I beg to move, in page 3, line 10, at the end to insert:

"plus twenty-five pounds for every one per cent. by which the prevailing rate of interest exceeds three per cent.".

The purpose of the Amendment is to try to relate the subsidy to be paid under the Clause to the actual cost of financing the building of houses. We are all aware that the actual cost of building accounts for only a fraction of the total costs involved in house financing. Even if we accept the argument, advanced by the Government in the White Paper, that an income of £53 per house per year from rents and rates is reasonable, this still leaves costs of about £120 per house built per year to be met from somewhere or other. The subsidy proposed in the Clause leaves a deficit of £78, perhaps £80, per house per year. It is not suggested where this money is to come from.

We have been told many times that the Government's proposals are based on spreading the deficiency over the whole stock of existing houses, but what will happen in practice? In Paisley, rents and rates already account for £57 10s. per house per year. This is above what the Secretary of State said is reasonable. Consequently, the added burden on the town council for each new house built under the provisions of the Clause must either be spread over all the ratepayers or confined to the council tenants by increasing the rent. I have never been able to accept the idea of pooling housing costs and spreading them over the stock of existing houses. It is a mistaken idea. It fails to take into account many factors, such as the age of the oldest houses and the higher costs of maintenance of older houses. It tends, too. to establish a uniformity of rent. It creates a lack of flexibility in dealing with local authority problems.

Whatever one may say about that matter, these arguments can certainly not be applied to development corporations and only in a very modified way to the Scottish Special Housing Association. What the Government propose to do in the Clause is to squeeze the tenants as hard as they can, and then to meet the remaining deficiencies of the development corporations and the Scottish Special Housing Association by applying a hidden subsidy in meeting the deficiency of these two bodies.

Because of the lack of time, I shall restrain myself. One of the difficulties in dealing with this subject under the Guillotine is that one cannot develop the point as one would like. There are so many Amendments to be considered that the time available is only 20 minutes to each Amendment. This is a preposterous situation. That being the position, I shall not give a long explanation of the figures in the Amendment, but will only say that the effect would be to keep static the cost to local authorities, development corporations and the Scottish Special Housing Association, and so avoid putting an extra burden on the ratepayers or on the tenants.

The Amendment would also help the problems of importing authorities by not placing a tremendous new burden on small local authorities, and it would also, perhaps, help to speed up Glasgow's overspill. The Amendment would do much to provide the kind of flexibility about which the Under-Secretary has been talking during the last two or three weeks. The only difference is that his kind of flexibility has been all the one way—a flexibility that would give him the right to reduce subsidies. We believe that, where the circumstances warrant it, local authorities should have added subsidies.

The effect of the Amendment would be to increase the subsidy to such a figure as to provide that the rent and rate contribution would be at the £53 or £54 per annum level that the Government desire. I therefore hope that the Under-Secretary will see the logic of the mathematics, and accept the Amendment.

The hon. Member for Paisley (Mr. J. Robertson) is an optimist in asking the Minister to exercise some degree of flexibility, because that is the last thing I would ever dream of expecting from the the Under-Secretary. The Amendment, if it were accepted, would certainly help to stimulate the rate of municipal house building in the county in which the Minister himself resides, and I am quite sure that he would have to pay less in rates if that local authority were able to get a lower rate of interest for its house building.

The Amendment talks about

"… twenty-five pounds for every one per cent. by which the prevailing rate of interest exceeds three per cent."

In the counties and the burghs there is certainly a great deal of feeling about the high rate of interest which, for example, constitutes an almost insuperable barrier to the County of Ayr and the town councils of Kilmarnock and other places building as they would wish.

Members of local authorities ask us very difficult questions about the rate of interest. The Amendment speaks of 3 per cent. We were recently told that the Government were borrowing a considerable sum of money from the International Monetary Fund and from the Government of Switzerland at that rate. Some members of local authorities wanted me to ask the Minister to put them in touch with the International Monetary Fund, or even with the Government of Switzerland, so that they might discover whether they, too, could borrow money at the very reasonable rate of 3 per cent.

I therefore ask the Under-Secretary to disappoint me by showing his flexibility in accepting the Amendment, and so helping the local authorities in the area in which he resides to go forward with the housing that is so badly needed there.

The purpose of the Amendment is to give a stimulus to local authorities to proceed with house building on a much greater scale, which the figures produced in the Housing Review for Scotland show to be more than ever necessary. In that document we find that between 1955 and the end of 1961 the number of houses built by local authorities had fallen from 29,278 to 19,541.

I am sure that the Under-Secretary will agree that added encouragement must be given to local authorities to build houses. If he does not believe that the rate of interest payable at present is a deterrent to house building policies, he should look at the replies given by his right hon. Friend the Secretary of State in reply to our Parliamentary Questions. Over the past three months the right hon. Gentleman has said that nearly half of the Scottish local authorities are not building any houses at all. That is a shameful state of affairs in a country which, in my view, is at present about the worst housed in Europe.

By encouraging local authorities to play their part in what is still Scotland's No. 1 social service—municipal housing—we will be fulfilling our responsibility, and I could not think of a better inducement to them than acceptance of the terms of the Amendment. Local authorities are at present having to pay quite prodigious interest rates. It is not simply a rate of 5 per cent. or 6 per cent.—the rate is at least 6¾ per cent.—and one has only to follow that transaction over the sixty years' life of a house to realise the devastating effect of high rates of interest on local authority housing revenue accounts.

If the Under-Secretary does that, he will find that at the completion of the financial term the houses cost, on an average, anything from two-and-a-half to three times the actual building cost. I know that I am being rather conservative in quoting such a figure, but I give it as an average. There is no doubt that some houses cost very much more over the sixty years.

I can vividly recall that when the interest rate was increased by 2 per cent. some local authorities decided to take strike action, and stopped building. The Under-Secretary might call those "wildcat" strikes, but one local authority was controlled by his party. As a protest against such prodigious financial burdens being imposed on the local ratepayers, it elected not to build any houses at that time. That indicates the effect of the interest rates on the outlook of local authorities.

The Secretary of State was asked by me whether he could make a comparison between the interest rates of 1951 and 1961; and what would be their effect on present-day costs of building. He replied:

"Annual loan charges on these 1961 costs would, at 6¾ per cent., be greater by the following amounts than at 3¾ per cent. in 1951; 3-apartment—£54 16s.; 4-apartment—£59 11s. 4d.; 5-apartment—£68 13s. 10d."—[OFFICIAL REPORT, 28th February 1962; Vol. 654, c. 148.]

That shows the extra we are paying in interest rates for the houses we are building. If the Under-Secretary cares to multiply that figure by 60 he will have a good idea of the crippling effect high interest charges have on the housing revenue accounts of Scottish local authorities.

How are we to tackle the problem? What must we do to redress this financial disadvantage? It would seem that we must make a financial contribution to local authorities so that they can overcome this serious economic problem and proceed with their house-building programmes. The Amendment would serve an extremely useful purpose in this respect, and, for that reason, I support it. Its object is clear, for it is designed to give authorities a stimulus and encourage them to proceed with enthusiasm and greater velocity—and, indeed, with more imagination—with their house-building programmes. Goodness gracious, if any part of the United Kingdom requires large-scale housing expansion, that part is Scotland.

I hope that the Under-Secretary will realise that the Amendment does not have a mischievous intent. Its object is to provide a financial inducement without which local authorities in Scotland will not be able to provide the housing needs of the people we represent. If the Government are genuinely keen to solve this problem, the Amendment provides one method of doing so. I hope that the Under-Secretary will see it in that light and will realise that the Amendment could be a boon to Scotland.

The Amendment seems to give a subsidy to certain houses built for overspill and other purposes under Clause 2 (1). The hon. Member for Coatbridge and Airdrie (Mr. Dempsey) seemed to consider that the Amendment would extend to all houses built by local authorities and I believe that once the Amendment became law it would be difficult to differentiate between the conflicting needs of overspill and other local authority housing needs.

The Amendment appears to insulate the building of a house costing £2,500 from the increased Bank Rate because 1 per cent. of £2,500 is £25. To my way of thinking, local authority houses, in many cases, cost less than £2,500 and, therefore, there is an element in the Amendment of a concealed subsidy, even over and above allowing for high interest rates. Once one allows this idea. that housing should be able to contract out of the economic policy of the country, one is in difficulty. I notice that Sir Stafford Cripps, as long ago as 1948, said that the rates of interest charged to local authorities were fixed from time to time to correspond broadly with Government borrowing rates for a comparable period.

Expenditure by local authorities on capital account is about one-fifth of the expenditure of the country and, therefore, if favourable interest rates were given to them it would, to a certain extent, nullify the economic policy of the country as a whole and some money would have to be raised either by taxation or inflation. I do not say that interest rates are not an important matter in the provision of houses, but it is relevant to quote from the Toothill Report, paragraph 1724 of which stated:

"It was claimed by some local authorities that high rates of interest are a serious factor in housing finance. The great bulk of local authority houses were, however, built at low rates of interest so that current high rates have a small effect on total costs. Against the rent factor, the burden of current interest rates is small."

We must keep a sense of proportion about this and, for that reason, I object to the Amendment.

The hon. Member for Galloway (Mr. Brewis) quoted from the Toothill Report. May I draw his attention to the opening words of his speech, when he referred to overspill, which, of course, has a bearing on the development corporations and the Scottish Special Housing Association. Will the hon. Member relate his arguments to the accounts of this Association and the development corporations?

I was pointing out that once we started giving an extra subsidy for overspill it would be difficult to stop there, for we would have to extend it to other types of expenditure by local authorities, including that on water and on old people's homes.

If an hon. Member who was not a member of the Standing Committee which considered the Bill but who has tried to follow the proceedings—and it is important that all hon. Members representing Scottish constituencies should express their views—wishes to join the debate at this point, may I say that the Amendment is an extremely interesting one because it raises the whole issue of the effect of interest rates on local authority housing, in whole or in part, and the question whether or not it is right to offset that effect in any way. As the hon. Member for Galloway asked: is it or is it not a good thing to discriminate between housing and other economic activities? We are perfectly clear about this; we are clear that it may be a good thing to do so. I would be surprised if the Leader of the House, whom I see in his place, would take the view that it is really wise to put the Government in a position of opposition to any form of discrimination as between one kind of economic activity and another.

Surely any element of planning, even financial planning, must result in the Government paying attention—even though this Government only pays lip-service to planning—to precisely this process of discrimination, although, apparently, that shocks the hon. Member for Galloway. My hon. Friends and I believe in discrimination between one kind of economic activity and another. We certainly do so regarding Scottish housing where it is desperately needed and where some sort of discrimination is necessary in favour of this economic activity.

Surely that is the principle here involved. It can be achieved by giving specially low rates of interest. But, if the Government will not do that, they can offset the high general rates of interest by special housing subsidies. That is a rather roundabout way of doing it, but it is quite possible. That is the issue of principle. What reason can there be for not doing that?

The hon. Member for Galloway produced the argument that interest rates do not affect housing. That, of course, contradicts the whole of the earlier part of his speech, in which he implied that interest rates were an overwhelmingly important factor facing local authorities. That is, of course, true and everyone knows it. The rate of interest is, of course, an enormously important factor when considering highly durable goods like a house.

We believe that Scottish housing, above all, must be exempted in one way or another from the general restrictionist policy of the Government. That is the issue I ask the Under-Secretary to deal with, because it is the only real issue of principle to be faced, and the Amendment brings it out in an acute form. We would like to see this matter dealt with clearly and as a matter of principle.

As the hon. Member for Fife, West (Mr. W. Hamilton) has just come into the Chamber, I should say—I would have said it, in any event—that I am a considerable recipient of subsidies. But I have never failed to state publicly, in this Chamber and on many occasions outside it, that it is a good principle to have no more subsidies than are absolutely necessary and that that policy, in my industry also, should be directed to doing what the Bill tries to do, which is to put subsidies where they are most needed.

On to the hon. Member's farm?

That is a matter for discussion.

I have never said that the farming industry was publicly owned. I said that it was publicly financed.

The hon. Member has certainly said that we ought to be publicly owned. If that is the case, I might ask: why not have cheap loans for farming? The hon. Member for Coatbridge and Airdrie has mentioned what he calls the cruel rate of interest of 6¾ per cent. I had a much more cruel one of 8 per cent. not long ago.

Is the prevailing rate of interest on capital for agriculture taken into account in the determination of the needs of the industry?

Order. The Committee is in danger of turning this into an agricultural debate, which would be out of order on the Amendment.

I am sorry, Sir William, for straying. I was tempted to go a little further.

The second weakness in the Amendment is that however we achieve what hon. Members opposite want, whether by cheap loans, by higher subsidies, or by discrimination of one kind or another, somebody must pay for manipulating the market. That somebody is the taxpayer. One has to strike a point of balance between the advantage to house building and the cost to the taxpayer. Subsidies are invariably a blunt weapon and they have little precision about them wherever they are used. For that reason, I do not support the Amendment.

We have had some curious economic arguments this afternoon. The hon. Member for Edinburgh, West (Mr. Stodart) seems to me to be completely misinformed about housing subsidies, in which there are all sorts of differences. One of the arguments of the Government for increasing the present housing loan interest and keeping it high is that the local authority can spread the increase over all the other interest rates when some of the loans are obtained at cheaper rates.

In effect, therefore, there is already discrimination in interest rates by the Government. Older loans are charged at less than the new loans, which will be charged for about sixty years at the present rate even if interest rates come down. This is certainly a method by which the Government reduce subsidies to local authorities by increasing their interest rates.

The idea that the Government borrow money from farmers and others to lend to local authorities is so much "hooey"—

I did not suggest that.

But the farmers are being investors. When they get these big profits, they must do something with them and they do not invest them all in Government loans. Presumably, however, some of the money finds its way back to the Government in loans.

In any event, that is not where the bulk of the money comes from. It is created by the banking institutions and it costs the Government only the amount that is necessary to administer these loans over sixty years. This is not something which is borrowed from the public in order to lend to the local authorities. It is a method by which the Government are increasing the charge for a loan service for sixty years. It is a method by which the local authorities are made to pay a higher proportion of the cost of a house than formerly.

The hon. Member for Edinburgh, West is quite right. The houses have to be paid for either by the tenant, the local authority or the Government. A constant struggle goes on about who should pay most. The Government use all sorts of tricks to see that more goes on to the local authority or to compel the local authority to push more on to the tenant. What has to be settled is not all this academic business about the cost of loans, but the question of what are the fair proportions as between tenant, local authority and Government. That is the argument which is presented by the Amendment.

The Government are increasing the cost to the local authority and, through the local authority, to the tenant by subterfuges of talking about market interest rates and things of that kind. This is a matter of Government decision. The Government can decide what proportion is to be paid by themselves, by the local authority and by the tenant. That is done by different methods, of which the subsidy is one and the rate of interest another. It would be far better if the Government were straight and honest and stopped all this humbug about interest and decided what proportion would be paid. Then, the public, the tenants and the local authorities would know where they stood.

We have had an interesting debate on the Amendment which has been moved by the hon. Member for Paisley (Mr. J. Robertson). Its effect would be to increase the rate of subsidy for overspill houses or houses provided by the new town development corporations or the Scottish Special Housing Association by £25 for every 1 per cent. by which the prevailing rate of interest exceeded 3 per cent. It would accordingly tie the overspill rate of subsidy to the prevailing rate of interest, which, presumably, is the Public Works Loan Board rate.

Is that not exactly what the Home Secretary did when he was Chancellor of the Exchequer, when he increased the subsidies in his first Budget?

I do not think that he did it in the way proposed in the Amendment.

But he did it.

The Amendment is an attempt to introduce the conception that subsidies should be increased to compensate for increases in interest rates. As the Committee will know, this is a very old hare which has been chased on many occasions. I do not think that hon. Members opposite—certainly not the hon. Member for South Ayrshire (Mr. Emrys Hughes) who has the honour to represent me in Parliament—will be a bit surprised to hear that the Government cannot accept the Amendment.

As has been explained on very many occasions, the Government take the view that, as the rate of interest reflects the economic situation, there is no reason why local authorities, as regards housing or other services, should be exempt from the economic trends which are reflected in the rates of interest they are called upon to pay for the money they require in order to build their houses. In any case, as my hon. Friend the Member for Galloway (Mr. Brewis) pointed out, how could such a policy be limited just to overspill housing?

I thought that my hon. Friend answered very well the point made by the right hon. Member for Dundee, West (Mr. Strachey)—whom we are glad to have with us this afternoon. Once this policy was adopted for overspill housing, why not for all housing subsidies? Indeed, why not for a good many other services, such as water and electricity? A similar insulation from increases in interest rates might be claimed for such services on the same grounds as have been used in this debate in respect of housing. The Amendment cuts across the whole economic policy of the Government. It is unacceptable for that reason.

Moreover, the Amendment bears little relation to the actual practice of local authorities in borrowing. Although the cost of local authority housing is usually financed over a period of sixty years, the initial borrowing will usually be for a very much shorter period. It is, therefore, completely wrong to assume, as hon. Members in advocating the Amendment seem to assume, that local authorities will continue to pay interest for sixty years at the rate prevailing when the subsidy approval was first given. What most large local authorities do is to maintain a consolidated loans fund under which the cost of borrowing borne by the new services is not the cost of raising new money, but the average cost of all outstanding loans.

That is not what the Secretary of State seems to say.

That is what happens in fact. The hon. Member for Coatbridge and Airdrie (Mr. Dempsey), who has a great deal of experience of local government affairs, must be aware of that. These internal borrowing rates have, admittedly, risen in recent years, but they are still normally less than five per cent., which is well below the P.W.L.B. rate.

I need hardly add that, besides being unacceptable on grounds of principle, the Amendment would raise the subsidy under Clause 2 to an unreasonably high level. At the present Public Works Loan Board rate of interest, it would add £75 to the subsidy rate of £42. I am sure that hon. Members will not expect me to accept a subsidy rate of £117—which is what it would amount to—over sixty years, or nearly three times the rate payable under existing legislation.

Will the hon. Gentleman tell the Committee the position of the development corporations and the Scottish Special Housing Association, and what the actual subsidy is per house built by a development corporation taking into consideration the grant made by the Government towards deficiencies?

I cannot do it "off the cuff". If the hon. Gentleman wishes to have that information, I can easily find out for him.

As so often happens, the good hearts of hon. Members opposite seem to be ruling their heads. What they suggest in this Amendment is really impossible. Interesting and ingenious though it is, I must tell them that the Government cannot possibly accept it.

The Minister's reply is not surprising. When he has no case at all, he accuses us of letting our hearts rule our heads. What we intend by the Amendment is to ensure that more and more desperately needed houses are built in Scotland. To look at only part of it, overspill, and relate that to the need in Glasgow, one sees how forcibly the need for additional subsidy is shown.

It has been interesting to hear the back benchers on the Government side. During the Committee stage and today we have heard from the hon. Member for Galloway (Mar. Brewis) why the Government cannot accept our Amendments. The hon. Member for Edinburgh, West (Mr. Stodart) amused me. He said that subsidies were a blunt weapon and, because they were a blunt weapon, he was against them. It has been evident throughout our consideration of the Bill that he has been against reasonable subsidies for housing, but I wish that he carried that strong principle into his attitude to farming. If he did, he would not want the kind of subsidies that many farmers receive today. I shall be able to believe that he is really in earnest about this blunt instrument when he speaks in an agriculture debate and says that he will vote against the farming subsidy on that ground.

The Minister and the hon. Member for Galloway both said that the rate of interest reflects the economic situation of the Whole country. Year after year, of course, our economy has under this Government sunk further into the mire. We do not quarrel with that description from the Minister, but we do quarrel with him when he says that it is vital that local authority housing should not be insulated against what he calls the prevailing economic situation. This is a heartless attitude on the part of the Government. We have had evidence of it throughout the whole Committee stage proceedings.

Have the Government ever said that industry generally—I leave farming out of it now—cannot be insulated against the high rate of interest or against the prevailing economic situation? What happened to Colvilles? If the Government were to apply to Colvilles what they have rigidly applied in the matter of subsidies and interest rates for housing, Colvilles would be in a much more difficult position today. What about the motor car industry? I am not quite sure, but I suspect that the Government are by their help insulating that industry—for very worth-while purposes; I do not complain in the least—against the prevailing economic situation. The whole argument advanced by the Minister and the Member for Galloway falls when we find that in other sectors

The Under-Secretary has not answered the points at all. The Clause deals particularly with development corporations and the Scottish Special Housing Association, and we are asking that the Government subsidy be paid to these two bodies. The Public Accounts Committee investigated the accounts of the Scottish Special Housing Association and the development corporations, and the hon. Gentleman will find that the grants made by the Government to meet the deficiencies add up to this amount. The realistic situation of Scottish housing is that a subsidy of £117 is required so that houses can be let at rents that people can afford.

I beg to move, in page 5, line 27, at the end to insert:

(7) Section one hundred and forty of the principal Act (which requires every local authority to carry, in each financial year, to the credit of the housing repairs account in respect of each house, building and dwelling such amount as they may think proper, not being less than eight pounds) shall have effect in relation to the first financial year beginning after the first day of November, nineteen hundred and sixty-one, and to each subsequent financial year with the substitution for the words "eight pounds" of the words "twelve pounds".

This Amendment is a proposed addition to Clause 3 (6), which deals with the provision of the 1950 Act which decides the amount that should be paid by a local authority in respect of each of its houses into its housing repairs account each year. Under the 1950 Act the sum was £4 a year. A few years after that the amount was increased to £8, obviously because it had become insufficient as a result of increasing costs. We contend that we have now reached a point in time when there should be another increase.

I believe that the Government recognise this, but what they are saying, in effect, is that they do not trust local authorities to make a true return. According to subsection (6), if a local authority puts to its housing repairs account £12 per year per house instead of £8, the Secretary of State may debar it from including the additional £4 in the debit side of its housing revenue account and thus he could debar it from qualifying for the £32 subsidy, and the result might be that it would get a subsidy of only £12.

There are very substantial grounds for our case that the amount should be increased automatically as it was previously. I estimate that since the repairs allocation was increased to £8 the cost of repairs has risen by about £75 per cent. The Secretary of State has told us that the average being paid in Scotland is £8 14s. That is already over the figure laid down, and many local authorities are paying much more. My hon. Friend the Member for Lanarkshire, North (Miss Herbison) instanced during the earlier Committee proceedings the Burgh of Dumbarton as paying an average of £11 16s. in repairs, but the actual contribution that the authority is making to its repairs account in respect of each house is 12 guineas per year.

The figures that we have culled from the rating review apply to 1960, and now we are in 1962 and costs have gone up substantially in the meantime. I am sure that hon. Members opposite who are fair-minded would agree that the tendency would be for the figures to have increased because the costs in respect of labour and material for repairing local authority houses have risen.

Taking the 1960 figures, one can pick out the small burghs of Alloa, Barrhead, Irvine and Troon with the figure for repairs per house varying between £11 and £13. Turning to the counties, we have Angus, Caithness, Dunbartonshire, East Lothian, Inverness, Kirkcudbrightshire, Renfrew, Ross and Cromarty, Selkirk and Sutherland paying from £11 to £14 18s. per house for actual repairs. Therefore, we are already well over the figure laid down.

The Scottish Office is well aware of this, but does not want to make it appear to the local authorities that it is raising the figure because of the new formula which has been introduced. I see the Under-Secretary shaking his head. Why does he not allow local authorities to debit their housing revenue accounts with the actual cost? He is not allowing them to put to their housing repair accounts the difference between £8 and what they are actually paying unless he consults them and they can justify it.

Does the hon. Gentleman think that he is dealing with a crowd of school children? He seems to be lining them up in a row and asking them their intentions. This is a besmirching of Scotland's elected representatives, and I am sick and tired of it. It is dreadful. I indict Ministers and Departments. I do not know where this emanates from, but whoever had this brainchild ought thoroughly to be condemned and "given his cards", whether he is an elected representative or otherwise.

The Government are virtually telling the public-spirited men and women who are coming forward for election into local government that they are not to be trusted. This is likely to result in people of a lower calibre coming forward, for what ordinary, decent, straightforward men or women would allow themselves to be treated in this way and held to these rules? It is most disgraceful and shocking that this should be brought into Scottish public life.

Would not the hon. Gentleman agree that the rules are exactly the same whether the figure is £8 or £4, as it was under the Socialist Administration?

The thing that I deplore about hon. Gentlemen opposite is that they think in abstract terms and deal with only one part of a problem.

An amount between £8 and £12 or £14 is not to be allowed to count on the debit side of the housing revenue account, as it has hitherto been allowed to count, because this might have an effect in deciding whether a local authority is to get the £32 subsidy or the £12 subsidy. That is the part I deplore. This formula is entirely new, so the hon. Member is off the rails a little.

I think that I have said enough to show our thoughts on this matter. If the Committee wishes to strengthen local authorities, it should show more trust in them. Do not let us destroy the fabric of local government and discourage the men and women who come forward to serve in a selfless way. I hope that the Committee will have regard to the strength of the Amendment and its purpose towards the elected representatives of the people of Scotland on local authorities.

I have listened with great interest to the hon. Member for Central Ayrshire (Mr. Manuel). Everything he said has confirmed my view that he has misread the 1950 Act and that the Amendment will not achieve any purpose. Certainly, it would not achieve what the hon. Member claimed for it. Under the 1950 Act, a local authority must put to its housing revenue account a minimum sum of £8. There is no question of a maximum sum. The Bill says that the Secretary of State may disallow that part of the excess which he does not consider to be reasonable.

I said so.

The hon. Gentleman may have said so, but he went on to give figures which belied that understanding of the situation. He told us that the average figure placed to the debit of housing revenue accounts throughout Scotland was not £8 or £12, but £8 14s. That is very much less than the figure he proposes.

The hon. Gentleman must realise that the fact that the figure is only £8 14s. is because the Secertary of State gave certain local authorities discretion to charge only £6 per house against the repairs account where the account is in a healthy state.

That may be so, but the hon. Member for Central Ayrshire is seeking to substitute £12 for £8 when the average figure is £8 14s. That makes nonsense.

If the hon. Gentleman studies the rating revenue for 1960, he will see that those local authorities charging only £8—some are charging less—are doing so in a desperate attempt to save rates, but are finding their housing repairs accounts becoming in a parlous condition.

The hon. Gentleman is getting into deeper water. The cost of maintaining a house is ascertainable in pounds, shillings and pence, and is not related to any notional figure of £8 or £12 or any other. The figure which a local authority notionally carries to its housing revenue account makes no difference to the rates.

That is a monstrous statement. The hon. Gentleman was once a town clerk. He does not know his business. He should resign.

The hon. Gentleman then went on to quote what he thought were extreme cases. He mentioned the large burgh of Dumbarton, with a figure of £11 16s. That extreme case is still below the figure of £12, which makes nonsense of the argument for the Amendment. He spoke of figures between £12 and £14 for burghs, admitting that some of them were under £12. The Amendment is nonsensical, because it would allow a debit in a housing revenue account of £12, when the average now is only £8 14s. Only in the most exceptional cases is the figure £12.

That is not surprising under a Tory Government.

If a local authority is so ill-advised as to carry as debit a figure which is in excess of its actual expenditure, the Secretary of State, quite rightly, has power to disallow part of it. But an honest local authority—which means 99·5 per cent., I hope, of local authorities—will put in an honest figure and the Secretary of State will not have occasion to use his power. In view of the fact that the Amendment would not only achieve nothing, but is also nonsensical, it should be cast out without further consideration.

I wish that the hon. Member for Central Ayrshire (Mr. Manuel) were on the Opposition Front Bench again. When he is there his speeches are very much more reasonable than they are when he is, to a certain extent, up in the clouds.

The effect of the Amendment would be, as he said, to raise the minimum contribution of a local authority to its housing repairs account from £8 to £12. As he pointed out, Clause 3 (6) provides that where the Secretary of State considers that a local authority's contribution from its housing revenue account to its housing repairs account is excessive, having regard to its previous practice and to any other circumstances, the excess amount may be excluded from its expenditure for the purposes of the resources test. That is all. It is only excluded for the purpose of the resources test. The expenditure admitted for the resources test cannot be less than the minimum of £8 per house.

It is perhaps worth emphasising, since the hon. Gentleman seems to be in doubt on this, that, if the Secretary of State decides that a local authority's repair contributions are excessive, he need not disregard the whole excess over the minimum of £8. He may admit some amount intermediate between £8 and the actual amount paid out of the housing revenue if the circumstances seem to him to justify this.

The statutory minimum contribution is £8 and the Amendment proposes to increase it to £12. I think that the hon. Gentleman had in mind the fact that, with a statutory minimum contribution of £12 instead of £8, the Secretary of State's scope for disregarding expenditure under subsection (6) would be correspondingly reduced.

So it should be.

I thought that that was probably the reason. As I have said, I think that the hon. Member makes this proposal for a mistaken reason, as the Secretary of State would not automatically out excessive contributions down to the minimum figure.

The hon. Member for Central Ayrshire also suggested that because costs have increased since the minimum contribution of £8 was laid down in 1952, the minimum ought to be higher today. It is true that costs of maintenance have risen and that the actual contributions by local authorities to their repairs accounts have risen in consequence. But the minimum amount which is mentioned here is indeed the minimum. There is nothing to prevent any local authority from putting into its repairs account whatever money it needs to spend. I do not know whether the hon. Gentleman quite appreciates that fact.

A local authority can put in more than £8 if it wishes to do so. If it can show that repairs and maintenance will cost more, it is fully entitled to keep its repairs account in funds by increasing the contribution which it makes to it from the housing revenue account. There is no intention that any such contribution to the repairs account which is genuinely required by reason of increased costs or because of other things—

What does the hon. Gentleman mean by "increased costs"?

I thought that would upset the hon. Member for Edinburgh, East (Mr. Willis). If, in my right hon. Friend's opinion, such a contribution is required for the purpose for which it is stated to be required, it will not be disregarded in the resources test calculations. I can give hon. Members opposite a complete assurance on that point.

Nothing in the Bill will prevent a local authority from properly maintaining its houses, nor will it be in any danger of getting a smaller subsidy through carrying out necessary repairs and maintenance. Since the Government are so keen on the proper maintenance of houses, the hon. Member for Central Ayrshire may wonder why we refuse to accept the Amendment to raise the minimum contribution from £8 to £12. The reason is quite simple. We agree that the cost of repairs has risen and we also realise that if it rises further the time will come when an increase in the minimum figure will be necessary.

Where the hon. Member and I part company is that I do not think that that time has yet come.

When will it come?

I do not know, but it has not come yet.

Will the hon. Gentleman agree that on-costs and repairs have increased more since the figure of £8 was introduced than they did in the few years between the increase from £4 to £8?

Perhaps the hon. Gentleman will allow me to develop my argument.

I am saying that the time to increase the minimum contribution has not yet come. I say that because a number of authorities are still able to repair and maintain their houses at an annual cost of less than £8 a house. This is shown by the fact that in 1960–61 no less than 24 applications by local authorities to contribute less than £8 a house to their repairs account were granted by the Secretary of State.

These applications were made under Section 140 (3) of the 1950 Act, which empowers the Secretary of State, after consultation with the local authority, to give a direction for the reduction or suspension of the repairs contribution if he thinks that the sum standing to the credit of the repairs account is more than sufficient for the purposes for which the account is kept. The fact that no less than 24 applications to contribute less than £8 were agreed to by my right hon. Friend indicates that the figure of £8 is not unduly low.

The great difference between hon. Members on this side and hon. Members opposite, including the Under-Secretary of State, is that we trust local authorities, whereas hon. Members opposite continually show by their speeches and their votes that they distrust local authorities and always try to find ways and means of hamstringing them.

I wish to take up the final point made by the Minister. He said that the Amendment would only place extra work on local authorities because many of them would ask for permission not to contribute £12 to their repairs accounts. I want to point out what the result will be if the Amendment is not accepted.

The hon. Member for Aberdeenshire, West (Mr. Hendry) said that the Amendment was nonsensical. In Committee we were accustomed to the kind of speech which he made today. I was accustomed to that kind of speech before he came to the House of Commons. I suspect that it was nonsensical of the hon. Gentleman's Government, in 1952, to raise the figure from £4 to £8, particularly in the light of the information which the Minister has given to the effect that more than 20 local authorities in 1960 asked for permission not to contribute as much as £8. I wish that the hon. Gentleman would listen to the arguments adduced by my hon. Friend the Member for Central Ayrshire (Mr. Manuel) and not put an interpretation on them completely different from that intended by my hon. Friend.

The Minister stated that the figure would remain at £8 for some time. He clearly showed that even he and his officials had their doubts about the wisdom of refusing to accept the Amendment. The figure of £4 was raised to £8 in 1952. Now, ten years later, can the Under-Secretary of State argue that repair costs have not increased since 1952? Of course he cannot. The hon. Gentleman should have tabled an Amendment which at least showed that the Government realise that the cost of repairs to houses has increased in the last few years.

The Under-Secretary of State said that the Secretary of State would not automatically disallow any figure of £8. We know that. He said that 24 applications by local authorities to contribute less than £8 a house to their repairs account were granted. It would have been more useful if he had told us the number of local authorities which have contributed more than £8 a year per house to their

I beg to move, in page 9, line 27, to leave out from "State" to "pay" and to insert "shall".

It may be convenient to take with this Amendment the other Amendment to Clause 9, namely, that in page 9, line 45, to leave out from "State" to "pay" and to insert "shall".

As this rotten Bill moves with indecent swiftness through its final stages, I am coming more and more to the conclusion that its purpose is not that which the Secretary of State has so often claimed for it—the stimulating of house building in Scotland. I believe that it has a two-fold objective. The first is, by various devious devices, certainly not in keeping with the dignity with the Secretary of State or even a Tory Government, so to frame legislation that it will ultimately relieve the Government of any financial contribution to house building in Scotland. The Bill shows a determined desire so to arrange financial matters and to give the Secretary of State such power that ultimately he will be able to tell local authorities that they are to get nothing from the Government to help them with their terrible housing problems.

The other and more dangerous objective is to elevate the Secretary of State to the rôle of dictator. The offending phrase which we are seeking to delete from Clause 9,

"may, if he thinks fit",

is the language of the bully. It is arrogant to say to people who ought to be regarded as partners, "I am the big boy and you will do as I think fit". That is not an attitude which should be adopted towards democratically elected public representatives. I do not know how new this phrase is, but it occurs too often in the Bill and a number of our Amendments have been directed towards its deletion.

Local authorities are doing their best. It is they who build the houses. Although the Government claim credit for a tremendous increase in the number of houses which have been provided, those who do the work are the very people who are insulted throughout the Bill. Our Amendment says, in effect, "Mr. Secretary of State, there are other people as interested and more interested in house building than you are, and you must deal with them in a reasonable and just fashion".

5.15 p.m.

If, as I hope, the Amendment is accepted, the Clause will read:

"The Secretary of State shall pay to the local authority a sum equivalent to any subsidy …".

What is proposed in Clause 9 is that when a housing association or development corporation defaults in the arrangement which it has made with the local authority, the local authority will automatically be vested with the houses with which the association or corporation was concerned.

It is only natural that the local authority should take over from a defaulting housing association or development corporation. But if it falls heir to a project, it should also fall heir to the rights which go with the project, namely, the subsidy. But in subsection (2, a) the Secretary of State says that no further subsidy shall be paid, but that in certain circumstances, "if he thinks fit", he may pay to the local authority a sum equivalent to any subsidy which would have been paid.

Let us examine this provision in some detail and apply it to a given situation. Housing associations are entirely new. They are experimental. We do not know how they will develop. In that state of newness, one can expect many difficulties, and I expect a great crop of difficulties which will lead to the abandonment of people who have entered such associations with the best possible purposes only to find ultimately that they are overwhelmed by the project which has to be abandoned and left half finished. It may be completed, but if it is unfinished the local authority will be asked to take it over. The subsidy will stop and, if the Secretary of State thinks fit. he may grant the local authority the sum equivalent to the subsidy which would have been paid.

It is not reasonable to expect a local authority to carry on with a project when it is uncertain of the economic mood of the Secretary of State, on which will depend whether he will continue the subsidy or say that it is not an occasion which warrants the continuance of the subsidy. Why should a local authority be at the whim and caprice and mood of the Secretary of State at any time? That could lead to a local authority justifiably declaring that in those circumstances it would have nothing to do with a project of that kind, for it is entitled to know exactly where it stands.

If we total up all the "if he thinks fits" and all the other qualifications, we see that local authorities are to be left completely uncertain about future contributions from the Exchequer. This is deliberate policy and not something which has happened merely by chance, for the phrase "if he thinks fit" in this Clause follows the rest of the purpose of the Bill, with which the Opposition are in total disagreement.

When a local authority accepts the responsibilities, it should also have the rights which go with them. I hope that we shall not be told that this phrase is used in other Bills. We are not now dealing with what has gone before. It is too easy to wriggle out of a situation by saying that this has been done before. We are concerned with a housing situation on which very little impact has been made. The Secretary of State puts on a front by saying that he is anxious to help, but his actions seem to show that he has some other objective.

I hope that if the right hon. Gentleman accepts the Amendment he will follow it by accepting others and will categorically tell local authorities that if they take over responsibility from a housing association or development corporation he will pay them a sum equivalent to any subsidy which would have been paid, so that they are not left in this state of uncertainty.

I do not for one moment expect that the Under-Secretary of State for Scotland will accept this Amendment, because if it were carried it would completely thwart the purpose of the Government, which is to take every possible power out of the hands of the democratically elected representatives of the people and concentrate it in the hands of the Secretary of State for Scotland or the Under-Secretary of State. In future, as regards rents, subsidies and policy, the Under-Secretary of State will be a "tinpot Hilter".

We were told during the last war that it was a war against dictatorship, but most dictators come from inside a country and not from outside. I am not sure whether, in dealing with housing, Hitler would not have been a far more democratic person than the Secretary of State for Scotland or the Under-Secretary of State. In many ways the Under-Secretary of State is like Hitler, except that he does not have his moustache.

Hitler was a house painter.

My hon. Friend reminds me that Hitler was a painter. At least, therefore, he knew something about houses, and I am sure that if he were responsible for housing he would exercise more intelligence and discretion than we can expect from the Secretary of State or the Under-Secretary of State.

The Government are here taking powers away from the democratically elected representatives of the people concerned. The Ayrshire County Council is dominated by Socialists, but they understand the housing needs of the area and were returned to the county council by the small burghs and by the landward areas largely because they were pledged to do something to change the appalling housing situation that has existed for so long in Scotland, but which in Ayrshire at any rate has to some extent been remedied by the progressive policies of the county council and the town council.

For many years I was provost of the burgh and member of the Cumnock Town Council. We had a progressive policy, as a result of which 90 per cent. of the houses are now owned by the municipality, and we resent power being taken out of the hands of the people who were sent to the town hall and put in the hands of somebody who is remote from the area concerned.

I know that the Secretary of State for Scotland does not like Cumnock Town Council. This is because of its policy of cheap rents. I do not want to go into the history of housing development in the area, but the town council has had to fight to make Cumnock Burgh one of the best towns for housing not only in Scotland, but in the country and, indeed, in the world. We have had to fight reactionary people. The reactionary landlord who supported the Government did his best to prevent houses being built, and we had to put a compulsory purchase order on him. Again, we had to go to arbitration over the cost of the land. Here again we were successful. In fact, the arbitrator gave less to the landlord than the town council were prepared to give him.

The more these small towns have asserted their democratic rights, the more jealous the Secretary of State for Scotland has become, and now the Government propose to whittle away the authority of the town and county councils so that they can concentrate power in the hands of the bureaucracy in St. Andrew's House; a bureaucracy which is taking its cue from the Conservative hierarchy throughout Scotland.

We know what is happening in Scotland. The people in the big house see democracy encroaching on their preserves. They do not like these housing schemes. They prefer houses dominated by local landlords. But now that these houses are being built, they have said to themselves, "We will allow them to build houses under certain restrictions, but we will retain power to fix the rents and to prevent any further advance by democracy."

This Bill takes us back to the seventeenth century.

Order. I think that the hon. Member is going a long way from the Amendment that we are now debating.

It is a long way back to the seventeenth century, but the Minister is—

Order. That is what I am complaining about.

That is precisely what I, too, am complaining about. However, Sir William, I am glad to see that we are not at cross-purposes.

I want to see the Bill so amended that powers will not be taken away from local authorities; that powers will not be put in the hands of a "tinpot Hitler" or a "tinpot Stalin", but that the local authorities will have power to administer housing in the way they have done up to now and as a result of which they have made such good progress.

May I call the attention of the hon. Gentleman to the fact that the same words occur in the 1950 Act? Section 87 (2, b), says:

"the Secretary of State may, if he thinks fit …"

Why is it that in those days the hon. Gentleman did not say that the Secretary of State for Scotland was a "tinpot dictator" or a "tinpot Molotov"?

If the hon. Gentleman had been here at the time he would know that I said a good many things then that I am saying now. One can use the same form of words to create bigger powers in a different way in a different setting and in a different Clause. The hon. Gentleman is an adolescent in these matters. As regards housing, he has not cut his wisdom teeth.

I hope that these Amendments will not be resisted and that the Under-Secretary of State for Scotland will say that he does not propose to usurp the powers of the people who are sent to the organs of local authority to represent ordinary people.

I hope that the hon. Member for Galloway (Mr. Brewis) appreciates that we are serious about this Amendment. Apart from the fact that he took us back to 1950, he must appreciate that we are clear here dealing with something that is being enacted for the first time. We are dealing not only with authorised arrangements made between a local authority and housing association corporations, but between the Secretary of State for Scotland and the corporations. What may have been applicable in 1950 is not entirely relevant now.

Apart from that, there is now a different attitude to housing from what there was in 1950, because until 1957 the Government were prepared to meet rising costs and rising interest rates by increased subsidies. We then entered a new housing era in Scotland.

This is a very narrow point. The Clause deals with authorised arrangements which have been made between a local authority and a housing association or corporation. The words "authorised arrangements" lead one to ask who authorised them? That person is the Secretary of State. The other arrangements are those made between the Secretary of State directly with the corporations or housing associations, so once again the Secretary of State authorises.

5.30 p.m.

We start with that, and then assume that these authorised arrangements have broken down and that the housing association or the corporation is in default. By virtue of the terms of the authorised arrangement the houses become vested in the local authority. This is where the grouse comes. If nothing had happened in relation to the authorised arrangements made between the local authority and the housing association a subsidy would have been payable, and would have continued to be payable not directly to the housing association but to the local authority, which would then pass it on to the housing association.

If, in these default circumstances, the house is vested with the local authority, why on earth, in this day and age—never mind what happened at any other time, or what words were included at any other time—should the Secretary of State take unto himself a discretionary power? Why should he decide to pay this to the local authority "if he thinks fit"? To me, those are rather insulting words. Before the question of default is mentioned in the Clause there is no mention of the Secretary of State's changing the subsidy payable to a local authority, to be passed on to a housing association "if he thinks fit". At the beginning of the Clause it is provided that the Secretary of State shall do so if he thinks that it is just. But the question of justice does not arise; it is purely a question of arrogance. It is purely and simply befuddled, bureaucratic arrogance.

If the Under-Secretary thinks that it is essential to retain these words, will he explain what the rest of the subsection means? It reads:

"the Secretary of State may, if he thinks fit, pay to the local authority a sum equivalent to any subsidy "—

and then come the words to which I wish to draw attention, and which to my mind construct a barrier of injustice—

"which would, after the said time, have become payable to them under this Part of this Act in respect of the house if all conditions precedent to the payment of the subsidy had been at all material times observed",

that is to say, if conditons were such that the question of default had never arisen.

If the question of default had never arisen the subsidy would have been payable. It would have been mandatory to pay it. All that we suggest is that if those conditions apply there is no justice in giving the Secretary of State power to withhold payment "if he thinks fit". I hope that my hon. Friends will support the Amendment.

The hon. Member for Glasgow, Shettleston (Sir M. Galpern) began by discussing the whole purpose of the Bill. It would be better if we left that aspect of his speech until the Third Reading. The effect of the Amendment would be to delete the words

"may, if he thinks fit"

and replace them by the one word "shall". This would make it obligatory upon the Secretary of State to pay to a local authority, when a housing association because became vested in it, a sum equivalent to the subsidy which would have been payable in respect of the house if it had remained in the ownership of the association.

Subsection (2), in effect, empowers the transfer of a subsidy from a housing association to a local authority when a house built by the association, with the aid of a subsidy, under authorised arrangements, becomes vested in the local authority. Subsection (4) applies the same provision to special arrangements. The principle behind these provisions is in no sense new. It is merely a continuation of the power contained in Section 87 of the 1950 Act. The hon. Member for Glasgow, Shettleston need not wave his hand; I am coming to his argument in a moment. The 1950 Act made the transfer of a subsidy subject to the discretion of the Secretary of State in the same way as is now proposed. There is nothing new in this power.

Tell me the old. old story.

There is nothing new, except for the Secretary of State.

The Secretary of State is new; but he has been going for longer than any other Secretary of State.

I may say that the provision contained in the 1950 Act, including the permissive power, had its origin in Section 11 (1) of the 1946 Housing Act, which was enacted by a Labour Administration.

We were not here then.

The hon. Member may not have been here, but some of his hon. Friends were here. I cannot understand why hon. Members opposite find this power objectionable now, when it has been in operation for so long.

The reason that we find it so objectionable is that the whole purpose of this Bill is diametrically opposed to that of the one referred to.

The hon. Member said that the words he seeks to delete are arrogant, and were words such as would issue from the mouth of a bully. All I can say is that they have been issuing from the mouths of hon. Members opposite, and that if we on this side are guilty of being bullies they are equally guilty. Theirs is an utterly nonsensical argument.

Let me explain the position. There may be an element of misunderstanding; I hope that there is. In the normal course of events no subsidy is payable to a local authority for houses which it acquires by purchase. An exception is made when a housing association house becomes vested in the local authority. The reason for that exception is that housing association houses are themselves subsidised, and the association providing subsidised houses is, in effect, thus supplementing the building programme of the local authority. Accordingly, the Bill proposes to continue the provisions of previous Acts, whereby, when such a house is sold or otherwise passes to the local authority, the subsidy may continue to be paid to the local authority and shall be retained by it instead of being handed to the association.

I can assure the hon. Member that where a housing association house becomes vested in a local authority a payment to that authority, in lieu of subsidy, is likely to be made in virtually every case. In our opinion, however, it would be wrong to make it obligatory, as the Amendment seeks to do, for the Secretary of State to make a payment irrespective of the circumstances of the takeover or the purposes for which the local authority intended to use the house. We appear to differ only on that very small point.

It is conceivable that upon acquiring a house from a housing association a local authority would intend to use it to accommodate members of its own staff, or for some other purpose for which, as the hon. Member will appreciate, a subsidy is not payable. Surely he is not contending that in those circumstances a subsidy should be paid. It is only