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First Schedule—(Amendments Of The Housing Act, 1936, For Purposes Of Removal Of References To The Working Classes)

Volume 465: debated on Monday 30 May 1949

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I beg to move, in page 38, column 2, to leave out lines 17 to 22, and to insert:

"In subsection (5), after the word 'rents' where it first occurs, there shall be added the words 'of houses suitable for occupation by the working classes.'"
The Amendment is simple but important. It is not very clear as it stands but if the House will bear with me I shall give an explanation. It is not often that I make a lawyer's speech in the House but I think it is necessary here. The object of the Amendment turns on the question of the control of rents charged by local authorities. Rents charged by local authorities for dwelling houses are of increasing importance; first, because the numbers of their houses fortunately are increasing; and second, because, alas, in many cases the rents they charge, at any rate for new buildings, are increasing also.

The control on local authorities is very different from the control on private landlords. Private landlords are subject to the Rent Restrictions Acts, which in any individual case nobody can possibly understand but in actual operation give, in most cases, a reasonable rent from the point of view of working-class families. Local authorities are not subject to the Rent Restrictions Acts. They are supposed to have certain standards by which they operate, and most of them have; they are under the fairly direct control of their possibly indignant constituents, who may be their tenants as well.

Consequently, always hitherto—at any rate, for a good time—they have had a double duty or check which, though very different from the other, has not operated too badly. This is to be found in Section 85 of the Housing Act, 1936, which is entitled "Conditions to be observed in management of local authority's houses," and which contains two provisions laying duties upon a council in fixing the rents. I shall read the second first because, logically, it comes first. Subsection (6) of that Section says:
"The authority shall from time to time review rents and make such changes, either of rents generally or of particular rents, and rebates (if any) as circumstances may require."
At first sight it looks as though they may do as they like, but there are many reasons in law as well as in practice why they cannot. As a matter of fact, what they do is to seek to fix rents, when subsidies and everything else have been taken into account, which will make the houses no great burden on the rate fund by reason of the rents charged to the tenants.

8.30 p.m.

It does not work too badly, but there are bad councils, and I remember one which secured a Tory majority on 9th November of a certain year and where the housing committee began to revise the rents on "the said 9th November," as the lawyers would put it, and revised them pretty drastically and put into the housing account all sorts of items that ought not to have been there at all. The other restriction which was made, and which at the moment is still laid on the housing authorities under the Housing Act, is in subsection (5) which says:
"In fixing rents"—
I think everybody agrees that means fixing rents from time to time, and not merely the first time—
"the authority shall take into consideration the rents ordinarily payable by persons of the working classes in the locality …"
and it then goes on to make a provision which does not concern us here.

So the housing authority has two checks on it. The first is that it must fix rents fairly in the performance of its duty, and the second is that it must have regard to the rents ordinarily payable by the working classes in that locality which has meant in substance for a good many years that they must have regard to the rents ordinarily payable by the working-classes for other similar property which is, in fact, allowed by the Rent Restrictions Acts and in that indirect way the Rent Restrictions Acts come into force. In fact, there is a sort of ceiling, rather like a cloud which can be pushed about a little, and the authority know that in fixing the rents—this will, perhaps, be more familiar to hon. Members on this side with their local government experience than to me as a lawyer—they must keep an eye on the ceiling provided by the Rent Restrictions Acts to the houses around that are in private ownership. I have seen it working and it works fairly well, although it has led to litigation where local authorities of a bad type have been astute enough to pile various items into the account in order to raise the rent.

Now we come to what the Government are seeking to do in this Bill, and I suggest to the House that in this instance they are applying a rule, which is of use for some purposes, in a manner which just makes it detrimental to the interests of tenants by taking away that ceiling altogether. What the Bill sets out to do, as explained in Section 1, is to extend the provisions of the Housing Act
"so as to enable account to be taken of the housing conditions and housing needs of all members of the community.…"
Putting it more concisely, the protection given to the working classes is sought to be given to rather wider circles, and for some purposes they want to take out of the Bill the reference to the working classes which would limit that operation. Consequently the First Schedule to the Bill—which is one with which we are pretty familiar in modern legislation and which I do not think is too bad—enumerates a number of Amendments to be made in the Housing Act, 1936, in order to remove references to the working classes. I say that where the effect of that is not to rob the working classes of any protection but only to extend it to other people it is admirable. But when we come to the words which I want to change and which are in page 38 of the Bill, what the Government wish to do is to leave out the words which are in subsection (5) of Section 85—
"In fixing rents the authority shall take into consideration the rents ordinarily payable by persons of the working classes in the locality,"
and substitute a subsection which will say:
"The authority"—
and then, picking up the latter part of the sentence,
"may grant to any tenant such rebate from rent, subject to such terms and conditions, as they may think fit."
The direct result of what the Government are doing will be to say to any Tory council, or possibly even to others, "Hitherto when you have been fixing rents for working-class dwellings you have had to bear in mind and to have regard to the rents charged around you, and, broadly speaking, that meant that you have been prevented from charging higher rents for similar accommodation. Very often your accommodation is better than the rent restricted accommodation around, and then you could charge a little more, but all the time you have had that elastic ceiling and your working class tenants have benefited by that. Now we, the Labour Government, in the Housing Bill tell you that you need take no notice of that in the future. All you need do is fix the rents under the following subsection, and review the rents from time to time. You will have a much freer hand in increasing the rents and we, the Labour Government, tell you that you can have that additional advantage over your tenants."

I did not wish to take up the time of the House on a matter like this without first having some discussion with the Minister. Beyond one of those happy phrases which we used to get from Tory Ministers about the time not being opportune, the line which the Minister took was, "I do want to keep out of this Bill references to the working classes." He does not propose to abolish the working classes; he only proposes to abolish references to them. I should have thought that the real answer to that was; abolish references to them by all means, when the only result of doing so will be not to hinder the working classes, but to help others, but do not abolish them when the result will be to injure the working classes.

The Minister, however, seemed to think that it was almost a matter of honour, or perhaps a fetish, to remove all references to the working classes. So I checked up on the Housing Act, 1936, as altered by his Bill. I see that he leaves words referring to the working classes in eight other sections for the very good reason that that helps the working classes rather than hinders them, and in three other sections again the words are left in because they refer to old statutes, and it would be impossible to leave out the reference.

From the point of view of trying to get rid of the words, the interesting part is that Part V, the part of the Housing Act which contains Section 85, is entitled, "Provision of Housing accommodation for the working classes," and the Minister has left that intact. He seeks to prevent injury to the working classes by suggesting that he must get the words "working classes" out of a Section which is in a Part of an Act which prescribes the provision of housing accommodation for the working classes." I hope that either he will produce a better reason—which does not seem to me to be very likely—or else he will make some accommodation by way of accepting this Amendment.

As is the way of lawyers, I seem to have done almost everything except draw the attention of the House to the Amendment which I have moved. At any rate, for a lawyer, I have not taken very long. What I want to do is to take this Section and amend it so that it shows that this particular limitation is applied on behalf of members of the working class and not only for other people. In fact, if I may go back to subsection (5), as it stands, this is what it says:
"In fixing rents the authority shall take into consideration the rents ordinarily payable by persons of the working classes in the locality."
The Minister might advance—he has not advanced it hitherto, but he might well advance it—the argument that that will not do because he wants the authority in due course to supply houses for people other than the working class and, in fixing rents for people who could pay substantially more, it would not be right to take into consideration the rents ordinarily payable by persons of the working classes. So, instead of the Amendment which the Minister puts forward I seek to insert the words:
"of houses suitable for occupation by the working classes."
I want to insert those words at a suitable point and, whilst the language will be a little clumsy, the meaning will be clear. The words will then run:
"In fixing rents of houses suitable for occupation by the working classes the authority shall take into consideration the rents ordinarily payable by persons of the working classes in the locality."
I submit that that both carries out the Minister's general policy and also retains for the working classes the protection which they have had under the Housing Act of 1936. It seems to me that that is what should be done. Having at any rate made the matter clear for myself, I leave it there.

The hon. and learned Member for North Hammersmith (Mr. Pritt) has quite properly called the attention of the House to what some people might consider to be a mistake and I think it is perfectly proper that a reply should be made. One of the answers to him is of course, that one of the reasons why we have dropped the words "working classes" is not only because local authorities now provide accommodation for much more diverse sections of the community but also because, so far, nobody has defined the term "working classes." It has been found to be incapable of definition. What my hon. and learned Friend is doing is re-importing into the Bill a term which we have left out because——

In the Act of 1936, I agree. But that is not the issue before us at the moment; the issue before us is the Bill before the House. What the hon. and learned Gentleman is now suggesting is that, having struck it out, I should now bring it back again. What we have done in the first part of the Bill is to eliminate references to the housing of the working classes.

The right hon. Gentleman must permit me. I called attention three times to the fact that he has not removed it from the Bill; he has removed it from the Bill except for 14 places.

8.45 p.m.

So far as this matter is concerned, it is impossible for me to accept the wording which the hon. and learned Gentleman suggests because what he argues is that the local authority, in fixing rents, should have regard to the rents paid by working classes in the area. My difficulty is, and the difficulty of local authorities has always been, how to define "working classes" in the area. As we are now providing accommodation for more diverse sections of the community it is becoming increasingly difficult.

There is one other point, too. The local authorities are becoming some of the biggest landlords. In fact, there are one or wo town councils. I think—I am speaking from memory—that not only are the biggest landlords in their areas but have more than half the houses in their areas. So we should have a tautological situation; the local authority in fixing the rent of a council house should have regard to the rents of council houses. That is purely tautological—to say the local authority, in fixing the rent of a house, should have regard to the rents it has fixed. So we should reach a situation which would be quite impossible.

Indeed, it is not correct to say that the ceiling to which my hon. and learned Friend referred has always had such an influence on the fixing of rents as all that. What really determines the level of rents fixed by a local authority is the amount of financial assistance given by the State and by the local rates for the building or improvement of the houses. This Bill, when it becomes an Act, will provide local authorities with grants to enable them to improve the dwellings of people in their districts—which they have the power to do now; but if they did it now they would have to charge such high rents as to make the houses intolerably highly rented. So we say to the local authorities, "You have this power. You cannot exercise it. We will make a grant to you so that you can exercise it in such a manner as will not cause you to charge rents which are intolerably high." So what in fact makes the rent to the tenant tolerable is not this or that formula but the amount of financial assistance the State gives to the local authority.

It is the same thing in regard to houses generally. The State makes a contribution, and before the local authority can fix rents it must make its own rate contribution. It cannot escape rate contribution. Then the local authority can charge what rent it likes, because, having received the Government grant, and having paid the rate contribution on the house, the local authority is entitled to charge such rent as, taking those two factors together, will give an economic rent for the house.

Was the formula which my hon. and learned Friend has mentioned at one time an effective ceiling? It was, I believe, in 1919 or 1920 a formula applied to what we now describe as the Addison house, when there were only a few council houses in a district, and when the rate contribution was limited to a penny rate. They had to have some criterion for the fixing of council rents, and so it was said the councils should fix rents conforming to those paid by other people for similar accommodation in the locality. My hon. and learned Friend was quite right in saying that. That was, in fact, an effective ceiling.

And is today; but the ceiling is becoming less and less effective in fixing rents. What actually fixes a rent today is the financial relationship between the State subsidy on the one side and the local authority rate subsidy on the other. If it found that the rents that are being charged to people—not only to working class people, but to those who are in the occupancy of council houses—proves to be burdensome, that burden arises, not because of the nature of the formula used for fixing the rents, but because the financial assistance given to the local authority is inadequate. What would occur if the local authority were compelled to keep its rents down? It could not attract more State subsidy and would put the rent up by way of increased rates. So we are not out of the vicious circle at all. It is not the formula that will help us.

No, the rents will not go up as a result. I admit that it is not a common case but it is a case that is growing more familiar. Suppose we take an ideal case. Suppose all the houses were in possession of a local authority, and suppose this formula did operate as a means of keeping rents down, or that the rents under the formula and the rate of subsidy and the state subsidy were not sufficient to provide an economic rent. Then the local authority would have to charge in the form of a rate what it does not charge in the form of rent, so the rates would be up. The comprehensive rate would be up and no benefit would accrue to the tenant. He would clearly pay in the form of a ratepayer what he is not being asked to pay in the form of a tenant. We do not, therefore, obtain from this the relief which I admit has been received in the past and would again be received were it not for the fact that we are providing for reasonable rents to be paid by other formulas and not merely the formula of comparison.

Suppose there is an estate—I know one in my town where I live called Cherry Orchard—where the rents are about 10s. 6d. a week. Presumably that would be a house which the right hon. Gentleman would refer to as being suitable for the working class. Next door there is a new estate going up where the rents are 24s. or 25s. 6d. a week. If this Amendment were accepted, would it not mean that the local council could not put up the rents charged for the old estate houses to the 25s. charged for the new?

No, because by doing so it would have to decide that the tenants living in the old rented houses were members of the working class but the other people were not members of the working class. In other words, it would say that the people occupying the lowest rented houses in this area were by definition the working class. The working class in an area are much more heterogeneous than was formerly assumed. This is a formula derived from the day when it was easier to define those below the salt and those above the salt than it is at the present time. I do not wish to continue language of that sort in a modern statute.

I think that it is true, as the Minister has said first, that the term is now obsolete, and it is foolish to import into an Act of Parliament, even in one instance, a term which is obsolete. The efforts of all of us should be devoted to eradicating the term so far as possible.

The hon. and learned Gentleman does not excuse importing it once more by saying that it occurs in other cases already. If he were devoting his skill toward eradicating the term where it does exist, there would be some meaning in the argument which he has presented to the Committee.

We find that in the Housing Act as it is proposed to be amended by this Bill references to the working class are in fact left in 14 times, including the title of a whole Part, and that surely destroys the argument that the reason it is being taken out of this particular Clause is because it is being taken out of the Bill as a whole?

I suggest that it is unreasonable if for purposes of convenience we leave the term "working class" out of the 1936 Act to import it into this Act.

It is not a question of importing it into this Bill. Surely the Minister realises that this is a question of amending the 1936 Act. What the Minister is doing is leaving it in the 1936 Act 14 times but taking it out in various places, including the places where he admits that to take it out pushes up the rents of the working class.

I do not mind being interrupted once, or even twice, or even in a three-cornered fashion, but I fear that if continued there would be multi-angular interruptions, which none of us could really usefully pursue.

The point to which I draw attention very shortly is that, of course, the arguments adduced by the hon. and learned Member for North Hammersmith (Mr. Pritt), and commented upon by the Minister, show the inevitable end of the process upon which we are embarking that is to say, we get into a position where, as there are no more private owners left who can be compelled to produce accommodation at below cost price, the accommodation has to be produced by the community, which then must pay for the accommodation either by a direct charge upon the occupiers of the accommodation or by a subsidy drawn from the pockets of exactly the same people.

That stresses enormously the third factor, to which the Minister did not refer: that rent depends not merely on the amount of financial assistance contributed by the State and by the local authority, but on the third factor, the original cost of the building. That stresses enormously the importance of keeping down, by every possible means, the cost of building.

Apart from that, the community will inevitably find itself in the position which the Minister so clearly put. If it keeps down the rents it pushes up the rates, so that therefore somehow or another the economic rent has to be found. That is the dilemma with which we are not directly faced, but towards which we are rapidly moving, for, as the Minister has shown, as many as a half, and in some cases as many as two-thirds of the houses are owned by the municipalities, so that the diminishing area from which the other contributions can be drawn is automatically becoming very rapidly less almost every day, and we shall eventually be faced with the position, as the Minister pointed out, where all the burden will fall upon the occupants of the houses directly, either by direct tax in the shape of rates or by direct contribution in the shape of rents.

"Section ninety-two (Loans by Public Works Loan Commissioners to companies, &c.)In subsection (1), the words "for the working classes," in the first place where they occur, shall be omitted and for the words "which may be made suitable as houses for the working classes" there shall be substituted the words "which the association desire to purchase with a view to the improvement thereof"; in subsection (2), for the words "or any other company, society, or association" there shall be substituted the words "or any company, society or association (not being a housing association)"; in subsection (3), the words "(being houses which have been constructed or made suitable for the working classes by the company, association, society, or person receiving the loan)" shall be omitted; and in the proviso to subsection (5) and in subsection (8) the words "for the working classes" shall be omitted."
—[Mr. Blenfcinsop.]