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Housing (Municipalisation)

Volume 884: debated on Thursday 23 January 1975

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7.43 a.m.

The issue of municipalisation—an ugly word for a doubtful practice—is not new, but it is continuingly relevant and needs constantly to be exposed to the light of day. At an earlier stage in this debate it might have been difficult, but in five minutes' time the sun will be officially up.

We are indebted to the Under-Secretary for his attendance at this un-convivial hour, and particularly as he is likely to hear much that is uncongenial to him, apart from his own contribution, which no doubt will be idiosyncratically sardonic as ever. I look forward to hearing it.

I intend in making my case to turn for illustration very much to my London constituency of Romford in the London borough of Havering, very much as I imagine the Minister will illustrate his case from his experience in his Manchester constituency.

Long before the first minority Labour Government last February, the Labour-controlled Greater London Council and the Labour-controlled London borough of Havering were embarked upon a policy of purchasing private properties to meet the general housing need in their areas. In the borough elections last May a Conservative/Ratepayer administration was returned in Havering which put an end to this policy, but not before the process in train had led to the purchase of approximately 1,000 such private properties. It is therefore very much a matter of a policy which has been experienced and the effects of it felt. It is those effects that I should like to examine.

The background is that the Chancellor of the Exchequer made in his March Budget last year provision of £200 million for this purpose, in his terms, as an expedient in an emergency situation. But like most expedients, this policy seems to have several defects. In my view, it can be faulted on five counts: it is wastefully expensive of public money; it is totally unproductive of new housing; it has the effect of sustaining house prices at an artificially high level to the detriment of prospective new purchasers; it is poor on grounds of management, and maintenance problems stored up for the future; and by creating tenancies in areas which are otherwise areas of owner-occupation by arbitrarily putting people in what is for them an alien environment, it is unnecessarily divisive and socially damaging.

It is wastefully expensive of public money on a number of counts. First, on the evidence, in many cases the price paid for the properties will have been much more than it might otherwise have been. I cite cases from the London borough of Camden. Two blocks of bedsitters were purchased by the borough for £85,000 each. A similar property was put on the market at £35,000. Arkwright Mansions, in Finchley Road, were sold to the council for £240,000. A local estate agent put a value of about £150,000 to £180,000 on them. These examples can be multiplied in no doubt smaller cases throughout the country, and certainly in my London borough.

Then there is the question of the condition and state of these properties. Many of them were a drag on the market for the reason that they were in poor repair and required a great deal of work to be done on them to make them fit for council tenants to live in and, in particular, to meet the stringent Parker Morris standards for council accommodation. They were expensive because as a result housing authorities were unable to cope with the necessary repairs. The properties lay vacant for many months, incurring not only high interest charges but a loss of rent revenue and, at the same time, a great deal of resentment on the part of nearby residents and those on the housing waiting list who could see properties standing empty.

There is a much more important continuing reason why these properties are wastefully expensive of public money. The differential between the outgoings on them and the rental income is, in my borough, between £1,000 and £1,500 a year. The tenants are being subsidised by about £20 to £30 a week. Therefore, one would think that the expenditure of money in this way was wasteful. I do not say that it does not serve a purpose, but—and this is a cliché—such a policy does not build one new dwelling, and it is a desperate expedient which I understand, in one sense, on the Government's part to get the housing market moving but it is an enormous sum of money to spend at the upper end of the market without producing any results in increased housing which all political parties agree is what is needed to crack our homeless and housing problem.

Therefore, money could, in my view, be much better spent mulching the roots of the housing market rather than purchasing expensive secateurs to cut off the fading blooms. Many of these properties are not among the best property on the market.

Then there is the question of the management and maintenance of properties. The London borough of Havering is a large area. It has purchased about 1,000 properties in different parts of the area. It will be difficult for officers of the borough to administer such properties of different sizes and standards. Maintenance will be difficult, since the variation in the construction of the units means that spare parts are not available for quick service to tenants. That is one of the minor drawbacks.

A more important factor is the way in which the intervention of local authorities with virtually bottomless purses in the housing market has boosted house prices at a time when they might have dropped. It is only too easy for Governments to provide money for the purchase of housing, but they find it neither easy nor quick to build the houses. The result has been a doubling of house prices in recent years. We find that, with the access of public authority money for the purchase of private properties, prices in those areas have not fallen, whereas prices came down in areas alongside where the policy was not pursued.

Finally, I come to the most contentious argument, which may provoke some angry response from the Minister, namely, the suggestion that, in bringing forward this policy as an expedient or emergency measure, it is non the less the long-term fundamental philosophical belief that all rented accommodation should ultimately be municipalised—"social ownership" is the current euphemistic phrase—and that the property-purchasing policy should be the start of a much wider longer-term campaign.

The first effects of that policy are most unfortunate. Taking an example from my constituency, the Nash estate was built between the wars for private owner-occupation. When the council started buying properties there, the owner-occupiers took round a petition to 1,000 households, of which 875, or 95 per cent., were against the policy of the indiscriminate purchase of those properties, and 76 refused to sign. The remaining householders were not at home when called on.

Before any hon. Member rushes in to say that this is sheer class consciousness and snobbishness, I should point out that many of the owner-occupiers who took the majority view were until recently council tenants from estates in East London and elsewhere in the vicinity, where their friends and members of their families still live. Their objection is not to the people who occupy the properties but to the principle of establishing tenancies in roads and areas which are otherwise solidly owner-occupied. That is a valid point of view which is widely held. A tenancy is not the same as owner-occupation. Except in rare cases, it is inevitably human nature that a tenant does not invest as much time, effort or expenditure to maintain and improve the property as someone who has striven by sacrifices and hard work over a number of years to save the necessary money to purchase and improve a property.

This was the controversy which arose in an area where already there are about 50/50 council tenants and owner-occupiers. It is an area which is by no means Tory in persuasion. It is a very mixed area. It was a genuine belief on the part of those owning properties in that part of Collier Row that it was unfair that tenants should be put amongst them. But it is, unfortunately, an instrument of social engineering, and perhaps the Minister will comment on it.

To me, knowing that only the very recent evident popularity of owner-occupation deters this Government from coming out more openly with their policy of municipalisation, it is significant that we should have such a policy embarked upon. It is thoroughly unsatisfactory, and, like many expedients, it will lead to long-term problems which will be with us many years hence.

If the Minister had the chance last night to read the Evening Standard he would have seen a relevant feature on housing with the heading
"Hope fades in the waste land."
It was a feature on the land in East London where it is said that 100,000 families could be accommodated in the area on both sides of the Thames between Tower Bridge and Beckton but which would require a very large sum of money to be invested in it over a period—an estimated £1,000 million over 20 years. It would seem that the money that is available to the Government for housing should be put into this kind of venture. It is very much more constructive. It would build new houses.

We support the Government in their campaign to secure a solution to our housing problem. That is not just a glib statement. It is a genuinely held belief. The Minister will know that we supported the Housing and Planning Bill which was enacted last summer and which will give assistance to housing associations and strengthen the housing corporation. We welcome the revival in the council house building programme. We would welcome any encouragement which could be given to private house-building performance, and we are glad that, by the provision of money, the mortgage flow is beginning to run heavily again. All these we welcome. But it is difficult to welcome a policy of indiscriminate and widespread purchases of properties by local authorities in the open market.

If at the end of this administration's period in office the public in my part of London see that the Government have done no more than harry the outer London boroughs to give up what little land they have, to destroy the environment which is London's heritage as well as their own residential privilege, and to suggest that local councils should purchase private houses in areas of owner-occupation, the Government will be condemned by the 6,000 acres of land lying derelict and disused, and in many ways suitable for redevelopment with a new town, and a substantial gain in housing. The electorate will not forgive them for it.

7.59 a.m.

I add a few words to those so eloquently delivered by my hon. Friend the Member for Romford (Mr. Neubert). I also wish to refer to the public expenditure which was authorised in the Budget of March 1974, when the Chancellor of the Exchequer allocated an additional £350 million to new council house building, to municipalisation, and to the buying of unsold newly-built homes.

The Ministry talks of "municipalisation" when it is talking about the purchase of houses from the rented sector. The purchase of houses built by speculative builders is distinguished from that in the Ministry's circular by the phrase "acquisition of new houses from developers". The justification for this new venture is that there is a need and a demand for more housing. There is always a demand for subsidised housing. It is impossible to say that there is a need but in any market situation, no matter how the market is rigged, there will be a demand for a product sold at less than the market prices. Unhappily, this demand, which is described as a need, is largely created by the Government's own policies.

I should like to pinpoint some of the factors over which the Government have control which have exacerbated the situation. I accept that inflation has much to do with the difficulties of the housing market. I am not trying to blame this Government for all our inflation but their Housing Act 1974 made the situation worse. I, too, heard the debate last night on the Act's effects.

The Minister rightly says that we cannot prove our assertion that security of tenure for furnished accommodation has led to the supply drying up, but he speaks like a counsel defending an accused when these are no such proceedings. We in the Tory Pary say, from our knowledge of human nature and our basic philosophical beliefs, that the landlord is as much a creature of idealism and self-interest as any normal human being. As a matter of sheer self-interest, if he cannot ever get control of his furnished accommodation he will not let it. There are no national statistics yet, but all that we have heard from various parts of the country shows that our understanding of the oddities and imperfections of human nature is more realistic than me muddled idealism which is the Socialist concept of the way in which landlords operate.

The present Government have also made the situation worse by the threat of land nationalisation, which is at least one of the depressing factors which have harmed the building industry, and by the council rents freeze, which has made council housing more attractive to first-time buyers or newly-married couples than private housing. This last factor, far from being a compassionate and useful measure, is harmful to the whole housing market. As my hon. Friend said so clearly and eloquently, it is wrong because it prevents young couples taking advantage of market conditions.

That is one of the odd paradoxes of the present Government's position. They rode to power, as all Governments try to ride to power, by blaming individuals rather than Governments for the creation of inflation. They had not got the courage to say that the previous Government were responsible for the creation of inflation. They had to say that all sorts of speculators, whether they be in land or commodities, were not only persons who benefited from inflation but persons who created inflation. So it was that among the economically illiterate they made a great deal of mileage by attacking those who made money out of the land boom which followed inevitably on the increase in the supply of money between 1971 and 1974.

However, the extraordinary thing now is that when the Government so vehemently attack those who made money out of the housing boom they are taking away the whole justification for the entrepreneur's rôle in the market situation. He takes the risk and the profits, and when things go wrong he ought to take the losses. Now the entrepreneur in the housing market is being prevented and protected from taking the losses because the Government are trying to buy up housing left unsold on the market, and they are preventing young couples from buying houses which would drop in price were it not for this most ill-considered policy.

It will be worse in the future. There are now about 50,000 houses unsold on the market. We all know that there is plenty of money in the building societies. Although the Minister will probably deny it, we are in a period of very rapid wage inflation. Many of the new rich, who under the social contract are enjoying wage increases of about 30 per cent., will find that it is to their advantage to become home owners. They will then find that the stock of housing which might have lain idle on the market for some time will have been bought up by the time they come on to the market. There will then be a grave shortage of houses available for sale, and once again we shall unhappily find that prices start shooting up very quickly indeed.

Therefore, I attack this measure most of all because it is grossly unfair to those who wish to move into home ownership either now or in the immediate future. But I also attack it because it is grossly wasteful of public money. As we all know, it is cheaper to allow the citizen to buy his own house than to push him into subsidised public accommodation. The figures were well rehearsed on the Second Reading of the Housing Rents and Subsidies Bill. I shall not bore the Minister with them at this early hour. He knows that in broad terms the subsidy on a new council house from the taxpayer and ratepayer amounts to about £1,000 a year, and that the average tax relief to an owner-occupier is about £300 a year.

These proposals for the purchase of unsold housing are also grossly wasteful because many Socialist-controlled local authorities take a very realistic view about the Government's expenditure. They recognise that the bonanza must stop at some time. They are extremely anxious to get as much housing purchased as quickly as possible, irrespective of whether that particular housing is suitable to their needs, because they know that, notwithstanding all the brave talk about everything being all right, fairly soon there will have to be a Draconian cut-back in public expenditure. I have seen this clearly in my constituency in recent weeks because the Labour-controlled Wolverhampton metropolitan borough council is at present negotiating to purchase 26 flats at Bromfield Court, Tettenhall Wood. This is high-class luxury accommodation intended to be occupied by people of comfortable means. The flats were on offer at £15,000 each, and in some instances they had only one bedroom. On any basis this is expensive accommodation which would clearly, not have been provided as subsidised accommodation for council tenants.

The proposal is that the council should purchase the flats, and I understand that its application for loan sanction is still being considered by the Minister. It is impossible to discover the criteria the Minister is applying in deciding what sort of accommodation is suitable for purchase by local authorities under this heading of public expenditure. The circular which the Minister issued to the local authorities to guide them in this type of purchase simply speaks in paragraph 23 of the
"Minister's readiness to approve such arrangements in cases where houses are available in the right place to meet urgent housing needs, and provided that the houses are of an appropriate standard and price."
That is as vague as vague can be, and it leaves the matter wide open for prodigal local authorities to exceed by far those prudent limits which the Chancellor has quite properly tried to impose upon local authority spending.

I know that the Minister is not loyal to the Chancellor's earnest desire to keep the borrowing requirement down. I had something to say on a previous occasion about the Minister's attitude to Government expenditure, but since he is now not only my opponent but also one quarter of my audience perhaps I shall be slightly more polite than I was before a larger audience.

There is another problem relating to the purchase of houses. My hon. Friend referred to the important point that when councils buy houses on partially-completed estates intended for private purchasers and private occupation there is a sense of social divisiveness among the people already living there. This arises not from snobbishness or, as one of my hon. Friends said, because we have derogated in any way from the important principle that ours is a national party not given to trying to stir up enmity between one class and another, but because the people recognise that there is a pride in ownership and that when householders own their own homes they look after them substantially better than when they live as tenants, whether they are tenants of a private company or a public corporation.

This gives rise to an interesting dilemma. In my constituency last summer the local authority purchased a number of houses on an estate called Wrekin Drive. The houses were part of a wider development on which a number of houses had already been sold to private purchasers. As soon as it became clear that the local authority was proposing to purchase the remaining houses, all hell was let loose and the original purchasers had a great deal to say about it. They rightly said that they had contemplated that the whole of the estate would be lived in by owner-occupiers. They said that they had been done by the speculative builder, and now they were going to be done by a combination of the Wolverhampton Council and the Minister, if the Minister gave loan sanction. The councillors, sensitive to these allegations, therefore said "The tenants who go into these houses will be hand-picked". That is reasonable enough, but it means that those who arguably need housing most do not go into those houses. The hand-picked tenants are the people who are socially respectable, who will conform to the standards of the area.

It may be that by hand-picking the tenants in that way the local authority is acting in contradiction to the rules that the Minister laid down when he set out his proposals for local authority housing programmes in Circular 70/74. Paragraph 30(c) stated that he would give loan sanction for the acquisition of properties which had been standing empty for six months, or properties with vacant possession, in areas in which there was a serious overall shortage of housing, and the acquisition of which would be for the purposes of housing essential public service employees or the homeless.

It is plain that if a local authority, in order to placate local views about the undesirability of putting council tenants into what is otherwise an owner-occupied estate, hand-picks the tenants, the probability is that they will not be homeless people, and other people most urgently in need of housing. Therefore, there is the ridiculous dilemma that, once again, by interfering in a market situation a Government fail to benefit those whom they most want to help.

I hope that the Government will rapidly reconsider the whole of their housing policy and take account of the real needs and character of the people, and realise that there is a place in housing for profit and the proper use of units of accommodation.

Here to some extent I take issue with my hon. Friend. It is dangerous to be for ever shouting for more housing, because we have enough units of accommodation. They may be in the wrong place, but we have enough. I should like to see a great deal more emphasis put upon the proper economic use of our present units of accommodation, as a first priority, before we try indiscriminately to expand the stock of housing.

8.18 a.m.

Order. The hon. Gentleman has already spoken in the debate. He needs the permission of the House to speak again.

With the leave of the House, I should like to intervene on this subject. I thank my hon. Friend the Member for Romford (Mr. Neubert) for raising it and my hon. Friend the Member for Wolver-hampton, South-West (Mr. Budgen) for bringing his experience and forensic skills to bear on the problems of municipalisation and acquisition, which is how we can describe these two headings of Government policy.

None of us should be surprised that the Government are behaving as they are, for many of us warned the electorate at the last two General Elections that what they are now doing would be part of a Socialist approach to housing policy. We have a right to consider the results and to see what that policy means for ratepayers, taxpayers and tenants if it is carried forward.

I hope that the Minister will not repeat the accusation that he made earlier about the attitude of the Conservative Party towards tenants and landlords. We are concerned with fulfilling the rights and expectations of tenants. If at times we are concerned with the rights of landlords it is because we believe that they fulfil a proper and important function in the housing market. Our concern is also for the housing stock.

The Government are falling into a grave error in saying that because eventually the rented housing sector will come under Socialist ownership it will be possible virtually to neglect the importance of giving landlords sufficient encouragement to keep their property in decent repair and condition. If that policy is pursued we shall have an endless renewal of slums which will make the eventual realisation of the Government's dreams that much more difficult.

Earlier the Minister talked about the commitment of the Labour Government to the expansion of owner-occupation. I am bound to say that that commitment seems to have slipped somewhat. We have been promised a statement on measures to improve the state of the housebuilding market and measures relevant to the owner-occupied sector for months, but we have heard nothing. I do not know whether it was a slip of the tongue when the Minister in an earlier exchange mentioned the Second Reading of a Bill—[Interruption.] In any event, we look forward to the promised statement. We hope that it will contain the same sort of commitment to house-building and owner-occupation as the Government have to municipalisation.

The Government have the wrong priorities. The Labour Party's attitude to housing priorities is not bady illustrated by the Greater London Council. The GLC is now threatening to raise the interest rate on its home loans from 11 per cent. to 13¼ per cent. That is threatened at a time when there is discussion in the Press of the possibility of some building societies reducing their lending rates and when interest rates overall are beginning to be reduced.

The GLC has recently reduced its maximum home loan from £10,000 to £9,000. A loan of £9,000 over 25 years with an interest rate of 11 per cent. would demand a family income of £3,975. If the GLC's latest threat comes into operation the family would need an income of £4,645. That is the income that would be required for an interest rate of 13¼ per cent. The cost to the GLC of holding down its home loan rate to 11 per cent. would be £3 million a year. It is apparently refusing to find the money. It is refusing to find one-twentieth of the amount that it is presently planning to spend on municipalisation. The GLC, like the Government, has its priorities totally wrong. It refuses to find that £3 million because of its doctrinaire and ideological commitment to municipalisation and acquisition.

We have three main complaints about the Government's policy. The first is that houses are frequently being acquired at exorbitant prices. When that accusation was first made by my hon. Friend the Member for Romford it caused a certain amount of agitation on the Treasury Bench. If the Government do not accept it, have they seen the work that Christopher Booker and Bennie Gray have been doing, the surveys that they have been preparing and the evidence they have been adducing week after week in the Observer?

The defence to that evidence has been extremely weak. On 24th November there was an article about Camden paying £85,000 each for two 16-bedsitter houses, which estate agents estimated to have an asking price of £35,000. My hon. Friend the Member for Romford mentioned that this was happening in Camden and elsewhere, with apparently exorbitant prices being paid. Mr. Mills the Chairman of the Camden Housing Committee, was challenged about this and his reply was interesting. I am sure that my hon. Friend the Member for Wolverhampton, South-West will relish the answer he gave. He said:
"Everyone knows the particular difficulties of fixing prices fairly, because a seller will not sell at prices that buyers are prepared to pay."
My hon. Friend is exactly right. The intervention of these councils in this way has rescued a number of people from their bad judgment.

Mr. Mills went on:
"I believe our current purchases will look cheap in a year or two's time",
by which I suppose he means that he expects house prices to begin to soar again under this Government. Again, my hon. Friend the Member for Wolverhampton, South-West illustrated the sort of process going on which may well lead to the return of that cycle.

The second complaint is that councils are buying up sound housing and going ahead with plans which will destroy large numbers of such houses. We know the attitude of the Secretary of State to this, because on 6th May last he said:
"I have for long been a passionate opponent of indiscriminate clearance, which I believe has gone too far in many areas.… I believe that indiscriminate clearance can be appallingly destructive of existing communities and is frequently a very expensive solution."—[Official Report, 6th May 1974; Vol. 873, c. 53.]
Yet we see that in Camden, Lambeth, Wandsworth and Islington, councils are going ahead with their plans, buying up sound houses and preparing to demolish them. This process involves housing being left empty for long periods.

That is our third complaint, that this programme of municipalisation is a wasteful use of the housing stock because large numbers of houses are left empty for long periods. The best estimate is that about half of the 1 million homes in this country which are empty at the moment are owned by local authorities which are not making proper use of their housing. It is a wasteful nonsense for them to be expanding their municipalisation and acquisition programmes in this way.

My hon. Friend the Member for Romford mentioned the subject of councils buying property on private estates and the two levels of maintenance which sometimes arise. Frequently the fault does not lie with the tenant because the rules of the local authority prevent tenants from carrying out the sort of improvements and maintenance which a private owner would carry out.

We know, too, because in Circular 171/74 which local authorities received on New Year's Day, that the Government recognise that the cost of managing these properties which are being acquired will place extra burdens on councils' allocations for maintenance and management. The circular says that where savings cannot be made elsewhere on the management budget this extra cost must be paid for by postponing the work of repair and maintenance. Anyone who owns property knows that that is a recipe for disaster.

If important repairs are postponed extra expense is built up to be met in the years ahead. To do this simply to make possible this programme of municipalisation is housing policy gone mad. This expenditure is bad on political and economic grounds because it is a wasteful use of precious resources. It is bad on housing grounds because it means spending money in vast quantities without adding a single extra house to our national housing stock. The scandal of dockland continues, and, while this programme goes ahead, millions of pounds are being wasted while thousands of people who could be housed in dockland wait for the go-ahead on that scheme.

This whole policy is, from the points of view of the taxpayer, the ratepayer, the tenant and the homeless, little short of disastrous.

8.30 a.m.

With the leave of the House, I will reply.

The hon. Member for Romford (Mr. Neubert) was good enough to include me in his compliments for attendance at this hour. I am grateful for the compliments but I recollect that about a year ago when the equivalent of this Bill was being debated I was inconsiderate enough to keep some of his hon. Friends up by initiating a debate at about this time of day. I rebuked the Government for apparently contemplating a General Election on February 7th on a dying election register, and I suggested that they postpone it until 28th February, suggesting that there would be a happy outcome, a Labour Government removing from the Conservatives the burdens of office.

The hon. Member is right. I had the Labour Party win in the last election to my personal credit. But I must also tell the hon. Member that when we came to office we found a housing situation verging on the disastrous because of the mismanagement of the Conservative Party. It was as a result of the disastrous housing situation which we found, together with the speeches we made, that we were returned twice last year and that we are pursuing policies which the Opposition, for reasons of ideology and doctrine oppose.

The hon. Member for Romford and the hon. Member for Wolverhampton, South-West (Mr. Budgen) spoke about different aspects of our policy, and I shall deal with their remarks separately.

The hon. Member for Romford was critical of the municipalisation policies which we put forward at elections and which we are pursuing as part of our mandate. He rebuked us for the kind of purchases which were made by the former administration in his own borough. He said that prices are more than they might have been. It is difficult to calculate whether a price is more than it might have been if one is buying the house. We are doing our best to ensure that local authorities get good bargains.

The hon. Member quoted not so much from his own constituency as from the borough of Camden and from the constituency of Hampstead within that borough. He was reinforced in his strictures by the hon. Member for Chelsea (Mr. Scott). We are constantly being assailed by his hon. Friend the Member for Hampstead (Mr. Finsberg), who originally affixed his name to this debate but for inexplicable reasons is not here, to get more permissions for his local authority to make purchases in his constituency. He becomes quite irritable if we refuse loan sanction to Camden Borough Council to purchase blocks of flats at high prices.

I was looking forward to pointing out the inconsistency between those who have spoken and the hon. Member for Hampstead, whose views I had amassed in a large brief. I assure the hon. Member for Romford that in choosing Hampstead he has chosen entirely the wrong constituency in entirely the wrong borough upon which to attack the Government, because his hon. Friend the Member for Hampstead joins the Camden Borough Council in assailing the Government for their stringent, mean and small-minded attitude towards the putative purchases of the Camden Borough Council. We are assailed also by other Labour-controlled councils including, I am sorry to say, my own Manchester council.

One reason why we are assailed is that the criteria for purchase under the municipalisation heading are more stringent under the Labour Government than they were under the Conservative Government. We are constantly being reminded that under the previous Government there was almost a carte blanche for municipalisation purchases, whereas the criteria in paragraph 30 of Circular 70/74 are stringent and restrictive. We have had to make them so because we have a large-scale municipalisation programme and, being a good sensible Socialist Government, we have priorities within that programme. Those priorities are listed from (a) to (e) in paragraph 30 of the circular which the hon. Member for Wolverhampton, South-West quoted accurately but misunderstood. Indeed, purchase cannot be indiscriminate and widespread—to use the words of the hon. Member for Romford—because the criteria in paragraph 30 are so stringent. There is now no general consent as there was under the Conservative Government.

All three hon. Gentlemen spoke of the misgivings and sometimes the opposition of owner-occupiers who sometimes find council tenants among them. It is not for me to comment on the views or motives of people who have taken trouble and spent a good deal of their own money on buying houses for owner-occupation. One can well understand any feelings they may have, however misplaced, that the value of their houses might be reduced by tenants being introduced. I ask the hon. Gentleman whether they would prefer to have council tenants among them or would prefer the houses to be unoccupied and possibly vandalised, which is what is likely to occur if they were allowed to remain empty for long.

That is one justification for the acquisition policy on which we embarked as a totally new venture when we came to office last March. Somewhat to my surprise and greatly to my satisfaction, that acquisition policy has been a considerable success. The latest figures show that since Circular 70/74 urged local authorities to venture into the acquisition from developers of newly-completed houses or houses approaching completion 174 local authorities have acquired 9,000 dwellings. That is a useful addition to local authority housing stock and an important aid to private developers and the building industry.

Although we welcome the addition of those houses to local authority rented stock, when we introduced the policy we made no secret of the fact that we did it first and foremost as a means of helping the building industry out of the trough into which it had fallen during the last period of the Conservative administration when we approached a situation in which the building industry had so many unsold new houses on its hands that it was not only not starting new houses but was not finishing houses under construction because of lack of confidence in the industry. It is undeniable that the policy on which we embarked when we came into office was strongly supported from within the building industry. The hon. Member for Wolverhampton, South West will realise that the industry was in great trouble and was grateful to us for intro-during a policy that assisted it to regain liquidity after it had had a large amount of unsold stock on its hands. There still is too much stock in its hands, but the position has improved.

Because the position has improved, because houses at the lower end of the market are now moving more easily—in a way in which they were not moving in the last period of Conservative Government—we are now reconsidering the acquisition policy. It is a policy that may well continue in some form, but the urgency of the situation that led us to introduce in last March is now less pressing. Therefore, we shall be reconsidering this aspect as well as others in our housing policy.

The hon. Member for Wolverhampton, South-West, reverting happily to true Tory doctrine, reproved us because he said that under our policy the entrepreneur was being prevented from taking losses. That is true. But if we had not taken this and other initiatives there would have been no private house-building left in the country. Those were the straits into which the building industry was being led by the Conservative Government. It was not only the building industry but the building materials industry that was approaching a desperate situation. Indeed, the building materials industry is still in a desperate situation, as the hon. Gentleman will know.

Is the Minister being frank with the House when he says that the reason that the Government are reconsidering the policy of purchasing new houses is simply due to the fact that it has been successful and now the lower end of the market is starting to move? It is plainly moving, because President Ford is doing what the Chancellor of the Exchequer may well do at the end of this year, and that is inflating—

Order. Is the hon. Gentleman making an intervention or a second speech?

I apologise, Mr. Deputy Speaker. Will the Minister say whether there are other reasons for the changed policy?

I am never anything but totally frank with the House. I am surprised that the hon. Gentleman should attribute a movement in the housing market to the concatenations of the Watergate affair, for that is what he seemed to be saying. He said that the movement stemmed from the fact that President. Ford had made his recent statement, but the movement in the housing market and the return of confidence to the housing market began earlier. The present Government and my Department have nothing which they are not ready to reveal to the House. Any concern we have about acquisition policy is entirely for the reason I stated and no other.

The hon. Gentleman seemed, on the other hand, to be slightly schizophrenic. While he rebuked the Government for helping private developers, at the same time he dragged out the old and inaccurate statistic about State aid to tenants being greater than State aid to the owner-occupier. One would think that he would not wish to give any State aid to owner-occupiers since he believes everybody must struggle in the whirlpool of the private market. But in a recent Written Answer my hon. Friend the Minister for Housing and Construction made clear that on an annual basis tax relief for an owner-occupier was considerably higher than the subsidy for a council tenant. I will gladly send the hon. Gentleman a copy of that answer, since it is one to which I give constant attention.

The hon. Gentleman revealed in the House, as he has in correspondence, his obsession with the Bromfield Court prospective purchase. It seems to emerge from his interest in this that he is terrified that if Wolverhampton Council were to buy these flats so many Labour voters would move into them that he would be deprived of his parliamentary constituency. In time we shall get him out of this House, but we shall not do it by diluting his constituency in this way.

I assure the hon. Gentleman that this prospective purchase, now being considered in the Department, will be decided upon the criteria within the circular. The hon. Gentleman should have read a little further on in the circular and beyond paragraph 23, because paragraph 25 amplifies the criteria. It says:
"As to price, the maximum should be that recommended by the District Valuer."
Therefore, there is a control on price.
"Local authorities should be able to negotiate favourable prices … It is not intended that local authorities should acquire dwellings in the higher price brackets and the Departments"—
that is, my Department and the Welsh Office—
"will not normally be prepared to approve arrangements involving such dwellings."
I assure the hon. Gentleman that the prospective Bromfield Court purchase will be judged according to those criteria, just as other purchases must be judged by them.

The criteria for acquisition are different from the criteria for municipalisation, and, therefore, although the hon. Gentleman read out some of the headings of paragraph 30, I must point out to him that those headings do not apply to the kind of acquisition he has in mind in the Bromfield Court situation.

The hon. Member for Romford and the hon. Member for Chelsea once again attempted to prove that this Government were not as interested in expanding owner-occupation as they are in expanding council tenancies. I remind them that it was the last Labour Government who introduced the mortgage option scheme and that it was the present Labour Government who introduced the £500 million bridging loan scheme.

I remember the Opposition going on and on about it when I moved the bridging loan order last spring. They attacked us for it, and threats were made to vote against it. The right hon. Member for Finchley (Mrs. Thatcher), who was not present on that occasion but raised the matter on others, attacked us for increasing the borrowing requirement. Nevertheless, we proceeded with it, and the result has been wholly beneficial. It has restored confidence to the private housing market, and it has helped bring about a very welcome flow of funds into the building societies, which is making increased mortgage commitment possible.

The hon. Member for Chelsea asked about our future plans for assisting owner-occupation. A statement will be forthcoming before too long. I trust that that statement also on further proposals by the Government will assist still more the owner-occupation market.

The hon. Member for Chelsea, who seems to be an assiduous reader of the Observer, mentioned some of the proposed acquisitions by certain local authorities in London. These are not acquisitions which have come about. They are all planned compulsory purchase orders, and, as such, they will be subjected to the very severe scrutiny to which all compulsory purchase orders are subjected under this administration. My right hon. Friend the Secretary of State for the Environment has expressed a personal interest in all compulsory purchase orders.

I assure the hon. Gentleman that the fact that proposals have been made does not necessarily mean that they will be accepted, though, since it is a semi-judicial proceeding, I must point out that it does not mean that they will not be accepted. All these proposals will be considered on their merits.

The hon. Member for Romford reproved us for chiding and harrying, as he put it, outer London boroughs for failing to build on their land. The report of the London Housing Action Group, which was published last autumn, and which was a report by that admirable all-party group whose members include a number of distinguished Conservative experts on housing, made it absolutely clear that the behaviour of many outer London boroughs in respect of house-building was an absolute scandal, that some of their housing totals were disgraceful by any possible criteria.

We, whatever the hon. Gentleman thinks, will certainly go ahead with all measures that we can to persuade the outer London boroughs to help the general London housing situation by making land available for housing, because the London housing problem is, in both quantity and quality, the most severe housing problem that this country faces, and measures must be taken to deal with it. We are determined to do so.

Our housing policy goes ahead on a number of fronts—council building, which will be helped by the Housing Rents and Subsidies Bill, assistance for owner-occupiers, and extension of the public sector. Whatever one's view upon this Latin-derivated word, we stand by our municipalisation policy. We believe that it is the right policy. We are governing it by the criteria laid down in the circular because, while financial conditions remain stringent, it is essential that priorities be imposed upon acquisition.

I assure the hon. Gentleman that we believe that acquisition by local authorities through municipalisation is the right policy, and we shall certainly encourage them to go ahead with it.

I ask the Minister, who has confirmed his Government's intention to proceed with their policy of attempting to solve London's housing problems by going to the outer London boroughs alone, not to sit down without mentioning the 6,000 acres of land which lie derelict and disused. I cannot recall his making any reference to that.

I do not believe we can solve the London housing problem in outer London alone. We are undertaking a new initiative in the London Housing Action Group by looking at the inner London situation. In our report of the London Housing Action Group last autumn we did not confine our strictures to the outer London boroughs. We also made it clear to the inner London boroughs that they must take urgent steps.

As for dockland, I agree with the hon. Gentleman that bringing land from dockland into use is an extremely important measure, but it is generally agreed by experts on the London housing scene, including the experts from his own party who add so much to the work of the London Housing Action Group, that dockland by itself will come nowhere near to solving the London problem, that, though it is an essential means of increasing housing in London, the possibilities from dockland have continually been exaggerated. This is agreed by experts.

This does not mean that we do not anxiously wish to bring dockland into use. We shall certainly do our best to ensure that that is brought about.

Will my hon. Friend undertake that if the friends of the hon. Member for Romford (Mr. Neubert) in the London borough of Havering repeat their performance of 1971, when they reduced the council's housing programme to practically zero, he will indeed continue to harry them and ask them to carry out their duty under the Housing Act? I assure my hon. Friend that there will be the greatest possible support from myself and other members of that authority if he does just that.

I assure my hon. Friend that any local authority in or outside London—Labour, Conservative or, if there are any left, Liberal—which does not fulfil its duty under housing legislation to provide dwellings for its citizens will be left in no peace by the Government. We do not distinguish between party control. There are, unfortunately, some Labour authorities which do not fulfil their obligations. We shall do our best to ensure that all local authorities fulfil their housing obligations to their citizens.