Repayment of Discount on Early Disposal of Freehold or Lease

Clause 8 – in the House of Commons at 4:03 pm on 20th May 1980.

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Photo of Jack Straw Jack Straw , Blackburn 4:03 pm, 20th May 1980

I beg to move amendment No. 13, in page 7, line 9, at beginning insert ' subject to sub-section (2A) below '.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

With this it will be convenient to take the following amendments:

No. 14, in page 7, line 13, at end insert— ' (2A) Where the conveyance or grant has been made following the exercise by the tenants of rights referred under subsection (2)(6) of section 15, the purchase price upon which the calculation of discount repayable shall be based shall be the value of the dwelling-house at the date of the conveyance or grant.'. No. 29, in clause 15, page 11, line 28 leave out from ' notice ' to end of line 34.

No. 31, in clause 15, page 12, line 5, leave out subsection (5).

No. 32, in clause 15, page 12, line 7, leave out ' two ' and insert ' one '.

No. 33, in clause 15, page 12, line 11, leave out ' two ' and insert ' one '.

No. 34, in clause 15, page 12, line 14, leave out ' two ' and insert ' one '.

No. 161, in clause 15, page 12, line 7, leave out ' two year ' and insert ' six months '.

No. 162, in clause 15, page 12, line 14, leave out ' two years ' and insert ' six months '.

Photo of Jack Straw Jack Straw , Blackburn

Under clause 15, tenants whose income falls below certain prescribed limits will have the right to pay £100 to the local authority and by that payment to gain an option, which is exercisable for the following two years, to buy their dwelling at the price that obtained when they paid their £100 down, and not at the price that prevailed when they came to purchase the property, irrespective of the increase in the value of the houses in the meantime.

Photo of Jack Straw Jack Straw , Blackburn

It is our judgment that this is indeed a monstrous provision, and that it is one of the most unjustifiable and objectionable parts of a thoroughly objectionable Bill.

The amendments are designed to deal with this option. Amendments Nos. 29 to 31 seek to delete the option provisions altogether. If that is not acceptable to Conservative Members after they have heard my arguments, they may then come to amendments Nos. 32 and 33, which seek to reduce the option period from two years to one year. Amendments Nos. 13 and 14—I hope that Conservative Members will pay particular attention to them—provide that those who exercise these options should not be able to make windfall profits of some hundreds—and in many cases thousands—of pounds which would otherwise fall available to them under the exercise of the option.

Let me deal first with our objections to the principle of these options. We object to the options as provided in the Bill because they are unfair to other tenants, unfair to owner-occupiers, unfair to those in the private sector—young couples trying to scrape together the money to get a mortgage to buy a house—and unfair to the ratepayers and taxpayers of this country, because of the dissipation and the throwing away of public assets.

In many ways these options amount to a fraud upon the public purse because of the way in which they seek to throw away public assets without justification. We object to the options provision because it will lead to large windfall profits being made by some tenants and the fact that those windfall profits will lead to the possibility of great abuse by tenants. The possibility of such abuse could create an administrative nightmare for local authorities which have to administer the options scheme. We also object to the options provision because, as I shall demonstrate, it is wholly unnecessary, even given the reason which Ministers have advanced for its being in the Bill in the first place.

It is the duty of any Government to seek to deal fairly with the various sections of the community in respect of which they pass legislation. That, above all, must be the case when we deal with housing, which is one of the most prized assets of all, and one of the most basic necessities of life. Do we have a Government who are dealing fairly with the provision of housing? We have a Government who, far from dealing fairly with the provision of housing, are dealing with it most unfairly. Those in the public sector who remain tenants will find their rents forced up and up during the life-time of this Government. Those rents are already about to be forced up by £2 during the next year, and as public expenditure forecasts indicate, they will probably more than double by the end of the period of office of this Government. And that is before we allow fully for inflation.

The Government have dealt far from fairly with owner-occupiers in the private sector. Having castigated the previous Labour Government for their level of mortgage interest rates, what have this Government done? As a result of their monetary policy they have forced the mortgage rate up to a record level. The result of that has been to create great hardship for hundreds of thousands of owner-occupiers.

A the same time, the Government's other policies are creating a desperate housing shortage for those who are in real need—those who live with families, who are homeless or who live in the private sector. Yet, while the Government are wholly dismissive of the claims of the overwhelming majority of people in housing need—both in the owner-occupied and the public and private tenanted sectors—in the Bill they offer not only discounts of between 33 per cent. and 50 per cent. to tenants who exercise the right to buy—and we object to that—but they gratuitously offer what amounts to an additional discount which can, as I demonstrated in Committee, and will demonstrate here again, lead to tenants making substantial windfall profits, for no good reason.

The only justification that we have been able to glean from the Government for these provisions is that they are so desperate to ensure that council estates are broken up—so desperate is the gauleiter of housing, the Secretary of State, to seek to buy off the political affiliations of tenants on council estates—that they have to go in for what is no more than an abject form of bribery. And because that bribery has been effected with money provided by the ratepayers and taxpayers of this country it amounts to a fraud upon the public purse.

As I have said, because of the large windfall gains that will be made there will be widespread abuse. There is no question but that tenants will have every incentive to understate their income in order to gain the right to an option and subsequently pay rent at a level that will, inevitably, be lower than their mortgage repayments over the following two years. They can then exercise their option and sell within two years, so making their windfall profits.

Photo of Jack Straw Jack Straw , Blackburn

The view that abuse will occur is shared not just by Opposition Members, and not just by Labour-controlled local authorities, but by the Association of Municipal Authorities when it was Conservative-controlled. Before the last general election the AMA said that the proposal to grant a two-year option to purchase at a fixed price, upon payment of a returnable deposit of £100, is open to considerable abuse.

Photo of Mr John Heddle Mr John Heddle , Lichfield and Tamworth 4:45 pm, 20th May 1980

The hon. Member has used the expression "windfall profits" six times during the last five minutes. I invite him to agree with me that no such windfall profits will be made because when the tenant has exercised his right to buy—whether it be after six months, nine months, a year or two years—he has to live in that property for five years before he is free of paying back any of the profit, if indeed there is a profit, to the local authority.

Photo of Jack Straw Jack Straw , Blackburn

The hon. Member must have been asleep in Committee when we discussed this matter in great detail and when I demonstrated—I believe convincingly—that even during the period when the discount obtained the tenant who had exercised an option would make an additional profit over and above that which a tenant in an identical position would make had he not exercised the option. If the hon. Gentleman disagrees with me, I invite him to look at the Official Report of Standing Committee F for the eighth sitting on Thursday 14 February. At no stage were the calculations that I produced for the Committee challenged by Ministers or by Conservative Members. I repeat that the existence of the option provisions will lead to many and great administrative complications.

Before I deal with the way in which windfall profits arise, may I say that the option provisions are wholly unnecessary? Options are written into contracts between private buyers and sellers where there is a danger that a potential vendor will sell his property to someone else unless the potential buyer can pin down the seller to agreeing to give the buyer the first option during a period. Under the right-to-buy provision in the Bill, the tenant already has an option, which he is able to exercise so long as he remains a tenant. Therefore, there is no justification for providing this option, because it is already written into the Bill.

Now let me deal with the details of how tenants will make their windfall profits. Let us consider two tenants in identical houses, who live next door to each other, who have identical tenancy records in terms of the length of time that they have been tenants, who have identical incomes and who both complete a purchase on the same day at a value on that day of £10,000. One of them completes in the exercise of an option that he made two years previously, and the other completes without the exercise of an option.

If those properties are sold the next day, the tenant who has exercised the option will make a windfall profit. of hundreds of pounds, and if the property is sold two or three years later he will make an additional windfall profit of well over £1,500. I gave the Minister the calculations on this in Committee—column 379–80 of the Official Report for 14 February 1980 of Standing Committee F. On modest assumptions about the rate of inflation, I showed that if the sale took place between the second and third years after purchase the windfall profit would be £1,680.

The Minister said at the end of that sitting that he would study with great care the figures that I had provided, and I look forward to hearing what he has to say about them. He knows that the figures that I gave are incontrovertible. The amendment proposes to deal with that injustice in a way which we believe will not even offend the sensibilities of Conservative Members, who are greatly attached to the option principles.

The amendment provides that during the five-year period in which the discount operates the amount of discount to be returned to the local authority on the sale of the property is based upon the value of the house at the point of purchase and not on the value when the option is exercised. I hope that the Government will accept the amendment. Unless their housing policy is based upon the ethics of the bingo hall and the morality of the street market, they have an obligation to accept amendments which are designed to introduce an element of equity into an otherwise wholly unjustifiable and objectionable Bill.

Photo of Mr Allan Roberts Mr Allan Roberts , Bootle

The provision which the amendment aims to remove is an administrative nightmare for local authorities. Let us suppose that a local authority plans to modernise an estate of council houses—not that much of that will happen because of the cuts in the housing investment programme. A tenant might put down a £100 deposit and reserve an option to purchase his property in the next two years at the market price on the date of the deposit. What will the local authority do? Will it proceed with the modernisation of the property? If it does, will the modernisation add to the value of the house at the date of the deposit being made, at the date of the work being carried out or at the date that the option is exercised and the tenant begins to purchase?

An administrative nightmare is being created. It will be impossible for local authorities to make rational decisions. Discretion should be allowed in such legislation. The Government are attempting to force councils virtually to give away their council houses. Their desire to sell council houses is not shared by masses of council house tenants. If it were, the number of purchases would be higher. The Government are trying to prove that they are right in claiming that council house tenants want to purchase their homes.

Let us consider what will happen when a tenant fails to obtain a mortgage and, under other provisions, gets together with members of his family who live in the same property and decides to purchase. The tenant and three others could each deposit £25 and exercise the right to buy two years later at the price at which the property was valued when the deposit was made. It is amazing that such advantages should be given to tenants and their families when it is almost impossible for young couples in the private sector to obtain a mortgage and when it is almost impossible for people to afford to buy a house because of the high interest rates imposed by the Government.

Local authorities are being forced virtually to give away their houses when would-be owner-occupiers outside the council sector have to struggle as a result of Government policies. One can see clearly that the Government are not concerned about extending owner-occupation but are conducting a vendetta against public sector housing.

The two-year option means that the Government are giving a discount, not of 50 per cent, but of 75 per cent. Local authorities will be forced in law to sell a public asset at 75 per cent. less than the market value. That is a scandal and a dissipation of public funds. As soon as ratepayers, taxpayers, tenants who do not want to buy and owner-occupiers realise what the Government are doing, they will recognise that the Government are attacking public sector housing for doctrinaire reasons and that they do not really wish to extend owner-occupation.

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

I need not elaborate. I am opposed to the sale of council houses. I am even more strongly opposed to compelling local authorities which do not want to sell to do so.

At the next general election I assume that the Labour Party will say in its manifesto that it will no longer compel local authorities to sell council houses. I am confident that that is the official policy. I can envisage queues of council tenants lining up at the town hall and plonking down £100, because councils will be forced, even under a Labour Government, to sell houses to such would-be buyers. That is contrary to the parliamentary doctrine that one Government cannot bind a subsequent Government. It is tantamount to saying that a Labour Government will force a Conservative Government to sell denationalised industries back to the public. That is retrospective legislation.

Let us examine what my hon. Friend the Member for Bootle (Mr. Roberts) said. Up to 50 per cent. discount is being given. In the last two years the price of houses has risen by about 40 per cent. One could put down the £100 and, two years later, save about 40 per cent. on the cost of the house. That is on top of the 50 per cent. discount. That is the biggest give-away in history. I cannot see the present Government compelling private landlords to give away their houses. Only communal property can be given away in such a manner.

The scheme will attract villains, shysters and crooks. I could name some. I shall explain how the corruption will work. Somebody can go to a tenant and say "Look, you put down your name to buy your own house. Of course, we realise that the purchase price weekly is greater than the rent. Never mind. We shall pay you half the purchase price so that you will pay less than you are now paying in rent. At the end of five years you sell the house and I, as the moneylender, take 50 per cent. of the profit." That will be an attractive proposition to thousands of people.

5 pm

Last night my hon. Friend the Member for Workington (Mr. Campbell-Savours) said that in the Lake District houses costing £15,000 could be sold by 1983–84 for £90,000, a profit of £75,000, a sum which most working people do not see in a lifetime.

The Government are opening the door to corruption of the worst and most obvious kind. It is bitterly resented and, if it continues, more and more loopholes will be found for that sort of thing. In fact, that will not be necessary because one is provided in the Bill. Enormous profits will be made. But who will pay for them? They will be someone else's losses. The profits made by individual buyers—or individual crooks—will be made at the expense of the community's stock of dwellings. That is one of the most objectionable and hateful parts of an altogether objectionable and hateful Bill.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I am glad that the House heard the speech of the hon. Member for Salford, East (Mr. Allaun), because its theme was the thread that ran through the speeches that were made during about 51 Committee sittings. Because of the procedure of the House an afternoon going through to midnight is counted as one sitting. Therefore, in technical terms there were 48 sittings, but it may have been 58—and it certainly seemed like 158.

We heard rehearsed at virtually every sitting the Second Reading speeches of Opposition Members. Throughout the discussions they showed their hatred of council tenants. They lost no opportunity to say that the tenants would stoop to abuse and crookedness. They described the benefits that the tenants would receive under the Bill as windfall profits.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I shall give way to the hon. Gentleman in a moment. I hope that he will wait until I deal with his remarks, because I propose to encapsulate some of them into my speech. I do not propose to follow the example of a rerun, because the House and the country have decided the principle. The Committee examined the Bill in detail and returned it to the House on Report.

The hon. Member for Blackburn (Mr. Straw) trotted out his outworn and tasteless description of my right hon. Friend the Secretary of State as a gauleiter.

Photo of Jack Straw Jack Straw , Blackburn

I must correct the Minister. It was not my outworn and tasteless description, but that of the hon. Member for Buckingham (Mr. Benyon). He used that expression during his speech on Second Reading about five months ago. I am sure that he will be glad to know—as will the members of the Conservative association in Buckingham—that he has been described by the Minister as distasteful. I think that the Minister also used another adjective. That description, apt though it was, was the authorship of a Conservative Member.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

The hon. Gentleman is admitting to cheap plagiarism. He was happy to do so on more than one occasion in Committee, which was quite at odds with his normally genial nature. I am glad that he has shown us that Blackburn can occasionally provide a Jekyll and Hyde situation. It did so from time to time with his predecessor, now Lady Castle, who could show a smiling face when she was trying to persuade the Government to give her something, but when she did not get what she wanted became rather less pleasant and reverted to type. At least we know that the hon. Gentleman has picked up her mantle.

The hon. Gentleman said that a council tenant would have every reason to understate his income. He showed yet again the opinion that he holds of his fellow citizens, many of whom he relied upon for his votes when he was elected. I wonder whether he visited his council estates and said "Many of you will indulge in deception to get your biggest possible discount." I am prepared to suggest that he did not do that.

The hon. Gentleman charged my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) with being asleep when my hon. Friend challenged him about his false assertion, oft-repeated, of windfall profits. I confess that I am content to accept the estimate that the hon. Gentleman made of his own arguments when he said that they at least convinced him. I can only tell him that they did not convince anybody else.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I am dealing with the hon. Member for Blackburn. I shall turn in a moment to the hon. Member for Bootle (Mr. Roberts), who accused us of a vendetta against public sector housing. I suggest that he is pursuing a vendetta against public sector tenants who, quite frankly, can look only to a Conservative Government for genuine assistance.

Photo of Jack Straw Jack Straw , Blackburn

In Committee we examined in detail the calculations that I made, and the Minister for Housing and Construction said that he would study them with great care. That is on the record. Will the Minister say whether my calculations were wrong, and, if so, in what particular?

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

My hon. Friend may have said that he would study the hon. Gentleman's calculations with great care, but that did not imply that he would do any more than look at them and say whether he agreed that the pocket calculator produced the answer. I have had some calculations made which indicate that a £10,000 house bought outright after five years would produce a value of £10,100 after the Bill discount clawback. An option purchaser two years later—because of the option process—would receive £8,500, and would have to wait two further years before his house was worth £10,900. The house of the person who had bought outright would, by then, have reached a value of £11,700. The calculations are on assumptions of a 40 per cent. discount and a 10 per cent. national house price increase.

I do not propose to examine the hon. Gentleman's figures, because I have not calculated them. I say that quite frankly. If my hon. Friend said that he would look at them, I am content to believe that he has done so. The fact that he has not decided to say anything means, presumably, that he takes the same view as I do, namely, that those calculations may satisfy the hon. Gentleman, but they do not need to bother the House.

Photo of Mr Allan Roberts Mr Allan Roberts , Bootle

Will the Minister say whether the assertion that I made is reasonable? I said that if someone takes out an option and decides to exercise it after a two-year period, he will then be buying the house with a 75 per cent. discount, not a 50 per cent. discount.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I do not accept that form of arithmetic.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

If I did, I should be sitting on the Opposition Benches. I prefer a commonsense argument. That is why I am fortunate enough to be on this side of the Chamber.

Photo of Jack Straw Jack Straw , Blackburn

The Under-Secretary of State is treating Members and the assurances given by his hon. Friend in a contemptible way. After I had offered my calculations in Committee, and after the Minister had had every chance to take, advice from officials in the Committee, he said: I will certainly study the hon. Gentleman's calculations which relate to the narrow question of the discount clawback. I give him an assurance that I will study the figures that he has given."—[Official Report, Standing Committee F, 14 February 1980; c. 392.] What is the result of the Minister's study of those figures? I want not the phoney calculations that the Under-Secretary has made, but the result of the study of the figures that I gave. May we be told the conclusion of that study?

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

Quite clearly, the calculations that were studied by my hon. Friend did not warrant any further action We do not propose to change the Bill because of those figures.

I wish to deal with the hon. Member for Salford, East, who was glad to reaffirm the policy of the Labour Party, namely, that it would withdraw the right to buy. On this occasion, we are not at cross-purposes. Until the Bill is passed, local authorities have the opportunity to sell; tenants do not have the right to buy. I hope that at least this time the hon. Gentleman will not feel that I am misrepresenting him. What he believes the Labour Party will do—the hon. Gentleman speaks with great authority, as he has told us on many occasions, and we have all acknowledged it—is withdraw the right to buy. I understand that that will be in the Labour Party's manifesto. We are at one on that. I am glad that that is on the record.

I suggest that the hon. Gentleman has drawn a somewhat false analogy over the option situation. Parliament would not be binding its successor. A legal document would have to be honoured. I do not believe that even the Labour Party would wish to dishonour a legal document—which the individual option document would be—between the tenant and his landlord. That is the difference.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

In 10 or 15 years, which is the soonest that we are likely to be in opposition, we might be unhappy if the Labour Government—[Interruption.] I said "soonest". I hope that my hon. Friends will give me credit for that. We would be unhappy if the then Labour Government, in 20 or 25 years, said that they were going to repeal the legislation. They would be constitutionally entitled to do that, but we would resist them if they said that they would cancel retrospectively option agreements freely entered into between tenants and local authority landlords. That is the point.

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

Does the Minister deny that for two years after the election of a Labour Government, that Government would be bound under this legislation to compel local authorities to sell, even though the contract had not been completed? That is the question.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I think that the hon. Gentleman has again slightly misunderstood me. Until legislation repealing this measure was passed local authorities would have to continue issuing option notices to tenants who wished to purchase. Once the legislation was passed, that would cease. I hope that the hon. Gentleman was not saying that option documents already issued would be cancelled. That is the difference between us.

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

Does not the Minister think that he is being unfair in permitting this kind of thing to continue into the life of a Government opposed to it? Surely he is binding that Government to do something that they would not want to do.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

Many Governments have come into power and, until they passed the appropriate legislation, have been saddled with legislation passed by their predecessors. However, I hope that the hon. Gentleman is not saying that he would encourage his Government—I say "his Government", although by then I am not sure whether they would be—to welsh on option agreements legally and freely entered into.

Photo of Mr Tristan Garel-Jones Mr Tristan Garel-Jones , Watford

I am grateful to my hon. Friend for making this important point. May I ask him to clarify, or extract a clarification from the Opposition spokesman on, this matter? If a constituent of mine placed a deposit with the local authority, which entitled him to purchase his council house, and entered into a contractual agreement with the authority giving him the option to buy that house, would it be the intention of the Labour Party to allow the Watford borough council to honour that contract or to renege on it? I think that this is a very important matter.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I shall happily give way to the right hon. Member for Manchester, Ardwick (Mr. Kaufman) if he would care to clarify that point now, or, if he is proposing to intervene in the debate, perhaps he could make it clear later. It is occasionally useful to know whether his view coincides with that of the hon. Member for Salford, East on housing matters. One has responsibility in this House. The other has responsibility on the national executive of the Labour Party. We know who runs the Labour Party. It is not the Opposition spokesman in the House. However, it would be useful to know whether their views coincide.

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

I suggest that it is deliberately unfair of the Government to grant options in the second half—I would say altogether—of their period of four or five years in office, because they know that they are putting a subsequent Government and local authorities in an invidious position. The question is not as posed by the Minister, but whether the Government should do that kind of thing.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead 5:15 pm, 20th May 1980

Any Government should continue to uphold the law passed by Parliament. No Government are entitled to anticipate an event that probably will not happen. Therefore, the Government would be wrong to discourage local authorities, even during the last three months of office prior to an election.

I should like to make the position perfectly clear. I hope that I understood the hon. Gentleman correctly—if not, he may interrupt me—as having said that he thinks it is unfair that these options should continue to be granted within 18 months or so of a general election. If a Labour Government were elected, would he support legislation to cancel options freely entered into? He prophesied what would be in the Labour Party's election manifesto. Unless the big battalions of the TUC change their mind, or change the mind of the Labour Party conference, the hon. Gentleman could have a major say in the manifesto, overriding any moderate views of the right hon. Member for Birmingham, Spark-brook (Mr. Hattersley). Therefore, we are entitled to ask: does the Labour Party intend to support legislation to dishonour options freely entered into?

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

The Labour Party has not considered that question. It has unanimously decided to oppose the view being expressed by the Minister on option mortgages.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

That is stage one. So the House and the country are entitled to know—one deduces this from what has been said—that the Labour Party will try to renege by legislative methods on options freely entered into. There can only be a "Yes" or a "No" to that. We have not had any clear commitment. Therefore, we are entitled to assume that the unfairness seen by the hon. Gentleman would be translated into legislation. We are also entitled to assume the same answer from the right hon. Member for Ardwick, unless he takes an opportunity during his speech to set the record right.

The hon. Member for Salford, East spoke about the bitter resentment of many people over the policy of this Government to compel local authorities to sell council houses. I have read the bitter resentment of that Birmingham voter—a life-long Socialist—who, when he went to buy his home, having made inquiries prior to the election was told "No, mate, it is not on any more". I have sympathy for him. It is sad that he did not listen to what we were saying and to the threats being made by the Labour Party. All I can say to him is "Hang on, old chap, we will rescue you, and perhaps you will decide that the party of the people is not the phoneys of the Left, but the Conservatives ".

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

I do not know anything about the Birmingham voter, but I know about Conservative Members of Parliament who have had the courage to say that they are opposed to compelling authorities to sell council houses. I know of Conservative-controlled local authority associations which were and still are diametrically opposed to this proposal.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

That may be. The Government were elected on a manifesto which made it clear that the sale of council houses and flats would be effected in such a way that local authorities could not contract out of the law of the land. We are carrying that through into legislation for the benefit of as many council tenants as wish to exercise that right.

We also said that those who are not in a position to exercise that right forthwith would be entitled to an option. This would perhaps be an appropriate moment, Mr. Deputy Speaker, to come back to the options provision. You have been generous in allowing us to range wider than the amendments might have indicated It has been useful to nail the Labour Party yet again on its anti-local authority tenant views.

As I have tried to indicate the provision in clause 15, whereby a tenant who cannot afford to buy straight away may have a two-year option to purchase the dwelling house at the original valuation, is one to which the Government are fully committed. The provision that we have made is tightly drawn. The option procedure will be available only in limited circumstances where a tenant's mortgage entitlement would not enable him to buy immediately. In any event, I think that most people who buy will want to do so at once, so that they can start paying off their mortgage, and so that the five years for discount sharing begins to run as soon as possible. As to the life of the option, it must surely be long enough to fulfil its purpose. The tenant should know in advance the price at which he can buy while he saves the money to do so.

It is right to remind the House of what my right hon. Friend the Secretary of State said when he referred to this provision in his adoption speech. He said: We shall further offer these tenants the right at a nominal price to an option to buy if they remain tenants, so that they will know that they have a legally binding right for, say, two to three years to buy at a price fixed at the date of the option. At that time we were considering whether it should be two or three years. After careful consideration, as the House knows, we concluded that the two-year period was right. I said earlier that the option procedure was an integral part of the right to buy. We believe that a period shorter than two years would be too short to make the option of any benefit, given that some time will have to elapse from a tenant's initial application to the date at which it becomes clear that he may have the option to complete at the fixed price within two years. I am firmly of the opinion that it would be wrong to cut down the period to one year or six months. I hope that the House will join me in that view.

The amendments are designed to disadvantage the purchaser who buys, having taken advantage of the option to complete at any time within two years that is conferred by clause 15 on a limited number of those who exercise the right to buy. It would do so by compelling them, if they resold their home within five years—we should remember that it is their home—to repay all or part of the discount that would be based not on the price they paid, but on the discount to which they would have been entitled had the house been valued at the date of completion of the sale.

In support of the Government's opposition to these arguments I cite two more points which I hope will convince the House that the amendments are misconceived, mischievous and positively harmful to council tenants. The first is that purchasers who act with the benefit of the options conferred by clause 15 will be less well off than other purchasers. That is why we believe that they deserve the special help provided by the option provisions to which the Government are clearly committed by their election manifesto. In our view, the question of their being less well off also provides a good reason for not discriminating against them when they have actually bought.

The second reason is perhaps one of detail rather than principle, but it is important to repeat it. In putting down their amendments the Opposition have demonstrated their bitterness and their wholehearted opposition to the idea of options. They have ignored the disadvantage already experienced by option purchasers—a point made by my hon. Friend the Member for Lichfield and Tamworth. Those purchasers will, in any case, be caught up by the discount sharing provision for a period of five years, beginning up to two years after the service of their initial notice claiming to exercise the right to buy. To that extent they will be penalised in comparison with those who can afford to buy at once. In my view that is entirely fair and reasonable, but to go further would impose a disadvantage on such purchasers, which I do not believe, in equity, could be justified.

I hope that this moderate speech, drawing on the compassion of the Labour Party for local authority tenants, as one would believe if one were to listen to some of the comments that are made, will persuade the House that it would be in the best interests of the council tenants if the amendment were withdrawn or not pressed to a vote. If, however, the Opposition wish to demonstrate yet again the contempt in which they hold local authority tenants, I suggest that my right hon. and hon. Friend should vote the amendment down.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

In the Standing Committee, we always appreciated the humour, conscious or unconscious, with which the Under-Secretary of State entertained us. The hon. Gentleman excelled himself today when he talked about the Labour Party's vendetta against, or hatred of, council tenants, and when he claimed that council tenants were looking to the Conservative Government. On 1 May, in a ward in my constituency composed totally of council property, the vote in favour of the Labour Party was six to one. The swing to Labour from last year—there was no swing against Labour in the general election—was 7½ per cent.

In the constituency of the hon. Member for Manchester, Withington (Mr. Silvester), who was driven out of the Chamber by the tedious repetition of the Minister, a safe Conservative ward containing a large council estate was easily won by Labour because of the votes of the council tenants. If the hon. Member for Withington were to offer himself today for re-election in that constituency, there would be another Labour Member on this side of the House very soon. Similarly, the hon. Member for Watford (Mr. Garel-Jones), who talked of one of his constituents, would be lucky to retain his seat if he were to apply for re-election now. If the hon. Gentleman wants to test my argument, he can apply for the Chiltern Hundreds and we will all come and take part in the by-election.

The option provision that we are debating is a singular episode in the life of the Government. It is the only price control that the Government have imposed. Inflation under the Government has more than doubled, to almost 22 per cent. The Price Commission has been abolished. Value added tax has been doubled. Prescription charges have been quintupled. Rents are being forced up this year by 28 per cent. for the council tenant and by at least as much for the private tenant. The price of purchasing a house is rising steadily. Of all the prices being forced up under this Government, including gas prices and other fuel prices, the only price—

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

No, I shall not give way to the hon. Gentleman. He may, in Committee, have been sleeping, but sometimes we would have been pleased if he had been afflicted with catalepsy. The only price controlled under the Government is the price at which one—

Photo of Mr John Heddle Mr John Heddle , Lichfield and Tamworth

On a point of order, Mr. Deputy Speaker. The right hon. Mem ber for Manchester, Ardwick (Mr. Kauf man), I believe, misinformed the House, without doubt, unintentionally. He stated that the prices of houses were continuing to rise. I submit that house prices rose 30 per cent. a year under his Government—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. That is not a point of order. It is a point of argument.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick 5:30 pm, 20th May 1980

It is also an inaccurate point of argument, Mr. Deputy Speaker. The hon. Gentleman said that I might have been misleading the House inadvertently. If I mislead the House, it will be deliberately and not inadvertently. [HON. MEMBERS: "Oh."] But, of course, I would do no such thing, because I am dealing with the Government's record on prices, on which the truth is indictment enough.

This £100 option is seen as particularly unfair when one considers the private house purchaser. What a boon it would be for someone wanting to buy a privately owned house if he were able to pick up the most excellent house that he could find, built to very high standards, because council houses are built to Parker Morris standards whereas the National House-building Council's standards are well below Parker Morris standards, go to the vendor, put down £100—the cost of 100 prescriptions—and keep the option to buy that house for two years, and if he then changed his mind he could get back his £100 as well !

One has only to state that proposition to see what an extraordinary privilege it would be for the private house purchaser if the Government were to give him that opportunity, and how the Government really would be fulfilling their pledge to help the home owner if they were to do that. But the private house purchasers, who are frequently badly housed and wishing to buy houses because they are badly housed, will themselves, through the taxes and the rates that they pay, be contributing towards paying for this remarkable privilege for people who, by definition, are well housed and who must be well housed because they like the house in which they are living well enough to want to continue living in it and to buy it.

Photo of Mr Tristan Garel-Jones Mr Tristan Garel-Jones , Watford

Will the right hon. Gentleman give way?

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

No. We are under a guillotine, and I think that the House will want to move on to other amendments.

The Opposition regard this option provision as an unacceptable rip-off of public assets which are being paid for, not by the Government, but by every taxpayer, every ratepayer and every mortgagor in the country.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

Yes. Every man and woman in the country will be paying for

this privilege for a small number of people. That is quite unacceptable.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

Even the sick and the disabled, through paying a high rate of value added tax and general taxation, are paying for it.

Photo of Gerald Kaufman Gerald Kaufman , Manchester Ardwick

That is an extremely valid point, because the Social Security (No. 2) Bill helps to impose taxation upon those who are sick and the unemployed. They, together with the home owner buying the house on the market, will be paying for this privilege for a very small number of people. That being so, the Opposition will vote against the Government on this issue, and we invite other parties to do so, too.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

I was hoping that the right hon. Gentleman would be giving way.

Question put, That the amendment be made:—

The House divided: Ayes 237, Noes 294.

Division No. 314]AYES[5.34 pm
Abse, LeoCohen, StanleyField, Frank
Adams, AllenColeman, DonaldFitch, Alan
Allaun, FrankConcannon, Rt Hon J. D.Fitt, Gerard
Alton, DavidConland, BernardFlannery, Martin
Anderson, DonaldCook, Robin F.Fletcher, L. R. (Ilkeston)
Archer, Rl Hon PeterCowans, HarryFletcher, Ted (Darlington)
Ashley, Rt Hon JackCraigen, J. M. (Glasgow, Maryhill)Foot, Rt Hon Michael
Ashton, JoeCrowther, J. S.Ford, Ben
Atkinson, Norman (H'gey, Tott'ham)Cunliffe, LawrenceForrester, John
Bagler, Gordon A. T.Cunningham, George (Islington S)Fraser, John (Lambeth, Norwood)
Barnett, Guy (Greenwich)Cunningham, Dr John (Whitehaven)Freeson, Rt Hon Reginald
Barnett. Rt Hon Joel (Heywood)Dalyell, TamGarrett, John (Norwich S)
Beith, A. J.Davidson, ArthurGarrett, W. E. (Wallsend)
Benn, Rt Hon Anthony WedgwoodDavies, Rt Hon Denzil (Llanelli)George, Bruce
Bennett, Andrew (Stockport N)Davies, Ifor (Gower)Gilbert, Rt Hon Dr John
Bidwell, SydneyDavis, Clinton (Hackney Central)Ginsburg, David
Booth, Rt Hon AlbertDavies, Terry (B'rm'ham, Stechford)Graham, Ted
Bottomley, Rt Hon Arthur (M'brough)Deakins, EricGrant, George (Morpeth)
Bradley, TomDempsey, JamesGrant, John (Islington C)
Bray, Dr JeremyDewar, DonaldGrimond, Rt Hon J.
Brown, Hugh D. (Provan)Dobson, FrankHamilton, W. W. (Central Fife)
Brown, Robert C. (Newcastle W)Dormand, JackHardy, Peter
Brown, Ronald W. (Hackney S)Douglas, DickHarrison, Rt Hon Walter
Brown, Ron (Edinburgh, Leith)Douglas-Mann, BruceHart, Rt Hon Dame Judith
Callagnan, Jim (Middleton & P)Dubs, AlfredHattersley, Rt Hon Roy
Campbell, IanDuffy, A. E. P.Haynes, Frank
Campbell-Savours, DaleDunn, James A. (Liverpool, Kirkdale)Healey, Rt Hon Denis
Canavan, DennisDunwoody, Mrs GwynethHeffer, Eric S.
Cant, R. B.Ellis, Raymond (NE Derbyshire)Hogg, Norman (E Dunbartonshire)
Carter-Jones, LewisEnglish, MichaelHolland, Stuart (L'beth, Vauxhall)
Cartwright, JohnEnnals, Rt Hon DavidHome Robertson, John
Clark, Dr David (South Shields)Evans, loan (Aberdare)Homewood, William
Cocks, Rt Hon Michael (Bristol S)Ewing, HarryHooley, Frank
Horam, JohnMason, Rt Hon RoySilverman, Julius
Howell, Rt Hon Denis (B'ham, Sm H)Maynard, Miss JoanSkinner, Dennis
Howells, GeraintMeacher, MichaelSmith, Cyril (Rochdale)
Huckfield, LesMellish, Rt Hon RobertSmith, Rt Hon J. (North Lanarkshire)
Hughes, Mark (Durham)Mikardo, IanSnape, Peter
Hughes, Robert (Aberdeen North)Millan, Rt Hon BruceSoley, Clive
Hughes, Roy (Newport)Mitchell, Austin (Grimsby)Spearing, Nigel
Janner, Hon GrevllleMolyneaux, JamesSpriggs, Leslie
Jay, Rt Hon DouglasMorris, Rt Hon Alfred (Wylhenshawe)Stallard, A. W.
John, BrynmorMorris, Rt Hon Charles (Openshaw)Steel, Rt Hon David
Johnson, Walter (Derby South)Morris, Rt Hon John (Aberavon)Stoddart, David
Johnston, Russell (Inverness)Morton, GeorgeStrang, Gavin
Jones, Rt Hon Alec (Rhondda)Moyle, Rt Hon RolandStraw, Jack
Jones, Barry (East Flint)Newens, StanleySummersklll, Hon Dr Shirley
Jones, Dan (Burnley)Oakes, Rt Hon GordonTaylor, Mrs Ann (Bolton West)
Kaufman, Rt Hon GeraldO'Halloran, MichaelThomas, Dafydd (Merioneth)
Kerr, RussellO'Neill, MartinThomas, Rt Hon George (Cardiff W)
Kilfedder, James A.Orme, Rt Hon StanleyThomas, Dr Roger (Carmarthen)
Kinnock, NeilOwen, Rt Hon Dr DavidTilley, John
Lambie, DavidPalmer, ArthurTinn, James
Lamborn, HarryPark, GeorgeTorney, Tom
Lamond, JamesParry, RobertUrwin, Rt Hon Tom
Leighton, RonaldPenhaligon, DavidVarley, Rt Hon Eric G.
Lestor, Miss Joan (Eton S Slough)Powell, Rt Hon J. Enoch (S Down)Wainwright, Edwin (Dearne Valley)
Lewis, Arthur (Newham North West)Powell, Raymond (Ogmore)Wainwright, Richard (Colne Valley)
Lewis, Ron (Carlisle)Prescott, JohnWatkins, David
Litherfand, RobertPrice, Christopher (Lewisham West)Weetch, Ken
Lofthouse, GeoflreyRace, RegWellbeloved, James
Lyon, Alexander (York)Radice, GilesWelsh, Michael
Lyons, Edward (Bradford West)Richardson, JoWhite, Frank R. (Bury & Radcliffe)
Mabon, Rt Hon Dr J. DicksonRoberts, Albert (Normanton)Whitehead, Phillip
McCartney, HughRoberts, Allan (Bootle)Whitlock, William
McCusker, H.Roberts, Ernest (Hackney North)Wigley, Dafydd
McDonald, Dr OonaghRodgers, Rt Hon WilliamWilley, Rt Hon Frederick
McElhone, FrankRooker, J. W.Williams, Rt Hon Alan (Swansea W)
McGuire, Michael (Ince)Ross, Ernest (Dundee West)Wiliams, Sir Thomas (Warrington)
McKay, Allen (Penistone)Ross, Stephen (Isle of Wight)Wilson, Rt Hon Sir Harold (Huyton)
McKelvey, WilliamRoss, Wm. (Londonderry)Wilson, William (Coventry SE)
Mackenzie, Rt Hon GregorRowlands, TedWinnick, David
Maclennan, RobertSandelson, NevilleWoodall, Alec
McNally, ThomasSever, JohnWoolmer, Kenneth
McNamara, KevinSheerman, BarryWrigglesworth, Ian
McWiliiam, JohnSheldon, Rt Hon Robert (A'ton-u-L)Young, David (Bolton East)
Magee, BryanShore, Rt Hon Peter Step and Pop)
Marks, KennethShort, Mrs RenéeTELLERS FOR THE AYES:
Marshall, David (Gl'sgow. Shettles'n)Silkin, Rt Hon John (Deptford)Mr. Joseph Dean and
Marshall, Dr Edmund (Goole)Silkin, Rt Hon S. C. (Dulwich)Mr. James Hamilton
Marshall, Jim (Leicester South)
NOES
Adley, RobertBruce-Gardyne. JohnEden, Rt Hon Sir John
Altken, JonathanBryan, Sir PaulEdwards, Rt Hon N. (Pembroke)
Alexander, RichardBuchanan-Smith, Hon AlickEggar, Timothy
Amery, Rt Hon JulianBuck, AntonyEmery, Peter
Ancram, MichaelBudgen, NickFalrbairn, Nicholas
Arnold, TomBulmer, EsmondFairgrleve, Russell
Aspinwall, JackBurden, F. A.Faith, Mrs Sheila
Atkinson, David (B' mouth. East)Butcher, JohnFarr, John
Baker, Nicholas (North Dorset)Butler, Hon AdamFell, Anthony
Banks, RobertCadbury, JocelynFenner, Mrs Peggy
Beaumont-Dark, AnthonyCarlisle, John (Luton West)Finsberg, Geoffrey
Bell, Sir RonaldCarlisle, Kenneth (Lincoln)Fisher, Sir Nigel
Bendall, VivianCarlisle, Rt Hon Mark (Runcorn)Fletcher, Alexander (Edinburgh N)
Benyon, Thomas (Abingdon)Chalker, Mrs. LyndaFletcher-Cook, Charles
Benyon, W. (Buckingham)Channon, PaulForman, Nigel
Best, KeithChapman, SydneyFraser, Rt Hon H. (Stafford & St)
Bevan, David GllroyChurchill. W. S.Fraser, Peter (South Angus)
Bitten, Rt Hon JohnClark, Sir William (Croydon South)Fry, Peter
Biggs-Davison, JohnClarke, Kenneth (Rushcllffe)Galbraith, Hon T. G. D.
Blackburn, JohnCockeram, EricGardiner, George (Reigate)
Blaker, PeterColvin, MichaelGardner, Edward (South Fylde)
Body, RichardCope, JohnGarel-Jones, Tristan
Bonsor, Sir NicholasCorrie, JohnGilmour, Rt Hon Sir Ian
Boscawen, Hon RobertCostain, A. P.Glyn, Dr. Alan
Bottomley, Peter (Woolwich West)Critchley. JulianGoodhew, Victor
Boyson, Dr RhodesCrouch, DavidGorst, John
Bralne, Sir BernardDickens, GeoffreyGow, Ian
Bright, GrahamDorrell, StephenGower, Sir Raymond
Brinton, TimDouglas-Hamilton, Lord JamesGrant, Anthony (Harrow C)
Brocklebank-Fowler, ChristopherDover, DenshoreGray, Hamish
Brooke, Hon peterdu Cann, Rt Hon EdwardGreenway, Harry
Brotherton, MichaelDunn, Robert (Dartford)Grieve, Percy
Drown, Michael (Brigg & Sc'thorpe)Durant, TonyGriffiths, Eldon (Bury St Edmunds)
Browne. John (Winchester)Dykes, HughGriffiths, Peter (Portsmouth N)
Grist, IanMajor, JohnSainsbury, Hon Timothy
Grylls, MichaelMarland, PaulScott, Nicholas
Glimmer, John SelwynMarlow, TonyShaw, Giles (Pudsey)
Hamilton, Hon Archie (Eps'm&Ew'll)Marshall, Michael (Arundel)Shaw, Michael (Scarborough)
Hamilton, Michael (Salisbury)Marten, Neil (Banbury)Shelton, William (Streatham)
Hampson, Dr KeithMates, MichaelShepherd, Colin (Hereford)
Harvnam, JohnMather, CarolShepherd, Richard (Aldridge-Br'hllls)
Haselhurst, AlanMaude, Rt Hon AngusShersby, Michael
Hastings, StephenMawby, RaySilvester, Fred
Havers, Rt Hon Sir MichaelMawhinney, Dr BrianSims, Roger
Hawkins, PaulMaxwell-Hyslop, RobinSkeet, T. H. H.
Hawksley, WarrenMayhew, PatrickSmith, Dudley (War. and Leam'ton)
Hayhoe, BarneyMellor, DavidSpeller, Tony
Meddle, JohnMeyer, Sir AnthonySpence, John
Henderson. BarryMiller, Hal (Bromsgrove & Redditch)Spicer, Michael (S Worcestershire)
Heseltine, Rt Hon MichaelMills, lain (Menden)Sproat, Iain
Hicks, RobertMiscampbell, NormanSquire, Robin
Higgins, Rt Hon Terence L.Mitchell, David (Basingstoke)Stainton, Keith
Hill, JamesMoate, RogerStanbrook, Ivor
Hogg, Hon Douglas (Grantham)Montgomery, FergusStanley, John
Holland, Fhilip (Carlton)Moore, JohnSteen, Anthony
Hooson, TomMorris, Michael (Northampton, Sth)Stevens, Martin
Hordern, PeterMorrison, Hon Charles (Devizes)Stewart, Ian (Hitchin)
Howe, Rt Hon Sir GeoffreyMorrison, Hon Peter (City of Chester)Stewart, John (East Renfrewshire)
Howell, Rt Hon David (Guildford)Murphy, ChristopherStokes, John
Howell, Flalph (North Norfolk)Myles, DavidTapsell, Peter
Hunt, David (Wirral)Needham, RichardTaylor, Teddy (Southend East)
Hunt, John (Ravensbourne)Nelson, AnthonyTebbit, Norman
Hurd, Hon DouglasNeubert, MichaelTemple-Morris, Peter
Irving, Charles (Cheltenham)Nott, Rt Hon JohnThomas, Rt Hon Peter (Hendon S)
Jenkin, Rt Hon PatrickOnslow, CranleyThompson, Donald
Jessel, TobyOppenheim, Rt Hon Mrs SallyThorne, Neil (Ilford South)
Johnson Smith, GeoffreyOsborn, JohnThornton, Malcolm
Jopling, Rt Hon MichaelPage, John (Harrow, West)Townend, John (Bridlington)
Joseph, Rt Hon Sir KeithPage, Rt Hon Sir R. GrahamTownsend, Cyril D. (Bexleyheath)
Kaberry, Sir DonaldPage, Richard (SW Hertfordshire)Trippier, David
Kimball, MarcusParkinson, CecilTrotter, Neville
King, Rt Hon TomParris, Matthewvan Straubenzee, W. R.
Kitson, Sir TimothyPatten, Christopher (Bath)Vaughan, Dr Gerard
Knight, Mrs. JillPatten, John (Oxford)Viggers, Peter
Knox, DavidPattie, GeoffreyWaddington, David
Lament. NormanPawsey, JamesWakeham, John
Lang, IanPercival, Sir IanWaldegrave, Hon William
Langford-Holt, Sir JohnPink, R. BonnerWalker, Bill (Perth & E Perthshire)
Latham, MichaelPollock, AlexanderWalker-Smith, Rt Hon Sir Derek
Lawrence, IvanPorter, GeorgeWall, Patrick
Lawson, NigelPrentice, Rt Hon RegWaller, Gary
Lee, JohnPrice, David (Eastleigh)Walters, Dennis
Le Marchant, SpencerPrior, Rt Hon JamesWard, John
Lennox-Doyd, Hon MarkProcter, K. HarveyWarren, Kenneth
Lester, Jim (Beeston)Raison, TimothyWatson, John
Lewis, Kenneth (Rutland)Rathbone, TimWells, Bowen (Hert'rd & Stev'nage)
Lloyd, Ian (Havant & Waterloo)Rees, Peter (Dover and Deal)Wheeler, John
Lloyd, Peter (Fareham)Rees-Davies, W. R.Whitney, Raymond
Loveridge, JohnRenton, TimWickenden, Keith
Luce, RichardRhodes James, RobertWilkinson, John
Lyell, NicholasRhys Williams, Sir BrandonWilliams, Delwyn (Montgomery)
McCrindle, RobertRidsdale, JulianWinterton, Nicholas
Macfarlane, NellRifkind, MalcolmWolfson, Mark
MacGregor, JohnRippon, Rt Hon GeoffreyYoung, Sir George (Acton)
MacKay, John (Argyll)Roberts, Michael (Cardiff NW)Younger, Rt Hon George
Macmillan, Rt Hon M. (Farnham)Roberts, Wyn (Conway)
McNair-Wilson, Michael (Newbury)Rossi, HughTELLERS FOR THE NOES:
McNair-Wilson, Patrick (New Forest)Rost, PeterMr. John Stradling-Thomas and
McQuarrie, AlbertRoyle, Sir AnthonyMr. Anthony Berry.
Madel, David

Question accordingly negatived.

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

I beg to move amendment No. 159, in page 7, line 18, at end add ' or(c) the grant of a lease or sub-lease for a term of twenty-one years or less with an option to renew or to purchase the freehold or lease as the case may be; '. The intention of the amendment is to tighten the clause to avoid purchasers getting round restrictions on resale. I am sure that most hon. Members accept that the Government's intention is not to allow the Bill to become a licence for speculation and profiteering. However, it will be possible for it to be used in such a way by the unscrupulous.

Many people, especially we in the Liberal Party, have no objection to incentives being offered through discount systems. The local authority in my constituency, having considered what is right for the area, has decided to implement the discount opportunities at the earliest possible moment.

It is that which the Government are trying to do by means of subsection (3) (a) and (b) that leads me to move the amendment. Subsection (3)(a) refers to a further conveyance of the freehold or an assignment as one category of disposal within the subsection. Subsection 3(b) refers to the grant of a lease or sub-lease for a term of more than twenty-one years otherwise than at a rack rent The danger is that the Bill might enable a purchaser to lease or sub-lease a council house which he had bought for up to 21 years without losing his entitlement to a discount. Someone might buy a house for £18,000. He could then claim a discount of £9,000 and lease or sub-lease his home. He could use the money that he had made as a result of the discount to invest, speculate or buy another property. He could maintain the option of selling the property to the lessee 21 years later, or at a time of his choice.

If the Bill does not contain a clause that will stop speculation and profiteering, some people may use the loopholes to make a quick killing. I understand that the Minister may not be able to give an undertaking that he will accept the amendment. However, I hope that he will agree to consider the implications of the clause. When the Bill is considered in the other place, I hope that he will agree to incorporate the amendment in the Bill. In that spirit, I commend the amendment for the Minister's consideration.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Camden Hampstead

As the hon. Member for Liverpool, Edge Hill (Mr. Alton) made clear, the amendment is intended to stop up what at first sight appears to be a loophole in the discount snaring arrangement.

As clause 8 stands, if a purchaser, under the right to buy, granted a lease and option on his dwelling-house of the type specified in the amendment, it would not trigger off the five-year discount. However, if the new lessee then exercised the option so that there was a consequent disposal of the freehold or long lease within that five-year period, the discount sharing provision would bite on that transaction. It may be feasible to draw up leases and options which would enable a purchaser, under the right to buy, to dispose of his dwelling-house and immediately receive something close to market value without triggering the discount sharing provision.

I am glad that the hon. Gentleman has drawn attention to this problem. We have been considering the scope for such devices, but we should like to consider this one further. If need be, we shall table an appropriate amendment in the other place. On the basis of that assurance, I hope that the hon. Gentleman will seek to withdraw his amendment.

Photo of Mr David Alton Mr David Alton , Liverpool Edge Hill

I am grateful to the Minister for his helpful reply. On that understanding, I am happy and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made:

No. 15, in page 7, line 31, after ' him ' insert ' by the Housing Corporation or a building society '.

No. 16, in page 7, line 32, at end insert ' or further advanced to him by the Corporation or society '.

No. 17, in page 7, line 39, at end insert ' (7) In this section "building society" means a bulding society within the meaning of the Building Societies Act 1962 or the Building Societies Act (Northern Ireland) 1967 '.—[Mr. Geoffrey Finsberg.]