The rent recoverable from the tenant of a dwelling-house in Scotland which is subject to a controlled tenancy shall be increased on the commencement of this Act and on each anniversary thereof by 25 per cent. or such lesser proportion as may be necessary until the recoverable rent equals the gross annual value of the dwelling-house.—[Mr. Hendry.]
I beg to move, That the Clause be read a Second time.
I have here a letter from a constituent which seems almost incredible. He writes:
I am the landlord of a flat above my own home and have just given the tenant a receipt for a half year's rent. The sum involved is £8 11s., a total of £17 2s. per year.
My constituent has written this letter completely on his own initiative. It is a long letter and I do not propose to read it all, but on the following page he says:
There are six habitable rooms in the tenant's flat.
Here we have a flat with six rooms, a bathroom and all modern conveniences, for which the half-yearly rent is £8 11s.
Incredible though it may seem, that is something not uncommon in Scotland, where the level of rents of houses controlled under the old Rent Acts is quite fantastically low. Indeed, when one compares rents in Scotland with the corresponding rents in the south of England, one almost imagines that the half-yearly rent is a week's rent by English standards, and that the whole year's rent corresponds to the English monthly rent.
These very low rents are due principally to historical causes, with which I need not weary the House. Suffice it to say that in Scotland formerly the landlord had to pay part of the local rates, and as the local rates went up year after year between the wars the amount of rent retainable by the landlord became less and less. After the last war that process continued even faster, and things reached such a pass in 1956 that Parliament took steps to change the incidence of rates so that the whole of the rates became payable by the tenant and the landlord knew where he was, but by that time the retainable rent receivable by the landlord had fallen to such a very low level that in some cases the effect was a negative rent retained by the landlord. Such a ridiculous situation had to be dealt with. Since then very small increases have been retainable by the landlords where they have carried out certain repairs, but still the level of rents is very tiny indeed. In many cases the rent which is received by a landlord is not sufficient to pay the very minimum of repairs necessary for these houses.
I propose this Clause not in the interests of landlords, because, after all, with tiny rents like that there would be very little benefit to the landlord from a very small increase such as the 25 per cent. which I have suggested, but in the interests of the tenant himself—[Laughter]—so that the house occupied by him will at least be kept in some semblance of repair. Hon. Members opposite may laugh at my concern for the tenant, but it is obvious that we must have a great deal of concern for the tenant when we look at the actual level of rents and the effect of the Clause which I am moving.
In February of this year the Scottish Development Department published the results of a survey, made under their supervision, of the rents of controlled houses in Scotland. It was a voluntary survey, and it was done in conjunction with the National Federation of Property Owners in Scotland. It did not cover the whole of Scotland, but it covered the greater part, and covered 56,740 houses which, by any reckoning, is a very substantial sample of houses in Scotland.
As this is a Government publication, we are entitled to look at it to find out what the effect of my proposals would be. We find here that taking all controlled rents contained in the survey, which includes three of the major cities of Scotland and a considerable number of counties, the average rent of those let houses subject to control under the old Rent Acts was £15 15s. 5d. per annum, an incredible figure. If we look at the average gross annual value of these houses we find that the figure is £27 16s. 7d. per annum, so that, obviously, if the rent were increased to the full extent of the gross annual value the rent would still be ridiculously small and would barely suffice to cover the cost of necessary repairs.
These houses are rapidly going into decay. Even a small increase in the retainable rent would be of very great advantage to the tenants who have to live in them, because what has been happening in the past is that landlords have been maintaining these houses in repair out of their own pockets at their own expense, and that is a process that can only go on for a very short time.
If only the hon. Member were patient, he would hear this. I can understand his anxiety. These houses vary in age considerably, but they were all built prior to the First World War. That does not necessarily make them very old houses. Some of these houses have been built in the first decade of this century and are well-built stone houses, with several apartments, hot and cold water, bathrooms and all modern conveniences.
There are throughout Scotland modern tenement houses of that sort rented at about £20 per annum. They were rented at about £20 per annum in 1914 and are still rented at about that figure because of the historic incidence of local rates. In his own constituency the hon. Member will find modern houses with three or four bedrooms have rents at that sort of level. There are many of them in the City of Dundee, which I know personally.
I will try to help the hon. Member further by speaking about the type of these houses. They vary a great deal and from his knowledge of rateable value in Scotland he may be able to identify them. In the Scottish Development Department's survey they have been put into six categories. Those categories are: houses with a gross annual value ranging from nothing to £15 per annum; between £16 and £20; between £21 and £25; between £26 and £30; between £31 and £40; £41 and over. The hon. Member will know that an old house with a rateable value of over £41 is by all accounts a good house.
There have been several cases in Scotland recently where luxury houses have been the subject of rent appeals. I have no doubt that the hon. Member for Dundee, West (Mr. Doig) could tell us something about them. Every Scottish hon. Member will appreciate that a house with a rateable value of over £41 is by any standard a good house. Houses in the highest category in the survey number 8,559, 15·1 per cent. of the total. The average rent of these houses, which were controlled under the old Rent Acts, with a rateable value over £41, is £26 19s. 10d., which is ludicrously small.
If the hon. Member had any knowledge of management of property he would know that it is impossible to maintain a house in Scotland, England or anywhere, in a state of repair if the rent is in the region of £26 19s. 10d. per annum. I should have thought that anyone with experience in this matter would have known that.
Returning to the category of the 8,000 houses mentioned in the survey, the highest category with an average rent of £26 19s. 10d., the average gross annual value is £51 0s. 3d.—less than £1 a week, less than the hire of a television set. Many people in Scotland are paying less in rent of a house than rent for a television set. If these rents were increased only to the gross annual value, the average rent would be less than £1 a week. I admit that in certain circumstances there might be hardship and certainly a shock if the rents were increased in one jump to the gross annual value, even if the increase were only from £26 to £51 a year. I suggest that it would be reasonable if it were increased in steps to something like a fair rent and the steps I propose are of 25 per cent. increases. That would be over about four years, but not necessarily over four years because it is not entirely a matter of a 100 per cent. increase to bring the rent to what the local assessor considered a fair rent. There is a statutory duty on the assessor to fix a fair rent in these circumstances. I suggest that if that were done this horrible situation of vast quantities of houses in Scotland falling into disrepair would cease and the standard of housing there would improve accordingly.
The House will see that this is not a serious increase under any circumstances and would be fair to the landlords and the tenants. The question of reaching a fair rent has already been discussed on another new Clause dealing with the proposed arrangements for converting a controlled house into a regulated one. The Minister himself moved the new Clause which, under certain conditions, allows an increase of 15 per cent. per annum. It was proposed that this should only be done in certain circumstances and by order. The Minister argued cogently against many of his hon. Friends that 15 per cent. was reasonable. I suggest that if 15 per cent. per annum up to the gross annual value is reasonable in England and Wales, my proposal that there should be a 25 per cent. increase per annum in Scotland is more than reasonable.
I believe that as a result of the deliberations in Committee the Under-Secretary has a certain amount of sympathy with this proposal. I hope as a result of his deliberations since the Committee stage, when I was rather less modest than I am now, his sympathy will be abounding and he will be able to accept this Clause.
I am tempted to support my hon. Friend the Member for Aberdeenshire, West (Mr. Hendry) only because one of his truisms caused laughter on the other side of the House. The laughter came from hon. Members whose hearts are usually in the right place, but on this occasion they were showing their prejudice against the landlord. Deep down in their hearts they know that what is proposed is in the best interests of the tenants. It is a fact that if the rent does not produce an income which allows the owner to spend money on repairs then essential repairs are neglected. Those of us who visit Scotland and enjoy it and find that its people are friendly think that there are too many deplorable houses there. The proportion is much higher than in England.
I do not think that the coincidence or historical accident to which my hon. Friend referred which has kept the rents so stupidly low is the reason for the bad conditions there. We in England who have always looked after Scotland and who would like to see a better standard—
On this occasion, I want to support my hon. Friend against the laughter.
Those who manage property want to keep it in good condition. They can only keep it in good condition if they have an income which enables them to spend money on it. I accept completely the contention of my hon. Friend that if his Clause were accepted it would be in the interests of the tenant. I do not think that the landlord would be able to retain anything that was worth while out of it. If we view this objectively, and accept the facts of life, and they are that the income has to be there before it can be spent, it would be seen to be in the best interests of improving the housing conditions of Scotland to accept the Clause.
I hope that the Treasury Bench will see fit, if it wants to improve general housing conditions in those parts of Scotland, which are in need of improvement, to accept the Clause. We have to ensure, by legislation, as far as we can, that the money going into the coffers is spent upon these things. If the Under-Secretary of State can think of a better way of increasing the rent, so that it could be spent on repairs, we will listen, but if he cannot, I think that the House will advise him to accept the Clause.
There is some misunderstanding on the part of the hon. Gentleman the Member for Aberdeenshire, West (Mr. Hendry), about the intentions of the Government in this matter. I thought that we had successfully convinced the House that our new Clause No. 3 was a response to what was said in Committee on this point. What the hon. Gentleman the Member for Aberdeenshire, West, is seeking to do is to introduce into the Bill an entirely new system of rent tariffs which is quite foreign to the whole intention behind the Bill.
The hon. Gentleman is perfectly consistent in that he has always maintained this point, irrespective of the Government in power. The last time that the hon. Gentleman moved such a Clause, as I reminded the Committee, was in 1962, in the discussion on the then Bill. The then Under-Secretary said that the data on which his argument was founded was uncertain and unknown, and that until such time as the then Government were able to know the full facts, it was wrong of them to accept his proposition. When the hon. Gentleman moved a similar Clause in Committee he resorted, quite fairly, to a survey conducted by the property owners in Scotland, with the full co-operation of the Scottish Development Department.
It was always said that this was an incomplete survey which did not cover all the houses in Scotland, but only a certain number. In relation to controlled houses it involved 56,000, compared with a figure of quarter of a million such houses. So it cannot be said that it was a completely sound survey. My point is that, like the previous Government, until such time as we have further facts, no one can argue the case whether it is true that in all cases of controlled houses in Scotland they will go to at least the level of the gross annual value in rent.
The hon. Gentleman says that survey was incomplete and did not give a true picture because it involved 56,000 out of 250,000. The Government are taking a census survey based on 1 to 10 and they will act upon that picture. Surely 1 to 5 is more accurate?
That might be fair if one is an amateur statistician, but if one talks to statisticians on this one finds that there are various ways of taking samples and of innocently taking inaccurate samples which give a wrong answer. No doubt Dr. Gallup might have a good argument about this.
One of the first acts of this Government was to agree to conduct, through the Social Survey Unit, a comprehensive survey of housing finance and housing conditions in Scotland. The first of these surveys will be published in the autumn and we hope then to have the first full social record of what the Scottish housing position is.
I am not arguing the conclusions of the survey, which I have not seen. I am saying that there is no comprehensive picture of evidence on which to base the arguments that the hon. Member has put forward—I merely re-echo what Under-Secretaries of his party have said on this matter—and on which to make his claim that all controlled houses in Scotland should be rented at the gross annual value.
In the context of the Bill, the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) made a sound reflection when, in talking about the valuation pattern in Scotland, he invited me to make comparable comments on the Scottish system, as the Court of Session did recently on the English system. He said that it is not certain, in the argument about fair rents, that in all these controlled houses cases the rent officer would agree that a fair rent is gross annual value or more.
I will give some illustrations from the local housing indices of the 1961 Census. There are in Scotland 460,000 houses which do not have exclusive use of all four arrangements—that is, a fixed bath, hot water tap, water closet and cold water tap. Anyone with knowledge of the controlled housing pattern in Scotland knows, however, that the lower gross annual value houses, to which the hon. Member for Aberdeenshire, West referred in six categories, are the very houses which are without those facilities.
I admit that I cannot prove that. The figures have never existed to give us the exact figures in terms of rent tariffs as opposed to physical facilities. It is, however, a fair point for the Government to take to say that it is wrong to presume that all these controlled houses are bound at some time or other to be paying the gross annual value as a fair rent—that is, presuming that the rent officer is bound to accept this right away.
The hon. Member is arguing that while nothing is to be done about this in England, where the housing position, in crude physical terms, is at least six times better—there is no comparable English Clause to that which the hon. Member has moved, in Scotland, where housing is worse, after the Bill has received the Royal Assent we are to have for the controlled houses an automatic rise of 25 per cent., 25 per cent. a year later and the same thing the following year and the year after that until the full gross annual value rent is paid for controlled houses.
I am willing to concede that there may be a category of housing for which that is fair. I go further and say that perhaps even the rent officers might decide that the fair rent was higher than the controlled rent. That, however, is for the rent officers to decide. Otherwise, the whole intention of the Bill will be frustrated if we presume that we know the answers when we neither have the complete evidence nor know how the rent officers will work.
As we have agreed to incorporate new Clause No. 3 in the Bill and we have allowed the idea of bringing in controlled rents in an orderly manner, and since the creeping decontrol provisions will mean that about 17,500 houses will come out of control into regulation, as well as the operation of subsection (6) of new Clause No. 3, we are making a serious attempt to look at the problem.
I for one accepted the position of the property owners when they argued the case that they should have a pilot scheme in Glasgow, in the only area where they could, to demonstrate how they could modernise tenement property and make it fit to live in. With the agreement of my right hon. Friend the Secretary of State, who is on duty in Scotland attending Her Majesty, otherwise he would be anxious to take part in this debate, we persuaded the corporation to embark upon a trial process like this to demonstrate the financial facts.
If the property owners have a case for modernising property, they should be allowed to demonstrate it and we should be allowed to see the kind of rents which they would have to charge to make the system viable. We are not adopting a doctrinaire, hidebound attitude. The House must be fair, and see that the Government's intentions are respectable. We have honoured what we said in Committee by bringing in new Clause No. 3, and we feel that although it may be modest in the eyes of hon. Gentlemen opposite, it is an attempt to try to make fair rents work not only for regulated and presently decontrolled houses, but also for the controlled housing sector in Scotland.
It is with some hesitation that I rise to speak on a new Clause which refers only to Scotland, but as I was considered fit to defend Scotland during the war, I do not see why I should not criticise her when I think that she is doing wrong. I was in the 52nd Highland Division for 2½ years during the war. I was prepared to fight, and if necessary to die, for Scotland, and therefore I do not see why I should not be allowed to criticise what is being done here.
I support the Clause because most of the arguments advanced by the hon. Gentleman were in favour of it. He said that the situation in Scotland was six times as bad as that in England. What is the reason for that? It is—and I say this with great trepidation—that Scotland has not been as wise as we have been in England. Down here there has been a steady growing acceptance of the fact that, if we want property to be maintained in a recent condition, rents have to rise with the fall in the value of money, and, therefore, rents have to be near the economic value that is necessary for a landlord to get an income on which he can modernise his house.
The housing situation is worse in Scotland than in England, because what I call market forces have not been allowed to operate to the extent that they have done in England. I do not say that there is not a housing problem in England, but it is accepted that the quality of housing, particularly controlled housing, is worse in Scotland than it is here. Everybody knows that rents in Scotland are very much lower in Scotland than they are in England and, therefore, very much further away from the economic rents, or the gross rateable value. This is really half the problem that is facing Scotland.
The hon. Gentleman says that the Government are to conduct a survey, and that they have only 55,000 houses on which to base a decision. That is the sort of argument that I heard for 13 years when we were in power. The hon. Gentleman has learnt very quickly that when one does not want to do something, the thing to say is, "We have not got enough information." We do not need a survey to tell us that landlords in Scotland do not receive a reasonable rent for their property. In some cases they receive only a quarter of the gross rateable value of the property, and, therefore, under the present economic conditions no money is available for them to bring their property up to a respectable standard.
I would not mind if the Government said, "We accept the ideas behind the Clause, but if in means that over a period of years rents of houses will be brought up to the gross rateable value, we will bring in a parallel Clause so that this may only happen provided that the landlord carries out certain improvements to his property".
The hon. Gentleman has interrupted in a most discourteous way. He has done so while remaining seated. I shall not give way if he rises now. The point is that if the hon. Member, speaking for the Secretary of State for Scotland, said, "We accept the basic concept behind the new Clause but if we brought it into force we should want to have certain corollaries running parallel with it. We would accept gross rateable value as the recognised rent for the properties in Scotland only if the landlord, before being allowed to get the rent that would accrue to him as a result of the Clause, did carry out certain improvements to the property", I would support him. We all want improvements brought about by the provision of baths and lavatories.
The hon. Member should not refer to himself in derogatory terms at this hour of the night. We know that he is a squalid politician. I do not know why he should seek to draw attention to the fact.
Everybody in Scotland, for very desirable reasons—because they wanted to keep the rents down—
I will bring the House back to the good humour it was in previously. I am sure that the hon. Member is not capable of initiating a deliberate falsehood even if he tried. He is showing his usual exuberance when sitting on those benches. He can never keep quiet for long.
I was only trying to reduce the temperature of the House. [HON. MEMBERS: "Oh."] If hon. Members wish to interrupt me I can go on for a long time. I do not mind what the hon. Member for Central Ayrshire (Mr. Manuel) says about this. The level of rents of controlled tenancies in Scotland are very much lower than those in England. I am not trying to make a party point, because this situation has existed for many years, and both Governments have some degree of responsibility for it. But if the Scottish Office was honest about it it would agree that this is why so many houses in Scotland are in a worse condition than those in England.
In the table to which I referred, 55 per cent. of the houses in Scotland which are privately rented have one or two rooms. That is not true in England. When I said that the position in Scotland was six times worse, I meant that in these physical terms. It is unfair to compare rents of one-apartment and two-apartment houses with the rents of three- four- or five-apartment houses. That is what the hon. Gentleman is doing.
With great respect to the Under-Secretary of State, a great many houses in England are one up and one down. The facilities are little different from those in Scotland. These properties present a problem, but if one is to go any way towards solving it, we will not get any private landlord to bring about the improvements which we all want to see, unless he draws much nearer to an economic rent for that property and therefore has the reserve powers which are needed for him to expend the money on those improvements.
Is the hon. Member aware that his party, when in power, passed the 1954 and 1957 Rent Acts, which said that the cost of any repair carried out to or in or at or near a property was passed on to the tenant and that, after the total sum of the repair had been paid by the tenant, the increases in the rates still remained on the rent book and still continue today. So landlords in Scotland have been collecting additional money in additional rents for those repairs carried out since 1954 and 1957.
I shall not enter into a long speech on that. In fact, that is not completely accurate. Anybody who has studied the housing problems of the last 10 years knows that that is what I would call a loaded question. It is not strictly true. If one starts from a completely uneconomic rent and, because one spends a small sum of money on modernisation, one is allowed to amortise that amount and increase the rent by 2s. a week, if the rent is still below the uneconomic price which the landlord is getting in return, there is no incentive to do that modernisation.
I am not trying to make a party point. I think that because of the political problem in both parties, because of the great emotion involved in this, none of us has fundamentally faced the fact that property does not remain in good condition unless, in a prosperous society, the people living in that property are paying what, in the value of money today, is an economic rent.
The Clause says that people in this property should pay an economic rent. Knowing the Government's ideology on this, I would say to them that I am prepared to accept that if they accepted the Clause they would do so on the basis that they would want to bring in some conditions to say that if the rent was to be increased, it would be allowed to be increased provided only that the landlord had carried out the necessary improvements to bring the property up to the standard acceptable to all the people in that house.
That would be a sensible and constructive approach to the problem from the Government of the day. I am surprised at the attitude on the other side of the House, because I am trying to be constructive and to overcome the problem which every person in the country wants to see overcome.
I think that I have made the point to the hon. Gentleman. I understand why his right hon. Friend the Secretary of State is not here, but the hon. Gentleman made a far more effective speech than his right hon. Friend would have done—far more vitriolic and in the House of Commons mood than we usually have at two o'clock in the morning. Any sensible person would accept the new Clause, if necessary with modifications. I would not object if the Government accepted it but added that there must be conditions attached concerning the increases. After all, we are speaking about the need to bring about improvements to property, much of which will be standing long after many of us would like to see it demolished and replaced with new building.
We should approach this problem as practical people and not as a group of individuals with certain ideologies. Nobody who owns property and who is not getting an income from it will spend his resources, if he has any, or income from other sources on improving that property unless he knows that he will get a reasonable return on the money invested on making those improvements. I hope that the Government will approach the new Clause in a constructive way and will either accept it or accept the principle underlying it.