Part of Orders of the Day — Supply – in the House of Commons at 12:00 am on 21st June 1978.

Alert me about debates like this

Photo of Mr Bruce Douglas-Mann Mr Bruce Douglas-Mann , Merton Mitcham and Morden 12:00 am, 21st June 1978

That is an average price of £2,500. The hon. Member for Hove (Mr. Sainsbury) has confirmed what I understood the hon. Member for Henley to say. I believe that the average mortgage is over £7,500. Clearly the hon. Member for Henley is talking about a 66 per cent. discount. It is clear that the person who buys a public asset at a substantial discount is able to make money if he sells it and that he at least makes a gain. But no one else gains.

The local authority is unlikely to gain. So far as I am aware, the only serious statistical analysis of the effects of selling council houses was prepared by the Leeds City Council. This was perceptively analysed in "Roof" for May 1977. Leeds City Council was able to show a very small gain by comparing the amount that it would receive from sales and offsetting it against the rents and subsidies that it would lose. But it was able to achieve that gain only by working on the assumption that rents would rise at 5 per cent. per annum over the life of a house whereas repairs were estimated to rise at 10 per cent. In practice, rents rose by an average of over 25 per cent. the following year. That was cooking the books in a manner which is characteristic of the fashion in which the Conservative Opposition presented their case. However, it is no basis upon which a housing policy for the country should be prepared.

The local authorities' gain would be even less if, as would almost certainly be the case, the only people who were prepared to lend on the scale required were the local authorities themselves. They would be transferring from one pocket to another, and the extent of the debt would be increased.

If the balance for local authorities is fine—though the evidence is compelling that local authorities would lose rather than gain from the sale of council houses—the Exchequer would lose at a tremendous rate. The Opposition pointed out, on the basis of first-year figures, that they can show that the cost of the subsidy to a mortgagee is less than the cost of the subsidy to a local authority tenant in a new house; but the subsidy on a mortgage goes on for as long as the house exists. Each time that the house is sold in a period of inflation, the subsidy starts again at a new higher rate.

Council houses built 10 or 15 years ago are now showing profits to local authorities. If such a house were sold, there would be a subsidy on the mortgage, and when the house was sold again, on the basis of the rates at which house prices inflate—say, 30 per cent. over four years—the subsidy would start again 30 per cent. higher. On average, houses are sold once every seven years. Therefore, the subsidies from the Exchequer would be renewed repeatedly. Many people live in houses which were built in the nineteenth century and they are still being subsidised from the Exchequer through mortgage tax relief.

The Conservative Party's irresponsible and misleading proposal would impose on the Exchequer an endless and increasing burden. The proposal to sell council houses, far from providing financial rewards, would be financially disastrous.

Looking at the social effects, it is obvious that they would be even worse, in practice only the better-off tenants could hope to buy and only the better houses with gardens would be sold. Council tenants who could not afford to buy would be left cooped up in high-rise blocks and the poorer quality council accommodation. There would be a substantial reduction in the number of new lettings which could be made. Approximately three out of every five lettings are of houses which have been vacated. Even if those were the only houses to be sold, there would be no new lettings from transfers.

In my constituency I have had recent experience of a husband and wife and five daughters living in a GLC flat consisting of two bedrooms and a box-room. Four of the girls were in one small room. It had inadequate ventilation. Medical certificates were provided. The flat was damp, there were mice, and plaster was falling down. The family applied to the GLC for a transfer. A GLC official, in response to the application, wrote: I very much regret that the position as far as houses are concerned has become more difficult in recent months because general properties are required to meet the Council's commitments under the 'Homesteading Scheme' and we are also required to set aside 50 per cent. of newly vacated estate houses for sale. We do try to keep the larger ones for our tenants but four bedroomed estate houses are few and far between. The Opposition would sell them all off and give a statutory right to tenants to compel reluctant authorities to sell such properties. The social effects of their policy—the only bit of policy that we heard today—would make our housing situation worse and the cost of meeting housing problems would be enormous. That was all that we heard from the hon. Member for Henley.

We did not hear what the Opposition would do about the Rent Acts. We constantly hear snide remarks by Conservative Members to the effect that the Rent Act 1974 dried up the supply of privately rented property. They are unable to produce any evidence to support that claim, because it does not exist.