House Of Commons
Monday 16th June 1975
The House met at half-past Two o'clock
[Mr. SPEAKER in the Chair]
Brookwood Cemetery Bill Lords
Order for Second Reading read.
To be read a Second time tomorrow.
Oral Answers To Questions
Prices And Consumer Protection
Car Parking Contracts (Exclusion Clauses)
asked the Secretary of State for Prices and Consumer Protection whether she will now introduce legislation to ban exclusion clauses in contracts of car parking businesses.
This is one of the problems on which the Law Commissions' recommendations are awaited. As soon as the Commissions' report is received we shall consider urgently what needs to be done.
Is my hon. Friend aware that we have been awaiting the report for several years and that the delay is quite disgraceful? Is he also aware that in the meantime motorists are paying very high rates to park their cars where they have no alternative but to leave their keys in the ignition and when an employee of the car park smashes up a car the motorist has to pay the bill because of an iniquitous exclusion clause in the contract? What is my hon. Friend proposing to do about this? Does he not agree that it is a disgrace?
I agree that it is a disgrace. I am sure that I do not need to spell out to my hon. and learned Friend that the Law Commissions are independent and not subject to the control of the Department. My hon. and learned Friend must make up his mind how much he wants to preserve the independence of the Law Commissions. He cannot have it all ways. We have made our position clear. I shall be happy to convey to the Law Commissions the point of view that my hon. and learned Friend has expressed.
They know it already.
At the end of the day the Law Commissions are not subject to my control or to my Department's control.
Does the Minister not agree that if the Law Commissions are not subject to the Government's control, the Government are not dependent on the Law Commissions and not obliged to wait until the Law Commissions produce their report? If they are so dilatory in producing their report, why will the Government not act independently of them?
If the hon. Gentleman had followed earlier exchanges on the subject he would realise that the question of exclusion clauses is more complex in relation to services than in relation to goods. The Law Commissions are within one or two months of completing their report. There are complications because of the legal differences in Scotland, England and Wales. This is causing some delay. However, nothing the Government could do in this sector could be as comprehensive as that which we hope to do in a relatively short while, based on the report which the Commissions have almost completed.
asked the Secretary of State for Prices and Consumer Protection by how much the retail price index has risen since 28th February 1974.
asked the Secretary of State for Prices and Consumer Protection what is the current rate of inflation based upon a grossing-up to an annual rate of the last three months' increase in the retail price index, and calculate on the same basis as the three month figure of 8·4 per cent. quoted by the Chancellor of the Exchequer as being the grossed-up annual rate of inflation for August 1974.
asked the Secretary of State for Prices and Consumer Protection what is the latest rate of price inflation expressed at an annual rate.
The retail price index has risen 25 per cent. over the last 12 months to May 1975 and 32·3 per cent. since February 1974. The change over the last three months, grossed-up to an annual rate, is 53·1 per cent. but the figures are distorted by the measures which the Government have had to take for the reasons my right hon. Friend gave in his Budget Statement.
No matter how much the right hon. Lady may talk about the figures being distorted, is she not aware that the disgraceful figure she has just announced is her personal contribution to 16 wasted months of Socialism? Is she not ashamed of being a member of a Government who are bringing this country to such a state that people going abroad on package holidays now purchase their currency a week in advance to avoid the effect of inflation? As the right hon. Lady is a well-advertised moderate in the present Government, will she now begin to disown the wild Socialist policies that are bringing the country to its knees?
The hon. Gentleman will know that over the last year-and-a-bit the Government have cut retail profits by 10 per cent., have announced a three-months' gap between price rises, introduced subsidies on basic foods, introduced investment relief into the Price Code, introduced maximum prices for subsidised food, and extended unit pricing. On every one of those measures the Opposition have attacked us, opposed us or, at best, grudgingly agreed with us. When the Opposition realise that indignation is no substitute for a positive policy I shall listen to them, but not before.
I entirely accept the point which my right hon. Friend has just made, but will she also take into consideration the fact that the time has come for very drastic measures to be taken? Will she consider the whole question of introducing a price freeze on certain basic commodities? I accept that this is very difficult. Nevertheless, will she now consider the proposals by, for example, ASTMS and other organisations, to have a price freeze on basic food commodities?
I am interested in any such proposals, including those by trade union leaders. However, it must also be accepted that there must be a general restraint on incomes if a price freeze is to serve any purpose.
Does the right hon. Lady not accept that we have moved a considerable way from the Chancellor's claim of 8·4 per cent. inflation last August, doubtless based upon a formula for the full-hearted content of the British people? Does she not further agree that over half of last month's staggering price rise was due to the action which the Chancellor took and action which probably the Secretary of State for Employment failed to take in relation to the social contract? When will the Government take some action through the Department of Prices and Consumer Protection to prevent this appalling rate of inflation continuing?
I have already indicated to the hon. Gentleman—and he knows it very well—that one of the main reasons for our inflation is not that we are a high-wage country but that we are a low-productivity country. The reasons for that go far back into our recent history. What is essential is to take, over the next couple of years, the investment measures that will enable us to become a high-productivity country. For the present, we require from all sections of the community, including the Opposition, acceptance of restraint for a couple of years, which will enable this process to begin.
Is my right hon. Friend aware that the measures she has taken are welcomed as an effort to control the rising cost of living? But does she realise that many of the price regulations are not being enforced? I recognise that it is impossible to enforce them from trader to trader, but is it not possible to have random checks to ensure that they are observed?
I thank my hon. Friend for what he said. Only recently I instituted a series of special inquiries into individual prices which go beyond the general control of the Price Code. The first reports from those special inquiries are expected very shortly.
is the right hon. Lady aware that she recently attracted widespread public support for her announcement in the referendum campaign that she would rather resign from public life than remain committed to an administration pursuing policies in which she did not believe? Will she apply the same high standards and resign from public life if her colleagues in the Cabinet do not introduce measures at once to bring down the disastrous rate of inflation?
Like so many of his colleagues, the hon. Gentleman always talks in general terms and never in specific ones. The whole difficulty about the Opposition's approach is that they try to replace policy with expressions of indignation and never face up to the problems of making a voluntary incomes policy work.
To take a specific example, has my right hon. Friend had any information from the suppliers of petrol that they will now be able to reduce their prices because of the reopening of the Suez Canal, the closing of which caused them to increase prices some years ago?
We shall certainly be closely watching the effects on oil prices of the reopening of the Suez Canal. I also assure my hon. Friend that the Price Commission, with our encouragement, is chasing up all falls in raw material prices to make sure that they are carried through in the final prices.
As the right hon. Lady has presided over the fastest rise in prices this century—rises which were largely avoidable and which will bring serious economic and social consequences in their wake—does she agree that in the circumstances it would be honourable to resign? Instead of giving lectures and quoting statistics, will she turn her attention to the consequences, in human terms, of the devastating rate of inflation—for which her Government are responsible—on the people who have not gained the spoils of the big battalions to protect them against the effects of inflation—people who will suffer a sharp cut in living standards, whose jobs are in danger—[HON. MEMBERS: "Speech."] I can understand that Labour Members do not want to hear this. Does not the right hon. Lady agree that her Government have created the most unfair society in this country since the war?
That was, perhaps, a speech rather than a supplementary question. I do not think that calling for resignations across the Floor of the House is a substitute for thinking about ways to solve the nation's problems. The hon. Lady knows perfectly well that her Government's efforts to deal with inflation led straight to the three-day working week. We are trying to find a better answer, based on a voluntary policy. The Opposition would do better to support us and the social contract rather than perpetually undermine it.
On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Secretary of State's answer, and to give her an opportunity for her to hear our proposals, I wish to give notice that I shall seek to raise the matter on the Adjournment.
asked the Secretary of State for Prices and Consumer Protection what is the latest annual rate of inflation according to the Price Commission index.
In the 12 months to February 1975 the Price Commission's index rose by 19·6 per cent. This index was published in the most recent quarterly report.
As the rate of inflation has more than doubled in the last three months, and as the Price Commission stated that any increases in prices have been due almost exclusively to increases in wages, is it not clear that a policy that seeks the control of prices, except the most important price—the price of labour—may well be in the interests of the British Labour Party but not in the interests of the British people as a whole, and must be a highly damaging sham?
The hon. Gentleman owes it to the country not to make remarks that are quite as wild as that. It is not the case that the rate of inflation has doubled in the last three months. The figure that I gave was 19·6 per cent. on a 12-monthly basis; the figure today is 25 per cent. That is not a doubling by any mathematics. I have made it clear on many occasions, as have my colleagues in the Government, that we are concerned about the level of labour costs. Incidentally, they are not just wage costs, for labour costs generally go far beyond that. The hon. Member simply cannot wave aside the problems of establishing either a voluntary or a statutory incomes policy. We have had long experience of the latter.
Does my right hon. Friend not agree that it is somewhat over-simplistic to argue that there should be a total freeze on prices at the same time as it is argued that there should be greater investment in industry? Do not many people find motivation for investment in a mixed economy in the profitability on their return? While profits need to be controlled, to argue that there should be no return on investment is likely to have major implications in terms of jobs.
My hon. Friend is leaping to exactly the opposite conclusion to that to which the Opposition leapt. We have neither said nor denied that there would be a price freeze; we have simply said that all options have to be open at present. It would be as mistaken for my hon. Friend to leap to one conclusion as it is for the hon. Member for Oswestry (Mr. Biffen) to leap to the opposite conclusion. The straight truth of the matter is that these issues are under discussion at present, as the House well knows. The investment relief was introduced by the Government, for the first time, specifically because we recognised the importance of there being the highest possible level of investment in the public and private sectors.
In view of the Chancellor's stated intention to halve the rate of inflation over the next 12 months, will the right hon. Lady say what base figure the Chancellor is using?
I would like the hon. Gentleman to ask my right hon. Friend that question because I am not quite sure of the exact phrase to which the hon. Gentleman is referring.
Is it not absolutely wrong to suggest that the basic cause of inflation is wage increases? While wage increases undoubtedly have a marginal effect on inflation, is it not the case that there are other factors of much greater importance? Is it not clear that in Chile, where a totally free enterprise system has been introduced, inflation has increased by 150 per cent.? Does my right hon. Friend not agree that it is not true to suggest that by lifting all price restrictions inflation is automatically held back? On the contrary, is not private enterprise the biggest ingredient in the creation of inflation?
My hon. Friend must accept, as I must, that in recent months labour costs have been the main force behind inflation.
I do not accept that.
I repeat that these are labour costs including the costs of the professions and the self-employed. It does not mean costs which fall only to trade unions. My hon. Friend and I would agree that we live in a relatively low-wage economy and that it is understandable that people try to force up their wages in this situation. The centre of our problems lies in the fact that we have to increase productivity to the extent that we can pay decent wages. These are not problems created over the last year-and-a-bit by the Government.
asked the Secretary of State for Prices and Consumer Protection what plans she has to mitigate the effects of inflation on food prices for those on below average incomes.
The food subsidy programme, together with the operation of the Price Code and other counter-inflation measures, will continue to provide substantial benefit to those on below-average incomes.
Is the hon. Gentleman aware that, due to the failure of his Government to take action sooner, we now have the same inflation rate as Brazil, and that for it to be cured everyone in this country will have to take a cut in their standard of living. During this process, what new measures has the hon. Gentleman in mind to protect the old and the weak, who will necessarily be most at risk?
As the hon. Gentleman will appreciate, the Chancellor of the Exchequer is undertaking consultations with both sides of industry on the future programme. In the meantime, the protection which we give to the lower income groups remains.
In view of the scaling down of food subsidies, will my hon. Friend resist the introduction of VAT on food as practised in the Common Market?
I have no knowledge of any such intention, but my hon. Friend will fully appreciate that that is a question for the Chancellor of the Exchequer, and that it would be utterly wrong for me to try to answer it.
asked the Secretary of State for Prices and Consumer Protection if she will make a statement about the results of her voluntary agreement with retailers and manufacturers to restrain the prices of certain essential household items.
The voluntary agreement covers two lists of goods: one of items which retailers keep on continuous offer, and the other of items on which manufacturers concentrate their promotional price-cuts. The combined price of the retailers' items increased by 19·6 per cent. between May 1974 and April 1975, and that of the manufacturers' items by 22·4 per cent.; together they rose by 20·1 per cent. In the same period the retail food index rose by 25·1 per cent., and the index for manufactured foods by 34·6 per cent.
I am glad to hear of that progress, but does my hon. Friend agree that this is an area of price restraint in which the housewife does not understand the system, and that on occasion it can be counter-productive, because she soon forgets the cut in prices at the beginning of the special offer period but remembers the often steep rise in prices at the end? Therefore, could any indication be given of total savings to the consumer as a result of the agreement? In any renegotiation of the agreement, will my hon. Friend try to improve the public's understanding of the system?
The saving is between 5p and 6p in the pound. I fully appreciate the point that my hon. Friend makes. It is difficult for consumers to appreciate that they are continually receiving this marginal benefit from the existence of the voluntary agreement. We are discussing what price control, and so on, is to follow at the end of the voluntary agreement, or whether the voluntary agreement is to continue.
Will the Minister give an assurance that in his efforts to continue voluntary agreements with retailers he will explore all possible means of ensuring that small self-employed shopkeepers are fully represented in the negotiations?
We shall do what we can to ensure that that is done. We fully appreciate the importance of the small shopkeeper, particularly to those confined to shopping in a limited locality, such as the elderly.
When the Department has this relative success with private industry, why is it so clearly unable to have any success with the publicly-owned industries, particularly electricity and gas, in keeping down the cost of their products to small consumers—for example, the cost of consuming electricity through a prepayment meter and the cost of consuming small amounts of electricity and gas? When the Department is having this success with the private sector, why cannot it achieve the same success with the industries owned by us and controlled by my right hon. Friends and the House?
I congratulate my hon. Friend in getting his speech in early. There is a subsequent Question on this subject on the Order Paper.
Reverting to the question asked earlier by the hon. Member for Liverpool, Walton (Mr. Heffer), does the Minister agree that even if the voluntary agreement is not renewed there is no point in using Section 2 of the Prices Act for a total freeze? To do that when underlying costs are rising would simply be further to lower investment and increase unemployment. Will the hon. Gentleman give an assurance that the Government will not impose a total freeze?
The Opposition call on us to take action to curb prices and then spell out their opposition to every option. We are willing to consider all options constructively.
asked the Secretary of State for Prices and Consumer Protection what assessment she has made of the impact of the Price Code on the level of the retail price index in the light of the recent trends in raw material and other costs.
The Price Code continues to exert a useful influence on the RPI. Precise quantification is not possible.
Even so, is there not now ample evidence to the Price Commission and the right hon. Lady's Department to suggest that margins in both industry and commerce are narrow and competitive? In those circumstances, does she not agree that to call for a freeze on prices, or, for that matter, on wages, is misconceived and nonsensical?
There has been a substantial fall in profit margins in the past 12 months, and profits are not now contributing to the rise in prices, but I do not think that the abolition of the Price Code, which the present Government inherited from their predecessors, would be a very helpful prelude to a major national attack on inflation.
In view of the British Steel Corporation's reduction in the price of certain steels, how soon can my right hon. Friend give an estimate of the effect that that will have on the price of refrigerators and other household items?
I would need a little time to consider that question from my right hon. Friend because it takes about four to five months for the prices of raw materials and of processing materials to work their way through to the retail level. As I have said, the Price Commission is already under instructions to follow through all falls in raw material and industrial material prices to the point of the retail trade.
asked the Secretary of State for Prices and Consumer Protection whether she will review the Price Code in the light of the latest CBI industrial trends survey.
I have just amended the code to help exporting firms and reinforce the investment relief. I have no plans for further changes at present.
Does the right hon. Lady accept that the recent survey showing a reduction of investment intentions highlights the fact that investment relief, as it is called, is a restriction, and that 45 per cent. of investment is supported by retained profits and that for income tax purposes 100 per cent. is written off? Surely investment relief should not be substantially increased if it is an impediment rather than an assistance to investment.
If it is an impediment, it is surprising that industry welcomed its introduction and also pressed for its increase from 17½ per cent. to 20 per cent. It is a basic part of the Government's philosophy that where policies can be undertaken to increase investment which itself will create new jobs, it is very much in the national interest for that to be done. It is still a surprise to me that the previous administration had no investment relief of any kind in its price code.
Is it not a statistical fact that price increases have been at their steepest since we appointed a Secretary of State for Prices and Consumer Protection? Is it not possible that that is not wholly coincidental and that the more profit margins are restricted the more capital investment is restricted, and the more capital investment is restricted, the more expensive things become?
The hon. Gentleman's argument would be stronger if he would recognise that in the last two years there have been massive increases in both oil prices and world commodity prices, which, it is generally accepted, have been the main forces behind inflation until the last few months. In the last few months, in consequence of thresholds and other claims, there has been a take-over by the cost of income from the cost of commodities. But there is no doubt that the cost of commodities was the original engine behind the rate of inflation that we now have.
In view of that answer, will my right hon. Friend guarantee that she will resist any further relaxation in the Price Code in foreseeable economic changes that may be coming in the near future?
No, I could not give that guarantee, because in certain circumstances a relaxation of the Price Code, like the recent investment relief relaxation, is directly related to the employment position. Representations have been made to me by trade unions, for instance, with a view to making such a relaxation. There must always be a balance between trying to keep prices down and keeping employment up.
Is the right hon. Lady aware that one of the most depressing and significant aspects of Question Time today has been her unwillingness to rebut suggestions that we might have a statutory prices freeze? Will she take this opportunity here and now to hold out relief and hope to the industrial and commercial community by saying that she would not countenance a prices freeze because of the bankruptcy that it would inevitably involve for British industry and commerce?
The hon. Member will appreciate that, as my hon. Friend the Minister said earlier, it is the first responsibility of the Government to leave all possibilities open in dealing with the rate of inflation.
Garages (Code Of Practice)
asked the Secretary of State for Prices and Consumer Protection what report she has received from the Office of Fair Trading regarding the discussion it is having with garages on a code of practice; and what action is proposed.
The Office of Fair Trading announced on 27th May that its discussions with the motor trade had led to the adoption by the Scottish Motor Trade Association of a code of practice in respect of used cars. It is hoped the rest of the United Kingdom trade associations will follow the Scottish example.
I thank my hon. Friend for that reply. Does he not agree, however, in view of the increase in petrol and other motoring costs, that there is greater need for consumer protection for the motorist than ever before? Will he look again at the Consumer Association report, which showed that one-third of the cars leaving garages were inadequately maintained and two-thirds were dangerously inadequately maintained? Does not something need to be done, and done urgently?
Yes, Sir, but it is a matter of doing something as urgently as possible which will be effective, when dealing with a series of outlets scattered throughout the country, many of them very small. I am sure that my hon. Friend will go along with me in congratulating the Director General and the Scottish Motor Trade Association on the first breakthrough in this sector. The schedule of inspections that we have agreed to is very valuable, and no obstacle has been put in the way of progress in England and Wales; it is just that the Scots started earlier. We hope to see this extension into England and Wales, including new cars and servicing generally.
I congratulate the Scots on their forward movement, but what is my hon. Friend proposing to do to stimulate the English and Welsh into doing likewise? Can he show to the learned and independent members of the Law Commission how much progress has been made in other sectors, so that they may try to sink their international difference?
My hon. and learned Friend seems determined to return to a point that he made earlier. I would probably be rebuked by you, Mr. Speaker, if I followed his example. For England and Wales, the Director General assures me that he is not meeting any obstacle from the trade, and that the trade is co-operating fully and willingly in attempting to establish a good code of practice in England and Wales. We hope that he will reach a suitable conclusion soon. We expect that he will come to some agreement by about the turn of the year, or early next year.
Food Manufacturers' Charter
asked the Secretary of State for Prices and Consumer Protection whether she will make a statement about the Government's policy towards the proposals in the food manufacturers' charter.
The trade has agreed that there should be such a charter. I am discussing this question with it at the present time.
In view of the rapidly rising costs of manufacturers, does the right hon. Lady agree that it is urgent to have a move towards a voluntary policy which will take account of all the costs with which manufacturers are faced directly as a result of the Government's voluntary wages policy?
It is the Government's policy to enter into voluntary planning agreements with industry, but the outline of the food charter is still in very general terms and we are discussing with them the details which the food manufacturers have in mind.
My right hon. Friend seems rather timorous—if I may use a Scottishism—about any attempt being made to impose a wage freeze. Will she tell us that she will not agree to the blandishments of the trade to have a free-for-all in prices, and that everything she has been doing in this respect will be kept up in the months ahead?
My hon. Friend need have no fear that I would like or want to see any kind of free-for-all in prices at present. That would be madness.
asked the Secretary of State for Prices and Consumer Protection if she is satisfied with the effect of food subsidies on the cost of living.
asked the Secretary of State for Prices and Consumer Protection by what percentage the payment of food subsidies has reduced the average cost of those items to which they apply.
asked the Secretary of State for Prices and Consumer Protection what effect food subsidies have had on the cost of living; and if she will make a statement.
The present saving in the General Index of Retail Prices as a result of food subsidits is estimated to be 1·4 points, while the reduction in the average cost of subsidised foods is estimated to be about 20 per cent. These savings are particularly helpful to low-income families which have to spend a high proportion of their money on food and other necessities.
The right hon. Lady was asking for specific suggestions. As food subsidies are making only a marginal impact on food prices, yet adding substantially to inflationary pressures because they are increasing Government spending, would it not be more sensible to reallocate these blanket, indiscriminate and wasteful subsidies to those families and pensioners who are being hit worst by the ravages of inflation?
The hon. Gentleman must have misheard what I said in my answer. I made it clear that food subsidies are making a 20 per cent. difference to the prices of subsidised foods. In terms of benefit, they are four times as valuable to a family with an income of £20 or under per week as to a family with an income of £80 or over per week.The Opposition are in little position to criticise when, in government, for years they pursued a policy of subsidising the nationalised industries, where the benefit was 2 to 1 in favour of the high-income groups.
As my hon. Friend's answer clearly demonstrated that, in terms of subsidies on basic foods, the less well off are receiving substantial help, will he give an undertaking, in view of the efforts which will be made to re-vamp the social contract in the weeks ahead, that subsidisation of basic foods will continue in order to assist the less well off in our community?
It is our intention that the subsidies on food shall continue. We have announced the programme for the following year. There will be no cut in them until the next financial year. There is no question of the subsidies being terminated. It is a matter of their being phased out systematically.
I accept the point that the less well off are being benefited to some extent as a result of the food subsidy policy, but will not the right hon. Gentleman take on board the reasonable point, put by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), that if the Government wish to continue to direct most help towards these people it could be more effectively and perhaps more generously done direct through the social services benefit system?
I appreciate the hon. Gentleman's attempt to be constructive. In the Chancellor of the Exchequer's announcement of public expenditure cuts, the increases that were scheduled for the social services were not in any way cut. For example, there will be a further uprating of pensions and associated benefits in November, the non-contributory invalidity scheme, and the help for the one-parent family.
If the food subsidy system is so egalitarian in its nature, why are food subsidies being phased out progressively?
It was never envisaged that food subsidies would be continued permanently. As my hon. Friend will remember, at the time when he supported the original programme in the House it was made clear that food subsidies were an interim measure. My right hon. Friend made it clear that in the long term she was envisaging more on social security benefits—for example, if a new system such as that for one-parent families could be devised—and that we would move away from food subsidies. It was always envisaged that the food subsidies would be short-term, and the Act was brought in for two years.
What effect have food subsidies on the retail price index? Would it not be better, for example, to look at the rating system, and methods of reforming it?
The amount being paid in food subsidies is £550 million, in real terms. I ask the hon. Gentleman to read my answer, in which I stated their impact on the retail price index.
If the hon. Gentleman is right—and I accept it—that the value of food subsidies to a man on £20 a week is four times that to a man in a higher income group, does this not show, in itself, that there is a great deal of waste in the system and that it distorts the value of food in relation to other commodities in our community? Would it not be much better to give the lower income groups the help they undoubtedly need much more directly?
The hon. and learned Gentleman is aware that we have looked at a whole series of alternatives. Food subsidies were introduced because they could apply immediately. In addition, experience of schemes introduced by the Opposition—I accept their motives, but their methods were wrong—such as the family income supplement, and so on, all had a low uptake and did not get to the people who most needed the help.
Does not my hon. Friend agree that subsidies on essential foods, such as milk, bread, butter and cheese, have kept food prices in this country much lower than those in neighbouring European countries? Would it not be possible at the point of sale to show the amount of the subsidy to the consumer so that she could appreciate the benefit of the Government's action in subsidies?
The difficulty about that suggestion is that in a period of high inflation various changes would make it difficult and possibly confusing to give such information. My hon. Friend should also bear in mind the risk that if too much information is given at the point of sale, at the end of the day the consumer ends up getting no information.
Does the hon. Gentleman acknowledge that as the average family has to spend over £12 a week more than it did last year, and as poorer families need £10 a week more, and as the pension for a married couple will have to go up by £5 in December to restore its purchasing power to the level of last July, in this context the 85p a week that food subsidies are saving families is insignificant and irrelevant? Could not the Government have helped people far more by restraining inflation instead of trying to conceal it?
The hon. Lady states the obvious when she says that it would be better to restrain inflation. Both parties have been trying to find effective methods of doing just that, and we have invited the co-operation of both sides of industry in achieving an agreed policy. The hon. Lady constantly repeats the record and I congratulate her on having had it played on the radio for the first time today, but no doubt the listeners will become as familiar with it as we are. So far, the Opposition have not come up with a single alternative.
asked the Secretary of State for Prices and Consumer Protection if she will make a statement on the implementation of the Government's proposals to scale down food subsidies.
asked the Secretary of State for Prices and Consumer Protection if she will make a further statement on her proposed phasing out of food subsidies.
We have not decided the adjustments to be made in particular subsidies in 1976–77. The position will be considered nearer the time in the light of developing economic conditions and the expected price movements for the various subsidised foods.
I accept the need, expressed on all sides of the House, to help those on low incomes, but does the hon. Gentleman not agree that confidence in the pound sterling will not return until we, as a nation, stop subsidising consumption? Will that process not be painful for all sections of the community?
I do not agree with that conclusion. It is not necessarily valid. There are far more important factors which relate to confidence. I do not think it did confidence any good to have such an irresponsible speech as that which we had from the Leader of the Opposition at the weekend.
Since it was the Government's argument in favour of food subsidies that they protected those on low incomes, is that not a reason to retain them? Will it not be much more difficult—
It is the Common Market.
It is nothing to do with the Common Market. Does my hon. Friend not agree that it will be much more difficult to get an acceptable voluntary incomes policy if food subsidies are phased out, because of the consequential rise in the price index? Does my hon. Friend not agree that the trade unions will not accept that there should be an increase in food prices at a time of income restraint?
I accept the problem put by my hon. Friend. The change that has been envisaged for next year—and I stress that it is next year; there are many months before the change comes into operation—will still add only half per cent. to the cost of living at a time when the Chancellor envisages a substantial change in the rate at which the cost of living is increasing.
asked the Secretary of State for Prices and Consumer Protection what has been the value of food subsidies to the average family in Great Britain for each week; and the value for each person, during the last 12 months.
The latest estimate of the value of food subsidies to a typical family of two adults and two children is about 75p per week. During the last 12 months the estimated average value per person has varied between 15p and 23p per week.
Does my right hon. Friend agree that the subsidies have been of great help to millions of people and that this help has been insufficiently appreciated in the country? Does she also agree that the absence of that help would be noticed by those to whom a half of 1 per cent. increase in the price of food is a great deal?
I thank my hon. Friend for what he said. The Conservative administration did not see fit to increase family allowances at all, but food subsidies have been of direct help to people with several children to raise.
Is it not the case that out of the total amount of subsidies for the current year, namely, £550 million, £280 million is going to families with more than £50 a week and only £270 million to families with less than £50 a week?
The hon. Gentleman is falling into the common statistical error of comparing households which are mostly one- and two-person households—that is, pensioner households—with households which are normally four- and five-person households in the upper income brackets. If he were to look at the benefit per capita, he would find, as we have said, that the proportionate benefit to low income households is between three and four times what it is to high income households.
Advertising And Packaging
asked the Secretary of State for Prices and Consumer Protection what study she has made of the amount spent on advertising and packaging goods, and their respective contribution to prices; if she will take steps designed to reduce advertising and packaging expenditures; and if she will make a statement.
Estimated expenditure on media advertising was £870 million in 1973. A Government-sponsored study of the economics of advertising will be published later this year. Expenditure on packaging is estimated at £1,700 million for 1974. The Waste Management Advisory Council, set up by the Government, is studying the possibility of eliminating excess packaging.
Is my right hon. Friend aware that many of us hope that before very long the Government will introduce controls on the advertising of essential commodities? Even so, we believe that in the meantime it is essential to curb some of the obvious excesses of our society, such as unnecessary advertising and packaging. Is she aware that such a curb would be generally welcomed by the community?
I sympathise with my hon. Friend's anxiety, especially in respect of excessive packaging, for much of which there is no justification. With advertising it is very much a matter of looking at the facts in each case. Sometimes advertising has the effect of lowering costs and at other times of raising them. My hon. Friend will be aware that my Department is in close consultation with the industry about ways in which the position may be improved.
No one wishes to see excessive advertising, but will the right hon. Lady bear in mind that the survival of many newspapers, or at least their cost to the public, depends largely on the amount of advertising that they are able to carry?
Yes, that true. The real danger with advertising is that it can sometimes create a more inflationary climate than would otherwise exist. I have in mind the example of some of the advertising for financial credit schemes in 1973, at a time when the previous administration was trying to cope with a massive but out-of-hand boom.
On a point of order, Mr. Speaker. May I ask my right hon. Friend either to answer my supplementary now, or Question No. 10 now, or both at the end of Question Firm?
That is not a matter of order.
asked the Secretary of State for Prices and Consumer Protection if she will amend the Price Code so as to exclude the weighting of price increases in diabetic products with costs not related to their manufacture.
My right hon Friend told the House on 17th April that she had asked the Price Commission to look into the price of diabetic foods. It will be decided whether there is need for any action when we have seen the commission's report.
May I give my hon. Friend an example of the need for action? One of my constituents went to complain about an increase in the price of diabetic chocolate biscuits at Boots and was told that the reason for a massive increase was the big increase in the price of sugar.
I can understand the consumer's no doubt bemused reaction. However, it is interesting to note that although the price of sugar has risen massively, the price of sorbitol, which is a substitute, is still twice as high as that of sugar. We must wait until we have received the report and then consider what action may be taken
asked the Secretary of State for Prices and Consumer Protection whether she will arrange for an investigation of door to door selling and financing of central heating.
The Director-General of Fair Trading is already engaged in a review of doorstep selling. The financing of central heating installations will be covered by regulations to be made under the Consumer Credit Act.
Does the hon. Gentleman not agree that the Consumer Credit Act can be brought into this? Since some of the firms involved have been named in newspaper articles, would not this be an ideal situation for the Director General of Fair Trading to invoke Section 38 of the Fair Trading Act to warn those companies and to take whatever appropriate action may be necessary in the Restrictive Practices Court?
The hon. Lady will know that we discussed this matter at considerable length in the House last week. I am sure that we all very much regret that she was not able to be with us.
It was an Adjournment debate.
It may have been an Adjournment debate, but it was an extended one. We would have welcomed the hon. Lady's point of view. Dealing with the point about the Consumer Credit Act, I can tell the hon. Lady that we shall be introducing licensing in the autumn. That will be an ideal opportunity for the Director General to impose further discipline upon those who have behaved in what I know the hon. Lady would agree can be described as a shabby way towards the consumer. I am sure that the Director General will welcome any information that the hon. Lady can give about individual firms.
Does my hon. Friend accept that there are Labour Members who would join with the hon. Lady in calling for stringent action to be taken against those free enterprise contractors who exploit the consumer when selling central heating? Is it not worth reminding the House and the country that the best people to give advice on central heating are at the electricity boards and gas boards? Further, is it not the case that such advice is free?
That is extremely sound advice. It is valuable for the House to warn the consumer as often as possible of the risks he faces in buying from some doorstep salesmen. Most of them are decent, genuine traders. It needs only a small proportion of people trading in high-cost goods like central heating to do tremendous harm to large numbers.
asked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the latest report of the Price Commission.
The report deals with many topics, including movements in labour costs, and material costs. The report says that prices were still being affected by the increase in oil prices but once this worked its way through, rising prices would largely be due to rising labour costs.
In the light of the Price Commission report, does the right hon. Lady consider that there is any further scope for restricting price increases by limitations on wholesale or retail margins? Will she say whether her plan for continuing restraint of prices will take into account the danger of promoting unemployment through the erosion of profit margins, caused in many cases by a delay in approving price adjustments at a time of high and accelerating inflation?
As I have already said, we are trying to strike a balance between the needs of investment and the maintenance of employment, on the one side, and the need to reduce the rate of inflation, as far as possible, on the other. It is with this in mind that I have given the Price Commission additional powers to make special inquiries about individual prices while retaining a general structure of control over the profits of enterprises.
What is the Price Commission doing about the excessive cost of ice-cream, hamburgers, and so on, charged by street traders in the West End? Let us forget all these airy-fairy theories. What is it doing about that?
Since one of my hon. Friend's colleagues has asked exactly this Question, it would be unfair of me to answer it in reply to a supplementary question.
Consumer Advice Centres
asked the Secretary of State for Prices and Consumer Protection if she is satisfied with the number of consumer advice centres currently available.
In June 1974 there were about 35 consumer advice centres now there are about 60, including mobile units. In addition, there are 670 citizens advice bureaux, an increase of 45, most of which now deal with consumer problems.I would like to see this development go further when the economic situation permits. But at present the Government consider that the enforcement of consumer protection legislation, much of it new, including the Consumer Credit Act, must, within the constraints on local authorities' spending, have priority over new developments in consumer advice.
But will my right hon. Friend accept that the implementation of consumer advice centres is an important part of the social contract? Does she agree that in Labour's Programme 1973 we stressed the importance of establishing a nation-wide system of high street consumer advice and control units to which the consumer could go immediately and ask for the price control mechanism to be operated, instead of the present rather haphazard system? Will my right hon. Friend urge action to be taken on this?
I think that my hon. Friend will accept, coming as he does from one of the leading local authorities in this field, that there has been a very sharp jump forward in the last 12 months. Indeed, if I were to give him the figures from when the Government came to power in February 1974, he would see that there has been about a fivefold increase in the number of consumer advice centres as well as an increase in the number of citizens' advice bureaux. I assure him that I yield to no one in believing that these are of crucial importance, but it would be a mistake for Parliament to pass legislation and then not to finance the means of enforcing it as quickly as possible.
Is it not true that, on a cost-effective basis, citizens' advice bureaux are giving far better value for money than are consumer advice centres, particularly at a time when there is a great shortage of local authority funds?
I think that the hon. Gentleman would find it hard to sustain that argument. It depends very much on the citizens' advice bureaux at which one looks and in what area, because the citizens' advice centres are virtually all in metropolitan areas, with relatively high rent and rate costs to meet. But my strong impression from those advice centres which have been in being long enough to return effective reports is that in many cases they are more than saving their ratepayers the cost of running them. We are endeavouring to get full reports so that we can put a complete picture before the House, but as many centres have been running for only a matter of months, and in some cases weeks, the hon. Gentleman will appreciate that it will be a little time before such a report can be brought forward.
May I draw my right hon. Friend's attention to a change in practice in the consumer advice centre in my constituency, which is one of the two consumer advice centres in Scotland? Is she aware that the control of it is now in the hands of the regional authority and that, instead of the director of the consumer advice centre being able to drive a bargain with the retailer, problems now have to go through a cumbersome mechanism, with letters being written? This is disadvantageous to the customer.
I assure my hon. Friend that we have urged local authorities not that they devolve on the districts the major responsibility which was left with the county authorities under local government reorganisation but that, as far as possible, matters of consumer complaint should be dealt with locally, which gives a much more effective and helpful service.
Is the right hon. Lady aware that the high-powered and expensive expertise offered by gas and electricity consultative councils is not used a great deal by people who need the advice? Therefore, will she discuss with the gas and electricity boards the possibility of these consultative councils having officers available to help the public in consumer advice centres?
The hon. Gentleman will be aware that the question of the structure of nationalised industries' consumer councils has been sent to the National Consumer Council for review, and we hope that one of the things which will emerge from it is a simplification of the direct service to the consumer, who often finds it easier to go to one point of assistance rather than to many.
asked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the referendum result as it affects the work of her Department.
Since I took office I have made numerous representations in the consumer interest on European Community matters, notably in relation to agricultural, competition and consumer protection policy. I shall continue to pursue these questions, and I am happy to say that the Commissioner in charge of consumer affairs will be coming here to see me shortly.
May I congratulate my right hon. Friend on the part she played in the referendum campaign, and may I say how anxious a number of us on these benches are that this House and her Department play their full part in European matters now that we are in the Community to stay? Is she aware that a number of our Socialist colleagues in Europe will be almost as interested as I am to learn the answer to my earlier supplementary question? If she could give it while answering this supplementary question, I should be extremely pleased.
I am interested in all aspects of consumer affairs, and, as in Europe, I endeavoured to get the agricultural Commissioner to consider more closely the interests of consumers in drawing up agricultural policy, so domestically I am anxious to persuade the electricity and gas boards to take into account the concern of small consumers for pricing policies which are less regressive than they are at present.
Ice-Cream And Coca-Cola
asked the Secretary of State for Prices and Consumer Protection if, in the interests of visitors and overseas tourists, she will refer to the Price Commission the prices being charged for ice-cream and Coca-Cola outside the Palace of Westminster.
I am concerned about the reports of excessive charges by some street traders, but a reference to the Price Commission would not be the right remedy for a problem which may well involve unlicensed trading.
Will the Minister take from me a suggestion as to the right remedy for the traders outside this temple? If they cannot observe the prices recommended by the manufacturers of these soft drinks and ice-cream, and continue to charge prices which are three times as much as they should be, thereby rooking tourists and visitors to this country, they should be chucked out. I suggest that we put up in St. Stephen's Garden and other places, notices of recommended prices, and so safeguard our tourists.
I am afraid that the hon. Gentleman is wrong if he thinks that this problem is confined to the immediate area of the Palace of Westminster. If it were, it would be easier to solve. This sort of abuse and cheating of tourists takes place on a wide scale in London, and one of the difficulties is pinning down the people concerned. As they are unlicensed, they are often difficult to trace. For this reason, I have invited the London Tourist Board to a meeting with me this week, so that we can discuss what further measures can be taken. I am sure that this and the publicity that the hon. Gentleman has now given to the matter will help tourists. I think that magistrates could also help by not imposing such derisory fines when these people are caught.
(by Private Notice) asked the Secretary of State for Northern Ireland if he will make a statement on the severe recrudescence of violence in Northern Ireland in the last 48 hours.
There were a number of incidents in Northern Ireland during Saturday and Sunday, 14th and 15th June. On Saturday 14th June two people were killed and 10 injured. The main incident was in New Lodge Road, Belfast, when a woman was killed and five persons were injured in the same attack when gunmen carried out a shooting attack; in addition, a man was killed by a gunman at the Garden Bar in the Tiger Bay area, and there were two other shooting incidents, involving injuries, in Belfast. There were also incidents involving injuries in Castlewellan, Co. Down, and Larne. On Sunday 15th June a man was injured by a gunman in the Village, Belfast. There were other attacks in Belfast but no one was hurt. The RUC is taking every possible means to deal with these incidents and 18 people have been charged with murder, attempted murder, and explosives and firearms offences in respect of those incidents.In addition, the House will be aware of incidents which occurred last Friday, including one in which a child was killed and her father seriously injured in Belfast; and in the early hours of this morning, weapons and ammunition were stolen from the UDR centre at Magherafeld, Co. Londonderry. Since the Provisional IRA cease-fire, violence has continued but its nature has changed. The cease-fire has brought into sharp focus a great deal of violence in, and between, both communities. This violence has got to be stamped out if the road forward in Northern Ireland is not to remain blocked for ever. The security forces are doing everything possible; the help of the people of Northern Ireland is essential to them in this vital task. As I stated in the answer which I gave to my hon. Friend the Member for St. Pancras, North (Mr. Stallard) on 11th June, during the period 1st January to 9th June 1975 52 attempted murder charges, 199 firearms charges, 35 explosive charges, 131 theft charges and 45 other security-type charges were made. These figures do not include murder charges, of which there have been 54 so far this year.
While recognising the volume of successful action taken by the RUC, to which, despite the right hon. Gentleman's efforts, not sufficient publicity is probably given, may I ask him two questions? First, what has been the rôle in these matters in recent days of the incident centres? Second, bearing in mind that uncertainty as to the future status of Northern Ireland is the breeding ground of violence, is it not the case that those who purport to issue and to give circulation to baseless and improbable rumours as to Her Majesty's Government's action in hypothetical circumstances bear a grave responsibility for the consequences?
The incident centres have been used both ways to try to find out who has been involved in the violence of the last few days, and, indeed, of the last three or four months. But I must make a basic point that is sometimes ignored. The cease-fire is not complete, it is not genuine and sustained, but in terms of the violence within a community, sectarian violence, the killings and the murderings are taking place from both sides of the community—indeed, on balance, in terms of murders, from the majority community. It is most important to get that into perspective.On the second question, of course uncertainty plays a part, but the more I look at it the more I realise that there are people in Northern Ireland who are motivated not by political ideals or ideas but by killing for the sake of killing. For instance, if the right hon. Gentleman could tell me what was involved in spraying a bus queue with machine-gun fire which killed and injured people, what that was supposed to do for the future of the community on either side, I should be obliged. I cannot sum it up. This is deeper and more senseless than perhaps any of us realises; and it is the cease-fire which has isolated it.
I know that my right hon. Friend would not want anyone to say anything which would inflame a difficult situation, but would he not agree that the catalogue of melancholy actions is getting deeper and deeper and that, so far, the political actions which we have taken do not seem to have had the effect that we had hoped for? Therefore, is not a complete reassessment of our political approach to Northern Ireland absolutely necessary because at the moment we are getting nowhere?
My hon. Friend has fallen prey to the English disease of pretending that there is a simple answer to the problem of Northern Ireland——
The present approach is not working.
My hon. Friend says that it is not working, which illustrates the same point. Years of hatred are involved in present events. There is one point: thank heaven the number of men in the Army who have been hurt or killed since the end of last year is much lower, which is a part of the story that I was trying to indicate of the different nature of the present violence.What is happening in Northern Ireland now is that, with the IRA violence very much lower, this violence is taking place in working-class areas—I use the phrase advisedly—and it is sectarian, inter-sectarian, Chicagoesque, and, politically, I do not believe that even a political solution would solve this problem. It will go on even if we came up with a nice simple solution to the problem of 800 years.
While one congratulates the RUC on its efforts to deal with these terrible incidents—efforts which have been well recognised by the welcome honour to Sir Jamie Flanagan which we heard about on Saturday—is it not the case that the Government are resolved, whatever may be said to the contrary, that our forces shall continue in support of the civil power until normal policing by the RUC throughout the Province is possible?
Yes, Sir. Support by the Army for the civil power is marked by the presence in Northern Ireland of 13,000 soldiers. But when the Army first went there five or six years ago it was for a particular purpose. There is no denigration involved in what I say, because I am fully aware of the incredible rôle that it has played. A great deal of what I have described today is not capable of solution by soldiers; it needs detective work and the sort of investigation that the RUC is used to. This is the nature of the change which has taken place, and I am grateful for this opportunity to illustrate the changed nature of the security situation in Northern Ireland. It would be wrong to pretend that the violence comes only from the minority community. That is not the case. It comes from both sides. We have to mark that well.
May I ask the right hon. Gentleman about a matter for which we do have responsibility? That is the raid on the UDR depot. Is it not the case that a large number of weapons were stolen and that it is suggested that between a minimum of three and a maximum of nine people only were involved? Does that not suggest that security was very lax? In order to prevent these weapons from spreading into very dangerous hands, has the area been cordoned off and have we sought and received the support of the authorities of the Republic on the border?
Without wanting to avoid answering those questions, I must make it clear for the record that the UDR and the Army, when it comes to answering Questions in the House, are the responsibility of the Secretary of State for Defence. However, I have, of course, looked into that matter this morning. A great deal is being done in regard to the raid on the UDR armoury last night. It would be foolish of me to give any indication of what is involved. It is not easy, when this sort of thing happens, for the spread of arms to one or other of the para-military organisations to be prevented. But it is a bad thing and everything is being done to deal with it. Without checking on the telephone, I do not know at the moment the preliminary view of the security forces. Here again. I would advise against jumping to conclusion as to which of the para-military forces carried out this raid overnight.
Does not my right hon. Friend agree that a monumental mistake was made when we entered, in a military sense, into the Northern Ireland situation? Would it now be wise to review the position from the point of view of a withdrawal and allow the people of Northern Ireland to try to sort out their own problems in their own way?
I have just reported that the people of Northern Ireland are trying to sort out their own problems in their own way. Their own way is not pleasant. I repeat a point of view which I sometimes hear. It is largely a working-class fight which is taking place in Northern Ireland. I refer to 1969. It is easy after the event to say that going in in that way was a monumental mistake. The Army was already there, because Northern Ireland is part of the United Kingdom. The job of this Government—as I am sure it was of the previous Government—is to obtain normal policing, with normal civilian forces to deal with this matter. It is not meant that the Army should deal with this kind of problem. However, it has a rôle to play there. I hope that when, from time to time, the number of soldiers in Northern Ireland is reduced it will not be seen as a case of pulling out but will be seen as a case of dealing with a situation in the best way.
Will the Secretary of State take it that the hon. Members on these benches from Northern Ireland agree with him that a section of the majority population has been involved in the most dastardly deeds? Will the right hon. Gentleman agree that the majority of the Protestant population in Northern Ireland completely dissociate themselves from these actions which are supposedly done in their name? Will he confirm that the Protestant population in the main are supporting, through their leaders, the members of the Royal Ulster Constabulary as it carries out its work? Will he say whether he takes heart that tomorrow in the Northern Ireland Convention, for the first time in Northern Ireland politics, an all-party motion proposed by the leader of the UUC, and seconded by the leader of the SDLP, condemning violence will be discussed? Does he not feel that that is an omen in the right direction?
Taking the hon. Gentleman's last point, when I first proposed to the House that there should be a meeting and a Convention, representing the people of Northern Ireland, composed of people sitting together and putting their minds to the political problems of Northern Ireland, there were many who believed that that was impossible. I do not deny the difficulty. This past weekend illustrates that. There are many signs in the Convention that the representatives of Northern Ireland stand a better chance than those from outside in working out their future. This is about the only comment I have made in recent months. Tomorrow's activities in the Convention show what can be done. I note with interest what the hon. Gentleman said. We have faced difficulties together. As he said today, he has spoken out against violence. That cannot but be helpful. The majority of both communities want peace, but there is a small group of people with guns. That is the measure of the political problem in Northern Ireland.
Is the Secretary of State aware that the reported detention of four men almost immediately after the indiscriminate shooting in the New Lodge area is very much to the credit of the soldiers involved? It is very reassuring. Will the Secretary of State say whether that action fairly reflects the growing success of the police and the armed forces in dealing with these terrible sectarian attacks?
The difficulty, when we move into the area of cases being considered by the courts, is that I must not get involved in matters which are sub judice. On Saturday afternoon the men of the Second Parachute Regiment—I saw the Officer Commanding on Saturday evening—apprehended some people shortly after the machine-gunning took place. I must leave the matter at that point. This illustrates the fact that the police are too stretched to patrol the interfaces, and that the Army has a rôle to play, and that it did on that occasion apprehend a number of people. We must await the outcome from the courts.I should like to pick up one of my hon. Friend's points. Those persons were not detained by me. They will go through the courts. That is the measure of the change which is taking place.
Uganda (Mr D Hills And Mr S W Smolen)
With your permission, Mr. Speaker, and that of the House, I should like to make a statement about the two British subjects imprisoned in Uganda.Hon. Members will know that Mr. Hills has been convicted and sentenced to death by a military tribunal on charges connected with his authorship of a book, as yet unpublished, which has been held to be critical of President Amin. Mr. Hills had previously appeared before a civil court, when similar charges against him were withdrawn by the prosecution and the magistrate stated that there was no case to answer. Mr. Smolen has also appeared before a military tribunal on a charge of hoarding under the recently introduced Uganda economic crimes decree. Under this decree he is liable, if convicted, to a maximum penalty of 10 years' imprisonment. However, President Amin is reported by Uganda radio to have said that he too will face the death penalty if found guilty. Mr. Smolen's case has been adjourned until 18th June. Her Majesty's Government have been embarked on an intense round of diplomatic activity since the danger to Mr. Hills' life first became apparent. I cannot at this moment indicate all the steps which are being taken, but a number of world leaders and Governments have made or will make representations to President Amin on humanitarian grounds on behalf of our two citizens. Some have requested that we should not reveal the messages they have sent, and I shall, of course, respect their confidences. It could in any case well be that their messages will thus be more effective. The House will wish me to express its appreciation to them and particularly to President Kenyatta, who has been in contact with President Amin on several occasions and through whom we have been aware of developments in the Ugandan position. I have instructed our acting High Com missioner in Kampala, Mr. Hennessy, to deliver the personal message to President Amin signed by the Prime Minister, and he has done so today. The normal means of communication between Governments are through diplomatic representatives. I have, of course, given very careful consideration to the report emanating from radio Uganda that President Amin has demanded that the message be delivered by myself or by my right hon. Friend the Secretary of State for Defence, although the Ugandans have not so notified us in any formal way. I wish to inform the House that I do not think it would assist good relations between our two countries in the long run if I were to deliver such a message under duress. [HON. MEMBERS: "Hear, hear.") But if, as I hope, humanity prevails in the cases of Mr. Hills and Mr. Smolen I should be very willing to discuss with President Amin in the near future the state of relations between our two countries. Amongst the subjects I would wish to raise with him is the future of the 700 or so Britons remaining in Uganda. I am grateful to hon. Members who refrained from pressing me to answer questions on this subject last week. The House will appreciate that it is necessary for me to continue to exercise reticence.
The Secretary of State has been good enough to keep the Opposition informed, through me, of what has been happening. I am most grateful for that. Is he aware that the Opposition have strong feelings of indignation and concern about this situation? I assure him that it is our intention to do everything we possibly can to help him with this tragic situation. For the time being I am sure that he is right in saying that exercising reticence is the correct procedure. The time will come when that situation no longer applies and the matter can be discussed. For the time being I am sure that the House supports the efforts being made by the Foreign Secretary.
Although it is right that the cases of these two citizens should receive widespread publicity, does the Foreign Secretary agree that unhappily there are other citizens, some of whom are known personally to Members of Parliament, whose fate is equally uncertain? Does he therefore accept, as we accept, that diplomatic activity is the right answer, especially amongst those Commonwealth countries which are members of the Organisation of African Unity?
I am much obliged to the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) and the right hon. Member for Chipping Barnet (Mr. Maudling). Yes, Sir; I think that in this matter diplomatic activity is the best chance we have of ensuring that humanity prevails. I propose to pursue this in an intense but, I hope, non-provocative way.
Does my right hon. Friend appreciate that those of us who have in the past interceded on behalf of prisoners will understand the difficulties under which he has been labouring, and that it is only because of that understanding that there have not been more vocal expressions of the disquiet which so many of us feel so strongly?
Yes, I recognise that. It was for that reason that I volunteered this statement today, in order that I could say to the House as much as possible in the circumstances and in order that the House should recognise that I feel that I have a responsibility here.
As Mr. Hills' brother-in-law is a constituent of mine, may I thank the Foreign and Commonwealth Secretary for his statement this afternoon? Those of us who have connections with these two unfortunate citizens wish to show forbearance in any way that we can in order to assist the excellent work which the Foreign Office and the right hon. Gentleman have done. But would he not agree that if barbarous sentences are meted out, this will be seriously deleterious to British-Ugandan relations in the future?
The sentence has already been announced in the case of Mr. Hill, and it is now for President Amin to consider whether he will exercise clemency in this case. I believe the whole House will join in making that request to him. As regards Mr. Smolen, he has not yet been convicted, but the sentence which President Amin has said will be carried out if he is found guilty appears to go beyond what is laid down under the economic crimes decree.
Sir Brandon Rhys Williams, supported by Mr. Clement Freud and Mr. William Hamilton, presented a Bill to amend the law relating to Parliamentary and local government elections; to enable electors to register an alternative vote; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 11th July and to be printed. [Bill 178.]
Orders Of The Day
[18th ALLOTTED DAY],— considered
Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Coleman.]
There are few moments when a debate on housing is not relevant, but I think the House will agree that this is an occasion when it could not have been more relevant.As the Secretary of State knows full well, and has made clear in recent speeches, the country is at the moment in the throes of a grave economic crisis, and a drastic curtailing of public expenditure is clearly necessary. Yet in the matter of housing, public expenditure has rocketed and new public sector housing in particular has often become hideously expensive. Subsidies and the local authority debt burden have soared. Yet, in spite of this, housing remains, I believe, our greatest social weakness. I suspect that many hon. Members on both sides of the House, like myself, will join in saying from their own experience in their surgeries and through their correspondence that of all the things which are put to them, housing is again and again the most serious and most worrying. The purpose of this debate is to establish, first of all, exactly what is happening and to explore what can be done. But it is also to point out to the Government the folly of some of the Government's present policies and the damage that their doctrinaire blindness is doing to ordinary men and women who are desperate for somewhere to live. What we are seeing is, on the one hand, profligate and often ineffective public spending and, on the other hand, bigoted policies over private tenancies, land and so on, which are clearly cruel in their effects. I want to look first of all at the present situation. It is perfectly true that the latest figures for starts from February to April are up on both the private and public sides. The private sector starts are up 40 per cent., public sector starts are up 3 per cent.—and that is something. But the comparison is with 1974 which was the worst year for house building since 1951. Has anybody any confidence at all that these present latest figures can be maintained in present circumstances? The percentage increase in private sector starts in particular is from a quite abysmally low level of 104,800 last year, which was the worst since 1953. I understand that the latest Department of the Environment Private Enterprise Housing Inquiry suggests that 1975 would see 135,000 private starts, which is 30,000 fewer than in any of the 15 years between 1959 and 1973. So, as I say, the improvement is only on the dreadful year of 1974. The fact is that at the moment we have substantial unemployment in the building industry, but we still have huge brick stockpiles. The reports from the industry on the sales side are particularly depressing. Although the improvement in mortgage availability is welcome, and the Secretary of State, I think, has been sensible in his emphasis on achieving stability, the number of mortgages supplied for purchases of new houses is slightly down between the last quarter of 1974 and the first quarter of 1975. At the same time, the £100 million cut in local authority mortgages will not help because this will hit the lower income groups who find it hardest to get mortgages. Taking the picture in public sector housing, the situation is clearly equally critical. Part of it was summarised in an article in The Times of 12th May when the planning reporter said:
The article goes on to say:"The economic crisis, for perhaps the first time, has focused public attention on the enormous and ever-growing cost of public housing programmes. On March 31st 1973 the local authorities' housing debt totalled £8,889 million. By the end of the current financial year it is estimated that the figure will be some £16,500 million."
Local authorities are faced in some parts with huge costs of building new houses. Yet some persist in addition in enormously expensive municipalisation programmes, though it must be said that the Government at last seem to be, partially anyway, stamping down on this. I will not embarrass the Secretary of State by quoting the highly pertinent articles of Messrs. Booker and Gray. I will not rehearse the examples of Camden and other areas, which are proposing to pay astronomical sums of money for new house building. Hon. Members and the country are familiar with these stories. But the Secretary of State has to recognise that the cost of new housing in the London area ranges from £20,000 to £50,000 a unit, and clearly that cannot go on. Interestingly enough, members of the GLC, or some of them, are coming to recognise this. In the Daily Telegraph of 23rd April there was a report that the Chairman and Vice-Chairman of the Policy and Resources Committee, Mr. Harrington and Mr. Stutchbury,"…there is a real possibility that if things go on as they are councils will find themselves unable to service their debts."
It was a gross over-simplification of the then Under-Secretary, whom we see here today, last week to"have told the ruling Labour group that they must face drastic cuts in their programme."
His actual words, the House will recall, were "to build without a ceiling." I think the word "subsidy" was incorporated in the course of revision of the Hansard text. His actual words were somewhat more to the point than the version which appears in Hansard. The public expenditure problem in housing is prodigious. It has been summarised recently in an illuminating paper by Dr. Edward Craven of the Centre for Studies in Social Policy, with which I am associated, which is to be published shortly. He says:"draw the attention of local authorities to the fact that they are able to build without a subsidy ceiling and that many local authorities could be building far more if only they had the will to do so."—[Official Report, 11th June 1975; Vol. 893, c. 402.]
Against this:"Throughout the 1960s, spending on housing represented about 5 to 6 per cent. of total public expenditure, even though this included a period during which a previous Labour Government was giving housing priority. In 1972–73, it still accounted for only 6 per cent. But then came the jump. There was a big increase in 1973–74; housing indeed was the only major programme to be specifically exempt from the December 1973 expenditure cuts. And by 1974–75 housing expenditure represented 9.4 per cent. of total public spending. In volume terms in that two-year period, housing expenditure went up from £2,047 million to £3,616 million, a 77 per cent. increase: in cost terms, it rose by a staggering 119 per cent."
What were the consequences of this? Dr. Craven continues:"Total public expenditure increased by only 14 per cent. in volume terms, and 22 per cent. in cost terms."
In other words, what has been happening is that in terms of additional housing—which, after all, is what really matters—the results can only be said to be bitterly disappointing. Why has public expenditure soared? There are a number of reasons for this. I just want to pick out two. First of all, the big drop in the sales of council houses has seriously affected the figures. In 1972 over 60,000 council houses were sold. In 1974 only 1,000 or 2,000 were sold. The consequence of this is that between 1972–73 and 1974–75 there has been a fall in receipts from this source of £276 million. Quite apart from this, there are very strong objections to the Government's policy. Secondly, there has been the enormous growth in subsidies, which account for a third of public expenditure on housing today. Subsidies increased by 113 per cent. between 1972–73 and 1974–75, and they now stand, according to an answer to a Question on 11th June, at £1,218 million. As Dr. Craven says:"… the sharp increase in expenditure has not been reflected in a similar increase in housing output in bricks and mortar terms, or at least not on anything like the same scale. Almost all indicators of housing output—improvement grants, new building, level of slum clearance—fell or are to increase relatively slowly over the period 1972–73 to 197576. A very large part of the increase went into refinancing the housing programme, into transferring stock from the private to the public sector, and into cushioning families from the effects of price inflation."
That is at the heart of our present problems. Under the Government strong element of distortion has entered into housing policy. It is perfectly true that the rent rebates and allowances which we introduced and support account for 28 per cent. of the increase in subsidies. However, the crucial factors include the rent freeze from March 1974 for one year. The loss of income from this to the housing revenue accounts was about £90 million. This rent freeze was at a time when earnings were increasing steadily. Over the years there has also been the general tendency for rent to provide for an ever-smaller proportion of housing revenue accounts. The net contribution after rebates is now well below 50 per cent. In 1973 unrebated rents contributed 69 per cent. towards the housing revenue accounts. Now that is down to only 55 per cent. I regret having to put these statistics before the House because this is never the most attractive way of arguing, but we have to examine this area in these hard times. This situation simply cannot continue. Neither the ratepayer nor the Exchequer can bear this burden, particularly where the incomes of a considerable proportion of council tenants have been rising well ahead of inflation. The fact is that average earnings have raced ahead of rents. The Secretary of State must now state his policy for rents in clearer terms. What does he have in mind? He simply cannot leave this matter to the local authorities. It is quite clear that this problem has become far too vast to be left simply to the decisions of individual councils. Equally, he cannot leave the whole problem until next year because the pressure on public expenditure is so great that he must take action now."This rise reflects a number of factors but the most important of these is inflation—and more specifically the Labour Government's decision to use the housing programme as an instrument of incomes policy and incomes maintenance on an unprecedented scale".
I have listened carefully to the argument advanced by the hon. Gentleman. Is he advocating—and I hope I am not correctly summarising his argument—that the Government should compel local authorities to raise rents?
If the hon. Gentleman is strongly opposed to that policy, he will find himself shortly fighting with his colleagues. The Secretary of State has to use powerful influence over the local authorities in this matter, which is what he will have to do anyway.At the same time there is the long decline in the private rented sector. The House knows that in 1950 private rented dwellings accounted for 45 per cent. of households in the United Kingdom. In 1973 that figure was down to 17 per cent., including housing associations. The Labour Party revels in this. It believes that this is social progress. Labour Members say so over and over again. I believe that they are profoundly wrong. I suggest that they read an article by Dr. David Eversley of the Centre for Environmental Studies, which was published in New Society on 16th January this year. I should like to quote what he said about the consequence of not having private rented houses.
"What are we going to do to enable people to move house when they need to change jobs? What are we going to offer, besides a council house after a very long wait, to young couples getting married and perhaps wanting to start a family? If the answer is 'nothing', then no one should be surprised if large cities cannot man their essential services, if homelessness is on the increase, and if fertility is falling faster than even the optimistic had demanded.
I believe that those words would ring true with very many poorer people in our big cities if only they were to read them.There remains a further question—whether a state of affairs where there is no choice, other than ownership or local authority tenancy, represents the environmental millenium we wanted? It is a question, however, which we should ask those seeking homes, not the theorists. It is hard to see what joy the strangulation of the private housing market has brought to those most in need of a roof over their heads."
Perhaps the hon. Gentleman is aware that in a Fabian Society pamphlet on the subject of municipalisation similar words were written by me. Would the hon. Gentleman not take into account the fact that the greatest and sharpest decline in the stock of privately rented dwellings took place between 1957 and 1964 at a time when the 1957 Rent Act was taking premises out of control? Would he not agree that the measures taken have protected a large number of tenants from being evicted as a consequence of the lack of protection under the Rent Act?
I fully accept that this has been an ongoing decline for a long time. However, I believe that the hon. Gentleman is wrong in a way that is typical of his party, because it approaches this in terms of an obsession with security rather than with provisions. Above all we need provision. Whether we can ever get substantial new investment into the private rented sector is obviously a substantial question. I should like to see it, but clearly there are difficulties. What cannot be doubted is that there is real hardship at the moment arising from Labour's war on landlords. This hardship applies equally to small landlords and to the homeless alike.The truth is that the long years of control and, in particular, the folly of the Rent Act 1974 have taken their predictable toll. I believe that forcing landlords to subsidise tenants through control means quite simply that landlords give up. The drying up of furnished tenancies caused by the Rent Act 1974, which we predicted last year, is now taking place, with cruel results. Obviously none of us can give exact figures for what is happening. No doubt when he replies to the debate the Minister will talk about the evidence. But we all know what is happening. Every hon. Member who has people coming to him in a desperate search for housing knows that the 1974 Act has seriously diminished the stock of rented housing. There is no question about it. The evidence from estate agents, who are in a position to know, confirms this point completely. This has happened, and with cruel results.
I should have thought that the Chief Whip would have cared about this.
I am not quite clear whether the Patronage Secretary is seeking to intervene.
I think that it is impertinent of the hon. Gentleman to talk about care about housing. The record of the Conservative Party when in Government is pretty grim. Most of us have spent a long time, in the House and outside it, trying to stop the Tory Party supporting landlords whose objective has been to destroy property and the initiative of those who want to buy it.
I suggest that the right hon. Gentleman turns his powers and eloquence on to his colleagues on the Government Front Bench and tries to rub some sense into them on this matter.The Secretary of State must think of ways of alleviating the problem created by the Rent Act 1974. It is absolute madness to encourage under-occupation at a time when we should be thinking of the reverse. There is no question that the Rent Act 1974 is encouraging under-occupation. The truth is that at a time when we have enormous public expenditure and inflationary problems, the Government are making matters far worse through sheer Socialist folly. Firstly, as I have said, there is their excessive use of housing policy as a means of supplementing incomes, which in many cases do not need it. Secondly, there is total commitment on their side to housing as a social service, rather than seeing the social service element as something which should be brought in to help people in need. Thirdly, there is persistent bias against the private sector, especially the private rented sector. Fourthly, there is bias against selling council houses, which is doing nothing for our housing stock and is adding again to public expenditure. In addition to this, we still have the incredibly expensive demolition and redevelopment which are beloved of Socialist councils, and municipalisation for municipalisation's sake, even though we are now seeing a slowing down of the latter. We also have a very worrying picture on improvements. The figures for house renovation grants are down from 89,700 for the first quarter of 1974 to 29,900 in 1975. If this debate does nothing else, it should at least give the Government the chance to state what is happening. At present we have statements and circulars following each other with such bewildering and sometimes contradictory rapidity that no one knows where he stands. It is extremely difficult to follow these circulars as they come out and contradict each other. As if that were not bad enough, we have such astonishing policies as the Community Land Bill. I do not propose to go into detail today on the Community Land Bill, but quite apart from its other grave defects it can only harm housing, certainly private housing, very severely indeed. The truth is that it is already, by the mere threat of its existence as an Act, drying up the supply of land. To come up at this time with a measure which does nothing to make for cheaper housing seems to me absolutely extraordinary. I beg the Secretary of State to drop it, even if it means some unpleasantness among his colleagues. May I also say to the Secretary of State that the way that this Bill is being handled in Committee is absolutely disgraceful. I hope that both the Secretary of State and the Chief Whip will study the leader published in this morning's edition of The Guardian on this subject. The situation is clearly out of hand. The question now is what should be done. Because it is so out of hand, on the public expenditure side especially, it is particularly difficult, clearly, to put it right. But we must try to pick something up out of the ashes. The need to cut Government expenditure makes it imperative that housing policy should be rethought in such a way that we get the best out of such money as there is. For a start, this means jettisoning Socialism. Socialism has nothing to offer in housing policy today. It is expensive. It pays far too little regard to the desires and needs of individuals. It is geared to mass housing, at a time when we need human scale housing. It is geared to authoritarian paternalism, at a time when we need choice and sensitivity. Over and over again, Conservative instincts about what people want have been proved right, not least because of our emphasis on choice and variety. We on our side accept the place for council housing, but there is a pressing need to give fresh life and stability to the private sector, both owner-occupied and rented. This is not only a matter of desires and needs. It is also a fact that support for the private sector is a much more cost-effective way of providing housing where one can do so. It is clear that the cost of subsidising each new local authority house—initally, anyway—is about three times the tax relief on a mortgage for each new purchaser. The figures come from the Government and assume loan charges based on an interest rate of only 9.6 per cent., which is well below the current borrowing rate. How can we stimulate home ownership? First, I believe that we should return to encouraging the sale of council houses. With the rise in incomes and a static level of private house prices, this should be easier than it was a year or two ago.
Having quoted figures for council houses sold some years ago, is the hon. Gentleman aware that most of those were "given away" for less than £2,000 and that quite a number have since had to be bought back by the authorities which sold them, because of their housing shortages, for sums ranging between £8,000 and £10,000? Does the hon. Gentleman consider that to be good economics, when the balance has to be found, in the main, by the local ratepayers, from rents and from the taxpayer in general? Is that the hon. Gentleman's philosophy?
The figures must be approved by the district valuer. The fact that houses can be sold back seems to be an advantage in the scheme rather than a disadvantage. One of the arguments against selling council houses has always been that some people may not be able to afford to keep up their payments. If they can sell them back, that is all to the good.Secondly, I believe that, again for public expenditure reasons, we must give additional support for mortgages if at all possible and certainly do what we can to hold down the rate. As I have said, I think that the present supply is adequate, but I believe—the Secretary of State has, I think, acknowledged this—that the rate needs to be watched very carefully. Thirdly, we must make more available for larger loans, because a bottle-neck has built up at the higher end of the market. Fourthly, we must scrap the Community Land Bill and encourage people to bring forward land for sale and get on with the job of implementing Dobry. One of our charges against the Community Land Bill is that it has put the Dobry Report on the shelf at a time when it would be of great value to be able to push ahead with its recommendations. Fifthly, we must look closely at new forms of buying. There is the half-and-half scheme, which has received publicity lately, and possibilities of partial shares in equity, and high-start schemes, and so on. This is not the time to adopt an excessively doctrinaire view, but the great need is to keep the market going. I turn to the private rented sector. For a start, clearly we must repeal the Rent Act 1974, or alternatively, at the very least, bring in some new form of short-term lease which does not confer longterm security. The North Wiltshire approach, which has been discussed recently, is a start, although I have doubts about how widespread its value might be. Better still, we should take seriously the approach of my hon. Friend the Member for Kensington (Sir B. Rhys Williams) for some form of shorthold. [Interruption.] It is no good Ministers and ex-Ministers mocking this, because at present the need is desperate. We should also seriously consider the possibility of restoring some real point in investing in private lettings. Perhaps that can be done through depreciation or through capital grants, for example. The need is clear and it is being acknowledged even within the Labour Party. The House may recall that in the Daily Telegraph of 23rd April Mr. Stutchbury said:
Later it was reported that Mr. Stutchbury argues"I think it is now clear that London's housing problem cannot be solved from the public sector. The main reason for this is the doubling of interest rates over the past two years."
What about the council sector? The money which is available for this sector must be used for building provided it is at a reasonable cost. Secondly, there is a strong case for trying to keep the improvement programme going. Thirdly, I hope that we can maintain mortgages for those who do not meet the level of the building societies. Fourthly, there is the continuing need to keep housing associations under way. Clearly rents must rise and account for a substantially greater proportion of the housing revenue account than at present. We also need to attack under-occupation in the public sector as in the private sector. For example, I think we could do more to encourage transfers and ex- changes. We could do more to increase the number of smaller units and to encourage lodgers in council houses, making it worth while to have them. At the same time, we should review management policies and move towards an effective tenants' charter of the kind which the Conservative Party has advocated. What about the crucial question of the council rent system? I have a suspicion that the Secretary of State may now be somewhat ruefully regretting his party's attitude to the fair rent system in the Housing Finance Act 1972. It may be true that next year's rent increases will be approximately double the 50p which would have been allowed under that Act. Whether or not fair rents should be brought back can be debated. It may be better to work through a mixture of subsidies and the proportion of the housing revenue account which is to be borne by rents. I do not begrudge the Secretary of State his present inquiry into housing finance."that the Government has done this, as a start to subsidising the private landlord so that he is not, as at present, subsidising his tenant. They should move towards a situation where the private landlord can get an economic return on his property and afford to keep it in repair."
Is the hon. Gentleman suggesting that if his party had been in office it would have limited rent increases to the 50p per annum envisaged in the Housing Finance Act 1972, when at the same time he is suggesting that we should be increasing rents still further? What is he advocating? Is he seriously suggesting that his party would have kept rent increases down to 50p.
I am suggesting that we have to face a vast problem and that the cries which were put forward by Labour Members, including the hon. Member for Mitcham and Morden (Mr. Douglas-Mann), during the passage of the 1972 Act have now been shown to be complete hypocrisy.I do not begrudge the Secretary of State his present inquiry into the whole subject of housing finance although I think it is high time that he embarked on it. I also accept that there is an important need to establish the basic facts of the situation—for example, the extent to which we need new housing. However, it is certain that if the Government continue to approach their housing policy in the spirit of narrow partisanship, which characterises the Minister for Housing and Construction more than anyone else, there will be no hope of meeting the real needs. Housing is an area in which we must achieve a great degree of agreement and stability. If the Government do not recognise that and if they persist in their bigoted and inflationary housing policies, they will do the gravest disservice to the long-suffering people of this country, and the homeless and ill-housed above all.
As a veteran of more than five years of debates as my party's spokesman on housing, I again welcome the hon. Member for Aylesbury (Mr. Raison) to his new job. I have no doubt that, very properly, the hon. Gentleman is extremely pleased to have attained his position, but he should not allow his spirits to rise too high.Crosland's law states that to be appointed Tory spokesman for housing is the kiss of political death. Let us remember the roll of honour over the past five years. First, there is the position of the right hon. Member for Worcester (Mr. Walker). Where is he now? He is very much out of sight on the back benches. The right hon. and learned Member for Hexham (Mr. Rippon) wisely committed political suicide only hours before he was due to be guillotined. The right hon. Member for Brighton, Pavilion (Mr. Amery) sits sadly and disconsolately on the back benches, as does the hon. Member for Southend, West (Mr. Channon). The hon. Member for Chelsea (Mr. Scott) is in a similar position. It is a poor, sad, miserable prospect that lies ahead of the hon. Member for Aylesbury unless, of course, he manages to follow the one exception to this hideous tale of carnage—namely, the right hon. Member for Finchley (Mrs. Thatcher), the present Leader of the Opposition. However, to judge from the private mutterings of her supposed supporters, even the right hon. Lady does not seem to have total security of tenure. The hon. Gentleman showed an almost sublime impertinence in criticising the Government's housing record after his Government had been in power for four years and when we have been in power for only one and a quarter years. I must remind the House briefly of the situation which we inherited in March of last year from the hon. Gentleman's Government. To reverse the words he applied to this Government, the Conservative Government were unsocialist, non-partisan, unbigoted and undoctrinaire. They showed care for the private rented sector and were motivated by good Conservative instincts. What did they do with that non-partisan outlook? First, I turn to new house building. In 1973, the Conservatives' last year in office, the total number of new houses completed was below 300,000, the lowest figure since they were previously in office in 1963. Council house building was at its lowest level for 25 years. Private house building had virtually collapsed. House prices had doubled during the years of Conservative rule. Land prices had trebled. The mortgage rate had increased from 8½ per cent, to 9½ per cent., 10 per cent. and 11 per cent. The mortgage feast of 1971–72 had given way to the famine of 1973. Generally the would-be home-buyer received a clobbering such as he had never had in living memory. There are many thousands of young couples who will never forgive the Conservative Party for what happened in those years.
No, I have only just begun. In the council house sector the determination of rents had been taken away from democratically-elected local authorities and handed over to non-accountable rent scrutiny boards. Despite the fact that, against their wishes, subsidies increased as inflation gathered pace, Conservative Ministers, through the sheer clumsiness of the Housing Finance Act and its frontal attack on local democracy, managed to alienate almost every council and council tenant in the country.In the private rented sector, about which the hon. Member for Aylesbury had so much to say, the Tory Government simply abdicated. There was only drift and muddle. They finally conceded, about 10 years later than all other informed commentators, that the sector could not be sustained, yet they refused to extend security to the furnished tenant, the chief victim of the decline. They refused to accept the advice on municipalisation that was given in Layfield and in other reports. They refused for years to stop the misuse of improvement grants which was leading to gentrification. Finalyl, I turn to land. When I hear the hon. Gentleman attack our land Bill I become more charitably disposed towards the Bourbons. They may not have learnt anything but at least they forgot nothing. Conservative Members, however, seem to have forgotten everything. They have forgotten the Klondyke rush for land in 1971 and 1972. They have forgotten the enormous profits that were made by land speculators. They have forgotten that, contrary to their free market economics, higher prices led not to greater land availability but to land hoarding in the hope of still further profits. They have forgotten that when the land price balloon at last burst the financial position of many house builders was disastrously weakened and the task of restoring the house building programme made much harder. I find it quite impossible to give any credence to Conservative criticism of our housing policy. Faced with the situation that we inherited in March last year, we had to take swift emergency action right across the housing field. At the same time we wanted this emergency action to fit into the broad strategy for housing which was clearly needed. What did we do? First, new house building. In the public sector, we started with Circular 70/74 in April 1974, which made it clear that the Government were prepared to make available the necessary extra money for local authorities to increase their programmes. We then, in the Housing Rents and Subsidies Bill, devised a subsidy system which provides strong Exchequer support for new house building, and we greatly reduced the restraint imposed by the cost yardstick control. The result—although, with respect, the hon. Gentleman was extremely grudging about this—has been a heartening increase in new building in the public sector. In Great Britain, completions last year were 20 per cent. up on 1973, starts 30 per cent. up, and—most significant of all—dwellings in new contracts approved 34 per cent. up. The increased momentum is being sustained this year. The figures for the first four months of this year show further sizeable increases in completions, starts and approvals over the same period last year. So, though I am still not satisfied, this is success No. 1. In the private house building sector—where one would never have gathered what was the position a year ago from listening to the hon. Gentleman—the first priorities were to bring to an end the disastrous mortgage famine and prevent the imminent rise in the mortgage rate to 13 per cent. We achieved both these objectives by the £500 million loan to the building societies—a loan which was strongly attacked at the time by the right hon. Lady the Leader of the Opposition. So the mortgage rate has been held at 11 per cent. and the building society net inflow is running at a record level. Contrary to what the hon. Gentleman appeared to suggest, the number of commitments per month has been rising substantially in recent months, and I am happy to say that all this is now being reflected in the figures for private house building. Again, this up-turn received rather a grudging response from the hon. Gentleman. Over the three months from February to April, allowing for seasonal fluctuations, private starts were 40 per cent. up on the previous three months and now run at about 12,000 a month. Annual completions at about the same level were 12 per cent. up on the same comparison. Confidence is returning to the market and there is no doubt that the trend is in the right direction, compared with the unprecedented slump in private house building caused by the disasters of 1973–74. So, though I am still very far from satisfied, this up-turn in private house building is success No. 2, and it derives from the Government's commitment, not just in words but in action, to the support of owner-occupation. The action which we took on mortgages last year was successful in tiding us over the immediate crisis, but it also had a deeper significance. It represented a first step towards mortgage stabilisation. I, personally, as some hon. Members know, have been committed to this concept for many years, and it is now a key element in our housing policy. It is not a simple matter. We are nowhere near the end of the road on this yet, but the agreement of 11th April with the building societies has given us for the first time a firm basis for achieving mortgage stabilisation in the future. I willingly acknowledge the helpful way in which the building societies are working with us in the Joint Advisory Committee. Mortgage funds, although important, are not the whole answer. In January we announced a further package of measures to help the private house building industry—measures worked out by the Government in close discussion with the house builders and the building societies. The low-start scheme for the first time buyer, the emphasis on the need to cut down planning delays, and so on, have also contributed to the return of confidence to the industry. Despite this evidence, the hon. Gentleman again repeated today the claim that the community land scheme in some sinister way sounds the death knell of private house building. It of course does nothing of the sort. The health of the house building industry is a matter of close concern to us in the Government, and the scheme has been carefully designed with this in mind. Any radical measure of reform such as the land scheme involves difficult changes and adjustments. Some will inevitably have doubts as to how matters will work out and will rightly seek reassurance, in particular on the key issue of the continuity of land supply. We are still in discussion with the house building industry, and the special arrangements we propose about, for example, builders' land banks and the small sites have already shown our strong desire to help smooth the initial stages. Our commitment to a high level of new house building, public and private, is clear, but we must ensure that our building programmes reflect the actual needs of our population. For example, we need far more dwellings for smaller households, both for renting and for owner-occupation. I am looking here for a shift of emphasis in local authority programmes and for greater awareness on the part both of private builders and of planning authorities of the demand for smaller houses for owner-occupiers. These were the essential messages of Circular 24/75. From new house building, I turn briefly to the existing stock of houses. The worst problem here—to this extent I agree with the hon. Gentleman—lies in the pri- vately rented sector. This sector, as we all know, has been declining steadily since 1918, or since even before the First World War, but the decline has been more rapid since the end of the First World War, and the decline has been as fast under Conservative as under Labour Governments. Many of us, as the hon. Gentleman fairly said, welcome this decline as a matter of social policy, but it carries with it the danger of a loss of low-income rented housing on a scale which we simply cannot afford. Although the hon. Gentleman had a lot to say about the private rented sector he told us nothing, except for the vaguest hints, of what the Conservative policy for that sector would be. If there were some equitable policy for the sector which could be found to prevent the loss of low-income rented housing, presumably the Conservatives would have found it between 1951 and 1963 or between 1970 and 1974, but they did not. As one of my hon. Friends pointed out, the decline has been at least as rapid—in one case more rapid—under Conservative as under Labour Governments.
Does not the right hon. Gentleman appreciate that, whatever is Conservative policy on rented houses, the Labour Party must give an undertaking? In 1961 I said in the Chamber that if the Labour Party would give a guarantee not to interfere with or control the flow of houses we would build 50,000 houses a year. That would have given us 750,000 houses, and the problem would have been nearly solved by now.
The Conservatives had a fairly long period of office between 1951 and 1964, and if there were an equitable method of increasing new investment in this sector they would have found it. The hon. Member for Aylesbury mentioned the possibility of new investment but was utterly vague on how that might be achieved. That is one danger—the loss of low-income rented housing.The other feature in the private rented sector is that it contains a disproportionately high share—about 40 per cent.—of all older substandard housing. These two facts underline the crucial importance of municipalisation. On the one hand, this is often the only method by which we can get substandard property improved. It is also the only method by which we can preserve in the rented sector enough property to let at rents which people can afford. We recognise, of course, that full social ownership cannot be achieved overnight. Public expenditure restraints have obliged us to go more slowly than we would have liked in an ideal world. In spite of these constraints, we have provided for a very substantial increase in public expenditure for acquisitions by local authorities. Last year this expenditure was running at £180 million, which compares with around £50 million in earlier years. I have recently announced that I propose to switch money to municipalisation to make sure that spending is maintained at the same figure this year as last year.
Will the Secretary of State tell us what "full social ownership" means in housing terms?
In the terms in which we are immediately speaking, it includes acquisitions by local authorities and acquisitions by housing associations. Looking ahead, we hope that there will be other forms of social ownership. My hon. Friend the Minister for Housing and Construction will perhaps be speculating aloud about other possible forms in the future. Municipalisation is pointless unless we find money to improve municipalised property. Here there has been a great deal of misunderstanding. My hon. Friend the Minister for Housing and Construction, who knows all the Section 105 arguments backwards, will no doubt have some important words to say about this matter this evening.It has been said that we have cut expenditure on improvement of council-owned housing by about 50 per cent. That is not so. The actual reduction in England, in constant prices, is from £305 million last year to £255 million this year. That still leaves councils spending almost five times as much in real terms on improvement as they were spending as recently as 1969–70. That they are spending five times as much shows what an enormous boost has been given to the improvement of our public stock of housing. I do not say that we have yet got the right balance in these matters. To help us try to find it, we have set up, with the local authority associations, a study group which will examine all these matters. Chaired by my hon. Friend the Minister for Housing and Construction, this study group is now hard at work and we look forward to seeing its conclusions. There is much else which I could say about the better use of our existing housing stock. The hon. Member for Aylesbury listed a number of points like con versions, empty houses, lodgers, the encouragement of transfers and the rest. I shall not repeat them all, but I was grateful to him for repeating almost verbatim our circular "Housing Needs and Action" which refers to the importance of every single one of the points he mentioned.
The Secretary of State referred to the cut-back in England. Does he agree that the figures for Wales on the degree of rehabilitation and modernisation of publicly-owned houses shows a decrease from the £29 million of the last financial year to £9·4 million expected for the current financial year?
I do not have the figure at my finger tips, but I shall ask my hon. Friend to deal with that point when replying. The position in Wales is different, for reasons that the hon. Member knows very much better than I. Owner-occupied housing represents a much higher proportion of the total housing stock there than in England so that there is a different balance between private improvement and public improvement.Having discussed investment in housing, I now turn briefly to the cost of housing and the question of subsidies. First there is the would be owner-occupier. By the time we came into office last March, the man on average earnings wanting to buy a house had been to a large extent priced out of the market by a combination of the explosion in house prices and the rise in the mortgage rate. Now, however, due partly to the stability of house prices over the past two years and partly, and I fully concede this, to wage-inflation, the relationship has returned to something more normal. Given our agreement with the building societies on mortgage stabilisation, I see no reason to expect—indeed I am determined to avoid—a price explosion of the kind we had in 1972–73.
Will the right hon. Gentleman say, supplementary to the statement he made on his agreement with the building societies recently, whether he has given them any guidance that they should impose positive restrictions on mortgages as some building societies have already voluntarily done?
No, I have given them no more guidance than emerges from the joint statement that we put out a very short time ago.1 turn now to council rents, which will present us with an extremely difficult situation in the years ahead. While house prices have gone up much faster than average earnings in recent years, rents have gone up much more slowly, and this is especially true of the two years 1974–75 and 1975–76—due partly to last year's rent freeze and partly to the special element of housing subsidy in the Housing Rents and Subsidies Act. Since May 1973 the retail price index has risen by 39 per cent., average earnings by 45 per cent. and average unrebated rents by 23 per cent. The consequence is that the contribution of rents to the costs of the housing revenue accounts has been steadily falling since the late 1960s. Curiously it fell even through the years of the Housing Finance Act. In 1968 it was 74 per cent., now it is 55 per cent., and these are average figures. In some parts of the country—London for example—the contribution of rents is much lower than the average figure of 55 per cent. This growing gap between rent income and housing costs has of course been covered by subsidies—it could not be covered from anything else—partly from the rates but mostly from the Government. This year Government subsidies will be three times in real terms what they were five years ago. They are in consequence pre-empting a higher share of the housing money we have available, and that reduces the share available for capital expenditure on improvement, municipalisation and the rest. Now the Chancellor has announced that he is seeking a saving of £65 million in housing subsidies, of which about £50 million relates to local authorities in England. Unless I am to make deeper cuts in essential capital spending on housing, this saving can be found in only one way, and that is through rents. So rents next year will have to go up faster than they have recently. This year, on present indications, they will rise by only about 12 per cent.—far less than the likely rise in earnings. Next year, the increase will have to be larger. Exactly how much it will need to be is a matter for detailed discussion between Government and local authority associations in the course of the rate support grant negotiations over the next few months. We cannot yet give a figure in money terms, partly because we do not yet know what next year's inflation rate will be. However, it is clear that increases will have to do more—and quite a bit more—than merely to keep pace with inflation. Rents will have to start making the kind of contribution in real terms towards housing costs that they have done prior to the most recent developments. Despite this, housing expenditure will remain one of the Government's highest priorities. Some of my hon. Friends continually press me for still more spending on housing and my sympathies are entirely with them. But I wonder whether they realise the actual rise of expenditure on housing last year, and how it reflected the extremely high priority we give to housing. In 1973–74, in effect the Tories' last year in office, public expenditure on housing in Great Britain amounted to some £2,740 million at 1974 prices. In 1974–75 it rose—still at 1974 prices—to some £3,470 million. This is an increase of more than a quarter in a single year, which represents a large shift in Government priorities in expenditure. Now the country faces an economic crisis far more serious than any we have faced since the war. The priority claims on our national resources are the balance of payments and higher industrial investment. We therefore cannot expect any significant further increase in housing public expenditure over the next few years. Housing did well last year—spectacularly well. From now on we shall have to do our best within what is still an enormous total, but without the freedom of manoeuvre which continuous growth would provide. In this situation we shall have some hard decisions to take. Priority programmes must be protected. But from now on more spent in one area means that less is available somewhere else.
I am unable to marry up the figures the Secretary of State has given—the figure of £2,740 million for 1973–74 and £3,470 million for 1974–75 being spent on housing subsidies. Will he give us the origin of these figures?
I believe these are from the last public expenditure survey but if that is not the case I shall ask my hon. Friend the Minister to say so when he replies. I take it for granted that they were from that survey.I have no absolute confidence that we have got all our priorities completely right. I have a lot of sympathy with the comment in this month's Municipal Review:
I admit that, and this is one of the basic reasons I have set up a long-term housing review. I am sorry that the Opposition have not put down a motion today because had they done so we might have learnt what their housing policy was. There is no more assiduous reader of the speeches by the Leader of the Opposition than myself, but if I were asked what Tory policy on housing was I would not have the faintest idea even after listening to the speech by the hon. Member for Aylesbury this afternoon. We had a lot of "Perhaps we should do this", "Perhaps we should do the other", "Perhaps we should look at this" or "Perhaps we should look at the other." We had a certain amount of praise for new developments last year, almost all of which were the responsibility of the Labour Government or Labour councils. I turn to what the Conservatives would do and how far that differs from what they did under the 1972 Act. On this subject we are absolutely in the dark. I revert to a speech made by the right hon. Lady the Leader of the Opposition, last week. That speech was purported to be—so I understand from the Press reports—a major speech on the economy. Over and over again the right hon. Lady said and this was implied today by the hon. Member for Aylesbury—that subsidies are a thoroughly bad thing. I hope that the closing speaker for the Opposition—no doubt another new appointment—will illustrate what that phrase means. The hon. Member for Hampstead (Mr. Finsberg) is one of the hon. Members who knows most about housing, and I am delighted to learn that he is to reply. I hope that he will elucidate what "dislike of subsidies" means in the area of housing. Does it mean that the Opposition have now ditched their disgraceful election pledge to subsidise mortgage rates down to 9½ per cent.? If they have not, their Leader stands exposed as a hypocrite. If they have, it is time they said so openly to the country. Does it mean that it is now Conservative policy to remove or reduce the £680 million subsidy which owner-occupiers receive by way of tax relief on their mortgages? What does it mean for subsidies to council housing, for rents and for council householding? We know that they would repeal security of tenure for furnished tenants. We know that they dislike municipalisation. We know that they would encourage the sale of council houses. But beyond that everything is in utter darkness. In a brief year and a quarter we have not yet solved the housing problem. Of course we have not. But we have started firmly along the right road. Local authority house building is up. Private house building is up. The mortgage situation has been stablised. We are acting positively to improve both the condition and the use of our existing housing stock. Above all, housing is receiving a much higher priority in terms of public expenditure than it did under the Conservatives. I am far from being satisfied with our progress, but at least we have begun to make progress. It hardly lies in the mouths of Opposition Members, who left us the shambles of a year ago, to carp and criticise today."What appears to be needed is a critical judgment of the allocation of housing resources across the board. It is true, as the Secretary of State has rightly pointed out, that the total national housing programme has reached a plateau with expenditure of the order of £3,500 million a year as compared with £2,500 million in real terms two years ago. But it does not seem certain that all the priorities are yet right."
I have not spoken in a housing debate since I left the Department of the Environment in 1972, though naturally I have watched from the sidelines the evolution of housing policies. Both sides of the House approach the matter from rather different angles, yet what has impressed me most, from listening to the debate today and, indeed, to previous Government statements, is how much closer we are now than we appeared to be in the long days and nights when we crossed swords during the Committee stage of the Housing Finance Act 1972. Certain agreeable aspects of that Act, such as rent rebates, allowances, slum clearing subsidies, and so on, have been accepted and endorsed by the Government. That came as no surprise to me. Indeed, in Committee the right hon. Gentleman who is now Secretary of State paid tribute to some of these ideas.I was very glad to hear the right hon. Gentleman say today that although there had been some shortfall on housing improvement grants compared with the high point to which we had brought them, they were still a great deal better than they were in 1969–70. At least he was doing his best to keep up with the standards which we had tried to set. We must never forget the importance of housing improvement socially, even more than in terms of accommodation unit provision. On council house rents, we seem to be on much closer ground than we were before. In Committee the right hon. Gentleman as well as the Minister for Housing and Construction lambasted me on two grounds, first, that we were raising the rents, as they said, inordinately, and, secondly, that we were depriving the local councils of their autonomy and freedom in determining the rent level. It now seems clear that the rents will be raised in many cases substantially higher than the Housing Finance Act would have raised them. It is all very well to say, as I think the hon. Member for Leeds, West (Mr. Dean) said, that of course if we had been in the present economic situation we too would have had to put them up higher. My reply is that we would never have allowed ourselves to get into that situation, but, of course, that is an academic answer. I turn to the freedom of local authorities to determine their rents. Under the limitations that seem likely to be imposed on them by the Treasury, their freedom will be what used to be termed in good old Socialist parlance as "freedom to sleep under the bridges", because that is the only place to sleep. I do not propose to go into all the details which have been raised.
When the right hon. Gentleman says that rent increases may be in excess of what would have been charged under the Housing Finance Act, has he forgotten that the original increases were only of a limited duration, and that the Act catered for three-yearly reviews upwards? The 50p per year was for only three years, and would have been increased thereafter.
I was saying that what we had proposed was of a fixed character. It now appears that rents will be raised still higher than we had proposed. It is all very well for hon. Gentlemen to say that "If you were in office and had the present economic situation to deal with you might have to put the rate higher than you had intended." If we had been in office, we would not have had this situation to deal with. But, as I said, this is an academic point, and I do not want to dwell on this argument.There is common ground between us that the rents have had to increase at least as high and almost certainly higher than we had proposed and that the freedom of local authorities to determine the rent will be severely limited. I do not want to go into the very important but largely administrative points that have been debated. I stand strongly for the maximum extension of private house ownership. Therefore, I hope that we shall not go back on the election pledges of my right hon. Friend the Leader of the Opposition. We must do everything to encourage home ownership through the building societies and through the sale of council houses. Of course, there remain differences of emphasis between us. However, the gap between us is substantially narrower than it appeared to be in 1972. While there remain differences of emphasis which no doubt justify us in dividing the House this evening, on this major element of social policy the two parties—or, at any rate, the representative and serious elements in both parties—are closer than they have been for some time. That is an undoubted gain.
After listening intently to what the right hon. Member for Brighton, Pavilion (Mr. Amery) said—
What did the right hon. Gentleman say?
He said a considerable amount.I recall the halcyon days of 1971 and 1972. I think that about 15 of the hon. Members present served on the Committee considering the Housing Finance Bill—[Interruption.] Halcyon days and nights, I agree. If we examined the Official Report of the Committee proceedings, some of us on both sides of the House might find that we had to eat some of our words. I agree with the right hon. Gentleman that it would be devastating if the Leader of the Opposition ever went back on her pledge to reduce the mortgage interest rate for potential house buyers to 91 per cent. That was a promise, and there can be no back-tracking on it. In March 1974 we inherited a mortgage interest rate of 11 per cent., and it is still 11 per cent. But many people, particularly in the London area, are paying much more. The rate of 11 per cent. is the minimum. I know of many families in my constituency and elsewhere in the London borough of Wandsworth who, being unable to obtain a mortgage through the local authority or a building society, turn to finance houses. I am referring to some of my immigrant population, for whom it is not easy to find anywhere to live. They have to pay as much as 13 per cent. and even 16 per cent. to buy a house. No one should be under the impression that 11 per cent. is the maximum rate. I agree with the right hon. Gentleman that we must try to encourage home ownership among ordinary people. The Labour Government achieved more than 50 per cent. owner-occupation. One of my aims in life is to see that figure reach 60 per cent. or even 75 per cent. I am sure that the right hon. Gentleman also wants to see the extension of owner-occupation. The invective of the hon. Member for Aylesbury (Mr. Raison) against the Government was disconcerting. If we are ever to solve the housing problem it must be done by co-operation between all those who engage in house building and all those in politics and Government. The hon. Gentleman had only two solutions to the housing problem. One was the sale of all council houses and the other was the increase of council tenants' rents. Anyone with any idea about housing knows that those are not the answers. More than 50 per cent. of council tenants live in large blocks of flats which are not conducive to owner-occupation, unless there is some form of co-operative ground landlordship by the tenants themselves. I am not averse to that. It is a good idea. The sale of council houses and putting up council rents do not produce one more brick or one more house for people to live in. The hon. Gentleman said that 65,000 council-owned houses had been sold to their occupiers. Later, he said that about 10,000 of these had been sold when we were in power. When the councils sold 65,000 houses to their tenants it did not produce one more house, but it gave the ownership of a council house to any people who could have afforded to buy a house on the open market, and so provide a house for people not so well off. That would have been a much better policy. What I am really interested in is the situation in London, and I want specifically to deal with that. The Conservative Government, through reductions in taxes of all kinds, released on to the market an enormous amount of money that they thought would be invested in industry. Instead, in 1971, 1972 and 1973 it went into property development, into acquiring new sites. The result has been that, particularly in London, hundreds of acres are lying idle, owned by firms which are going bankrupt because they cannot meet the interest charges on the money they borrowed to buy the sites. This is happening not only in inner London but in my own borough, the London borough of Wandsworth. I must point out to my right hon. Friend the Secretary of State that local authorities were encouraged to buy houses where the owner-occupier could not sell to a private bidder. In my constituency the Wandsworth council has bought hundreds of houses from owner-occupiers who could not sell them and who wanted to move away. Each house was bought for conversion into two flats, but unfortunately they remain empty and their condition is getting worse every day. They are being damaged because the council does not have the necessary money to convert them. The sooner more money is made available to local authorities in London to convert them the sooner will some of the homeless and those living in overcrowded conditions find somewhere suitable to live. What I have just said applies to both the public sector and the private sector. One can walk through Wandsworth, Battersea, South and Battersea, North—wherever one likes—and see house after house that was privately occupied and is now empty and becoming structurally worse, week after week. One of the reasons is that although the owners can find buyers the buyers cannot obtain mortgages. I see in the Chamber several Members representing London constituencies. They know as well as I do that there is a barrier to people living in London obtaining a mortgage sufficient to buy a house in the area in which they live. In Wandsworth the price for the average type of house ranges between £15,000 and £28,000. As soon as the building societies know that it was erected towards the end of the last century or early in this century they tell people applying for a mortgage "We are very sorry. We do not have the funds for this type of property at present" or "We have exceeded our quota "or" The building is far too old". This happens to many people in London wishing to buy their own houses. I appeal to the building societies. Surely a compromise can be found, perhaps with the Government guaranteeing the interest due on the money borrowed, and giving a guarantee if, for example, the house has to be used for development in 20, 30 or 40 years' time. I see no objection. I see no reason why thousands of houses should remain empty in London because building societies will not advance the money for their purchase As local authorities have such a dearth of money for their house purchase schemes, perhaps we can reach a compromise on the matter. Last week, I put down a Question to my right hon. Friend about the agreement that he had breached with the building societies in order to get some money from them to help people in the inner urban areas. His reply was not satisfactory. As the Government helped out the building societies to the extent of £500 million last year, surely they can reciprocate now that they are getting such enormous sums from investors. Surely the huge insurance companies could allocate some of their money for use in extending home ownership, or for modernisation of houses which are empty at present.
I am listening attentively to my hon. Friend, but it seems that there may be some misunderstanding. First, the £500 million last year was a loan, and almost all of it has been repaid. Secondly, we have announced an agreement with the building societies whereby they are willing in principle to help make good the £100 million cut in local authority lending. I hope therefore, that there will not be any cut in total mortgage lending.