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

It will be convenient, I think, to discuss at the same time Government Amendments Nos. 14, 15, 16, 17, 25 and 27.

Now that we have ensured that the aristocracy can sleep easy tonight, perhaps we can get on with this important business.

The new clause is lengthy, but it sets out a simple proposition. It and the amendments grouped with it are connected by the principle that rents in the private sector should not be permitted to rise by more than £1·50 per week in any year. The new clause applies this limit to rent agreements and the new sub-paragraph (4) which Amendment No. 17 would add to paragraph 3 of Schedule 2 applies it to registered rents which are being phased. There is one small difference between the two categories—where a registered rent is being paid, the service element is not to count as part of the increase, in the same way that it is discounted when the amount of each phased increase is calculated. This cannot be applied to rent agreements because no such separate amount is identified in their case.

The amendments also give the Secretary of State power to vary the amount of the maximum increase. It is clearly possible that inflation over the next few years might make it necessary to alter the present figure of £1·50 to keep it in line with changing money values.

There are two issues involved in this group of amendments—the need for a maximum limit on rent increases; and the level at which that maximum should be set. We need a maximum limit because, as a result of the automatic decontrol programme begun by the 1972 Act, several thousand controlled tenancies have had fair rents registered. It is inevitable that fair rents will in some cases be very much higher than rents which may not have changed very much since as long ago as 1914. It is only a fairly small percentage of rents—about 10 per cent. of registrations—which are increased by more than 75p per week with phasing applied but it is a problem which we cannot ignore.

Housing is a basic living cost and counter-inflationary measures must bite particularly hard on such unavoidable expenditure. The whole purpose of the phasing provisions of this Bill is to make sure that necessary rent increases take place as gradually as possible so that inflation is restrained as far as it can be. In most cases division of rent increases into three phased stages reduces them to a size which is compatible with this principle but we must have a second line of defence against inflation for the small percentage of cases which do face very substantial increases. The maximum increase proposed in these amendments is the most effective way of doing this.

5.0 p.m.

Rents will still be able to be reregistered after three years even if the previous registered rent had not been reached because of the maximum increase and a new round of phasing would allow the rent to move gradually to a fair rent without, in all probability, involving the maximum increase. Such cases would be likely only where overall increases of the order of £300 are due to be made.

Obviously, the level at which the maximum should be fixed is something on which everyone will have their own ideas and there can be no monopoly of right in such a situation. A figure of £1·50 is indeed a high figure, but there are good reasons for its being so. It is designed to confer very real benefits on those tenants who—with or without stautory phasing operating—are faced with very large increases in rent; these increases are undoubtedly a counter-inflation concern. At the same time, it is pitched high enough not to make inroads into the progression of any significant numbers of rents towards fair rent levels; they therefore are consistent with our aim to move away from historic low rents and all their attendant problems.

As these amendments stand at present we are laying the ground for the gradual rise to a fair rents level for all regulated tenancies at the same time as conferring a very real benefit on those tenants who would otherwise face completely unacceptable rent increases. I hope therefore that the House will support me in proposing this new clause and associated amendments.

Although the Minister has said that this is a simple point, he will accept that the amendments are rather complex. It is unfortunate that we did not have the opportunity of discussing them in Committee. We could have gone into them more thoroughly with more notice. However, I have a few questions about them.

First, the Minister mentioned that this is a clause which should bring some benefits to tenants. He mentioned that it covered both agreements and new registrations of rent. Will he indicate how many tenants might be affected by the new clause? I think that the number will probably be small, because obviously only where there is an increase over three years of £225 will this have any effect.

Second, why has the Minister introduced this provision in this Bill, when I understand that there has been no similar move in the Bill that relates to England and Wales? My understanding is that registrations in England and Wales tend to be higher than they have been in Scotland, although it is difficult to make any general comparison. There has been no indication that English rents have been registered at any lower level. Why was the move made here?

My third general question is whether the Minister does not feel that this new clause might undermine the principle of the rent assessment committees' work and of fair rents, because the rent assessment committees, when meeting to determine rents, bear in mind what would be a fair return for landlords after a period of three years. It would appear that this would interfere with that.

As I have said, we have had little time to consider this proposal. Will the Minister give an undertaking—without commitment, of course—that between now and the next stage of the Bill, which will be its consideration by the House of Lords, he will give consideration to anomalies which might arise from the new clause? I say this because although it may sound fair and reasonable to impose a £1·50 per week limit on rent increases, much depends on where one starts from. If one starts from a rent of, say, £5 or £6 a week, that is obviously different from the case of starting from, say, 50p a week. Between now and the next stage of the Bill, will the Government consider whether there might not be a case for saying that the new clause should apply only to cases in which the fair rent or a reasonable percentage thereof has been established, or cases in which the rent paid was, say, £1 a week or £2 a week?

I think that there is a danger that the clause may produce a number of anomalies in our Scottish scene, where we have some rents at a relatively high level and some at a low level. Is the Minister willing to consider the anomalies which may arise as a result of the clause?

I quite accept that this is a small group with which we are dealing. I should not like to put precise figures on it, but it is certainly about 100. Therefore, it is not a major problem but is confined to one group, of which we know, and possibly some of the higher rented houses in fairly good areas. So I am not over-stressing the value of it. Nevertheless, we do know that it will be helpful to a small group, and we think that it is an element of justice to put a maximum limit when we have set one in the council sector, albeit it is a different sum.

It is true, as the hon. Gentleman says, that there is no comparable provision in the Bill that relates to England and Wales. It is to our credit that we have produced something that meets a prob- lem in Scotland. I do not think that it is any less significant because of that.

I have had personal discussions, informally, with various people involved in operating rent assessment committees. I can give the hon. Gentleman a categorical assurance that it will not upset the fair rents principle. We are not changing that in any way. The hon. Gentleman can take that as a firm assurance.

The hon. Gentleman specifically asked me about an undertaking. I do not think that any Government or draftsman are ever completely confident that what they are trying to do does not produce anomalies or some effects that were not foreseen. I am reasonably confident that we have got this about right, but it would be totally wrong of me to suggest that we are always perfect. I do not say that. The hon. Gentleman may have a point. I am not saying that he has, because I have not examined his suggestion in any detail. If the hon. Gentleman would care to submit any details to me, I should certainly be willing to study them with interest. But I should not like to commit myself, because I am reasonably confident that we have got it about right. I do not undertake to give the hon. Gentleman any specific assurance that we intend to alter it at the House of Lords stage.

I urge my hon. Friend the Minister to resist giving any assurance, as has been suggested, that the maximum limit should be greater where the current rent is smaller. It may, indeed, be a valid point that there is a long way for a 50p rent to go before it reaches the fair rent level, but it is in precisely these cases that a tenant is faced with much greater percentage increases in the weekly rent.

We also have to remember that any tenant paying this kind of rent—by implication, still under rent control—is a tenant who has not changed his tenancy for the last 20 years or so, say, since 1957. The vast majority, therefore, are pensioners. Irrespective of any consideration of income, they are the very people who find it most difficult to adjust quickly to a sudden change in their rent payment, particularly when it reflects percentage increases of 300 per cent., 400 per cent., or 500 per cent. Therefore, I hope that my hon. Friend will not—I am sure that he will not—give any ground here towards setting a higher maximum figure where the rent is lower.

My hon. Friend the Minister mentioned that the figure was rather high. He indicated that there can be no consensus on the figure because every hon. Member will have his own idea of what the appropriate figure should be. He will, however, I am sure, concede that the figure he has chosen of £78 per annum is precisely double the figure of £39 per annum that is suggested in the Bill for the council or public sector.

How was it that the Government fixed on a figure so markedly different from that for the public sector? What equity is it that the private tenant should be faced with a maximum figure which is double that applicable to the council tenant, especially when there is a body of evidence before us which shows consistently that private tenants have significantly lower incomes than council tenants, as hon. Members opposite are fond of stressing?

I was also distressed to hear my hon. Friend say that the Government wanted to get away from the historic rent basis in the private sector. That is a little unfortunate, as we appear elsewhere in the Bill to be placing the council sector firmly on the historic rent basis. It will be difficult for those like myself who represent very few council tenants but a very large number of private tenants to explain to our constituents why the legal maximum figure in their case is double that for the council sector and why the figure for the council sector has been fixed on an historic rents basis whereas in their case it is thought fair and proper that we should as quickly as possible get away from that very basis.

This is the other side of the argument. I did not say that I would give ground on the point that was raised. If I were to say now that I am flexible, that would be a mistake. As I am never too dogmatic, I said that if somebody suggests to me that we have done something which can stand being looked at again because it may give rise to anomalies, and if I were given evidence for that, I would look at it. I gave no assurance that I would take any action in another place.

The point that my hon. Friend the Member for Edinburgh, Central (Mr. Cook) has made is quite a good one. A maximum increase of £1·50 is a lot if we are talking in terms of a rent of £1 a week. However, the level could have been anything. Some might argue that it might have been £50 per year, some might say £100, some even less. It is just what we think, on balance, is reasonable.

I know that it is tempting to make a comparison between the private sector and the council sector, but there are so many factors that tend to make comparisons difficult. I referred to historic low rents and all their attendant problems. That is different from the phrase which tends to be used in terms of council tenants. I do not think that my hon. Friend should make too much of that phrase. In arriving at this figure we have borne in mind that rent allowances are available.

This is usually what happens when one tries to arrive at a fair figure. I am criticised by both sides. That encourages me in my belief that we have the figure about right. I hope that the House will accept the new clause and the related amendments.

We should be grateful for small mercies. The Under-Secretary has made it clear that he is not giving a specific assurance but that, if there are any anomalies, he is willing to look at them before the Bill goes to the House of Lords. On that basis, I am happy to recommend my hon. Friends to support the clause.

I beg to move Amendment No. 1, in page 2, leave out lines 3 and 4.

This is a drafting amendment. It is fairly insignificant and needs no further explanation.

The Minister proposes to leave out the words:

"have regard to the terms of their rebate scheme under section 15 of the 1972 Act".

Section 15(1) of the 1972 Act states:

"It shall be the duty of every local authority to bring into operation not later than 1st October 1972 a scheme for granting to persons who occupy as their homes houses to which the local authority's housing revenue account relates and which are let to them by the local authority rebates from rent, calculated in accordance with the provisions of the scheme by reference to their needs and their resources."

The important words are:

"by reference to their needs and their resources".

Surely local authorities should have regard to the needs and resources of those paying rent—for example, those who are disabled or persons on very low incomes who may not be able to afford the rent in question. Surely local authorities should not allow the cases of those in special need to go by default. Why does the Minister wish to omit these words?

It is never wise to argue with a lawyer. However, this is still a drafting amendment. No particular category of people is involved. The amendment is designed to tidy up a possible misinterpretation of the 1972 Act, where the fact that there were rent rebates available could be used in determining rent levels.

This technical drafting amendment in no way affects the eligibility of any person or groups of persons—disabled or otherwise—as to how they will be treated under the rebate scheme.

I hope that with that technical explanation the amendment will be accepted.

I beg to move Amendment No. 2, in page 2, line 7, at end insert:

'(c) having regard to the general level of rents charged by comparable housing authorities and by the Scottish Special Housing Association and by new town development corporations'.

This is an important amendment which I hope the Minister will be able to accept. Because of the amendment the Minister has introduced, the Bill now provides

"In determining standard rents for houses … a local authority shall … (b) subject to section 33 of the 1972 Act … take no account of the personal circumstances of tenants."

In other words, a local authority just has a general obligation to charge reasonable rents.

There is no indication of what the Government have in mind by "reasonable". We know from experience that there is no indication of how often rents should be reviewed. What does "from time to time" mean? We suggest that, to avoid a recurrence of a situation which developed last time, local authorities should be under an obligation in fixing rents to

"have regard to the general level of rents charged by comparable housing authorities and by the Scottish Special Housing Association and by new town development corporations".

We want to avoid what was a most unjust situation which existed before we introduced our 1972 Act whereby the rent paid for a council house depended not on ability to pay, not on the category of house, but simply on the area one happened to live in. In an area such as Saltcoats the rents would be very low, in some cases absurdly low. In another area the rents would be very high. This was unreasonable and unfair.

It is only fair and reasonable that the rent should be determined first by the tenant's ability to pay—by his personal circumstances—and by the rate demands on other members of the community and not simply in accordance with the place where one lives.

There is no doubt that in the past the Government used the SSHA, which they largely control, and the new towns as pacesetters for rent increases. This brought great injustice on people who lived in new towns and on tenants of the SSHA. Although there have been considerable moves to try to equalise the situation, the last information we got about rents in local authority houses and in new towns and the SSHA was that on 28th November 1974 the average rent for a Scottish local authority house was £138 per annum; for the SSHA house it is £144 and for the new town house it is £193. This is the result of development in which new towns and the SSHA were used by Labour Governments as pacesetters for rents.

Surely the hon. Member would accept that there is a marked similarity between the rent figures for the SSHA and the local authority. The disparity is with the new town figure, and surely the hon. Member accepts that new town rents are that much higher because most of the houses have been built in the last decade and, therefore, to meet historic costs the rents must be high.

If the hon. Member thinks that historic costs are the basis of fixing rents he will support our 1972 Act because in it we tried to introduce the principle that pooled historic costs should be the basis for fixing rents and that there should be a gradation towards that. That is the principle of the Act which is being destroyed by the Bill. I am astonished to have an indication from the hon. Member for Edinburgh, Central (Mr. Cook) that he supports the principle of the 1972 Act.

We know exactly what will happen if we pass the Bill without making the amendment. It will mean that certain local authorities, for blatant political purposes—for vote catching—will keep rents artificially low. In other areas they will go up reasonable amounts and elsewhere they will probably be a bit higher.

Our 1972 Act was an attempt to take housing out of the political scene and to ensure that tenants moved to a situation of a pooled historic cost rent by gradual easy stages of 50p a week over a period of years. In some cases the rent for council houses has reached almost an economic level. All the scare stories about £6, £7 and £8 rents which would result from the Tory Act have been shown to be nonsense. Therefore, if we do not make the amendment the crazy situation will exist throughout Scotland of rents varying from one region and from one district council to another. This will be unfair and unjust, and it will simply permit the Labour Party to distort the housing market by using cheap rents as a simple means of buying votes.

I was astonished when I first read the amendment, but then it dawned on me that its object is not to bring rents on to an equal basis but to raise them. If the hon. Member for Glasgow, Cathcart (Mr. Taylor) had introduced the amendment in order to remedy some inequitable process I should be inclined to agree with him and appeal to my hon. Friend the Minister to accept the amendment.

It is not good enough to say that rents in new towns are £50 a year higher than the rents of local authority housing. The cost of building these houses is so much higher because of increasing interest rates and the general increase in costs in recent years. This does not happen in areas other than new towns where houses are being built now at increased cost. There is an equalisation process now going on. I would rather see an equalisation of house rents throughout Scotland, and merely because some people were unlucky enough to go into the house at a later date should not mean that they have to pay a higher rent.

I ask my hon. Friend to pay no regard to the amendment which seeks a substantial increase in local authority rents, but to take a sympathetic attitude to the view of hon. Members who, like me, represent new towns where tenants have to pay a much higher rent than tenants of comparable housing—and I stress the word "comparable"—in other parts of Scotland. I accept that my lion. Friend will not regard the amendment with any great favour, but will he consider creating an equalisation process so that rents in new towns are not markedly higher than local authority rents in other parts of Scotland?

I am interested in what the hon. Member for East Kilbride (Dr. Miller) said. He has asked his hon. Friend the Minister to bring in an equalisation scheme for cases where there appears to be a different charge for the same house in a different area. He is not willing to concede, however, the effect of this principle, which is the basis of the amendment. I must point out to my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) that the rent is determined not according to where one lives but according to which party is in control in that area. If the hon. Member for East Kilbride wants an equalisation grant he should support the amendment, the basis of which is that there should be an equality of rent for an equality of house whatever its age and position and whoever is in power in the area.

This is the first time that I have had the opportunity of replying to the hon. Member for Kinross and West Perthshire (Mr. Fairbairn), and he is wrong. Even by looking at the housing statistics of local authorities it is sometimes difficult to determine their political flavour. I do not think that anyone could draw a specific conclusion on that score.

I can assure my hon. Friend the Member for East Kilbride (Dr. Miller) that I am not accepting, or asking the House to accept, the amendment. In general terms I agree that it is desirable that a comparable house should command round about a comparable rent. But there are qualifications. New towns do not have a rate subsidy and a rate contribution. Amenity and all the other environmental factors come into play. Provided we compare like with like, who can deny the logic and justice of my hon. Friend's argument? I therefore have sympathy with it.

The amendment is a new idea. It suggests that the system which operated before the 1972 Act did not work. There have been no representations from any local authority objecting to what we are proposing, which is to make that system the basis of the review of rents from time to time. There is, therefore, no support for the amendment from anywhere on the Scottish housing scene.

The amendment is an elegant testimony to the belief, which underlay the Opposition's approach to the Bill in Standing Committee, that local authorities cannot be trusted. We differ completely from the Opposition on that score, and we are proud to do so, especially when dealing with new authorities. They have not yet had an opportunity to perform but already the Conservatives have so little faith in them that they want to tie things up for those authorities tighter than we would wish.

5.30 p.m.

I cannot dispute that in the past a number of authorities failed to review rents as often as they might have done, or as the courts decided, should have done. It is a matter of debate whether they did any service to their tenants, because an undue preoccupation with low rents sometimes detracted from the need to improve standards and manage- ment, matters of which we are all now aware and perhaps the new authorities will pay more attention to them. For these reasons, we should reject the amendment.

The amendment raises a specific question, which I do not want to dodge, about the SSHA and new town development corporations. The rents differential has been narrowed, and, hopefully, will continue to narrow.

Good.

It is all right for my hon. Friend to say "Good", but if that requires local authorities to raise their rents—

No.

The House will see the difficulty I am getting into.

Does the Minister accept that one way in which we could achieve this desirable objective is to reintroduce the 1972 Housing (Financial Provisions) (Scotland) Act?

I have been long enough in this busines to be suspicious of simple solutions, especially when one of them is the 1972 Act. However, I concede that if it had eliminated all rate contributions and all housing deficits, as it was intended to do, we should ultimately have reached the position desired by my hon. Friend the Member for East Kilbride. But that is not the way in which any of us would have chosen to arrive at that happy situation.

That is why we rely on the good sense of local authorities. In an inflationary period, I can see no hope of any authority—local authority, SSHA or new town—reducing rents. But I hope to be able to avoid giving the impression that any Government deliberately uses the SSHA or the new towns as trend-setters for increased rents. I have already said that in the current climate rents are likely to increase, but it is not fair to the SSHA or new town corporations deliberately to use them as whipping boys to encourage local authorities to do something.

Is it possible for my hon. Friend to indicate to the new town development corporations that it is not incumbent on them continually to increase their rents in order to keep the differential between their rents and local authority rents? There is no God-given reason why that differential should remain. It it is possible for the rents to equalise themselves, let it happen. But do not let the development corporations imagine that they must keep the difference between the rents of their houses and the local authority houses.

My hon. Friend is taking me too far along the road that he wants to travel. I have said that I accept his proposition as a general principle. We must equally recognise that under the present system new towns are working under different constraints and financing arrangements. Therefore, I would not like to undermine the responsibilities that the House has placed on them. But I have made clear the direction in which I think we should proceed as a general principle.

Of course, there are differences. For example, some authorities will still have no SSHA houses or new town houses within their area of responsibility, so comparisons are difficult. Some other authorities could have practically no deficit in their housing account and still have relatively low rents. Saltcoats is a good example. [Laughter.] Conservative Members always laugh. I was going to pay a compliment to my hon. Friend the Member for Central Ayrshire (Mr. Lambie), but I see that he is not here.

Although the rents in Saltcoats are relatively low, the local authority's housing costs are also relatively low, because the bulk of its building was done when costs were relatively low. It was fortunate and far-seeing enough to acquire a large amount of housing land in advance of need. Therefore, whatever arguments Conservative Members may put forward in attacking authorities such as Saltcoats, people such as ex-Provost Lambie and the Lambie dynasty must be complimented on their wisdom in buying up land in those days. Perhaps other authorities did not have the same opportunity, but we should accept that Saltcoats has done a good job.

We think that we have the measure about right. We believe that the interpretation of "reasonable" is understood, and that all the factors that hon. Members think should be taken into account will be taken into account by the new district authorities.

The House should not accept the amendment, which merely introduces an additional complication without clarifying the duties that will be placed on local authorities.

I cannot let the occasion pass without commenting on the amendment, because the amendment, in the name of six Conservative Members, is to try to get rents increased. Drawing red herrings across the Notice Paper in the form of the SSHA and new towns will not do. The hon. Member for Glasgow, Cathcart (Mr. Taylor) who represents a tremendous number of council tenants, should stand up and say so if he wants the rents increased, and should not cloak that desire in the type of amendment we have before us.

The hon. Gentleman knows, I know, and my hon. Friend the Minister knows, because we all represent Glasgow constituencies, that Glasgow has the highest average council house rent in Scotland. We also know from debates in Committee that the average rent of a comparable SSHA house is not as high. As my hon. Friend the Minister rightly says, there are one or two unusual examples, such as Saltcoats in Ayrshire, where, because of the foresight of people who were in command of the local authority in the past, who bought up land very cheaply and took on a building programme within their limits, the housing revenue account is much healthier than that of many larger authorities. But it is not fair to take one or two isolated examples.

Housing is now a district function. We gave a promise that we would put the control of rents back into local authorities. Freedom for local authorities was one of the planks of the Conservative platform in 1970, but they did not give freedom back to the authorities. They introduced the 1972 Act, which they know was one of the worst pieces of class-ridden legislation ever to pass through the House.

When the hon. Gentleman uses the words "worst pieces of class-ridden legislation", do I understand him to mean that he greatly regrets that those less able to pay their rent were most helped?

That is not the argument, because the Labour Government were the first Government to introduce subsidies. We have always been concerned about the inability of certain people to meet the rent levels of certain houses. [Interruption.] I give the hon. Gentleman the point on the allowances for private tenants. But this discussion centres on council tenants, and we are comparing their position with that of tenants of the new towns and the SSHA. I hope that my hon. Friend the Minister takes the point.

I am glad that my hon. Friend advises us to reject the amendment, which is an attempt to make council house rents rise as fast as possible. That has always been the Tories' attitude. We have only to look at the figures which the Minister presented to each member of the Committee considering the Bill to see that council house rents have reached a dangerous level. If they continue to rise, good wage-earning families, virile young families, will move out of large council estates, because they will find it much cheaper to obtain a mortgage and buy a flat or a house.

We must be careful in the application. We should be concerned not only with rent levels but with the social composition of the large housing estates that we have created. We could end up with a situation in which those estates will be occupied by low-paid workers, the unemployed, the pensioners and the disabled. That would create a dangerous situation. The rent that is being paid is not the only criterion that we should bear in mind. As legislators we have a social as well as a fiscal responsibility.

The new district authorities also have regard to the difficulties that people face in paying council rents. That is why they have suggested weekly rents or other forms of paying their rents—for example—the Giro system. In my opinion the rent levels for council houses are extremely high. I think that I speak for admost all of the council tenants that I represent. I hope that my hon. Friend will see that the amendment is a sham and that he will reject it.

Is the hon. Gentleman prepared to say how much the average council tenant in his constituency pays in rent and how much he pays in rates?

The hon. Member for Cathcart knows the figures as well as I do.

Then let the hon. Gentleman tell the House.

The hon. Gentleman receives a copy of the Glasgow housing manager's report and the figures are available at the Table Office. I do not carry all the figures. I believe that the average rent was roughly £167. I accept that the rates are at a high level in Glagow, but that is not the point. The argument about the amendment is that in the opinion of the Conservative Opposition council rents are not high enough. That has always been the attitude of Conservative Members. They should come clean and tell the House that that is their attitude. I am glad that my hon. Friend has rejected the amendment.

With respect to the Minister, we are not satisfied with his reply. I must say straight away to the hon. Member for Glasgow, Queen's Park (Mr. McElhone) that he does not interpret our amendment as we would wish.

Of course not. What does the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) expect?

I must make the point firmly that what we want is to have rents throughout Scotland which are, roughly speaking, comparable. We feel that if the amendment is not accepted that will not be the position. We are suggesting that there will be a feeling of injustice throughout Scotland if the Government pass legislation which causes certain areas to have large housing deficits owing to low rents while in other areas there will be no deficits because the rents are of a different level. I have mentioned that the average rent in Saltcoats in November 1973 was £66 whilst in Bishopbriggs it was £119. Anyone who transferred his home from Saltcoats to Bishopbriggs would find that his rent would nearly double overnight. We believe that that would cause a feeling of injustice and unfairness to be felt by many people throughout Scotland.

We wish to avoid a situation in which some local authorities will be charging high rents and others very low rents.

Surely the hon. Gentleman is not comparing like with like. Apart from other considerations, when comparing Saltcoats and Bishopbriggs it must be remembered that one area is obviously Conservative—that is the area in which the rents are high—and that the other area is Labour dominated. Surely the argument must be based on the housing revenue account. Anyone who has studied the Saltcoats housing revenue account over a number of years will have seen that it is in a much healthier position than many other like accounts. That is the main reason for the rents being low in Saltcoats.

I know that for the current year £171·28p is the average annual rent in Glasgow. I suggest that in comparison with Saltcoats that is a high figure. I can well imagine the attitude of persons living in Saltcoats who might wish to transfer to Glasgow. If the hon. Gentleman is suggesting that it is fair for persons living in Saltcoats to be charged one level of rent and those living in Glasgow to be charged a different level of rent, I suggest that that is not the view that will be taken by many people in Scotland.

The hon. Gentleman is making two entirely different points. I agree that there should be some kind of equalisation, but if he is trying to put forward the example of someone moving from Saltcoats to Bishopbriggs, finding

Order. The hon. Member for East Kilbride (Dr. Miller) has addressed the House earlier on this amendment. He may seek to ask a question but he cannot make a second and further point by way of a further intervention.

I am merely asking whether it is not the case that somebody moving from Bishopbriggs to Saltcoats will find great relief in the foresight of the people of Saltcoats.

The point must be made that it should not matter where a person lives in Scotland or where he goes to live. We believe that he should be charged approximately the same type of rent for living in the same type of house. We think that it is grossly unfair to have any form of situation which differs from that. That is why we are pressing the amendment.

On 28th November 1974 the average annual standard rent in Scotland as a whole was £138·20p. For new town development corporation houses the average was £193·68p and for Scottish Special Housing Association houses the average was £144·72p. We feel that that differential is much too wide and that no harm can possibly come from comparing the figures.

I beg to move Amendment No. 3, in page 3, line 5, leave out Clause 5.

In moving that Clause 5 be deleted from the Bill I say at once that I understand and share the concern which led to this clause being moved in Committee. I must also say, however, that it is essential that the clause should not be allowed to remain in the Bill. As hon. Members would expect, in the interval between the Committee proceedings and today I have met my hon. Friend the Minister of State at the Department of Health and Social Security to draw his attention to the clause and to seek his views. The clause has also been drawn to the attention of the Chairman of the Supplementary Benefits Commission, Lord Collison.

After these discussions I have to tell the House that I am reinforced in my view that the clause is technically deficient—I know that is never a good argument—and impracticable in that it aims to provide an "on request" type of service for beneficiaries without regard to whether they have difficulty in budgeting. Much more importantly, however, the clause is unnecessary in so far as it relates to people who fall behind with their rent.

To take the main point first, the clause is no longer necessary because of an important shift of emphasis in the approach by the Supplementary Benefits Commission to the whole question of direct payment of rent. While in the past this has been regarded as an expedient to be adopted only when persuasion or other attempted remedies have failed, this is no longer the case. Guidance recently issued to Department of Health and Social Security offices, which make payments of supplementary benefit on behalf of the commission, will result in authorisation of direct payment where a tenant is persistently failing to pay rent at a much earlier stage than previously.

This is a significant change in emphasis and should serve to eliminate one of the most frequent difficulties encountered in the past when requests for direct payment were liable to be turned down until arrears reached substantial proportions. The new guidelines will allow much greater flexibility and a greater area for discussion, so that it will become more a matter of management than of policy to see that the guidance is put into practice.

6.0 p.m.

There are detailed instructions in the code for the guidance of local offices. I have studied them, and, knowing something about the subject, I am satisfied that they provide a flexibility that did not exist before.

I am aware of the guidelines which have been sent to the offices, but I am not sure about their interpretation. It has always been a problem to use compulsory powers to deduct rent payments from supplementary benefit recipients. However, I understand that they will be introduced only as a last resort, when all other efforts have failed. My information from social security people in my constituency is that they intend to go to great lengths to encourage people to pay their rent, to accept their responsibilities, to fulfil their obligations—

Order. The hon. Gentleman will remember that he is intervening in a speech.

Yes, Mr. Deputy Speaker, but this is an important point. I had to mention the background before asking my hon. Friend whether he is positive that the guidelines will be interpreted in the generous way he has indicated.

I can never be positive about anything in which there is a degree of flexibility. I should not have used that word. "Discretion" is the official word.

There has been a change in the guidelines given to local offices. On the one hand, there is a specific guideline to deal at a much earlier stage with beneficiaries who have rent arrears, while still leaving discretion to be exercised locally.

Has my hon. Friend had time to look at the figures which I gave him earlier today which showed that in Edinburgh there are 2,000 supplementary benefit claimants who owe, on average, about 12 weeks' rent and that only 260 of them are paying rent direct through supplementary benefits offices? Is he confident that the arrangement which he has made with the DHSS and the assurances which he has been given by that Department will guarantee that these figures are brought much more closely in line with each other?

There have been discussions with officials of Edinburgh Corporation and the DHSS subsequent to the last letter which my hon. Friend received from the corporation. I think that Edinburgh Corporation will be reasonably satisfied, but that is a matter for my hon. Friend to check and perhaps advise me on if I am wrong There has been an increase in the number of direct payments, and, with the new instruction, I am sure that no technical barrier will exist if the case is made for increasing the number of direct payments.

When last May the East Kilbride and Stonehouse Development Corporation increased rents for some houses which were occupied by people on supplementary benefits a difficulty arose for some people because the extra amount was not available from the Department of Health and Social Security until they had incurred the debt for the extra rent which had to be paid. In other words, there was a time-lag during which they owed the money. Some elderly people, in particular, came to see about the matter. I thought that I had straightened it out with the development corporation and with the DHSS, but apparently that is not so.

It would be of great benefit if the Department of Health and Social Security could ensure that the extra amount of rent—indeed, the whole rent—was paid without the tenants, often elderly women, having to worry and sometimes even receiving letters saying that they are in arrears.

That is a slightly different point which my hon. Friend should take up with the Department of Health and Social Security. Presumably he is talking about cases in which direct payment has been accepted but there is an increase in rent or rates, or both, and a time-lag in increasing the allowance. I agree that such situations sometimes cause unnecessary alarm and concern. However, I am sure that that matter can be sorted out and explained to the satisfaction of my hon. Friend's constituents.

I confirm that the letter which my hon. Friend the Member for Edinburgh, Central (Mr. Cook) sent me showed that there were 263 direct payments made in Edinburgh. Our latest information, which covers the last couple of weeks, is that the figure is up to 483.

The change in the regulations is not a minor change. Perhaps I did not do the point justice in Committee. The Supplementary Benefits Commission is conscious of the problem of housing associations which cater specially for one-parent families and other low income groups liable to experience particular difficulty in budgeting and has issued special instructions about these. This initiative has been warmly welcomed by the National Federation of Housing Associations.

We are expecting the report of the Morris Committee dealing with the relationship between social work and housing, but within its remit was a requirement to examine problems associated with the matter we have been considering. I sympathise with the views of hon. Members. I shall meet in the near future the Association of Housing Managers. I shall be putting this matter to the association, because the key to it is the use by housing managers of better and quicker methods for identifying people who are in arrears with their rent, or even identifying them before they fall into arrears.

I hope that, with that explanation, the House will accept the amendment.

The Minister's explanation is not satisfactory. The hon. Member for Coat-bridge and Airdrie (Mr. Dempsey) struck the nail on the head when he said that direct payments were made only in the last resort.

The Minister made clear that there were three criticisms. The first was that the clause was imperfectly worded. Imperfect wording can easily be straightened out. His second criticism was that the clause was impracticable. It is perfectly practicable to enlarge the Department of Health and Social Security and ensure that the civil servants render a service of the nature we advocate. It may be inconvenient for them to do it with their present staffing, but it is perfectly practicable. Therefore, the hon. Gentleman's argument in that respect was not convincing.

The third argument was that it was not necessary. It is extremely necessary, and I am reinforced in that belief by representations from three sources. The first source is Shelter, the Scottish campaign for the homeless. The second is the housing committee of Edinburgh Corporation, which has had its request turned down by the Secretary of State and has resorted to approaching Members of Parliament. The third source is the report of the Committee on One-Parent Families by Sir Morris Finer. The Minister mentioned the Morris Committee, but the Finer report deals with this matter on page 511 in recommendation No. 158 which states:

"Where a tenant receiving supplementary benefit requests, with the support of the social services department or the housing authority or an appropriate voluntary organisation, the Supplementary Benefits Commission to pay the rent direct the application should normally be granted as a matter of course."

We are asking only that this should be done on request.

Recommendation No. 159 states:

"Where the social services department and landlord, in the long-term interests of the tenant, ask for the rent to be paid direct there should be greater willingness on the part of the Supplementary Benefits Commission to do so."

I appreciate that the Civil Service may have applied great pressure on the Minister and said that this arrangement would be inconvenient, but there is a feeling growing up between social workers in Edinburgh Corporation and social workers in the Department of Health and Social Security. The corporation social workers feel that they are doing a lot of work which should be carried out by officials of the Department, especially in relation to the payment of energy charges. Rather than risk persons committing suicide or having to be taken into care, they feel that they must pay the energy charges on an emergency basis although they do not believe that within the strict definition of the statute they are entitled to do so.

This is a reasonable request which I ask the Minister to accept.

I share a great deal of the concern which was expressed by the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), and I have a full power of attorney to speak for my hon. Friend the Member for Edinburgh, Central (Mr. Cook). The assurances given by the Minister go a long way towards meeting the reservations which were expressed in Committee, and the hon. Member for Glasgow, Cathcart (Mr. Taylor) has adopted similar procedures in days gone by.

The Minister was generous enough to say that perhaps he had not done justice to the point in Committee. He has responded generously. In the interval he has consulted Lord Collison and has had discussions with the Minister of State, Department of Health and Social Security. The situation in Edinburgh has improved substantially in the last two weeks. We are always as concerned about Edinburgh as we are about our own localities.

The assurances given by the Minister have gone a long way to meet the distressing problems. The Minister is aware of our concern, and I do not doubt that he himself has a genuine concern. His explanation has more than satisfied us.

I have listened carefully to what the Minister said but I cannot take as charitable a view of it as did the hon. Member for Glasgow, Queen's Park (Mr. McElhone). I am surprised that the hon. Member for Edinburgh, Central (Mr. Cook) saw fit to give a power of attorney to his colleague rather than give his own public confession of why, for reasons best known to himself and his colleagues, he supports the Government.

The Minister gave interesting details which we all welcome. No one disagrees with the added flexibility that the Supplementary Benefits Commission will apply. What I have been waiting to her and have not heard is any good reason why a tenant who wishes his rent to be paid directly by the Supplementary Benefits Commission should be refused that right.

It is desirable that flexibility should be applied, but the tenant is in no different position from any other person who chooses to have various sums deducted from his income before it reaches him. All hon. Members receive their salaries after deductions for national insurance and pension contributions. We have no choice in the matter. The deductions are made partly because it is thought desirable to make them and partly to ensure that the payments are made. In addition, many members of the public, fearful of getting into arrears with insurance contributions, choose to have them deducted before the money reaches their pockets.

Will the Minister give us an explanation of his attitude, other than the inconvenience it might cause to one or two Government or public officials, which is not a good explanation when we are considering the public interest? Will he give a good reason why a tenant who chooses to ask for his rent to be paid directly should not be allowed to do so?

The argument that has been put forward in the past is that the tenant must bear the onus of meeting his own commitments, and we accept that. This request in no way indicates that the tenant is denying his commitments any more than an hon. Member who asks his bank to deduct money by standing order refuses to accept his commitments. If this method is convenient to the tenant, if it ensures that the landlord receives the rent and that the arrears disappear and do not reappear, on what basis does the Minister refuse to accept the method?

The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) was not present in Committee when we discussed this matter and he cannot have read my magnificent contribution or he would not have gone over the same around. His is a typical middle-class approach: "Why should not we have the right to decide how the money should be paid?" It is not as simple as that. The hon. Gentleman claimed to take account of the right of the individual. He and his hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) skilfully disguise their patronising attitude which is that in the interests of the public purse we should take away the right of the individual to say "I shall decide how I shall spend my own money".

The argument may be put the other way. The next stage will be when the Morris Committee reports on electricity charges. It may be said that the people who are receiving supplementary benefit should have their bills paid direct. The next suggestion will be that if they need clothes they should be Given chits which can be exchanged for clothes at the local store. Those people will end up with no money.

Quite right.

The hon. Gentleman says, "Quite right"—

I did not say "Quite right" to the Minister's remark about people ending up with no money. What I said "Quite right" to was the suggestion that a person on social security benefits should have the responsibility to say that he would like to have his rent deducted from his social security payment. It is the Minister who is interfering with the right of the individual. We are trying to protect the right of the individual to do what he wants to do.

There is a genuine difference of opinion on the two sides of the House. I think I have expressed the overwhelming view of my hon. Friends. There are staffing problems in the Department, but that is not the main burden of the case. If the House wills something it is up to us to find the means to do it, but we must appreciate that there have been many changes in legislation which have laid burdens on the Department—for example, the Christmas bonus, and beef coupons for old-age pensioners. I should not like to see the matter go by without proper consultation through the DHSS with the staff concerned.

Does not the Minister accept that it will take much more time and cause more trouble for the Department if it considers each application and decides whether it is to be accepted or refused than if the Department accepts every application in which a tenant asks for such deductions to be made?

I do not want to take up the time of the House any longer. The system works fairly well. Where there are guidelines, most of the cases fall within them. It is only in the odd case that discretion needs to be exercised.

Hon. Members who know anything about social security will realise that the system works reasonably well. The Finer Report has been taken on board. That is partly the reason why there have been changes of coding and advice to local offices. I am confident that we do not need to have the clause in the Bill, and I hope that the House will agree to delete it.

I am bitterly disappointed with the Minister's remarks. He spoke about extending the guidelines, but the debate in Committee on this point was on the question not whether the guidelines should be extended but whether the principle should be accepted. The Minister must be aware that if this proposal cannot be undertaken in one year because of administrative difficulties, if the principle is accepted the Opposition—and, we hope, those Labour Members who supported us upstairs in Committee—will be glad to go along with the Minister in any proposal for the period to be increased to two, three or four years.

The Minister mentioned the Finer Report—a bulky document running to hundreds of pages. I ask the Minister to look at page 396. I hope the Minister will listen to what I am saying instead of making arrogant and stupid interventions—[Interruption.] Had the Minister taken part in the proceedings on the Local Government (Scotland) Bill, he would understand why we take this attitude. However, if he looks at page 396 of the Finer Report, he will see that it says:

"where the tenant, with the support of the social services department, or the housing authority … requests the Commission to pay the rent direct, the application should (other than in exceptional circumstances) be granted as a matter of course".

That is precisely the situation we want to arrive at.

The Minister was wrong in his comments about the speech of my hon. Friend the Member for Edinburgh, Pent-lands (Mr. Rifkind). There is no question of our adopting an arrogant or middle-class attitude, but we are deeply concerned that, because of the absence of this facility, which we seek to provide, many hundreds of families in Scotland will be penalised. Those families are undergoing agonising crises. Many are breaking up, and mothers are taking pills because many families find great difficulty in managing their affairs.

The Minister said that he would extend the guidelines, but I am concerned in assisting families who now face problems, and am very much interested in preventing such situations arising. The Minister must be aware of the figures published in Glasgow by the Castlemilk Interest Group showing an increase in the number of evictions for non-payment of rent. Every eviction involves human hardship and tragedy. The Minister must be aware that if this facility were introduced, it would go a long way towards preventing some of these problems arising, and would certainly help a large number of people who are in trouble.

Nobody underestimates the administrative difficulties. This proposal would mean creating work for the Supplementary Benefits Commission and the DHSS. However, if the right were automatic there would be no need to go through each case individually. We want to establish that at some future stage, when the administrative problems are overcome, the Government will accept the Finer Committee's recommendation on this point—a point supported by the Edinburgh Corporation and social workers in many parts of Scotland—namely, that every tenant on supplementary benefit and other benefits who wants his rent paid direct should be able to take advantage of such provision.

I was disappointed with the remarks of the hon. Member for Glasgow, Queen's Park (Mr. McElhone) for we thought that we had his support—

Has the hon. Gentleman any evidence of persons making such a request from the social security authorities, and of the request being refused?

Yes, I have. I can give the hon. Gentleman many examples. If he will contact the Castlemilk Interest Group, it will give him the evidence. Furthermore, the Family Service Unit in Glasgow has evidence of such refusals.

We are interested in this being an automatic right. We do not want to lay

I beg to move Amendment No. 4, in page 3, line 17, leave out from 'surplus' to 'after' in line 18 and insert 'on capital account'.

The clause as it stands could be summed up as a "grabbing profits from the new towns" clause. If a new town development corporation makes a considerable profit, it should not inevitably go to the Government. It is only fair that if a new town development corporation makes a fair profit, it should be enabled to use it to improve the amenities of the new town.

The new towns make a tremendously significant contribution to Scotland. During the summer months many visitors to Scotland are taken specially to see them as models worthy of copying in other countries. We believe that the new towns are worthy examples for other places. I ask the Government to think again and perhaps to have a more general and nationalistic approach to the matter.

Although I did not have the good fortune to be a member of the Committee that considered the Bill, I have read the Committee proceedings. This matter was discussed at some length, and, moreover, since the Committee proceedings, my hon. Friend the Under-Secretary has written to the hon. Member for Glasgow, Cathcart (Mr. Taylor) and to other members of the Committee explaining the Government's thinking behind this provision and why they did not think it desirable that we should accept the amendment. In those circumstances, I do not wish to make a long speech about the amendment. I simply remind the House of the background against which the provision has been inserted in the Bill.

I shall not make anything of the fact that this provision was put into the English Act in 1972 by the former Conservative Government, because I accept that for this Government to follow the provisions of the previous Government in any respect would probably be the weakest argument for any provision we might be making.

Apart from that, there are substantial and reasonable arguments in favour of including this provision in the Bill. It is discretionary. In the event of a new town having a surplus, there is no obligation on the Secretary of State to provide for the surplus to be paid into the Consolidated Fund. Before there was any question of using this provision—it is not likely to be used in the near future—there will of course be consultations with the development corporation concerned.

The principle that surpluses may be recovered is already part of our existing new towns legislation. The 1968 Act, for example, provides that when a new town corporation is wound up any surpluses from the winding up should be paid into the Exchequer. That is a reasonable provision, because it takes account of the history of new town financing, which has been done very largely at the expense of the taxpayer.

We must remember that apart from loans made to the new towns, the development corporations already receive substantial Exchequer grants, apart from what is done to eliminate their housing deficits. For example, during the year to 31st March 1974, £1·8 million was paid to the new towns in Scotland by way of grants additional to the usual housing subsidies which are paid to public authorities. The effect of the financing arrangements for the new towns is that, for good reasons—because the new towns make an important contribution to economic development in Scotland and because they also provide admirable housing for the people who live in them—the taxpayer has taken on special obligations towards them. That being so, and the taxpayer having invested considerable sums in new towns, it seems utterly reasonable that if and when the new towns begin to make surpluses there should at least be a discretionary provision—not obligatory or mandatory on the Secretary of State or the new towns—that, if the circumstances justify it and the surpluses are not required either for writing down the loans or for capital expenditure, they shall be paid back to the Government, from whom the original investment came.

As regards the present position in Scotland, East Kilbride and Stonehouse is earning a surplus on general revenue account. It is not earning a true surplus since it is still in deficit on its housing revenue account. However, on the general revenue account the surplus, with our approval, is at present being used to reduce the need for new borrowing in East Kilbride for ongoing development.

There will be considerable capital expenditure in building up the new town of Stonehouse. None of the other new towns is likely to be in a real surplus position before the 1980s except perhaps in respect of the effect on new towns of the Government's new policy for land which we shall have the opportunity of debating later in the Session. However, in the event of surpluses becoming available, it seems to us only right that one of the possibilities for dealing with them should be that they be paid back to the Exchequer. That is the sole, limited and inoffensive purpose of the provision. Therefore, I cannot accept the amendment.

I hope that by raising this matter both during in Committee and now we shall make the Government think about something which, for the second time, is unfair to the new towns.

The Minister did not deal with our amendment. He gave us an interesting dissertation on the letter sent to us by his hon. Friend, but he did not deal with the difference between capital and revenue.

I did not deal with that because the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) did not deal with it either when he moved the amendment, so I thought that that was not a point to which the Opposition attached any importance.

I am afraid that the Minister could not have been listening. That was the precise point to which my hon. Friend referred when speaking about repayment. We feel that it is unfair if the Government decide to take money from new towns with a surplus on capital account and deny them the right even to take the sum off the accumulated debt. If the Minister of State lent me £1,000—which is very unlikely—and I paid £500, I think it is fair and reasonable to regard that debt as being £500.

This proposal seems unfair. I had hoped by this amendment to make the Government look again at something which appears to be very unfair to the new towns.

I do not want to make heavy weather of this. I met all the new town chairmen and chief executives within the last fortnight to discuss problems relating to new towns. The Bill and this provision are well known to them. I have received no complaints about them. As I understand it, the new towns are not the least unhappy about this provision.

I beg to move Amendment No. 5, in page 4, line 21, leave out from 'rent' to 'which' in line 27 and insert:

'(whether registered before or after the commencement of this Act).'

With this we may consider Government Amendments Nos. 6, 8, 9, 10, 11, 21, 24, 26 and 28 to 36.

The purpose of these amendments to to deal with especially steep increases in rents following the end of the freeze. Before I go any further, I direct hon. Members' attention to the explanatory material on the effect of these amendments, which has been made available. It was circulated to all members of the Committee and I hope that they found it helpful. Under existing legislation tenants whose rent increases were in course of phasing when the freeze began, and those who had rents registered in the early months of the freeze, might have to pay an increase made up of two phased increases immediately after the end of the freeze—either together or within a short time of each other. In many cases this would result in very steep increases and would wipe away much of the counter-inflationary benefit of the freeze.

The effect of the amendments is to allow rents to be increased at a steady rate towards fair rent levels, following the end of the current standstill. The amendments can be summarised as follows.

For rents registered before the freeze which were already subject to phasing the new paragraph 5A provides that they shall resume phasing at the next stage which they would have been due to reach had the freeze not occurred, instead of resuming at two levels of phasing higher. This would have happened in a very large number of cases.

Sub-paragraph (3) of the new paragraph 5A provides that for rents registered during the freeze which would have been subject to existing phasing provisions, phasing shall begin from the end of the freeze instead of from the date on which the rent was registered.

Paragraph 5B introduces the same arrangement for rents registered before or during the freeze which were not previously entitled to phasing and which had not been increased to the registered rent when the freeze began.

The amendments are made within the framework of the fair rents system, which we introduced in 1965. As my right hon. Friend indicated on Second Reading, we are undertaking a longer-term review of housing policies and finance and we shall be looking closely at the system of "fair rents" as part of that review. In putting down these amendments, we are attempting to reduce the impact of steep increases in the post-freeze period. In that sense, they are designed to deal with a situation at a particular period of tme.

The changes will, however, enable us to make steady progress towards "fair rents" from what we must recognise as in many respects a low rent situation in Scotland. As I said when we discussed an earlier group of amendments, this perhaps has made worse some of the problems arising from that policy. The amendments are made in keeping with the "fair rent' system. They do not significantly impede progress towards "fair rents", and they do not interfere with established rights of application for re-registration of a fair rent three years after the original registration.

The new phasing arrangements make it possible to repeal—and so rationalise—the existing phasing provisions contained in the initial Rent (Scotland) Act 1971 and the 1972 Act immediately, instead of in two years as the Bill provides at present. Most of the amendments in this group are consequential upon this change. We are all concerned, in the interests of the public, whom the Bill affects so directly, to simplify the legislation on private rents as far as possible, and we are therefore proposing that we should make this Bill the sole piece of legislation to which anyone need refer concerning phasing, instead of perpetuating phasing provisions in two other Acts.

I hope, therefore, that my hon. Friends will support me in these amendments, which attempt to solve sympathetically yet rationally the problems of phased rent movements, particularly in the post-freeze period. I commend the amendments with enthusiasm as being an attempt to introduce an element of justice to all concerned in a situation which has arisen because of the freeze.

Will the hon. Gentleman answer two brief questions?

First, has he discussed this proposal with representatives of rent assessment committees, and do they envisage any practical difficulties? The committees will be meeting to consider new rents and a period of re-registration when the tenants will not be paying the rents which would have been paid according to their previous decisions.

Secondly, the Minister explained that new Clause 1 was not being introduced in England and Wales. To what extent is this bringing about a variation in practice, compared with the situation in England and Wales?

Dealing with the hon. Gentleman's first question, as I said earlier, I have had informal discussions with some of the people concerned in the operation of the Rent Act. Again, I can give the hon. Gentleman a fairly categorical assurance that this proposal should not present any problems from the point of view of administration or from that of the application of the fair rents policy.

As the hon. Gentleman knows, we are proposing simply a phasing arrangement which does not alter what might be described as the anniversary date of the registration of a rent. In some cases the tenants will arrive at the anniversary date where the rent can be re-registered, even though in some cases they will not have reached the fair rent. It does not cut across the basic principle of aiming towards a fair rent. However, because of the freeze and because of what we are doing, there is this difference in the final stage when the next registration may take place. In other words, it does not alter the date for that, but it means that in some cases the fair rent may not have been reached. It will not present any problems. It does not even introduce a new consideration, because the existing fair rent is already known and established.

As for the hon. Gentleman's second question, we are happy to be able to say that what we have done here is slightly better than the English and Welsh have done. This might have been appropriate to our debates in the past two days. The only provision made in the English and Welsh legislation is for those rents registered during the freeze. We are bringing in the category of rents which were registered before the freeze. I am sure that hon. Members will compliment us on having the initiative and vision to be slightly different and, as usual, better.

I beg to move Amendment No. 7, in page 5, line 39, leave out from 'by' to end of subsection and insert:

'such sum as the rent officer considers reasonable having regard to the sum expended on repairs'.

This amendment was partially discussed in Committee, although we are putting a different face on it now.

Basically, we are dealing with approximately 5,000 substandard houses which still have controlled rents. The Bill contains provisions whereby fair rents cannot be established for these houses. Instead, the landlords are entitled to a return of only 12½ per cent. of the cost of any repairs that they do. The rents of most of these houses are very low. If a landlord wants to spend money on repairs, he will not be able to do so on the basis of the revenue from the rents of those houses. It seems to us that 12½ per cent. is unreasonable in view of the cost of borrowing money. If the landlord has to borrow money, he will not get an adequate return from his rents to finance the loan.

We do not suggest changing the figure to a higher percentage. Instead, we suggest that rent officers should be allowed to consider a reasonable return for the landlord who has to borrow money to pay for repairs. Each case will vary. Some repairs will be major; others will be minor. But, bearing in mind the cost of borrowing, 12½ per cent. is unreasonable and allows no flexibility.

I hope that the Minister will accept the principle, if not the exact wording, of the amendment.

I understand the reasoning behind the amendment.

The figure of 12½ per cent. is precedented in earlier housing legislation. I take the point that it is not easy to arrive at exactly the right percentage in a matter of this kind. We thought that in all the circumstances 12½ per cent. was probably about right.

As the hon. Gentleman said, we are dealing here with houses which are still subject to controlled tenancies and not to the fair rent provisions. Therefore, my principle objection to the amendment is that it brings the rent officer, who is concerned specifically with the fair rent provisions, into an area from which we have specifically excluded him for policy reasons and for other reasons which it is not appropriate for me to explain at the moment.

My second objection to the amendment is that it would introduce uncertainty about the effect that carrying out repairs would have on rents. Although the hon. Gentleman may think that by inserting a provision of this kind into the Bill the object would be achieved of encouraging landlords to spend more on repairs and to do them where in other circumstances they would not be willing to do them, there is an equal and perhaps greater danger that, with an element of uncertainty in the situation, a landlord would be less willing to carry out repairs than he would be under the clause as it is drafted.

7.0 p.m.

There would, of course, be certain anomalies also between one kind of tenant and another, with some tenants paying on a percentage basis and others through the rent assessment proceedings. But the basic arguments against the amendment are those I have mentioned. The first is that the rent officer would be introduced into an area where he has really no jurisdiction at the moment. The second is that the amendment would create uncertainty. On balance, the provision in the Bill is the better one, but I agree with the hon. Gentleman that it is important that we should encourage landlords in this kind of situation to carry out essential repairs to property and give them a certain financial incentive to do so.

I am surprised that the hon. Member for Glasgow, Cathcart (Mr. Taylor) has moved the amendment. Earlier, he wanted to curb the freedom of local authorities in the determination of rents. Now, paradoxically, he argues for more freedom to be given to rent officers to decide rent increases. It is a strange concept of democracy that would give less freedom to members of local authorities democratically elected, but give what would appear to be absolute power in this respect to non-elected officials, the rent officers.

The amendment states that rents could be increased by

"such sum as the rent officers considers reasonable having regard to the sum expended on repairs."

That would be giving the rent officer far too much latitude and, as my hon. Friend has said, it would be asking the rent officer to intrude into an area where he did not intrude before. It is more appropriate that this House should decide what is reasonable, and that is what the Government are attempting to do. One-eighth of the cost of repairs per annum seems to be a reasonable amount.

Earlier, the hon. Gentleman pleaded for the rights of private tenants. That made me even more surprised by the amendment, because it would mean that a rent officer could, in effect, raise the rents of private tenants by exorbitant amounts. The Government's standpoint is far more reasonable in setting a ceiling in both the private sector and the public sector, including a ceiling on the amount to which rents can be raised per annum as a result of repairs carried out by the landlord.

I am quite unimpressed by the arguments of the hon. Member for West Stirlingshire (Mr. Canavan), but the Minister of State has put practical objections to the amendment which are worth considering. I hope that between now and later stages of the Bill he will reconsider whether 12½ per cent. is really an appropriate figure.

I beg to ask leave to withdraw the amendment.

I beg to move, That the Bill be now read the Third time.

This is an important piece of legislation. In our manifesto for Scotland we promised to repeal the Housing (Financial Provisions) (Scotland) Act 1972, which indiscriminately put up rents, and to restore the power of local authorities to fix their own rents. The Bill fulfils that undertaking. From next May, local authorities will again be free to determine reasonable rents for the houses they provide and to make their own decisions about the size of the rate contribution to the housing revenue account.

The Bill also provides for a strengthening of the Government subsidy support available to local authorities, with £5 million more being made available by way of housing expenditure subsidy in 1975–76 and further increases thereafter. The rent income subsidy, which is meeting 90 per cent. of the loss of income of local authorities on the rent standstill in the current year, will be continued in 1975–76, when it will have totalled about £12 million to local authorities.

These two sums are not chickenfeed, and I am sure that the local authorities and the tenants recognise, as I hope the House recognises, that the Government are making a further substantial contribution to the provision of adequate housing in the public sector. The Bill has revealed a fundamental difference of opinion between the Government and the Opposition, and we are not surprised about that. It seems still to be the case that the Opposition mistrust local authorities—even the new local authorities. That mistrust was behind the 1972 Act.

We have never accepted that principle. We have confidence in the ability and integrity of the new local authorities to build up their housing programmes, which have lagged behind because of the 1972 Act. The Bill will also give confidence to the building industry. We have not forgotten the private sector, by introducing a limitation on the increase of rents and the phasing provisions. This is an extremely important piece of housing legislation, and in political terms it is a fulfilment of a promise we have given. For these reasons, I hope the House will give it a Third Reading.

This is an important Bill, but I do not agree that it is acceptable. It is in two parts. The first part deals with the public sector and the second with the private sector. Our arguments in Committee were largely on the provisions for the public sector, although the hon. Gentleman has introduced some sweeping new amendments dealing with the private sector following reconsideration since the Committee stage and in the light of anomalies which might have arisen.

We object to the Bill for three main reasons. First, as the hon. Gentleman has rightly said, it fulfils an election pledge by the Labour Party to repeal the Housing (Financial Provisions) (Scotland) Act 1972. What the hon. Gentleman has not done is give us any reasons why the Labour Party wished to do so. Apart from saying that it is a pledge fulfilled, the hon. Gentleman has not told us just what hardship was caused by the 1972 Act. What stands out is that the Act was subject to the most blatant campaign of unfair misrepresentation of any Act of Parliament.

There was no better example of this than the propaganda to the effect that rents of £7, £8 or £9 would be charged as a result of the Act. In Committee, the Minister gave us some details of the present percentage housing deficits of local authorities, which showed that several were on the point of achieving an economic rent, and so would not need to have substantial increases in future.

We also object to the Bill because the national rent rebate scheme which our Act introduced ensured that rents were related not to the political complexion of the council but to the needs of the individual. As a result 241,000 tenants—three out of every 10—are at present receiving rent rebates, which average £75.

We also think that the Bill is wrong because it will add to housing deficits. The present deficit of around £27 million will increase by probably £8 million in 1975, which will mean more on the rates for everyone, including council tenants.

The most objectionable feature is that there will once again be wide variations in the levels of rents. Our Act was intended to bring about some harmony and do away with the situation in which rents in one area could be much above or below what they were in others. It can therefore be understood why we feel that the Government were wrong to repeal the 1972 Act and introduce the Bill.

We should aim at fairness. We believe that we had achieved fairness with the 1972 Act, first, because it helped those in need, second, because it limited rent increases until an economic rent had been reached to 50p a week and, third, because it aimed at eliminating the rates subsidy.