The Bill, as the Government have pointed out many times, brings in a new system for basic subsidy in Scotland. This is, perhaps, its most important provision, and the first three Clauses govern it. But the clear point remains that the amount of the basic subsidy due to local authorities for new housing will vary from year to year and that the rate is to be decided by the Secretary of State himself in relation to the previous year's interest rates. It has been argued that this will be helpful to the local authorities because it will give them assurance for the future against rising interest rates and against high interest rates. Clearly there is advantage for the local authorities when interest rates are high, and certainly, in the last two years, when the rates have been continually high during the period of economic crisis, a basic subsidy related directly to interest rates is an advantage.
The question which we want to ask—and I hope the Minister will be able to give me some attention because this is an important question—is, does the Minister expect this state of economic crisis to continue for the whole period of the Labour Government? He has been speaking as if there will always be interest rates of 6½ per cent., or 7 per cent., or even higher. I can assure him that the country, almost unanimously, hopes that interest rates will come down. That is what people in all walks of life and in all trades and professions are hoping. If interest rates come down, then there is uncertainty as to what will be the actual amounts payable in subsidy each year.
To sum it up, local authorities have the advantage of the subsidy being pegged to 4 per cent. interest rate. That is quite understood, but in return for that they have the uncertainty about the amounts they will actually receive, depending upon how interest rates will vary or may vary in the future. Houses will qualify under the Bill for this new form of basic subsidy, in many cases where proposals were submitted on or after 1st January, 1965—that is, over two years ago. We have already discussed this retrospection. Most of those ought to have been completed, certainly if they are not multi-storey, during 1966, but the Government appear during that year to have lost touch entirely with the public authority housing programme. Indeed, they appeared to be completely at sea with the housing programme during 1966.
In March, the Government, through the Labour Party's manifesto, categorically stated that at least 40,000 houses would be built in Scotland in 1966. The manifesto said that the Conservatives had a target of 40,000, and it went on to say,
We will beat it this year".
We know the result. We know what, in fact, happened. The figure was just over 36,000. What happened to the other 4,000 houses? I hope that the Minister will tell us. We know, having seen last month the figures for the year, that the figure of 36,000 was considerably assisted by the private sector, which built about 200 more houses than in 1964. That is something which, in itself, is welcome, but the correct statement which the Labour Party should have made in its March manifesto less than a year ago should have been, "We will build about 36,000 houses and we will be considerably assisted in this by the private builders". That would have been a true statement, and a true prediction of what, in fact, happened. That is what should have been said. How could the Government have been so wide of the mark in March? Were they just hopefully guessing? Responsible Ministers do not usually allow such statements unless they are founded on some solid facts or information. If the Government were not simply hopefully guessing, then this was a misleading statement to the electorate. To put it bluntly, it was a swindle. Perhaps the hon. Gentleman will say that it was the economic crisis. But that economic crisis has been with us for two
years. It was no good making this prediction in March if it was subject to the economic crisis continuing. If the hon. Gentleman says that the July measures affected that prediction, that statement, that pledge, in March, we know that the July measures were drastic for Scotland. But if that is put forward as the excuse, why was the Minister of State still so confident last November? On 1st November, in the Scottish Grand Committee, when I mentioned the statement concerning 40,000 houses, he intervened to say
The year has not finished".
So, on 1st November, the Minister was still thinking in terms of 40,000 houses being built by the end of the year. Within two months of the end of the year he was out by 4,000. That is why we naturally doubt and wonder whether the Government know what is happening, or is likely to happen, with the building of new houses. Can we believe these statements, or the pledges, or the forecasts, on housing in Scotland which they put out? I hope that the hon. Gentleman will tell us something about this, because this is the first opportunity since those figures came out for the Government to explain why they were so hopelessly wrong with their predictions during the year.
The Bill does away with the favourble differential, as we see it, in the basic subsidies in Scotland, because the basic subsidy amounts for houses, unless the hon. Gentleman can tell us something different, will be the same in England and Wales as they will be for Scotland.
Previously the figures have been higher for Scotland. Where a house qualified for £32 subsidy in Scotland, it was £24 in England. Where it was £12 in Scotland, it was £8 in England. The system now adopted for Scotland on the one hand and England and Wales on the other means that this differential for basic subsidies disappears. I agree that a differential occurs in some of the special subsidies, but not in the basic subsidy.
The Minister may explain that this is adopted for England as well as for Scotland because subsidies are now altogether higher, but again we revert to the point about interest rates. They are higher now because interest rates are at crisis rates and we hope that they will not continue at present levels.
Regarding special subsidies, there are reductions under Clause 4 for multi-storey buildings, a point which we touched on during the Report stage, and, under Clause 9 for expensive sites. The Bill makes reductions in these two special subsidies.