Orders of the Day — Housing and Land

Part of the debate – in the House of Commons at 12:00 am on 2nd November 1972.

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Photo of Hon. John Silkin Hon. John Silkin , Deptford 12:00 am, 2nd November 1972

It is my pleasant duty to start by congratulating the hon. Member for Rochdale (Mr. Cyril Smith) on his very interesting maiden speech. I hope he will not regard it as a precedent if I say that on one thing in particular I very much agree with him. That is the question, at a time when old-age pensioners have to suffer inadequate pensions, of looking at the whole basis of the television licence and its cost. I discussed that with my hon. Friend the Member for Rutherglen (Mr. Gregor Mackenzie), who shadows Post Office questions, and he also felt that despite a large number of difficulties—and there would be difficulties—it was a very interesting point that had been made.

I should like to say two other things. The hon. Member for Rochdale is to be congratulated, first, on the athletic speed with which he made his maiden speech—three leaps into the Chamber and into his seat—and also, which I regard as a major triumph, on actually getting some Liberals to attend a housing debate.

Throughout this very long debate there have been three major threads. The first is the effect of Government policy on rented accommodation. The second is the cost of houses to buy. The third is the price of land. It is right that we should discuss these three points because all of them concern ordinary people with low incomes and their quest for a home of their own. My hon. Friend the Member for Ealing, North (Mr. Molloy) pointed out that this was at the root of all our discussions, and of course that is true.

A great deal has been made in this debate of the unfairness and, as my right hon. Friend the Member for Grimsby (Mr. Crosland) pointed out, the inflationary effect of the Government's policy with regard to rented premises. The fact is that the whole of the Government's Housing Finance Act has a number of effects upon accommodation in general. My hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) gave us some very interesting points on take-up and on rebates. I also remember that in Committee he pointed out that as a result of the Act it will not be very long—I hope I have got the figure right; perhaps he will correct me if I am wrong—before the price of land in the private sector is 2·6 times what it is today. If rent goes up by 2·6 times, the basis is that the capital value of a house also increases 2·6 times. This is one of the inflationary effects on housing generally, apart altogether from the rise in council rents. The effect of this is that second-hand houses go up in price and they in turn force up prices of new houses.

It has been said by the hon. Member for Southampton, Test (Mr. James Hill) and by other hon. Members, including most of my hon. Friends, that one way to bring down the prices of houses is to build houses. This would be admirable. But if we are agreed that the start of it all is local authority housing —and I think we have so agreed—it follows that we ought to examine the Government's record in local authority housing. I do it in no partisan spirit but in response to the kind invitation of the Secretary of State, who talked about local authority house-building under Labour and said that there was a decline.

Let us give the right hon. Gentleman some figures. In the lowest quarter in 1970—that is, at the worst possible time, at the height of the financial crisis—under the Labour Government the figure for public sector completions was 42,821. It was not a figure of which I was particularly proud, but there it was—42,821. In the last recorded quarter under the present Government this year the figure was 28,890.

The effect of that is simple: it forces people to look for accommodation to buy even when their circumstances militate against it, even when they cannot afford it, even when the house they wish to buy is in poor condition. It is largely this fact which has led to the increase in the number of mortgages about which the Secretary of State boasted earlier today, but it does not increase the stock of houses available. It is time we began to consider the reality of the situation, not just the Minister's special pleading.

It is nearly three years since the right hon. Gentleman made his 10-point proposals. He will remember, as I do. He was modest enough today to talk about only seven of them—I forget what happened to the other three—but he said that they had had an effect on the cost of houses. The right hon. Gentleman may recall that on 27th April, 1972, I put a question to him. I do not like quoting my own words, but I paused for a reply on that occasion and had no answer, so perhaps the right hon. Gentleman will answer now. I said: I calculate—the right hon. Gentleman may disagree, but he cannot disagree, very much—one gives him the benefit of all these figures, the effect on the price of a house is rather less than f240."—[OFFICIAL REPORT, 27th April, 1972; Vol. 835, c. 1790.] And I went on to say that, since the price of houses was at that time rising at the rate of £6 a day, it would take only 40 days of the present Government to erode the whole lot.

Would the Secretary of State still like to challenge those figures? He has had about six months in which to do it. He does not reply, and I am glad about that, because it means that we agree at least on one thing.

A great deal has been said, and understandably, about the plight of the young couple trying to buy their own home for the first time, but I shall put a slightly different problem to the House. I ask hon. Members to consider the position of the larger family, a family with growing children, perhaps three of them, and an elderly widowed parent living with the family. According to the Nationwide Building Society, the average price of a four-bedroom house—this is new and old together—is £11,000. I should point out that that covers a wide range, from £9,000 in the North-East and Wales to more than £18,000 in London and the South-East. The problem is accentuated in the areas of overcrowding, which is why there are the wide differences.

It may be said that four-bedroom houses are not the normal requirement, and I agree that they are not, but they are important to a large number of people with families, the very people whom we want to help.

What about the average modern house? In 1970, in the time of the Labour Government, in London and the South-East the average industrial worker had to put down—I am sure the Secretary of State will agree, for they were his figures on which I dwelt—a deposit of £1,000. The average deposit today, according to the report of the Nationwide Building Society, in London and the South-East is £3,100. It is cold comfort to my hon. Friend the Member for Southampton, Itchen (Mr. R. C. Mitchell) and even less comfort to the hon. Member for Southampton, Test that in their area the figure is £3,235. This represents the largest rise in house prices in modern times.

What is the reason? What possible answer could there be? Sure enough the Minister for Housing and Construction gave the answer to the House when he said: What has happened is that there has been an increase in the money in people's pockets and an increase in the credit facilities available, for which this Government, far from being ashamed, can take credit."—[OFFICIAL REPORT, October 18th, 1972; Vol 843, c. 242.] That is his excuse and that is what he is proud of, although the Prime Minister, as far as I can gather from what he says, does not seem to think that more money in people's pockets is a good thing.

The average manual worker's monthly earnings in 1970 were £117. The latest available figures show an increase to £129, so that he has £12 a month more in his pocket. In 1970 when the Labour Government left office the average monthly repayment on a mortgage was £32. I do not think that the Secretary of State will challenge the figures, which are his own. The average monthly repayment in London and the South-East today—and again these are the figures given by the Nationwide Building Society—is £57. Therefore, the person who wants to buy a house has not only to put down £2,100 more on the deposit than he had to under the Labour Government but he also has to find another £25 a month out of the £12 a month increase in wages in order to make his mortgage payments. All that is in addition to all the other enormous rises in prices, including 21 per cent. more on food prices. No doubt that is what the Minister for Housing and Construction means when he says that the situation is one for which the Government far from being ashamed, can take credit". The right hon. Gentleman may not feel ashamed, but in his speech yesterday to the National House-builders Registration Council I thought I could at last detect the first timid faint glimmerings of concern. On this side of the House we have always been concerned, and much more. When we think of the many millions of people, whether they have a growing family or whether they are young couples starting up in life, waiting for a home of their own, we are ashamed.

What is causing the enormous rise in prices? By far the largest principal factor in the rise in house prices is the rise in the cost of land. When last we debated the subject some months ago I said that the land accounted for about one-third of the cost of a house. I am inclined to think I under-estimated, certainly as regards London and the South-East. It could be so in some areas but in many cases I feel that it is perhaps not far off two-fifths.

But why has the cost of land rocketed so much and why have the Government done nothing about it? Certainly the Government tried to do something about it on 22nd July, 1970. The Secretary of State announced in the House the end of the Land Commission. Why was it abolished? The Secretary of State had this answer. He said: The Land Commission has failed…to stabilise the price of land…".—[OFFICIAL REPORT, 22nd July, 1970; Vol. 804, c. 549.] I have pointed out many times that in the last six months of the Labour Governnment land prices fell by 4 per cent. The right hon. Gentleman has said to me many times "But that was because there was a tight money situation". I have done a little research and perhaps between now and the next time we discuss the matter the right hon. Gentleman will also do some research. Perhaps he will examine the previous occasions when we had "stop-go" under his Government. He will find that in the "stop" phases the price of land did not go down. Mostly it continued to go up although, I agree, not by very much. There was only one new factor in 1970, and that was that the Land Commission was in existence.

When we left office in June, 1970, the price of land had fallen by 4 per cent. By mid-1972 it had risen by an average of 50 per cent. My guess is that by the end of 1972 there will be an even bigger rise. So what price land stabilisation now? The Secretary of State is a very agreeable, plausible chap, and when he talked of stabilisation in 1970 the country probably trusted him. But I dare say the country would have trusted him if he had been alive in 1912 and had talked about stabilising the "Titanic".

Why has the price of land rocketed? The cause, very simply, is the revival of the free market following the abolition of the Land Commission in July, 1970. Incidentally, there has not only been a boom in the price of housing land. An example was given me recently of 150 acres of land the price of which had gone up from £200 to £600 an acre in three months. But the point about this land is that it is very bad agricultural land for which it would be impossible to get planning consent. All the turf was removed before it was sold.

The Secretary of State's words about land speculation were very forceful. He warned that there was a section in the Finance Act under which some people might even have to pay tax if they made profits. I can understand this frightening threat. But although the Secretary of State sounded like a witch doctor of the militant Left, those of us who listened to him last Session when he talked about the rigorous action in which he would indulge if Centre Point was not used or sold will simply measure it by that—and Centre Point has been neither used nor sold.

A real, emergency policy for land is necessary at this stage. The Government are doing nothing, and I propose to make to the Secretary of State some suggestions about what should be done. My hon. Friends the Members for Portsmouth, West (Mr. Judd) and Battersea, South (Mr. Ernest G. Perry), both of whom made eloquent speeches, said something with which I disagree. They said that no land was available in their areas. What they meant, I think, was that no land in their areas was available to local authorities, and that is very different.

First, the Government should forthwith reverse the policy of selling local authority land to private developers and encourage local authorities to buy land themselves. Only yesterday Dr. David Eversley, the former Chief of Strategic Planning in the Greater London Council, reminded us of what we on this side of the House have said many times, namely that developers, so far from bursting to develop land, are hoarding it. It is the local authorities to which we should be looking for houses. The first point, therefore, is to let the local authorities have the land.

Further, we should speed up the completion of the survey of surplus land held by nationalised industries, particularly British Rail, hospital boards, the Ministry of Defence and other Government Departments, and offer that surplus to the local authorities at existing use value. Thirdly, I was glad that the Secretary of State mentioned that he was giving a direction to local authorities about planning permissions and that they need not be bound by the five years. That is not quite good enough. What he should do is to insist on a two-year period during which work has to be started on a planning permission otherwise it will lapse.