I will not waste time trying to educate the hon. and learned Member for Nelson and Colne (Mr. Waddington) on the difference between the rent that is required to persuade a private landlord to remain in private letting and the rent which a local authority, performing its social responsibilities to its tenants and families with low incomes, needs to charge in order to cover its costs, but I take up one point concerning the release of housing land. Of course it is desirable that it should be released at a steady rate which the building industry can cope with. In the past, there have been floods and droughts, and the construction industry has suffered acutely as a result. Just to speed up the release of housing land without ensuring that the building industry will be able to cope with it will produce windfall capital gains for the landowners without doing anything to the benefit of housing. Such capital gains, from which everyone, as an owner-occupier, has benefited, are a substantial contributory factor to the inflation from which we are suffering.
I wish to concentrate my remarks on an area in which, to quote the hon. and learned Member for Nelson and Colne, "the poor and beaten-down British worker is starving as a result of Tory policies." I refer to the stress areas of our cities, where, as a consequence of the free market in rents and the fact that furnished tenants have no security, there has been an immense escalation of property values, particularly in central areas. Large numbers of families are being evicted from their homes. In many city areas communities are being destroyed to make room for relatively rich people, who move in and displace the families who have been living in the area for many years.
I shall argue the case for a determined Government-supported policy of acquisition of rented accommodation. It need not necessarily be local authority ownership, but social ownership such as housing trusts or non-profit making ownership. I do not put forward this argument on the ground of political doctrine, although I do strongly believe that it is intolerable that one person should own the home of another as an investment, with the person who is living in it regarding it as his home and the landlord thinking of it as an investment. It is inevitable that a conflict of interests will arise, and that at some stage the conflict will be resolved in a way which one or other of them will regard as unfair.
Although I believe in principle that the private ownership of rented properties is undesirable, I hope that the Government and hon. Members on the Government benches will accept that it is essential that steps should be taken to bring rented low-income accommodation in the stress areas into public or social ownership before it disappears completely. There is no other possibility of retaining it.
I was pleased to note that the Secretary of State, in his comments on the Layfield Report, said that the Government believe that problems of housing stress and homelessness cannot be resolved within the context of the private rented sector alone. In the stress areas it cannot be resolved by the private sector at all. I remind the House of the Milner Holland Committee of 1965, which, in its report on Rachmanism and housing stress, at page 122, said:
the houses most deficient in domestic amenities, most inadequately maintained and most in need of clearance are found among those which are privately rented, and our enquiries gave us little confidence that their present owners would be able to prevent their further deterioration, even if they are willing to attempt it.
The committee continued:
It was put to us by the representatives of one local authority that areas like this called for a drastic and comprehensive attack on bad living conditions, using whatever remedies seemed best suited to the particular circumstances. They might be designated as 'areas of special control'; and some authority might be set up, with responsibility for the whole area and armed with wide powers to control sales and lettings, to acquire property by agreement or compulsorily over the whole area or large parts of it, to demolish and rebuild as necessary, to require improvements to be carried out or undertake such improvements themselves, and to make grants on a more generous and more flexible basis than under the existing law.
The conditions which led to the committee reporting in that way have, if anything, become worse in the stress areas. The case which the committee argued is stronger today than ever before. That view is strengthened by a good deal of authoritative evidence. The London Boroughs Association, giving evidence to a sub-committee of this House on expenditure, urged the Secretary of State to grant it powers to buy up bad landlords and improve property itself. More specific recommendations have been made from the studies recently carried out in the Colville-Tavistock areas of North Kensington.
The Kensington and Chelsea Borough Council, which is probably the most conservative of all local authorities, set up an inquiry under its former borough surveyor, Mr. Clinch. He is a public servant for whom I have considerable admiration, but in the many years I have known him he has never given any indication of departing in any significant way from the orthodox conservatism of his employing authority. Reports of Mr. Clinch's report have already appeared in the Press, and I have a draft of his report.
After reviewing the problems of the area—which is characteristic of many stress areas—and reporting on the squalor and lack of opportunity for a satisfactory family life in the prevailing conditions of multiple occupations, he discussed the economics of improvement and conversion. At paragraph 11 he reported:
The operation of the improvement grants system has undoubtedly led to higher rents.
He then referred to evidence submitted to him by the Notting Hill Housing Trust—one of the trusts which has been most
active and most effective in the area—and said:
Stress areas, especially when bordering on an area of expensive housing, are now providing opportunities for investment expectation. That is not essentially different from the effects of Rachmanism 10 years ago.
Mr. Clinch refers to evidence that current profit on rents for converted one-to two-bedroomed flats in the Colville area of North Kensington is running as high as £15 to £20 a week. For non-converted, non-self-contained flats it is £10 to £15 a week. It is difficult to find a bed-sitting room at under £5 a week. As a result of his consideration of the evidence and his study of the area Mr. Clinch concluded:
The Borough Council is faced with a dilemma of major proportions. It must apparently decide whether it can tolerate the perpetuation of houses in multi-family occupation without civilised amenities, promote improvement for a different class of the community than the present occupiers or attempt a solution by a direct intervention outside its current policies.
Mr. Clinch then said that the appropriate policy for the council to pursue was to involve itself in a direct intervention policy with regard to Colville. He said:
It has to secure that whenever possible terraces pass into the ownership of the council or a housing trust for treatment as a whole.
Mr. Clinch quoted examples of the cost involved in conversion and improvement in support of his case. He gave details of a terraced house bought for £15,000 and converted at a cost of £9,000 into three lettings. He found that the minimum rate which a private landlord would have to charge to give a reasonable profit per flat would be £21·60p per week. He commented:
These rentals are startling in themselves. When placed in the context of the level of income enjoyed by the present population of North Kensington they are grotesque.
We have a good deal of information about the levels of income in this area. We find already that a high proportion of the tenants in the area are paying rents of more than 20 per cent. of their income. In many cases those with low incomes are paying up to 27 per cent. of their income in rent. It is impossible in these circumstances for the majority of those who now live in the area to continue to do so. Eighty per cent. of the existing population cannot pay more
than £10 per week, according to the Notting Hill Housing Trust survey.
It is useless for the Minister to refer to the provisions of the Housing Finance Act. Even if the maximum allowance is increased, the basic provision of the Act is that a tenant will have to pay 40 per cent. of the so-called fair rent, and the maximum allowance available will be £8 a week. The Minister has discretion to enlarge the allowance in certain areas. I am not sure of the exact figure, but I believe that it is 25 per cent. for Chelsea and Kensington, with a £10 maximum allowance. That will still leave the majority of people in the area outside the level of converted accommodation. However, what happens is that the accommodation does not get converted for the existing occupiers to rent. The property is converted for sale.
Properties offered for sale can fetch nearly double the capitalised value of even a fair rent in an area like North Kensington, which borders on rich areas—and there are similar areas on the fringes of the centres of every city, where property values rise so fast that there is immense demand for property for sale to those who can afford to pay substantial prices. In areas like North Kensington, for example, people who help to run hospitals and public transport, the food distribution service and the construction service, are being forced out to make room for executives of businesses who want to move into London, in many cases from Europe, and want a pied-à-terre in London for use during the week or to make space for others who can afford the high price demanded. As a result, the people who have spent most of their lives in the area are being evicted; this is happening in large numbers, and these people are being forced right out of the area. This can and must be prevented. I know that the Minister is aware of the problem and is sympathetic towards it. He has the tools to deal with it if he is willing to use them. He has compulsory purchase powers. Local authorities have presented him with compulsory purchase orders but he has turned them down. Presumably, it is the Secretary of State who carries the ultimate responsibility.
I was pleased to see that a compulsory purchase order in respect of the Granby area of Liverpool had been approved. In general, the right hon. and learned Gentleman's Department has taken the view that it is not its function to confirm compulsory purchase orders, even in severe cases of harassment and mismanagement, simply to prevent housing stress. A case was presented to the Minister about a property in St. Ervans Road, North Kensington, where there had been numerous convictions for harassment and illegal eviction. Because all of the old tenants had been turned out and the present tenants were content with the landlord the Minister turned the application down.