(c) crown copyright
Catalogue Reference:CAB/129/77
Image Reference:0028
y
SECRET
C . P . ( 5 5 ) 12 C
COPY NO.
6 1
20th S e p t e m b e r , 1955
CABINET
HOUSING SUBSIDIES
M e m o r a n d u m b y the M i n i s t e r of Housing
and L o c a l G o v e r n m e n t
I submit b e l o w m y p r o p o s a l s f o r l i g h t e n i n g the burden o f the housing
s u b s i d i e s and f o r r e d u c i n g the t o t a l v o l u m e o f house b u i l d i n g .
Owing to the
a b s e n c e a b r o a d of the C h a n c e l l o r of the E x c h e q u e r I h a v e b e e n unable to
a g r e e t h e s e p r o p o s a l s in d e t a i l w i t h h i m .
H o w e v e r , they f o l l o w c l o s e l y
t h o s e w h i c h I outlined t o t h e C a b i n e t a t its m e e t i n g on 5th S e p t e m b e r , and
on w h i c h t h e r e a p p e a r e d t o b e g e n e r a l a g r e e m e n t .
2.
In our e l e c t i o n m a n i f e s t o , w e u n d e r t o o k t o m a i n t a i n a high r a t e of
house building and t o c o n c e n t r a t e e s p e c i a l l y on s l u m c l e a r a n c e and the
r e l i e f of urban c o n g e s t i o n .
A s u b s t a n t i a l s u b s i d y should t h e r e f o r e continue
t o be paid in r e s p e c t of houses built ­
( i )
( i i )
(iii) f o r the r e - h o u s i n g , d i r e c t l y o r i n d i r e c t l y , of s l u m
dwellers;
in N e w T o w n s , o r as p a r t of expansion s c h e m e s
under the T o w n D e v e l o p m e n t A c t to a c c o m m o d a t e
e x c e s s population f r o m o v e r c r o w d e d c i t i e s ; and
in a p p r o v e d c a s e s , to a c c o m m o d a t e w o r k p e o p l e
c o m i n g into an a r e a to m e e t the u r g e n t n e e d s of
i n d u s t r y ( e . g. c o a l m i n i n g ) .
3.
F o r such houses I r e c o m m e n d an E x c h e q u e r s u b s i d y of £ 2 4 .
T h i s r e p r e s e n t s a s l i g h t i n c r e a s e of about £2 on the p r e s e n t E x c h e q u e r
subsidy ( £ 2 2 I s . O d . ) .
H o w e v e r , i t f a l l s s h o r t b y n e a r l y £11 of the amount
w h i c h , under the e x i s t i n g p r a c t i c e , would be r e q u i r e d f r o m the E x c h e q u e r
t o m a k e g o o d the i n c r e a s e in i n t e r e s t r a t e s and o t h e r c o s t s s i n c e the
subsidy w a s f i x e d a y e a r a g o .
4.
. T h e subsidy on h o u s e s f o r o t h e r p u r p o s e s should be a b o l i s h e d
a l t o g e t h e r as soon as p o s s i b l e : but i t would be unwise t o e f f e c t this
d r a s t i c change a l l at o n c e .
T h e f i r s t and i m m e d i a t e step should b e t o cut
the s u b s i d y on houses built f o r " g e n e r a l n e e d s " .
I would l i k e if p o s s i b l e
t o r e d u c e it f r o m the p r e s e n t l e v e l of £22 t o about £10.
H o w e v e r , if w e
a r e not t o l o s e the e s s e n t i a l c o - o p e r a t i o n of the L o c a l A u t h o r i t i e s , i t m a y
b e n e c e s s a r y t o m a k e s o m e a d v a n c e on this f i g u r e .
They have reacted
m o s t s t r o n g l y to the l a t e s t i n c r e a s e in the i n t e r e s t r a t e s on public w o r k s
l o a n s , and when t h e y l e a r n that on top of that the G o v e r n m e n t a r e p r o p o s i n g
d r a s t i c a l l y t o cut the s u b s i d y , t h e y w i l l c e r t a i n l y p r o t e s t v i o l e n t l y .
In
f a c t , t h e y m a y adopt the attitude that t h e y a r e not d i s p o s e d t o build any
substantial n u m b e r of houses w i t h so l o w a s u b s i d y .
I a m m e e t i n g the r e p r e s e n t a t i v e s of the L o c a l A u t h o r i t y A s s o c i a t i o n s on 3rd O c t o b e r t o d i s c u s s the p o s i t i o n , a f t e r w h i c h I w i l l be b e t t e r a b l e t o a d v i s e m y c o l l e a g u e s on t h i s p o i n t . 5.
Other housing s u b s i d i e s ( e . g . f o r f l a t s ) w o u l d be adjusted proportionately. 6,
M o s t L o c a l A u t h o r i t i e s w i l l p r o b a b l y d e c i d e t o m e e t a l l or p a r t
of the cut in subsidy by r a i s i n g r e n t s .
I w o u l d p r o p o s e to a d v i s e t h e m to
sx^read any such r e n t i n c r e a s e s o v e r a l l t h e i r h o u s e s , n e w and o l d , and to
c o n s i d e r adopting d i f f e r e n t i a l r e n t s c h e m e s , as has a l r e a d y b e e n done by
quite a number o f C o u n c i l s .
7.
L o c a l A u t h o r i t i e s should b e a b s o l v e d of t h e i r s t a t u t o r y o b l i g a t i o n
t o pay subsidy out o f r a t e s on any of t h e i r h o u s e s , o l d o r n e w .
A t the
s a m e t i m e t h e y should be l e f t f r e e t o do so to such e x t e n t a s they m a y
think f i t .
T h i s would g i v e L o c a l A u t h o r i t i e s a f u r t h e r i n c e n t i v e t o r a i s e
C o u n c i l house r e n t s t o s o m e t h i n g m o r e n e a r l y a p p r o a c h i n g what the
tenants can a f f o r d to p a y .
8.
T h e s e new r a t e s of subsidy would apply t o a n y d w e l l i n g s built in p u r s u a n c e of t e n d e r s a p p r o v e d b y a L o c a l A u t h o r i t y a f t e r the date of the announcement.
S u b s i d i e s p a y a b l e in r e s p e c t of h o u s e s p r e v i o u s l y " a p p r o v e d w o u l d , of c o u r s e , not b e a f f e c t e d ,
9.
T h e e x i s t i n g s y s t e m , under w h i c h the G o v e r n m e n t f i x e s the h o u s e ­
building p r o g r a m m e of e a c h L o c a l A u t h o r i t y b y the i s s u e "of housing
a l l o c a t i o n s , should be brought to an end s o that a u t h o r i t i e s would be f r e e
t o build a s many houses as they w i s h with s u b s i d i e s a t the r e v i s e d r a t e s .
10.
Our a i m should be to r e d u c e p r o g r e s s i v e l y the n u m b e r of
s u b s i d i s e d h o u s e s c o m p l e t e d by L o c a l A u t h o r i t i e s and N e w T o w n s in
E n g l a n d and W a l e s down to (but not b e l o w ) 120,000 a y e a r , and the t o t a l
r a t e of c o m p l e t i o n s in G r e a t B r i t a i n down to (but not b e l o w ) 270,000 a y e a r .
It i s r e a s o n a b l e to e x p e c t that the r e d u c t i o n in the g e n e r a l needs subsidy
and the " c r e d i t s q u e e z e " w i l l p r o d u c e s o m e t h i n g a p p r o a c h i n g this r e s u l t ,
though it i s i m p o s s i b l e t o f o r e c a s t with a c c u r a c y the p r e c i s e e f f e c t of
e i t h e r of t h e s e m e a s u r e s .
T h e p o s i t i o n should, t h e r e f o r e , be c l o s e l y
watched.
If it should be found e i t h e r that the r a t e o f house building i s
s t i l l t o o h i g h , o r that i t i s f a l l i n g a w a y t o o r a p i d l y , f u r t h e r a c t i o n m a y
have to be considered.
11.
If they a r e a p p r o v e d by the C a b i n e t , I w o u l d p r o p o s e t o announce t o the H o u s e the changes p r o p o s e d in p a r a g r a p h s 2 t o 9 a b o v e and t o s a y that a B i l l t o g i v e e f f e c t t o t h e m w i l l b e i n t r o d u c e d as soon as p o s s i b l e , I would not s p e c i f y the p r e c i s e f i g u r e s f o r the n e w subsidy r a t e s , pending the o u t c o m e of m y m e e t i n g with the r e p r e s e n t a t i v e s of the L o c a l A u t h o r i t i e s on 3 r d O c t o b e r . Conclusion
12.
A c c o r d i n g l y , I ask m y c o l l e a g u e s ­
(a)
t o a p p r o v e the p r o p o s a l s outlined in p a r a g r a p h s 2 to 10 a b o v e ; U\0 (b)
to a g r e e that I should m a k e a s t a t e m e n t t o the House
on the l i n e s indicated in p a r a g r a p h 11; and
( c )
t o a u t h o r i s e t h e p r e p a r a t i o n of the n e c e s s a r y B i l l ,
with a v i e w t o its e a r l y i n t r o d u c t i o n .
D.S.
M i n i s t r y of Housing and L o c a l
G o v e r n m e n t , 3 . W , 1.
19th S e p t e m b e r , 1955.
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