Orders of the Day — Housing Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 15th November 1971.

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Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East 12:00 am, 15th November 1971

The figure which the hon. Gentleman quotes is an exaggeration. It is not £220 million—it will rise up to that in the years to come if the present situation continues—but £160 million to £170 million. But, apart from the statistics which he quoted, the answer is, yes—because this is where the main burden of expenditure lies. In London alone, which is one of the stress areas, the figure is that, of the 250,000 G.L.C. tenancies, only about 100,000 receive any subsidy at all. The rest are paying profit rentals.

Whatever definitions may be given to the distinction between tax remission and rent rebate, more money is going towards assisting mortgagees than into council subsidies. I am not necessarily quarrelling with that—[Interruption.] I am merely stating a fact, and it is time that these myths were dropped. We cannot discuss these matters sensibly unless they are dropped.

I said that I am not necessarily quarrelling with this because I wish to query the Government's policy of maintaining only one half, as it were, of the subsidy system. Broadly speaking, they are maintaining it for individuals—that is, the general subsidy for owner-occupiers—and abolishing it for council tenants. My hon. Friends have asked time and again why, if it is right to have a general subsidy in the owner-occupation sphere, it is not equally right to adopt that principle in the public sector.

As for the standard of income of council tenants, let us get rid of another myth once and for all. I am talking about the stories we hear of Jaguars and Rolls-Royces being parked outside council houses. Nowadays we also hear of each household having half a dozen television sets, most of them in colour. [Interruption.] It is no use the ex-editor of New Society, the hon. Member for Aylesbury, gesticulating at that remark. I am repeating the sort of silly tales that are put about by the friends of hon. Gentlemen opposite. The hon. Gentleman knows as well as I do that this is the sort of nonsense that they spread, and the former correspondents of the publication which he once edited will confirm this.

Although the facts in this connection were established some years ago, they bear repeating. A sample of about 20 typical local authorities was taken in 1968 by the Prices and Incomes Board. It revealed, first, that while only 1·3 per cent. of husbands and wives had joint incomes of over £40 a week, 50 per cent. had joint incomes of less than £20. This excluded tenants receiving unemployment, sickness or supplementary benefit. It was also shown that non-earning pensioners and pensioners drawing supplementary benefit comprised 35·3 per cent. of all council tenants tested by the sample. A great deal more information was provided on that occasion but it seems to have slipped the minds, if it was ever in them, of most hon. Gentlemen opposite who have spoken in this debate.

The remarks from the benches opposite, from Ministers downwards, can be summed up by the slogan "Our proposals will transfer subsidy from bricks and mortar to people." Indeed, that phrase has virtually been used by hon. Gentlemen opposite time and again in this debate.

Whatever the rights and wrongs of the Bill, it is clear from a reading of it that nothing of the kind will happen. The vast majority of subsidy will continue to go, I believe rightly—one may query the details of the subsidy but, as a principle, this will be the position, and rightly so—to bricks and mortar. [Interruption.] If hon. Gentlemen opposite query that assertion, I am willing to extract from the large wad of papers which I have with me some simple statistics from borough treasurers in London which prove the point.

Consider the position of one typical London borough, the details of which I was considering shortly before coming into the Chamber. It will have about £350,000 a year in rent rebate subsidy. The total of all other subsidies which relate to the cost of bricks and mortar, both past and present, will rise at the end of four or five years to several million pounds.

It is not correct to say that the Bill will reduce the rate burden. It will reduce it for about two to three years, it will vary from one authority to another, but, according to figures I have seen from borough treasurers, it is likely to rise sharply again after the first three years. In the same borough to which I have just referred—I shall not name it because it represents a type rather than an individual borough—the current figure of about £900,000 rate deficit per year on a major house-building exercise will drop to about £360,000 next year under the Bill, double itself the following year and be back to a £950,000 rate burden in the third or fourth year. The rate burden will then continue to rise, according to the borough treasurer, to a level of about £1½ million. That is a good deal higher than the present rate burden, which was described by the Secretary of State for the Environment the other day as a major financial crisis about which we on this side did nothing when we were in office. No doubt the £900,000 was a major financial crisis, but presumably the £1½ million five years from today, on the basis of the Government's system, would not be a financial crisis. Someone else may be able to sort out that logic, because I cannot.

Many other things can be said about the contradictions and the sheer ignorance of certain assumptions brought out in the debate by hon. Members opposite about housing reform. I turn to the basic question of why we had a housing finance review which eventually led to the White Paper and to the Bill. Broadly, we can break this down into two possible answers or, additionally, a mixture of the two.

First, a Government could be so concerned—this is why I regret the absence of Treasury Ministers from the Front Bench—with the rising costs of subsidies to the Exchequer that they want to do something about it and to cut them down, if not in current terms, certainly in terms of projected figures over a period of years. Second, a Government could decide that the main reason for their housing finance review, if not the sole reason, was that the present system of housing finance—in all its aspects, not simply in terms of subsidies—did not adequately support the scale of urban renewal needed by our cities and some of our townships; that the present system was in certain respects inadequate where individuals were concerned—that is where the issue of rents and rent rebates comes in—and that the cost was overburdensome to the ratepayers and tenants. Those are the three factors.

There might also be a mixture of reasons. Obviously a Government must be concerned with total expenditure at any time, but that should not be the prime purpose of reviewing the housing finance system. The prime purpose—certainly for the Department of the Environment; not the Treasury, or so we are told—should be to produce an effective urban renewal policy on a scale we have not yet seen. It may well be asked, as it previously has been asked, "Why did you not do anything about it yourselves?" I have said that we began to take action with a series of measures in previous years. But I accept straight away that there were certain major lessons on housing to be learned, particularly from the last 18 months or so of the previous Government's period of office. If we were having a more general housing debate I should elaborate more on this, and I may do so in the future.

The first lesson I draw from that experience is about investment, which was touched upon so well by my hon. Friend the Member for Norwood, because unless one can work out more clearly an idea of firm public sector investment programming over a period of years, at least something on the lines of what we do in matters of defence, education or hospital services, and one tries to stick to it, one will be buffeted about and be unable to take the necessary policy steps to implement the objectives.

We have never had a firm investment programme in the public sector. We have had general objectives, worked from year to year, and we have created incentives to encourage expansion. The most effective period for the public sector was between 1964 and 1968. I make that point as a matter of fact and not as a matter of polemics. That can be done, but in the whole history of housing no programmed investment over a period of years ahead has been worked out.

Now, in what is described as the major reform of housing finance this century, there is not a murmur of it in either the White Paper or the Bill. Unless we have forward programming, both nationally and locally, particularly with the new larger local government units coming into existence, we shall not be able to achieve the objectives we all desire.

I turn in connection with investment to the question of the lack of information about the Government's intentions. The White Paper states that there are 2 million slums. The Secretary of State referred to the scale of the slum problem. In response to Questions about the Government's intentions we have had nothing except a general hope. The assertion that the slum clearance subsidy under the Bill, if used by local authorities, could solve the slum problem within a decade is absolute nonsense. Anyone who makes such an assertion must be speaking in ignorance.

Anyone with experience of the worst slum problems in the centre of cities—I am not speaking of the widespread "slumdom" that exists in the sprawling areas outside the hearts of major conurbations—knows that it is not the problem of the value of slum land which has been cleared which has held up the clearance programmes. It has been a whole series of other factors—the high cost of interest rates, the cost of clearing nonconforming industrial use from land which might be used for housing, but not the cost of slum land.

During the unhappily short period when I was more or less in the position now occupied by the hon. Member for Southend, West (Mr. Channon) I did a good deal of touring round the country visiting authorities which had the crisis with which we are concerned. Three points emerged. First, the main reason there was a slow down in house building by local authorities was the lack of political will, but I will not go into that now. The two real issues were the problems of refinancing maturing debt and the eighteen months interregnum between the start of building and completion when a building qualified to received subsidy. Had it not been for these two factors, most of the financial problems facing local authorities would not have arisen.

Most of the problems that arose in Lambeth, in my borough, in many other London boroughs, and in other cities, would not have arisen if a system could have been devised of extending the 1967 Act subsidy provisions to cover that period, at least in selected test areas having serious financial problems, and if the benefits could have been extended to the refinancing of maturing debt.

None of this is touched upon in the Bill. I have said that after a short period of benefit there will be a rise in the burden on ratepayers. I have not attempted to go over again the central issue of the unfairness of so-called fair rents. If the Government proceed with this scheme and produce a system which will result in a surplus of about £300 million to £400 million by the time it is fully operative they will be responsible for introducing into our housing pattern one of the most iniquitous and inequitable systems we have seen in housing policy.