Factors to be considered in relation to section 23A

Orders of the Day — Rating and Valuation (Amendment) (Scotland) Bill – in the House of Commons at 4:45 pm on 29th March 1984.

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23B. Before making an order under section 23A of this Act the Secretary of State shall take account of any reduction in housing support grant to, and shall have regard to the impact of levels of rents in, the local authority or class thereof specified in the order".'.—[Mr. Craigen.]

Brought up, and read the First time.

Photo of Mr James Craigen Mr James Craigen , Glasgow Maryhill

I beg to move, That the clause be read a Second time.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

With this we may discuss the following amendments:

No. 20, in clause 6, page 6, leave out lines 14 to 16 and insert— `Any limit must take full account of evidence submitted by a local authority demonstrating significant changes in the council house waiting list or other special needs.'.

No. 21, in page 6, line 31, at end insert— '(6)(a) The Secretary of State shall not make any order under this section applying to any local authority if it appears that X is less than Y. Where X =(H+C)÷N and Y=I÷M (b) In subsection 6(a) above, H is defined as the total amount of Housing Support Grant payable to that local authority for the year specified in the order; C is the total contribution which that local authority estimates it will make out of their general fund to the credit of their housing revenue account for the year specified in the order; N is the number of tenants of houses owned by the local authority; I is the total estimated amount of mortgage tax relief given by the Government and M is the estimated number of recipients of mortgage tax relief in the United Kingdom for the year specified in the order.'.

Photo of Mr James Craigen Mr James Craigen , Glasgow Maryhill

The purpose of the new clause is to draw out some of the arguments that were partly discussed in Committee concerning the level of rents and the housing responsibilities of district councils. As matters stand, the Secretary of State will now fix rent levels in 1985–86. Effectively, he will take from the local authorities that power to determine the prevailing level of rents within their areas.

The operation of the present system of housing expenditure limits has never been satisfactory to the housing authorities, but there is even greater dissatisfaction among local authorities over the Government's proposals for determining rents and limiting rate fund contributions. Rents have more than doubled since this Government came to office. That is why the legislation should include a provision that takes account of the level of rents.

Moreover, it is essential that the Government be fairer in their assessment of the kind of responsibilities now facing Scottish housing authorities as landlords. The Minister, like myself, is well aware of the debates that took place during our consideration of the Scottish tenants' rights legislation, particularly in relation to the consultation document on right to repair. That highlighted some of the problems that face local authorities in carrying out their statutory responsibilities as public landlords and drew attention to some of the difficulties and costs involved in adequate maintenance and repair of Scotland's public sector housing.

According to Shelter, about 40 per cent. of pre-war housing owned by local authorities is still awaiting modernisation. I do not intend to overstress the situation in Glasgow, but the percentage of pre-1940 stock awaiting modernisation is 68 per cent. in north-east Fife, 59 per cent. in Inverness, 50 per cent. in Banff and Buchan, 88 per cent. in Badenoch and Strathspey, and 77 per cent. in Renfrew. Consequently, a sizeable proportion of council housing is still awaiting modernisation.

That will cost money. As the Government have been cutting back on housing support grant to local authorities, it is important that they should take that fact into account when determining the rate fund contribution limits—one of the other main sources of finance available to the majority, but not all, of district housing authorities in Scotland.

I need hardly remind my hon. Friends of the report recently published on dampness by the Select Committee on Scottish Affairs. I know that my hon. Friend the Member for Cunninghame, South (Mr. Lambie) hopes to catch your eye, Mr. Deputy Speaker, to say a word on that subject. The Minister knows that he and I may again be together in Committee to deal with a Bill on housing defects in non-traditional housing, following investigations by the Building Research Establishment. The Government have a duty to take into account all these factors in determining their approach to the rate fund contribution and the availability of funds for housing authorities to carry out their statutory duties.

6 pm

In Committee, the Minister questioned the maintenance and repair costs of some local authorities. The maintenance costs of multi-storey buildings and of a number of tenement properties tend to be higher than the average, and that should be more adequately reflected in the housing support grant that is given to local authorities.

We debated the housing support grant earlier this year. In fact, 30 out of the 56 Scottish authorities get no support whatever, and what has been available for Scottish local authorities receiving HSG has been steadily decreasing since this Government came to office.

The Government should be more straightforward in telling Scottish tenants that the Secretary of State will fix their rents as from 1985–86. During this debate, we should like to elicit from the Minister whether the principle of having each authority's housing expenditure fixed by the Secretary of State will open the way for similar proposals in education, social work, cleansing and so on. In our view, it is a principle that should be looked at much more closely before the Bill reaches the statute book. I hope, therefore, that the House will approve the new clause.

Photo of Mr David Lambie Mr David Lambie , Cunninghame South

I want to take up what my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) said about 30 out of 56 housing authorities in Scotland not qualifying for housing support grant in 1984–85. This is happening at a time when the Government have been steadily increasing national subsidies to owner-occupiers by way of tax relief on mortgage interest. With increasing building costs and—until recently—the high rate of interest, the amount of money given in tax relief on mortgage interest has been escalating throughout the period of office of this Government. In 1979–80, the average tax relief on mortgage interest in the United Kingdom amounted to £250 per annum, or £5 a week. In 1983–84, it had increased to £400 per annum, or £8 per week. I say that to draw attention to the discrimination that has been exercised by this Government in favour of owner-occupiers against council and other public sector housing.

I do not object to that. It is Tory party policy, and it has been so since the end of the war. I object to the fact that they have no mandate for that policy in Scotland, even though they have a mandate for it in the United Kingdom. Two thirds of our people in Scotland still live in public sector housing or in private tenanted sector housing, and those people are entitled to a different policy from the one that has been carried out by the Conservative Government in England and Wales. Even Conservative Members must realise that this is discrimination against Scotland and that it is giving more money to the richer areas of the United Kingdom than to the poorer areas such as the industrial parts of Scotland and my area of west central Scotland.

The overall figures show that mortgage interest tax relief this year amounted to £2·5 billion. National subsidies to council tenants throughout the United Kingdom amount to only about one quarter or one fifth of that sum. In the old days, Conservative Members used to say that if one took into account the rate fund contributions, as well as the national subsidy, the equation evened itself out. Even under Labour Governments, the money allocated for housing finance in the United Kingdom was divided more or less equally between owner-occupiers and council tenants. It was Labour policy to give people the opportunity to decide for themselves whether to be a tenant receiving national subsidies and rate fund contribution, or to be an owner-occupier receiving subsidies by way of tax relief on mortgage interest.

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden

Does the hon. Gentleman agree that one of the most significant reasons for increasing mortgage relief is the vast number of council tenants who have taken advantage of the opportunity to buy their homes? They are no longer tenants, and they are getting mortgage interest relief on their new mortgages.

Photo of Mr David Lambie Mr David Lambie , Cunninghame South

The hon. Member for Strathkelvin and Bearsden (Mr. Hirst) is a young boy in the House. When he has had more experience, he will know that that is not the argument. We are not arguing whether the owner-occupier should receive tax relief subsidy from the Government. Before the hon. Gentleman pursues that argument, he should remember the recent findings of the Chancellor of the Exchequer, and perhaps next year, in this or a similar debate, he will be asking me to go into the Lobby in support of his revolt against the Conservative Government's policy to stop tax relief on mortgage interest. The hon. Gentleman may be looking for friends next year to defend his people, the owner-occupiers, from attack by the Conservative Government and the Chancellor who are at present attacking council tenants.

Photo of Mr David Lambie Mr David Lambie , Cunninghame South

I shall not give way to my right hon. Friend because of the guillotine, and I know that others of my colleagues want to speak. I do not mind giving way to a Conservative Member, but not to my right hon. Friend, because I know that I shall agree with him. I hope that he will not mind.

I was saying that, in the old days, Conservatives used to say that council tenants get a rate fund contribution as well as a national subsidy. That was correct. I was saying that under Labour Governments, and even under good Conservative Governments — I say that in inverted commas; the wets are no longer in the Cabinet—that equation was given effect. It was a fair equation for both the owner-occupier and the council tenant. Now we are seeing discrimination against the public sector.

The average rate fund contribution in 1979–80 in Scotland was £82 per house. In the same year the housing support grant was £239 per house, making a total national and local subsidy of £321 per house. In the financial year 1984–85 the rate fund contribution will be increased, in spite of Government policy, to £113 per house, but the housing support grant will go down to £59 per house, making a total national and local subsidy of £172. Despite the rate fund contribution, when the total subsidy of £172 for the council tenant is compared with the £400 per annum given to the average owner-occupier in Britain, my claim of Government discrimination against council tenants can be seen to be justified.

I say again that Conservative Members should be representing the views of the people of Scotland. They are here by their votes and they should be standing with us and attacking their English colleagues who are carrying out the policies in England where they can get away with it because the majority are owner-occupiers. However, they will not get away with it in Scotland, as they will find out in the district council elections next month when Labour will sweep the board again and keep control of most Scottish councils.

Not only are there council houses in Scotland, but over large areas there are many houses owned by the Scottish Special Housing Association and in my constituency by the Irvine development corporation. We were told at the end of January that because of the Secretary of State's diktat, SSHA tenants' rents were increased by an average of £1·10 per week. In my new town of Irvine the development corporation said that it was increasing its rents by £1 per week. It was given a choice by the Secretary of State of increases between £1 and £1·20. Because of pressure from Labour Members on the board — there are still some such members despite the Secretary of State's attempts to remove them at every opportunity and to replace them with Tory lap dogs—the increase was at the lower end of the scale.

Yesterday we received from the secretary of the SSHA a breakdown of rents for the individual areas within our constituency. Irvine has a large number of SSHA tenants and I discovered that the increases range from just over 10 per cent. to just over 12 per cent. That is a 12 per cent. increase in rents when the cost of living has increased only from 4 to 5 per cent. Not only are the SSHA and the Government asking tenants to pay increases in rents to keep them in line with the cost of living, but they have more than doubled them. If the Government are proved correct and the cost of living goes down this year, that discrimination against SSHA tenants will become greater.

In Springside, a mining village, the male unemployment rate is 25 per cent. Many areas have a tremendous problem of long-term unemployment, and Springside is one. There was an 11 per cent. increase in rents. In Dreghorn there was a rent increase of just under 11 per cent. In Kilwinning there was an increase of over 12 per cent. In Stevenston there was an increase of just under 13 per cent. The SSHA also sent me information about its housing in Saltcoats and, although I do not represent the place, many people there think that I do, so I had better mention it as well. There was an average increase in rents from 11 per cent. to nearly 13 per cent.

6.15 pm

The Government are not only discriminating against council tenants in general but they are being particularly harsh towards tenants of the SSHA and the new town corporation. My constituency is fortunate to have solid Labour councillors who will increase their majority after the local elections in May. The council recognises the tremendous economic problems in the area and the problems of long-term unemployment when one man in four is unemployed. In spite of the Secretary of State's diktat that it should increase rents—he is taking power in the Bill to take action against them—it decided to freeze rents during the year. That decision was justified, but it creates a serious anomaly. Council house tenants' rents will be frozen, but people living in the same street in an SSHA house will have to pay an increase of from 11 to 12 per cent. That creates much bad feeling among tenants. I hope that that bad feeling will be directed not against the council but against the Government and the Secretary of State for Scotland.

When the Labour party is returned to power I hope that we shall be as discriminating in favour of council tenants as the Government are in favouri of their supporters—the owner-occupiers who live mainly in the rural areas in south and central England. If we do that, we shall always have a Labour Government and we shall then be able to organise national housing finance on a fair basis to divide equally the money available between both the owner-occupiers and the council tenants.

Photo of Dennis Canavan Dennis Canavan , Falkirk West

I want to speak briefly in support of amendment No. 21 in my name, although I whole-heartedly support new clause 2, which was moved by my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen).

I am against clause 6 because it is an attack on local democracy and, even worse, an attack on the living standards of council house tenants and their families. In essence, the Bill is an attack on local democracy and local freedoms. It virtually dictates to local authorities the amount of money that they can take from their general fund and put into their housing revenue account.

There is no justification for this further intervention by the Government into the affairs of local government. The net effect will be a further attack on the living standards of council house tenants. Unless one of the amendments to clause 6 is accepted, the clause will further escalate council house rents. Underlying the clause is a political doctrinaire attitude. The propaganda that the Minister is trying to put across to owner-occupiers in particular is that council house tenants are receiving far too much subsidy, and that the people who are paying that subsidy are those who own their houses or have mortgages to buy their houses. The underlying philosophy behind clause 6, if it can be called a philosophy, is that there is an inequitable distribution by way of subsidy in favour of council house tenants, and that the clause will correct the imbalance.

The underlying thought in the Minister's mind seems to be that housing authorities are not responsible enough to decide how much should come from the general rate fund and be put into the housing revenue account. If the Minister is suffering from that underlying thought, it is a misapprehension and a delusion, as the Government's statistics reveal. The Minister appears to want to use the old Tory tactic of divide and rule, to set the owner-occupier against the council house tenant, making one lot jealous of the other, and blaming the council house tenant for getting far too much subsidy at the expense of the owner-occupier.

The net effect of the clause will be a further escalation in rent levels of council houses in Scotland. While the Tory Government have been in power—and the figure is already out of date, but it was the most up-to-date figure that was available in the Library—between 1979 and 1983 the average weekly rent in the public sector in Scotland has increased by 100·2 per cent. In other words, since the Laird of Leckie became the Secretary of State for Scotland, and his boss became the tenant of 10 Downing street, council house rents in Scotland have more than doubled. That is a statistical fact which I think not even the Minister would attempt to deny.

Although there have been price increases in general, and wage increases for people still fortunate enough to have jobs, the increase in the retail price index over the same period was only 45·6 per cent., and the increase in the index of average earnings in Great Britain was 60·8 per cent. Rent increase have far outstripped the rate of inflation and the increase average earnings. There is no justification for the draconian increase in rents that has taken place. The net effect of the clause, unless my hon. Friend's amendment or my amendment is accepted, will be further rent increases.

My hon. Friend the Member for Cunninghame, South (Mr. Lambie) dealt with the alleged imbalance between the amount of subsidy that goes to council house tenants and the situation of private sector owner-occupiers. Lest the Minister doubts the source of my hon. Friend's statistics, I wish to back them up, although not with the same figures that my hon. Friend quoted, because they cover a slightly different period. However, they reinforce the general trend and the argument of my hon. Friend. In considering central Government subsidy to local authority housing, it must be borne in mind that over half the housing authorities in Scotland now receive no housing support grant. Indeed, the local authority covering my constituency, Falkirk district council, will receive not a penny from the Government in housing support grant for the second year running, yet the Government can afford to spend millions of pounds on prefabricated houses for people on the Falkland Islands.

Taking Scotland as a whole, the central Government subsidy, or housing support grant, amounts to £123 per tenant. The local authority subsidy to local authority tenants, the rate fund contribution to the housing revenue account, amounts to £98 per tenant, giving a total of £221 per tenant for the financial year 1983–84. As to the corresponding amount of subsidy, namely, mortgage tax relief given to people in the private sector who are buying their houses, my hon. Friend the Member for Cunninghame, South gave an average figure of £400 per mortgagor per annum throughout the United Kingdom. I understand that the total income tax relief for the United Kingdom on mortgage interest is £2,700 million.

I have a Scottish figure that was supplied by the Library. For the record, I should point out that the librarian did not get these figures off the top of his head. The figures that I have already quoted were given in the Scottish public expenditure White Paper, and the Scottish housing statistics 1982, fourth quarter, table 26. The source for the figure that I am about to quote is Hansard, 18 April 1983, at column 50. The Treasury's estimate of the cost of mortgage interest tax relief in Scotland for 1983–84 amounted to £140 million, representing approximately £450 per mortgagor receiving tax relief. The amount of tax relief per mortgagor in Scotland is by any estimate over twice the amount of subsidy per council house tenant. I hope that the Minister will deal with these figures. Nobody dealt with them, or refuted them, in Committee. The Minister knows that they are correct. Indeed, if they are not correct, he will be calling into question the veracity of his own Department.

Photo of Mr John Maxton Mr John Maxton , Glasgow Cathcart

It is worth pointing out to my hon. Friend that the owner-occupier has the added benefit of not having to pay capital gains tax when he sells his house. That tax benefit is given to him by the Government.

Photo of Dennis Canavan Dennis Canavan , Falkirk West

My hon. Friend is right. Many other forms of subsidy are given to owner-occupiers. I am taking this as a rough yardstick to compare the amount of subsidy given to council house tenants and the amount of tax relief of various kinds given to people who take out a mortgage. Even the most biased Conservative Member would surely agree that there is a strong case for a more equitable distribution by having subsidy in favour of council house tenants, rather than discriminating against them, which is the aim of the clause.

As to amendment No. 21, if one adds the amount of housing support grant given to a particular local authority to the authority's estimate of rate fund contribution for the year to which the order would apply, if approved, and divides that by the number of council house tenants in the local authority, the result is a rough measure of the amount involved. Indeed, if all the variables were accurately measured, there would be an accurate measure of the average subsidy per council house tenant. The other variable in the second equation is the average amount of mortgage tax relief.

Photo of Mr Michael Hirst Mr Michael Hirst , Strathkelvin and Bearsden 6:30 pm, 29th March 1984

Does the hon. Gentleman agree that the fundamental flaw in the algebra of the equation is that it fails to differentiate between the capital value of owner-occupied houses and tenanted accommodation? Therefore, his comparison is specious.

Photo of Dennis Canavan Dennis Canavan , Falkirk West

The hon. Gentleman forgets that, once a mortgage has been fully paid, the owner-occupier is left with a capital asset. If there is an imbalance in the equation, and if it was corrected, it would have to be in favour of council house tenants. The hon. Gentleman may have difficulty in understanding algebra. The amount of subsidy per council house tenant is less than the national average subsidy for mortgage tax relief.

The Secretary of State should not have the power to intervene and make an order that virtually dictates to a local authority how much it can take out of the general fund to put into the housing revenue account.

I appeal to the Minister to consider these constructive amendments. He failed to refute the arguments in Committee. If he had one ounce of fairness in him, he would accept the amendments. He pretends to speak for public sector tenants. We all know the background of some of the Government Front Bench spokesmen, from the Secretary of State downwards. Many of them do not know much about council tenants and the difficulties that they face because of the Government's vicious attacks on them. The Government refuse to intervene to keep prices down, but are prepared to intervene to push up rent levels. They intervened today to push up the price of electricity—a further measure to attack the living standards of people on low incomes. I appeal to the House to accept new clause 2 and amendment No. 21.

Photo of Malcolm Bruce Malcolm Bruce , Gordon

I wish to speak briefly to amendment No. 20, which asks the Government to take account of the growing housing problem resulting from the simplicity of their housing policy.

Despite a successful council house sales policy, the gap between those who do not have a council house and cannot afford to buy a house and those who have council houses and intend to buy them is becoming wider. As a result council house waiting lists are growing longer. There is nothing in the Bill to encourage me to believe that local authorities can do anything other than watch the council house waiting lists grow.

I shall cite one or two examples from my area. The housing waiting list in Aberdeen has reached 4,700, with virtually no council houses being built. The list is growing steadily year by year. The purpose of the amendment is to require the Secretary of State to take account of that problem. I attended a meeting in Aberdeen earlier this week at which a member of the Tory group fairly pointed out that the Labour group had held down the rates and, as a consequence, had forfeited capital allocation. That had reduced its ability to meet the housing problem. Although I acknowledge that, in a district such as Gordon—where rents have risen fully in accord with the cost of living and are economic—the gap is still growing. The number of people looking for council houses is increasing, while the council's ability to meet that demand is reducing. The Bill can only make the problem significantly worse, unless the amendment is accepted.

I urge the Minister to tell me why he believes that local authorities can meet that growing problem. In all the time that we served together in Committee on the Tenants' Rights, Etc. (Scotland) Amendment Bill he did not answer that question, even though it was asked on numerous occasions by many hon. Members. All we obtained were statistics on how successful was the policy of selling council houses—which was irrelevant to the problem.

The Minister will know that the problem of housing associations, which might legitimately be regarded as able to fill the gap, is that they are grossly over-subscribed and under-funded. I would not be satisfied if I thought that the Minister regarded them as a solution to the problem.

The danger that has emerged in the debate is that Conservative Members appear to believe that selling council houses will meet every need, while Labour Members believe that only the problems of council tenants should have priority. Yet there are people who do not fall into either category. They do not have a council house and they cannot afford to buy a house. Those people form the bulk of the growing waiting list. It is no good saying that Mr. Barratt can satisfy people who have no way of raising a deposit, let alone of paying a mortgage. Many of my constituents feel insulted because their neighbours who have a council house have the opportunity to buy it at a discount, while they receive no help at all. The Bill will do nothing to solve that problem. Indeed, it will make it worse unless the amendment is accepted.

I urge the Minister to recognise that we need a more flexible approach to housing. Local authorities should be able to demonstrate to the Secretary of State the need within their areas, and that need should be taken into account when their rates are being set and their housing allocations calculated.

It might help the hon. Member for Galloway and Upper Nithsdale (Mr. Lang) if I tell him that I expect support from his colleagues who were upset by the rate-capping proposals for England and Wales. The hon. Member for Glasgow, Cathcart (Mr. Maxton) also mentioned that. Twelve Conservative Members voted against the proposals for England and Wales, yet they voted for the proposal for Scotland. They were the right hon. Members for Chesham and Amersham (Sir I. Gilmour) and for Daventry (Mr. Prentice) and the hon. Members for Aldershot (Mr. Critchley), for Harrow, East (Mr. Dykes), for St. Ives (Mr. Harris), for Staffordshire, Moorlands (Mr. Knox), for Rutland and Melton (Mr. Latham), for Brentwood and Ongar (Mr. McCrindle), for Clwyd, North-West (Sir A. Meyer), for Ashford (Mr. Speed), for Congleton (Mrs. Winterton) and for Macclesfield (Mr. Winterton). I hope that they will support us in the Lobbies tonight. We hear much about the West Lothian question, but this is the reverse.

I hope that not only my colleagues will support the amendment, but those Conservative Members who have stated their opposition to such legislation. I hope that they will follow the logic of their argument and vote against the Bill.

Photo of Mr Barry Henderson Mr Barry Henderson , North East Fife

I am astonished that the hon. Member for Gordon (Mr. Bruce), who pretends to take a rational position somewhere between wherever the Labour and Conservative parties happen to be, should support the concept of rate fund contribution to housing revenue account. That is essentially what the new clause and the amendments are about. The whole concept of such a rate fund contribution is as outdated as the dogma of Socialism preached by Opposition Members.

It is a concept that gives the impression that it would help less well-off tenants of council houses to have that form of rate fund contribution. It is a fallacy to think that that approach would help those tenants financially in a way in which they would not otherwise be helped. Only ratepayers would be hurt because, if tenants were in receipt of such a low income that they needed the help of the rate fund contribution, they would be entitled to housing benefit. The rate fund contribution would put on the back of the ratepayer costs which would otherwise fall on the back of the Exchequer and the national taxpayer.

Ratepayers who are not well-off and are council house tenants would be hit by the rate fund contribution burden that the Opposition want to place upon them, whereas retired teachers enjoying Members' salaries and living in council houses would enjoy a rate fund contribution. The Opposition are proposing to hurt ratepayers, and their scheme will not help tenants. I commend as a much better example of good sense the policies of the North-East Fife district council, which receives no housing support grant and makes no rate fund contribution to the housing revenue account. No rent increase was introduced by the council this year and there will be no rate increase either.

Photo of Tom Clarke Tom Clarke , Monklands West

You have rightly and eloquently reminded the House, Mr. Deputy Speaker, that one of your principal tasks is to protect the rights of Back Benchers. I urge that view upon the Minister and the Government. The more that Back Benchers are given the opportunity to examine the Bill, the weaker it will turn out to be. As my hon. Friends the Members for Cunninghame, South (Mr. Lambie) and for Falkirk, West (Mr. Canavan) have shown, our responsibility is to listen to our colleagues who are working in local government and doing a first-class job in difficult circumstances. Many of them serve on housing committees; they face the realities of the problems that the House is debating, but more immediately so than Members of this place.

If Conservative Members suggest that the Labour party does not put high priority on the needs of the owner-occupier, I recommend that they refer to the record of the previous Labour Government, which was infinitely better in terms of mortgages, rates and grants for home improvements than the record of this Government. I say to my right hon. and hon. Friends that none of us should be modest about the Labour Government's housing record.

There is a great economic depression in Scotland and there are high levels of unemployment. Great problems stem from fuel poverty. However, the Government are inflicting even more hardship on many council tenants by means of the Bill by making respectable by way of legislation a reduction in housing support grant. In addition, they have introduced most subtly yet another reduction in the rate fund contribution to the housing revenue account, which means that the burden of dealing with housing expenditure will be carried in the main by increasing rents.

Although the Government may win the vote this evening and may think that that will solve the problem and further their vendetta against council tenants, I think that they will have to return to this subject before this Parliament concludes. I say that in the knowledge that rent increases, many of them substantial, have taken place in authority after authority. That is certainly so in districts in Monklands and in the part of Strathkelvin which I represent. Council house tenants — good people who place a high priority on good housekeeping and who are canny in every aspect of it—are finding that they cannot meet the demands that are being placed upon them by Government legislation and the Government's hysterical attempt to put almost all the housing burden on rents.

The Government are clearly influenced by economic theory and not by the needs of council tenants and the Bill will be seen as hollow and irrelevant to the housing problems that the Scottish people are facing. The Government's economic theory will fall on its face. I regret that it will be some time before the Government are persuaded that that is so, given their large but temporary majority. I have no doubt that the views that I have expressed are those of the Scottish people.

Photo of Michael Ancram Michael Ancram Parliamentary Under-Secretary (Scottish Office) 6:45 pm, 29th March 1984

I have listened carefully to the arguments of Labour Members in this debate, which were well aired when the Bill was being considered at length and exhaustively in Committee. I have no need to repeat the basic purpose of clause 6, which I think is well known. It will enable my right hon. Friend the Secretary of State for Scotland to limit by order the contributions that local authorities budget to make from their rates towards expenditure on their housing account. We have been prompted to take the new power by our concern that local authorities continue to budget for rate contributions to housing current expenditure in excess of the levels that we believe are necessary or justified. This is unfair to both the ratepayer and the tenant because it pre-empts for a general subsidy on rents resources which would be better spent on the modernisation and improvement of the housing stock.

The Government have been criticised in the past and during the debate for linking rate contributions to current expenditure with housing capital expenditure in this way. Labour Members have suggested that the Government's actions are an attack on local democracy. They must recognise that the Government have an undeniable responsibility to take decisions on the total amount of public expenditure which can be devoted to housing and on the broad division of that total between capital expenditure, to which the hon. Member for Gordon (Mr. Bruce) was referring, and subsidies on current expenditure to ensure that scarce resources are applied where they are most needed. It is my understanding of the remarks of the hon. Member for Gordon that he would find little to disagree with in that.

New clause 2 seeks to ensure that before making an order setting limits to rate contributions my right hon. Friend should have regard to any reductions in housing support grant and to the likely impact on rents.

Photo of Dennis Canavan Dennis Canavan , Falkirk West

Will the Minister comment on the statistics that appeared in The Scotsman on 14 December 1983? In comparing the financial year 1979–80 with the estimates for 1984–85, and taking the rate fund contribution as a percentage of income, it showed that the contribution of all the local authorities in Scotland was 14 per cent. in 1979–80. It is estimated that it will be the same for 1984–85, whereas the percentage of income by way of housing support grant will fall from 39 per cent. to 7 per cent.

Photo of Michael Ancram Michael Ancram Parliamentary Under-Secretary (Scottish Office)

If the hon. Gentleman will let me develop my argument in my own way, he may find the answer to the question he poses by means of those figures. He has not detracted from the argument that I have been advancing, that resources that are pre-empted for current expenditure are at the end of the day often necessary for capital expenditure. That is the crux of the issue that we are discussing. The level of housing support grant and the impact on rents will be factors to be taken into consideration in setting the appropriate limits to rate contributions, but I do not think that they can be viewed in isolation.

The hon. Member for Glasgow, Maryhill (Mr. Craigen) alleged that the reduction in housing support grant, when taken with the steps that we are taking to limit rate contributions, will remove local discretion in setting rages and lead to unreasonable increases in the average rents paid by tenants in Scotland.

I refute the charges, first, because local authorities will remain responsible for determining their level of expenditure on management, repairs and maintenance, which can have a significant impact on rent levels. For example, Glasgow's expenditure on management and maintenance per house, the highest in mainland Scotland, is nearly one and a half times the average of other authorities. If Glasgow reduced its expenditure per house to the average, it would save the equivalent of rent reductions of £2·20 per a week.

If anyone accuses me of not comparing like with like, let me give an example of neighbouring Labour-controlled authorities. If Stirling reduced its management and maintenance expenditure to the same level as Falkirk, that would permit a reduction in rent of about 75p per week in Stirling. Rate fund contributions are genuinely two-sided and local authorities will retain considerable discretion and responsibility in setting rents.

Secondly, the current average rent in Scotland of £9·87 per week is still only 6·8 per cent. of the average weekly earnings of a manual worker. If one takes that as a proportion of all average earnings, the figure is lower still. I make no apology for drawing attention to the fact that the average weekly in England is just over £14, although the average weekly earnings of a manual worker are slightly below the Scottish level. Those with genuine difficulty in paying rent can qualify for housing benefit. Those hon. Members who argue that it is unreasonable for rents to rise beyond their present level are totally out of touch with the real world.

I shall deal later with amendment No. 21. Amendment No. 20, in the name of the hon. Member for Gordon, seeks to ensure that in setting limits to rate contributions my right hon. Friend must take account of evidence submitted by local authorities demonstrating significant changes in council house waiting lists and other special needs. With respect, I believe that the amendment is muddled, and I shall try to explain why.

Clause 6 will enable the Secretary of State to limit the rate contributions that authorities may make to their current—I stress the word "current" —expenditure on housing, which goes towards management and maintenance costs, together with loan charges on the authorities' historic debt. New building and renovation to meet general and special needs is financed out of capital expenditure. My Department collects information on general and special needs, including waiting lists, in the context of the housing plans that authorities are required to submit. Such information is fully taken into account in determining the capital expenditure consents that we allocate to local authorities at the beginning of each financial year.

An authority's requirement for capital expenditure has no direct bearing on the current expenditure costs that it would be expected to meet in any year from its housing revenue account. Where public expenditure resources are limited as they are at present, and if authorities can be encouraged to reduce rate subsidies from current expenditure, that will free the rate subsidies for current expenditure and provide additional resources for capital expenditure. I understood that that was the argument advanced by the hon. Member for Gordon. On that basis I should expect the hon. Gentleman and his hon. Friends to support us in the Lobby if a Division is called on the new clause.

The hon. Member for Falkirk, West (Mr. Canavan) must be complimented on the ingenuity of his amendment. However, those who have read his amendment and listened to his explanation may still be a little confused, so perhaps I can simplify matters for them. The amendment seeks to ensure that the Secretary of State shall not set limits to an authority's rate contribution if the combined total of that authority's housing support grant and estimated rate contribution per tenant is lower than the average amount of mortgage tax relief per mortgagor in the United Kingdom.

The hon. Gentleman alleged that the Government had given a disproportionate subsidy to owner-occupiers, while reducing the subsidies for council tenants. I do not accept that. In the first place, the hon. Gentleman is not comparing like with like when he seeks to relate the average subsidy per tenant to housing support grant and rate fund contributions, which between them amount to £227 per tenant in the current financial year, with average tax relief per mortgagor.

One must also take into account the rent rebate element of housing benefit, which accounts for £90 per council tenant. In the current financial year, therefore, the total average subsidy per council tenant is £317, whereas the average tax relief per owner-occupier is £246. The hon. Gentleman seeks to compare the average subsidy to council tenants not with the average tax relief for all owner-occupiers but with the average tax relief received by owners with mortgages, which amounts to £432 per mortgagor.

Photo of Michael Ancram Michael Ancram Parliamentary Under-Secretary (Scottish Office)

I shall not give way to the hon. Gentleman as I imagine that the hon. Member for Glasgow, Garscadden (Mr. Dewar) wants a little time at the end of the debate in which to tell the House whether he wishes to press the new clause to a Division.

If the average tax relief received by owners who have mortgages is taken as a base, a fair comparison must be with those tenants who receive the rent rebate element of housing benefit, for whom the average subsidy is even higher, at £535 in the current year. Whatever basis is used for the calculation, the argument put forward by the hon. Member for Falkirk, West does not stand up.

I do not accept that council tenants are in some way getting an unfair deal. Substantial sums are being made available by taxpayers and ratepayers in the form of subsidies for council housing. Our concern is that the subsidy from the ratepayers towards rents is already higher than can be justified by need and is pre-empting resources that would be better spent — I refer again to the argument of the hon. Member for Gordon — on modernisation and improvement of the housing stock. That is why we consider it necessary to take the powers in clause 6.

Clause 6 will discourage authorities from taking short-term political decisions to pre-empt scarce resources and to subsidise those with no need of subsidies. The clause will be welcomed by ratepayers. It is fair to tenants, who are themselves ratepayers, it makes economic sense and it is in the longer-term interest of the housing stock. For those reasons, I must ask the House to reject the new clause and the amendments taken with it.

Photo of Mr Norman Buchan Mr Norman Buchan , Paisley South

I am glad to have the opportunity to disabuse the Minister. We have no intention of withdrawing the new clause. On the contrary, the Minister's comments have made us even firmer in our intention to press it.

I congratulate my hon. Friend the Member for Falkirk, West (Mr. Canavan)—I do not always agree with him—on his brilliant analysis of the real situation and on the brilliant simplicity of his solution. This whole subject has undoubtedly been bedevilled by the mad way in which over the years the Tory party has played politics with rates, rents and subsidies. In housing, as in other sectors, the Tories have used their friends in the press—whatever Opposition Members say in public speeches, the press is not behind us — to give the impression that the tax evader is somehow a hero while the person who tries to improve his social security benefit is a scrounger; that the person who obtains large tax relief on his mortgage somehow represents the roast beef of old England and the best mutton of Scotland while the person who properly receives housing support from central and local funding is somehow — the Tories have said this themselves — a second-class citizen.

The fairly simple formula adopted by my hon. Friend the Member for Falkirk, West—seeing the Secretary of State for Education and Science arrive in the Chamber, I thought that he had come to explain the algebra to his colleagues in the Government—sets the two factors in their proper relationship. Housing support for rent and rates is not a handout but the proper application of public funds to support housing programmes and should be treated in the same way as tax relief for those buying their homes, especially the less well-off. The figures show, however, that the well-off benefit from Government policy by a factor of two to one compared with the average owner-occupier or council tenant. My hon. Friend has made that clear in stark terms.

The new clause allows that concept to be introduced and I strongly commend it to the House.

It being Seven o'clock, Mr. DEPUTY SPEAKER proceeded, pursuant to the Order [5 March] and the resolution this day, to put forthwith the Question already proposed from the Chair.

Question put, That the clause be read a Second time:

The House divided: Ayes 153, Noes 223.

Division No. 213][7pm
AYES
Anderson, DonaldGeorge, Bruce
Archer, Rt Hon PeterGould, Bryan
Ashley, Rt Hon JackHamilton, James (M'well N)
Ashton, JoeHarman, Ms Harriet
Banks, Tony (Newham NW)Harrison, Rt Hon Walter
Barnett, GuyHart, Rt Hon Dame Judith
Barron, KevinHattersley, Rt Hon Roy
Beith, A. J.Haynes, Frank
Bell, StuartHealey, Rt Hon Denis
Benn, TonyHeffer, Eric S.
Bennett, A. (Dent'n & Red'sh)Hogg, N. (C'nauld & Kilsyth)
Bermingham, GeraldHolland, Stuart (Vauxhall)
Blair, AnthonyHowells, Geraint
Boothroyd, Miss BettyHoyle, Douglas
Bray, Dr JeremyHughes, Robert (Aberdeen N)
Brown, Gordon (D'f'mline E)Hughes, Roy (Newport East)
Brown, Hugh D. (Provan)Hughes, Sean (Knowsley S)
Brown, N. (N'c'tle-u-Tyne E)Hughes, Simon (Southwark)
Brown, R. (N'c'tle-u-Tyne N)Janner, Hon Greville
Bruce, MalcolmJohn, Brynmor
Buchan, NormanJohnston, Russell
Caborn, RichardKaufman, Rt Hon Gerald
Callaghan, Jim (Heyw'd & M)Kennedy, Charles
Campbell-Savours, DaieKilfedder, James A.
Canavan, DennisKilroy-Silk, Robert
Carter-Jones, LewisKinnock, Rt Hon Neil
Clark, Dr David (S Shields)Kirkwood, Archibald
Clarke, ThomasLambie, David
Clay, RobertLamond, James
Cocks, Rt Hon M. (Bristol S.)Lewis, Ron (Carlisle)
Coleman, DonaldLewis, Terence (Worsley)
Concannon, Rt Hon J. D.Litherland, Robert
Cook, Frank (Stockton North)Lloyd, Tony (Stretford)
Corbett, RobinLofthouse, Geoffrey
Corbyn, JeremyMcCartney, Hugh
Craigen, J. M.McCrea, Rev William
Crowther, StanMcDonald, Dr Oonagh
Davies, Rt Hon Denzil (L'lli)McKelvey, William
Deakins, EricMackenzie, Rt Hon Gregor
Dewar, DonaldMcNamara, Kevin
Dixon, DonaldMcTaggart, Robert
Dobson, FrankMcWilliam, John
Dubs, AlfredMadden, Max
Dunwoody, Hon Mrs G.Marek, Dr John
Eadie, AlexMarshall, David (Shettleston)
Eastham, KenMartin, Michael
Edwards, Bob (Wh'mpt'n SE)Mason, Rt Hon Roy
Evans, John (St. Helens N)Maxton, John
Fatchett, DerekMeacher, Michael
Faulds, AndrewMeadowcroft, Michael
Flannery, MartinMichie, William
Foot, Rt Hon MichaelMikardo, Ian
Foster, DerekMillan, Rt Hon Bruce
Foulkes, GeorgeMiller, Dr M. S. (E Kilbride)
Fraser, J. (Norwood)Morris, Rt Hon J. (Aberavon)
Freeson, Rt Hon ReginaldNellist, David
O'Brien, WilliamSmith, C.(Isl'ton S & F'bury)
O'Neill, MartinSnape, Peter
Orme, Rt Hon StanleySoley, Clive
Pavitt, LaurieSpearing, Nigel
Penhaligon, DavidSteel, Rt Hon David
Pike, PeterStewart, Rt Hon D. (W Isles)
Powell, Raymond (Ogmore)Strang, Gavin
Prescott, JohnThomas, Dafydd (Merioneth)
Randall, StuartThompson, J. (Wansbeck)
Rees, Rt Hon M. (Leeds S)Tinn, James
Richardson, Ms JoTorney, Tom
Roberts, Ernest (Hackney N)Wallace, James
Robertson, GeorgeWeetch, Ken
Robinson, G. (Coventry NW)White, James
Robinson, P. (Belfast E)Williams, Rt Hon A.
Ross, Ernest (Dundee W)Winnick, David
Rowlands, TedWoodall, Alec
Sheerman, BarryYoung, David (Bolton SE)
Shore, Rt Hon Peter
Short, Ms Clare (Ladywood)Tellers for the Ayes:
Short, Mrs H.(W'hampt'n NE)Mr. John Home Robertson and Mr. Allen McKay.
Silkin, Rt Hon J.
Skinner, Dennis
NOES
Adley, Robertdu Cann, Rt Hon Edward
Aitken, JonathanDurant, Tony
Alexander, RichardEdwards, Rt Hon N. (P'broke)
Alison, Rt Hon MichaelEggar, Tim
Ancram, MichaelEmery, Sir Peter
Arnold, TomEvennett, David
Ashby, DavidFallon, Michael
Aspinwall, JackFavell, Anthony
Atkins, Robert (South Ribble)Finsberg, Sir Geoffrey
Atkinson, David (B'm'th E)Fletcher, Alexander
Baker, Nicholas (N Dorset)Fookes, Miss Janet
Baldry, AnthonyForman, Nigel
Batiste, SpencerForsyth, Michael (Stirling)
Bendall, VivianFowler, Rt Hon Norman
Berry, Sir AnthonyFox, Marcus
Biffen, Rt Hon JohnFranks, Cecil
Blaker, Rt Hon Sir PeterFraser, Peter (Angus East)
Bonsor, Sir NicholasFreeman, Roger
Boscawen, Hon RobertGale, Roger
Bottomley, PeterGalley, Roy
Bowden, Gerald (Dulwich)Gardiner, George (Reigate)
Boyson, Dr RhodesGarel-Jones, Tristan
Brandon-Bravo, MartinGlyn, Dr Alan
Bright, GrahamGoodhart, Sir Philip
Brinton, TimGoodlad, Alastair
Brittan, Rt Hon LeonGow, Ian
Brooke, Hon PeterGower, Sir Raymond
Brown, M. (Brigg & Cl'thpes)Grant, Sir Anthony
Bruinvels, PeterGreenway, Harry
Bryan, Sir PaulGregory, Conal
Buck, Sir AntonyGriffiths, E. (B'y St Edm'ds)
Budgen, NickGriffiths, Peter (Portsm'th N)
Burt, AlistairGrist, Ian
Carlisle, John (N Luton)Ground, Patrick
Carlisle, Kenneth (Lincoln)Grylls, Michael
Carttiss, MichaelGummer, John Selwyn
Channon, Rt Hon PaulHamilton, Neil (Tatton)
Chapman, SydneyHampson, Dr Keith
Chope, ChristopherHanley, Jeremy
Churchill, W. S.Hannam, John
Clark, Hon A. (Plym'th S'n)Harvey, Robert
Clark, Dr Michael (Rochford)Haselhurst, Alan
Clark, Sir W. (Croydon S)Havers, Rt Hon Sir Michael
Clarke, Rt Hon K. (Rushcliffe)Hawkins, Sir Paul (SW N'folk)
Cockeram, EricHawksley, Warren
Conway, DerekHayes, J.
Coombs, SimonHayhoe, Barney
Cope, JohnHayward, Robert
Corrie, JohnHeathcoat-Amory, David
Couchman, JamesHenderson, Barry
Cranborne, ViscountHickmet, Richard
Crouch, DavidHicks, Robert
Dorrell, StephenHiggins, Rt Hon Terence L.
Douglas-Hamilton, Lord J.Hind, Kenneth
Dover, DenHirst, Michael
Hogg, Hon Douglas (Gr'th'm)Sainsbury, Hon Timothy
Holland, Sir Philip (Gedling)Sayeed, Jonathan
Holt, RichardShaw, Giles (Pudsey)
Hooson, TomShaw, Sir Michael (Scarb')
Hordern, PeterShelton, William (Streatham)
Howarth, Gerald (Cannock)Shepherd, Colin (Hereford)
Howell, Rt Hon D. (G'ldford)Shepherd, Richard (Aldridge)
Howell, Ralph (N Norfolk)Shersby, Michael
Hubbard-Miles, PeterSims, Roger
Hunt, John (Ravensbourne)Smith, Sir Dudley (Warwick)
Hunter, AndrewSmith, Tim (Beaconsfield)
Hurd, Rt Hon DouglasSoames, Hon Nicholas
Jessel, TobySpeller, Tony
Johnson-Smith, Sir GeoffreySpencer, Derek
Jones, Gwilym (Cardiff N)Squire, Robin
Jones, Robert (W Herts)Stanbrook, Ivor
Joseph, Rt Hon Sir KeithStanley, John
Kershaw, Sir AnthonySteen, Anthony
King, Roger (B'ham N'field)Stern, Michael
Knight, Gregory (Derby N)Stewart, Allan (Eastwood)
Knowles, MichaelStewart, Ian (N Hertf'dshire)
Lamont, NormanStokes, John
Lang, IanSumberg, David
Lawler, GeoffreyTapsell, Peter
Lawrence, IvanTaylor, John (Solihull)
Lee, John (Pendle)Taylor, Teddy (S'end E)
Leigh, Edward (Gainsbor'gh)Terlezki, Stefan
Lilley, PeterThomas, Rt Hon Peter
McCurley, Mrs AnnaThompson, Donald (Calder V)
MacKay, Andrew (Berkshire)Thompson, Patrick (N'ich N)
MacKay, John (Argyll & Bute)Thurnham, Peter
Maclean, David JohnTracey, Richard
Major, JohnTrotter, Neville
Mather, CarolTwinn, Dr Ian
Mayhew, Sir Patrickvan Straubenzee, Sir W.
Miller, Hal (B'grove)Vaughan, Sir Gerard
Monro, Sir HectorViggers, Peter
Moore, JohnWaddington, David
Morris, M. (N'hampton, S)Wakeham, Rt Hon John
Moynihan, Hon C.Waldegrave, Hon William
Murphy, ChristopherWalden, George
Neubert, MichaelWalker, Bill (T'side N)
Nicholls, PatrickWard, John
Oppenheim, Rt Hon Mrs S.Wardle, C. (Bexhill)
Page, Richard (Herts SW)Watson, John
Parris, MatthewWatts, John
Percival, Rt Hon Sir IanWells, Bowen (Hertford)
Pink, R. BonnerWells, John (Maidstone)
Pollock, AlexanderWheeler, John
Powley, JohnWilkinson, John
Proctor, K. HarveyWinterton, Mrs Ann
Raison, Rt Hon TimothyWinterton, Nicholas
Rathbone, TimWolfson, Mark
Roberts, Wyn (Conwy)Wood, Timothy
Robinson, Mark (N'port W)
Roe, Mrs MarionTellers for the Noes:
Rossi, Sir HughMr. David Hunt and Mr. Archie Hamilton
Rumbold, Mrs Angela
Ryder, Richard

Question accordingly negatived.