I beg to move, in page 48, to leave out lines 34 to 43, and to insert:or order as is mentioned in the last preceding section if he is entitled to an interest in any qualified land and the value of that interest or, in the case of an interest extending to other land, the value of that interest in so far as it subsisted in that qualified land, was depreciated by the decision or order:Provided that compensation shall not be payable under this Part of this Act in respect of an order under section nineteen of the principal Act so far as it relates to any particular land if—
- (a) compensation in respect of that order is or was payable by the local planning authority under section twenty of that Act; and
- (b) by virtue of paragraph (b) of the proviso to subsection (1) of the said section twenty (which relates to development exempt from development charge by virtue of Part VII of that Act) the compensation includes or included compensation in respect of loss or damage consisting of the depreciation in value of an interest in that land."
I should like to explain this Amendment and the four others relating to Part V of the Bill. When we re-examined this Part of the Bill, we came to the conclusion that it could be drafted in a much more compact and understandable form by eliminating certain repetitions and substituting particular for general references to other parts of the Bill. This Amendment and the other Amendments which we are discussing do that. We are not altering the provisions in any material particular, and the whole series of Amendments may be fairly described as drafting Amendments.
§ Mr. George Lawson (Motherwell)
Perhaps I shall be in order in putting this question, as it relates to Part V of the 1232 Bill. I am wondering what is the effect of making these compensatory payments for past accounts where permission was refused, and what revocation will be made and compensation paid for these past refusals. I am wondering what effect the payment of this compensation will have upon the future value of the land in question. The present position, I understand, is that the value is in fact the existing use value plus the claim. Unless I am wrong, the payment of compensation will reduce or extinguish the claim. What happens after this payment has been made? What happens to the land and the value of the land? Does the compensation payment go into the existing value of the land? In consequence, if it happens that some local or public authority were at a subsequent date to decide that such land should be compulsorily bought, what would be the position regarding the price of that land?
Perhaps I can make myself clear in this way. If a piece of land were valued at a given restricted use value of £50, and because of refusal to permit development £150 were paid in compensation, would this add to the value of the land and would the value of the land become for future purchasers or compulsory purchase purposes £200, or would the public authority acquire that land for £50? In this case, would the public authority be required to pay back to the Government, which in the first place paid compensation of £150, that £150? If it paid £50 plus £150, it seems to me that the owner of the land would be paid twice, once for compensation for refusal to develop, and then this extra £150 if the land were compulsorily acquired. I am sorry if that sounds a little vague. This is a matter which should have been thrashed out in Committee, but, as is well-known, we had very little opportunity of doing so.
I think that the hon. Gentleman stated clearly what the Clause does. The Clause lays down circumstances in which compensation will be paid in respect of previous planning decisions and revocation or modification orders. Where that payment has been made, the claim value is reduced. The compensation payable is the existing use value plus the value of the claim. The claim value will be reduced by the amount which has been paid, so payment will not increase the value of the land. 1233 The local authority will at any time be able to purchase at the existing value plus the unexpended balance of any claim which is outstanding at that time. If the claim is completely wiped out, the purchase will be at the existing use value of the parcel of ground.
§ Mr. Lawson
Let us assume that the use value is £50 and, because of refusals, to develop, £150 is paid in compensation. If a local authority or a public authority at a subsequent date buys that land compulsorily, will it be required to pay £200, because that would be the use value plus the claim, or will it pay £50?
The answer is that it may not be £50; it may be more than that. It would be the existing use value of the land—
—at the date of acquisition plus any unexpended balance of the claim that was outstanding.
§ Mr. Lawson
I am still not clear. Would the £150, for example, enter into the use value, and would £200 become the new use value which the local authority would require to pay
§ 4.30 p.m.
§ Mr. Thornton-Kemsley
While my right hon. and gallant Friend is thinking about that, perhaps I can offer the humble suggestions of a valuer who occasionally has to deal with these problems. The answer is simple. Existing use value is the value of the land for the use to which it is put at the relevant date. No extraneous circumstances—such as whether a Part V claim or part of a Part V claim is outstanding—alter the existing use value of the land. It is purely a matter of the valuer's valuation of the land subject to the use to which it is being put at the relevant date. No other considerations have any bearing whatever.
§ Mr. Lawson
Does it follow, then, that in the case which I have described the local authority could buy the land at existing use value, which need not include the £150, and that since the claim has been reduced by £150 the local authority would be obtaining the land more cheaply than would otherwise have been the case had the claim still been outstanding?
We are entering the realms of mathematics. Suppose that the established claim is equal to £200 and the compensation is £75; the balance that would be left would be £125. On compulsory acquisition, the compensation is the existing use value—let us take the £50, as the hon. Member did—and the remainder of the claim, which we have bought out at £125. Therefore, the local authority would pay a total of £175, which, with the compensation already paid, makes a total of £250: that is, the original claim plus the existing use value. If the hon. Member studies this when he sees it in the OFFICIAL REPORT tomorrow, he will find that it answers his question.
§ Mr. T. Fraser
When my hon. Friend studies all this in the OFFICIAL REPORT tomorrow, he will find that the right hon. and gallant Gentleman has proved him to be right and that the owner would be paid twice for the land. Despite what the hon. Member for North Angus (Mr. Thornton-Kemsley) said, the land of which my hon. Friend was speaking and a low existing use value.
My hon. Friend and I both represent constituencies in industrial Lanarkshire, where there has been a good deal of industrial development in recent years. It is conceivable that in my hon. Friend's constituency or mine a person may have owned a piece of land on which stood some derelict or dilapidated houses which it was thought might one day be removed to provide an open space. My hon. Friend had in mind that there would be a claim holding in respect of the land because the person owning it anticipated that there would be industrial development upon the land. But industrial development has not, in fact, taken place, and later there might be a compulsory acquisition of the land, with an exceedingly low existing use value.
What my hon. Friend wanted to know was whether the existing use value of the land, plus the unexpended balance of any claim, would lead to a sum considerably in excess of any value that anybody would ever put upon the land, and whether the owner, having had compensation for loss of development rights, would be paid twice. If my hon. Friend reads in the OFFICIAL REPORT tomorrow what the Joint Under-Secretary has said, 1235 he will find that in his illustration and assumption he has been proved to be right or, at least, has been supported by the words of the right hon. and gallant Gentleman.
May I give one assurance to the hon. Member and his hon. Friend? The owner never receives more than the existing use value plus the unexpended balance of the claim. That really is the answer.
§ Mr. Lawson
That would surely mean that if the owner had already received, in the case I mentioned, £150, that would reduce his claim or, perhaps, wipe it out altogether. It would not be added to the value of the land and consequently, when the public or local authority came to buy the land, it would buy it at existing use value, which would not include the compensation payment. In consequence, this method would mean that the public or local authority would be able to buy the land more cheaply than it would if no compensation had been paid, because then it would have had to pay the established claim.
If the claim had been paid previously, obviously the local authority would be buying at a lesser sum. In other words, if a claim had existed, the local authority would have had to pay the existing use value plus the claim; but the claim has been already paid, and so, obviously, the local authority pays only the existing use value.
§ Amendment agreed to.
Further Amendments made: In page 49, line 4, leave out "Part II," and insert:
sections twenty-five and twenty-six.
In line 8, after second "Act," insert:
(b) as if the reference in subsection (1) of the said section twenty-six to section twenty-nine of this Act were a reference to section fifty-two thereof.
In line 10, at beginning, insert:
For the purposes of the application of this Part of this Act with respect to such a planning decision as aforesaid.
In line 12, leave out from "shall," to end of line 13, and insert:
have effect as they have effect for the purposes of Part II of this Act."—[Commander Galbraith.]