Orders of the Day — Housing Support Grant (Scotland)

Part of the debate – in the House of Commons at 12:12 am on 21st January 1981.

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Photo of Donald Dewar Donald Dewar , Glasgow Garscadden 12:12 am, 21st January 1981

I always admire the practised ease with which the Under-Secretary works hard to mask the stark and unpalatable facts which lie behind his Government's policy. He has become very practised at denying what evidently is. We had a splendid example at the beginning of his speech when he said, almost casually, that perfect harmony had reigned between the Government and the Convention of Scottish Local Authorities; they had agreed on almost everything, except what was relevant income and what was eligible expenditure. If they could not agree on that—the foundations of the whole system—the hon. Gentleman's definition of "agreement" is very strange indeed.

I want fairly briefly to try to explain to the House why we regard this housing support grant as such thoroughly bad news for the whole of Scotland. The first reason is the very simple one that resources that are being made available to housing authorities in Scotland are being very sharply reduced in this support grant. It was £228 million last year. It is £140 million this year. That is a drop of 34 per cent. Putting it another way, the loss equals a reduction in subsidy per house of about £100. That is a very substantial amount on every local authority house in Scotland. Indeed, in 11 authorities it is above £145 per house, although they have been stabilised at that quite scandalous figure at the expense of other authorities.

What we are saying, very simply, is that to decrease in this dramatic way the real resources that are available for housing need in Scotland, at a time when the housing crisis is deepening and when authorities are struggling to maintain properties and standards, is a criminal misuse of priorities by the present Government.

We are entitled to ask what the future holds, because the White Paper on public expenditure shows that housing expenditure will be reduced by 42 per cent. by 1984, and that this year it runs at £603 million and by 1984 it will be down to £410 million. That kind of drop would easily accommodate the virtual abolition of the housing support grant by 1984.

If that is what is happening, if that is the road which we are to be taken down right to the end, the consequences for housing in Scotland will be very serious. Perhaps we could hear something of this in the wind-up speech.

Our objection is that the whole housing support system is artificial and contrived. I suspect that we start with the result that the Minister has a figure in his mind and he slots in the figures which allow him artificially to arrive at the conclusion he wants. I cannot go into it but we all know—it was referred to in the last debate—the appalling artificiality of the 6 per cent. expectation on wages and 11 per cent. on general cost inflation. No one believes in those figures, which show just what a totally artificial system we are now trying to operate.

But apart from the cut in the HSG itself, to appreciate the full impact, one must also consider what the Government are doing on the rate fund contribution in the individual authorities. The aggregate for the rate fund contribution for the whole of Scotland, the Government suggest, is £62 million. Last year it was £88 million. If that were updated for inflation, it would be about £102 million or £103 million. So the £62 million is very low. It cannot be achieved and I do not believe that any hon. Member believes that it can be achieved. It is a determined disregard for reality by the Government and they put it forward for a reason which is good to them but sinister to us.

It is a superbly simple strategy. One cuts the housing support grant, because that is within the Government's control; then one restricts the rate fund contribution, and one has a yawning gap between those totals and the income needed to meet expenditure. One is then forced either to massive redundancies and cuts in services or to what I suspect the Government really want—massive increases in rents. That is achieved by shamelessly manipulating the artificial formula for designating the individual rate fund contributions of local authorities.

The Government have taken a straight population multiplier of £8. Let me illustrate the idiocy and artificiality of that approach. It means that areas with the same population get the same notional rate fund contribution. One example which has been used often in the debate is that of Eastwood and Clydebank. They are on a par because each has a population of just over 50,000. But Eastwood has 2,000 public sector houses and Clydebank has 11,000. The rate fund contribution, as a contribution or subsidy per house, comes to a figure of £308 in Eastwood and only £52 in Clydebank.

So the system at the end of the day militates strongly and shamelessly against authorities with big public sector housing inputs. That is a distortion which cannot be defended by any sane or reasonable person. If there is to be this kind of allocation of RFC, the formula should at least take some account of historic fact or of the housing needs of individual authorities.

This may sound very dry and academic, but the result is totally devastating. In my own local authority, Glasgow, last year the RFC was just over £27 million. This year, the Secretary of State has said, "It must be restricted to £9 million, and by the way we are docking £7½ million of your housing support grant as well". As a result, when Glasgow considers its expenditure and its reduced HSG and the ludicrous RFC, it finds a shortfall of £42 million, which has to be made up by increases in rents, if it is done as the Secretary of State implies, of almost 70 per cent.

Even if we take the Shelter figures that have been circulated to all hon. Members, which make a simpler calculation and leave out expenditure variations, and merely take the HSG plus the RFC for 1980–81 and subtract the similar figures for 1981–82, it is clear that there was a startling assumed rent increase in the mind of the Secretary of State when he fixed his figures.

It is not only the big, wicked Socialist authorities which are penalised. Caithness, Skye and Lochalsh, Nithsdale and similar authorities will be expected to find 50 per cent. increases if the figures are to be taken seriously, as the Secretary of State apparently intends. I listened with care to the Under-Secretary. He started by implying that the rent increases were unfortunate. He said that if we had held to certain financial targets in the previous year they would not have been necessary. I thought that he was bringing forward an argument of financial expediency—no one likes it, but it is necessary unpleasant medicine and for the good of the country we must swallow it. The cliches flow easily.

But the hon. Gentleman appeared to argue that rents in Scotland are too low when set against certain social criteria—we spend more on drink and tobacco and so on. The overwhelming impression left by the Under-Secretary—and we want to know whether it is a correct impression—is that he wants rents to go up because he feels that that is socially desirable. If that is the Government position, and I suspect that it is—not just because of what the Under-Secretary said, but because it is the logic of the fraudulent system that the Government are operating—the people of Scotland are entitled to know that.

The point made by my hon. Friend for Glasgow, Cathcart (Mr. Maxton) is valid. There will be some offsetting increases in other sectors of public expenditure. If the 50 per cent. or 55 per cent. of council tenants who are already eligible for rent rebates, though many may not take up their entitlement, is to be increased, the cost of the rebates will largely be borne by the Exchequer and there is bound to be an offsetting advantage.

The morality of the Government's saying that they want average rent increases in Scotland of 40 per cent. while the wage rises of those who will be paying the increases should be held down to about 6 per cent. is wrong. But not only is the morality wrong. The sanity and the political philosophy from a Tory point of view are wrong, because we shall be drawing thousands of families into the poverty trap with these ill-conceived measures.

All that is depressing enough, but there is a final refinement which I find the most objectionable feature of the housing scene. It is the Government's intention to link housing capital allowances to the level of rents. That is a monstrous proposition—I use those words advisedly—and essentially objectionable. People's expectations and perhaps their real needs will always outrun what we can supply in the short term, but at least there ought to be an equitable principle of distribution—which must be the need of the local authorities that are putting in bids for the available resources.

The Government have said that there is £267 million to be distributed in housing capital allowances this year, presumably according to need, and every local authority will be given its dollop. But the Government added that the £267 million may become £200 million, because they may dock up to £67 million, not because the needs disappear and not even because of financial necessity, but because authorities have not forced up rents artificially to the levels pre-determined by the Secretary of State.

Let us take Glasgow as an example. In its third housing plan, the council reckoned that its capital requirements for 1981–82 would be £79 million. It was allotted £66 million and I do not complain about that. The council probably did not expect to get everything that it asked for. Presumably the Scottish Development Department and the Minister thought that Glasgow ought to get £66 million on merit and on need. The council has now been told that that will be cut to £55 million—a drop of £11 million—unless it forces up its council house rents by at least 50 per cent., and that it will not receive the whole £66 million unless council house rents rise by something approaching 70 per cent. That is an offensive and monstrous sanction of the most crude and immoral sort. I do not want to give any encouragement to such a proposition. To break the concept of need in the housing capital allowance, and tie it artificially to an arbitrary rent policy—an unjust and inequitable policy to boot—is something that no Ministry worth its salt should contemplate.

On Monday evening the Minister drew my attention to an item on the Press Association tape, for which I was grateful. I thought it worth sharing with the House. It stated: Britain could he heading for a disastrous housing shortage, a leading builder has warned…house building had dropped to the lowest level since 1053 I do not know in detail the housing policy that existed in 1053, but at that the equivalent of the Secretary of State was Macbeth. I do not think that he was noted for his housing management record. If I remember rightly he laid waste to the land with pillage and pestilence. I am considering tabling a parliamentary question to discover any other similarities between his housing record and that of the Government.

We are facing a desperate prospect. Rents and rates will soar, and at the same time the Government's prescription is "You will pay more, but you will receive less". We shall see new building grinding to a halt. We shall see rehabilitation and modernisation programmes and the building of sheltered and special purpose housing, almost disappearing. To be fair to the Minister, I am sure that he has the same problems in his constituency as I have in mine. It is difficult to talk sympathetically and hold out much hope to someone living in a house that was built long before the war, and who is genuinely worried not only about inadequate, but about positively dangerous wiring when our message must be "Your rent and rates will rise massively, but the re-wiring work that you have been waiting for for so many years must be postponed indefinitely because of the capital allowance cuts introduced by the Minister". We have to say that the cash which our constituents had hoped for to modernise their homes has been filched by the Govenment as a sanction measure because their councillors have not been beastly enough to their tenants. That is a cock-eyed and ludicrous position for any councillor or housing Minister to be in.

We are facing a real crisis. I have been around in Western Scotland and involved in Scottish politics for a considerable number of years. For the first time I am now meeting responsible and reasonable councillors who are asking "What is the point of continuing? If we are to be tied, as a sort of mute, executive arm, to policies that we abhor and cannot influence, there is a limit to how far and how long we can go". I am trying to argue that we have not yet reached that stage. But when I look at this sort of housing support grant, and at clause 13 of the Local Government (Miscellaneous Provisions) (Scotland) Bill which is in Committee—it allows the Secretary of State to deem to be excessive and unreasonable any estimated expenditure of a local authority, on grounds so wide and ill-defined as to provide no significant check against prejudiced, arbitrary and insensitive administrations of the sort that I begin to fear we are now facing—I have some genuine sympathy with the worries and the anxieties of those councillors. It is a bad, bad thing for the whole of the local government system when such a mood of defeatism and resigned anger is abroad.

My local authority has been agonising over the apportionment of the massive increase beween rates and rents. In a sense, although it is theoretically important, for many of my constituents—and no doubt those of other hon. Members—in the outturn it does not really matter very much. Whether it is 31 per cent. on rents and 31 per cent. on rates, or 15 per cent. on rents and 47 on rates, if one lives in a three-apartment flat in my constituency at the end of the day the difference between the two is only a few pennies. Because of this housing support grant, no matter how ingenious the councillors, no matter how they may turn and twist, that family will have to find about £12 or £13 a month at a time of economic distress and high unemployment.

I say to the Minister in all seriousness—