Orders of the Day — Housing Finance Bill [Third Allotted Day]

Part of the debate – in the House of Commons at 12:00 am on 8 May 1972.

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Photo of Michael Meacher Michael Meacher , Oldham West 12:00, 8 May 1972

I first echo what has been said about the well-argued and forceful speech of my hon. Friend the new Member for South wark (Mr. Lamborn). I particularly congratulate him on his skill in treading the narrow line, the perhaps invisible line, between being relatively uncontroversial and making some emphatic com- ments about the Bill. I am especially pleased to do this not only because I spent some time going around the estates about which he spoke before his dramatic victory last Thursday, and therefore have some experience of what he was talking about, but also because I believe that his constituency has the largest number of tenants of any in the country—98 per cent., I believe. For that reason my hon. Friend's words carry weight. We all look forward to further contributions from him on housing and other matters.

On a Bill that is more concerned with finance than housing, it is remarkable how coy the Minister has been about telling the House the true facts about the financial changes it will bring about. The central factor about the Bill is that it is not, as Ministers have repeatedly claimed, a shift in subsidy from bricks and mortar to families and people. but rather a straight cut in subsidy to council tenants.

According to the latest available figures, the central Government's housing subsidies, plus rate fund contribution and supplementary benefit rent payments. amounted in 1970–71 to £465 million. By 1975–76, when the fair rent system is operational, the best available figures suggest that rent rebate and rent allowance subsidies, plus supplementary benefit rent payment. will amount to only £240 million. If one adds the rate fund contribution to the housing revenue account deficits, the figure rises to about £280 million. But the central point is that this represents a swingeing cut of little short of £200 million, and simply to achieve this central fact it is proposed to build a means test apparatus of unprecederuted bureaucratic proportions.

What it means for the local authorities and the private tenants, if we extrapolate from housing trends of the last five years, is a cut in subsidy from £63 to £33 a year, a reduction on average of almost half. By contrast, over exactly the same period the total of mortgage interest tax relief to owner-occupiers will rise from £300 million to about £400 million, representing on average a rise for the owner-occupier of from about £62 a year to about £68. It is this shift from the poorer half of the nation in favour of the better off other half that lies at the heart of the Bill, and it is entirely consistent with the whole anti-welfare ethos of the Government.

It is equally clearly inconsistent with the principle enunciated in paragraph 5 of the White Paper "Fair Deal for Housing ", which has already been quoted, somewhat curiously, by hon. Members on the Government side. It refers to fairness between one citizen and another in giving and receiving help towards housing costs The size and coverage of some of these rent increases can only properly be described as penal.

Here I take it that we are going by the original figures and not those produced at the last minute by the Minister in a moment of panic opportunism last week. It is therefore likely that 750,000 council tenants will be faced with a compulsory rise, even after rent rebate has been taken into account, of between £1·50 and £2 a week. It is also likely that a million and a quarter tenants with incomes of only up to £10 a week above the national average—the previous figures were below average—will, after rebate, have to pay an extra £3 per week for their homes.

These are huge increases by any standard and they are nevertheless still understatements, because in every case allowance has been made for appropriate rebate being received and all past experience suggests that this is wildly optimistic. It is a bad and sad augury for the Bill that at a time when it is proposed to extend three million means-tested rebates to tenants, the family income supplement, after a publicity campaign costing £500,000, has had a take-up rate over the last few months of under 50 per cent. If the means-tested rebate has a take-up of under 50 per cent., as is likely, the size of future rent increases will be substantially bigger than the Government have tried to predict and quite the reverse of what the Minister tried to make out last week.

Leaving that aside and assuming that rebates are wholly taken up, optimistic though that is, it is clear from existing housing statistics of rent levels and household income that local authority tenants will lose all across the board. That does not in any way exclude those on the lowest incomes. The average council tenant still stands to lose about £50 of his present annual £86 subsidy, which includes supplementary benefit rent payments which are often omitted from calculations. The higher income council tenant will stand to lose £60 a year. Even the lowest income council tenants, those the Bill is intended particularly to help, so we are told, those with incomes of less than £20 a week, will still lose on average about £25 a year, including supplementary benefit rent payments. These are not fair rents: they are grossly unfair rents. and they are made to seem all the more unfair because of the stark contrast in the different treatment between housing groups.

While 4 million tenants with incomes below £40 a week will lose—even with supplementary benefit rate payments taken into account—£150 million. 21 million owner—occupiers with incomes over £40 a week will stand to gain about £57 million over the same period in extra housing aid. These are the financial facts. They have been worked out extremely carefully on the basis of all the information the Minister has given and all the existing housing statistics.

There is another way in which the poor are to be forced to subsidise the rich. It is clear that areas with low rents will produce the most surplus. These rents are to be forced up to the fair rent levels, just as it is true that areas of high rents, which are near the so-called fair rent levels, will need help in order to pay rebates. By this means surpluses as well as subsidies will be drawn from relatively low rent areas to relatively high rent areas. Yet it is low rents that are chiefly in poor regions and high rents that are chiefly in well-off regions.

That means that the areas that have been picked out by the Hunt Report, for instance. as those most in need of economic aid will lose one of the few economic advantages they have left to alleviate the housing problems of better off areas. There is another redistributive distortion in the Bill. It is the power given to local authorities to refuse to pay rent rebates if they are considered to he too large because the accommodation is deemed to be unsuitable for the tenant.

The general tendency following from this can be only for the better-off tenants to he channelled into the better-class areas and for the poorer tenants to be channelled into the lower-class areas. Apart from the ugly discrimination by income that this will inevitably evoke, in the long run there will not be a great saving of public expenditure. This crystallisation, the stratifying, of districts by rent and income is likely in the long run to attract the requirement of costly positive discrimination in both education and environmental programmes. It would be foolish to assume that public expenditure will necessarily be cut by anything like as much as Ministers have indicated.

Even if low income tenants were awarded better class accommodation and given large rebates, many would still not be able to pay a higher rent because, so long as their income exceeds the needs allowance, they are obliged to pay 40 per cent. of the fair rent. The better the accommodation is, the larger is the 40 per cent. in cash terms. Nor is the tenant necessarily better protected since we have been told that the allowance will be only a proportion of the fair rent if the dwelling is much larger than the tenant is supposed to require or is situated in an area of high property value.

We have been given no adequate assurance about the fate of, say, an elderly couple who have been living for many years in a flat in a relatively low income area but who find because of middle-class colonisation that their area becomes popular, relatively fashionable and expensive, a fact quickly reflected in a rapidly rising fair rent. At the same time the local authority refuses to pay the full rebate because the dramatic rise in property values is regarded as making the area unsuitable for these persons. There must be millions of such persons.

It is this social divisiveness even more than the income levels which will tell against the poor man. It is this divisiveness by area which is paralleled by the domestic divisions which will be produced under the Bill, by the sharp cutback in rebate as a result of every extra adult non-dependent member of the household. It is unforgivable that many poor families will have to make a choice between keeping their grandmother with them and losing a rebate or a greater part of it or preserving the rebate and rejecting the grandmother. These things are unforgivable because they are not done as a result of economic necessity but as an odious side-effect of a policy of retrenchment in favour of the rich.

I see the Secretary of State smiling but this Bill is aimed at cutting public expenditure on council tenants to give several hundreds of millions of pounds to the better off, particularly those earning over £5,000 a year. Far from the Bill being an example—as the right hon. Gentleman said with a rather curious irony on another occasion—of practical Socialism, a title by which he chose to geld rather than gild, this Measure, it is the biggest step this Government have taken in the introduction of a new poor law.