PROPERTY, EXETER (COMPULSORY PURCHASE) (Hansard, 12 May 1954)

§ Mr. Dudley Williams (Exeter)

Although I have had considerable correspondence with my right hon. Friend the Minister of Housing and Local Government and his Parliamentary Secretary on this subject, I am very glad to have this opportunity of raising in the House what I consider to be the very unfair treatment of certain property owners in my constituency. This is caused by the complexity of the compensation provisions under the War Damage Acts and the Town and Country Planning Acts.

The difficulty arises originally from the War Damage Acts, under which the owner of a blitzed property could receive, according to circumstances, either the 1394 cost of works payment, which was intended to pay for the rebuilding where the building was not a total loss, or a value payment, where the building was a total loss and was not to be rebuilt. For present purposes I confine myself to a cost-of-works payment and especially to cost-of-works payments in respect of property which was to be subject to compulsory purchase by the local authority.

Section 58 of the 1947 Act is the Section which provided for the payment of compensation to owners of property for the taking over by the State of their development values. It set up the £300 million fund for this purpose and was to apply to all land which had a development value on the appointed day—1st July, 1948.

Section 59 provided for additional payments for war-damaged land, and said that where such land stood to receive a value payment and was, because of the war damage more valuable—where old poor class property was wiped out leaving the site available for a more profitable purpose, then, since that extra development value was being taken away by the Act, the owner should get a higher payment. This Section was limited only to one type of land war-damaged and one for which a value payment was to be made. A scheme was later to be made settling the details as to making claims and payments.

Under these Sections of the 1947 Act owners could submit claims for lost development values caused by the effect of that act, but many people, both professional and lay, interpreted Section 58 as applying only to unblitzed property which had development value and, therefore, those who owned blitzed property did not submit claims under Section 58.

I cannot say whether their interpretation of the Sections was faulty. What I can say is that owners did not appreciate their position in relation to exclusion from compensation until the Central Land Board issued the Scheme—the Planning Payments (War Damage) Scheme, 1949, which expressly excluded these Section 59 claims from the ordinary compensation for depreciation of land values occasioned by the 1947 Act. By the time that scheme was made it was too late for the owners to submit their claims under Section 58. In the meantime, some compulsory purchase orders 1395 had been made under Section 53 of the same Act and the compensation payable ignored compensation for the loss of development value that might have been inherent in the property, or in the site on which it stood.

When the Central Land Board assessed compensation for the ordinary loss of development value under the Town and Country Planning Act, 1947, it again excluded any such development value. I am informed on the advice of very distinguished counsel and other professional advisers that the interpretation of the Central Land Board is certainly open to challenge, but how far it could be fought in a court of law with any prospect of success following the issue of the Statutory Instrument which regularises the position after the damage has been done, is very questionable and certainly might be very difficult to settle.

My constituents did not put in their claims in a casual manner. They obtained professional advice before doing so and, since the decision has been made that their claims were made under the wrong Section of the Act, many of them have sought the opinion of counsel as to whether that is a correct decision. After reading two opinions of eminent counsel in these cases, it is clear to me that there must have been considerable doubt in the minds of professional advisers at the time that these claims were put in. Therefore, I think that something should be done by Her Majesty's advisers to rectify the situation.

I quote the words of one of these learned gentlemen who expressed his opinion: Having regard to the fact that the case clearly falls within the words of Section 59 (2, b) of the Act of 1947, it is not surprising that the claimants refrained from making a claim under Section 58 in the expectation that they would get a larger payment by claiming under Section 59 and it is most unfortunate that they could not know that the case would not fall within the ambit of the scheme under Section 59 until the time for claiming under Section 58 had expired. In the case of another opinion it is stated that the misconception which has arisen in relation to the making of claims under Section 58 … is a reasonable one. These claims are not late claims. They were claims that were made under Section 59 of the Act and were only 1396 invalidated, if at all, by the regulations which were subsequently made. There have been cases where claims have been made under Section 58 have been found to have been made in error. I have not particulars of these, but I understand that they exist in the Department of my hon. Friend. These property owners have subsequently been allowed to transfer their claims to Section 59. Surely if this was permitted, claims made in error under Section 59 because the regulation had not been issued should be transferred to the proper Section, 58.

I maintain that the Minister has power to rectify this, because subsection (5) of Section 58 of the Town and Country Planning Act says: The power of the Treasury to make a scheme under this Section should include the power to amend any such scheme to a subsequent scheme made thereunder. I think that gives the Minister the necessary power he must have to put the matter right. I know that my right hon. Friend has given very considerable consideration to this unfortunate situation but the purpose of my appeal tonight is to ask him to review the matter once more.

Several of my constituents have suffered severely. One in particular has lost several thousand pounds if the present state of affairs is to be allowed to continue. How many other property owners in other blitzed cities—London. Plymouth, Southampton, Bristol and others—are suffering, I do not know, but in such a mass of complicated legislation as war damage and town and country planning any citizen should be given the benefit of the doubt, and I hope that my hon. Friend will be able to offer some comfort.

§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples)

I would congratulate my hon. Friend the Member for Exeter (Mr. Dudley Williams) on the reasonable and lucid way he has presented a most complicated and complex subject, and I would also say he has been very tenacious in the assiduity with which he has followed the rights of his constituents. I envied him his intricate knowledge and grasp of these complicated problems.

There may be some doubt on the question whether a way could be found to help my hon. Friend's constituents, but the more important question is whether there is any real ground for the complaint made. The provisions of the legislation which give rise to the trouble are very complex indeed. I think the simple way to expound them is to consider what was in mind in regard to development value, first, under the War Damage Act of 1943, and, secondly, under the Town and Country Planning Act of 1947.

The War Damage Act dates from a time when development charge had not been invented. No attempt had been made in legislation to separate existing use value from development value. The payments provided for by the Act were, broadly speaking, payments representing the cost of works involved in making good the war damage; or, in the case of total loss as a result of the war damage, value payments. The value payments were assessed on a comparison between the value of the property before and after the damage had been sustained.

As, of course, was often true the value of the site after damage might be as great as or even greater than the value of the site before the damage. The bomb actually assisted matters by knocking down the building. Value payments in consequence were sometimes depressed by the presence of development value which in the ordinary way remained in the hands of the property owner. That was the position under the relatively simple War Damage Act.

The Town and Country Planning Act. 1947, passed by a previous Administration, was intended to secure a complete separation between the development 1398 value on the one hand and the value of property for existing use on the other. Development value was taken over by the State with effect from 1st July, 1948, and no one had the right to develop land beyond that date without paying a development charge. The £300 million fund was set up as a source of payment which was to be made to the generality of owners who could show that their land possessed development value on the appointed day.

Under Section 59 of the 1947 Act there was a separate scheme for payments in cash by the Treasury to owners who could show that a value payment due under the War Damage Act had been depressed by the presence of development value on their land. This was an entirely separate scheme from the £300 million scheme, but it must be emphasised that nothing could be claimed under the war damage scheme which could not also be claimed under the general scheme. The difference between the two was that under Section 59 the owners would be paid in cash, quickly, and could expect 100 per cent, and that is in rather startling difference to claims under Section 58.

These are the broad lines on which development value was dealt with in these two Acts. A great deal more detail is required to appreciate the misunderstanding which has provoked the troubles of my hon. Friend's constituents in Exeter. In a compulsory acquisition the position alters. This was clear on the face of the Act itself. The two Acts contain special provisions about the effect of compulsory purchase on payment for war damage. The combined effect of Section 14 of the War Damage Act and Section 53 of the Act of 1947 was that in the event of a compulsory purchase any owner otherwise entitled to a cost of works payment did not receive that payment; for, obviously, he could not make good war damage if the land had been taken from him.

Instead, the payment was converted into a value payment, and that payment was diverted from the owner to the acquiring authority, who paid him the value of his property as if the war damage had been made good. This ensured that a full and adequate payment would be made by the authority for the existing use-value of land, but the effect of 1399 the provision on what might be obtained by the owner in respect of development value might be considerable. The basis of any claim he might make on the £300 million fund was to be the difference between the restricted value and the unrestricted value, the unrestricted value being, in effect, the open market value.

In these Exeter cases with which we are now dealing, where acquisition took place at the nationally restored value, that value, which was often fairly high, was required to be taken as the restricted value. It became the floor for the calculation of the development value. The result was that in calculating the development value for the purposes of a claim on the £300 million fund a perfectly good building had to be assumed to be on the land, and the cost of removing it might sometimes be so high that no claim could be established.

We are not concerned with the question whether this was right or wrong. In an Adjournment debate we cannot discuss future legislation, and at this point we cannot discuss whether this legislation was right or wrong. It was very hotly debated at the time. The provision had the effect I have described, but in spite of that effect many people who were bought out on the notionally-restored basis did establish claims on the £300 million fund under Section 58.

Some may have thought that on the basis of Section 59 they could have obtained payment in cash under the schemes to be made under that Section, instead of waiting for a share in the distribution of the £300 million fund. That is what these people in Exeter thought. They omitted to do what everyone else in a similar position appears to have done, that is, not only entered a claim under Section 59, but also a claim on the £300 million fund. Despite the complexity of the provisions to which reference has been made, there is no real justification for people to have relied solely on the Section 59 scheme.

The case put before the House is that the provisions of Section 59 itself enable the scheme to cover not only cases where a value payment was appropriate, but also cases where a cost of works payment was appropriate but was 1400 changed to a value payment. One type of case where this happened, though not the only one, was where the land had been bought compulsorily. The scheme as made did not cover cases of this sort. The result was that people who, on professional advice, did not claim on the £300 million fund, but waited for the Section 59 scheme, really missed the boat. Therefore, it is argued, they should have a further opportunity to claim.

I must confess that at first sight this seems a convincing argument, but it ignores the effect of a compulsory purchase. It was known to all those concerned in Exeter that their properties were to be acquired by the council. It was known that the payment made to them by the council would be the value that the property would have if the whole of the damage had been made good, in other words, the notionally restored value. The war damage payment would have been made to the council and not them. For the development value they had to look to the State, and I am bound to say with the greatest of respect to my hon. Friend that it should have been obvious that a Section designed as Section 59 plainly was from the outset to supplement the value payment would not be of use to them.

They knew they could not be concerned with the assessment of the value payment and with the question whether the amount was depressed by development value. Their only promising course would have been a claim on the £300 million fund. This they did not do. My hon. Friend submits now that there is no reason why the omission should not be remedied at the taxpayers' expense. They found out their mistake when the scheme under Section 59 was published in December, 1949, in Statutory Instrument 2243 of 1949. That scheme excluded from its scope the supplementation of value payments, where the reason for the value payment was that a cost-of-works payment had become inappropriate through compulsory acquisition of the damaged land.

My hon. Friend next mentioned claims in error under Section 58, and suggested that they could be shunted to Section 59. That does not affect the argument. When the suggestion was made to shunt the extra claims it was too late. Even if it was considered right that some means 1401 should have been found to enable the people concerned to put in a valid claim for payment of development values it is doubtful whether it would be possible to arrange it without legislation. The 1947 Act provides no specific power to amend the scheme made under Section 59 and the nature of the claims on the £300 million fund is altered by the 1953 Act which suspended payment pending further amending legislation which is now under consideration by a Standing Committee.

In that Bill the Government have taken the view that people who failed to claim for whatever reason would not be allowed to make them now. My right hon. Friend has referred to it as the Domes-day Book and if it is not there it cannot be reopened. The case here mentioned represents one category in which a claim might have been made, but was not made The Government have made it clear beyond peradventure that the Domesday 1402 Book is closed and claims cannot be readmitted. My hon. Friend has pursued the matter practically and tenaciously, and although I have no hope that decision by the Minister will be altered, I will, in view of what he has said, look carefully at his remarks in HANSARD and see whether there are any points which I have not answered and will communicate with him.

There is no hope of reopening the wider aspect by which many people throughout the country could re-establish claims, and there is no hope of giving relief to his constituents who did not make claims. But in view of the lucid and reasonable way in which he has put forward the case I will examine it again, although I make no promise whatever.