far-reaching and in some respects controversial. That report was debated in your Lordships' House on 27th January 1986.

The White Paper issued by the Government in September of last year addressed many of the recommendations of the report and forecast the changes which we are discussing today. It has taken three years to formulate the legislation, and I suspect that it will take some time yet before its proposals become effective.

One of the Government's four principal objectives announced in the White Paper was, to put new life into the independent rented sector". in order that, the letting of private property will again become an economic proposition". As was stated by several noble Lords (and notably by the noble Baroness, Lady Young) unlike many countries in Europe and North America where the private sector occupies the largest part of the rental housing market, the proportion of rented housing in the private sector in Britain has declined drastically since the War. As the Minister has said, it accounted for only 8 per cent. of the total rentable stock in 1986. I believe that the figure is now even lower. To a major extent, this decline was fuelled by a rent control system which prevented private property owners from realising a fair return from investment in rental property—as low as from 2 to 3 per cent. on capital employed—and by a legal regime governing security of tenure which deterred the private landlord because of the difficulty in regaining possession under reasonable circumstances.

The Bill seeks to make a start in reversing that situation, and I welcome that intention. However, a change of such proportions will not be achieved easily or quickly. Historically the public perception of the private rental sector is one of suspicion. That will change only gradually, as the proposals in the Bill arc implemented. Furthermore, an abrupt dismantling of the rent control system and other protective aspects of the current regime would create unacceptable social hardship and further aggravate the situation.

However, it is encouraging to note the steps in the form of housing rent assistance that the Minister has outlined to facilitate the transition. It will take time for a financial climate to develop which will attract private funds to the building of new housing for rent. and it will be necessary to prime the pump by providing incentives for private investment through such as agencies as the Business Expansion Scheme and in support of the housing associations. Even so, as long as interest rates stay at current levels (with all that that implies for mortgage costs) the desired effect will he further inhibited.

Nevertheless, I believe that the thrust of the Bill in respect to regeneration of private sector rental housing signals an encouraging beginning. The ultimate objective must be to create an orderly and flexible private market in parallel to the public housing sector. Whether the Bill will be successful in realising those objectives will depend on how resolute the Government are in implementing those policies, and how consistent any future governments are disposed to be in carrying them through in future years.

5.15 p.m.

Baroness Gardner of Parkes

My Lords, I find this a most interesting and innovative Bill. I believe that many of the provisions in it will be of great benefit to people who wish to rent property. As regards private landlords, one of the great difficulties has always been an almost complete lack of understanding of the private landlord on the part of the Labour Party.

When the Francis Committee reported on security of tenure for furnished tenants not long after security of tenure had been brought in for unfurnished tenants, there was also a minority report. The minority report was produced by one member of the committee. All the members of the committee, with the exception of one person, believed that it was unwise to bring in security of tenure for furnished lettings. However, the minority report stated that that should be done.

In due course, a Labour Government took it upon themselves to implement in full the minority report. At that stage, I attended a London Boroughs Association meeting. That body was Labour controlled. I gave a lift to the man who was then the chairman of that body. It was just before the implementation took place. I said to him: "Don't you understand that when you bring in security for those places on top of the security that you already have, you will see a drying up of all the furnished accommodation which is presently available?" He said: "No, no". I pay tribute to him in that I think he was completely genuine in his belief that that would not happen. That proved to me that there was no understanding of the situation. We saw very rapidly that there was no hope of young British people who wished to marry and find furnished rented accommodation being able to find it. The shorthold system which has recently been introduced has helped to some extent. However, it has not helped a great deal.

I can speak only for London. However, there is now a surplus of luxury rented accommodation in London. Many noble Lords will have seen accommodation for foreigners and company lets advertised in the glossy magazines which come through our doors. There is a wide choice in such rentals. If one has such a property to let and one contacts agents, they will say: "It is very difficult. The market is saturated and there are very few people wanting that type of accommodation. It is difficult to get a tenant". In addition, in order to get such tenants, one has to do the place up magnificently, otherwise it will not command a big rent.

I believe that there are many landlords who would he perfectly happy not to have to put in superb furnishings. When we look at the price of one settee at about £1,000 for that type of accommodation, we can see that those furnishings are not cheap. There are many landlords who would happily take a reliable tenant at a lower rent if they did not have to do luxury interior decorating. That is enormously expensive and it is a great growth industry. If a landlord is prepared to let his property in a clean, reasonable and fit condition and allow people to decorate as they wish, he will be able to accept a lower rent and still get a reasonable return.

Mention has been made of battered wives and where they are to go. I should like to take up that point because that is something about which I have been very concerned. There are shelters for battered wives but 1 do not think that the Bill covers that category. I could not quite understand the point that was made on that issue.

There are so many speakers in this debate that I do not wish to speak for long. However, I am slightly puzzled and should like to ask the Minister in summing up to clarify the position in relation to statutory housing responsibilities. He mentioned that some local authorities wished to dispose entirely of their housing stock. Will they be relieved of their statutory housing responsibilities or will there be a complete change in those responsibilities? Mention was made of homeless people; are they to be the only people covered?

The other day I went to buy a small piece of carpet. When I asked about this or that carpet the salesman said that I could not possibly have it because it was all on order for people providing bed and breakfast accommodation for the homeless. He said: "They are making so much money out of it; it is fantastic. They recarpet all the time because the places get pretty hard use." The present homeless situation is unsatisfactory. Within the City of Westminster there are homeless people from all over London because we happen to have bed and breakfast hotels. That is no way for people to live and it is certainly no way for people to exploit the situation and make large sums of money out of it.

I believe that the Bill will help. I can remember the hard to let GLC housing estates—run down and unattractive. I think that the HATs, as they are called in the Bill, may be able to take on an imaginative role and do something with that accommodation. I believe and hope that they will provide reasonable accommodation for homeless people. If so, that will be a great achievement of the Bill.

To me, the problem is that there is little room for new building in London, certainly in central London. Therefore we must make the best of what is already available. The solution of knocking everything down and starting again is not always the right one. I can remember when I was a candidate in Blackburn seeing whole rows of terraced houses boarded up, and other great areas of wasteland where demolition progressed much faster than rebuilding ever could. That had a drastic effect on people. In the few houses that remained, people sat on their doorsteps waiting and looking as if the world had passed them by. Therefore, I think that in London in particular the answer is not rebuilding but refurbishment. I believe that that will happen under the Bill.

The greatest thing would be to see an end to the discrimination against British people which exists today. Any Australian relation of mine, any foreigner who comes to this country, finds that housing is available. The discrimination is against the young British person wanting to marry who has little hope of finding anything.

I hope that the Bill will bring about a generally increased rented accommodation sector so that, although possession will be easier, as has been mentioned by many speakers, possession will not matter because there will be somewhere else to move on to. That is what we want to see. We do not want a situation where one has to cling like grim death to where one is because there is no alternative if one leaves. We want to see a spread of housing accommodation in such a way that one makes demands of one's landlord as to how the place should be maintained and what one should have. Then, if it is not satisfactory, one will have the choice of going somewhere else. I believe that the Bill will do those things.

5.24 p.m.

Baroness Fisher of Rednal

My Lords, I shall not be following up the remarks of the previous speaker in my observations because my experience covers perhaps a much wider area than the housing situation which exists in Westminster. As my noble friend Lord Dean mentioned, for a considerable time I was the chairman of the Birmingham housing committee. The Minister will know without my telling him that Birmingham has the largest number of local authority houses in the country.

We have talked this afternoon about houses, flats and property. We ought to be talking about people, because it is people who live in those properties. These arc not houses to them; they are their homes. I think that that is why this Bill is such an important one. Some of the observations that I shall make will be on the lines that these are homes and that what we want to provide in the future is homes.

Looking at provision that has already been made, 16 million people live in approximately 6 million properties held by local authorities. The tenancies of some of those properties could be profoundly changed as a result of this Bill. We have to remember that a high proportion of the most vulnerable members of society are tenants living in local authority or housing association accommodation. Nearly 2½ million of the people living in those properties are dependent on housing benefit. That is a very large percentage of the population that we are talking about this afternoon.

If the right reverend Prelate the Bishop of Southwark is back in his place—I am not reprimanding him because he left the Chamber; far be it from me to do that—perhaps I may give him figures for Birmingham. In June 68 per cent. of council house tenants in Birmingham were receiving housing benefit. Following the April 1988 changes, 7,000 tenants, not only of council houses but also of housing associations and private landlords, lost their benefit completely. If there had not been changes in April this year the figure would have been much higher.

If we look forward to tomorrow when the Select Committee on Social Services in the other place will report, according to the leaks which have already gone to the press that report contains charts which show quite clearly the dramatic rise in the number of families on low incomes. The numbers claiming means-tested state benefit has climbed from 4–4 million since this Government came to office until it is now nearly double at 8.2 million. Those people, who cannot possibly afford to buy, will be in the greatest difficulties if private landlords take over unless housing benefit is considerably increased.

As my noble friend Lord Dean said, there is nothing in the Bill for those people who are at the bottom of the pile—the homeless. Nothing is offered in this Bill for those people. Their numbers could possibly increase if the new mandatory grounds for possession under assured tenancies are implemented. I reiterate what the noble Earl, Lord Russell, said. If there is to be the great sell-off which the Government intend and which will no doubt come about, how on earth will the local authorities comply with their statutory duty to the homeless with a greatly diminished stock?

We have heard this afternoon about local authorities which keep houses empty for long periods. We have heard also that the Government themselves do not have a clean sheet. University College in London has just issued a report which shows quite clearly that housing associations are no better. In fact the figures show that in the way that they apply their re-letting policy they are worse. One in 10 properties owned by leading housing associations are empty for a longer period of time than arc local authority properties. The report shows quite plainly that the record of the associations compares unfavourably with that of local authorities.

In the Second Reading debate in the other House, the Secretary of State mentioned the "physical decay and decline" to be found in large council housing estates. Describing such places he said that they are: often monotonous, soulless places in which few would choose to live—if they had a choice …We cannot leave them to suffer. This is the problem we now have to tackle" .—[Official Report, Commons, 30/11/87; col. 620–621] As my noble friend Lord Dean said, the people of Peterborough opted to go to Peterborough council when they were given the choice. He also gave us examples of that happening in Manchester, and, as the Minister knows, quite recently the residents of Telford new town voted almost unanimously to transfer to the Wrekin District Council. In Basildon 98 per cent. of tenants want to be with the local authority. A Gallup poll conducted for the National Consumer Council which is a very reliable organisation, found very little evidence of council tenants wanting to transfer to private landlords —in fact only around 1 per cent. There is no foundation for the suppositions of the Secretary of State and they are not based on any research to prove that the people who live in council housing on vast estates are suffering or clamouring to get away from them.

Yesterday afternoon, in the course of preparing my notes for this debate, I wanted to find out the meaning of "social landlords". I knew the meaning of "social" but thought that I ought to find the definition of the word in the dictionary so as to be quite sure that I knew all its meanings. The dictionary I used was a Collins New English Dictionary and under "social" it gave the meanings "companionable, affable, gay"—I did not think that that was an adjective that tenants would want to apply to their landlords—and "living in communities, for examples as ants". Of course people crush ants but I am sure that the Government do not want to crush people who live in council houses. I finally came to the definition which I thought the Government wanted, namely, "affecting the public interest", at which point I said to myself, "That's it! Now I can understand".

However, I then looked up the word "landlordism" and immediately hit a difficulty because the definition read: the principle of the supremacy of landed interests". I was not sure how that tied up with "affecting the public interest". There are some noble Lords in this House who are much more intellectual than I am and who will be able to argue that point.

If one looks at Tenants' Choice, which is the lovely document that the Government have made available, one sees at the top of page 2 that the idea of tenants' choice is to give tenants the opportunity of taking over rented housing from the local authority so that there is diversification and competition. The first paragraph on that page finishes with words that I want to emphasise: and the influence of the best housing managing practices of other landlords". I do not know who are those "other landlords". They must be somewhere because we are to look to their influence. The Government must know who they are. When the Minister replies perhaps he can tell us who they are because not only I but all tenants will want to know. I do not think he should he shy about giving us names. I am not a Londoner but I know that Haringey, Camden and Brent are very important areas of London and this Government never fail to remind us of their names. I am sure that Haringey, Brent and Camden will be interested to have details of those landlords.

Will the new landlords be housing associations? At the present time there are 4,500 housing associations, of which only some 150 have a stock of more than 800 properties. Arc they the people who will take over local authority housing? Or can we take it for granted that it will be the Housing Corporation? And let us not forget that the Housing Corporation is purely and simply a government quango; it was another way of giving money for housing provision so that it did not go to local authorities. Will that quango be charged with promoting private landlords and capital and eventually shall we see the transformation of the housing association movement into just another private sector operator?

Another point that I should like to raise is whether the social landlords have to monitor their waiting lists and report on housing need to the local authorities. Have I understood correctly—and this is a rather important point—that the landlords of those tenants who transfer to registered housing associations will continue to be monitored by the Housing Corporation but that monitoring of those who have moved over into the new "social landlord" category will not continue'?

The fears of a big Housing Corporation go back about 35 years when the plea for a giant housing corporation was squashed by the then Minister of Health, Aneurin Bevan. No doubt those plans are still on the books in the DoE after 35 years and they have been brought out by this Government to be put into operation.

As for Tenants' Choice, I heartily condemn the voting procedure of "pick a landlord". I think that it is despicable and not democratic. As for treating abstentions as "yes" votes, no government would ever be elected if they had to rely on abstentions.

Lord Graham of Edmonton

This one would not, my Lords!

Baroness Fisher of Rednal

And of course, my Lords, Age Concern are very concerned about abstentions and say: We feel that many elderly tenants will abstain through uncertainty about the implications, believing that this signifies their preference to retain the council as their landlord". There are alternatives in the Bill which will inevitably lead to the loss of secure tenant status. There are succession rights and there are HATs, which are intended to introduce diversity of tenure after refurbishment, but it is imperative that the tenants should have the option to return to those properties. It is on the three issues of democratic voting, succession rights and the tenants' paramount needs on HATs, that I make a very special appeal to Members of this House. For a considerable period of time during the education Bill we dealt with what we called Christian values and the ethics of Christianity. Eventually on the final vote we decided on what I consider was the right proposal: that religion is important and that we would safeguard the rights within our schools. Although I did not enter into the debates, I like to think that I live as a Christian, having Christian values. But I hope that those noble Lords who felt so strongly about those issues in the education Bill will look upon the three issues that I have mentioned and use them as Christian moral issues. Perhaps they will consider them as socially fair and morally just.

I am drawing to a close if noble Lords are becoming anxious—

Lord Graham of Edmonton

No, no.

Baroness Fisher of Rednal

I thank my noble friend. My Lords, perhaps I may also echo the point to which the noble Lord, Lord Goodman, referred when talking about anxiety, concern and worry. I am not talking here of something I do not know. Two weeks ago the councillors of a local authority outside Birmingham had arranged meetings on two of their small housing estates to explain the Housing Bill to them. Local authorities cannot advertise any more. Therefore the councillors are having to do the job on the floor of meetings. I was invited to sit and listen. The worry. concern and anxiety were awful. There were approximately 500 tenants at the one meeting, and over 750 at the other. The concern was manifest among all the people there. They asked. "What does an assured tenancy mean? What does a short hold tenancy mean'?" These people are not politicians. They are not people who normally go to meetings. They went to a meeting because it concerned their homes. They were worried that something might happen to them and that they would not be able to return to them. They asked such questions as, "What does it mean that we are protected under the Rent Act?" One lady asked, "Will you send us a card to tell us where the voting place is, and where we have to use our votes?" These people are anxious because they do not know what will happen. They do not know when they will vote. They are even frightened of being ill in hospital, and of losing their vote.

There is anxiety creeping in among tenants on the applications on rights to buy. I refer to figures for Birmingham. If one looks at applications on rights to buy, between August and November of last year on average about 350 applications a month were coming forward. Since February of this year, when more details began to he made known about the Housing Bill. there has been a four-fold increase in applications. In January, the figure was 305, in February 416, in March 1,029, in April 1,015, in May 1,046; and in June 1,176 applications to buy were made. Perhaps it means that all the people in Birmingham have suddenly become rich and have decided that now they will buy; or it could easily be a fear that they will lose their properties.

In conclusion, I agree with what many of my noble friends have said. The only hope for a low-income family is social rented housing. That is what the tenants want. That is what they are voting on. However, will the Government allow sufficient public investment to enable local authorities and housing associations to get on with the job, or do they intend that council housing should increasingly become welfare housing carrying the stigma of failure? If that is the aim of this Bill—and that is what I read into this Bill—it is a very sad day, and divisions that are already apparent in the country will divide still further the haves and the have-nots.

5.45 p.m.

Lord Henniker

My Lords, I feel very inadequate to follow the noble Baroness, Lady Fisher. I am sure that we all sympathise with the many problems that she sees ahead. However. I wish to speak in particular about a matter in which I am involved: that is, rural housing. I should first declare an interest. I am chairman of the rural housing association in my county of Suffolk. It is one of 11 set up by the National Agricultural Rural Trust and the Rural Development Commission.

In speaking of rural housing, it does not mean that I am not mindful of the overwhelming problems of the inner city. I have spent the last 15 years of my life involved in charitable work basically in the inner city. I share fully all the worries of the right reverend Prelate the Bishop of Southwark and many others. However, perhaps it is not always considered that the rural areas are part of the same problem. People regard them as comfortable places where these problems do not arise.

I have been watching the situation carefully for the last few years. The problems are increasing just as quickly in the rural areas as they are in the inner city. They are not only great, but urgent. As the noble Baroness, Lady Young, said, in this respect the world is moving very fast. Until recently Suffolk was remote. In the last two years there has been a revolution. The railways were electrified. Car parks at the stations were improved. People poured in and house prices have risen on average higher than anywhere else except in London. Prices have increased two-fold. The result is that people cannot buy houses and for the first time in a highly rural county we are experiencing the problems of homelessness.

We have done some local research in my area. We have found quite a large number of young people who have jobs and want to stay but have no housing. It is becoming a very urgent and aggravated problem. I was always in favour of the sale of council houses. It always seemed to me, as somebody has said, that they were a petrified pool which needed stirring up. However, if we sell those houses we must provide rented housing to take their place. The rural housing associations are in the job of trying to provide rented housing. We have in our sight in small villages, schemes of six to eight houses for starter houses and for old people. The need is absolutely proven. Without raising undue hopes, we have explored a large number of villages and we find almost universally that this is what they want to do.

Being countrymen we are careful about the environment. We do not believe that increasing the housing at that rate can have any adverse effect. In a county where there are perhaps 500 villages—we think of villages comprising up to 800 people—it could produce a lot of houses. The noble Lord, Lord Goodman, referred to certain problems of bureaucracy. In three years we have only just started to complete our first scheme.

I welcome the Bill. I believe that it offers an opportunity, if we take it, of producing houses for rent. We in the country also have empty houses which cannot be used. It is a problem that needs tackling, particularly in looking after the homeless. We have an opportunity if we can make it work.

I am sure that all kinds of problems of which I am not aware will come out during the Committee stage, but I hope that we shall overcome them. I have been even more encouraged from a rural point of view by a statement made by the Secretary of State on 5th July about rural housing and the discussion document issued on village housing. That all seemed to indicate to me that there had been much mutual listening to the various people who have been involved in this problem. It seemed to me that there was little in the statement made by the Secretary of State with which I could disagree and which did not form a valuable basis for co-operation.

My only fear from what the Government have said is that they may underestimate the size and urgency of the problem. They suggest 300 units for the whole country in the first year. That is more than we have at the moment, but our speed is snail-like. I believe that 300 units will prove to be too small.

Looking forward, the numbers involved do not seem to me to be large enough. I may be wrong. It is possible that as we get more houses on the ground we, the housing associations, may be able to paddle our own canoe to find other ways of doing better.

There are some other matters in the Bill that rather bother me. I hope that we shall explore them in Committee. I am worried about the reduced role of local authorities. One can only speak from one's own experience. My experience has been that the local authority with which I deal is imaginative and sensitive both to the need for development and the needs of the environment. Like the noble Lord, Lord Goodman, I am worried about the future of the rent officer. His role has been enormously valuable. I speak as a landlord and I have a good many tenants. The rent officer has been an enormously pacifying, peacemaking figure and has prevented a great deal of controversy and conflict which might otherwise have come about.

Finally (and others have mentioned this) from the explorations I have made—though it is enormously in our interests to make it work—I am a little worried about the possibility of co-operating with the private sector in raising money. We have been successful in our explorations in finding a number of landlords who were not only generous but far-sighted enough to he able to let us have land reasonably cheap. But even if one takes that into account, it seems difficult to imagine that one can achieve co-operation from private sector funds which will produce rented accommodation affordable by people living in the local area. Although I expect that one day the trickle down will work (I believe that our area is at the moment at the top of the national league for economic development) it has not yet done so, and wages still appear to be very closely tied to the wage of the agricultural worker. That is a problem that will require a great deal of looking at.

I am sorry that I have concentrated on this problem, but I feel that from my point of view housing is the biggest social problem in our area. I believe also that, basically, it is perhaps the biggest social problem in the country as a whole.

5.55 p.m.

Lord Seebohm

My Lords, you probably all remember the story of the Irishman who came up before the beak and said "M'lud, before I speak, may I say something?". I should like to say that, having listened to the noble Baroness, Lady Fisher, I was very impressed and minded of what she said when speaking about homes: we are not talking about bricks and mortar or houses even. I also remember that sonic time ago we used to speak about "accommodation units". That so infuriated Winston Churchill in another place that he burst into song and said: Accommodation unit, sweet accommodation unit: There is no place like accommodation unit". Now, if I may, I shall make my speech. Over 100 years ago the Royal Commission on Housing for the Working Classes started its report with the following statement which, as it is very short. I shall repeat. It read: At the very outset of the inquiry, your Majesty's Commissioners had testimony to prove that though there was a great improvement … in the condition of the houses of the poor, yet the evils were still a public scandal and were becoming in certain localities more serious than they were before". That statement was reprinted on the front of the Duke of Edinburgh's report. at least on the summary of it, and the insinuation was that the situation is now just as it was in 1885.

Great improvements have undoubtedly taken place for the people of Great Britain. particularly as regards welfare generally, but for some reason we have never succeeded in finding a satisfactory solution to the housing problem. There is a strong moral element in this and it has never been generally accepted that for many people, perhaps 20 per cent. of the population, the provision of housing is a social problem, a social service, and not an economic one. Without a warm, adequate and watertight dwelling many families are condemned to a miserable existence which is quite unacceptable in an affluent and, I trust, caring society.

Both political parties when in office have made genuine attempts to improve matters, but frequently legislation has done more harm than good. Legislation intended to help the tenant has destroyed the private landlord. In July 1985, precisely three years ago, the Duke of Edinburgh's report was published and in January the next year I had the honour to introduce a full dress debate in the House on this report. The report made a number of important recommendations and it is worth considering how far the Bill implements the very carefully thought out recommendations in that report. The first concern of the report was devoted to rented housing. The committee pointed out that none of the pension funds, the building societies, the insurance companies and so forth has used its funds for the provision of rented housing. In western Europe and the United States of America rented accommodation is provided mainly by the private sector, but uniquely in this country it is almost exclusively the province of the state.

The committee also recognised that the past principle of subsidising houses had not been successful and that subsidies should be on people and not on bricks and mortar. I shall perhaps cross swords with the right reverend Prelate on that, but experience over the years—and this is incorporated in the report for which I was responsible over 20 years ago—has shown that subsidising bricks and mortar rather than people had not been a success. The recommendation therefore was for an allowance that should be available to everyone in need, depending on his or her resources and requirements. It would help elderly owner-occupiers and those on low incomes buying their own homes. It would help tenants of local authorities or other landlords. Then a number of reasons are given as to why this would secure fairness between tenants, owners and landlords. However, what was realised was the great cost of all this, and the committee made it clear that it should be financed at least in part by the gradual withdrawal of mortgage interest relief.

I remember that in that debate 2½ years ago the Minister on the Front Bench—I believe it was the noble Lord, Lord Elton—said that he wanted to make it absolutely clear that the Government were committed to keeping mortgage interest relief. That is something which I know will be debated for many years yet, but to my mind it is one of the matters that has prevented us from giving sufficient housing benefit to people in need.

The intention of the Bill is clear and it is praiseworthy. It is to increase the number of houses in the private-rented sector. In order to encourage that, many of the restrictions on rent levels will disappear, there being virtually none on new construction or new lettings. However, clearly the Government are not prepared to increase substantially public expenditure to meet the need for rented accommodation. In my view, past history of restrictions on rents and landlord powers will make individuals and financial institutions very cautious before investing in rented accommodation, even after the Bill is enacted, without considerably increased incentives. From the tenants' point of view, if rents are to have any relation to the cost of a building, there is likely to be little difference between the rent and the cost of buying a house with a mortgage.

Admittedly, since the publication of the Duke of Edinburgh's report housing benefit has been increased. In putting a ceiling on mortgage interest relief there was a move towards improving the situation and bringing a little closer the status between tenant and landlord. However, the Bill does not go nearly as far as the report recommends in bringing the status of the two types of occupation closer together.

It appears that the Government are putting a great deal of hope in housing associations expanding to provide more rented accommodation. However, a large-scale increase in that field seems to be overoptimistic because at present it consists of approximately only 10 per cent. of local authorities' stock. As the noble Earl, Lord Caithness, said, it is approximately only 3 per cent. of the total accommodation in the country. If that must be doubled it will take a long time and I do not know whether many of the housing associations are equipped managerially to deal with that. The advantage of relying on that method of expansion appears to ignore the urgency of the matter, instead of encouraging local authority expansion at the same time. The inevitable result is that homelessness will remain with us for a long time and probably at much the same level.

I do not have time to deal with the recommendations of the inquiry. It clearly recommends a strengthening of the comprehensive strategic role of local authorities which have the machinery and expertise to provide for many of the needs of the poor, elderly and disabled, provided that they are given the tools with which to do so. I am a strong supporter of local government and decentralisation of responsibilities but, clearly, that is not the Government's view at the present time.

I should like to conclude by dealing with the question of the homeless, particularly the young. I believe that there is a solution to the problem. The noble Baroness, Lady Young, said that those who criticised the Bill were good at doing so but not at providing a solution. I believe that there is no reason why we should not have a housing loan in this country. I believe that it would be well received and that there is no harm in having a housing loan which would provide permanent assets as opposed to merely budget deficits.

I believe that, if one wishes the private sector to become more involved, there is no reason why financial institutions should not provide lease-backs for local authorities which are building hostels for the young. Student-type hostels could be built at a comparatively cheap rate and they would be only half the cost of the present payment for bed-and breakfast accommodation. I believe that a double attack on the problem would be worth looking at.

The need to provide accommodation for the itinerant young, the unemployed youth, must be dealt with with the utmost urgency. Although the Bill will provide some help I am afraid that it will not do so in the short-term. The Bill provides a medium to long-term solution, but it will not deal with the crisis which neither it nor the noble Earl appear to recognise.

6.5 p.m.

Lord Swinfen

My Lords, I welcome the general idea behind the Bill; it is to increase the amount of accommodation available for rent. With only one type of landlord throughout the nation at present the matter can only he improved. I should like to raise three points dealing mainly with disabled people. I understand that the new assured tenancies will not he liable to an assessment of a fair rent. I welcome the introduction of private sector money to help housing associations rather than only the housing corporations, but I believe that that may well cause rents to rise and to rise steeply.

Can my noble friend assure the House—not only me because I am not the only person interested—that housing benefit will increase sufficiently to cover the additional higher rents? In addition. and rather more seriously, what provision will be made for people on low incomes but who are not entitled to housing benefit, as often happens with physically disabled people who go out to work? Will the voluntary housing associations allow them to run up large debts? Housing associations cannot afford to do so, particularly the charitable associations. What provision will be made for them to cover the additional rent?

I turn from the question of rented accommodation and those who wish to stay in such accommodation to the question of the transferable discount for tenants of charitable housing associations. I believe that in Committee we must look seriously at the limit of the uplift. As I read the Bill, the amount of transferable discount obtainable by a tenant who wishes to buy another property is only the increase over eight years in the cost of building the "home". I would rather use the word used by the noble Lord. Lord Seebohm. It is much more important than a "housing unit" because we are talking about people's homes. If people wish to buy their own homes and go independent—and I understand that that is government policy—it does not destroy any of the housing stock. It leaves a flat or house available for someone of greater need and I believe that wherever possible we should fulfil that need.

During our discussions on the Housing Act 1985 I fought strongly against the right of tenants of accommodation specially adapted and designed for disabled people to have the right to buy it. I have changed my mind as regards local authority housing, and, to some extent, housing associations, except in special circumstances. A great deal of the specially adapted accommodation has only wider spaces for a wheelchair to move round, wider doors and a ramp. Not all such accommodation has special equipment, specially designed kitchens and special bathrooms with hoists, because not every disabled person needs that. I also understand that a large number of housing associations and, I believe, most housing authorities are now building their new houses with wider corridors, wider doors and spaces so that where no ramp is needed to enter they would not need special adaptation for a large number of disabled people. I can see nothing in the Bill to improve the right to buy for disabled people and together with noble friends I shall come forward in Committee with an amendment to that end.

In particular, we must remember that very often where a building is specially designed for a disabled person and that disabled person dies, the family continues to live in the home without needing those special adaptations. That home is then lost as a special home to the disabled community.

Lord Dean of Beswick

My Lords, I am grateful to the noble Lord for giving way. His understanding of the present situation in that he believes that houses adapted for special need are being easily sold is not in accordance with the facts. If one reads Hansard one can see that only a short while ago Members from this side of the Chamber, and maybe the other side, challenged the Government's interpretation of the very amendments which the noble Lord supported and said that the Government were avoiding the wishes of the House. The percentage of those houses being sold, as given by the noble Lord, Lord Skelmersdale, was very low indeed. Therefore, that does not accord with what the noble Lord is saying unless there has been a tremendous acceleration over the past few months.

Lord Swinfen

My Lords, I am afraid that the noble Lord has totally misunderstood me. I have been saying that it is virtually impossible for a disabled person to buy his own house because he does not have the right to buy. I have been saying that disabled people should have the right to buy; that is my view. I have changed my mind. As I said before, when we were discussing the Housing Act 1985 I fought against the right to buy specially adapted accommodation for disabled people. I have now said that I am in favour of it with one exception; that is, where there are special blocks of flats for disabled people and permanent help available in the form of a warden or someone else.

I also told the House that much modern accommodation is being built with wider doors, corridors and halls where there is room for a wheelchair to move around, but it is not being designated as special accommodation. If one can enter the building without using a ramp—and if it is on the same level as the ground outside a ramp is not needed—such accommodation would be available because it was not designated as especially for disabled people.

I hope that the House is now clear as to what I am saying. I shall now leave the matter because time goes on and we all wish to get away early for a change.

6.14 p.m.

Lord Stallard

My Lords, in a few weeks' time Parliament will rise for the long Summer Recess after what has been, for me at any rate, the most depressing Session of any that I can recall. Any last vestiges of the "consensus society" which has existed since the end of the War, supported by all governments, have been destroyed by an elected dictatorship in the other place supported by a huge, unaccountable majority in your Lordships' House— not very well represented this afternoon, I must confess.

On the Government Benches there is a complacent acceptance, and almost a defence, of the existence of a huge pool of unemployed men, women and youngsters in order to maintain pressure on wages and conditions and to weaken trade union organisations. The constant chipping away at social security benefits in ill-thought-out legislation has destroyed the caring atmosphere which has been nurtured carefully for decades. There is now an atmosphere of despair and hopelessness in many of our inner city areas and reductions in board and lodging benefits have resulted in many single people becoming homeless, becoming involved in drug and alcohol abuse and in crime.

Attacks on local governments and their finances with the spin-off effect that that has had on voluntary organisations has exacerbated the situation. Of course, the poll tax, which we have only recently been discussing, in my view will make all those matters worse in the inner city areas. The so-called reform of education, with the abolition of ILEA, will add to the fears and worries of thousands of decent, ordinary citizens.

If the Session had ended there, the situation would have been serious enough. If the Home Secretary did not say what the Sunday Telegraph says he said about the possibility of trouble in some inner city areas, he would probably recognise the ingredients for trouble resulting from the implementation of those policies. The gap between the haves and have-nots has never been wider and is becoming wider with every new attack which the Government mount on working people's conditions. Without doubt, the tension in many areas is increasing.

The Session did not stop there. We are about to discuss another measure, the Housing Bill, which has already been recognised as yet another savage attack on virtually the same group of people who are still worried sick and reeling from previous attacks and who are confused about the effects of all the measures to which I have referred. As a consequence of this legislation, the experiences mentioned by the noble Baroness, Lady Fisher, will be felt in towns and rural areas up and down the whole country.

Like my noble friend Lord Dean, I also resented the inference at the beginning of the Minister's remarks about local authorities: that they had fallen down in some way in doing their job. Of course, I recognise, as much if not more than most, that they have not been able to do all that they would have liked to have done for many reasons. However, their contribution to the housing stock of the nation has been enormous and has been internationally recognised as such. Many clever dedicated men and women have devoted their working lives to striving to improve still further the quality as well as the quantity of public sector housing.

In aid of that I quote the ADC, which is not noted for its support for the kind of councils which I have represented. It said: The Association considers that not enough credit is given to housing authorities for the improvements in housing conditions noted in … the White Paper—an increase in the number of households decently housed, ridding the country of slums and helping to ensure that nearly all housing has the basic amenities. The record of housing authorities is generally good—they should not be blamed for any general social problems that may be manifest in urban centres. These are conditions which are found in many countries". That is a fairly mild criticism, but it is strong coming from the ADC.

I recognise, as do most people, that it has long been a major plank of this Government's overall strategy to diminish the powers of local authorities. To this end they have been discussing over a long period how the housing responsibilities of local authorities could be removed or drastically reduced. This Housing Bill is the result of those deliberations. In a speech in Bristol on 28th August last year the Housing Minister said: Do we really want the state to build new saleable houses which it will then sell at a discount? For what? As a way of providing subsidised houses for first-time buyers? That would be a very elaborate way of doing that, and very random in whom it helped". He went on to say: The next great push after the right to buy should be to get rid of the state as a big landlord and bring housing back to the community. The councils can then concentrate on their front line housing welfare role: buying the housing services they need, or subsidising those who need help, and undertaking the wide range of regulatory enforcement, planning and other tasks which are the essence of the public sector. I think that those sentiments have been encapsulated in this Bill.

The Bill contains 127 clauses and 15 schedules. It is thus very difficult, if not impossible, to comment on or quote at any length or in any detail the proposals contained therein. However, I should like to elaborate on some of the issues raised by the Minister in his opening remarks.

He commented on the shrinkage of the private rented sector. This is a favourite comment of all Government spokesmen. He gave the impression that the Bill would halt that decline. Nobody who understands housing or who has worked in the field of housing believes that. The private rented sector has been in decline since 1918, and there is a wealth of evidence to prove that fact. In 1918 private rented housing constituted 90 per cent. of the housing stock of this country. Today it represents 10 per cent.

There have been numerous attempts, by various Conservative governments in particular, to introduce legislation to reverse that trend. They have all failed, and so will this one. It did not work in 1957, as my noble friend Lord Dean said, and it will not work today. The reason for this failure is well put in a document I have received from Shelter. It says that the simple reason for this is that the decline in the private rented sector is due to changes in the financial infrastructure and not due to registered rents and security of tenure discouraging landlords from letting. The rent required to produce a return comparable with other investments is so high as to be far beyond the means of most potential tenants, and we all recognise that, particularly in the inner cities. In addition, the rent a landlord will require for a decent return will almost always be higher than what the occupier would pay as a mortgage for the same accommodation. Why pay a high rent on an insecure tenancy when you could buy the same property with complete security and pay less for it? Those are the facts. That is the situation in the inner cities, and the Bill does nothing to improve that situation.

In his opening remarks the Minister also mentioned the security of tenure of existing tenants. Most of the documents that we have received have mentioned the problems of security of tenure. One such problem was outlined again by the noble Baroness, Lady Ewart-Biggs, who spoke earlier about the succession to a tenancy. Tenants will lose an important right which they now have, and there are other conditions attached to that. Under the proposed change of landlord system, a secure tenancy becomes an assured tenancy or an assured shorthold tenancy. It is obvious that landlords, faced with this choice and with nothing to stop them, will opt as soon and as quickly as possible for assured shorthold tenancies which will give them far more control over their tenants and will make it much easier to get rid of tenants who they do not think can afford the kind of rents they would want to charge.

Under this change of landlord system, a rent fixed by a democratically elected body at the moment at a non-profit level becomes a market rent geared to provide the landlord with a return on investment. That is something which frightens the life out of everybody in inner London, market rents being what they are.

The right to buy has been mentioned. We do not know what the future of the right to buy scheme will be under the Bill; it is not mentioned; it is certainly not clear. Tenants will also lose their right to be consulted on any matters of any significance on their tenancy. They will no longer be able to participate in the tenants' exchange scheme, which has done a good job in many areas. There will be no obligation on these approved landlords to participate in the national mobility scheme. There is no mention of that in the Bill. In short, tenants will lose many of their rights established under the 1980 tenants' charter which was introduced by the present Government. This Bill will destroy the charter which this Government introduced in 1980. That is a demonstration of how far they have gone.

The Minister also mentioned the housing benefit situation. There have been many debates in this Chamber on housing benefits in other pieces of legislation. The Minister gave the impression that the proposals in this Bill would meet the costs of tenants in need. Such tenants' costs would be met by housing benefit and therefore they would not be adversely affected by market rents. That is not true. The Bill itself makes that impossible. Rent officers will have to vet the rents of applicants for housing benefit. If the local authority pays housing benefit on the actual rent charged, and not on a lower rent officer figure, its subsidy will be cut, but the rent officer's rent will in no way be binding on the landlord.

The Bill also gives the Secretary of State the power to introduce a rent stop, as is clearly defined in the Bill. A local authority would be banned from paying housing benefit above a centrally determined level. The rent assessment committee would be able to register rents, but many—perhaps most—private tenants will not be allowed to apply for registration. Even where they do apply, the rent level set will not necessarily be the maximum chargeable, and there is therefore no guarantee that the housing benefit will meet the market rent situation. That again stretches the proposals in the Bill beyond belief.

Finally, the Minister spoke about the question of homelessness, which is outlined in Clause 70 of the Bill. It is simply mentioned in the Bill, and I read it to see whether I had missed something. Clause 70 of the Bill clearly states: In paragraph (a) of section 72 of the Housing Act 1985 (which provides that, on a request by a local housing authority for assistance in the discharge of certain statutory functions relating to homelessness, or threatened homelessness, a body of a description specified in the paragraph shall co-operate in rendering such assistance as is reasonable in the circumstances) … I do not know how that will help. The meaning of "reasonable in the circumstances" will never be agreed anywhere. We all know that there is no chance that this Bill will increase the stock by the amounts necessary to cater for, or cope with, the homelessness situation.

Perhaps I may remind the Minister of his own department's estimate in 1985 of houses in multiple occupation contained in a DoE report entitled, The 1985 Physical & Social Surrey of HMOs in England & Wales. That report said that at least 2½ million people live in over 350,000 houses in multiple occupation. They include people from all groups: a third of them are women; 12 per cent. are retirement pensioners; 81 per cent. of bedsit tenants are single people. There are over 10,000 homeless families in bed and breakfast hotels. People from ethnic minorities are disproportionately represented in houses in multiple occupation in many inner city areas.

The same Government report said: There are some exceedingly squalid conditions in HMOs, and their existence is an indictment of national and local government housing policy over many years. Having regard to those statistics, how could this Bill even begin to cope with the situation of homelessness which exists in inner city areas and up and down the country at the moment?

Finally, the last point that I noted from his speech and which I welcomed to an extent, are the proposals to strengthen the Protection from Eviction Act 1977. However, having looked at it again, and at the Bill, and at some of my earlier notes, I do not believe that the proposals go far enough to deal with the situation in the real world, the world that most of us live in and have experienced. I hope to be able to return to that and other matters during the further proceedings on the Bill.

6.30 p.m.

Lord Monson

My Lords, although I agree with those who have criticised the voting procedure set out in Part IV of the Bill, at this time of the evening I shall concentrate entirely upon one or two aspects of Part I.

First, I declare an interest as a landlord, albeit in a modest way. Having said that, I have more than once also been a residential tenant in my time. I am also both a business landlord and, in another location, a business tenant. Therefore, I can see both sides of the landlord-tenant question. I am well aware of the latent tensions—happily they normaly are latent—which are bound to exist to some degree between landlord and tenant. It has to be said that renting or letting out property for weeks, months or years cannot equate to renting or hiring out a car for a weekend or a fortnight.

One appreciates the Government's efforts in this Bill to be fair to both sides, but I cannot help wondering whether they have the balance quite right. I am not connected in any way with the Small Landlord's Association, but I read its literature from time to time. Over the past 10 to 15 years the association has never stopped emphasising that small landlords are not, by and large, interested in squeezing the maximum amount of rent from their properties; they are interested in having a careful and quiet tenant. If the tenant turns out unexpectedly to be a bad egg, they want to be able to replace him with the minimum degree of time, trouble and expense. In that respect their priorities are totally different from those of the large, impersonal landlords who are concerned with maximising their rents and who are not too worried about the odd bad tenant, the cost of dealing with whom can be spread over a substantial number of properties. In addition, the large landlord has access to first-class managerial and legal advice.

Small landlords—by whom I mean those having one or two houses or three or four flats to let—have perhaps inherited their properties, which therefore have sentimental associations. Often they are keeping the property for their children when they grow up and get married. Another significant point is that in many cases the house or flat concerned is adjacent to their own. Therefore, the small landlord has both sentimental and practical reasons for ensuring that, above all, he has a careful and considerate tenant, and is frequently prepared to forgo high rents in order to achieve that.

The corollary of being prepared to offer a low rent to a good tenant is the desire for an assurance that it will not be excessively difficult to get rid of a bad tenant. Unfortunately the Bill does not seem to help much in that respect. The loss of 13 weeks' rent before the landlord can be absolutely certain of repossession, under the provisions of Schedule 2, is unlikely to worry a large landlord whose gross income will be large enough easily to absorb such losses; but it might he crippling for a small landlord with only one house to let and who does not have the time or expertise to pursue an elusive former tenant through the courts.

Again, the anti-harassment clauses in Chapter 4 of Part I are certainly reasonable, even desirable, where a large landlord is concerned given the residual Rachmanism which still crops up from time to time. The noble Lord, Lord Ross, cited a notorious individual with an unpronounceable Dutch name about whom we have read so much recently. However, for the small landlord the implied assumption that he is a potential wide boy, or even a potential thug, can only discourage him from putting a vacant property on the market.

Let us suppose that, driven to distraction by a tenant in the next door house or flat who persists, despite frequent and repeated warnings, in playing heavily amplified music at maximum volume at three o'clock in the morning, the landlord in desperation cuts off the tenant's electricity in the small hours. Will he not find himself liable to severe penalties under the provisions of Chapter 4 for this technically illegal but all too human reaction?

I am sure that the Government's basic intentions are good. It is no accident that, as the noble Baroness, Lady Young, pointed out, most of the most prosperous countries in Europe—notably Switzerland and West Germany—have a thriving rented sector. However, the Government seem to be relying almost entirely on large landlords, aided and abetted by the recent tax concessions made within the business expansion scheme, to do the trick. If the Government's researches have convinced them that they can dispense entirely with small landlords, all well and good, but if that is not the case and assuming that they consider small landlords still have a useful role to play, I suggest that the only encouragement for small landlords is the introduction of a two-tier system. By that I mean a choice for the tenant to pay the full market rent with maximum security of tenure or a distinctly lower rent—say, two-thirds of the market rent—with a much more restricted security of tenure.

The first option would appeal most to elderly people and to young couples both of whom are earning and possibly thinking of starting a family or who already have a family. The second option would appeal to young, mobile single people—school teachers, nurses, construction workers, possibly on a short-term or temporary assignment—who would be quite happy to forgo maximum security of tenure in return for a lower rent. I urge the Government to consider the introduction of such a system when we reach the next stage of the Bill. After all, it conforms to the Thatcherite principle of maximising freedom of choice for the individual and for families.

Finally, I switch to a point made so tellingly by the noble Lord, Lord Jay—the distortions in the housing market caused by taxation. The gross disparity in the treatment by government of tenants and owners respectively cannot be defended. At the moment, every householder with a mortgage of £30,000 or more—that includes most householders—receives a substantial subsidy from his or her fellow taxpayers of approximately £16 per week. I say "subsidy" because the tax allowance is not available to any other private borrower, as distinct from business borrowers.

If the householder earns more than £22,000 to £24,000 a year depending on marital status, then the subsidy is increased to £25.50 per week at current interest rates; all this at a time when housing benefits for tenants in rented housing are being squeezed. If the mortgage relief subsidy is continued (and many of the most respected economists in this country think that it should not continue) then simple justice suggests that it should be extended to tenants of all rented accommodation, both public and private.

6.38 p.m.

Lord Coleraine

My Lords, I welcome Part I of the Bill as a belated attempt by the Government to breathe some life into the corpse of the private rented housing sector. It is desirable that there should be a right to rent, both for landlords and tenants. That this Bill should be before us in the 10th year of a Conservative Administration makes me wonder whether one day, perhaps by the end of the century, we shall be able to look back and say of the Bill, as once was said of the legend of St. Denys, that it is the first step which is the difficult one.

The history of the Conservative Administration and the speed with which their legislative impetus develops once they have seen the way, leads me to hope for the best. However, I shall offer a few thoughts later as to where the way ahead should lead us. On the other hand, the history of the rent Acts and the Government's failure to act earlier makes me only cautiously optimistic. Two dead hands have hung over our thinking on the right to rent since the ill-fated Rent Act 1957 introduced creeping decontrol which, had it continued and had new lettings free of control been permitted, might by now have brought about a house renting market with which we would have been satisfied.

The first dead hand is that of socialist dogma fuelled by the intervention into the housing market of Mr. Rachman and those like him. As the force of the socialist argument has receded and, as it seems to me, a closet consensus has arisen between the parties on many aspects of housing and the rent Acts, so the Treasury has more recently stepped in to impede progress, fearful that rent deregulation will blow housing benefits sky high. Now we seem to be making some progress here.

The noble Baroness Lady Ewart-Biggs and the noble Lord, Lord Monson, mentioned Mr. Rachman and doubtless his dry bones will be rattled before your Lordships on many occasions before we are finished with the Bill. In the context of this Bill, Rachmanism is a stale red herring. The provisions of the 1957 Act, which directly encouraged the abuse and harassment of tenants, are not in the Bill. It was those provisions that permitted immediate de-control subject to some transitional protection of dwellings with high rateable values. The Bill preserves and protects the rights of existing rent Act tenants. When the noble Lord, Lord Dean of Beswick, spoke he said that the effect of the 1957 Act was that when landlords got possession of houses they sold them off. The noble Baroness said that that would also be the effect of the Bill. There is nothing in either the Bill or the 1957 Act, apart from the deregulation of higher rented properties, which accounts for the predisposition of landlords to get rid of their properties when they get them back from their tenants. Landlords now sell off their houses as they did then because of the rent Acts.

What really brought Rachmanism into being was not the 1957 Act, but the relative affluence of the 1950s–1960s and the birth of a new desire for home ownership. There was the growth of the building society movement and the rapid development of the market for flats sold for premiums on long leases. Once it became clear that the rent Acts had killed once and for all most of what they had been enacted to preserve, there was a stampede out of renting both by landlords and tenants. Nothing short of compulsory reletting could have halted this. Immense profits were made by landlords who obtained vacant possession from their rent Act tenants and then sold.

The possibilities for speculators remain today, as we know, but the activities of those who invented the winkling game 25 years ago or more have been whittled away by legislation against harrassment and unlawful eviction. I welcome the important clauses in the Bill which increase the protection of tenants in both these cases. There are those on the Benches opposite who say that even if one were to sweep away all the panoply of rent control and security of tenure under the rent Acts, one would still not resurrect the private rented sector. I am inclined to agree with them. We have existed for far too long with government subsidies and handouts for home ownership. The economic freedom of choice which should exist between buying and renting no longer exists in any real sense.

There is a deplorable lack of fiscal neutrality in this field and I regret that my right honourable friend the Chancellor of the Exchequer seems to have finished his programme of fiscal reforms. There is also a lack of neutrality in the provision of social security benefits. Governments recognise that in the market generally the stimulation of demand is as likely to increase prices as to increase supply yet governments fail to recognise that the massaging of demand in the housing market, where supply patently cannot respond to demand as freely as it can in the manufacturing and service sectors, will even more certainly operate to stimulate prices rather than supply.

There are various factors today that are harming the house renting market. First, I mention mortgage interest relief which has been referred to already. Until about 20 years ago interest relief was available on an entirely different basis from that which applies today. Broadly, if one then received income which had borne income tax by deduction, this was treated as franking the tax on the interest which one paid so that tax did not have to he paid twice. If I remember correctly, one deducted and retained the tax on the interest one paid. That relief was restricted to house purchase interest. Later, the whole basic principle was abandoned entirely. Now, even if one were not entitled to interest under the old system, one is given a straight subsidy provided that the loan is for the purchase or the improvement of one's principal residence. There is also the only or main residence exemption for capital gains tax. Both the noble Lords, Lord Jay and Lord Monson. referred to those points.

There is also favourable treatment for home ownership in various social security provisions such as in applications for legal aid, for mandatory awards for higher education and for housing benefits for the payment of rates. All these have the effect of inflating capital relative to the rental values of housing and, perhaps paradoxically, driving people to buy rather than to rent.

My suspicion is that the Government tend to be blinkered in their attitude towards home ownership as against other forms of property ownership. The evidence of the Bill and of the debates in another place suggest that Government support for the house renting market is somewhat half-hearted. It is seen primarily as a way of securing the maximum utilisation of vacant property as a short-term housing measure. What is needed is a return to house renting as a respected form of tenure. I have in mind one of the principal conclusions of the inquiry into British housing to which the noble Lord, Lord Seebohm, and other noble Lords referred. In Chapter 5 of the report it states: Renting must therefore provide for those who cannot buy. It must also in our view provide opportunities for those who do not want to buy and those who, already owners, would prefer to rent". In supporting the provisions of the Bill as regards the private rented housing market, I suggest that they can only be a beginning and that the way ahead must lie in honouring the words of the report which I have quoted. There must be a move towards fairer treatment of those who want to rent in terms of greater fiscal neutrality and social benefit neutrality.

6.48 p.m.

Lord Pitt of Hampstead

My Lords, in my capacity as Chairman of Shelter, I am particularly concerned with one aspect of this legislation. In my speech I intend to content myself with addressing one simple question. Will the Bill increase or decrease homelessness in this country? I regret to say that this is not an issue that the Government addressed at all in the White Paper that preceded the legislation. However, it is the issue by which the Bill should be judged. The increasing incidence of homelessness is one of our biggest immediate problems. Fine sounding phrases like giving a tenant the choice of landlord ring empty to those who can find no landlord at all.

We have a housing crisis in Britain and not a homelessness crisis. The level of homelessness is an indication of the depth of that crisis. The annual rate of homelessness, according to official statistics, is 112,730 families a year. That figure represents only the people who have been accepted as homeless by local authorities. It does not include many who are homeless but not in a priority group. It excludes the single homeless. Many families would previously have registered on council or housing association waiting lists. However, the local authority new housing programme has been cut by 80 per cent. since 1979–80. Local authorities are building 16,000 houses a year compared with 105,000 a year in the mid-1970s. If we had continued to build as we were building, we would not have the present housing crisis. Housing associations, now mentioned so favourably in ministerial speeches, have had their building programme cut by half since 1979. The housing associations could be forgiven for being somewhat bemused by this contradiction. We have therefore a housing supply problem.

A significant percentage of people simply cannot afford to buy their own home. But this is the system of tenure being energetically pushed by the Government. Over 50 per cent. of households with a male wage-earner in London cannot afford the cheapest one-bedroom flat. In the case of households headed by women, the figure is 85 per cent. What are their choices? How will the Bill affect them?

The Government have now accepted that their original strategy to privatise all rented housing and allow a totally free market cannot work without turning the housing crisis into a housing disaster. The Government are proposing to create two rented housing sectors: private landlords and a new category of social landlords. I turn now to these specific proposals.

The Government believe that private renting has declined because of rent Act controls. That is a dogmatic belief, unsupported by the evidence. The National Housing Forum is composed of all the major bodies involved in housing, including the Association of Metropolitan Authorities, the Association of District Councils, the National Federation of Housing Associations, the Institute of Housing, Shelter and major professional bodies such as the Royal Institute of Chartered Surveyors, the Royal Institute of British Architects and others. I quote from A Future for Rented Housing published by the National Housing Forum: Given the financial and other attractions of owner-occupation, there is a lack of effective demand for renting private accommodation at market rents. This lack of demand, rather than rent control or security of tenure, explains the continuing decline of the private rented sector". The real reason for the decline in private renting is two-fold. The first is straightforward. Private tenants do not wish to be private tenants. They would prefer to be tenants of local authorities or housing associations. If possible they would like to buy their own home. This is not surprising as the private rented sector includes some of the worst housing in this country and contains some particularly unsavoury landlords. I hope to show the noble Lord who has just sat down that Rachmanism is alive and well and flourishing in many areas of our cities and towns. There is plenty of evidence of this fact in the files of Shelter's housing aid centres.

Only last week, Shelter visited a privately-rented maisonette above a shop which was infested with rats. Our director, who visited the premises, is still recovering from the shock of a dog running between her legs with a rat in its mouth. This was in Manchester, the rent was £63 a week. An eight-week old baby living with its mother in those premises was protected by a net over the cot to ensure that it was not attacked in the night. This is happening in Britain in 1988.

The second reason for the decline in private rented accommodation is economic, as has been stated by my noble friend Lord Stallard. It puts paid to the Government's argument that the private rented sector can be revived by reducing rent control. Market rents will not give potential landlords an attractive enough rate of return on their investment. That is the point. The House Builders Federation explains this by saying: A market rent on a terraced property in the South East worth £45,000 would have to be £86 per week to give the developer a six per cent. rate of return. A mortgage on a similar property would be £76 per week". The landlord may accept a lower return because of the growth of the house as a capital asset, but this means that he will sell again sooner or later. It does not provide a secure financial base for renting.

In the free market proposed by the Government the landlord will rent at the highest price obtainable. In a situation of acute shortage much more money may be made from those tenants who are wholly dependent on benefit. It is even more profitable to convert large premises into so-called bed-and-breakfast hotels. Public money through housing benefit and board and lodging payments are going straight into the pockets of private landlords who arc exploiting the shortage. In the brave new world of a completely free market, the situation would get worse.

The Government's answer is to limit the amount of housing benefit that will be paid. That will simply mean that the tenants are faced with the option of topping up the rent from other sources. And the other sources are usually the money that should be spent on food and clothing. For some people, however, the sums will not add up. Many more people will become homeless as a result of defaulting on unaffordable rents adding to those who are homeless today because they cannot meet their mortgages.

Therefore the cycle of poverty, exploitation and homelessness will continue. There will he no restrictions on landlords asking for deposits or key money. As these items are not eligible for loans or grants to people on social funds, the ability of many people to obtain any kind of private rented accommodation will be restricted.

The turnover in this sector may expand to meet the needs of better-off people who want rented accommodation on a temporary basis. I agree that such people will benefit. However, to suggest that the sector will expand and reduce homelessness is misleading and dangerous nonsense. People who are unemployed or on low incomes will simply not be able to afford the new rent levels. Housing benefit will not rise to meet the new rent levels. The role of the new rent assessment tribunals will not allow this to happen. Many tenants on the new assured tenancies will have no access to any new rent setting system. Housing benefit, which provides no help at the present time for people on low incomes in work, will on deregulation of rents create a new unemployment trap for many single people on low earnings. They will simply be unable to afford new rent levels of over £50 per week and carry on working. The deregulation of the private rented sector will therefore not increase the supply of rented accommodation at a quality and a price that homeless and low income households can afford.

The proposals will in fact have the opposite effect. As rents rise, more people will be made homeless as a result of being unable to pay them. As I have already said, the housing benefit system, as currently structured, will not, as the Government have suggested, take the strain. The proposals for housing associations are equally negative. It is true that the Government have not, as they originally intended, pushed the housing association movement into the same jungle as private landlords. The new social landlords' charter and the recent code of practice from the housing associations state that rents should be at a level affordable for low income groups. But these statements have no legislative force and will be contradicted in practice by the new financial regime that the Government propose to impose on the housing association movement.

We have heard a great deal recently about the new sources of private finance, so it is worth reminding noble Lords that, contrary to popular belief, council houses in this country were built with private money. We have had recent restrictions—and I do not necessarily mean since this Government came into power. This was when one of our Governments were in power. But in those days, councils were able to borrow from the private financial market to build and improve property. They could borrow relatively cheaply, because they could secure the loan against their assets and taxation base. It is only the nonsense of current Treasury rules that prevents this from happening now.

It is easy to illustrate that the rules on local authority spending arc economic nonsense. If a council borrows £2,000 to install central heating in a council house and the loan is repayable through rental income, this is included in the public sector borrowing requirement. But if the person next door who has bought his house does exactly the same and borrows money and repays the loan, that is not included in the public sector borrowing requirement.

The previous Minister of Housing, Mr. John Patten, said in an interview with Shelter's housing magazine, Roof: That's an extremely difficult question to answer". when asked whether there is any meaningful difference between the effects of those two forms of housing expenditure on the real economy in contrast to some abstract Treasury model. It's a slightly different point. he said, uncomfortably. Clearly it's difficult to see where the pound notes change colour between public and private. I am quoting from John Patten's interview in Roof magazine in January 1987.

Housing associations will not be able to borrow as cheaply as councils from the private money markets, because they do not have a sufficient asset base and have no taxation base on which to secure the loan. Loans will be expensive and if index-linked may result in unacceptable repayment levels. But the associations will have to pay them to survive. They will be able to do this only through raising rents. If their future tenants cannot meet these new levels of rent, the associations will be placed in the invidious position of going bankrupt or evicting tenants who cannot pay. Economic reality will triumph over empty statements that rents should remain within the reach of low income groups. That means that housing associations will not be able to increase the supply of affordable rented accommodation for the poorest in our society.

Those arguments apply equally to the more recent proposals to transfer local authority stock to newly-formed housing associations. Without an increase in both the total amount of housing association grant from the Housing Corporation and a higher percentage of grant for many schemes in high-cost areas, an expansion of housing in this new social sector will simply not be forthcoming. I want to draw your Lordships' attention to the fact that it is ironic that the Government's strategy for funding housing associations could only work with more—not less—central government subsidy, whereas the local authority borrowing model in many cases requires no subsidy at all to keep the rents down to reasonable levels. That is a fact.

However, the Government have made it clear that they dislike local authority housing. Indeed, they have made clear in recent years that they dislike any form of local government. The removal of housing from local authority control is merely a tenet of this faith and not, essentially, a housing issue at all.

There are some local authorities which are self-evidently bad managers of housing. However, there arc a far greater number which are better managers by any criteria than any other existing landlords. The legislation does not distinguish between them. If the Government are concerned about the standard of local authority housing management, they should try to find ways of remedying this. Instead of this, we are in the process of destroying the sector that has provided low income groups with good quality housing for decades. What we have built and paid for over the years and what has held out the prospect of a secure home for many is to be disposed of. I regard this as an act of political vandalism which is unequalled even in this Government record.

However, my central concern is how councils in future will meet their obligations to homeless people. At present some councils have fewer relets or new buildings than would be required to house homeless families, even if every single vacancy was used. This is a supply problem and not a demand problem as the Government try to suggest. Councils are losing stock and cannot replace it because the Government have placed restrictions on their spending capital receipts and on their borrowing. Hence many are forced to use bed-and-breakfast or other forms of temporary accommodation, which the Government have freely admitted costs more per annum than a new-build or a refurbished council dwelling.

We are being asked to believe that empty property is the answer. It is not. If we look at London, we find that some of the councils with the highest use of bed-and-breakfast accommodation have the least empty property that can be brought into use. Of course, by all means take every step to bring empty properties into use—we should do that in any case. But let us not pretend that this will solve the bed-and-breakfast problem. It will not.

If homeless people have a right to be housed, however limited these rights are in their present form, one crucial question remains. If homeless people cannot find accommodation in the private rented sector—and I hope I have shown you that they will not be able to—or the housing association sector, and councils are no longer to be landlords, what will happen? Who will meet the duty to house the homeless? I know what the Government answer is. They say that the councils can contract with new social landlords to meet the obligations. But if this sector cannot expand, it cannot meet the demand.

It does not take a genius to realise that we shall be faced with an American style problem, as described by the noble Lord, Lord Dean of Beswiek, earlier in the day, with thousands of homeless people, many of them with children, sleeping in night shelters and emergency halls. That is what happens in the States. I cannot believe that is the kind of society in which your Lordships would like to live. There are many points on which the worst effects of this legislation can be reduced. Amendments will be brought forward on these issues at Committee stage. However, I have sought in my speech to respond in general terms to my original question. Will this Bill make homelessness worse or better? (I know that I have been speaking for more than twenty minutes). I regret that my overwhelming conclusion is that it will make matters much worse.

I had intended to touch on a few other points such as the effect it would have on women, particularly single female parents and the disabled; but I believe other people will deal with that aspect.

Finally, I wish to express my fear that these proposals will exacerbate the problems of racial tension in the inner cities. Black housing organisations have been unanimous in condemnation of these proposals. I am glad that the Government have conceded that new social landlords must meet the Section 71 duties under the Race Relations Act. However, this is mere lip service, if deprived racial minorities are competing with others for the rapidly diminishing supply of rented accommodation.

The Government proposals on housing action trusts will be a testing ground for their real commitment. The proposed new housing action trusts in London and Leeds affect areas where there are high concentrations of black citizens. It is the duty of the Government to see that they are fairly treated and are not discriminated against. I hope that the fears of many black organisations are unfounded; but I am deeply concerned about that aspect of Government policy.

The housing crisis in Britain is not a national disaster. It is an inevitable outcome of government policy. The Government have ignored the evidence of the rising numbers in bed-and-breakfast accommodation and the rising numbers of homeless people on the streets visible in every city and town in Britain. This legislation offers little hope for the future. I hope that noble Lords will support the various amendments coming forward at Committee stage because it is possible to improve the Bill. However I also hope that noble Lords will support me in a plea to the Government to change their housing strategy.

7.15 p.m.

Baroness Masham of Ilton

My Lords, there is no doubt in my mind that to many people the saying, "An Englishman's home is his castle" is very true. To a disabled person this is just as true. Disabled people are individuals the same as anyone else, with spouses and children, or single with the pride of having worked and saved money. Yet they have been ostracised and discriminated against by not being given the right to buy their council houses.

When the Housing Bill of 1984 was amended by your Lordships, an amendment was carried which ghetto-ised disabled people into a category of second-class citizens. The late Baroness Lane-Fox and I knew that this would happen. Disabled people living in a street with other families, some of whom are elderly, living in identical accommodation, have been the only people not allowed to buy their house. That was just because they had a ramp or a few rails and a wider door added. The elderly have been allowed to buy.

I have promised many people, who have been unlucky enough to have sustained some misfortune which has left them disabled, to bring this matter up in your Lordships' House. I have had letters and telephone calls from people in many parts of the country—from Bristol, London, Harrow, Harrogate, Sheffield, Norwich, Stroud and other places. Some have taken the matter to the ombudsman. The director of the Prince of Wales Trust Advisory Committee is a disabled lady married to a disabled man who had polio. They have lived in their council house for more than 20 years, the husband having always been employed. They feel so strongly about this that they want to take their case to the European Court of Human Rights. A disabled man ends a six-page letter to me by saying: I am beginning to feel somewhat desperate because I cannot seem to make anyone realise the struggle that I have had to try and lead an independent life". I hope your Lordships will be able to do something about this discrimination because it is not an easy matter. Many of these people feel that their Members of Parliament have acted like Pontius Pilate over this matter and washed their hands and left it at that. The best solution would be that if a suitable house for a disabled person were sold, the council should replace the stock. Then more houses would he built and the stock would be built up in the public and private sectors instead of there being a static situation.

There is a very serious situation. The problems of physically disabled people have been neglected in the last few years, so great are the difficulties of getting the mentally ill and handicapped integrated into the community. There is a lack of up-to-date houses suitable for physically disabled people. Maybe that is because even though councils could sell houses to disabled people, they have not. The stock has stayed static and the much-needed new houses do not seem to have been built at all.

One disabled man who has tried to buy his house which was minimally adapted has been frustrated because it has been a major operation to get any repairs done by the council. He tells me that the quality of workmanship was dismal. His wife was dismayed when for weeks they had to wait to have a slate repaired while the water dripped into a bucket. When a repair to a kitchen worktop was done, a non-matching surface was supplied, making the kitchen look a mess. There are people who would take pride if they owned their house and would improve the standard of that house.

Councils need some encouragement to help disabled people in all aspects; those who wish to buy so they are not discriminated against; those who need rented accommodation and those who need warden-supported accommodation. Here there should not be a right to buy as it would make the system impossible to operate.

There have been some good housing association schemes in various parts of the country. John Grooms Association for the Disabled, which is helped so much by the noble Lord, Lord Swinfen, should be congratulated on what it has done. It may be said that some accommodation for disabled people is more expensive to provide. If that is so, the price paid might have to be made to fit the bill, but people should not be refused the right the buy just because they have a disability when they are integrated in the community in a house that is surrounded by other houses which have been sold.

I hope that the Government will be able to correct this unjust ruling which has caused so much unhappiness and strife. Perhaps the number of people is small to the Government, but to the individual the discrimination seems gigantic. This Bill does not seem to help disabled people in any way; in fact, I am told that disabled people have been excluded from being able to change their landlord. If that is so, I can only say that it is piling on the agony to people who have so little choice at the best of times. I ask my noble kinsman the Minister to explain this and tell the House whether that is really the fact. I sincerely hope that it is not.

I hope that the Government will be very positive in trying to help and not hinder those disabled people who wish to live lives that are as independent as possible in an environment which is still difficult in Britain. Countries such as Canada and New Zealand are covered by legislation to make life a great deal easier in the environment should one have to use a wheelchair. On a recent invited visit to Docklands, I found it worrying to observe that no suitable housing had been built for disabled people. All sections of society should be taking their fair share of providing suitable houses. Disabled people span all sections of the community.

I wish to make one final point. Over the years I have noticed that many young people seem to have difficulty in obtaining rented accommodation within their means or that supplied through social services. I meet many young people in the course of my work at youth custody. It seems that many of the young men's girlfriends get pregnant so that they can get a house or flat. That does not seem a wise way of getting accommodation. Many of those young people do not realise the responsibility of bringing up a baby and the baby may suffer in many different ways. I ask the Minister whether there is anything in the Bill to help alleviate that situation or whether the situation is to become worse. There seems to be concern over some aspects of this Bill. I hope that the Minister will be able to give us some reassurances tonight.

7.24 p.m.

Lord Stoddart of Swindon

My Lords, I wish with all my heart that I could stand here tonight and give the Bill a welcome. Indeed, I wish I could give any Government Bill a welcome. But it seems to me that the Government's record in this respect, as in many other respects, is quite deplorable.

We have here a Housing Bill which the Government claim will assist the private rented sector. How on earth it will do that I do not know. We have heard many speakers this afternoon, but none has been able quite to work out how the private rented sector will be improved by the Bill. But I must confess that I should prefer that the Government were intent on improving the stock of houses rather than bringing in Bills which merely transfer responsibility from one sector to another. That is why the Government's record on housing is so deplorable. Everything that they have done has been designed to worsen the housing position, not only in the rented sector generally but also in the owner-occupied market as well. I shall tell the House why that is so.

The Government have taken out of the rented sector some 1 million houses. They have also, by their financial restrictions, prevented local authorities from building 500,000 houses which would have added to the stock in the rented sector. Therefore, the rented sector has lost 1,500,000 houses as a result of Government action. But what has that done? It has not only prevented people who cannot afford houses from having a decent roof over their head for rent, it has also put such pressure on the owner-occupied market, the houses for sale market, that it has forced up the price of houses and the land upon which they stand. That is why the Government's record is so deplorable.

Everything the Government have done has not really assisted housing generally. It has brought about more problems and exacerbated existing ones. Indeed, it appears to have been done because of, or in pursuit of, the Government's policy of transferring to the rich and powerful more riches and more power at the expense of those who are weak and poor. The Bill carries on that policy, and as I and other speakers have already said, it will not assist by one jot or iota the provision of housing.

Further, since the Government have been in office not only have they attacked local authorities through their powers and by the removal of finance, but they have also manipulated the market against the rent payer. Since 1980 the amount of money per annum which has gone into the public rented sector has been halved, while the amount of money which has gone into the private sector through tax relief on mortgages has doubled. Therefore, again, by their financial manipulation, the Government have taken away enormous resources from the rented sector in an attempt, presumably, to buy votes in the owner-occupied sector. In the long run that simply will not work.

I must tell the Minister that we shall one day have to grasp the nettle that was shown to us by the noble Lord, Lord Seebohm. There will have to be an equalisation between the assistance given to owner occupiers and rent payers. That must happen if we are to solve the problem in its entirety. The Minister and the House should understand that there is no single kind of tenure which is either good or bad.

Throughout our lives we need different forms of tenure. When we are young and starting a family, most of us cannot afford to buy a house without putting a great strain on family finances and it is proper that there should be houses available for rent. As our financial situation improves we may buy a house. As we get older, it may be right for us to sell our house and go back into the rented sector to find accommodation which suits our needs after our children have gone. To deal with the situation properly, we must have equalisation. The Government must start working on that matter. The policy may be unpopular; it may take a long time to implement. However, we should make a start.

My final point concerns the attack which the Government have been making over a long period of time on local authorities and local authority housing. In the Bill we see power being taken away from localities and given to central organisations under the control of the Government. I call that undemocratic centralism. I did not think that the Conservative Party believed in centralism, whether democratic or undemocratic. However, centralism is being augmented by the Bill. I say to the Minister that so far as local housing is concerned, local authorities have been far better providers and managers than central government ever have been or could be. Virtually everything that is bad in local authority rented housing has been imposed on local authorities by central government.

When I was the chairman of the housing committee in Reading and leader of the council, I was forced by central government to build 30 per cent. of our housing stock in high-rise fiats or industrial buildings. Those are now being razed to the ground at the behest of central government. Had we not built in that way, we would not have had an allocation for building housing. When I was in the position to do so, I ensured that we had a properly balanced housing policy in Reading. We built for rent; we built for sale; and when it was right to do so, we sold council houses. We also assisted housing associations and helped to form the James Butcher Housing Association, which is known nationally. We were able to do that because we knew the needs of our locality.

Local authorities will not be able to proceed in that way under the Bill. However, they will still have responsibilities to fulfil housing needs in their areas. Frankly, that is not on. The Government are making a serious mistake in believing that there is a substitute for proper local authority provision of houses and proper and decent management of housing resources by local councils. It is they who know the problems and it is they who know what measures and what building will solve those problems.

I implore the House to examine the Bill very carefully. I believe that some improvements can be made to it. Perhaps things which are said in this House will make the Government think again. However, I fear that in the last analysis the Bill will merely add to the housing crisis which exists in this country and which has been building up over the past eight or nine years. That could have been avoided if properly tried and tested housing proposals and provision had been made. I oppose the Bill root and branch. It is with regret that I sit down, knowing that I cannot go into the Division Lobby against it.

7.35 p.m.

Baroness Faithfull

My Lords, in his clear presentation of the Bill to the House, the Minister said that he would listen to what was said by your Lordships and that he would be prepared to consider any recommendations which were made. During our consideration of the Local Government Finance Bill, the Minister listened and made many concessions.

I am the 23rd speaker in this debate. Many points have been made by other speakers. I therefore propose to ask only three questions which to some extent will encapsulate the various points made by noble Lords. My first question concerns the right of council tenants to transfer to other landlords if they choose to do so. I ask the Minister what the mechanics, procedures and practicalities of the relevant clause will be. The noble Baroness, Lady Fisher, made a number of points relating to the clause.

I have received letters from council tenants all over the country. They wish to know what advantages they will gain by transferring to another landlord. Will the various people who are canvassing tenants for transfer make clear in writing what they have to offer, how they will collect rents, how they will handle alterations and redecorations and how they will deal with repairs? Tenants have asked me what basis they should use in judging whether they should stay with their present landlord or transfer to another landlord. Tenants wish to know whether they may transfer back to the old landlord if they are unhappy with the new one. It is only fair to see that tenants are clear about what they will be voting for. The noble Baroness, Lady Fisher, has already made those points.

Secondly, I wish to ask the Minister several questions about bed-and-breakfast accommodation. The provision of bed-and-breakfast accommodation will have to continue for some time, no matter what policy may be adopted by this or any other government. However, we hope that such provision will not be permanent. Perhaps I may make the point that this issue is non-political. In 1972 I called a meeting in Oxford which was attended by civil servants from the Department of the Environment, by politicians and by representatives of local government. I pleaded with them to initiate a policy which would prevent the use of bed-and-breakfast accommodation. That was in 1972; we are now in 1988.

Whatever policies we adopt, bed-and-breakfast accommodation must continue in use. Therefore, I must tell the House that such accommodation is a divisive and socially damaging way of caring for people. It damages children, parents and marriages. Health visitors find it difficult to offer advice to families who are accommodated in that way. The provision of education to children in such accommodation is made more difficult. Bed-and-breakfast accommodation has been a blot on our social policies since 1970.

Secondly, bed-and-breakfast accommodation is frightfully expensive. It is astonishing how expensive it is. It costs roughly—and these are very rough figures—between £200 and £250 a week to keep a family in one room in bed-and-breakfast accommodation. I let a flat in my house in Oxford. It has two double bedrooms, a study, two lavatories, a bathroom, a sitting room and a kitchen; and I charge just over £100 a week. Compare that flat with one room at the top of a building, sharing a bedroom and a bathroom. What is wrong with society that that can happen?

It is very expensive: in 1986 we spent £63 million on bed-and-breakfast accommodation, and in 1987 it was £100 million. That is throwing money away. It is a problem which I believe all parties have to tackle on a non-political basis.

These are really dreadful places. In London I think that the area which has most bed-and-breakfast accommodation is Bayswater. A number of voluntary workers have gathered together under the chairmanship of Dr. Stone—whose father the late Lord Stone was in your Lordships' House—and have attempted to alleviate the conditions. The environmental health officer has to visit the buildings, but what has the environmental health officer done? Environmentally it cannot be right to cook in the basement, to carry your food five flights up and to have to carry your dirty dishes back to the basement to clean them. A number of the locks on the doors are broken. The condition of the houses is poor. I also understand that fire officers visit; yet when I visited one or two of those places the fire hazards seemed to me appalling.

Perhaps I may ask my noble friend the Minister whether it is not possible to fix the rent of bed-and-breakfast accommodation. Alternatively, is it not possible to desire that the environmental health officer lays down rules as to how those places should be run? What is quite certain is that they cannot go on as they are at the moment.

I have spoken to a number of residents in bed-and-breakfast accommodation. They have pointed out to me how impossible it is for them to leave. First-time house buyers can buy a house for approximately £61,000. They can possibly get a mortgage on £11,500; but the gross weekly income they would need to earn in order to buy themselves a house would be £397 a week. A bus driver earns £136 a week, a shop assistant £69 a week, and supplementary benefit is £60 a week. Therefore there is absolutely no possibility of them being able to buy a house. If they are on the council housing list they may have to wait something like four years. So I ask my noble friend the Minister whether through this Bill we cannot improve the whole situation with regard to bed-and-breakfast accommodation with the ultimate aim of phasing it out altogether.

My third point concerns single women. I am bound to feel an interest in this subject. This week I have talked to nurses. I spoke to one in particular who passed her exams with distinction: in fact, she passed first out of the university and the hospital where she took her course. She is coming to London to take a special course. She has not been able to choose which hospital she will go to to take her course because she must first find out where she will be living. She must find out where she can live so that she does not have to walk home from the hospital late at night. She has not been able to go to the hospital of her choice to take the subject that she wants. Secretaries, teachers, nurses and other single woman are in the same position.

That brings me to the whole question of private accommodation and the present deregulated private rental sector. The cost of everything has gone up—a pair of shoes, milk, everything. I would ask my noble friend the Minister how the cost of rented accommodation can come down when it is so expensive to run rented accommodation. I have just had our house painted and I know what the cost is, although I did not do it myself because I am no good at painting. How will costs in the open market come down so that single women and families with small children will be able to find rented accommodation which they can afford?

Having said that, it may appear that I have complained about the Bill. I believe that there is a great deal of good in this Bill. Like the noble Lord, Lord Goodman, and others, I believe that this is a good Bill but I also believe that it needs a number of amendments.

7.46 p.m.

Lord Graham of Edmonton

My Lords, the Minister—who I know is a compassionate man—must have been deeply unhappy to hear most of what his noble friend Lady Faithfull said about the realities of housing, not only in London but in general.

As the noble Lord, Lord Pitt, said earlier, we have a housing crisis not a homelessness crisis. Much of the increased homelessness that we have seen in recent years has been the result of the reduction in the rented housing capacity of local authorities and housing associations. It is my fear that in the social rented sector private investment will only go where returns are the greatest, thus leaving great regions of the country starved of new rented housing. The private landlord will only meet a fringe demand. Adequate returns on investment in most areas will mean rents higher than the equivalent cost of buying. People who cannot afford to buy cannot afford such housing.

In my view other proposals in the Bill will lead to a worsening of the social indicators of the link between ill health and bad housing. The wedge between the two-thirds of our society who are well off and the one-third who are not well off will be driven in even harder. Poorer communities will be displaced by those with financial power. Housing options will be increasingly closed. The Government's proposals do not add up to a housing policy; they reflect a housing policy vacuum.

In my view, and I believe in the view of' most Members of this House, people have a right to expect that housing policy should meet certain key criteria. Those criteria should include the following: genuinely affordable homes with as little need for assistance with housing cost as possible; adequate security of tenure; good quality accommodation, properly maintained; and letting based on need and not on wealth.

I believe that the Bill as a whole will undermine the capacity of both local authorities and housing associations to do that which is most crucial—to plan and supply adequate levels of provision for low income households. I declare an interest as a committee member of the Co-operative Development Society, which is a housing cooperative society. I listened with great attention to the man who is known as "Mr. Housing Corporation", the noble Lord. Lord Goodman, who earlier this evening warned us of the damage and dangers that were lurking within the Bill not only for the Housing Corporation but also for housing associations.

The driving force behind the policies in this Bill is not the tenants' choice or "pick a landlord" because that does not include the option for a tenant in another tenure to choose a local authority or housing association as his landlord. The question of whether local authorities are good or bad landlords is incidental. I support the remarks of my noble friends, whose experience as councillors and managers of local authority housing—and as such they are the people who meet those who are in real housing need—is that the vast majority of local councils of all political persuasions have been good landlords, continue to be good landlords and want to provide good housing for people in need.

In my view the Government simply do not want local authorities to be landlords. They want to decrease public subsidy and borrowing, reduce local authority responsibility for housing and transfer the burden of housing provision to the private sector. Much has been made of the "social landlords' charter", but it does not apply to the private rented sector where the worst landlords are to be found. I do not wish to be alarmist, but the Minister could not begin to compare the worst landlords in the public sector and the worst landlords in the housing association sector with the worst landlords in the private sector. As other noble Lords have said, it is the evil of Rachmanism which stalks the land and many tenants, both private and public, are fearful about what this Bill will do to them.

A great deal has been made by the Minister and his friends of the idea that tenants should not be too worried about the gap that might arise should rents increase, and they have emphasised the net that the Government have provided in order to ensure that assistance is given. Of the 6.5 million rented households in England and Wales, 4.9 million receive housing benefit—50 per cent. of private tenants, 60 per cent. of council tenants and 75 per cent. of housing association tenants. Only 89 per cent. of private tenants who are thought to be eligible for full benefit, and a staggeringly low 53 per cent. of those who are thought to be eligible for partial benefit, are in fact claiming it. I venture to suggest that when this Bill becomes an Act those percentages will increase considerably. More and more people will be forced to claim benefit.

What have the Government done in respect of housing benefit? Since 1983 housing benefit has been cut not once, not twice, not three times, but eight times. That is a measure of the Government's concern to ensure that people are adequately housed. The latest cut, which took place on 4th April this year, was £640 million.

The worst examples of neglect by landlords are found in the private sector. There is no automatic link between high rents and good conditions. If there were, bed-and-breakfast accommodation would certainly be among the best and highest in the land.

I should like to spend a little time on the peculiar and desperate problems of London. I have been a London MP and president of the Association of London Authorities. I listened very carefully and sympathetically to what the noble Baroness, Lady Gardner of Parkes, had to say about the plight of people in desperate housing need and in particular the homeless. The Government have said very little in this Bill about the homeless. In his opening speech the Minister made some noises about it; but there is very little in the Bill which tackles the problem of homelessness. Over one-in-three of all households accepted as homeless by local authorities in England and Wales are in London. Seventeen out of every 1,000 households in inner London are accepted as homeless by a local authority. The national figure is only six out of every 1,000. Homelessness is not just an inner London issue; the fastest increase is in the outer London boroughs. The problem has been getting worse and will continue until the Government does something about it.

What have the Government done to increase the nation's housing stock and the number of new-build houses? The answer must be very little indeed. In 1975 of the 28,000 houses that were built in London, 20,000 (70 per cent.) were constructed in the public sector; yet in 1986 of the 10,000 houses that were built, only 1,200 were in the local authority sector.

The noble Lord knows that the provision of rented accommodation has certainly depended very heavily upon the public sector, yet he and his colleagues have presided over such a disgraceful situation. In addition to those single homeless who are registered there are a great many who are not registered. It has been estimated that in central London last year more than 2,000 homeless people were sleeping rough, more than 30,000 were squatting, 30,000 were in short-life accommodation and about 10,000 were in direct access hostels and night shelters.

I should like to conclude by saying a few words to augment the very wise remarks made by the noble Baroness, Lady Faithfull, about the plight of people in bed-and-breakfast accommodation and in particular in that part of London which is called Bayswater. Members of this House who have done their political duty in the past few days will have visited the Kensington by-election. I certainly did, and I am sure that so did many others of your Lordships at one time or another. That is the heartland of the biggest concentration of families in bed-and-breakfast accommodation. In 1982 there were only 200 families. In 1986 that number had increased to 1,500. Now 25 of the London authorities are sending more than 2,000 families into bed and breakfast accommodation there.

The noble Baroness quoted a figure of between £200 and £250 per week. Last week I was told of families that were accommodated in one room for which a charge in excess of £500 a week is met by the public purse. I endorse everything that has been said by the noble Baroness, Lady Faithfull; it is a scandal and disgrace. What kind of a life can it be for the children of those families? When the Minister looks at what needs to be done, he must immediately consider how that dreadful problem can be solved.

In my view this Housing Bill will mean higher rents, less protection for tenants, more homelessness, longer waiting lists, less council housing, fragmentation of council estates (which will lead to increased management costs), less help for the housing associations and no help for local authorities in tackling the problems which face them. Worse than that, the Bill will do nothing to deal with the housing crisis which currently faces the nation. In this Bill there are no plans to build a single extra home nor to provide money to spend on improving old or defective housing. Indeed, it seems likely that our housing problems will he made much worse. That is why I condemn this Bill unreservedly.

7.58 p.m.

Lord McIntosh of Haringey

My Lords, ever since I became interested in public affairs there have been people in positions of authority who have thought that the housing crisis—the housing problem—was capable of resolution in their lifetime and by simple means. When I was young it used to be by bricks and mortar. Harold Macmillan did a magnificent job in increasing the amount of house building. During the Labour Government of 1964 I remember being bullied mercilessly by the man who is now the noble Lord, Lord Mellish, who spoke in his capacity as Minister for Housing and Local Government not of bricks and mortar but rather of concrete and steel. However, the emphasis was on the idea that you had to build more in order to solve the housing crisis. The noble Lord, Lord Goodman, reminded us that even though that is not enough, it is certainly an essential element in any effective housing policy.

However there were also people, including I am sorry to say my hero Anthony Crosland, who had the illusion that one would reach a state in which the housing crisis would be solved and in particular when there would be a crude surplus of dwellings over households. I do not believe that any of us think that nowadays. We recognise that housing is one of those areas where people's aspirations and will to spend money on better housing for themselves and their families will continue to increase at a rate which means that for my lifetime, and I am sure for that of my children, we shall be in a period of what is seen as a housing crisis. What we have to appreciate is that it is a housing crisis of the affluent and a crisis of choices for those who have a reasonable range of choices before them and not the crisis that we now have: a crisis of desperation, poverty and homelessness. It will not come to an end. I yield to nobody in my belief in the inevitable advance of Socialism. I recognise that the market mechanism will continue to work in housing for as far ahead as we can see. It is a necessary part of housing policy. I hope to show that it is not sufficient; I hope to show in what way the moves of this Bill towards a market mechanism in housing are not only insufficient but dangerous.

Let us consider the problem with which the Government and all of us find ourselves faced. Let us divide it into the different sectors of housing because that is the way it presents itself. First, on public housing, as my noble friend Lady Fisher said, the important issue is that we should not turn from a public housing policy to a welfare housing policy, and to a housing policy in which being a public sector tenant involves the stigma of failure. Yet we have very nearly reached that position already. If one looks at the proportion of people who are council tenants and rented tenants among tenants generally who are on housing benefit one will see that the proportions are startling and horrifying. Fifty per cent. of private rented tenants are on housing benefit to a full or partial extent. The figure is 60 per cent. of council tenants and 75 per cent. of the tenants of housing associations. We are already too close to a dependency society which we ought not to be envisaging. I give warning that I propose to show that a so-called reform of housing, which increases housing rents and reduces housing security for those most in need, will inevitably increase dependency and will go against everything in which I thought this Conservative Government believed.

Let us consider the position of local authorities. Clearly their resources and powers to do anything about housing are critical. The housing investment programme authorisations have gone down by 75 per cent. in real terms since 1979. As my noble friend Lord Graham has just said, the housing benefit has been cut eight times, most recently in April of this year. Under those circumstances the Government have the nerve to complain to local authorities as if the number of empty properties were such a crime that it disqualified them from a real role in public housing.

Let us look at owner occupiers. Owner occupiers—and this is an issue which I am sure that no political party, including mine, will face straight on—are subsidised to the extent of more than £4 billion, as my noble friend Lord Jay said earlier. That subsidy is three-fold. It consists of the abolition of Schedule A many years ago; it involves not only tax relief at the standard rate but also at the higher rate of taxation. However, it has economic effects which are not incalculable but rather obvious and very damaging to our economy. The immediate effect has been this dramatic increase in house prices. This has very considerable social effects in the short and medium term, and even greater social effects in the longer term as it stops becoming funny money.

However, beyond that, this increase in house prices is above all what is fuelling the increase in inflation and damaging our competitiveness in world markets. If the Government had any rationality in their economic policy, it ought to be a danger signal for them in their ability to control and maintain economic progress, or to recover economic progress, although I should not go into a general economic policy. Here is another sector. It clearly works. It is clearly popular, but at a very great economic and social cost.

The private rented sector is a peculiar sector. We are being presented with a peculiar theory of government. The theory is that we have a carrot to extend to the private rented sector by improving the return on investment for landlords. There are two issues on that. First, as has been said by a number of noble Lords, while one has subsidies for owner occupation, the return on investment for landlords must mean that the rents must be higher than mortgage repayments. Otherwise people will not find it worthwhile. But of course the other aspect is that with public sector housing, one has a portfolio which consists of older and newer houses, those which have been totally amortised, and those which are subject to very high interest payments. With that portfolio one can have a rational rent policy because one can have a policy of cross-subsidy between the older and newer properties. A private landlord cannot do that. Housing associations have found it very difficult to do that although as they mature they are finding it easier. However, the theory that by offering the carrot of a greater return on investment to private landlords one will somehow increase private rented property is an economic nonsense. It does not hang together. When it is combined with the stick which says that by increasing rents one will drive the tenants out of the private rented sector, it is quite clear that the proposals the Government are putting forward in this Bill do not touch the real heart of the problem.

We then come to what a number of noble Lords have said is the real heart of the problem. When does our housing policy not work? In other words, I refer to homelessness. Homelessness is not referred to in the Bill; or it is conspicuous by its absence. I refer to the policy of decreased security, the problem of defaulting on unaffordable rents and the increased likelihood of eviction. I remember as a councillor sitting on doorsteps to stop landlords carrying out furniture. It will happen all over again now. How can it be said that these policies of making housing more unaffordable to the poor and less secure for the poor can do anything other than increase homelessness? If there is one element on which this Government will stand condemned when this Housing Bill is looked at calmly in later years, it will be their failure to deal with homelessness.

Perhaps I may analyse the problem of housing in a very sketchy way. It does not seem that the Government have a real answer to the problems that are facing this nation in their housing policies. Let us take the Bill quickly, part by part, to see where the answers may lie.

Part I refers to private rented property. The solution here is expansion by deregulation. That was tried in 1957. We know very well what the results of that were. Noble Lords on all sides of the House have referred to that, sometimes with a sense of expiation of guilt, and sometimes with horrific memories of the social injustice that resulted. It did not work then and it will not work now. What we shall have is a new type of tenancy called—with Orwellian irony—assured, which means not secure. The characteristics of that tenancy will be that there will be higher rates, higher rents, more reliance on benefit, and therefore more dependency on handouts.

There will be a restricted right of succession applied only to spouses, not to caring relatives, as my noble friend Lady Ewart-Biggs pointed out, and certainly not applied to others in very great need. There will be the excuse for eviction to a suitable alternative which means that there is a possibility of tenants being shifted around from one short-stay piece of accommodation to another. Eviction can be achieved by the courts on that basis.

Inevitably I am convinced that we shall move not just to assured tenancies but to assured shorthold tenancies. What landlord in his right mind will give a tenancy on a periodic basis when, for between six months and two years, he can give a tenancy which will enable him to get the tenant out without any difficulty at the end of the shorthold term? There will be a decrease—not an increase—in mobility and exchange facilities because it is those which local authorities, for all their faults and with all the difficulties that confront them, have sought to provide for council house tenants. By any standards Part I of the Bill is not helping the problem; it is making it worse. We shall have to seek to change it.

Part II refers to housing associations. Housing associations have been in the public sector ever since they started. Many noble Lords of all political persuasions and of none have taken part honourably and loyally in the housing association movement. I cannot believe that any of them will feel that the exchange of the housing association movement from the public sector into the private sector is a move for the better. Housing association tenants will now be assured, not secure. They will not be paying a fair rent but a market rent, as assessed if necessary by the rent assessment committees. All the integration which has been an essential part of the work of housing associations with the local authorities will disappear. It is interesting that the only appearance in the Bill of the tenant's guarantee, which features so heavily in the Government's publicity for the Bill, occurs for housing associations. One is bound to ask why it does not apply to other forms of social landlord and indeed to other kinds of landlordism. The financing of housing associations is transferred from the accountable elected authorities to the unaccountable unelected Housing Corporation.

I have no brief against the Housing Corporation: it does an admirable job. I am not against a comparable organisation being set up for Wales. I am sure that the separation will lead to decentralisation and a sense of independence in the Principality which is very worthwhile. But the fact remains that the Housing Corporation is a nominated body having great and undefined powers over housing associations which, in the Government's own estimation, are an essential part of the development of a housing policy. So Part II does not work.

Part III concerns the housing action trusts. I see from this afternoon's statement that the score is Waldegrave 1, Ridley nil. In other words, the idea of the Secretary of State that huge chunks of inner city housing would be handed over to the housing action trusts has, on mature reflection, been realised to be unreasonable and possibly fraught with financial difficulty. Thus, what we have is a highly selective list of areas and housing estates named by the Minister this afternoon. We shall have to see how far the department and the Government are able to extend this principle.

The principle of the housing action trusts is deeply unacceptable to us. The trusts are nominated; they are not elected like local authorities. There is no tenants' right to choose. Tenants' choice is an important part of the propaganda for the Bill. But it does not occur for housing action trusts. There are to he no nomination rights, for example, for the homeless as apply in local authority housing. There is no right of return to the local authority at the end of the period of the housing action trust—I see the Minister reaching for his pencil; I too have read the Bill—unless the local authority can afford to repurchase at the new price the property which the housing action trust will then release. That seems to me on the whole to be rather unlikely. I suspect that what we have here is not a policy but a policy gesture of a particularly damaging and undemocratic kind. I do not believe that Part III of the Bill helps.

Part IV is probably the most deeply objectionable, in a simple way, of any. What is proposed is that those local authority tenants who have had security—they may have had bad repairs, bad maintenance, bad design but have had local authorities to complain to and councillors to kick when those things have gone wrong—will lose all the rights they have had of succession, of repairs, of exchange and mobility, of fair rents and of all the functions integral to public housing. They will lose them all. When there is a transfer under Part IV all tenancies will be on the assured basis rather than on the secured basis.

A number of noble Lords have referred to the ballot. But it is the idea that we should have a ballot organised by one side, by the applicant, when there is no requirement for the applicant who is conducting the ballot to give information of the kind that noble Lords have asked for about what will be the status of the tenancy when the transfer has taken place. It is a ballot which the National Consumer Council calls inertia selling. It relies on a positive 50 per cent. negative vote to stop a transfer of an estate and permits those who are old, in hospital, away, or who have not received a ballot paper, to be counted as being in favour of the transfer when they have not expressed an opinion or even been able to express an opinion. Part IV is not a solution to our housing problems.

Part V contains a number of issues. The most important is housing benefit. This is a national scheme administered locally. It has been under attack, as my noble friend Lord Graham said, but it is on a comparable basis nationally and it is understood and clear what the qualifications for housing benefit are. However, in the Bill there are threats even to the housing benefit scheme. Clause 117 allows the possibility of a rent stop. This means that a local authority shall not be able to pay housing benefit on rents above a certain level to be determined by the Secretary of State. Even if there is not to be a rent stop, there is threat of a subsidy loss to local authorities when rents are in excess of what is determined a proper rent by rent assessment committees. Everybody who knows about the way in which rents will be determined realises that this will happen on many occasions. There will also be many occasions when local authorities, for the best of humanitarian reasons, will have to subsidise people and pay housing benefit above the level of market rent so that old and disabled people are not thrown on to the street.

The housing benefit system is by no means secure from the Bill. We are at risk as everywhere else of having a real worsening of housing conditions rather than making them better. The right reverend Prelate the Bishop of Southwark clearly stated what our objectives on housing policy should be. He said that there should be enough good low rent accommodation to meet present and likely future need. I could not have invented a better definition than that, although I should add to it that some flexibility in tenure and movement and some say in management of one's own estate, some assurance of maintenance standards and some security of tenure are all critical parts of housing policy. I do not believe that the right reverend Prelate would disagree with that.

In summary the Bill is worse than shifting the deck chairs around the deck of the Titanic. It is actually helping the Titantic to sink. We are moving backwards in all the five parts of the Bill. In all five parts we on these Benches, with as much cooperation as possible from other poeple who are interested in housing and who understand housing, will seek to make major amendments to the Bill.

8.19 p.m.

The Earl of Caithness

My Lords, we have had a valuable debate and I should like to thank those of your Lordships who have spoken. I am grateful for the support I have received from around the House and I am grateful for the support I have received. But there have been a number of queries. I am saddened by what some of your Lordships have said in agreeing that we face a problem but do not seem to think that the private sector has any part to play in trying to solve that problem. I believe that some of that is due to political dogma. On the other hand I believe that some is due to misunderstandings of the Bill which I hope will be sorted out at Committee stage.

Before responding to your Lordships points, I should just like to make two general comments. First, we still intend to ensure that as many people as possible can own their own home. Our success has, of course, been dramatic. There are nearly 3 million more owner-occupied homes than in 1979, and approaching a quarter of a million more first time buyers in 1987 than in 1979. This process of spreading wealth throughout the community and encouraging individuals to take responsibility for key financial decisions will continue.

While promoting such a major extension of freedom and choice it would be wrong, on moral as well as economic grounds, if we did not do something similar for those who need or want to rent. I know that the noble Lord, Lord Goodman, will support me in saying that. This Bill will help break down the monolithic local authority estates, and by increasing choice and stimulating competition we shall see a greater variety of rented property.

Secondly, and contrary to what the noble Baroness, Lady Fisher, and the noble Lords, Lord Pitt and Lord McIntosh, appear to indicate, I must emphasise again that homelessness is at the forefront of our minds. We have increased the housing capital programme to over £3.8 billion this year. Extra resources have been made available through the Government's Estate Action Programme to bring empty local authority dwellings into use to help the homeless. And I repeat that over the past seven months we have allocated additional resources totalling over £74 million to tackle homelessness.

We are now going further to tackle the question of bringing empty properties back into use. For far too long current and potential private landlords have been deterred by fears of existing rent controls and what the party opposite might do if it was returned to power. What a tenancy market needs is consistency of approach and an incentive to let. To date private sector landlords have had a legitimate excuse. Local authorities have not. The number of local authority properties empty for more than a year is nearly three times the number of families in bed-and-breakfast. I agree with my noble friend Lady Faithfull that this is an area of concern. We are therefore looking closely at what can be done to get local authority empty property back into use and thus reduce the massive social and financial burden of bed-and-breakfast accommodation. My right honourable friend the Secretary of State, has announced that we shall shortly be asking authorities to make a return giving details of their empty properties.

I know that the Government are not immune from ciriticism for having empty properties.

Noble Lords

Hear, hear!

The Earl of Caithness

My Lords, departments are fully aware of the need to bring empty dwellings back into use or, where they are no longer needed, to sell them as quickly as possible. Operational requirements are reviewed regularly and targets set to reduce the vacant stock. Where departments have no immediate operational need for empty dwellings, but disposal is not practicable, they are encouraged to let them temporarily to local authorities or housing associations so that they too may be used for the homeless.

Lord Graham of Edmonton

My Lords, it is a failure.

The Earl of Caithness

My Lords, does the noble Lord wish to speak?

Lord Graham of Edmonton

My Lords, if the noble Earl is telling the House what he intends to do but the reality is that it is not being done, I say that that is a failure in policy.

The Earl of Caithness

My Lords, I am glad that the noble Lord rose to his feet to say that. Many of your Lordships have concentrated on the cities and rightly so. I am grateful to the noble Lord, Lord Henniker, for what he said about rural housing. The noble Lord was right to say that there is no reason why those in rural areas should not have the right to buy. I was grateful to him for the welcome that he gave to the announcement made by my right honourable friend the Secretary of State on 5th July. We are looking to increase the supply of rural housing by expanding the role of housing associations and encouraging private investment. The housing corporations are doubling their programme in rural areas with a target figure of 600 approvals by 1991. We are also looking for more private investment in low-cost housing in villages. The deregulation of rents, combined with benefits and subsidies now available, should provide a major stimulus.

Many noble Lords opposite have said that we must have more houses. But, sadly, no one has said where. I believe that all noble Lords who have spoken are, like the Government, supporters of the Green Belt. At Question Time today the noble Lord the Leader of the Opposition specifically asked for a commitment that no more agricultural land should he taken for any kind of development. Presumably that included housing. Yes, we all agree that there is a problem and that we must use existing accommodation to the full. I contend that without the measures in the Bill to stimulate the provision of private sector rented accommodation the position will become only worse. In contrast to the position of noble Lords opposite we want the private rented sector to play an important role in increasing consumer choice and contributing to job mobility, just as it does in other prosperous European countries. Our proposals will open the way to a revival of private renting.

A good deal has been said during the passage of the Bill about harassment. Much of this comment overlooks two very important points. First, landlords who break the law are a minority, not the majority as some would have us believe. Secondly, the worst landlords make their profits as a result of the Rent Act because, just like Mr. Rachman in the 1950s, they buy houses with tenants at prices which are severely depressed by rent control with the aim of driving out the tenants and selling with vacant possession. This process has been going on for years; it is caused by the Rent Act; and the Bill will self-evidently reduce the opportunities for this sort of behaviour rather than increase them. I am sure that that will be welcomed by the right reverend Prelate, who spoke with feeling on the matter as did the noble Baroness, Lady EwartBiggs.

I am not saying that the Bill will put an end to bad landlord behaviour. Of course, it will not. There will always be some unprincipled landlords. But we believe that our proposals on harassment and repairs, and on houses in multiple occupation, will go far to discourage had behaviour and to provide the tenant with a remedy when it does occur.

The noble Lords, Lord McIntosh of Haringey and Lord Dean of Beswick, said that we had not learnt lessons from the 1957 Rent Act. Of course it can be seen in retrospect that the Rent Act of 1957 did not achieve the objects of the government of the time. I believe that the Opposition now tend to blame the 1957 Act for the decline in the rented sector, whereas the truth is that it probably had little effect one way or the other. However, there are lessons to be learned from the 1957 Act and we have learned them.

First, the Bill, unlike the 1957 Act, does not deregulate existing lettings. The rights of existing tenants will be protected. Secondly, we are offering future tenants reasonable statutory security of tenure where in 1957 security was left entirely as a matter of contract. Thirdly, in 1957 there was no legislation on illegal eviction or harassment. Now we have the Protection from Eviction Act 1977 which we are strengthening. Finally, there is one other big difference between 1957 and today; namely in the 1950s there was no housing benefit system to help the poor tenants to pay their rents.

Housing associations will, of course, still mainly be responsible for providing lower-income groups and people with special needs with housing. Indeed, we want them to expand that role in which they are well experienced; more experienced than local authorities. Deregulation will, therefore, not result in associations raising their rents as high as the market will bear. Housing associations are non-profit making bodies and will continue to receive grant towards their development. Between 1987—does the noble Lord wish to speak?

Lord Stoddart of Swindon

My Lords, no, I apologise to the noble Earl. We were discussing something that he had said.

The Earl of Caithness

My Lords, between 1987–1988 and 1991 there will be a 20 per cent. increase in the provision for the Housing Corporation's approved development programme, taking it to £850 million.

We propose a system under which grant rates will vary according to location and scheme type so that the differing development costs are taken into account. In this year's pilot mixed-funding programme national average grant rates were about 60 per cent. With grant rates at these levels, the Government are confident that housing associations will be able to bring forward schemes, including schemes for the homeless.

We accept, however, that some smaller or special needs housing associations may not, at least initially, be able to obtain private finance. For these worthwhile schemes 100 per cent. public funding will continue to be available.

The reforms of the housing benefit system, which some of your Lordships mentioned, including the noble Lord, Lord Ross of Newport, and the right reverend Prelate, which took place in April, removed a large number of anomalies. They have helped to ensure that benefit is directed towards those who need it most and in particular they protect the most disadvantaged people by ensuring that their rent is met in full. Our proposals for the treatment of rent for benefit purposes after deregulation should mean that the rents charged by individual housing associations are met in full. The cut-off point for eligibility purposes will be market levels, and associations will be in receipt of grants aimed at maintaining rents below such levels wherever they would be beyond the range of lower income groups.

I am aware of concern that tenants at particular income levels may be hard hit by rent increases. The interaction between rent levels and housing benefit will clearly need to be taken into account in the Housing Corporation's administration of grants to housing associations.

The noble Lord, Lord Winterbottom, raised the important point of housing for Wales with which the noble Lord, Lord McIntosh, disagreed. We believe that it is not only appropriate but essential that, at this particular important juncture in the development of the movement, the work of the Welsh associations should be supported by a body which is wholly Welsh-based and is completely in tune with the housing needs of Wales. That idea found overwhelming support among housing interest groups in Wales when it was canvassed in the consultation paper issued at the end of last year. Therefore, I can say to the House that in our view this important measure is very timely and carries the wholehearted support of the people of Wales.

I am delighted to assure my noble friend Lord Moyne that it is common ground between my department, the Housing Corporation and the housing associations that associations should be allowed to retain such surpluses as are reasonably required to set up sinking funds which will provide for future major repairs. That is far better than making associations dependent on grants with all the bureaucracy and rationing which that entails to finance major repairs. However, I fear that he has not yet persuaded us that associations should be allowed to retain the whole of their surpluses over and above what is required to finance major repairs. They should be allowed to retain a proportion; that will help them to give the private investor his confidence which we agree is so important.

I mentioned earlier that there would be guidance from the Housing Corporation—a tenants' guarantee—which will be cleared with the Secretary of State. This will cover allocations, tenancy terms and principles for setting rents. Perhaps I may remind your Lordships of some of the relevant factors which will be included. Houses must go to those who need them most. Disadvantaged groups must receive special attention. Tenancy agreements should allow tenants to exchange homes and carry out improvements. Rents must remain within the reach of those in lower paid employment. The principles behind the tenants' guarantee will extend beyond housing associations to cover, for example, landlords who seek to take over properties from the new housing action trusts provided for in the Bill.

Lord Dean of Beswick

My Lords, I am very grateful to the Minister for giving way. The question of the designation of HATs was only sprung on us today. Have the Government thought through what the effects will be on some of the large local authorities which have substantial stocks of pre-war houses that are out of loan sanction and which operate pool rents? The removal of the loan obligation from some houses allows them to level a lower rent on the more modern properties. What will happen under the HATs scheme if those properties are taken over in HATs areas? Will not the rents then escalate?

The Earl of Caithness

My Lords. I know that that has been of concern to my honourable friend the Minister for Housing. Perhaps I may write to the noble Lord on that point.

I welcome the support of my noble friends Lady Young and Lady Gardner of Parkes for the proposed HATs. I am sure that both my noble friends are right that in years to come the success of the policy will lead to areas positively seeking HATs designation and the benefits which they can achieve. Anyone who has seen estates like North Peckham and Gloucester Grove in Southwark will know exactly why we have brought forward proposals to establish HATs. They will provide a window of opportunity to tenants who now live in what are often squalid and depressing circumstances.

If we decide to go ahead with HATs in the proposed areas, and the designation orders are approved by Parliament, local people will be consulted and involved in a number of ways: HATs will be statutorily required to consult tenants about their plans for the future of the area and about day-to-day management of the estates. We shall appoint to HAT boards people who know and live in the area; and we have said that we expect this to include tenant representation.

We shall be asking HATs to create tenants' advisory fora to provide a focus for channelling local peoples' views beyond representation on the HAT board and beyond other consultative arrangements. HATs will want to encourage locally-based management techniques pioneered by the Government's priority estates project and estate action programme, which will include encouraging tenant management. When HATs come to dispose of property occupied by secure tenants they will be required to consult them fully about the disposal options.

I should say to the noble Baroness, Lady Fisher of Rednal, that HATs will only be able to make such disposals to landlords approved by the Housing Corporation or back to a willing local authority. Furthermore, beyond its housing role, HATs will help to provide job opportunities and encourage the enterprise of local people. I very much hope that the six local authorities affected by today's announcement will lend their full support to the establishment of HATs in the interests of their tenants.

As regards HATs I should like to correct something said by the noble Lord, Lord Dean of Beswick. He said that £176 million was being spent on HATs. I can confirm that the figure I gave in opening the debate was £125 million which has been allocated to the six housing action trusts over the next three years.

The noble Lord, Lord Ross of Newport, complained that HATs were wrong because they were undemocratic. HATs will be statutorily required to consult the relevant local authority and local residents about their proposals for the area and also to consult tenants about the future management of their homes. Of course, HATs will be accountable to my right honourable friend the Secretary of State who, in turn, is accountable to Parliament.

I believe that there is some confusion about the proposed proportion of local authority stock which we believe might be taken over by those six HATS. It varies from about 4 per cent. for the London candidates to 12 per cent. elsewhere. That amounts to a relatively small proportion of local authority property in those areas. The establishment of HATs should ensure that the stock is better managed and maintained so that, for example, the many properties lying empty will be brought back into use, not least to deal with the problem of homelessness.

I disagree with the noble Lord, Lord Stallard, on the Clause 70 point which he raised concerning HATs. The key role that HATs can play in alleviating homelessness is to bring back into use stock which is currently lying empty. Beyond that we intend that the Secretary of State will make clear in his management guidance to HATs that he expects them to act positively in support of their duties under Clause 70 by, for example, entering into agreements with local authorities over nomination arrangements.

Another window of opportunity is provided by Part IV of the Bill. Probably no part of the Bill has been more misrepresented than the tenants' choice provisions. Some tenants have quite wrongly been told that they will have no choice whether to transfer or not; and that, if they do transfer, they can, at best, expect the imposition of large rent increases and, at worst, eviction. The truth could not be more different. Tenants' choice increases tenants' rights. It effectively gives tenants the right to seek a new landlord to whom they would like to transfer their homes. It will be tenants who will choose collectively, whether an application goes through; and individually, whether they want to transfer or stay. It will be tenants who will decide whether the terms on offer from an applicant are acceptable.

Tenants will also have the very substantial safeguard of knowing that, to gain approval, applicants must be prepared to commit themselves to the long-term provision of housing for rent and must meet very stringent tests of competence and suitability drawn up by the Housing Corporation.

Many of the new landlords who take part in the scheme will be housing associations. Others will be responsible private landlords. Some will be bodies which tenants will be helped to set up for themselves. Tenants must not be deterred by tales of mythical Rachmans and profiteers who would stand no chance of approval.

The noble Lord, Lord Dean of Beswick, asked which local authorities are thinking of transferring their stock to new bodies. Let me assure the noble Lord that it is not wishful thinking on the Government's part. The Institute of Housing has said that it has been contacted by over 100 authorities, and the department is aware of over 70.

Let us remember that in the case of voluntary transfers by councils the local authority itself will have made the choice to transfer its housing to another body when it comes to the disposals we talked of earlier. It is one thing to say that such a transfer should not happen in the face of overwhelming opposition. We agree with that. It is quite another matter to force a locally-elected authority to continue to be a landlord against its will if it has decided to opt out of direct housing provision, met the criteria laid down by the Government and convinced most of the tenants affected that there is no reason to object.

The noble Lord, Lord Ross of Newport, expressed concern that tenants of some of the councils considering large scale transfers were confused. Of course it is right that there should be safeguards for tenants, and we have provided for them. The Housing and Planning Act 1986 spells out requirements for consulting tenants. The authority must give the tenants enough information about its proposals for them to take an informed view.

To the noble Lord, Lord Stallard, and to my noble friend Baroness Faithfull, I should say that, before the ballot of tenants, the applicant will have to set out for them clearly, on a basis which binds him legally, his proposed rents under the new tenancies and the arrangements for the review of rents and also the other terms of the tenancy, including repairs. If a tenant does not accept the proposal, he or she can reject it by voting against transfer. I am sure that tenants will not vote for rents that they cannot afford, and the new landlord will only be able to charge those rents in future on the basis set out in the tenancy agreement. No tenant therefore will face unexpected large increases in rent at or after transfer. There are safeguards therefore.

Let us stress to the noble Lord, Lord Dean of Beswick, and the noble Baroness, Baroness Fisher of Rednal, that a transfer cannot happen unless tenants are fully and properly consulted and it cannot happen if a majority object. But, so long as there is that longstop, we accept the principle that a local authority may opt out of the direct provision of housing.

The Lord Bishop of Southwark

My Lords, while the Minister is dealing with the transfer by a local authority of all its housing, will he deal with the question of what will happen about the statutory duty to house the homeless? Will he come to that?

The Earl of Caithness

My Lords, I am afraid I cannot recall whether I shall come to that because I have a lot of notes that I shall not come to. However, I can assure the right reverend Prelate that if I do not come to it I shall write to him about it. It is an important point.

Lord Stoddart of Swindon

My Lords, I am most obliged to the noble Earl. Am I right in believing that the Bill provides that if the tenants agree and the houses are transferred to another landlord, the local authority may have to pay a sum of money in transferring those houses in the sense that they will be transferred at market value but that the amount of loan outstanding could be greater than the market value of the properties? If I am right in that, where will the additional money come from? Will it come from the housing account or from the ratepayers? If it is to come from the ratepayers, should they not have some say in the matter?

The Earl of Caithness

My Lords, that is a point that we shall be looking at in detail in Committee. As I understand it, there could be a negative value on the properties.

To my noble friend Baroness Gardner of Parkes I should say that councils will not be relieved of their statutory duty for the homeless if they no longer have any housing. But, if they have made provision through an enforceable contract to dispose of that statutory duty, then they would be relieved of it. The local authorities would have to make very adequate arrangements in order to convince us on that point.

Contrary to what some of your Lordships have said, local authorities will continue to play an important role in assessing local housing needs and in ensuring that those needs are met.

I was very interested to hear what my noble friend Lord Swinfen and my noble kinswoman Lady Masham said about the very strong desire which many disabled people have to own their own homes. I pay tribute to the way that my noble kinswoman has assiduously kept us aware of the depth of feeling there is on this subject. I have considerable sympathy with them. Why should they be denied the rights of others? I know that there are strong feelings on all sides of the House, and this is a matter which will be debated at length at a later stage.

The noble Lords, Lord Shaughnessy and Lord Seebohm, mentioned in particular the Duke of Edinburgh's inquiry into British housing. One of its recommendations was that rents in all sectors should be related to the capital value of the property. That leads us to market rents. I should like to reaffirm what the Government have said repeatedly in another place. We fully accept that, if our policy of boosting the private rented sector is to work, tenants on low incomes or who are unemployed will need help to pay market rents. We have undertaken that housing benefit will be available to enable tenants to afford market rents. There will of course need to be checks to prevent exploitation of the benefit system, and that will be the rent officer's role. However, there will be no attempt to depress the level of rents met by benefits below market levels.

To the noble Lord, Lord Seebohm, I should say that it is quite wrong to suggest that housing subsidies go preponderantly to owner-occupiers, notwithstanding the fact that the average private tenant already receives about 50 per cent. more in rent allowance than the average owner-occupier receives in mortgage interest tax relief. The noble Lord, Lord Stoddart of Swindon, wants equalisation. I do not know whether the noble Lord wants mortgage tax relief to go up or rent allowance to come down.

The right reverend Prelate the Bishop of Southwark asked about the number of tenants claiming benefit. About 1.1 million tenants will receive rent allowance in 1988–89. The number is likely to rise as the number of lettings at market rents increases.

I know that I have not answered all the points raised. Perhaps I might be permitted to answer the noble Baroness, Lady Ewart-Biggs. Where a tenant has a Rent Act tenancy, any new tenancy granted by the same landlord will also be a Rent Act tenancy. That was a point she raised of major concern. This applies whether the new tenancy is related to the same or different accommodation. All that is required is that the landlord and the tenant must be the same.

I promise that I shall write to those of your Lordships who raised points that I have not covered. I know that there are many. The subject of housing, as the noble Lord, Lord McIntosh of Haringey, said, is incredibly complicated and is a subject which all governments have faced. We believe that our housing policy is both caring and realistic. We are not ignoring the needs of those who cannot afford to buy or who do not wish to buy. However, the status quo is untenable. The Bill before your Lordships embodies a new strategy for the way in which rented housing will be provided in future. It will deregulate new lettings in the private sector in order to encourage new landlords into the market. It will restructure housing association finance to help them make greater use of private sector funds. It will establish housing action trusts to take over and channel resources into some of the worst areas of run-down local authority housing. It will give local authority tenants new rights to choose their preferred landlord, and it will clarify local authorities' rights to seek a new landlord. This will ensure that there is a choice of housing options available for those who want to rent their homes. I therefore ask your Lordships to agree that this Bill should now be read a second time.

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