§ Order for Second Reading read.
§ The Chancellor of the Exchequer (Sir Kingsley Wood)
I beg to move, "That the Bill be now read a Second time."
The main object of this Bill is to expedite certain of the work of the War Damage Commission and so to accelerate the classification of properties that have 1336 been damaged and the necessary plans for rebuilding and for redevelopment after the war. We are now able to take the course set out in the Bill mainly owing to the satisfactory progress that the Commission has been able to make with its work. When the Commission was first appointed it took over from the Inland Revenue Valuation Department over 1,000,000 claims which had already been lodged in respect of war damage that had occurred before the War Damage Act, 1941, was passed. The great bulk of these claims were in respect of partial damage which in many cases had already been repaired. The Commission was thus faced with ft heavy load of arrears of claims due for immediate payment. Further claims continued to come in, and are still coming in, but towards the end of last year the Commission found that they had, broadly speaking, wiped off their arrears. The War Damage Act, however, requires the Commission to apply to every damaged property a statutory test to determine whether the property is a total loss and, therefore, normally the subject of a value payment or whether it is not a total loss and, therefore, normally the subject of a cost of works payment. In other words, the test is designed to determine whether the property is economically worth restoring or hot, and this is the second stage of the Commission's work.
The third stage will, of course, be the making of payments in respect of repairs and rebuilding after the war when civilian building is again possible. It is clearly desirable that if possible the Commission should complete the classification, at least of all properties damaged to date, before the end of the war. The sooner this is done the easier it will be for owners and others to know how they stand and to make their plans for rebuilding or redevelopment. If that is not done, it may hold up post-war reconstruction. If the Commission can now set themselves to work on the classification, they will be ready when the third stage arrives to deal with current classification and current claims, and the provisions in the Bill for which I am now asking the Second Reading will make it possible for the Commission to do this classification now.
Section 4 (1) of the original Act requires the Commission to decide whether the case is a total loss by reference to levels of cost and value at some future 1337 indefinite time. The Commission thus has to consider not only when the work of restoration would be likely to take place but also what is likely to be the level of prices and the values at that indefinite time. It is obvious how difficult it is to draw conclusions as to post-war levels of value from present estimates, and this makes it practically impossible for the Commission to get on satisfactorily with this second stage of their work. The Bill, in Clause 1 and the Schedule, amends Section 4 (1) so as to make the test one upon pre-war levels of costs and values. It is not suggested that the solution is entirely scientific or that an entirely scientific solution can be found, but I would suggest to the House that it is a solution which should serve well as a working basis. There is probably no particular ground for thinking that the houses or other buildings which were economically worth restoring before the war would not be thought worth restoring after the war or vice versa, and the general effect of the proposed solution will be to expand the field within which costs of works payments can be made, which, as many hon. Members will remember, was strongly urged on all hands when we last debated this matter. Broadly, it should result in the rebuilding of any good building which was damaged, and the change will enable the Commission's work to be done now and will introduce a large measure of certainty in place of hypothesis. Thus I hope it will lessen the scope of disputes and differences.
It is, course, necessary in applying the test of the 1939 levels and values and prices to ensure that this does not result in a cost of works payment owing to a change of circumstances between pre-war and post-war in cases in which rebuilding ought not to take place. This can be secured, for the Treasury has power to issue directions under Section 7 in regard to the public interest which could be utilised so as to enable the Commission to make a value payment in cases where post-war conditions make restoration improper, notwithstanding that the test gave a cost of works payment. I may say, for the information of the House, that there has already been evidence that owners of property are likely to ask for a value payment, which they can do under the provisions of the Act, in lieu of a cost of works payment, where a 1338 restored building is likely to be what is called a white elephant.
I need not say much about Clause 2. The House will remember that at a late stage in consideration of the amending Bill last year certain lengthy and complicated provisions relating to rent charges were introduced. Further consideration has disclosed one error and one or two omissions, and it is necessary to put these right before the Acts, are consolidated, so we are taking this opportunity to-day to do that. The purport of the small technical Amendments involved is explained in the Memorandum to the Bill, which no doubt has been noted and observed by hon. Members. I commend the Bill to the House; I think it will help us with our reconstruction plans, and I hope it will meet with general approval.
§ Sir Charles Edwards (Bedwellty)
I am very glad that this Bill has been introduced, because there is great need of improvement in regard to some of the questions connected with war damage payments. I have been dealing with a case which occurred in my own constituency, where a bomb fell about two years ago and totally destroyed or damaged no fewer than 100 houses. No repairs were put in hand, although many of the houses were not so badly damaged that they could not have been made habitable. Later people began to take up the question and got in touch with the war damage authorities in Cardiff. There was much letter writing, following which the people concerned were asked to get a contractor's estimate for the repair of six houses. A contractor in Newport gave a price, and after further letter writing he was told" to commence work. He did so until the amount due to him had risen to £900. From that point he was not able to go further, because there was no sign of payment, owing to a dispute having arisen as to whether it was to be a cost of works payment or a value payment for the work.
While that dispute was in progress the man who was doing the work had gone a certain distance with his repairs, but as I say he reached a point at which he could not carry on any further. That is about two months or more ago. These houses have been left in that half-repaired state since, and I suppose that to-day, owing to the wind and rain, they 1339 are almost back to the state in which they were at the beginning. I got in touch with Cardiff about the matter and had a very nice letter, saying that they would write to me again and that sort of thing. Later, they wrote to say that they had nothing more to do with the matter and that the letters had been referred to London and were now in the hands of a committee which was dealing with this problem. I then wrote to the chairman of that committee. I received an acknowledgment and was told that a further letter would follow, but no letter has followed, and these houses are still in a half-repaired state.
I do not quite know what this value payment means. I gather from the Chancellor of the Exchequer that when the value payment is to apply, it relates to the value of the house before the damage took place. If that be so I think it may be satisfactory, but that has not been so in this case of Rogerstone in Monmouthshire. The houses were in a repairable condition, and the people wanted a cost payment for the work done. They thought that if it was a value payment, it would be the value after these repairs had been done—which would have been very different from the value before the damage took place. I wonder, then, if it is clear that from now onwards the value payment is to be related to the value before the damage took place. If so, that payment I think, would be satisfactory. If not, it will not be satisfactory, and nothing less than the cost of the job will be satisfactory. This trouble has been going on for a long time, and it is a very serious matter in Rogerstone. It will be seen how important it would be if even six houses were to be put into a proper state of repair. I hope that whoever is in charge of this Debate will take note of what I have said and get this matter cleared up. I hope this Measure will make it possible to deal with cases of that kind, which are very serious for the people concerned and very expensive to the country, especially when houses are left in a half-repaired condition for months and work upon them has to be started all over again. I commend these facts to the consideration of the right hon. Gentleman.
§ Mr. Butcher (Holland with Boston)
I think the House generally is grateful to the Chancellor of the Exchequer for the 1340 introduction of this Bill, which is the second Measure we have had in amendment of the original War Damage Act. My right hon. Friend in introducing the first Measure, said that in regard to this question of war damage, he would be able to apply only some form of rough judgment, but I believe that the amending Act of last year, with this Bill, will go some way to refine and improve the original Measure. I believe too that this very painful and difficult question of war damage has been handled, on the whole, extraordinarily well by the War Damage Commission, and if it is not out of place to do so, I should like to pay a tribute to their work generally. Many problems, such as that to which the right hon. Gentleman the Member for Bedwellty (Sir C. Edwards) has alluded are due to the difficulty of interpreting the original Act and the amending Act; and I believe that the Minister who replies to-day will be able to give us some assurance that this Bill deals, in some way, with those difficulties.
Having said those kind things, I have to return to certain observations which I ventured to make on the Measure of last year. I regret very much that no steps are being taken at this late date to meet the position of those who are paying interest on property which, as a result of enemy action, they are no longer able to enjoy. Under the original Act the interest payable by His Majesty's Government is 2½ per cent., payable after the war, but the continuing burden upon owners of property at the present time is at the aggregate rate of interest payable from income, arising not only out of the property damaged but out of the whole of their resources. I am not going to dwell upon the point now. I know very well that it was a matter of debate, and if it is a suitable subject for an Amendment at a later stage of the proceedings on this Bill, then I and my hon. Friends will ask your permission, Mr. Speaker, to move such an Amendment.
§ Mr. Bellenger (Bassetlaw)
I have considerable sympathy with the points just raised by my hon. Friend the Member for Holland with Boston (Mr. Butcher). I do not know whether this is a suitable occasion on which to try to persuade the Government to change their mind on something which we debated extensively on the previous amending Measure, but 1341 as, apparently, the Government have indicated their intention of bringing in amending Bills from time to time, to improve the original Act, I would urge upon them the necessity of considering this question once again. This Bill deals only in a limited way with the original Act. All it does, as I understand it, is to enable the War Damage Commission to decide now whether a cost of works payment or a value payment is to be made in respect of a damaged house. In so far as the War Damage Commission can indicate to the owner, or the different owners concerned in a property, from the freeholder to the mortgagee perhaps, that a payment will be made on a certain basis after the war, either a cost of works payment or a value payment, then I think it is all to the good that owners of damaged property should know exactly where they stand.
I would, however, like to ask a question. It is clear that if the Commission decide that a cost of works payment is to be made, then there is no doubt about it. The payment will be made on the cost of the works and will be made to the person carrying out those works. But where it is a value payment, am I to understand that the Commission will indicate not only the nature of the payment, but also the amount of the payment to be made after the war? In other words, will the Commission say to the owner, "We are going to make you a value payment at the end of the war, and we are going to pay you X," naming the sum? I ask that question because many owners have mortgages in respect of damaged properties, and many are continuing to pay interest on these mortgage loans. Many others are not paying the interest, but the interest is accumulating, and so is the debt. Therefore, both sides, the mortgagee and the mortgagor, would desire to know what is to be the amount of the value payment, if the Commission decide that that is a suitable form of payment for the particular property concerned.
There is another matter that occurs to me. The right hon. and learned Gentleman the Attorney-General will know that under one of the previous Acts—I think it is the Landlord and Tenant Act—the owner of a leasehold property damaged as a result of enemy action can serve a conditional retention notice on his ground landlord that the 1342 premises are unfit, and, thereupon, if they are unfit, the ground rent ceases. As soon as the War Damage Commsision decide on a cost of works payment, I think—and in saying this I speak subject to correction by the Attorney-General—that the owner will have to decide whether he is going to retain the lease, and, if he does, he will have to pay the ground rent. If I am right in that assumption, it will be very unfair if the owner in such a case is compelled to pay the ground rent and yet, because of a Regulation made by the Ministry of Works, is not allowed to carry out repairs to the property if they exceed £100, without, of course, first getting a licence, and if they are extensive repairs, probably he will not get a licence. Therefore, he will be in the position of not being able to carry out repairs to the property but may be called upon by the ground landlord to pay ground rent. I am not sure that I have got the facts correct in every detail, but I think the right hon. and learned Gentleman will understand the point I am making. I should like to have an assurance that the result of this Bill, which will enable the War Damage Commission to decide whether there is to be a cost of works payment, or a value payment, will not be to put the owner of a leasehold property in a worse condition, so far as ground rent is concerned, than he is in at the present time without this amending Bill. Those are the only points I wanted to mention. I am entirely in agreement with the purpose of the Bill, which I think will facilitate many transactions that are held in abeyance at the present time because the owners do not know whether they will get a cost of works payment or a value payment at some indefinite and indeterminate time, probably many years hence.
§ Mr. Pickthorn (Cambridge University)
I am a little apologetic about the question I am about to ask, because I am a little afraid that perhaps I ought to have been able to find out the answer from the Bill, but I am not quite sure of it, and I think the question just asked by the hon. Member for Bassetlaw (Mr. Bellenger) really makes my question proper as a supplementary to it. I would like to ask the Financial Secretary to the Treasury this: If I understood the hon. Member for Bassetlaw rightly, his first question was: Under this Bill, is the effect going to be 1343 that the question will be decided on a new principle whether a payment shall be a rebuilding payment or a value payment; is that going to be the end of it, or is there also to he at the same time a decision now on what the value payment shall be? The supplementary question I would like to put is this: If the answer to the second part of the hon. Member's question is "Yes," then will the effect of this Bill be that the maximum value payment will be the number of pounds sterling which the building would have been worth upon the fixed date, that is, March, 1939?
§ Mr. Douglas (Battersea, North)
This Bill is of a highly technical character, and it purports at any rate to make a substantial alteration in the position of people who are making claims in respect of war damage. I do not want to deal with Clause 2, which merely repairs some omissions in the amending Act, but Clause 1 does appear to make a quite appreciable difference to the existing procedure. If I understand the effect correctly, to decide whether a value payment or a cost of works payment is to be made, three different values or prices have to be ascertained: first, what the hereditament is worth in its damaged condition; secondly, what it will cost to reinstate it as it was before the damage; and, thirdly, what will be its value after it has been reinstated. If the difference between the value as reinstated and the value as damaged is greater than the cost of the works that are necessary to reinstate it, a cost of works payment will be made. As I understand it, the Bill proposes to make that estimate as at the values in March, 1939, instead of referring to some future date. That is certainly an improvement in that it gives a defined criterion instead of a very indefinite one, because views as to what values may be in the future obviously can differ to a very considerable extent.
In the Memorandum to the Bill it is stated—and I understood the Chancellor to repeat that statement—that the result of this provision will be that a larger number of cost of works payments will be made and, therefore, that there may be a larger charge upon the Exchequer. I should be very much obliged if somebody would explain that a little more fully, because the Chancellor, in the course of his speech, said that it would 1344 make no difference to the position of the claimant whether one looks to 1939 or to the future, but that his position will be the same. If that is so, it is difficult to see what is the effect of this alteration and why it should increase the number of cost of works payments. The only explanation which occurs to me—I do not pretend to be a valuer—is that if one repairs a building, one can say that it has a certain definite value when it is repaired. The problem of what its value is in its damaged condition is much more subtle. Surely, the means of determining what the value is in the damaged conditions is by deducting from the value as repaired the amount it will cost to repair the building, and if that is so, the difference between the repair value and the damage value will always be equal to the costs of the works which are necessary to repair it, except in the case where the cost of the works exceeds the full structural value, that is to say, where the difference between the repair value and the site value is greater than the cost of the works. If that is the case, then it is only in that event that the value payment will arise; but it is very far from clear from the wording of the provision whether that is to be its effect or not.
Another point to which I wish to draw attention is that the Bill continues the distinction which is in the principal Act between what is called a developed hereditament and other hereditaments. The term "developed hereditament" has not got its natural meaning; it has a highly artificial meaning. It relates to a case where the amount of land which is used in connection with the structure is comparatively small as compared with those cases in which a very large amount of land is used with the structure. I take as typical examples the case of an ordinary dwelling house with a small garden, which would be treated as a developed hereditament, and farm buildings, which apparently are not treated as developed hereditaments, and there is a very considerable difference between the treatment of these two classes of property in respect of the amount of compensation that may be claimed. In the case of the developed hereditament it is very much larger than in the other case, though in point of economic effect both are fully developed according to the kind of use for which the land is suitable. That is an anomaly which still calls for remedy and which has not yet been dealt with.
1345 Clause 1 (2) merely gives the War Damage Commission discretion to review their determination in the light of the Amendment that is made by the Bill. It ought to be made obligatory upon them to treat every case upon precisely the same basis whether they have come to a determination about it before the Amendment is passed or not, otherwise it is highly unfair that some people, by the mere accident that they have had their cases determined by the Commission, shall be treated in one fashion whereas others will be treated in a totally different fashion because the Commission considers their cases after the Bill becomes an Act. There is no obligation upon the Commission to deal with that. It is left entirely within their discretion whether they shall or shall not do it. Everyone should be treated on precisely the same basis and it should be obligatory on the Commission to deal with them according to the law as it will be after the Bill is passed.
§ Captain Gammans (Hornsey)
I do not wish to oppose the Bill. I hope it is only the first of other amending Bills which the Chancellor of the Exchequer will lay before the House. As it is, I am rather puzzled to know why this particular side of War Damage is brought before the House at all. This legislation differentiates against property owners more than any other section of the population. They are not merely paying the ordinary taxes but they are paying this special tax as well. Although the first Act was definitely a shot in the dark, there was underlying it a definite promise and a definite principle, and that was that the loss should not rest where it fell. But the loss does lie where it fell and the whole of the damage which has been done to date, and as far as we can see is likely to be done, unless the war takes a most unfavourable turn, will be paid entirely by the house owning community. It seems to me that the time has come when the Chancellor might show that he proposes to implement the promise that this loss should be shared by the community as a whole. May we have an assurance that these contributions year by year, at the rate of £40,000,000, will not continue to be levied against property owners? By 1st July next they will have paid no less than £120,000,000, and that is a terrible handicap to them when it is very difficult indeed to make property profitable. I hope that this is only the first of a series of amending Bills.
§ Mr. Ridley (Clay Cross)
I confess to considerable inexperience in this matter, and, if I did not make that confession, my inexperience would probably reveal itself in what I am about to say. There are three main inequities, one of which is confirmed by the Bill and the other two are left entirely untouched. I cannot believe that we are anywhere within the region of equity in saying to a man whose house was completely destroyed in 1940, that we will in 1948 or some other date make him a payment based on the value of the property at about the date when it was destroyed, regardless of what kind of property the payment will enable him to secure in replacement of the property destroyed. The owner of a house worth £800 or £850 in normal times may discover that, owing to changing prices, £850 will not enable him to replace the property destroyed but only to buy something very inferior in material, in size, in aspect and in every other sense. We only touch equity when we make that man, who has no margin, a payment, on whatever date it is made, which will enable him to replace the property destroyed. To enshrine in the Bill a date in March, 1939, is to confirm an inequity and not to remove it.
Two other matters which have been referred to are the relations between the ground landlord and the tenant whose property has been destroyed and between the mortgagee and the owner-borrower. Neither of these disabilities is dealt with in the Bill at all. No one will deny that there is a feeling that the mortgagee of damaged property has been placed in a preferential position. I see no reason at all why the lender of the money should not wait till the date on which the tenant landlord will also have to wait for a damage payment. The indeterminate position which my hon. Friend the Member for Bassetlaw (Mr. Bellenger) described of the tenant and the ground landlord also needs very much more careful consideration than has been given to it. I have had brought to my notice many cases of what seems to me serious injustice. I appeal to the Government to reconsider the suggestion that the value payment should be made at a date which may have no relation at all to the cost of replacement, and to consider also the desirability of responding to the widespread desire to reconsider the relationship between the tenant landlord and the mortgagee on the 1347 one hand and the tenant landlord and the ground landlord on the other.
§ Mr. Jewson (Gt. Yarmouth)
This is a matter about which the district from which I come has been naturally greatly exercised, and I can give a welcome to this Bill, as far as it goes, although I regret it does not go somewhat further. Like the hon. Member for Cambridge University (Mr. Pickthorn), I feel that I may be asking about a matter which I ought to be able to work out myself, but it is not always easy to understand the phraseology of Bills. My Chamber of Commerce has been greatly exercised on the question of the difference between the value payment and the cost of works payment. It has been thought that a man who gets a cost of works payment will be a great deal better off under the original Act than the man who gets a value payment. It has been represented to me that in certain circumstances a value payment might be actually less than a cost of works payment. Therefore, accepting the statement made that the new basis is expected to result in a larger number of cost of works payments, I welcome the Bill. I should like to have a little more light on the comparative figures of cost of works and value payments as they will be after this amending Bill has gone through. I should like to underline what was said by the hon. Member for Holland and Boston (Mr. Butcher) about the position of mortgagees. That is a matter which requires attention. It is not in this Bill and I do not know whether it can be added to it as it goes through. I hope, however, that it will receive attention in the near future. I am not quite happy on the question of the contribution. It seems to me that the basis on which the contribution is paid ought to be the Schedule A assessment at the time it is levied. It is now the Schedule A assessment as it was in 1939, which in quite a number of cases may be an unfair basis as time goes on. I shall be glad to know whether that point also can have consideration.
§ Sir Ernest Shepperson (Leominster)
I would like to ask whether agricultural farm buildings are included in undeveloped hereditaments and whether this Bill assumes that the estimates of the repairs of agricultural buildings will be the cost of what those repairs would have been 1348 in 1939. These buildings are often made of wood, and the cost of repairs is much higher now than in 1939.
§ Colonel Sir A. Lambert Ward (Kingston-upon-Hull, North-West)
The hon. Member for Clay Cross (Mr. Ridley) advanced a point which has been discussed on several occasions as to the unfairness of giving a value payment to the owner of a house which has been totally destroyed basing that value on the value of the property in March, 1939, because in the interim the purchasing power of money may have decreased to such an extent that it is impossible for the owner to build anything approaching the property he formerly held with the money he will receive. His suggestion practically comes to this, that a value payment should be the value of the property in March, 1939, plus a sum to make good the difference in the purchasing power of money at that date and at the date when payment is made. I must confess to having considerable sympathy for views of that kind, but at the same time I am not at all sure that the suggestion is possible. I wish the Attorney-General could make a statement as to whether something of that kind would be advisable. I admit the difficulties, because the increase in the cost of building or replacement may be totally different from the decrease in the purchasing power of money in other respects. In these circumstances only a purely arbitrary sum could be suggested to make good the difference between the value of the property in 1939 and the value at the time when the reconstruction or repair was carried out. I should like to know whether something of that kind is possible because it would go a long way towards meeting the grievance which has been advanced by the hon. Member for Clay Cross.
§ Dr. Russell Thomas (Southampton)
I should like to refer to the point made by the hon. Member for Great Yarmouth (Mr. Jewson) in regard to the basis of payment under the War Damage Act. I regret that the Chancellor has not tackled this matter before. The present basis is very unfair to many property owners who have to bear a great burden. Not only are they taxed 10s. on Schedule A, but they have to pay the war damage contribution. They are taxed for the contribution on the 1939 Schedule A assessment, which in many cases is much higher than 1349 the present assessment. This is particularly true of the owner-occupier. I know several cases in my constituency of houses which were let at a fair rental in 1939. The leases have fallen in for various reasons and the owner-occupiers have taken possession. They have now lower Schedule A assessments, but they have to pay the contributions on the higher assessments of 1939. In other words, they have to pay on the rents they were receiving then. I know of a house which was let at £120 a year in 1939. The lease came to an end and the owner went back to live in the house. The assessment was reduced by the local authority to £80 and the Income Tax authority accepted that as Schedule A assessment. The owner, however, has to pay 2s. on the £120 and not on the £80. That is grossly unfair and it is time the Chancellor took the matter in hand. It is highly regrettable that he has not seen fit to deal with the matter in this Bill. It may be said that it is not an appropriate thing to put in this Bill, but he should have brought in a comprehensive amending Measure which would have treated property owners in as fair and just a fashion as possible.
§ The Attorney-General (Sir Donald Somervell)
The Second Reading of this Bill has been the occasion for a number of points being raised which we discussed before and with which I was very familiar at the time of the first Bill and the amending Bill. I am not sure that I carry the details of every point in my head, but I will do my best to deal with them. My right hon. Friend the Member for Bedwellty (Sir C. Edwards) raised a special case. It is always difficult to deal with a special case without knowing the circumstances. He suggested that there had been some delay. That, of course, is always unfortunate, but tributes have been paid to-day and on previous occasions to the expedition and efficiency with which the War Damage Commission have endeavoured to deal with the multitudinous cases which they have had. I do not want to say anything about the particular case without knowing all the facts. It is one of the general provisions of the Act that, so far as temporary repairs to prevent further damage are concerned, they should be done promptly. In many cases they have been done by local authorities, 1350 and they should be paid for irrespective of what the ultimate decision about the property may be.
§ The Attorney-General
I am not complaining at my right hon. Friend raising it, and I will certainly look into it. In so far as some of the difficulties in that case may have arisen from the difficulty of determining whether there should be a value payment or a cost of works payment, this Bill is designed to prevent it occurring to the same extent in future. It enables a decision as to which pigeonhole a property falls into to be decided in the light of pre-war values and estimates which can be made to-day. One or two of my hon. Friends asked for such guidance as I can give on the fundamental point as to the difference between these two categories of payment. I will do that as shortly as I can and explain how this Bill fits into that scheme. If a man gets a cost of works payment—and I am not sure that my hon. Friend the Member for Leominster (Sir E. Shepperson) realises this—he gets the cost of the works when they are carried out. He is not adversely affected by any increase in the cost of building. The value payment in the Bill as originally introduced and as it is at present is based on pre-war values. The point was raised in the earlier discussions and was raised to-day whether that might have to be looked at again if values have gone up very much when the war is over. My right hon. Friend has always said that we may have to look at it again, but that it is the only practical basis at present.
I think this Bill goes a long way to meet the case which was put on previous occasions for the inadequacy of the value payments. My right hon. Friend and the notice on the outside of the Bill draw attention to the fact that this Measure will extend the scope and number of cost of works payments. Some hon. Gentlemen asked why that was so. The reason is, I think, that values do not necessarily go up in proportion to the cost of building and of repairs. Therefore, applying as you have to, apart from this Bill, the post-war cost of repairs and the post-war values in order to decide whether there is a total loss you would, I think, find more 1351 cases of total loss than if you applied the pre-war standard. Applying this standard, it comes to this, that if a house was worth reinstating before the war a cost of works payment will apply. As my right hon. Friend said, it will broadly result in the rebuilding of any building which was before the war a good building. If it was a type of house which no one would take unless there was a tremendous housing shortage and which no one would have put up again before the war, the owner would get a value payment representing its pre-war standard.
But if you could say before the war, "This house was worth putting up"—it may not always be totally damaged but have been substantially damaged—you will get a cost of works payment, and you will get the advantage that the repairs will be paid for and the owner will be getting a substantially new house, whereas the house before the war may have been of a certain age. That is broadly what this Bill is designed to effect. It does extend the scope and it will enable those determinations to be made now.
§ Mr. Bellenger
Then we may assume that the hypothetical cost of repairs as at March, 1939, will be the factor used by the War Damage Commission?
§ The Attorney-General
Yes, obviously it would be wrong to apply the 1943 or 1944 or 1945 cost of repairs if you were only going to look at the 1939 value. Suppose the valuer looked at this in 1939; would he then have said to the owner that it was a reasonable proposition to rebuild it?
§ The Attorney-General
Repair or rebuild. Then I was asked whether the War Damage Commission, when they had done this calculation, would inform the owner, assuming it becomes a value payment, of the amount, and I understand it is their intention to do that. Next I was asked about the contributions. It was said that if we got no more damage it might be that the damage would be covered more or less by the contributions with little if any contribution from the Exchequer. But I think we should be giving hostages to fortune if we made some declaration now on the basis that we should suffer no more substantial damage. It is a point which 1352 must be raised with my right hon. Friend when we are through the wood and see what the whole picture is.
Some reference was made to the Schedule A basis. That has been fully discussed before and I do not want to go into long arguments which are really outside the scope of this Bill, but I will put this point. I think all would have insured against war risks with an ordinary company if they could have done it. Everyone would have taken out an insurance before the war, or on the outbreak of war, and the value he would have put on the premises would have been the pre-war value, and it might be quite wrong—nothing in this thing is completely logical—to let a man's contribution, because you have spread it in instalments, go down because, perhaps quite temporarily for the war period, the premises are in an area where there is more risk of damage.
§ Dr. Russell Thomas
So you admit then that the war damage contribution is a capital charge on property?
§ The Attorney-General
It would be wrong to say that because the annual value has gone down, because the rent is less, the contribution should be less, because as soon as the war is over the house may be in what becomes a popular part of the country, say on the south coast. It it is damaged the man will get the cost of works payment, and why should his contribution be lower than that of his neighbours because during the war his property was a less remunerative proposition? But that is a matter which has been discussed a good deal on previous occasions.
Then my hon. Friend the Member for Leominster asked about agricultural buildings. The position, I understand, is that farmhouses and the most substantial buildings, or the buildings directly connected with the farm, are treated as developed land and will come under the principles of the Bill, but outlying buildings may not be so treated. If he wants further detailed enlightenment as to where the line is drawn, perhaps he will let me know. I think I have dealt with the question of the hon. Member for Cambridge University (Mr. Pickthorn) about value payments. It is the intention that owners should be told that at present it is pre-war value. But supposing a determination is made that it is 1353 a cost of works payment, will that remove the lessee's right to withhold his rent although it may not be possible to get the repairs done? The answer is, No. The right goes on until repairs can be done. My recollection is that there is some Regulation to deal with the case where a lessee might sit and do nothing although he could get a licence to do the repairs. The Commission have decided that a cost of works decision will not affect whatever rights he has under the Landlord and Tenant Damage Acts. I hope that I have now dealt with the points raised, and I am grateful for the welcome which has been given to this Bill, although recognising that some people would like to have seen a lot of other things in it.
§ Mr. Bellenger
Has the right hon. and learned Gentleman obtained any idea from the War Damage Commission of the length of time before the bulk of these claims are assessed either on a cost of works or value payment?
§ The Attorney-General
No, Sir. I am afraid it will be a considerable time. There are a large number of cases, and each demands individual examination. No doubt a certain amount of work has been done already, but it will still be a considerable time.
§ Mr. Silverman (Nelson and Colne)
I notice that my right hon. and learned Friend has said nothing at all, and I think I understand why, about what was said during the Debate on the old vexed and controversial question of mortgagors and mortgagees. I do not invite him to reopen the discussion now, but I should like to know whether the Government still have it in mind, or whether we must assume that they have made up their mind on the matter and do not propose at any time to reopen it.
§ The Attorney-General
I did mean to make a reference to that. My right hon. Friend's opinion is the same as it was when the matter was last discussed.
§ Question, "That the Bill be now read a Second time," put, and agreed to.
§ Bill read a Second time.
§ Bill committed to a Committee of the Whole House, for the next Sitting Day.—[Mr. Adamson.]