Orders of the Day — Housing Bill

Part of the debate – in the House of Commons at 7:13 pm on 30th November 1987.

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Photo of David Winnick David Winnick , Walsall North 7:13 pm, 30th November 1987

Yes, my hon. Friend is right to say that they will not receive the money either.

The Government are determined to replace the role of the elected local authority, in nearly all cases Labour-controlled. Where the Government feel that they can get away with it, they abolish the local authority as they did the Greater London council. What concerns me and my right hon. and hon. Friends is that increasingly democratic accountability is being eroded and undermined. That happened with the urban development corporations and will happen again with the housing action trusts. That is totally wrong and is just one reason, among many others, why the Bill should be opposed.

In response to my intervention earlier the Secretary of State admitted, perhaps for the first time in his life, that mistakes had been made during the introduction of the Rent Act 1957. Of course, many of the claims now being made about this Bill in relation to a revival of the private rented sector were made when the 1957 Rent Bill was passing through the House. It was said by the then Minister that the 1957 legislation would revive the privately rented sector and deal with many of the outstanding problems in housing. However, the result of the 1957 Act was a substantial reduction in the amount of rented accommodation and it led to the abuses that have caused such outrage in the country. Even the hon. Member for Mid-Staffordshire (Mr. Heddle), who is known for his enthusiasm about the private rented sector, warned about the possibility of another bout of Rachmanism.

I am perhaps one of the few Members who happened to be a member of a local authority when the 1957 Act was in operation. Even with all the problems we had to face then we decided to rehouse the people, who were being evicted, lawfully, under the 1957 Act. I have some knowledge of what happened under that legislation and of the misery that was caused as a result of Tory dogma. The Secretary of State has a great deal of cheek to refer to dogma in the Labour party when it was Tory dogma that led to the 1957 Act and it is Tory dogma that is responsible for this proposed legislation.

In the private rented sector the emphasis is on market rents and such rents will undoubtedly be higher than would be the position if a mortgage were being paid. Also, a person paying a mortgage would obtain tax relief. The Evening Standard of 9 November contained some advertisements for rented accommodation and I shall quote some of the rents being asked. There were some houses available, not many, for rents ranging from £130 to £240 a week. One or two-bedroom flats were available from £30 to £70 a week. Undoubtedly, such rent levels would be much higher under this Bill.

We are concerned on this side with people who cannot find rented accommodation, cannot afford a mortgage or are living with their families in bed-and-breakfast hostels. How many of those people could afford the rents I have just quoted? Is there any indication that such rents would be lower? Of course, as I have said, if anything, rents will be higher as a result of the proposed legislation.

How many tenants would be able to claim housing benefit in order to pay such exorbitant rents? Housing benefit is being substantially reduced. Rent officers will assess how far the rents being paid are unreasonable, but only for the purpose of deciding whether housing benefit should be paid, not to decide whether the rent should be lower. The rent officer will have no such power any longer. Is it desirable for large public subsidies to be paid to private landlords in order for them to charge what would undoubtedly be exorbitant rents, certainly in areas of acute housing shortage?

The Secretary of State denied that existing tenants would be in any danger. He said that they are protected and that there is no question of existing tenants in the private sector being in any difficulty. However, it is interesting to note that the Secretary of State emphasised the powers in the Bill against harassment. It is interesting too that the White Paper said: It is important that existing tenants whose Rent Act rights will be preserved should be protected against the minority of landlords who may be prepared to harass them in order to obtain vacant possession and to relet at higher rents. Is that not an indication of the fact that even the Government recognise that existing private tenants may well be at risk from the activities of property companies and landlords who know that if the tenants who are at present under regulated tenancies are forced out the accommodation can be relet at market rents?

Rachmanism — it was not just one unscrupulous person by any means — came about as a result of landlords knowing that if an existing tenant could be forced out, the place could be sold off with vacant possession at a much higher price or relet at deregulated rents. That was the incentive for Rachmanism. I say to the Secretary of State today that the same incentive exists as a result of the measure he is introducing. Many existing tenants have every reason to feel anxiety and fear that if the Bill becomes law their position as tenants will be greatly undermined.

The Minister who replies to the debate will of course say that there are powers in the Bill to deal with the activities of unscrupulous landlords or property companies. I agree such powers will be introduced but they will not be sufficiently effective. It may well be that they will not be used in many cases. It will be difficult to charge directors of large property companies who may use a third party to carry out their dirty work. Even if charges are brought and fines are applied by the courts, in nine cases out of 10 the tenant being pressured and intimidated out of their accommodation will not be allowed back inside those premises. Therefore, as my hon. Friends have been saying, we have every reason to fear the consequences of the Bill.

On the matter of security of tenure, I agree that there is a difference between this Bill and the Rent Act 1957. Under the 1957 Act security of tenure did not exist for new tenancies. It continues to exist under this Bill. However, although security of tenure will continue to exist in law for assured tenancies, it will be largely undermined as a result of the market rents. Once an agreement comes to an end between a landlord and tenant, shorthold or otherwise, and the landlord says that he wants much more in rent and the tenant is not in a position to pay, what is the use of security of tenure? The tenant will not have any recourse in law. Therefore, the provisions in the Bill relating to the private rented sector are 80 per cent. or 85 per cent. the same as those in the Rent Act 1957.

The Secretary of State lives in his own dream world. He spoke during his speech about anyone who had a house to spare to rent, so I asked my hon. Friends whether they did. They all said no. Perhaps the Secretary of State has friends on the Conservative Benches and in other places who find that language understandable. To them it does not cause the amusement and merriment that it does among Labour Members and people at large. This is an odd person to be Secretary of State at a time of acute housing crisis.

I agree with those Conservative Members who said that most people will resolve their housing position by obtaining mortgages. There is not much doubt that, insofar as people can afford to do so, they will want to own their own place. The Labour party, as we have said many times, has never been against owner-occupation. Far from being against it, we have encouraged it in almost every respect. For the record, to give substance to what I have said, in the late 1960s a Labour Government introduced the option mortgage scheme, which made it much easier for people on modest incomes to become owner-occupiers—strange action for a party supposedly against owner-occupation. If people want to become owner-occupiers, that is fine—let us give them every encouragement.

There is some agreement between Conservative and Labour Members about there remaining a substantial minority of people—more than Conservative Members think—who will not be able to obtain a mortgage. They cannot afford it and will recognise that from the beginning. It would be wrong if they were pressurised into obtaining a mortgage when clearly they did not have enough income to pay it off.

Like my right hon. and hon. Friends, I believe that the responsibility for providing the necessary rented places should lie with the local authority, genuine housing associations and some co-operative projects, but, in the main, with the local authority. It is sometimes argued that local authorities are very bureaucratic and not concerned. My local authority of Walsall was probably the first to decentralise its housing system. The authority provided 28 neighbourhood offices in the borough and that type of decentralisation has been copied by a number of other local authorities, mainly by Labour ones.

The housing problem of those who are not able to afford a mortgage and who are often in desperate need of rented accommodation will not be solved in the private sector. That sector is interested in one objective only— making the maximum profit. If property companies and private landlords were not concerned with making the maximum profit, there would not be much justification in being involved in property. Why should a company be involved in lettings unless it wants to make the maximum profit?

All the evidence from private landlords to the Select Committee on the Environment, which looked into the private rented sector and of which I was a member, showed that they wanted the maximum return on their investment.

The Bill will not solve any housing problems. It is a charter for property companies, unscrupulous landlords and potential Rachmans. The only way in which we can help those people who are in need of rented accommodation, who have as much right as any Member of Parliament to satisfactory housing and who cannot afford a mortgage, is through local authorities and genuine housing associations. That is why the Bill should be rejected and fought at every stage—as my hon. Friend the Member for Walton said, line by line. When we go into the Division Lobby at midnight, we shall go in with the same justification as our Labour predecessors did in voting against the 1957 rent legislation.