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Phasing Of Rent Increases Where Rent For Dwelling-House Under Regulated Tenancy Is Registered

Volume 890: debated on Monday 21 April 1975

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Lords Amendment No. 4: in page 3, line 35, at end insert:

"and to section (annual limit on private sector rent increases) of this Act,"

I beg to move, That this House doth agree with the Lords in the said amendment.

With this Amendment we are taking also the following:

Lords Amendment No. 5, in Clause 7, page 4, line 32, at beginning insert:
"Without prejudice to section (annual limit on private sector rent increases) of this Act,"
Lords Amendment No. 6, after Clause 7, in page 5, line 44, at end insert new Clause B—(Annual limit on private sector rent increases.).

The following amendments in the name of the Secretary of State to Lords Amendment No. 6:

In line 4, leave out from 'agreement' to 'was' in line 7 and insert:

', the total of the rent payable under a regulated tenancy in a relevant period shall not, by virtue of a notice of increase or rent agreement taking effect at or after the commencement of this Act, be increased by more than £78 above the rent which would be payable in a period of helve months at the rate at which it '.

In line 8, at end insert:

;and sections 6 and 7 of this Act shall have effect accordingly in relation to the rent payable for any rental period beginning at or after such commencement'.

In line 1 I, leave out 'on or'.

Leave out lines 42 and 43 and insert—

'(7) The provisions of section 6(2), (3) and (5) and section 7(4) and (9) of this Act and of paragraphs 9 and 10 of Schedule 2 thereto shall apply for the purposes of this section as they apply for the purposes of those sections '.

and Lords Amendment No. 17, in Schedule 2, page 17, line 43, leave out "6 and 7" and insert:

"6, 7 and (annual limit on private sector rent increases)".

These various provisions deal with the basic provision in the Bill relating to private properties that there should be a maximum limit of £1·50 a week on the increase in rents. The principle is already accepted and provided for in the Bill. The purpose of these amendments is to tighten the application of the principle by covering cases in which the limit of £1·50 a week on rent increases is not already specifically covered in Clause 7 and Schedule 2.

11.30 p.m.

The amendment is related to instances in which two increases might be permitted during the same year because a new registration under the fair rent procedure or a rent agreement replacing an existing registration or rent agreement was made during the year. In such cases the provisions would limit the second increase, if necessary, to an amount lower than the Bill would otherwise permit. The purpose is to make sure that the two increases, taken together, do not exceed the limit of £1·50 a week over the whole year.

I shall be glad, if the House so wishes, to explain the amendments in detail or to answer questions about them. The amendments to the amendments are basically drafting amendments to make the provisions clearer and to remove certain ambiguities and uncertainties in the wording.

The Minister of State has kindly said that he would answer questions on the amendments. I wish to raise a few questions.

On Report, I asked the Minister whether he would look into possible anomalies which might arise under Clause 7, which introduces the £1·50 limit. He said that he would, but, so far as I can see, the way in which the anomalies have been dealt with has made the situation worse in relation to the case of which I have given details to the Under-Secretary of State and of which the Minister of State is well aware.

Can the Minister of State give the latest figure for the number of houses affected by Clause 7 as amended by this tightening-up amendment? As reported in column 1409 of the Official Report for 5th February, the Under-Secretary gave the figure of about 100. My fear—and I should appreciate the Minister's comments on it—is that this tightening-up amendment will make worse a grotesque anomaly which has been created for a number of houses in Glasgow owned by the Western Heritable Investment Company, about 1,500 of which are in my constituency and a number of which are in the constituency of the Minister of State. The anomaly is particularly unfortunate because it seems that this amendment is the culmination of a series of blunders and errors and some plain deception. Will the Minister explain the situation on this amendment?

The background to the story is that there are about 1,500 rented homes in a place called King's Park, Croftfoot, and a number in the Minister's constituency which have fixed rents since about the 1930s of £32 per annum. The 1969 Act unfroze these houses and enabled a fair rent to be applied for. In 1972 a fair rent was applied for in certain test cases and a figure of £340 was established. This would have involved a very substantial increase, admittedly phased over three years.

Discussions took place with the company, because it decided not to impose the rent of £340 but to have discussions, and after considerable discussions the company agreed to offer agreements to the tenants of £240 over three years, which was £100 below the fair rent figure established by the rent assessment committee. It was agreed that these increases would commence on 1st January 1974.

After more discussions, the company made a further concession whereby three months' grace was given, and it was agreed that the first increase should take place on 1st April 1974. The agreements are voluntary, but in fact all the tenants, with the exception of 57, signed them.

On 8th March the Government introduced their freeze order—the Counter-Inflation (Residential Rents—Private Sector) (Scotland) Order 1974. Speaking about these houses, and referring to the first increase under the agreement, the Minister said:
"That increase was to have come into force on Thursday"
1st April
"but it has been frozen."—[Official Report, 25th March 1974; Vol. 871, c. 230.]
Considerable doubt was expressed. It was thought that the Government had made an error in this order, and that the only tenants in Scotland whose rents would not be frozen were those of the Western Heritable Investment Company. The Opposition made it clear that we were not enthusiastic about the principle of a freeze, but that if there was to be one it should apply to everyone. We expressed doubt. In a letter to the secretary of the tenants' association dated 19th March, the Minister said:
"the effect of the order is to freeze rents until the end of the year at the previous rent levels. I am very glad to be able to be telling you this."
Further doubts were expressed on the matter. We tried to clarify the position, which was to some degree explained in a Press statement on 29th April, headed:
"Millan gives assurance on rents."
At that time Councillor Peter McCann had an interest in this matter. He is now the designate Provost of our new Greater Glasgow District. It was stated that he had received an assurance by telephone from the Minister of State that supplementary legislation would be enacted if necessary to cover this situation. In other words, if an error had been made it would be put right. I sent a series of letters to the Minister of State in an endeavour to clarify this. It was a hot political issue because within a few weeks we were about to have an election for the King's Park region under the new local government arrangements. Considerable play was made in the election of the rent freeze issue. In the course of the campaign that was the only guidance we received. We were unable to obtain any further guidance.

The area involved was gained by the Labour Party by a narrow majority. After the election the matter was clarified. The Minister wrote a letter to me on 15th May explaining that he had considered carefully the possibility of making an amending order to put matters right, but after taking further legal advice and consulting his colleagues he had concluded against making such an order at that time.

That was a dramatic change in the situation. The Minister suggested that the matter could be resolved only in the courts and that the tenants should take pot luck. The tenants took the matter to court, but lost their case. Therefore there is an astonishing anomalous situation. There was a specific pledge in the House of Commons, and an alleged conversation just before the municipal elections with a Glasgow councillor, who was deeply involved with the Labour Party. It was said "If the rents are not frozen we will put the matter right." However, it seemed that the Minister had thrown these tenants to the wolves. Those tenants were accordingly thrown to the wolves. They were the only tenants in Scotland whose rents were not frozen.

One anomaly was dealt with by the Lords amendment. I refer to the case of the 57 tenants whose rents had been frozen because they had not signed agreements. I expected that, having made at best a blunder and at worse a gross deception, the Minister would either have resigned or taken appropriate steps to put the matter right. By means of this amendment the Government are saying "We are doing nothing for the unfortunate 1,500 tenants whom we misled during a municipal election, but we are doing something about the 57 tenants who did not sign agreements. We shall ensure that their rents will not rise by more than £1·50 per week each year."

As a result, those who did not sign agreements will be considerably better off, at least for a period of years until things are sorted out. That would appear to be adding insult to injury for the tenants of Kingspark and Croftfoot. If I am right in my interpretation of this Lords amendment the Minister's action here is grossly unfair to the large body of tenants in those two districts. They took the Minister's word in the House of Commons and were guided by the alleged conversation which was never denied until after the election, into believing that the situation would be put right. Yet nothing is being done for them. To the contrary, the action that is being taken will make the anomaly worse.

What has happened will make it much more difficult in the future to conduct negotiations on agreements. Agreements were one aspect of the legislation which hon. Members on both sides agreed was good. We all wanted to encourage them and to encourage landlords to offer rents which were below the agreed rents of the rent assessment committees. After seeing what the Government have done in this case some landlords might be tempted to conclude that the company concerned was simply a mug. If it had followed its commercial interest and extracted the maximum it could under the legislation it would have had more cash in its hand.

The hon. Member for Edinburgh, Central (Mr. Cook) is looking puzzled. Perhaps I should explain to him that in 1972 a fair rent of £340 was registered in test cases and could have been charged from that time. However, the company. under the terms of the 1969 Act, delayed implementing the finding and offered agreements of 100 less.

By his action the Minister is piling up difficulties for anyone seeking to negotiate an agreement in the future. Will he say whether I am right in my interpretation of the Lords amendment? Does it tighten up what was provided for by Clause 7, which had the sole effect of protecting about 100 tenants in Scotland, of whom 57 are tenants of the Western Heritable Investment Co. Are they getting the privilege of help from the Government in having to pay a smaller increase in rent, while nothing is being done for those to whom the Minister owes a great deal because of the letter he sent to the Secretary of my tenants' association, because of the pledge he gave in the House and because of the pledge he was reported in the Glasgow Herald to have given to Glasgow councillor Mr. Peter McCann who was involved in an election at an important marginal seat at the time, and which was not denied until after the election.

This looks like being a rather unfortunate episode which reflects no credit on the Minister, unless tonight he can say something to clarify the situation, or tell me that I have misjudged the meaning of the amendment.

The hon. Member for Glasgow, Cathcart (Mr. Taylor) has made an interesting speech which has nothing to do with the Lords amendment. If he had listened to what I said he would have recognised that fact, but he was determined to make yet another speech about Western Heritable. That being so, I am quite happy to reply to the points he made.

The amendments we are dealing with are simply to tighten up the principle already agreed in the Bill before it went to the other place. As I made clear in my original explanation of the amendments, they relate to cases where there was a change during the year where a new rent was registered after a rent had been previously charged, where a new rent agreement was brought into account to replace an earlier rent agreement or where a rent was registered where there was previously a rent agreement.

11.45 p.m.

The purpose of the Lords amendments is to ensure that the general principle of the Bill, which is to limit the increases to £1·50 a week, should be maintained. It is very difficult to say how many tenants could be protected by this particular tightening up, but we reckon that it may benefit between 2,000 and 3,000 tenants.

The other matters that the hon. Gentleman was raising relate to Clause 7 without its being amended by the Lords amendments at all. The hon. Gentleman has been talking about the original provisions of that clause.

Where does the figure of between 2,000 and 3,000 come from? On 5th February I specifically asked the Under-Secretary about this matter and was told:

"I should not like to put precise figures on it, but it is certainly about 100 ".—[Official Report, 5th February 1975; Vol 885, c. 1409.]
What has changed between 5th February and now to make 100 suddenly become a figure of between 2,000 and 3,000?

I do not know what the hon. Gentleman was discussing on 5th February but it certainly was not the Lords amendments which we are now discussing. The hon. Gentleman has an obsession, a sort of guilt feeling about the Western Heritable houses, but he must listen to what I was explaining now —that is, the Lords amendments, with which, as I understand it, we are meant to be dealing.

We estimate that these amendments may affect about 2,000 or 3,000 tenants. The hon. Gentleman is talking about something entirely different. He is talking about the original provisions of Clause 7 and he is relating those to the particular case of the Western Heritable houses. Even there his explanation of the events is not only misleading but actually inaccurate as a description of the events in some particulars.

We have been over all this ground on numerous occasions. The hon. Gentleman's constituents and my constituents understand the position very well—at least mine do, because I have explained it clearly to them. I am not sure whether the hon. Gentleman's constituents have had it explained quite so well, because they have the hon. Gentleman to put up with and his explanations of the position are sometimes less than accurate.

The basic position was that the "freeze" order in March 1974 was meant to apply, as I made perfectly clear at the time and have done so subsequently, to the Western Heritable tenants in the same way as it applied to everyone else. Following a decision at the sheriff court within the last month or two, it has been decided that the order was defective and does not apply to Western Heritable tenants who signed rent agreements with the company before 8th March 1974, although the first payment of increased rent under the rent agreement had been deferred until after that date—namely, to 1st April 1974.

The doubt that was cast on whether the order covered those tenants was cast very soon after the order was made and certainly before the municipal elections in May 1974. But I made it absolutely clear then to my own tenants, and at a meeting at which representatives of the Kingspark tenants, who are in the hon. Gentleman's constituency, were also present, that if the order was subsequently found to be defective by the courts there was nothing that the Government could do about it, because to introduce another order would mean doing something retrospectively, which was not within our powers under the Counter-Inflation Act 1973, under which the order had been prepared.

Far from explaining that after the election, I explained it as clearly as I could not only to my own constituents but also to the hon. Gentlemen's constituents, as represented by the King's Park Tenants Association, in the middle of the election campaign. The Conservative candidates used it as one of their planks during the campaign. I am very glad to say that in my constituency of Glasgow, Craigton for the very first time we had a completely clean sweep. We dislodged the existing Conservative councillors despite their attempt to use this particular matter during the election campaign. If the hon. Gentleman is saying that I misled my constituents during that campaign he is maligning me, because he is inaccurate. I explained the situation to my constituents perfectly clearly and, as I have said, I explained it to the hon. Gentleman's constituents as well.

The hon. Gentleman has never come clean about the rent freeze. I dare say that in Cathcart he pretends to be in favour of the rent freeze, but he spoke against it in this House. At best, therefore, the hon. Gentleman is equivocal about the rent freeze.

The hon. Gentleman said a lot of highly inaccurate things about me. Therefore, he must listen to his own record in the matter. Basically, he has been against the rent freeze, although he has been careful not to make it explicit when dealing with his constituents.

The anomaly is that those who signed the rent agreement will, because of the provisions of the Bill, be paying rather higher rents than those who stood out against it. The hon. Gentleman is worried not because it is a matter of principle or of gross inequity but because he recommended his constitutents to sign the rent agreement. In fact, he initiated the rent agreement with the Western Heritable Investment Company and then had a meeting with his constituents at which he recommended that they should sign the agreement. They signed it and are worse off than if they had not done so.

That worries the hon. Gentleman considerably. Indeed, he wants to mitigate his concern or to get himself off the hook. I think he used that expression on a number of occasions and has used it in a conversation with me. If he is to quote back things that I am reputed to have said to others, perhaps I may be allowed to say that. The hon. Gentleman wants to get off the hook by the simple process of making sure that those who did not sign the rent agreement do not gain by it but will pay the increases that the people who signed the rent agreement pay. That is the anomaly that the hon. Gentleman wishes to have removed.

That was an argument on Clause 7, so it is nothing to do with these Lords amendments. However, there is a need to put the record straight. Since the hon. Gentleman is determined to pursue these matters, I have put the record straight.

When did the hon. Gentleman deny the publication "Millan gives assurance on rents" before the election? I have no recollection, nor have my constituents, of the hon. Gentleman denying that until after the election.

I gave no assurance to anybody that new legislation would be introduced to countermand the order. I explained the position clearly to my constituents. They will be able to confirm this. I also explained the situation to the hon. Gentleman's constituents who were present at one of the many meetings that I held regarding the matter.

Question put and agreed to.

Subsequent Lords amendment agreed to.