The Fair Rent System
The “Fair Rent” system is fundamental to the operation of the 1965 Rent Act introduced by the Labour government. Broadly speaking, its object was to please both landlords and tenants, by ensuring that the tenant paid a “fair” rent, and that the landlord received a “fair” return on his capital. This was to be achieved by ignoring the existence of the laws of supply and demand. Not a very promising start. However, it is intended that this system will gradually replace the present forms of rent control which have existed since 1915.
State control over rents is supported by all political parties (except us), including Communist and Left-wing splinter groups, and is hailed by them as a measure which is in the interests of the working class. It is nothing of the kind. Since 1915 most rents from workers houses let by private landlords have been kept artificially low by successive statutes controlling rents. The result has been that little or no fresh capital has gone into working class housing, either to replace old houses or maintain existing ones. In 1915 there were 8 million houses in England, 90 per cent were owned by private landlords. In 1970 there were 17 million houses, of which 3.4 million or 20 per cent are now owned by them. (White Paper Fair Deal for Housing, 1971). In Scotland in 1915 practically all houses were owned by private landlords. In 1970 only 13 per cent are now owned by them. (Francis Committee on Rent Acts, 1971).
According to the White Paper Fair Deal for Housing, there are over 2 million houses without bathrooms or indoor sanitation, etc. and which urgently require basic improvements like installing hot water. When the alleged benefits of low rents and rent control are paraded by Labour and Communist reformers, this should always be balanced against the disadvantages and inconveniences suffered by those workers whose house is rapidly deteriorating into a slum. It cannot be said to be in the interests of the working class to live in overcrowded conditions in sub-standard decaying houses, even if the rents are low.
One other effect of rent control has been virtually to abolish the letting of unfurnished houses and considerably increase the rents of furnished apartments. In theory these are subject to control, but in practice, anyone taking advantage of the Acts to get his rent reduced almost signs his own eviction notice.
Governments always claim that through rent control they are protecting the tenant from exploitation by the landlord during periods of housing shortages. What in fact they are doing is to take the sting out of wage demands and prevent wages from rising. Wage restraint and rent control are twin policies pursued by all the major political parties. Undoubtedly some workers have benefitted initially from low rents at the expense of the landlords, but as their accommodation becomes dingy and dilapidated they will begin to wonder whether it was worth it.
The Labour Party rank and file have apparently miscalculated the effect of their own 1965 Act. Most of them thought it would reduce rents. The reverse has happened. The Committee on the Rent Acts (Francis Committee) reported in 1971 that in the majority of cases where an application was made to the Rent Officer the rent was increased. From 1965-1970 29.3 per cent of rents were decreased, 8.7 per cent were unchanged, and 62.0 per cent were increased. In over 40 per cent of the cases where the rent was increased, the increase was over a half.
Probably the unkindest cut of all was when the Tories decided that Labour’s Rent Act, based on the fair rent principle, should in future be applied to council houses. At present there are 4.5 million council houses in England and 894,000 in Scotland. Hitherto these have not been covered by the Rent Acts. The present Housing Finance Bill before Parliament will alter this. The subsidies, at present running at the rate of £220 million per year, will be discontinued. Rents will then be fixed on the “Fair Rent” principle, which, in effect, means they will rise. Local authorities are to be legally bound to charge economic rents. Tenants who cannot afford the new and higher rents will receive rent rebates up to a maximum of 60 per cent. For the purpose of calculating the rebate, the incomes of man and wife together with any interest on Post Office savings or other income, plus 0.1 per cent of any uninvested capital over £300, i.e. savings, will be included. This Means Test will also apply to tenants of private houses who, under this Bill, will be given cash grants to help pay their increased rent. The Means Test dragnet will leave nothing uncovered.
The general strategy is that those workers who can afford to pay the higher rents will help those who cannot, with the government making up any deficit. Any deficit will be spread over the general body of tenants, and rents adjusted upwards to get rid of it. This redistribution of poverty among the working class is nothing new. Neither is the appalling ignorance of Labour MP’s and their Communist and other supporters of how the capitalist system works. The worker, generally speaking, receives only sufficient wages to enable him to live and reproduce future workers. The value of his labour power determines his purchasing power. He cannot increase his wages without attacking the capitalists’ profits. He cannot get something for nothing, whether it be food, housing, etc. The social reformer will never face these facts.
The debate on the Housing Finance Bill has put the Labour Party, and their running dogs, the Communists and Trotskyists, in a curious position. They were responsible for the legislation embodying the “Fair Rent” principle, as the Tory government spokesmen shrewdly reminded them.
They are in real difficulty. If they vote against the Bill they will be voting against the principle of rent rebates (which they accept) and financial assistance being given to needy tenants living in private houses. If they support the Bill they will be in favour of supporting rent increases for millions of Council tenants. Such is the dilemma of the reformer. As it is, the entire effort that has gone into legislation to abolish or even ameliorate the workers’ housing problem has proved to be a complete waste of time.
After fifty-five years the greatest political minds working within all three of the major political parties have produced a solution to the housing problem which really amounts to the proposition—that the worker will get what he can afford to pay for.
The real solution to the housing problem is not financial but social. The freeing of the technical means of production from their financial stranglehold is a task of a Socialist society.