§ Lords Amendment: At the end of Subsection (3), leave out "the amount of that increase" and insert "such proportion of the expenditure of the authority as, failing 1589 agreement, in the opinion of the arbitrator has increased the value of such property."
§ Mr. BURNSI move "That this House doth disagree with the Lords in the said Amendment."
The effect of the Amendment inserted by the Lords would be that the local authority could only recover as betterment the amount of the expenditure by the local authority under a scheme. But expenditure frequently has no necessary relation to betterment. The scheme of a local authority may mean little or no expenditure on the part of the local authority, but property might be enormously increased in value. On the other hand, a local authority might incur very large expenditure, and no property would be materially increased in value thereby. We think this Amendment is inequitable in two ways. It would mean that the local authority could only recover from any particular owner an amount in proportion to the expenditure which had increased the value of his property. The amount so recovered might be much less than the local authority ought to get. On the other hand, I put the case in this way in the interest of the owner. If a man's property is worth £500, and is increased in value by the making of a road which cost £3,000, it would be obviously unjust that the owner should be responsible, as he would be under the Lords Amendment, for £3,000. I am informed that some of the Noble Lords who voted for this Amendment are now under the impression that in many cases it would damnify the owner more than the local authority. The Bill, as originally introduced and sent to the Lords, would have given the local authority the whole of the betterment accruing under the operation of a scheme. Noble Lords objected to that, and we made what I thought was a magnanimous offer, namely, that half should go to the owner and half to the local authority. That offer is still open, and we can only give Noble Lords an opportunity of accepting it by disagreeing with their Amendment. We cannot go further than that. We think that half and half is most reasonable. I have no doubt that when we disagree with this Amendment, their Lordships will see the magnanimity of our proposal and adopt our view.
§ Mr. LYTTELTONThe right hon. Gentleman seems to think that we ought to reject the Lords Amendment without further discussion. As a matter of fact, what is the Government scheme as he 1590 reveals it? The local authority, without taking upon themselves the responsibility of purchasing a property, embark on a scheme in which that property is involved. If the scheme which they authorise turns out successful, they are to have, under the Government scheme, the entire profit of it at the expense of the owner of the property which it affects. If, on the other hand, the scheme turns out a loss, then the local authority will not contribute a penny to that loss. That is the right hon. Gentleman's idea of equity. If the local authority are convinced of the soundness of a town planning scheme they can apply for compulsory powers, and take the responsibility on their own shoulders. But they refrain from doing that, leave the property on the hands of the owners, wait to see what is the result, and take the gain if there is a gain, and do not share the loss if there is a loss.
§ Mr. WALTER GUINNESSThe Amendment which the Government now want to reject appears to me quite necessary if they believe in the principles of their own Finance Bill. Apparently they cannot believe in those principles, because this betterment proposed by the Government is quite indistinguishable from the scheme which will arise under the Finance Bill. I think they could have distinguished it from unearned increment if they had said that this betterment is only to be that increase in value which was the result of the expenditure of the local authority, but now that the Government refuse to take that definition, this betterment covers exactly the same ground as the increment. It seems quite unjust if increment arises under a town planning scheme that the owner is to lose the whole of it, and if it arises in any other way the owner is only to lose one-fifth of it. There is no possible logical foundation for that, and we all wait with interest to see how the Government justify this proposal in one case and not in all cases. The right hon. Gentleman has taken credit to himself for great magnanimity in suggesting that the Government would be satisfied with only half the increase in value. No doubt they copied that provision from one which obtains in certain local Acts. In the Local Improvement Acts where you find that provision the whole district has been improved entirely by the expenditure of public money. In London when the Tower Bridge approach was made the whole increase in value in that district was due to the expenditure of public money, and it was perfectly reasonable that in that 1591 case half the increase in value for a given term of years should go to the local authorities. But in the cases which will arise under this Bill there will be no question of public money, although the whole district will have changed its quality and become building land instead of agricultural land by this increase of value owing to the expenditure of private funds. When a district is developed in the ordinary way, roads and open spaces and many other amenities are all laid out at private expense, and it is perfectly absurd for the Local Government Board to come in and say that all that natural increase in value, which is the legitimate reward of private capital being expended, is to be confiscated by the local authority.
§ Mr. WALTER GUINNESSThe right hon. Gentleman says "No." He has taken that attitude in previous stages of the Bill, and he has never explained how he is going to limit the operation of this provision—"where by the operation of the scheme any property has increased in value." There is not a word about limiting this value, which is the increase of value under the town planning scheme, which will include buildings and roads, and if a man puts up buildings and gets an increase of his capital and good rents by wise planning of his buildings, then, as town planning schemes are controlled by regulations as to buildings under the fourth Schedule, the Local Government Board will be able to run all that in and charge upon it. The chief result of this provision which the Government propose would be, if it ever does become law, to make it quite impossible to build. The President of the Local Government Board shakes his head, but, as has been pointed cut, a town planning scheme is going to absolutely include everything.
§ Lord ROBERT CECILI do not see any answer to the point raised by my hon. Friend. A local authority agrees to a scheme to be carried out, and the Local Government Board confirm it. It is part of the scheme that the work shall be carried out by a private individual, it may be by the owner of the property which is benefited. Then the local authority comes down under this provision and claims the whole of the profit which has accrued to the owner by expenditure of his own money on his own scheme. If that is the effect of the Clause—and as far as I can see it is 1592 the effect—the only result will be that no improvement will ever be carried out by a private individual under this town planning provision. They will say, "Very well, we will carry it out in our own way, and not pay a percentage to the local authority or the Local Government Board if we can avoid it." Surely that cannot be what the Government intend. It may be that the Government intend that the local authority shall be entitled to recover the whole of the benefit where they themselves have carried out the scheme and spent money upon it, but in that case the local authority may well spend a very trifling sum. The scheme may merely involve their spending a small sum of money to open up a bit of back land by a road. Are they thereupon to carry off the whole of the profits which may arise?
§ Lord ROBERT CECILIf they do, then they throw the cost of it on the ratepayers of the district. I am not quite clear as to whether they can make a special district a special contributory place, but, in any case, the provisions of the Bill are clearly unjust. It cannot be just to say that where two private individuals or the actual individual concerned spends money for developing his property, that thereupon the whole of the profit arising from that development should go to the local authority. That cannot be just or right or proper, I venture to say, that the difficulty raised by the Lords Amendments has not been even alluded to by the President of the Local Government Board. He has got to deal with that case and explain either that it is wrong to suppose that profit can possibly come within this Clause, or that there is some reason which certainly escapes me why that profit should go to the local authority.
§ Mr. HERBERT LEWISIt seems to me that we are discussing this matter with some little confusion, if I may venture to say so to the Noble Lord who is always extremely lucid, between what I may term the natural benefit, the ordinary element, and the artificial element brought about by making a scheme. As regards the ordinary or natural benefit, that increase in the value of land which would take place in the neighbourhood of a growing town, that under any circumstances would naturally belong to the owner of the property. That would not be due in any degree to the making of the 1593 scheme, but as regards the betterment which is due to the making of the scheme, It is surely only right and just, as my right hon. Friend has suggested, that a share of that benefit should belong to the local authority.
§ Lord ROBERT CECILI do not think I made the point I desire to make clear to the hon. Gentleman. There is an owner of land near a town who desires to develop his land. Under this Bill the local authority is entitled to come in and say, "That must be developed under a town planning scheme," and they make a scheme to regulate the development of that land. Assume that it is a beneficial development will it or will it not be the case that the whole of the profit arising from that development or from the making of the scheme which authorised that development to which the local authority will not have contributed one halfpenny, is it or is it not the effect of this Bill that the whole of that profit will go to the local authority?
§ Mr. HERBERT LEWISThe Noble Lord says that the local authority will not have contributed a single halfpenny, but, as a matter of fact, the local authority is responsible for the payment of compensation in respect of every atom of injurious effect to the property with which they have to deal. I think that should be borne in mind. Surely it is only fair that the local authority should be able to recoup itself from that in some way or other. There is a method suggested by the Lords Amendment by which the local authority could be compensated, but, as my right hon. Friend has already shown, that method might result in the greatest possible injustice to the local landowner. Upon the legal construction of the Lord's Amendment the result to the local landowner might be absolutely disastrous. We are upon that particular Amendment now, and I think the House will be wise to reject it. We prefer the system of assessing not the total amount of the increment, but it is absolutely necessary to draw a dividing line between the natural increment and the artificial increment. As regards the artificial increment, having regard to the expenditure of the local authority, it is absolutely essential some portion of that increment should be given to the local authority to compensate it.
§ Mr. STEWART BOWLESThe Parliamentary Secretary to the Local Government Board has drawn a distinction 1594 between what he calls natural and artificial increment. That is very interesting, though for my part it would appear at first sight that no increment could be strictly natural, and the increment of land, particularly in relation to any development scheme, must be to a large extent artificial.
§ Mr. HERBERT LEWISI meant ordinary.
§ Mr. STEWART BOWLESOrdinary, as apart from the scheme. I will not pursue that aspect now, but really with great respect the hon. Gentleman (Mr. Herbert Lewis) has not dealt with, or attempted to deal with, the very simple case put by my noble Friend (Lord Robert Cecil). As this is a matter of importance, I will repeat shortly the case put by him. The case is quite simple. A landowner wishes to develop his land and the local authority prepares a scheme for the development, which the landowner adopts, and the development is carried out by him. The local authority does not spend a farthing, and yet, unless some such Amendment as this is inserted, for all time it will be open to the local authority to recover from the owner the amount of the increase of value. I am sure that cannot be the intention of the Government. This is a matter which clearly requires their careful attention.
§ Mr. BURNSIf the scheme does nothing which the owner could not have done without the scheme, it will not increase the value of his land. The hon. Member is entirely wrong when he speaks about the local authority taking the betterment for all time. In Clause 58 (3) he will find a limit of three months; and 58 (1) provides: "Any person whose property is injuriously affected by the operation of a town planning scheme shall, if he makes a claim for the purpose within the time (if any) limited by the scheme, not being less than three months after the date when notice of the approval of the scheme is published in the prescribed manner, be entitled to obtain compensation in respect thereof from the responsible authority." We are astonished at our moderation and generosity.
§ Mr. STUART-WORTLEYI think this Amendment presumes certain things which will not happen. What will probably happen is that a landowner will formulate a planning scheme, as the result of which some of his property will be developed in a way short of his strict legal rights, while other parts of his property may be benefited.
§ Mr. BURNSThe right hon. Gentleman is entirely mistaken. For complying with the scheme the owner gets a relaxation of bye-laws and regulations and other incidental advantage, which he could not get if he stayed outside the scheme.
§ Mr. STUART-WORTLEYIt may be that under the scheme nobody is injuriously affected, except the landowner, who has, so to speak, averaged the benefit over his whole property. The local authority is to make a claim in
§ 1.0 A.M.
§ Sub-section (4).—Any question as to whether any property is injuriously affected or increased in value within the meaning of this Section, and as to the amount and manner of payment (whether by instal- 1596 respect of the particular part of the property which happens to rise in value in consequence of the scheme, in regard to which it does nothing, and it is to make no allowance to the owner for that which he has foregone out of public spirit in respect of the rest of the property.
§ Question put, "That this House doth disagree with the Lords in the said Amendment."
§ The House divided: Ayes, 113; Noes, 26.
1595| Division No. 886.] | AYES. | [12.55 a.m. |
| Acland, Francis Dyke | Glover, Thomas | Pearce, Robert (Staffs, Leek) |
| Adkins, W. Ryland D. | Goddard, Sir Daniel Ford | Philipps, Owen C. (Pembroke) |
| Ainsworth, John Stirling | Gooch, George Peabody (Bath) | Pickersgill, Edward Hare |
| Allen, A. Acland (Christchurch) | Harcourt, Rt. Hon. L. (Rossendale) | Pirie, Duncan V. |
| Allen, Charles P. (Stroud) | Harcourt, Robert V. (Montrose) | Pointer, J. |
| Balfour, Robert (Lanark) | Harwood, George | Ponsonby, Arthur A. W. H. |
| Baring, Godfrey (Isle of Wight) | Hedges, A. Paget | Price, C. E. (Edinburgh, Central) |
| Barnard, E. B. | Henderson, Arthur (Durham) | Price, Sir Robert J. (Norfolk, E.) |
| Beale, W. P. | Henry, Charles S. | Radford, G. H. |
| Bowerman, C. W. | Herbert, Col Sir Ivor (Mon. S.) | Raphael, Herbert H. |
| Brooke, Stopford | Higham, John Sharp | Roberts, Charles H. (Lincoln) |
| Brunner, J. F. L. (Lancs., Leigh) | Hobart, Sir Robert | Roberts, G. H. (Norwich) |
| Bryce, J. Annan | Hooper, A. G. | Roberts, Sir J. H. (Denbighs) |
| Burns, Rt. Hon. John | Horniman, Emslie John | Rogers, F. E. Newman |
| Byles, William Pollard | Howard, Hon. Geoffrey | Samuel, S. M. (Whitechapel) |
| Causton, Rt. Hon. Richard Knight | Hudson, Walter | Seely, Colonel |
| Cheetham, John Frederick | Jones, Leif (Appleby) | Summerbell, T. |
| Cherry, Rt. Hon. R. R. | Jones, William (Carnarvonshire) | Sutherland, J. E. |
| Cleland, J. W. | Jowett, F. W. | Taylor, J. W. (Durham) |
| Clough, William | King, Alfred John (Knutsford) | Tennant, Sir Edward (Salisbury) |
| Cobbold, Felix Thornley | Lamont, Norman | Tennant, H. J. (Berwickshire) |
| Collins, Stephen (Lambeth) | Lehmann, R. C. | Toulmin, George |
| Collins, Sir Wm. J. (St. Pancras, W.) | Lever, A. Levy (Essex, Harwich) | Ure, Rt. Hon. Alexander |
| Corbett, C. H. (Sussex, E. Grinstead) | Lewis, John Herbert | Verney, F. W. |
| Cornwall, Sir Edwin A. | Macnamara, Dr. Thomas J. | Vivian, Henry |
| Cotton, Sir H. J. S. | M'Callum, John M. | Walsh, Stephen |
| Crossley, William J. | Maddison, Frederick | Walters, John Tudor |
| Davies, Sir W. Howell (Bristol, S.) | Markham, Arthur Basil | Ward, W. Dudley (Southampton) |
| Dewar, Arthur (Edinburgh, S.) | Marnham, F. J. | Warner, Thomas Courtenay T. |
| Dickinson, W. H. (St. Pancras, N.) | Masterman, C. F. G. | Whitbread, S. Howard |
| Duncan, C. (Barrow-in-Furness) | Micklem, Nathaniel | White, Sir Luke (York, E. R.) |
| Dunn, A. Edward (Camborne) | Middlebrook, William | Whitehead, Rowland |
| Essex, R. W. | Mond, A. | Wiles, Thomas |
| Evans, Sir S. T. | Morrell, Philip | Wilkie, Alexander |
| Everett, R. Lacey | Morse, L. L. | Williams, J. (Glamorgan) |
| Ferguson, R. C. Munro | Murray, Capt. Hon. A. C. (Kincard.) | |
| Foster, Rt. Hon. Sir Walter | Newnes, F. (Notts, Bassetlaw) | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Fuller, John Michael F. | O'Brien, Patrick (Kilkenny) | |
| Gladstone, Rt. Hon. Herbert John | Parker, James (Halifax) |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex. F. | Craik, Sir Henry | Morpeth, Viscount |
| Balcarres, Lord | Dickson, Rt. Hon. C. Scott | Stanier, Beville |
| Banbury, Sir Frederick George | Douglas, Rt. Hon. A. Akers- | Talbot, Lord E. (Chichester) |
| Bignold, Sir Arthur | Dumphreys, John | Valentia, Viscount |
| Cave, George | Forster, Henry William | Wortley, Rt. Hon. C. B. Stuart- |
| Cecil, Evelyn (Aston Manor) | Guinness, Hon. W. E. (B. S. (Edmunds) | Younger, George |
| Cecil, Lord R. (Marylebone, E.) | Harrison-Broadley, H. B. | |
| Clyde, J. Avon | Hay, Hon. Claude George | TELLERS FOR THE NOES.—Mr. Stewart Bowles and Mr. Newdegate. |
| Cochrane, Hon. Thomas H. A. E. | Kerry, Earl of | |
| Courthope, G. Loyd | Lyttelton, Rt. Hon. Alfred |
§ ments or otherwise)of the sum which is to be paid as compensation under this Section or which the responsible authority are entitled to recover from a person whose property is increased in value, shall be determined by the Local Government 1597 Board, and the determination of the Board shall be final and conclusive and binding on all persons.
§ Lords Amendment: Leave out from "by" ["determined by the Local Government Board"] to end of Sub-section, and insert, "arbitration under this Act in accordance with the first Schedule to this Act."
§ Mr. BURNSI do not accept the words proposed to be inserted, but I propose to substitute for them the words "the arbitration of a single arbitrator appointed by the Local Government Board, unless the parties agree on some other method of determination."
§ Lord ROBERT CECILMay I ask the right hon. Gentleman why the Government propose that the arbitrator shall be appointed by the Local Government Board instead of the Lord Chief Justice? In several other Bills that have been passed on the initiative of the Government, and in the Finance Bill and the Development and Road Improvement Funds Bill it has been provided that the arbitrator shall be appointed by the Lord Chief Justice. Why is that not done in this case?
§ Mr. BURNSExcept on a point of law, which we have conceded in Clause 40, we do not consider it desirable to bring in a judicial decision. This is an administrative rather than a judicial matter, and we think the Local Government Board should decide it.
§ Amendment to Lords Amendment agreed to.
§ Question, "That the House doth agree with the Lords in the said Amendment, as amended," put, and agreed to.