Housing

Part of the debate – in the House of Commons at 12:00 am on 23 March 1945.

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Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley 12:00, 23 March 1945

I do not want to intervene in this Debate for very long, but I rise for this reason, that probably not many other hon. Members remember all the similar Debates on the same subject after the last war and carry clearly in their minds what the result was. It has been suggested from time to time during the Debate that some sort of superman should be brought forward to deal with this matter as an individual, and the only name actually mentioned has been that of the greatest ballyhoo merchant of the age.

Let us consider for one moment what a competent Minister of Housing, with very great powers, would do, if he had the power and instructions to solve the problem. The greater part of this Debate has been taken up by one hon. Member after another telling us that there is a problem, and some of them have told us this at extremely great length. They have said that there are not enough houses, that people want houses and will want more houses, and they have enlarged upon this until I think the House is convinced that there are not enough houses and that we do want houses. Having agreed upon that, how would a Minister of Housing deal with the matter if he had power? If he were a wise man the first thing he would do would be to find out why there is a shortage of houses, a thing which nobody who has spoken in this Debate has dreamt of talking about. If somebody suffers from a disease and goes to a wise physician, the physician makes certain first of all what the disease is, and if he is a wise physician, he inquires how it was caused. Again, if he is a wise physician he takes steps to remove the causes of the disease. The Minister of Housing, having come to the conclusion that the body politic is suffering from a disease, the first thing to do is to find the causes of the disease, and we have to go back some years—to the year 1910, in fact.

It is now nearly 50 years since I had to earn my own living, and I remember that 40 years ago if any of us got a job in a different district, it was almost always possible to find in that district an empty house of a suitable type at a low rent. There was thus usually very little difficulty in moving a reasonable amount of labour from place to place. There was not a housing shortage 40 years ago and this is the reason. A very large number of private builders were engaged in speculative building; that is to say, having in most cases worked their way up after starting in the building trade as carpenters or bricklayers, they went into speculative building work. The financing of the thing was easily arranged. A large number of other people, wishing to invest their savings and regarding house property as a safe investment with a reasonable return, were ready to invest their savings in the building of small houses. The builder, on the other hand, when he made a profit on his speculation, wanted a good safe investment and his investment consisted very largely in putting a rent on the land on which stood the houses that he built and sold. As the investor who bought the house was usually a small man who had to raise most of the money on mortgage, the builder had to sell his house at the cost of production, or even below, but he made his profit on the land and invested it simultaneously.

Then Mr. Lloyd George came along and put a stop to that. He said, "The builder is not going to have that, it is unearned increment." The result was that the builder stopped building. The speculative builder went clean out and working class property was not built any longer, because any profit that he made was to be taken away from him as unearned income since it was an increase of the site value of the house that he built. Thus the first thing the Government did was to get rid of the whole system under which working class houses were built, and that stopped any further production of working class houses. Then the last war came. We found then that rents had a tendency to rise, because houses had not been built, and they had not been built because of the land values taxation scheme of Mr. Lloyd George. The natural development was that working class house rents began to rise. "Ah," said the Government, "We must stop this. We must put on a Rents Restrictions Act, and not allow rents to rise in this way." They thus cut off any further capital which could possibly be devoted to building working class houses. They said, in essence, "If you invest your savings in any other investment than working class houses you get the full market return on your investment, but if you are such an infernal fool as to invest your savings in building working class houses the Government will see that you do not get the market return."

That finished off any investment in working-class houses, so the system came to an end. At the end of the war there was a great shortage of building material, and also of building labour, and Dr. Addison came along and introduced into a short market a customer backed by unlimited resources and determined to buy anything that was offered regardless of the price at which it was offered. The result was that in the short reign of Dr. Addison—which was terminated by the late Lord Melchett, who put a stop to it—we managed to get the cost of a hovel up to about —1,250 net. When Dr. Addison left, the average rise in the cost of a working-class house was something between 5 and 10 per cent. every month that went by. That is the reason why Mr. Lloyd George got rid of his housing Minister. The heart-breaking thing about it is that the House and the Government are going to repeat exactly the same mistakes that they made before, and repeat them on a larger scale. Surely our adventures with agricultural houses a year or two ago ought to have taught us something. We announced that we were going to build agricultural houses and the price nearly doubled. If we had announced that we were going to build a larger number, the price would have gone higher still. It is inevitable on a short market.

I have explained how we produced the housing shortage after the last war and accentuated it until we got to a position of affairs when it had to stop. The cost of producing houses was such that the country and the taxpayer could not stand it any longer. The way we got out of it was this. First of all, Lord Melchett stopped the Addison scheme, and there was a terrific slump in the cost of houses. Then we went on to subsidies. The subsidy is a most ingenious device. I can best explain it by an analogy which, fortunately, most Members have not heard me use before. Suppose somebody was selling oranges in the street off a barrow at a penny each and managed to sell, say, 100 in a day. Suppose a Government Department came along and said, "To every purchaser of one of your oranges we, at the taxpayers' expense, will give a halfpenny." The price per orange would go up to 1½d. and the orange merchant would pick up an extra½d. profit on every orange and would sell just as many of them. That is the principle of a subsidy. If people are willing to give a certain price for an article and to buy so many, whoever supplies the article shall be provided at the taxpayers' expense with an extra profit of which, if he is a builder, he pockets as much as he can keep out of the clutches of the building material merchant and the building worker.

Finally, they dropped the whole thing and cleared out as fast as they possibly could. Then we began to get some houses. We got quite a lot of houses—more than we had ever got before—but it took years and years of all this footling around, and this whitewashing of the spots, when a little bit of thought as to the cause of the shortage might have saved us all that gigantic expense and all that delay. In practice, as far as local authorities are concerned, it works out in this way. I was a member of an urban district council at the time when the Government thought its duty was to build houses. It was an urban area which had very bad housing conditions, because it was built mostly at the time when the cotton industry was started. I ran a policy of having no housing policy at all. I refused pointblank to allow my council to build any houses, or to take any part in the racket at all. What was the result? We got a higher percentage of new houses between the wars than probably any urban council in the whole of Lancashire.

The thing is so simple if only people would think. As soon as it was known that there was not going to be any municipal housing scheme in my area, all the builders for miles round came bustling into the area, and put up houses as fast as they could. In fact, in order to preserve open spaces, I had to put on the brake, and stop the building of houses. Every time a builder came into our area to build a house he gave us a bit more rateable value. The one thing that was hampering my schemes for the benefit of the district was that our rateable value was so low. After a few hundred houses had been built we got an increased rateable value with correspondingly lower rates, which brought us more houses, with a further decrease of rates, and so on. We have remaining from those days two or three wooden shanties, utterly unfit for habitation, which were forced on my council when I happened to be away. They remain there as a monument to Dr. Addison, who pushed them on to us.

I hope the House has really been brought to think about these things. There will be no solution of the shortage problem until we do away with the causes of the shortage. It is no use going on patching and patching; you have got to stop the cause of the shortage before the shortage can be overcome. We have to realise that there is a short market in housing. It is short so far as buildings, labour and capital are concerned. It is short in a much more important thing than capital or material. It is short, owing to Government action during the war, in the two greatest capital assets of industry—on the one side the spirit of enterprise on the part of the employer, and, on the other side, the will to work on the part of the worker.