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Mr. Robert Litherland (Manchester, Central) : Manchester found that it was more economical to have programmed repairs--for example, the replacement of rotting window frames and the repainting of houses on a massive estate programme. Would that come under the heading of capital expenditure?

Mr. Chope : What could be described as the cyclical painting of estates every three, five or seven years, depending on the area, is an ordinary revenue item. If one wanted to replace windows by means of a major replacement programme which would only be necessary every 20 or 30 years, that would be a legitimate item to

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capitalise. That is the distinction to be drawn between ordinary expenditure items and items that can properly be capitalised and upon which capital resources can be spent.

Under the rent guideline system that we are introducing, we start by assuming a national total of rent income for the year. Our proposal for next year is that this should reflect an increase of 5 per cent. in real terms, plus 5 per cent. for inflation. That is exactly the same increase as we have assumed in the existing subsidy system for each of the last two years.

The net result of the rent proposals is that the proposed guideline increase is nowhere less than 95p and nowhere more than £4.50. Of 366 local housing authorities in England, 66 receive the maximum guideline increase, 170 receive the minimum increase and the remaining 130 fall somewhere between the two. For almost one half of all local authorities, there will be a guideline rent increase of less than the national inflation figure. I am prepared to guarantee that that is a figure and a fact to which Opposition Members will not draw attention.

The proposals are fair and reasonable. They will start the process of encouraging a more logical pattern of rents which will reflect the true variation in the valuation of property. They will also ensure that rents do not move out of the reach of ordinary people. They certainly do not reflect the dramatic claims made by the Opposition at Report.

While discussing the subsidy calculation and the proposals made on 23 October, it might be helpful if I were to say a few words about the other main assumption in the subsidy calculation--the allowance that we shall be making for expenditure on management and the maintenance of the stock. Our proposed assumption is that each authority will increase its spending by 5 per cent. to take account of inflation, plus an increase of 3 per cent. in real terms. That should enable all authorities to provide a good standard of day-to-day maintenance. The proposal, as with all the other elements of subsidy, is now open to consultation. The authorities have until 4 December to submit their comments.

5.45 pm

Mr. Soley : My immediate response is that those whom the gods wish to destroy they first make mad. I have never before heard such an incredibly blind view of the housing crisis, not least the crisis over rents. The Minister knows that what he has said about rents is only a very small part of the picture. Rents will increase dramatically.

The Government have not referred to the extent of the housing crisis which affects local authority tenants, housing association tenants and private tenants. This wide-ranging group of amendments provides us with an opportunity to debate both the housing revenue account and homelessness. Some local authorities will not be required to keep a housing revenue account, which raises the issue of what will happen to the homeless. The amendments also provide us with an opportunity to discuss rent arrears and rent levels.

One would have thought, from what the Minister said, that there is no problem. The reason that I was so anxious to intervene during his speech was to use for his benefit the Association of District Councils' evidence. That is not a Labour-controlled organisation ; it is almost solidly

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Conservative controlled. When I spoke at a conference of the association in the Minister's constituency, Southampton, I received overwhelming support from Conservative councillors when I said that in the Labour party's view the Secretary of State does not have the right to take away the money that they have gained from capital receipts-- from selling council houses--and make them use it to repay debts, although they want to use it to repair, renovate and rebuild the housing stock. I was cheered when I said that, so I say to the Minister, simply in terms of his own political survival, that he ought to be wondering why it is that he is so totally isolated and why it is that he is the only one who knows what a sensible rent is. The Government have consistently refused to tell us what a fair rent is. At first they referred constantly to market rents, but when market rents became a little embarrassing, because they were increasing so rapidly, we began to hear about affordable rents and low rents. Nowhere have the Government referred to what they think rent levels should be in the local authority sector, the housing association sector or the private sector. Such is the extent of the housing crisis that the Government cannot bring themselves to face either the purchase sector problem or the rented sector problem. That is why the Minister who, we are told, is responsible for housing, although I sometimes doubt it--the hon. and learned Member for Folkestone and Hythe (Mr. Howard)--chose not to speak about mortgage interest rate rises when he addressed his own party conference. Mortgage interest rates have no effect, apparently, on the housing problem, yet we know that they are hitting people badly if they are trying to buy for the first time or if they are trying to sell and buy another house. They are also having a grossly distorting effect on the housing market because of the combination of house price inflation over a number of years--which will resume again in due course--and a distorted subsidy system, brought about by the cut in subsidy to the rented sector. It is that which has created the chaos that the Government have inherited.

As there is now a housing crisis, the Government have decided that they had better not have a Minister for Housing. We were told initially that the hon. and learned Member for Folkestone and Hythe was going to be the Minister for Housing. Then we discovered that he was in charge of water privatisation. However, we were told that when he had finished privatising water he would deal with housing. When the hon. and learned Gentleman has finished with water and deals with housing, which presumably will be some time in the new year, what the hon. Member for Southampton, Itchen (Mr. Chope) will know for sure is that his position is unassailable. He will no longer be what he is supposed to be now, I assume--the Minister for Housing, although he never actually confesses to being the Minister for Housing.

Mr. John Battle (Leeds, West) : Will the real Minister for Housing stand up?

Mr. Soley : Yes, will he do so? In a way it is farcical, but really it is very serious. The major housing crisis that we face is due to a lack of affordable accommodation either for rent or for sale in both urban and rural areas, but we do not have a Minister for Housing to deal with it. There is not even a recognition of the problem.

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Mr. George Howarth (Knowsley, North) : Will my hon. Friend join me in congratulating the new Ministers and welcoming them to their various responsibilities? Will he also point out to them that they are respectively the twelfth and thirteenth holders of those posts since 1979? Will my hon. Friend also join me in saying that if we hold a similar debate on a similar Bill in 12 months time, it is almost certain that the hon. Member for Southampton, Itchen (Mr. Chope) and the hon. and learned Member for Folkestone and Hythe (Mr. Howard) will not be sitting on the Government Front Bench?

Mr. Soley : My hon. Friend is quite right. A number of the Ministers who passed through while I have been doing this job were in post for only 12 months. To be fair, one of the better Ministers held his post for only 12 months. Because he realised the seriousness of the problem and decided to do something about it, he was moved. To put the problem in context, rural areas of England which did not have a housing problem before now have one. Sons and daughters of people who live in good housing in villages in the south of England suddenly find that they cannot afford to buy or rent. People who have lived in the area for a long time, the people who drive the trains, teach in the schools or nurse in the local hospitals cannot afford to buy or rent. House price inflation has pushed house prices out of their range, and rents are going up to market levels and are therefore unaffordable. In Dorset, an average family house costs about £90,000, a market rent is approximately £100 a week and the average male unskilled wage in that area is £90 per week. It is impossible to square the equation.

Mr. Christopher Hawkins (High Peak) : The hon. Gentleman referred particularly to the south, but the problem is just as bad in many parts of the north. In my constituency of High Peak there are many villages where families who have lived there for many generations can no longer afford to buy or rent. In most of the villages and towns there is a desperate shortage of rented accommodation and council housing and there are no private-sector houses that ordinary people can afford.

Mr. Soley : I am grateful for the hon. Gentleman's support. I am not saying that the problem occurs only in the south, but the picture is more extreme in the south because house price inflation has had a much more dramatic effect there, for many reasons of which we are all aware. But the hon. Gentleman is absolutely right that in some areas of Yorkshire the figures are similar to those in the south, and that must apply to many other areas.

In addition to that general pain is something that I never thought I would live to see in my own country--teenage children sitting in our streets with cardboard signs saying, "Homeless and hungry". They are under 18 and they have nowhere to go. To have a Minister, whether or not he is responsible for housing, who is so blind to that appalling problem that he can introduce a Bill that not only does nothing about it, but because of certain conditions will prevent local authorities from doing something about it, is absolutely disgraceful. I cannot face seeing many more youngsters sitting homeless and hungry in the street.

There was a time when one did not give money to people who were begging because one knew that there was a support system. One could stop and talk to them and persuade them to go to their local DSS office or to

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emergency night shelters. During the last years of the Labour Government and in the early 1980s, even in London one could always get someone a roof over their head. Nowadays one cannot do that. That is why increasing numbers of the public, myself included, give money without asking questions because the housing crisis is so desperate. It is one of the worst examples of the typical Tory picture of private affluence and public squalor. Sadly, that public squalor is endured by the most vulnerable people. The Centre Point report shows that about one third of those youngsters have come out of care--the care that we operate in the Dickensian Conservative 1980s where apparently it is all right to leave kids out in the streets when they are no longer the responsibility of the local authority. They drift around and are likely to be drawn into crime, drug abuse and alcohol abuse which are strongly associated with homelessness.

Rent levels are central to much of our debate. The Government should face many of the problems concerning rent. They admit that they are trying to push up council rents, although they argue about how fast and how far. However, they rarely recognise or admit that they have dramatically pushed up housing association and private sector rents, so there is no escape. Some Conservative and other councils consider that if they transfer council housing to housing associations or private landlords somehow people will be safeguarded from rent increases. That is not true. Last year housing association rents increased by an average of 24 per cent. Market rents in the private sector are leaping ahead to such an extent that it is difficult to predict how high they will rise. My judgment is that the market rate will approximate towards what the property would fetch if it were sold and the owner invested the money and took a return on it. The interest rate that they would get would be roughly the market rent. That is why market rents are going through the roof. Just to make that appalling picture worse, the Government have introduced capital value rents. On 1 April 1990 the Government will bring in a new system of calculating rates based on the capital value of the property. The Ministers occasionally say that Labour's alternative to the poll tax includes an element of capital values. Our system would be fully rebatable, but there is no rebate on the capital value basis that they are using to set rent levels.

Mr. Chope : To bring the debate closer to the hon. Gentleman's home territory, does he support and approve of the rent policy in the Labour- controlled London borough of Hammersmith, where the average rent last year was £35.88 and where there has already been an increase this year far in excess of those prevailing in other local authority areas? Does he recognise that, whatever the level of rent, people are eligible for rent rebates? Under the existing system and under the new system there will be no alteration in rent rebate entitlements.

Mr. Soley : I agree entirely with my council when it says that it is being forced to increase rents by a Government who have progressively cut the money that goes to every local authority, regardless of whether it is controlled by the Labour party, the Tory party, the Liberal party or anything else. That is what is forcing up rents. There is always a case for increasing rents at sensible levels--using my definition of sensible and not the Minister's--but what

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is not acceptable is that in recent years the Government have removed the subsidy from the rented sector so that people are forced to pay more.

The Minister says that housing benefit is available, but it has been cut eight times by the Government, to the extent that many hon. Members on both sides of the House have constituents who have lost up to £10 a week in benefit. That is why the Government had to introduce phased transitional arrangements.

Still worse, late at night, the Government introduced that wicked Act in which they cut the benefit of people who have a spare room. If someone has a two-bedroomed home and a member of his family dies or moves out that person will suddenly lose housing benefit because he has a spare room. The Minister should try telling people that they will lose mortgage income tax relief if they have a spare room. How many spare rooms does the Minister have and how much mortgage tax relief does he get? If he thinks that it is fair that he gets mortgage income tax relief on his spare room, he should conclude that people in rented accommodation with a spare room should also receive some subsidy.

Mr. Battle : Does my hon. Friend agree that the Minister's statement that the Bill proposes no changes in housing benefit was quite incredible? I know that the Minister was not on the Committee considering the Bill, but he might have had the courtesy of reading the reports of its proceedings before he spoke. It is absolutely plain that one of the most iniquitous proposals in the Bill is the suggestion that those paying rent who are not on benefit will end up paying the difference in housing benefit when the subsidy is withdrawn from the DSS. That is in the Bill.

Mr. Soley : My hon. Friend is absolutely right. I was going to mention that in due course, but I am sure that my hon. Friends on the Back Benches will do so. What is happening is quite wicked because the poor will subsidise the very poor. I do not know why the Minister is shaking his head. His predecessor accepted that the aim was for those people receiving benefit to be paid in certain

circumstances--there will be many cases in local authorities--by people who were not receiving benefit. The next door neighbour not receiving housing benefit, but who has a job, will be subsidising in his rent level the housing benefit being paid to the person next door. It will not be paid centrally in the way that it used to be. It is incredible that the Minister is not aware of that.

6 pm

Mr. Chope : The hon. Gentleman is misrepresenting the position. Under the new ring-fenced housing revenue accounts money from the taxpayer- -the taxpayers' subsidy--will be used to meet the needs that exist. For example, if there is a need for more housing benefit to be paid out of that ring-fenced account by a given local authority because of the needs of its tenants, all things being equal, that will be compensated for by increased subsidy. It is a

misrepresentation to suggest that the poor tenants will be subsidising the even poorer.

Mr. Soley : Before he reads the message being passed to him by the civil servants, will the Minister give the House a guarantee that if any local authority finds itself in a

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position where the people receiving housing benefit are having that benefit paid for by other tenants it will receive an increase in subsidy so that that will not have to happen?

Mr. Chope : This is the first time that I have debated across the Chamber with the hon. Gentleman and I have come to the conclusion that he is selective in his choice of examples. He said that Government support for Hammersmith and Fulham has been cut causing rent increases. Does he accept that in 1986-87 housing subsidy in Hammersmith and Fulham was £10.5 million and in the current year it is £21.6 million? It has more than doubled but the hon. Gentleman was asserting that the Government have cut support to Hammersmith and Fulham. If he cannot get his facts right concerning his own local authority, I cannot take him seriously.

Mr. Soley : I will deal with both points. The Minister used 1987 as an example. I too would choose that year as an example. However, we are worried about the past 10 years during which time the Government cut money to local authorities by about £24 billion. Hammersmith and Fulham has borne more than its fair share of cuts, even when it was under Conservative control.

I thought that the Minister was going to give the House the commitment for which I asked. He said that I was being selective and misleading but I know that he would not want me to mislead the House. If I find an example of a local authority where housing benefit is being paid to some tenants and that benefit is being paid for by other tenants through the rents, will he give a commitment that he will ensure Exchequer subsidy to prevent that happening? Can we have a straight answer to that question because every local authority whether Labour or Tory is in that position?

Mr. Chope : We will ensure that where an authority cannot raise sufficient income to cover all the costs in its housing revenue account, including the cost of rebates, subsidy will be paid to make up the shortfall. There is no question of tenants having to pay more because of an increase in the rebates bill. If the cost of rebates increases, subsidy will increase to meet the extra costs. That subsidy should go to the authorities that need it and not to cover costs that authorities can meet for themselves. The closer we stick to that basic principle the more we can do to assist in meeting real needs. The further we stray from it, the more we will leave real needs unsatisfied. Perhaps that is what the hon. Gentleman wants.

Mr. Soley : The Minister is avoiding the change in the wording. Clearly he is not familiar with the Bill. Clause 78(1) of the pre-amended Bill says :

"In subsection (2) of section 30 of the Social Security Act 1986 (housing benefit finance), for the words total housing benefit' there shall be substituted the words relevant benefit' and there shall be added at the end the words and in this subsection "relevant benefit" means total housing benefit excluding, in the case of a local authority in England and Wales, any Housing Revenue Account rebates granted by them'."

Will the Minister give the House a commitment that he will ensure that any local authority finding itself in the position which I have described and which is set out in the Bill will receive the subsidy that the Minister said it should receive? Will the Minister answer yes or no?

Mr. Chope : I have set out the position clearly. The hon. Gentleman is mischievously trying to suggest that where a

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local authority is in need, tenants will have to pay more because of an increase in the rebates bill. He may not find that he has much material in the Labour party's policies on housing but he ought to get our policies right and understand them before he criticises them.

Mr. Soley : Getting it right involves reading the Government's clause, which I have just done. The Minister's position will be unassailable much sooner than I thought. He will not last long in the job if he makes such gaffs. It will not be missed that the Minister said that there would be subsidy from the taxpayer to ensure that the poor did not subsidise the poorest and then retreated to the position that he now holds.

Capital value rents will force considerable rent rises. The Minister skated over that lightly saying that the average rent rise would be quite low. I cannot remember the figure he used, but I think that he said it would be about 95p minimum and £4.50 maximum. The Minister could use this point against me if he wanted but the places worst hurt will be the southern areas of Britain. One of the people most hurt would be the chairman of the Conservative party--the man who encourages the team approach. The man in Mole Valley will not be clobbered on the poll tax but every one of his council tenants will have to pay an increase of £4.50 a week in rent.

Can the Minister try to understand what it is like to live on the average wage of an unskilled person which is about £100 a week and then have to pay a rent increase of £4.50 per week? Can he envisage a situation where, because of housing benefit tapers and cut-offs, many people will not receive any benefit towards that, or if they do, it will be minimal benefit? What will the Minister say to the tenants in many Conservative areas in the south who next year will face rent increases of up to £4.50? He could tell them to do what they are doing in Canterbury or Elmbridge, which is to abandon council housing altogether and hand it over to a housing association where tenants can expect another massive rent increase. The increase was 24 per cent. last year and it will be high again next year, although at present it is hard to predict just how high it will be.

There is also the question of capitalised repairs. Council rent levels are further threatened by the plan to stop local authorities spending capital receipts on repairs. In the past that has been accepted as entirely legitimate by the Department of the Environment. All of a sudden, the Minister has discovered that that is not what accountants would do. In fact, it is what accountants do in private business, in the public sector or in everyday life. It is a normal, sensible way of managing one's affairs. That is why I can pray in aid Lady Anson and the Conservative- controlled Association of District Councils and most of the other Conservative authorities which are not in the ADC. All of them agree with me that they should be able to use the money that they have accumulated to meet their repair and renovation expenses.

I am not alone in saying that the anxiety that is being caused to tenants is unacceptable. I have a cutting from the Hemel Hempstead Herald and Post about Dacorum council, another Tory-controlled authority. It states :

"tenants could face huge rent increases if the Government ties levels to the local private housing market.

Chairman of the borough council's HousingCommittee"--

a Conservative, of course--

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"Councillor Peter Benton, told the Herald and Post he is waiting quite anxiously' for information on new Government orders. It really could be a muddle of things. The point is that we are already an efficient council with our housing stock of 15,000 homes,' said Councillor Benton.

This is just another step in reducing our responsibility and one can only regret that.'

They are figures' "--

I do not know whether I entirely agree with this--

" drawn up by bald-headed civil servants eating their salmon sandwiches in the Department of the Environment in Marsham street'." I have not seen many bald-headed civil servants eating salmon sandwiches in the Department of the Environment, but that is what councillor Benton thinks. He went on to state :

" it will be an order of the Government"--

that is absolutely right--

"which the council can do nothing about'. "

I shall offer the Minister an opportunity to intervene. He thinks that there is everything that he can do about it. Will he give an assurance to the Conservative leader of Dacorum council that he will ensure he gives it sufficient subsidy so that it need not do what councillor Benton thinks it must do ?

Mr. Chope : Dacorum council is Conservative-controlled. The hon. Gentleman also referred to Mole Valley. He seems to think that it is wrong for a political party to impose fairer policies which may have an impact upon its supporters in certain areas. The Government do not share the hon. Gentleman's cynical view of politics. Last year, in Mole Valley, average rents were £19.74, and in Dacorum they were £18.99. There is plenty of scope for reasonable rent increases in those areas, having regard to the fact that, in the hon. Gentleman's own borough of Hammersmith, average rents were £35.88 last year. Also, this year in Haringey, which most hon. Members regard as a borough with considerable needs, rents increased not by £4.50 but by two tranches of £4.50--one in the spring and one in October.

Mr. Soley : Let me try to help the Minister, as he is clearly getting into some difficulty. He should sit back and relax and imagine that everything that I say to him is designed to help him out of a hole--funnily enough, it is. He should abandon his absurd approach to setting rents and should sit down with his officials--he had better bring in one of his senior friends or he will quickly find himself out of a job--and start asking, "What is an affordable rent?" He could start from the position that many people in the housing movement have taken. If people are spending more than 20 per cent. of their net disposable income on rent or housing costs generally, they will quickly get into serious economic trouble.

I do not expect the Minister to say that 20 per cent. of one's net disposable income is a satisfactory rent level. It is not--it is too high. That percentage should be the highest. However, we know that, increasingly, it is the case for council tenants, housing association tenants and, above all, private sector tenants. Many tenants in housing associations, the private sector and, increasingly, in the council sector, are paying between 40 per cent. and 50 per cent. of their net disposable income on housing costs.

If the Minister bought a house and mortgaged himself up to the hilt, he would be terribly worried if he found himself paying 40 per cent. or 50 per cent. of his net disposable revenue on housing costs for more than a year

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or two. He knows that he could not do it. If one cannot do that on a Minister's salary, I am damn sure that one cannot do it on the salary of a skilled, semi-skilled or unskilled person. I implore the Minister to give up the daft argument that he is getting himself into about whether councils can set levels. We all know that they cannot. We know that the Government have been centralising local authority powers like mad. The issue is not just about that. It is about what people can pay for rent and the subsidy that is being taken from them in the private sector, the housing association sector and the council sector.

Unless the Minister gets this matter right, he must soon face up to the fact that not only will more people be pushed into homelessness and economic despair because they cannot afford their rents, but, setting the personal problem aside, the economic effects will be disastrous. Not only in London but in many other parts of the country now employers cannot find employees in areas in which housing costs are high.

6.15 pm

Yesterday, on the Radio 4 "Today" programme, the Secretary of State for Education and Science volunteered the information--I did not prime him to say it--that the Government cannot recruit and retain teachers because housing costs are too high. If Conservatives--councillors and Ministers alike--are saying that, there must be something seriously wrong. If I cannot convince the Minister that this matter is deadly serious by referring to kids in the streets with their "homeless and hungry" signs or by getting him to examine mortgage rates and so on, what on earth can I do to convince him?

Matters have been made worse by what the Government are trying to do. They set out their proposals in their consultation paper of 23 October. It states :

"It is essential therefore that the introduction of the new system should not of itself introduce any sharp change in the level of rents or management and maintenance spending in any individual authority The effect of these proposals will be to ensure a smooth transition to the new regime."

The new regime involves rent increases of up to 173 per cent. in some areas, again including Mole Valley. The document went on : "For the tenant, the immediate effect should be indistinguishable from what would have happened if the current system had remained in force."

The Minister should tell that to the tenant in Mole Valley when he pays £4.50 a week extra. The commitment was known as the soft landing. If that is a soft landing, and if the economy is also in for a soft landing, we had better emigrate before it is too late.

Mr. Chope : One question is at the root of the hon. Gentleman's argument. If rents of £35.88 in Hammersmith are affordable, why must we permit Mole Valley rents to go up by no more than £1.95 a week? Why should Mole Valley rents of £19.74 not be allowed to increase so that they are more in line with costs in that area?

Mr. Soley : Apart from capital values, which are relevant, the real problem is that the Government are embroiled in a situation in which the housing subsidy system is now chaotic. They have allowed the purchase sector, subsidy to expand and expand--not only through income tax relief but through discount sales and so on--at the same time as they cut the subsidy to the rented

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sector. That distorts the housing market to the extent that there is enormous house price inflation and people are unable to buy. Because the Government have moved literally 1.2 million homes out of the rented sector into the purchase sector, and because the building of new premises has come to a grinding halt because of interest rates, there is nothing to replace the rented sector. That is why people cannot find anywhere to rent or to buy. It is basic economics--supply and demand. The Government do not seem to understand those basic mechanisms.

The effect of the proposals of 23 October is that 66 authorities will have an assumed rent increase of £4.50--the Minister will correct me if I am wrong--170 authorities at the minimum rate of 95p, and the rest will be somewhere in between. The £4.50 increases are overwhelmingly in London and the south-east, where rents are already higher than in the rest of the country. On 24 October, the then Minister, Lord Caithness--another one who lasted only a short time ; some people did not notice his departure, let alone his arrival--tried to pretend that the Government had achieved a soft landing. Indeed, they said that they had already achieved a soft landing, so if the £4.50 was still to come, presumably that is where one would hit the barrier. Lord Caithness said that the average assumed increase was £2.08--that is about 10 per cent. in cash terms--and was because so many authorities, especially in the north, had increases of 95p--below the rate of inflation.

However, that is not the whole picture. It was stated that the new system should not

"of itself introduce any sharp changes in rents in any individual authority."

However, that is clearly what it has done. In terms of that commitment, the average figure is irrelevant. The Minister should look at the figure of £4.50. The Government's proposals also stated :

"for the tenant the immediate effect should be indistinguishable from what would have happened if the current system had remained in force".

The Minister should tell that to the Mole Valley tenants and to those in the other 65 authorities. The average is irrelevant to tenants in Hackney, Lambeth, Mole Valley or Cambridge. What matters to them is the amount by which the provisions will affect them. The figure of £4.50 for those 66 authorities is over 50 per cent. higher than any determination that has ever been made under the existing system. Even if the 1981-82 figure of £2.95 is increased to allow for inflation, it is still only an increase in 1990-91 prices of £4.41. I hope that the Minister will give some thought to that in due course. I turn now to the issue of bad debts and rent arrears and to Lords amendment No. 320. I refer to the Minister's earlier remarks about the subsidy available. Local authority tenants are having increasing difficulty in paying their rents. Although local authorities generally are devising new forms of management systems to make it easier for tenants, if a person's rent is taking an increasing amount of net disposable income, that person will get into arrears. I should like the Minister to respond to my next point when he replies to the debate. The Audit Commission is about to issue a report, the contents of which are well known, demonstrating that there has been a massive increase in rent arrears in virtually all local authorities. The Audit Commission is equally clear about the cause. It states that the cause is the housing benefits cuts. Will the

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Minister address himself to the challenge that the Audit Commission is putting to this House--and especially to the Government--and do something to prevent rent arrears from escalating in local authorities across the country because of the housing benefit cuts rightly identified by the Audit Commission and about which many of my hon. Friends have known for ages?

We shall seek to divide the House on amendment (b) to Lords amendment No. 119, which deals with the repair and renovation issue.

Mr. Tony Banks (Newham, North-West) : I am grateful to my hon. Friend for giving way because I want to point out to him that, while he was commenting on the dramatic increase in rent arrears following the housing benefit changes, the Minister was shaking his head in disagreement. I agree that it is his own head--and he is welcome to it because it is not a particularly clever or pretty one--but the fact is that all the evidence is so overwhelming that I cannot understand why the Minister is in dispute. I can give him the figures for my own London borough of Newham, where arrears increased by 30 per cent.--in line with the average increase in arrears throughout the country, in both Tory and Labour authorities. Can my hon. Friend explain why the Minister does not seem able to understand the facts?

Mr. Soley : What I can explain to my hon. Friend, who rightly pointed out that it is the Minister's head and he is entitled to shake it if he wants, is that the reason the Minister shook his head is that if he had said, "No", it would have appeared in Hansard, whereas the shaking of a head does not often appear in Hansard. If the Minister has not discovered this already, he will discover pretty shortly that what I have said about the Audit Commission is absolutely right.

Mr. Banks : Perhaps the Minister's body was wriggling and shaking while his head stayed still.

Mr. Soley : We shall seek to divide the House on amendment (b) because we do not want any rent increase over and above the highest agreed by the Government in the last three years, which is about £1.95. As I have said, they will increase this year by £4.50 for many people. We shall seek to divide the House because we believe that the increase should be held to a maximum of £1.95, given that the increases that the Government have brought about over the previous eight or nine years have been well above what would normally have been expected by tenants.

I turn now to amendment (a) to Lords amendment No. 119. As capitalised repairs will increase costs, when setting the Government's prescribed rent levels, I should like the Secretary of State to take their effect into account. As my hon. Friend the Member for Manchester, Withington (Mr. Bradley) said in an intervention, the danger is that if the new capital value rents are taken into account together with the capitalised repairs problem, there is no doubt that several local authorities around the country--again, of all political colours--will face rent increases running into two figures--in other words, of over £10 per week. Furthermore, the authorities will not be able to do much about it. They could stop doing some of the repairs, with all that that implies for a worsening in living conditions and a decline in the housing stock. However, even if they leave some repairs, they cannot ignore them all and will then face rent increases in some areas of over £10 per week.

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I am simply asking the Secretary of State to take into account capitalised repairs before setting the rents. The Government's assumed maintenance figure for capitalised repairs may be wrong for 1990-91. Indeed, I am sure that it will be wrong. At this stage I simply want to put on the record the fact that I believe that there will be strong evidence to support that.

I have spoken for longer than I had intended, but as hon. Members will agree, I have taken several interventions. These issues are incredibly important. I end where I began, by saying that we are facing a housing crisis in this country the like of which we have not faced since the end of the second world war. The position is now desperately serious. I pray in aid again the Association of District Councils, which has produced a report entitled "A Time to Take Stock", stating that we need to spend between £36 billion and £50 billion just to maintain the existing stock in good repair or rather to improve its condition. When sentiments such as that come from Conservative organisations which are pleading with the Government to do something, I know that what my hon. Friends and I have been saying for many years is correct.

The housing crisis that is tearing apart the fabric of our society is not confined to the inner cities. It does not just affect the high-priced areas of the south. It is tearing apart the lives and the communities of people in urban and rural parts of Britain, in the north, south, east and west. Its worst form is the homeless child begging in the streets. Its everyday form can be seen in the people who cannot afford to pay their rents or mortgages and who become homeless as a result.

Mr. Gerry Steinberg (City of Durham) : I rise to support the Opposition amendments. My hon. Friend the Member for Hammersmith (Mr. Soley) has just delivered what I and many of my hon. Friends regard as an excellent opening to our debate, telling a few truths which, unfortunately, the Government are not necessarily prepared to accept. I have watched the Ministers on the Treasury Bench shaking their heads like nodding toy dogs in the backs of cars. It is a disgrace that they should do that and then simply read out the notes passed to them by the civil servants in the Box when they do not have a clue what this is all about.

All Opposition Members and the majority of people in the country know that costs are increasing alarmingly in every sector of housing. We have all heard about the plight of home owners. The mortgage increases and high interest rates have been given great publicity by the press and many of us are, of course, subject to those increases ourselves. The increases in local authority rents, however, have received little attention. Local authority tenants have faced huge increases over the past few years, yet these have been largely ignored by the press, and even by this House. Housing association tenants and tenants in the private sector have also been badly hit in the past few years. However, I wish to speak about local authority tenants.

6.30 pm

Council rents in England this year have gone up by an average of £1.44 per week, representing an increase of 9.6 per cent. That is bad, but it is not half so bad as what will happen if the part of the Bill with which we are dealing passes unamended into law. Further major increases in council house rents will be inevitable.

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In considering the housing revenue account subsidy, I will cite my local authority in the hope that the Minister will reconsider the situation. If the Bill is unamended and the notional housing revenue account turns out to be a minus, the amount in question will have to be paid over to the general rate fund irrespective of whether it equates with the actual revenue housing account. For my local authority of Durham, that will mean about £1 million more, or £2 extra per week per council house tenant. That sum will have to be passed to the general rate fund account or to one of the other accounts mentioned in the Bill. That is daft because one need not be a brilliant accountant to know that the notional account will become £2 million in deficit terms in view of the £1 million that is pushed over and the other £1 million that has to be found to bring the account into credit.

Nowhere in the Bill can I see what should be done with that additional £1 million when it is notionally put into another account. I suppose that it will be used notionally to subsidise the poll tax.

Mr. Peter L. Pike (Burnley) : Has my hon. Friend considered, in relation to Durham's housing revenue account, what the effect would be on the interest element if tenants were allowed tax relief in the way that mortgage payers get tax relief on their mortgage interest, whether or not they need that subsidy?

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