HC Deb 21 March 1947 vol 435 cc727-64

11.6 a.m.

The Chancellor of the Exchequer (Mr. Dalton)

I beg to move, That the War Damage (Increase of Value Payments) Order, 1947 (S.R. & O., 1947, No. 390), dated 4th March, 1947, made by the Treasury under Section 11 (1) of the War Damage Act, 1943, a copy of which Order was presented on 6th March, be approved.

Mr. Molson (The High Peak)

On a point of Order. May I ask for your Ruling, Mr. Speaker, as to what it will be in Order to refer to on this Order? You will appreciate that there are two different kinds of legislation dealing with compensation for the destruction of houses. The one arises under the War Damage legislation, which was the first legislation which was passed on this matter; and the other arises under the Town and Country Planning legislation which was passed in 1944, the subsequent year. This Order does deal with one of the difficulties that arise in cases where, under the War Damage Act, a certain payment would have been made, that is, payment for cost of works; but, owing to the impingement upon it of the Town and Country Planning legislation, and owing to the fact that there is no portability of cost of works, the payment which is made under the War Damage legislation is substantially reduced, if, under a planning scheme, the owner of the property is not able to rebuild on exactly the same site. This was referred to in the Report of the War Damage Commission, upon which the Order under discussion today is based. I am, therefore, asking you whether it will be in Order—and I suggest that it would be convenient, if it were in Order—to refer to the importance of bringing the compensation payable under these two different trends of legislation into line.

Mr. Dalton

May I submit to you, Mr. Speaker, that, important though the matter is which the hon. Member for The High Peak (Mr. Molson) has raised, it would be technically out of Order and practically inconvenient to discuss matters relating to cost of works payments on this Order. This is a narrower field, and I would submit to you that the right place to discuss the very important matter of portability of cost of works payments, as the jargon puts it, is on the Town and Country Planning Bill, when we have it before us. I submit that it would be out of Order here, and would confuse and complicate the discussion.

Mr. Molson

This matter has now been going on for a very long time. When we have tried to raise this matter on the Town and Country Planning legislation we have been told that it is out of Order to refer to matters which arise on the War Damage legislation; and now we are in the position, the completely anomalous position, where payments are made which do, in fact, result sometimes in very great injury to the subject under one piece of legislation. We have never been able to discuss this matter, and we urge that it is necessary for these lines of legislation to be brought into consistency with each other.

Mr. Manningham-Buller (Daventry)

While it may not be very convenient to discuss cost of works payments today, may I draw your attention, Mr. Speaker, to the fact that the Order we are about to discuss is based on the report of the War Damage Commission which, in paragraph 17, makes specific reference to the Town and Country Planning Act, 1944, and rather ties up one of the payments we are going to consider to the Town and Country Planning Act. In these circumstances I do submit that this Debate will be unduly narrowed unless we are able to touch upon the subjects my hon. Friend the Member for The High Peak has mentioned to you.

Mr. Medland (Drake)

May I point out that the Commission's report deals very largely with converted value payments, and they agree that these would operate under the Town and Country Planning Act, 1944. Therefore, it would be unfortunate if we cannot Debate these converted value payments.

Mr. Speaker

I must say that I feel I have a grievance. I have had no notice of this point. I should have liked to have had time to consider it, but it seems to me to be wrong that we should discuss that legislation under this Order. There was a suggestion by the last hon. Member who spoke that a passing reference could be made to legislation. It seems to me that we cannot discuss the War Damage Act on the basis of what valuation is made, but we can discuss the increases under the Order in comparison with existing legislation.

Mr. Molson

I apologise for not giving you notice, Mr. Speaker, but this really took place less than five minutes ago, when, to my astonishment, I learned that the Chancellor of the Exchequer did not intend to deal with this matter, which, I suggest, is more or less the kernel of the subject under discussion.

Mr. Speaker

I think perhaps it would be better to give the Chancellor of the Exchequer an opportunity to make his statement.

Mr. Dalton

I would like to explain now, in view of the points of Order which have been raised, that I have no desire to avoid discussion of the particular matter mentioned. My view, however, was that, points of Order apart, it would be a little inconvenient to take it here this morning. The hon. Member for Drake (Mr. Medland) referred to the portability of these payments, which was what the hon. Member for the High Peak (Mr. Molson) raised, but the hon. Member also raised the question of converted value payments. These, of course, are within the Order, and, obviously, are suitable to be discussed, and I hope to say something more about them.

This is a very technical and even tedious topic, and I hope I shall not unduly bore the House if I try to make it plain. It is a question of great human interest, but it is also one of great tediousness, technicality and complexity. This Order, which hon. Members will no doubt have read, is consequential upon a report by the War Damage Commission, made at my request, and, as I said last December, I felt a very strong desire to settle this matter as soon as may be. I think we have travelled far enough now from the end of the war when we should be able to end this state of things and when these payments could now be settled. I asked the War Damage Commission, who have performed a very fine service throughout this period and have done exceedingly good work with great devotion to duty, to be good enough to make it an urgent task to let me have a report on which I could take action designed to get this matter cleared up as quickly as possible for the benefit of those concerned. They made this report, and they made certain recommendations, which the Government accept, and their acceptance of them is embodied in this Order.

The War Damage Act prescribes two forms of payment for war damage to land and buildings, to which I will make reference, after having explained their relationship. If a property is worth repairing, having regard to the character of the property and the extent of the damage, a cost of works payment is due and is made when the work is done. That is the essential characteristic of the cost of works payment. It is paid when the work is done, and the War Damage Commission then pay the claimant the actual cost, as approved by them.

By a Treasury direction made some time ago, all houses built since 1914 qualify for a cost of works payment, as they are assumed to be reasonably modern and in good condition, and, in addition, all older houses of equivalent quality qualify for the cost of works payment, however severe the damage done to them, unless, indeed, they represent a wasteful use of the site. By far the greater part of this whole field of war damage payments consists of cost of works cases, as distinct from value payments, and in round figures nearly 3,500,000 properties fall within the field of the cost of works payment. Those which fall within the value payment, with which this Order is concerned, are very much smaller. With the cost of works side this Order does not deal. I may say more about that when the Town and Country Planning Bill is before the House, when it will no doubt be found convenient to make further reference to this matter. There are also other occasions on which, no doubt, by the ingenuity of hon. Members, this matter could be discussed, but I do not think it would be in Order for me to pursue it much further now.

As distinct from the cases which I have been describing—where a cost of works payment is made when the work is done—in cases where, consequent upon enemy action, a property is a total loss, that is to say, it is not worth while to make good the damage, a value payment is due to be made. These value payments are the measure of the difference between the value of the property before damage and the value of what the bomb left behind, at 1939 prices. That has been the position up to now, and that is the position which this Order is amending.

For a long time, it has been common knowledge, and it has been admitted by all Ministers in successive Governments when they have had to deal with these things since the end of the war, that this basis of value payments would give quite inadequate amounts to those concerned, and a terrible word called "escalation" has crept into these discussions. I have used it myself on occasions, but I prefer to say increase.—[Interruption.] Yes, it is a word which has been used by me, but not coined by me. It is an ugly word with a certain pretentious sound, but, in fact, it means increase. It has been thought that an increase was required in these payments in the interests, of justice.

Section 11 of the War Damage Act placed upon the War Damage Commission the duty of dealing with this matter up to the point of making recommendations to the Minister. Section II required the War Damage Commission to consider at the proper time whether these value payments, on the basis prescribed in the Act, that is, the 1939 level, should, having regard to the movement of prices and other events in the interval, be increased, and, if so, by how much. I informed the House, with general approval, last December, that I thought the time had come when this action should be taken. The War Damage Commission, at my request, and with great promptitude made a unanimous report. There is no difference of view among the members of the Commission on this, and the unanimous report was published on 6th March. The Treasury Order now before the House, and for which I ask approval, carries out the recommendations of that report. Both Scotland and Northern Ireland are covered, in addition to England and Wales.

The Commission's principal proposal is that the value payments should be increased by 45 per cent.—that is, what is called an escalation, or an increase, of 45 per cent. In paragraph 16 of the report it states that only the broadest justice can be done in dealing with this larger aggregate of cases. We cannot take the cases one by one or district by district and say that this one should have a certain proportion and the other one a smaller proportion. In the interests of administration we have to get one single overall increase for this particular class, and so the so-called original value payments are all given a 45 per cent. increase. The War Damage Commission in their report say: It has, however, been fundamental to the scheme of the War Damage Act from its inception that it was possible only to do broad justice as a whole over the immense field which it covers.

Mr. George Hicks (Woolwich, East)

Is that 45 per cent. in addition to the 30 per cent.?

Mr. Dalton

No, it is over and above the 1939 figure. This is an overall increase—and I apologise for all the jargon that the lawyers have accumulated around this subject—and the Commission recommends a 45 per cent. increase, which is rough justice by and large, taking one type of house with another type and one district with another district. These original value payments, as distinct from the converted value payments, are the great majority and they are dealt with in Article 3 of the Order which carries out the recommendation of the War Damage Commission for the 45 per cent. increase.

By a converted value payment I mean a payment converted from a cost of works payment to a value payment. There are a much smaller group than the original value payments with which I have dealt, and they come into payment under Section 14 of the War Damage Act. This is where the damage has not been made good and cannot be made good because the property has been compulsorily acquired or is to be compulsorily acquired by some public authority, by a local authority engaged in replanning its area or by a Government Department. Where the land on which this damaged structure stands is compulsorily acquired we have a case which would otherwise qualify for a cost of works payment, but the work is not done and a converted value payment becomes due. The proposal here is—and I do not wish to speak at any great length, for the Solicitor-General will follow up any points with which I have inadequately dealt—that there should be a larger increase in those particular cases, and the increase that is recommended for the converted value payment cases is that it should not be less than 60 per cent.: or any other figure as provided for the purposes of the maximum supplement under the Town and Country Planning Act, 1944. Therefore, Article 4 of the Order provides 60 per cent. for these cases.

In Article 5 of the Order, there is a reference to a very small class of case which arises under Section 13 of the War Damage Act. I will not elaborate those cases, but if hon. Members desire further elaboration of this the Solicitor-General will give it. I could give it, but I do not want to continue too long on this exposition. In this class of case, which is small in point of numbers, the Commission have discretion to pay what they think is a fit amount subject to the maximum laid down in Section 13 of the Act. Paragraph 19 of the report suggests that they should be given a discretion to increase this amount by not more than the percentages recommended in the two cases of the original value payment and the converted value payment, and that is implemented by Article 5 of the Order before the House.

With regard to the interest on these value payments, of course, the Chancellor of the Exchequer, other things being equal, wishes to pay this off as soon as possible, and, therefore, incur nothing for any additional liability for interest. That is the obvious point of view to have in mind, but under the War Damage Act interest is payable at 2½ per cent. on the value payment for the period between the date of the bomb and the date of the payment. This interest will be payable on the whole of the value payment as now increased whether original or converted.

Mr. Alpass (Thornbury)


Mr. Dalton

I would rather not be interrupted. Is that not quite clear? If it is not I will repeat it. The interest will be paid at 2½ per cent. on the total sum including the increase of 45 or 60 per cent. from the date of the bomb to the date of the payment.

Mr. Alpass

But will Income Tax be deducted from the increase?

Mr. Dalton

The interest is subject to Income Tax, and those people getting interest will have to pay the Income Tax.

Mr. Alpass

But surely some people will not have to pay?

Mr. Dalton

That is the answer. The only people who will not pay Income Tax on the interest are the people whose total income is not large enough to make them liable. If the people are rich enough they will pay. That can be discussed again on the Budget if necessary, but the point is extraordinarily simple. Interest is unearned income, and it is subject to Income Tax like any other unearned income.

The approximate total amount of the original value payments at 1939 prices was £100 million. This has now been increased by 45 per cent., which makes it £145 million. The total to be paid will be a little bit larger than that because a number of assessments may yet be raised as a result of the discussion and negotiations going on. I think it would be safe to say that the grand total of the original value payment allowing for the 45 per cent. increase will be within a maximum of 150 million. This does not include converted value cases, and it is not possible to give an estimate of what that amount will be because it will be spread over years. From time to time premises will be acquired by local authorities and it is not possible to say what the total of them will be. It will depend upon the plans of local authorities, the approval of the Ministry of Town and Country Planning, and the speed with which the work is carried out. But over a period of years the amount will be substantially smaller figure than the figure I have given for the original value payments inasmuch as the number of cases will be relatively small.

I am anxious to do all I can to speed up this process of liquidation, and I will do all I can administratively in that direction. There are about 200,000 properties which have been classified by the War Damage Commission as qualifying for original value payments, 170,000 of these being dwelling houses. Contiguous properties in the same ownership have been grouped together by the Commission to form a single value payment unit. If two houses are side by side they can be grouped together for a single payment unit and by this method 200,000 cases have been reduced to 150,000 value payment units. Therefore, for practical purposes 150,000 cases have to be dealt with. The Commission have already issued a formal determination of values in nearly 130,000 of these cases out of 150,000. The remaining 20,000 are now in course of being handled by the Commission.

Claimants have 60 days after the formal determination in which they can appeal against the Commission's figures. The number of appeals so far is not very large, which suggests that the Commission have done the job pretty well, and 105,000 determinations have already become final. I strongly urge on claimants to let the Commission have their views on the Commission's provisional figures with as little delay as possible, and I hope hon. Members who have any of these cases in their constituencies will appeal to their constituents who have such claims. If they do not act quickly the responsibility for delay rests not upon the Government, nor upon the War Damage Commission, but upon the persons concerned. They should "buck up," and should be encouraged by their Parliamentary representatives to "buck up" in putting in an appeal if they wish to make one. I will do my best to speed the process, but it may make a considerable difference to the final speed of settlement if we can get a quick response from all those concerned.

Nothing is said in the Order about when the value payments will actually be made. The Act leaves this to be settled by a separate instrument, that is, by Treasury Regulations made under Section 22 (1) (b) of the Act. I made it clear to the House in December last, and I have repeated it in reply to Questions recently, that it is my hope and desire to get all these payments made within this calendar year, before the end of December, 1947. As I have said, I am partly dependent on the co-operation of those entitled to the payments, but that is what I shall seek to do. The War Damage Commission, as is their duty, in paragraph 2 of the report which is before the House, draw attention to the difficulty of speeding this process beyond a certain point. I have already observed to them that I am glad they have warned us of the difficulties, and I am confident they will now cooperate with us in order to surmount the difficulties which they have clearly pointed out and will get the payments made as soon as administratively possible. If Parliament approves this Order today, as I hope it will, the necessary work of calculation can start at once, because that will give approval to the percentages indicated and the arithmetic can be begun, and we will carry through the next stages with all possible speed.

In nearly half the cases, the speed with which the Commission will be able to complete the preparations for payment will depend primarily on the owners themselves. I have spoken of the need for speed in lodging an appeal if an appeal is thought desirable, but, over and above that, there are many cases where two or more persons are interested in a single payment, and they should get together on the question of how the payment should be divided between them. It is most desirable that, wherever possible, agreement should be reached between the persons entitled as to the basis on which the division should be made, and the Commission should be informed.

As soon as this House has decided whether to approve the Order, the Commission will begin to distribute to owners, where there are two or more persons entitled, forms on which they can advise the Commission of the agreed division of the total sum due. Until the forms are received back by the Commission properly completed, the Commission cannot take any other steps. They will be dependent upon agreement between those entitled. Where the persons concerned cannot agree among themselves there is, as the House will know, a procedure laid down. They can refer the issue to the War Damage (Valuation Appeals) Panel which has been set up for this purpose, or in Scotland there is provision for a referee. The War Damage Commission themselves cannot give any advice on the division of the payment between the persons entitled; it is outside their scope, and this other procedure has been laid down to deal with it. I hope that in most cases there will be a voluntary agreement, but where voluntary agreement cannot be reached I hope this prescribed procedure for determining the matter will be followed by the parties as quickly as possible.

I think that is all I need say on the subject at this stage. The larger matters, to which reference was made at the beginning of this discussion, will, no doubt, come up at a later stage; I am asking the House today to approve this relatively simple matter, and I hope the House will think that the Government have acted with speed and justice to those concerned.

11.36 a.m.

Mr. Manningham-Buller (Daventry)

It is unfortunate that we should be having this Debate today without first having had an opportunity of debating those larger matters to which the right hon. Gentleman the Chancellor of the Exchequer has just referred. We have, in fact, sought an opportunity on many occasions. We sought an opportunity on the Second Reading of the Town and Country Planning Bill, and we were asked to defer discussion until a later date, which was rather a promise, I would not say of "jam tomorrow," but of some satisfactory announcement to be made. We are still waiting for that. In its absence, it is not very easy to place the consequences of this Order in their correct perspective, but I welcome the right hon. Gentleman's assurance that there is no desire to avoid discussion, and I hope, following upon that assurance, that he will go a little further and say that when we do discuss this matter there will be a full and proper opportunity for Debate upon it and not one likely to be cut short by the operation of the Guillotine.

Members on both sides of the House and, I suspect, the Members of the Liberal Party, who are not with us—of course, I have no authority to speak on their behalf—will, I am sure, not dispute for one moment that there is a clear and convincing case for the increase of value payments, and that those payments, if made now solely by reference to 1939 prices without any increase, would be inadequate, unjust and unfair. If 1939 prices were paid now or in the future, that dearly would not be compensation in the true sense of the word, although we have had occasion to complain that the right hon. Gentleman does occasionally use the words "fair compensation" to mean something considerably less than the loss suffered. But with regard to war damage cases, one must accept the principle of valuation by reference to some prewar date. It would be quite impossible for any valuer to go along now to a site and say what is the present day value of a building which stood on that site in 1942 and has since been destroyed. He could not express any reliable opinion now. He might form some estimate from the plans, but they would not show the condition of the building, and so in the case of value payments it must be conceded that one must go back to base one's valuation upon some value prewar.

I mention that because I want to point out the distinction that does exist between acceptance of this principle in the case of war damage payments and its acceptance at the present time as a basis for valuation with regard to the acquisition of existing buildings. By not dissenting from this Order it would not be right to assume in any way that we now accept the principle, that with regard to compulsory acquisition of buildings 1939 prices are the right standard. I mention that because I want to make it quite clear that that argument cannot prevail, and cannot be used properly against us on a future occasion.

If, in the case of these war damage value payments and converted value payments, the 1939 prices have to be referred to, and are by themselves inadequate, two questions remain for consideration. The first, of course, is: What should the increases be? The second is: When will the payments be made? With regard to the converted value payments—the nature of which the right hon. Gentleman has, if I may say so, most clearly explained—one must concede that it is a most difficult matter to arrive at a conclusion as to what the increase should be. It would seem here that the War Damage Commission have felt themselves in considerable difficulty, and have, rather like the Minister of Town and Country Planning in respect of another Bill, arbitrarily assessed what is in their view the right increase; and they have been largely affected by the 60 per cent. supplement given now to owner-occupiers under the Town and Country Planning Act, 1944. Indeed, they envisage that if that 60 per cent be increased, then this payment of converted values should also receive a similar increase. The right hon. Gentleman did not say anything about that. We would have liked to hear him give some indication that, if there is delay in making these converted value payments, and if there is an increase—we do not know—from 60 per cent. in cases under the Town and Country Planning Act, a corresponding increase will be made in regard to these converted value payments.

The War Damage Commission pointed out that there was no possibility here of discriminating between the various types of ownership. I must point out that this, though it is quite clearly the case under the War Damage Act, will result in an anomaly—it may be unavoidable—in that some recipients of the converted value payments will receive more than the persons who possess buildings at the present time, but who do not come within the wide definition of "owner-occupier" under the Town and Country Planning Act, 1944, and who will, therefore, not be entitled to 60 per cent. on the compulsory acquisition. I hope I have made that quite clear. If one looks at it from one angle the result will be that some persons who have been hit by Hitler will, in the result, suffer a lower financial loss than persons who are hit by compulsory acquisition under Socialist Measures passed by His Majesty's Government. As I say, that may be unavoidable. Whether it can be avoided or not may, and I hope will, depend upon the discussions we have with regard to compulsory acquisition generally, and the price at which that should take place. However, I must point out that there is a distinct anomaly which will prejudice some people whose buildings are subject to compulsory acquisition.

Again, I must point out this, too. The people who get these converted value payments will clearly not be getting as much money as if they were receiving a cost of works payment. Therefore they, too, are suffering, in one sense, some financial loss by reason of the compulsory acquisition of their property. So that from two angles this creates anomalies. They may be unavoidable, but I hope investigation will be made to see whether the first anomaly to which I have referred can be eradicated. The right hon. Gentleman indicated that the converted value payments were likely to be small in extent compared with the cost of works payments. He made reference to the date of payment of original value payments. But the converted values payments are likely to continue, as I understand it, for a good many years to come. Under the measures now under consideration the amount of compulsory acquisition is likely to increase.

It would appear to me to follow that the number of converted value payments which will have to be made will also increase substantially. That I infer to be one of the reasons why the right hon. Gentleman could not give any approximation of the total figures to which those payments would amount. I ask the right hon. Gentleman to say that, in so far as it is now possible to determine the converted value payments, those payments should also be made at the earliest possible date. I was not quite clear from his statement whether, in cases where it is possible, those payments would also be made—

Mr. Dalton

Perhaps I might give an answer to that now. We have no desire to hold up these converted value payments any more than the original value payments. As soon as they can be determined they shall be paid. The hon. and learned Gentleman will appreciate that a lot are dependent upon future events over the next few years, which we obviously cannot determine now. There is no intention to delay at all, as soon as the thing can be brought to an end.

Mr. Manningham-Buller

I am much obliged for the right hon. Gentleman's assurance upon that point. With regard to the other increased payments, the increase is again arrived at rather arbitrarily. It is assessed at 45 per cent. Again one appreciates that it may be, and probably is, quite impossible to do otherwise than fix a figure of that nature. The Commission expressed the view that the percentage increase was doing substantial justice; and elsewhere they use the expression "broadest justice." With regard to the use of that jargon which the right hon. Gentleman so wrongly attributed to lawyers—and I am sure the learned Solicitor-General will support me in this—the word "escalation" first fell in this House from the lips of the right hon. Gentleman, and not from the lips of any lawyer; and the other words he used are, surely, Civil Service jargon, for I have never heard them fall from the lips of a lawyer. No doubt we shall hear what the learned Solicitor-General has to say about that." Broadest justice" does have a significance to lawyers, in that it means an admission that justice cannot be done in a great many cases and that there will be a considerable number of cases of injustice. I think the right hon. Gentleman will admit that that must be the consequence of this Order. It may again be unavoidable, but in so far as this Order is definitely an attempt to do more justice than is done under the present law it has our approval.

I should like here to say a word about interest. No one would dispute that where interest on these value payments has to be paid by the right hon. Gentleman, then, if the individual's income is so large as to attract Income Tax, the interest should also be liable to Income Tax at the appropriate rate for the year.

Mr. Dalton

indicated assent.

Mr. Manningham-Buller

But I understand from the report that the tax is deducted before payment. Does it follow that those who do not come within the incidence of Income Tax will have opportunities to recover the sums deducted, and will they be informed of their rights? From the attitude of the hon. Gentleman the Member for Thornbury (Mr. Alpass) I think that this was the point he wished to raise, and it is very important. A great many of these people are not experts in Income Tax, and I do ask that they should be informed of their rights at the time when these value payments are made to them.

Mr. Dalton

There are two separate points, and in case there is any doubt perhaps I may deal with them now. First there is the question of liability to pay. That is determined by the amount of income, the family estate of the taxpayer and so on. Then there is the question of the mode of payment. From the administrative point of view, as the hon. and learned Gentleman has indicated, it would obviously be much simpler if Income Tax were deducted from the total payment made. It is also clear that in many cases—although by no means all—the recipient will be entitled to reclaim all or part of the Income Tax by reason of his income being below the level at which standard rate applies. The question as I see it is—this tax being agreed as I understand it is—whether there will be a means by which we shall let those concerned have full and early information as to their right to reclaim. I think I can give an assurance that this will be so although the exact method to be adopted will be a matter for discussion with the War Damage Commission. I have, naturally, no desire to retain this Income Tax.

Mr. Speaker

I think we are on delicate ground on this matter. Income Tax cannot be amended by this Order but only by the Finance Bill, so that the point is out of Order. With regard to the other point as to whether instructions can be given, that can be dealt with under the Order.

Mr. Manningham-Buller

That was the point to which I was directing my observations because it is so important in these cases that the people should be informed of their rights. Incidentally, I was not for a moment suggesting that the right hon. Gentleman was seeking wrongfully to retain this Income Tax.

I come now to the date of payment. There are 105,000 original value cases which have been finally determined, as I understand it. The right hon. Gentleman has not told us how many of those are cases where only one individual is concerned in receiving the money. One appreciates from what the right hon. Gentleman has said that where there are two interests involved there may still have to be some slight delay pending agreement between those interests, but a number of them must be cases where there is a single interest involved. I think it may be assumed from the right hon. Gentleman's statement that directly this Order is approved payment of those cases which have been concluded and in which one interest is involved will take place forthwith.

Mr. Dalton

I do not want to deceive the hon. and learned Gentleman or the House. They must not press me too far on this. I have said several times that it is my hope to have the whole thing settled within this calendar year, but the War Damage Commission has pointed out a number of difficulties and there is, of course, a question of chattels which does not come under this Order. We are liquidating the question of chattels, and I cannot give such an undertaking as the hon. and learned Gentleman has suggested, but will merely say that they will get on with this as quickly as the condi- tions of their work permit, hoping to conclude the whole thing within the present calendar year. I cannot go beyond that.

Mr. Manningham-Buller

I should be the last person to suggest that the right hon. Gentleman should raise expectations which could not be realised, but we are glad to have his assurance that these matters will be dealt with as speedily as possible, because I am sure that both sides of the House will agree that it is a great hardship on these people to have to go on waiting before they receive the value payment which would enable them to re-establish themselves in the manner in which they were living before the war or before their premises were damaged. I think I have covered all the points in this Order except to say that I should like the right hon. Gentleman to make it quite clear that if his payments are delayed for some reason they do extend to the original value payments after 1947. If, as we know will be the case, there are converted value payments after 1947, or there is a further inflation, or further depreciation in the value of money, I should like an assurance that in those circumstances the right hon. Gentleman will not hesitate to introduce a further Order of this sort. The necessity for that, will, of course, be avoided if payments are made promptly.

Mr. Dalton

Again, I do not want to deceive the hon. and learned Gentleman. I can give no such assurance. I am making a recommendation, the Order is before the House, and, as I have said, we will endeavour to dispose of the matter within the present calendar year.

11.57 a.m.

Mr. Medland (Plymouth, Drake)

In the first place I should like to say how very glad I am to find that the long drawn out battle extending from 1942 until the present time is now being brought to something approaching a conclusion. From the day when the bombs fell on many of our blitzed and devastated areas—and people had an opportunity of ascertaining where they stood with respect to the damage that had been showered upon them—until today, there has been a great sense of injustice among the people who suffered. From that period, throughout the days of the Coalition Government, then the Care- taker Government, and finally the present Government, representations were continually being made with regard to the effect of the assessment which had been made upon war damage.

War damage has been divided into two parts. Where properties which were built before 1914, and designated as old properties, have suffered damage, they were concluded to have been entitled to what is known as a value payment. Where damage had occurred to properties built after 1914, these were adjudged to be worth a cost-of-works payment. In other words, a new building would be put up in the place of that which had been knocked down, but where the original building was erected before 1914 only a value payment would be received which was based on the value as it was in 1939. Many of the bombs fell in 1941. The 1939 standard was adopted. and the result was that persons who lost the property in which they were living—I am speaking, not of business premises, the owners of which had much better facilities to recoup themselves, but of the hundreds of thousands of single property owner-occupiers who lost their properties in the blitzed cities—the valuation, if their house was built before 1914, was a value payment. The buildings were valued, the land was valued, and the war damage was paid upon the assessable value of the buildings in 1939 This Order increases the payment to those people by 45 per cent. It is not what could be called a generous contribution to the people who suffered this disability.

The position was further complicated by the passing of other legislation, and by its being laid down that where, as a result of war damage, the local authority, the Admiralty or a Government Department decided that they required the property in the interests of the better planning of a city, where a man was entitled to a new house, or a cost-of-works payment, the cost-of-works payment was to be taken away, and he was to be given a value payment. That was what was called a converted value payment. This happened under the Town and Country Planning Act, 1944. Therefore, there were in blitzed areas persons with whom the local authorities were not going to interfere who were getting a cost-of-works payment—a new house for an old one—but in other cases where the local authority was going to take over the property and use it in a planning scheme, the man would get, not a cost-of-works payment, but a value payment based on 1939 prices. That was the greatest injustice of all. I must tell the Chancellor how very grateful we are—and what a load it will lift off the backs of these people—to know that, as from the date of this Order, they will receive a 60 per cent. increase in the payment that is to be made to them. On behalf of thousands of people in the blitzed areas, I want to express appreciation for this Order, which is the result of a very long battle. When the Chancellor said that he was going to use the provisions of the War Damage Act to call upon the War Damage Commission to review the matter, I knew that we had won our battle, because I could not see how the Commission could come to any other decision, in face of the position which I have so inadequately described.

We have their report before us. Reference has already been made to one point in that report, and it is a point with which I disagree. A very real injustice is being done to persons who have suffered not as a result of their own negligence or anything for which they could be held to be responsible, but as a result of enemy action. I am going to talk about mortgage payments. I do not admit that you are giving justice to these people if you refuse to take into consideration the circumstances under which they have laboured from the time the bomb fell.

What are those circumstances? There are hundreds of building societies in this country. Ordinary working folk, the best of the people of this country, the thrifty people, the people who begin early in their married life to make provision for the time when they will retire, have taken up a mortgage on their own house so that, when they retire, they will have a dwelling to live in and will be free from the burden of rent. They are some of the best people in this country, the people who never come on to public assistance; they are the people affected by this Order. They took out a mortgage at 4½ per cent., and in some instances, 5 per cent., on the balance of the payment for their house. All through the period during which they have not had the use of their house, they have had to pay mortgage interest, and what is more, they have had to pay it on something which was not there. They had to seek other accommodation. Imagine what happened in a devastated town like my own, where 4,000 houses out of 34,000 were totally destroyed in six weeks. That meant that accommodation was almost impossible to get. What happened was that where one family lived before, three and four families were living. The rent they had to pay was out of all proportion to the accommodation they got. Not only had they to pay mortgage interest, but they had to pay rent—and an inflated rent at that—as well for the houses in which they lived. I could tell the Chancellor of cases in which some of the people in my district had to go and live in sheds—

Mr. Speaker

It seems to me that the hon. Gentleman is reverting to criticisms of the War Damage Act, which cannot be amended by this Order. He is going back to the original Debate when the Act was passed.

Mr. Medland

I am sorry, Sir. It is stated in paragraph 15 of the War Damage Commission's Report that they would have no regard for consequential losses. I was trying to describe consequential losses. I think I have described them, Sir, so I will leave that point.

Mr. Speaker

I do not see that consequential losses are in the Order; they may be in the White Paper.

Mr. Medland

A mere layman reading the White Paper has some difficulty in understanding the Order. However, I wish to conclude by asking the Chancellor three questions. Can he tell me whether the uplift provided by the Order—the 45 per cent. and the 60 per cent.—will apply to land that is compulsorily acquired, land which is the site of a value payment on the building, or a converted value payment? Second, will it apply to land which is the site of undamaged property? Third, will it apply to any damaged building not owner-occupied? I would like to say how grateful we are for the promise that payment will be made this year. We have waited since 1941 for some kind of rough justice to be done to hundreds of thou-thousands of people, and I must say that the War Damage Commission have treated applicants with the greatest consideration, and have met them in every possible way. We say, "Thank you," to them, and we ask the Chancellor to speed up the good work by making payments this year as early as he can.

12.12 p.m.

Mr. Gammans (Hornsey)

There is only one comment I have to make on the speech of the hon. Member for the Drake Division of Plymouth (Mr. Medland), and that is that I believe he made a slight mistake when he referred to the inflated rents which had been paid by people in his constituency. If those inflated rents were paid, surely, they could only have been paid to the tenant of the house and not to the landlord, because of the Rent Restrictions Acts.

I would like to refer to the Chancellor's speech, from which two very interesting general points emerge. The first was that the vast majority of properties which have been destroyed have qualified for a cost of works payment. The standard of that cost of works payment is, of course, high, and I hope that that disposes of the suggestion which we have heard put forward so often, that before the war most houses were slums. The figures show that the vast majority of those houses were houses of a high standard. Second, the Chancellor said that the total number of claims for value payments amounted to 200,000, and that the number of people who would be paid out, as a result of those claims, was about 150,000.

Mr. Dalton

It might be less, because they may have dispersed properties. I said that when contiguous properties and other cases were united the 200,000 might be reduced to 150,000.

Mr. Gammans

That shows how widely the ownership of properties is now dispersed in the community, and that some of the bogeys of landlordism are not quite so serious as I have heard the Chancellor suggest on more than one occasion.

I am sure that all Members will welcome this Order. The property owner has for so long been regarded as one of the untouchables of society that he is grateful for getting a bit of gristle where the rest of the community get their meat ration. I welcome the increased payment, because I represent a constituency which suffered very severely from war damage, and where 1939 values alone would have caused great hardship, if not actual ruin, to a very large number of thrifty people who invested their life's savings in property. I agree with my hon. and learned Friend the Member for Daventry (Mr. Manningham-Buller) that, valuable as this increase is, it is still very largely a hit or miss affair, because an increase in percentage can only be a hit or miss affair. In some cases, people will get more than their property was actually worth. But it is no good pretending that in most cases the money which the property owners will get will enable them to rebuild property equivalent in value or comfort to that which was destroyed. I suppose that it is impossible to do it now, but I would have liked to have seen the costs of works principle extended, so that the definition of a house which could come under the costs of works payment might have been a little bit wider.

I am sure that the Chancellor realises that this Order goes far beyond merely war damaged property. It concerns, as he said, the Town and Country Planning Bill, and, in fact, the acquisition of all private property by the State. It would be out of Order for me to refer to that any further, but I think there is one point to which I might refer, namely, the clause in that Bill which deals with war damaged property. On the Second Reading of the Bill, the Chancellor said that war damaged property would not attract a development charge. That is not strictly accurate, because if an owner extends the cubic capacity of his new building by more than 10 per cent. then it will attract a development charge. The difficulty which will face the Chancellor, and I think the owner of property, too, is that in many cases—

Mr. Speaker

Development charges do not come into this Order.

Mr. Gammans

I bow to your Ruling, Sir. The Chancellor said that he hoped to make his value payments this year, but he did not say what the effect of the payment of £145 million will be on the inflationary spiral of which he is so much afraid today. That is a considerable sum of money, and I seriously suggest that if he wants to lessen the danger of that inflation, at a time when he has a gap of £1,000 million between purchasing power and goods and services which can be purchased, he should provide additional facilities for the people affected here, and others, to invest this money in new houses. I hope that he and the Minister of Health will bear that point in mind. With these reservations, speaking on behalf of a much blitzed community, I very much welcome this Order.

12.20 p.m.

Mr. Berry (Woolwich, West)

I would like to speak on behalf of a great blitzed area in South East London. In my borough, we have a greater proportion of owner-occupiers than in most places in the country. This civic spirit has been spread over a number of years by the Royal Arsenal Co-operative Society, the Woolwich Borough Council, and the Woolwich Equitable Building Society. A great work has been done in enabling the better type of worker to get a stake in the country. Whether I come in under that heading or not, when my future wife promised to marry me, I took steps to buy my own house. As my mother termed it, "I had got the bird, and I wanted to get the nest." I am happy to say that, in the language of to-day, I did not "get the bird."

Attention has been called by hon. Members to the hard cases that have ensued from the operation of the original Act. When I first read this Order, although I had nothing to do with gambling in my life, a phrase came to me which I believe is used by those whose form of charity consists in keeping bookmakers supplied with unlimited champagne. This is, "Any to come, glad of it." I am sure that this 45 per cent. will be a very real Godsend in a number of cases. Where it is open to criticism is that this increase does not enable people to replace the property which they have lost, but it goes a long way to meet the costs of the destruction. Like the hon. Member for East Woolwich (Mr. Hicks) I have had letters pointing out that when a man was paid the net 1939 determination and had paid off his mortgage, he would be left with a site value of only £50 or £60; Under this suggestion, the man will be between £200 and £250 in pocket. It seems to me that while this will not enable people to replace their houses, it will enable them to clear their mortgages, and also enable them to have a little bit in hand.

The hon. Member for the Drake Division of Plymouth (Mr. Medland) has referred to the fact that the mortgage interest had to be paid right through. That was the case whenever one borrowed money. If one borrowed from the local authority under the Small Dwellings Acquisition Act the interest had to be paid. All those authorities and bodies who waived the repayment on principle during the war deserve commendation, whether they are local authorities, building societies or any other body who lent money. I regard today as a very happy occasion, because the hon. Member for East Woolwich and I have taken part in a considerable local movement which has rapidly spread in connection with war damage. My hon. Friend presented a petition to the House sometime ago and tried not unsuccessfully to get on the blind side of you, Sir. I think that it expresses the bonhomie with which you rule this House that he was allowed to go on as long as he did. The promoters of that petition will regard today as a red letter day, but they may regret that the red letter is slightly dimmed because at least 60 per cent. has not been granted. I congratulate the Chancellor of the Exchequer and the War Damage Commission in this connection. They have had a considerable job, which they have tried to do well.

12.25 p.m

Mr. Molson (The High Peak)

The matter which I wish to raise has, I think, been very fully covered, especially by the very clear speech of the hon. Member for the Drake Division of Plymouth (Mr. Medland). I think that the Chancellor of the Exchequer will remember that, before the summer Recess, he made a conditional promise that this House would have an opportunity of discussing the whole of this matter. There is no question that in all matters of equity there must be a very close connection between the payments to be made under the Town and Country Planning legislation, where property is acquired or destroyed, by the planning authority, and what is done in the case of war damage payments.

I hope, therefore, that I shall be in Order if I point out that where this increase in payment is made under this legislation, certain anomalies are likely to arise if consequential changes are not made in the Town and Country Planning legislation. In this report, the War Damage Commission point out that compensation payable under the Town and Country Planning legislation differentiates between the owner-occupier and one who is a tenant in his property. In their report they mention that, but go on to say that for the purpose of this legislation they do not think a distinction can be drawn between the two. In the case of property which comes both under this Order and under the Town and Country Planning legislation, there will be an anomaly in cases where there is a 60 per cent. increase under this Order, where it would not be obtainable under the Town and Country Planning legislation if that property did not come under this Order. I will not elaborate that point further.

I think that almost everyone who has spoken today has expressed the wish that the two lines of legislation shall be brought into harmony. I welcome this rough and ready way of bringing relief to persons who have suffered because of the impingement of Town and Country Planning legislation upon war damage. I have a constituent who had a shop in Sheffield, which was destroyed in the blitz, and it he had been allowed to rebuild on the old site in the way that he wished to do, he would have been entitled to draw a cost of works payment. Owing to the fact that he was not allowed to rebuild on the whole of that site, it becomes a converted value payment. Therefore, although 60 per cent. is probably not enough to make up the difference between the value of the property before the war and what it would cost to replace it at present building costs, this increase is a very substantial alleviation of the loss which he has sustained.

Like everyone else who has spoken today, I welcome the report so far as it goes. I am not quite convinced, after reading it, that these increases of 45 and 60 per cent. are really sufficient, in view of the great increase that has taken place in the cost of building. I take the general view, however, that where Parliament has appointed an expert Commission to go into these matters, and when it has investigated them and made a report, it is not convenient or wise for people without the same amount of knowledge to criticise the figure which has been arrived at.

There is one matter which I should like to put, and I shall not be surprised or aggrieved if the hon. and learned Solicitor-General is not able to answer the point on the spur of the moment. But the Chancellor of the Exchequer said that, whereas value payments would be made as soon as possible, converted value payments would only be paid at the time when the land was compulsorily acquired. I would point out that, under the Town and Country Planning legislation, it is proposed that, in future there shall be designation of land which is to be subject to compulsory purchase, and that that may be held up for a period of 10 years, or even for as long as 15 years, if an Amendment which has a bearing on it is accepted. I am sure that the right hon. Gentleman will realise that it would be a very great hardship upon the owner of damaged property if he were unable to obtain compensation to which he would be entitled if it were compulsorily acquired, although he would still not be able to dispose of it freely because, what I call the "blight" of designation, has already been spread over it.

There is one further point, and in this matter I think that, perhaps, I stand alone, and that the whole House is against me. I am sorry that the Chancellor of the Exchequer has announced that he is going to make these payments as soon as possible. I am greatly concerned about the damage of inflation, and when one considers the large number of very substantial payments which are being made by the Exchequer at the present time, in respect of a whole lot of matters, whether it be for nationalisation schemes, for war gratuities, for postwar credits, or for the chattel insurance payments, to which the right hon. Gentleman referred, the fact that it is proposed to pay this further £150 million at the present time seems to me to represent an increase in what he calls the "inflationary potential," which may even call into question the powers which he exercises, together with his many controls, to prevent an ungovernable increase in prices.

Last week, I asked him a supplementary question, and was very surprised to hear him say that his advisers inform him that there is not very much danger of inflation in these cases. It appears to me that, in the case of an individual who has lost his house, and whose house has not been rebuilt, which, of course, is the case in respect to the vast majority of houses which were destroyed during the war, that puts an additional purchasing power into that owner's hands, without, at the same time, providing him with the house. Here is another example of purchasing power being increased when, at the same time, there is no corresponding increase in the number of houses upon which such an owner would wish to spend the money. Therefore, I would have preferred that the amount of payment to be made should be determined as soon as possible, but that the payment should, in fact, only be made as and when the claimant is able to rebuild the house or the property, or to acquire some alternative accommodation.

With those few remarks, I welcome this Order for what it sets out to do in difficult circumstances, which is, on broad lines, to bring a great alleviation to our fellow countrymen who have suffered these heavy losses in the war. I hope that the Chancellor of the Exchequer will fulfil what, I think, was his promise made in August, that there shall be an ample opportunity for ensuring that those whose property is acquired under the Town and Country Planning legislation shall, at any rate, not be worse treated than those who benefit under this Order.

12.35 p.m.

Lieut.-Colonel Sir William Allen (Armagh)

I wish to intervene for a few moments to express, on behalf of Northern Ireland, my satisfaction with the proposition put forward by the Chancellor of the Exchequer. No matter how generous a Chancellor may be at any one time, there are always some hon. Members who want a little more, and I am afraid that I, on behalf of Northern Ireland, must plead guilty to that.

It is well known that we in Northern Ireland have had considerable damage done by enemy action. Linen mills have been destroyed, private property has been destroyed, and churches have been destroyed, but here we have the satisfaction of telling our people at home that they are going to receive a little larger compensation than was anticipated. I understand—and perhaps the Chancellor will correct me if I am wrong—that this compensation is only to be paid in respect of enemy action. That, of course, leaves out the damage that has been caused by the War Office and Air Force occupation of many of the buildings in the country. Perhaps, at some time or other, the Chancellor will see his way to increase the 1939 valuation, on which, I think, all these claims for compensation are based, and will consider compensation for damage done by the Service occupation of buildings. Of course, that refers to England as well as Northern Ireland. A great deal of damage has been done by the occupation of our own troops and those of our Allies. Perhaps, at some time, something will be done in regard to that. In the meantime, I wish, on behalf of our people at home, to express my great satisfaction at this increased compensation, and to express my hearty thanks for it.

12.38 p.m

Mr. Ronald Chamberlain (Norwood)

I only wish to intervene to ask the hon. and learned Solicitor-General whether, in replying, he will endeavour to say something on the matter of mortgage interest, and its bearing on the matter of value payments. Some reference has been made by my hon. Friend the Member for the Drake Division of Plymouth (Mr. Medland) and by my hon. Friend the Member for West Woolwich (Mr. Berry) to this very important matter, which has been a very heavy burden to a great number of owner-occupiers. My hon. Friend the Member for Drake referred to the fact that full interest payments had been made throughout by all these owner-occupiers carrying mortgages. I know I am right in saying that that is not—

Mr. Speaker

That is not affected by this Order in any way. It is not in the Order, and, indeed, I think that I ruled once before that it was out of Order to discuss the matter.

Mr. Chamberlain

I was only asking that the hon. and learned Solicitor-General should make some reference to the matter. If he will, I shall be very glad.

12.40 p.m.

Sir David Robertson (Streatham)

I am unable to join in the chorus of approbation with which this Order has been received today. I do not think that the victims of value payment terms will join in them either, but that they will rather incline to the view which I wish to present to the House. Some people may take the view in this case that half a loaf is better than no bread, but I am not satisfied to accept that principle.

The Order which we are discussing fails in two essentials. The first is that the proposed increase value payment does not compensate the recipients for the increase in values between the year 1939 and 1947. If the destroyed property had still been standing, it would have been worth much more than 45 per cent. over 1939 values. The Order fails, secondly, because it does not cover the difference in the value of bricks and mortar and the cost of labour between 1939 and the present day. As a matter of fact, in the report which is before us, the Commissioners themselves say that those costs have gone up at least 100 per cent. I am therefore surprised that the Chancellor of the Exchequer should come forward with a proposal limited to an increase of 45 per cent.

That proposal cannot be adequate to provide the people concerned with homes. These people had homes when the bombs fell, and very good homes. The homes were not old, as this report says. At the bottom of page 4 I read: The value payment, however, is made in respect of the loss of an existing building and normally of an old building. I submit that the bulk of the property covered by the value payment is in London. Much of it is in my own constituency, which was bombed as badly as, or even worse than, the constituency of the hon. Member for West Woolwich (Mr. Berry) or of the hon. Member for the Drake Division of Plymouth (Mr. Medland). Over 80 per cent. of the homes in my constituency were destroyed or damaged to a greater or less degree. The homes concerned were built largely at the beginning of this century and during the next 14 years, that is to say, from 1900 to 1914. Though just failing to qualify for a cost-of-works payment, the Treasury fought very hard to see that those homes did not come within the Treasury direction which permits well-built and well-maintained houses to qualify for cost-of-works payments. That may have been good bureaucratic administration but it was not good humanity. I can assure all hon. Members that houses of the same type which are still standing are excellent homes and will last for many a long day.

I appeal to the Chancellor to reconsider this matter. I feel certain that he will get repercussions from the victims, who will receive sums of money which will be most inadequate indeed. They will not be able to spend it on replacing their homes, and because of that fact inflation may be hastened.

Mr. Dalton

More money does not necessarily mean more inflation.

Mr. Molson

My hon. Friend the Member for Streatham (Sir D. Robertson) is making a very interesting speech but I would like to point out that the Treasury direction to which he has referred provides that, in addition to houses built after 1914, those built before 1914 might also be considered as qualifying for a cost-of-works payment.

Sir D. Robertson

In the cases which I have in mind and which occurred all over my constituency—particularly in Moyser Road—the houses were built between 1904 and 1907. Some were certified by the district valuer as qualifying for a cost-of-works payment under the Treasury direction when he went down there first of all. Because the great London County Council wanted those sites for the erection of temporary houses for 10 years, the War Damage Commission changed their mind. That was a grave wrong, which I challenged very vigorously at the time with the War Damage Commission, but I failed to carry my point. The houses were swept away, and temporary structures were put up in their place.

The point I am concerned about is that none of the people who are to receive 45 per cent. increase under the Order will be able to get a home, either by purchase at present values—which I think no one will deny—or by building. I do not think anyone will deny that statement either. I regard the present proposal as a bad compromise. My recollection is that the Chancellor said that it would cost a little over £1 million. I would be the last to suggest any wasting of public money, but justice should be done in this case. These people want homes and it is homes that they should have. I am speaking of the owner-occupier.

If it is right—and I would like the Chancellor to pay special attention to this point as it is most material—that the owner of a house which qualified for a cost-of-works payment and has now become compulsorily acquired by the local authority is to receive the 1939 value plus 60 per cent., why should the owner of a house in a place such as Moyser Road and entitled to a value payment, receive only the 1939 value plus 45 per cent.? Where can there be justice or justification in giving 60 per cent. increase in one case, where the value is easily ascertainable, and only 43 per cent. in the other? I suggest that it is only a sop that is being given to these owners of converted cost-of-works houses who suffer great hardship. They were told that their houses were to be rebuilt free of cost but now, because the local authority have taken them over, they get 15 per cent more. Neither position is right. It is manifestly unfair to the value payment people to give them only 45 per cent., when the cost of rebuilding or purchase has gone up to such an extent.

For those reasons I assure hon. and right hon. Gentlemen opposite that I do not propose to let this matter rest. I have been out of this House through illness for a considerable time; but an injustice is being done by this palliative of 45 per cent. Not one hon. Member who has spoken has attempted to justify it, and if the Solicitor-General, who, I believe, is to wind up the Debate, can justify it, I am sure hon. Members will be surprised. So will the public outside.

12.47 p.m.

The Solicitor-General (Sir Frank Soskice)

The proposals made by the Government have, as is manifest from the speeches that have been made, been well received. The hon. Member for Streatham (Sir D. Robertson) struck rather a discordant note, I thought. He complains that the increase is not enough. The position is that Section 11 of the War Damage Act, 1943, gives a limited power. It enables the Commission to make a report if they think that 1939 prices are inadequate, and the Government can then make an Order, upon the receipt of that report. The Commission is limited to considering matters which have arisen since 1941, that is to say, since the passing of the War Damage Act, 1941. Therefore, the matter is not at large. The Government are exercising a limited power, given to them by Section 11. The hon. Gentleman complained that the increase was not enough. He had a mistaken impression that it is to cost something like £1 million. My right hon. Friend pointed out that the cost of the increase would be something like £45 million. The difference is rather material. Indeed, the hon. Member for The High Peak (Mr. Molson) was concerned lest the proposal of the Government might increase any inflationary tendency that might be apparent at the present time. It is really very difficult to please everybody. In my submission, the Government have taken a reasonable course in this proposal.

The War Damage Commission, a body of independent experts with the greatest possible experience of this class of matter, have accumulated much knowledge and material on this subject. They have deliberated and prepared a report in which they make this particular recommendation as to increases. Why the Government should be expected to reject their report and to depart from the opinion of the independent experts and to go their own way I do not know. I submit that the Government have taken the only reasonable and sensible course. Every other hon. Member—the hon. Member for Streatham is the sole exception—has entirely endorsed the view which the Government have taken in this matter. The hon. Gentleman calls it half a loaf. It is a very substantial increase. These 60 per cent. and 45 per cent. increases are substantial on the previous prices and they will go a long way, as other hon. Gentlemen have pointed out, towards removing hardship which otherwise would have been caused.

Mr. Howard (Westminster, St. George's)

As the Solicitor-General is basing his argument upon the report of the War Damage Commission, would he be good enough to quote the words in the report which recommend a 60 per cent. increase? The only words I can find are: Not less than 60 per cent.

The Solicitor-General

Hon. Members will, no doubt, have read the report, which is based on this general proposition, that it is impossible, as matters stand, to do precise and exact justice; what the recommendations are designed to achieve, is to remove in some measure the hardship which exists. The hon. Member's comment has been made, and Members can consider it and the context in which the observation is made. The Commission say that it is quite impossible to make a differentiation between the types of buildings or between localities. If one wanted to do precise justice, one would have to make infinite refinements and subdivisions, which would be completely impracticable, and would make it impossible, as my right hon. Friend desires, as the House desires and as the country desires, to achieve some sort of finality in this matter.

My right hon. Friend's submission was that 1947 should be the year, if possible, which would see this matter wound up, but if we go on forever arguing, subdividing, reviewing and refining, that will be totally incapable of achievement. What the Commission say, is that as a matter of rough justice, we can try to draw a line between those houses which are old, and houses which are "good houses", whether they are pre-1914 houses or whether they are not. The hon. Member for Streatham admitted the exception in the case of houses which were pre-1914, but which were, nevertheless, of a better type and were more solid in structure. What they have done is to put on one side the less solid and older houses, and on the other the newer and better houses, those which are more likely to last. In respect of older houses, they have said, broadly speaking, and quite sensibly, that 45 per cent. is a proper figure. With regard to the others, they have said that the proper figure should be 60 per cent., subject to the comment which has been made.

I do not want to discuss the report in detail. They say that 60 per cent. is the maximum addition permissible for the purposes of Section 13 houses. In that case, they may adopt 60 per cent. for the better houses.

Mr. Hicks

Not less than 60 per cent.

The Solicitor-General

We have adopted the figure of 60 per cent. It is not less than 60 per cent., and is, in fact, 60 per cent., except that where there is a discretion in regard to the amount of increases for the Section 13 cases, that increase may be anything up to 60 per cent.

The hon. and learned Gentleman the Member for Daventry (Mr. Manningham-Buller) was concerned about the possibility of future acquisitions stretching away into the years to come. His fears are really unfounded. If he looks at the terms of Section 14, which converts cost-of-works payments into value payments where property is to be acquired compulsorily, he will see that when the work is done cost-of-works payments are made. Therefore, these cases will fall progressively out of the purview of the section. As time goes on, Section 14 will have less and less operation, and will apply to fewer buildings. I hope he will agree that his apprehensions on that score are not well-founded. The number will not continually increase as compulsory acquisition develops, but will progressively decrease as damage is made good.

Mr. Manningham-Buller

If the cost-of-works payments are to continue to be made and the work is being done, then obviously there will not be a converted value payment. Assuming a certain Measure passes this Session, there will be wide areas subject to compulsory purchase. If that happens, there will be no cost-of-works payment for execution of works in an area subject to compulsory purchase in a period of 15 years. That is why I thought we should have converted value payments continuing for a long period of time.

The Solicitor-General

That is very much the same point which was raised by the hon. Member for The High Peak. The answer is to be found in Clause 17 of the Town and Country Planning Bill, which provides that if you apply for permission to carry out a development, and that permission is refused, then you can require the planning authority to buy it from you. I do not think the hon. and learned Member need have any fears on that score. He has raised the point, and it will be carefully considered.

Mr. Molson

It is an important point which has been discussed upstairs. Designation is not one of the things which entitles the owner to immediate compensation.

The Solicitor-General

We shall bear that point in mind. As I have said, the matter will be carefully considered.

The question of mortgages was ruled out of Order, but I think I shall be in Order in saying that we are simply dealing with compensation for war damage, and that it does not cover any loss which is other than a loss strictly within the terms of that definition. Mortgage interest is not a loss of that sort, and, this Order does not therefore relate to that type of loss. It has to be borne in mind that if you receive a converted value payment, or original value payment, you have the advantage of a lump sum, and as far as interest is concerned, you can discharge the interest then and there.

Hon. Members on both sides have raised the question of the relation of the payment of compensation, which has to be made under the terms of the War Damage Act, and the payment of compensation under Section 58 of the Town and Country Planning Act. Obviously, we do not consider the two in isolation. The one is inter-related with the other, and both will be closely borne in mind.

I think I have traversed the various points that were raised. There were general expression of eulogy of the Order, and there were some expressions of disapproval. In so far as the expressions of disapproval are concerned, I hope the House will agree that I have answered them, in saying that we have no other course than that of following the recommendations made in this report by independent experts. We cannot get better advice than that, and this advice we have thought fit, in the circumstances, to follow. I would ask the House to approve the Order.

Mr. Manningham-Buller

Will the hon. and learned Gentleman allay our fears with regard to the cost-of-works payments? I must accept the assurance—and I am grateful for it—that he will look into it. But on that account, and on the basis that there may be further inflation, I did ask the question: Can we take it that, if there is further depreciation in the value of money, there may be later on, in those unfortunate circumstances a further increase, as envisaged by the War Damage Commission Report?

Mr. Dalton

I have already given an answer. It is, "No, Sir." We are trying to finish this matter as quickly as we can.

1.1 p.m.

Mr. Howard (Westminster, Saint George's)

I want to take up one point. The Chancellor of the Exchequer and the Solicitor-General have based themselves and their case on the fact that they are following the recommendations of this Commission, and I cannot accept that. It is, I submit, the duty of the Government to satisfy the House that the proposals in this Order are not merely not less adequate than any existing provisions, but that they are, in fact, wholly and fully adequate today. I submit that they have failed to do that. The Chancellor of the Exchequer—I noted his words when he spoke—said that these proposals carried out the recommendations of the Commission's report. The learned Solicitor-General has repeated, that the proposals in this Order follow the recommendations of the report.

So far as the 45 per cent. in the generality of cases on "original" payments is concerned, that is true. The Commissioners make a perfectly clear and definite recommendation. I think the important point in those cases is the interpretation of the words in the Treasury directive: Older houses of equivalent quality. If that Treasury directive is interpreted in a liberal and reasonable spirit I think we will all agree that the houses which will come under the 45 per cent. will probably not be entitled to more. But it depends wholly on how that directive is interpreted. But so far as "converted" payments qualifying for the 60 per cent. are concerned, I do submit that the Chancellor of the Exchequer and the Solicitor-General are misleading the House when they say they are following the recommendations of the Commission. The recommendations of the Commission are perfectly clearly set out in the summary, and also in paragraph 17 of their Report. They say that this percentage—that is the original percentage— should not be less than 60 per cent. Not less than 60 per cent. is a very different thing from a fixed maximum figure of 60 per cent. In the Treasury Order there is the fixed figure of 60 per cent., which, admittedly, is the minimum; but it is also a fixed amount and therefore a maximum. The reason why the Commissioners recommended not less than 60 per cent. is made perfectly clear in their report. They point out in paragraph 9 that building costs have gone up, in their experience, not less than 100 per cent. They point out that these payments have got to be based on the assumption that there will be vacant possession. In paragraph 13 of their report they say: We are informed by the Valuation Office— which, I think I am right in saying, comes under the Chancellor's authority— that, in the heavily war damaged districts, the sales with vacant possession of those 'not good' houses which if severely damaged would probably attract a value payment now— that is at the time of their Report— indicate an average increase of between 65 per cent, and 70 per cent. That is a statement of their view; and yet we are asked to accept as satisfactory, as just and adequate, a fixed maximum of 60 per cent. in place of their definite recommendation of not less than 60 per cent. I am sorry if I must be a lone voice, but I cannot, for myself, accept that the provisions of this Order are adequate. I believe that it is the obligation of the Government to show that they are adequate, and that they have failed to do so.

1.6 p.m.

Lord Willoughby de Eresby (Rutland and Stamford)

Like most other speakers in this Debate, I do, on the whole, welcome this Order in so far as it attempts to bring about a fairer basis of payments than was originally the case under Section II of the Act of 1943. Above all, I welcome the statement from the Chancellor of the Exchequer that these value payments will be made—or he hopes they will—before the end of the calendar year. I possibly take a slightly less sanguine view of the financial position than the Chancellor of the Exchequer, but I must say that there is no question that, with every month that goes by, these improvements will become less and less valuable. I am glad that there is now, at last, some finality over this matter. My constituency, mercifully, has avoided the war damage which many other constituencies have suffered in this country. But I am surprised, even in my own constituency, at the number of people who are suffering real hardships today as a result of the nonpayment of these claims to date.

The chief hardship usually occurs where people are paying a mortgage interest and receiving no rent. I have also been surprised to see the number of people of very moderate means who own this type of property who were very largely dependent on the rents which they received for their incomes and to pay their mortgage interest. I should like to ask one question, and that is whether the mortgage interest which is—

The Solicitor-General

On a point of Order, Mr. Deputy-Speaker. If I understood Mr. Speaker correctly, he ruled reference to mortgage interest as not being within the scope of this Debate and out of Order. It was for that reason that, when I was replying, I did not deal with that subject.

Mr. Deputy-Speaker (Mr. Hubert Beaumont)

Mr. Speaker gave that Ruling and I cannot allow the noble Lord to continue his argument.

Lord Willoughby de Eresby

If I had been allowed to continue I should have shown that the Chancellor of the Exchequer, during his remarks, did show that those value payments would have interest added to them at the rate of 2½ per cent. on which Income Tax would be payable. I was going to ask whether mortgage interest which had been paid could be written off against this interest.

Mr. Deputy-Speaker

Mr. Speaker has already ruled that that is not permissible, and, therefore, no answer can be given by the Solicitor-General.

Lord Willoughby de Eresby

Perhaps the hon. and learned Gentleman will bear that point in mind.

Question put, and agreed to.

Resolved: That the War Damage (Increase of Value Payments) Order, 1947 (S.R. & O., 1947, No. 390), dated 4th March, 1947, made by the Treasury under Section 11 (1) of the War Damage Act, 1943, a copy of which Order was presented on 6th March, be approved.

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