§ Order for Second Reading read.
§ 4.0 p.m.
§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. R. Bevins)
I beg to move, That the Bill be now read a Second time.
Compensation is a difficult and complicated subject. When my hon. and gallant Friend the Member for Gloucestershire, South (Captain Corfield) introduced his compensation Bill in February it ran to a modest six pages. The Bill now before the House extends to 77, and that gives some indication of the difficulty which was felt by my right hon. Friend when he was invited to facilitate the passage of a Private Member's Bill on the subject.
It would be ungracious of me, however, not to take this opportunity of congratulating my hon. and gallant Friend on his most effective pathfinding activities in February. They were remarkably well done. Although the Government Bill may not flatter by imitation of form, it certainly does so by imitation of substance, for the underlying aims of the two Measures are very much the same.
Hon. Members will recognise the difficulty about a speech on town and country planning: there is so much to say that one is in great danger of talking too much. I am sure that Lord Silkin felt this when he introduced the Town and Country Planning Act, 1947, for he then spoke at very considerable length. In fact, he was on his feet for 2¼ hours. I assure the House right away that there is no danger of my doing that. My horror of listening to a long speech is equalled only by my horror of having to make one. Therefore, I shall try to confine myself to broad essentials.
The great virtue of the Bill now before the House—it is a very real virtue—is that it is generally comprehensible. For a Bill on this difficult subject, I think that it is a positive gem of lucidity. I appreciate, of course, that a number of hon. Members on both sides of the House are specialists in this subject. Even so, I am sure that the House as a whole will be grateful to my right hon. Friend and the 584 Secretary of State for Scotland for the explanatory White Paper. We hope it will be helpful to hon. Members on both sides—it has certainly been helpful to me —because it is always a good thing if those of us who discuss a Bill first of all understand it.
The Town and Country Planning Act, 1947, attempted to deal in a very comprehensive way with the problems of compensation and betterment, problems which until that time had rendered planning on a national scale more or less ineffective. It was a very audacious and far-reaching Measure. The Act had two main elements. The first was to transfer to the State the development rights in all land and to provide for a once-for-all payment of compensation for loss of development value, which was limited to a total figure of £300 million. The second element was that when development was allowed the developer would buy back from the State the development value which he was then realising, and for that he would pay a charge equal to the whole of the development value. That was the development charge itself. It followed from this that when land was bought by compulsion the owner should be paid its value for its existing use only because its value for development had already been taken over and was to be compensated for by the State.
Eleven years ago—in 1947—it was believed by many people in the House and outside it that in the case of voluntary, as opposed to compulsory, land transactions land would change hands on the same basis—at existing use value— because the seller would be compensated and the purchaser for his part would have to pay for the development value of the land through the development charge. In the event, however, it did not work out quite like that. When I say that I am not making a party point at all. The fact is that the development charge itself became about as popular with the public as Lord Montgomery's memoirs have been with some of the generals. It became bitterly unpopular throughout the country. It frustrated land transactions. What happened in practice was that most landowners asked for prices which included value for development, and when the purchaser paid the development charge for the development he was, in effect, paying the development value twice over.
585 So it came about that at the very time when hon. Members on both sides of the House wanted to see a big expansion of the housing programme the development charge was acting as a brake. It was like a tax which acted to discourage development. On top of this, not many people understood what it was all about anyway; and that is never very helpful. It was, therefore, decided to abolish the development charge and to suspend the payment of the £300 million. The 1954 Act provided that claims against the £300 million would be paid only when the owner suffered either by a planning refusal or by a compulsory acquisition. In this way compensation for compulsory acquisition became existing use value plus the 1947 development value if there happened to be any. That is the present basis of compensation. That, very briefly, paraphrases the recent history of the matter.
That leads me to the Bill. The fact that on compulsory acquisition the element for development value is limited to the 1947 figure means that the price paid on compulsory acquisition of undeveloped land—I emphasise "undeveloped land"—is often very much less than the full market price which the owner would get in a voluntary sale in the open market. So we come to the two-price system, one price for private sales and another for public purchases.
The Franks Committee went out of its way, in paragraph 278 of its Report, to comment on all this, stating:The evidence which we have received shows that much of the dissatisfaction with the procedures relating to land arises from the basis of compensation. It is clear that objections to compulsory purchase would be far fewer if compensation were always assessed at not less than market value. It is not part of our terms of reference to consider and make recommendations upon the basis of compensation.The Committee added:But we cannot emphasise too strongly the extent to which these financial considerations affect the matters with which we have to deal. Whatever changes in procedure are made, dissatisfaction is, because of this, bound to remain.That is one way of putting it. Most hon. Members have had correspondence from irate members of the public—my right hon. Friend and the Secretary of State for Scotland certainly have—in which they 586 have said the same thing, but have put it rather more violently.
The two-price system has not only come to be regarded as an injustice associated with so-called land grabs and the use of the big stick by authority against the citizen. It has also tended to hinder local authorities in selecting the best sites for their purposes. Some of the local authorities have not been prepared to cause injustice; or, for that matter, to incur the odium which comes from the present basis of compensation for compulsory acquisition. My hon. and gallant Friend gave one or two examples of this when he spoke in February, and it was, I think, referred to by the hon. and learned Gentleman the Member for Edge Hill (Mr. A. J. Irvine) in his letter to The Times this morning.
Let me add this—and I should like to make this very plain. I think that it would be entirely wrong, and quite misleading, to assume that the grounds for this general sense of grievance are universal; in other words, that compensation is always unjust. I do not think that that is so. In the case of developed land there is, as a rule, not a great deal of reason for complaint, because, quite obviously, it has no value for development beyond its existing use.
The real trouble, of course, arises on the fringes of our towns and cities, where development values have risen—and, very often, very considerably, indeed—since 1947. I do not believe that anybody would wish to dispute that here there is a chasm between the market value of undeveloped land and what is payable on compulsory purchase. Sometimes, indeed, the market value can be as much as three or four times the compulsory purchase price, and I should tell the House that the evidence in the possession of my right hon. Friend indicates that, on average, market value for undeveloped land is at least 40 per cent. greater than the compensation actually paid under the present code—
§ Mr. William Ross (Kilmarnock)
The hon. Gentleman speaks of evidence in the possession of his right hon. Friend, but the unfortunate thing about these strange proceedings is that he has two right hon. Friends in support. Can we have figures for Scotland, or are we to be given them?
§ Mr. Bevins
I have been very scrupulous in my references to my right hon. Friend and to the Secretary of State. In this context, I referred to my right hon. Friend, because this evidence refers to England and Wales, and not to Scotland. But I have no doubt at all that my right hon. Friend the Secretary of State for Scotland will deal with all the points that the hon. Member raises.
This situation, whereby the compensation paid under compulsion is so much less than that paid in free transactions in the market is one that, in the Government's view, cannot be allowed to continue, and the Government feel that the only conceivable solution is to return to market value. This is what the Bill aims to do, and, in a moment or two, I hope to come to the methods by which we seek to do it.
At this point, I should like to refer to something that the Bill does not do. It does not affect the basis of compensation for planning restriction. That remains as it is. That is to say, the owner can claim the amount of the depreciation caused by the refusal, limited to the unexpended balance of the development value as established by his claim under the 1947 Act.
I think that most hon. Members will support me when I say that, nowadays, the country accepts planning restrictions as one of the necessary facts of life. It is certainly a fact that planning refusals have not given rise to that same sense of grievance as that which comes from compulsory purchase. The Government's object is to make planning more effective. What, I think, some people would like within this context is compensation up to the value that there would be if there were no planning control at all, or, to put it another way, the value that their land would have if everybody else's land but their own was subject to planning restriction—in other words, a sort of scarcity value.
I do not, however, think that this provides a good basis for any change—
§ Mr. J. A. Sparks (Acton)
May I put to the hon. Gentleman what I think is an important point in relation to the development plans and planning permissions? He is surely aware that the existence of the developing plans has enhanced the market value of many parcels 588 of land in many parts of the country. I he value is that created by the development plan, and not by the owner, or anybody else who is to get it in compensation.
§ Mr. Bevins
I do not think that any hon. Member would dispute that, but it is a point to which I shall come presently, if the hon. Member will allow me.
The House will probably agree that, on the whole, we have succeeded in separating these Siamese twins of planning refusals and compulsory purchase in a fairly workmanlike way, and the Bill does nothing at all to change the basis of compensation for planning refusals.
I come, now, to the Bill itself, and I hope that it will meet the convenience of the House if, at this stage, I refer only to its most important Clauses. Part I deals with compensation for compulsory purchase. The present basis of limited compensation is brought to an end by Clause 1. We are left, therefore, with the rules for the assessment of compensation that were laid down in 1919.
What do the 1919 rules say? They say that the value of the land for compensation is to be "the amount which the land, if sold in the open market by a willing seller, might be expected to realise." But what that land would sell for in the absence of compulsory purchase turns, of course, on planning control. That is to say, it turns on planning consents that have already been given, or that might reasonably be expected. Therefore, the question is: what sort of development would be allowed if the land were not required for public purposes?
Clauses 2 to 6 set out the assumptions that are to be made in relation to these planning permissions. These provisions are detailed. They are not easy to understand, and I have no doubt at all that during our later consideration of the Bill we shall need to look at them very carefully. Broadly speaking, however, there are three assumptions contained in this part of the Bill.
First, it is to be assumed that there is permission for the development for which the land is being bought. For example, if it is being bought for housing, the housing planning permission will be taken into account in the valuation. Secondly, it is to be assumed that there is permission for development for the use 589 for which the land is defined or allocated in the development plan. For example, in an area allocated in the plan to industry, an industrial permission would be taken for granted.
Thirdly, there are some cases in which the provisions of the development plan do not give a clear answer to the question: what kind of development would have been allowed here if the land had not been needed for public purposes? In those cases, we say that is to be assumed that there is permission for development in accordance with a certificate issued by the local planning authority saying what permission might reasonably have been expected if the land were not being bought by a public authority.
I turn now to Clause 7, which the House will probably regard as of some importance. This Clause seeks to protect authorities from paying for values that are created by the very schemes for which the authorities are buying the land. The Clause also protects owners whose land is being bought from depreciation caused by the actual proposal to acquire. The background to the Clause is a complicated one, which derives from the nature of the 1919 rules. In effect, the Clause modifies those rules to some extent to deal with particular cases where, perhaps, land is required by a local authority or other public authority for a purpose for which there is only a public, not a private, demand for the land, and it would be wrong to take into account that den and in assessing the market value. That provision will probably be acceptable to hon. Members on both sides of the House.
In the debate upon the Compensation (Acquisition and Planning) Bill, in February, my right hon. Friend the Minister of Housing and Local Government gave an undertaking in connection with the problem of notices to treat which have been hanging fire since 1947, or even earlier. In most cases compensation would be at pre-war values. Under Clauses 12 and 13, local authorities must now either proceed with these purchases or allow the powers to die. If they go on with the purchases the owners have an option to compensation on the basis of the 1954 Act.
Another grievance comes about where land is bought by a local authority for 590 one purpose and is then sold or used for a completely different and more valuable purpose. We have all seen newspaper reports of cases of that sort. It sometimes happens that land is bought for an open space and is later used for housing, or is bought for housing and is then given an industrial use, either by the local authority or some other authority. This has happened on many occasions in the past, and it will no doubt happen again in the future, because there is no finality about planning.
The return to the market value will not succeed in removing this grievance, because new and unforeseen planning permissions can entirely alter market values. Accordingly, Clauses 14, 15 and 16 provide that in these cases the original owner can claim additional compensation from the authority if the land is sold or used for a more valuable purpose within a period of five years of the acquisition. In this way the owner will get the same compensation as he would have received at the start if the new planning permission had been in force at the start.
§ Mr. G. R. Mitchison (Kettering)
What about the converse case, where the change of plan involves a lower compensation? Can the local authority recover what has been paid?
§ Mr. Bevins
No. The converse case does not apply. Where a local authority buys the land for one purpose and proceeds to use it for a less valuable purpose it would be grossly unfair to the person whose land had been appropriated if that were the case. When a local authority decides to buy land for a certain purpose it must assume the responsibility for having done so.
I was saying that this new system will mean that the owner will get the same compensation as he would have received at the start if the new planning permission had been in existence at the start.
§ Mr. Sparks
The bulk of sales in this context are private. What is the position of a private purchaser who pays a price for land based upon certain uses and then, in the course of two or three years, decides to use it for a higher use value, as a result of changes in the development plan? Will he refund to the seller the amount of the increased value of the land?
§ Mr. Bevins
Of course not. The hon. Member knows the answer to his question. A transaction between two private persons is perfectly free and voluntary on both sides. We are dealing here with the case of compulsory acquisitions, when land is bought for one purpose and is then used for a more valuable one.
§ Mr. Scholefield Allen (Crewe)
Would it not be easy to draft the Clause in reverse and make a provision in favour of a local authority on the same basis?
§ Mr. Bevins
I have no doubt that that would be quite easy, but it would be very unjust to the people whose land had been appropriated.
I do not need to keep the House for more than a moment on Part II of the Bill, which removes the need for ministerial consent for many local authority land transactions. These provisions are based upon a review carried out jointly by the local authorities and the Government, and represent a further step towards local authority independence. All this will simplify and reduce Governmental controls, as my right hon. Friend said we meant to do in the passage of the Local Government Bill.
Part III gives statutory effect to some further recommendations of the Franks Committee. As I imagine that this part of the Bill will probably command the general support of hon. Members on both sides of the House, at least in principle, I do not propose to dwell upon it at this stage.
I want to say a word about Part IV, however. Here, the most important Clauses are those concerned with what is popularly, or unpopularly, known as planning blight—that is to say, the effect on property of proposals which imply acquisitions at some future date, such as a scheme for a new road, cutting across a property. Many hon. Members on both sides of the House have brought to our notice the most distressing instances where owner-occupiers of houses want to move, or are obliged to move, for business or other reasons, only to find that they cannot sell their houses, or can do so only at a very low figure because of the threat of future acquisition, which scares off prospective purchasers.
This is something which no fair-minded Member would wish to tolerate any longer. It is high time that this evil 592 was eradicated. The Bill provides that the owner-occupier who has been unable to sell his house at a fair price may require—and I emphasise the word "require"—the public authority to buy his house forthwith at a price unaffected by the scheme. I ought to make it clear that this right is limited to the resident owner-occupiers of buildings who are either wholly or partly occupying them as private dwelling-houses.
It may be wondered why this principle is not being extended to owners of investment house property or industrial premises. My right hon. Friend the Minister of Housing and Local Government and my right hon. Friend the Secretary of State for Scotland have given this problem a good deal of thought, and they believe that Clause 31 will probably cover about 95 per cent. of the hardship cases which arise. There is no doubt that this hardship falls mainly upon owner-occupiers. Where, however, hardship occurs and the provisions in the Bill do not apply, we are asking local authorities to help by buying ahead of requirements. The local authority associations have indicated to us that they could have dealt with the whole of the problem in this way, provided that loan sanction and any appropriate grants were forthcoming. I should add that we ought not to give the owners of commercial and industrial properties, regardless of hardship, a statutory right to unload on to local authorities at any time they think fit. That would be wrong, and unreasonable.
Finally, I come to the wider issues of compensation and betterment which inevitably will loom large in the debate today. It may well be that there is no serious difference of view between the two sides of the House that a return to market value on compulsory purchase is necessary and, indeed, overdue. In the general sense, I believe that to be so. But it requires no stretch of the imagination to see that where we part company is on the question of betterment. Hon Members opposite believe that increases in compensation should be financed not from public funds but, to use the old-fashioned expression, from the unearned increment that accrues to landowners—[HON. MEMBERS: "Hear, hear."]—yes, that is a perfectly understandable point of view and one which is respected by many hon. Members on this side of the House.
593 All this recalls to mind that remarkable book by Henry George, "Progress and Poverty" and its eloquent advocacy of the single tax. But a number of attempts have been made to deal with betterment for the community. It was tried by Mr. Lloyd George, as he then was, when he introduced his increment value duty in 1909. It was tried by the then Mr. Philip Snowden, in 1931, and it was tried again in 1947. But by 1952 it was clear, at any rate to hon. Members on this side of the House, that that system —[HON. MEMBERS: "Hear, hear."] Wait a moment—had fallen down.
I have a sneaking suspicion that it was also clear to many right hon. and hon. Gentlemen on the benches opposite, because the right hon. Member for Bishop Auckland (Mr. Dalton) who, I venture to say, knows as much about this tricky subject as does the hon. and learned Member for Kettering (Mr. Mitchison). had this to say during the Committee 9tage proceedings on the legislation in 1952:We admit that the development charge was open to much criticism and much misunderstanding"—these are the important words—and was not, perhaps, one of the happiest inventions of the legal mind in our time."— [OFFICIAL REPORT, Standing Committee A; 16th December, 1952, c. 25.]The right hon. Gentleman was not alone in that view. It was echoed by the hon. Member for Wellingborough (Mr. Lindgren), who at one time was associated with the old Ministry of Town and Country Planning.
But let us come up to date, to the present Session, and recall the words of the Leader of the Opposition. Speaking in the debate on the Gracious Speech, the right hon. Gentleman had this to say:…we say that proper compensation for landlords who suffer from planning should be provided by charging landlords who gain from it, that is to say, out of betterment and not from a further charge on rates and taxes."—[OFFICIAL. REPORT, 28th October, 1958; Vol 594, c. 19.]That is all very well, but where does it take us? What does it mean in practical terms? In 1908 and 1909 Mr. Lloyd George and Limehouse had some real significance for many people in this country. But ten years later it was just a pleasant memory for radicals who had 594 a taste for the rhetoric of Mr. Lloyd George and no more. The fact is that betterment happens to be an exceedingly good subject for oratory, but a very bad one for law. Whatever the validity of the theoretical or academic argument, no British Government has ever yet succeeded in devising an effective system for the recoupment of betterment.
I have read with avidity the pamphlets issued by the Labour Party during the last twelve months. There are a number of them. What do they say about betterment? I have searched high and low, but I cannot find a single word about it. However, I beg hon. Gentlemen opposite not to be inhibited on that account this afternoon. I hope that not only will they make eloquent and theoretical speeches about the evils of this system, but also go a stage further and tell us exactly what they would do about it so that the whole country may know. I commend the Bill to the House
§ Mr. Mitchison
May I answer two questions which have been put by the Parliamentary Secretary? The first one was: where does this lead us? The second was: in which pamphlet shall I find the answer? I can assure him that the answer to the two questions happens to coincide. There is a pamphlet called "Towards Equality. Labour's Policy for Social Justice." I shall be referring to it shortly in more detail.
§ Mr. Bevins
I am obliged to the hon. and learned Gentleman for drawing my attention to that pamphlet. I have read it and I have no doubt that in his speech the hon. and learned Gentleman will tell us exactly what is meant by the words in that pamphlet.
§ 4.35 p.m.
§ Mr. G. R. Mitchison (Kettering)
First. may I associate myself and, I think, my hon. Friends too, with the little pat on the back which the Parliamentary Secretary to the Ministry of Housing and Local Government gave to his English right hon. Friend, the Minister, for producing a White Paper—I think we may also add, to his Scottish hon. Friend the Joint Under-Secretary of State for Scotland, too. There are many kinds of White Papers nowadays, but this is a useful one.
595 This ought not to be a single Bill. The Parliamentary Secretary told us that it is a perfectly lucid Bill and that he knew all about it; but he did not mention one word about its application to Scotland. He did not even tell us how perfectly lucid is the phrase, "dominium utile," and how well known it is to all English hon. Members who will have to read the Bill.
This practice of incorporating Scottish provisions in a Bill which applies also to England is being carried much too far and there is no case for it. Think of the inconvenience to a Scottish authority, or to a Scottish lawyer, in having to trace the Scottish law through a number of extremely involved and complex subsections in a United Kingdom Statute, and that on a very complicated matter. Think—this will appeal a little more to right hon. Gentlemen opposite—of hon. Members of this House who will have to deal with this Bill during its Committee stage.
As was the case with the rent legislation, and as has been the case with other Standing Committees, the Committee which will deal with the Bill will be a mixed Committee containing a small number of hon. Members who represent Scottish constituencies. That will be in accordance with our usual arrangements. The result will be that those Scottish Members will have to listen to an enormous amount of stuff affecting only England: and hon. Members representing English constituencies will have to listen to Scottish eloquence—and very good it is too—on matters affecting only Scotland. That is a pure waste of time.
This sort of thing used not to occur during the time when the former Secretary of State for Scotland was in office. Whether his manner in the Cabinet was more forceful, or whatever the reason, he did at any rate see that there was a good and proper division between English and Scottish legislation. He did not lump it all into one Measure to the inconvenience of everyone concerned and with, I hasten to add, a certain amount of injustice to Scotland. That is something which no doubt my hon. Friends who represent Scottish constituencies—including, I hope, my hon. Friend the Member for Glasgow, Central (Mr. McInnes)—will develop if they have the good fortune to catch Mr. Speaker's eye.
596 Now I return to the English part of the Bill. I shall not mention the part which affects Scotland because I do not understand it. I do not understand phrases like "dominium utile" and "feuduty" and I do not propose to venture to discuss that difficult subject. It is true that the Government have taken the opportunity in Part II of the Bill to introduce some proposals about Ministerial control and in Part III some of the recommendations of the Franks Committee. We shall have to look at these in Committee and I propose to say no more about them.
The main object of the Bill is, to use the words in the White Paper,a return to market value ' compensation for land which is compulsorily acquired.The Bill seeks in that respect to correct a grave and deliberate mistake made by the Government in 1952 when the present Prime Minister was the Minister of Housing and Local Government. We forcefully and repeatedly warned the Prime Minister of the mistake and told him that his proposals would lead to injustice and resentment, and would not work. Now that the Government have admitted our criticisms and seek to rectify their error, we shall not vote against this very limited Bill, but I shall have to point out in general terms not only that it has faults but also, because it is a limited Bill, that it does not in this form remedy or seek to remedy the injustice between the community as a whole and landlords generally.
I shall substantiate what I have said about the Government's mistake and our warning. There will be no mistake this time about what the Government did say. The 1947 Act provided, in effect, as the Parliamentary Secretary has explained, for the purchase by the community of all development values. We all know what they are; they represent that part of the value of the land which is its prospective value for future use, as distinct from the use to which it is being put at present.
It was for that purpose that Section 51 of the Act limited the purchase price on compulsory acquisition to the full present-use value and it was assessed, as the Parliamentary Secretary has said, under the rules of the 1919 Act, because prospective value was to be paid for by way 597 of compensation out of the £300 million fund irrespective of what parcels of land were compulsorily acquired and when. The result was that the price for land sold was on the same basis, whether the land was sold privately or was compulsorily acquired. So far as the law could deal with the matter, that was what it did.
We are now told that it did not work out that way and that in practice land did not change hands at existing-use value. Landowners, said the Parliamentary Secretary, asked a price which included development charge and people then resented having to pay development charge afterwards. There is a good deal in that; but was it resentment against the development charge, or was it, as it ought to have been, resentment against the landlords who asked a price which was more Khan existing-use value and which included development charge, which they were not intended to recover anyway? It seems a curious criticism and a comment, not on the deficiencies of the Act but on what appears to have been the grasping spirit of some of the selling landlords. 'That was the result, and I shall not go into that point any further.
In November, 1952, the Government decided to abolish the system which I will call the pooling of development values. They had to consider the compensation to he paid on compulsory acquisition, that is to say, what price should he paid both for the present value and for the value for prospective use. They kept full market value for present-use value. There has never been anything else. It exists now and it will exist when the Bill becomes law. There is no question about it today. The Government also had to consider what to allow for development value. They quite definitely chose not to allow current market value. They allowed something different, generally something distinctly less. The something different is stated in sub-paragraph (2) of paragraph 2 of the White Paper on the Bill and it is Compensation on the basis of the 1947 value.
Of course, the further we get from 1947 without increasing the prices and increasing the development, the greater is the difference between 1947 value and the current market value on acquisition. If hon. Members will consult the Financial Memorandum to the Bill they will find 598 that, over all, the present difference is about one quarter of the compensation paid. Some of the compensation will be present-use value; that is not altered. Accordingly, the proportion of the compensation which represents development value will be considerably more than one quarter. It is a large and widening gap.
There is no doubt that it was a deliberate choice. There was a White Paper at the time, Cmd. 8699. Paragraph 30 of it says:In practice the choice must lie between acquisition at current market value and acquisition, as proposed, at the current existing-use value, plus the 1947 development value…The Government have decided that the better course would be to base the compensation on the current existing-use value plus the 1947 development value.The Government and the Tory Party deliberately rejected the current market value of the land and took instead that other basis, which is the present one. There were two Bills to carry out the White Paper. Throughout the debates, the right hon. Gentleman the present Prime Minister referred again and again to the difference between the compensation he proposed and the full current market value which the Bill now seeks to introduce as the basis. I shall quote from him. On the first Bill we get:Now, of course, it might be argued that values should be paid for as they accrue—in other words, compensation should not be fixed to 1947 value.That is the argument which the Parliamentary Secretary has just been putting. Other hon. Members have also put it. He went on:That is a fair point"—I am glad to hear that from the Prime Minister—but there are two answers to that. First, in many cases these values will have been created by the efforts of the community, and secondly, the land owners have had no expectation of receiving more than the 1947 claim.That second reason is a question of history. Lower down in the same column we come to the conclusion:In future when compensation is paid either for compulsory purchase or on refused planning permission, it will be on the basis not of the value at the day but as laid down in the 1947 valuation. I say that is a fair' thing because of the first reason that I have given.That reason was:In many cases these values will have been created by the efforts of the community."— [OFFICIAL REPORT, 1st December, 1952: Vol. 508, c. 1116.]599 That reason is no temporary one. just as true today as it was then.
I come to the second quotation, on the 1954 Bill. The same right hon. Gentleman, now Prime Minister but then Minister of Housing and Local Government, said:It would have been all very much simpler, of course, if the Government had decided to pay compensation according to development value at the time of the refusal…That is market value. Although he was talking about refusal of planning permission, the point is exactly the same. The right hon. Gentleman continued:I do not think many people wanted that … it would ruin planning.Again, a little later the right hon. Gentleman differed fromsome people who dislike anything but the open market value as the price of land."—[OFFICIAL REPORT, 15th March, 1954; Vol. 525, c. 44–57.]How many of them do I see sitting opposite me today? The Prime Minister had plenty of warning that he was creating a two-price system—one price for compulsory acquisition and another in the open market—and warning that such a system would certainly lead to trouble and could not work. On the second Bill, now the 1954 Act, which dealt with compensation, my hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas) said this on the same day, 15th March, 1954:…what the landowner gets for his land will depend entirely on the chance of who happens to be the purchaser, whether it happens to be the local authority or a private individual. That is an extraordinary price structure to set up. I cannot see how a price structure of that kind—that two-tier price system—if imposed upon the country…By the party opposite, I might add—…can possibly survive.My hon. and learned Friend went on to refer to a letter in The Times from Sir Malcolm Trustram Eve. Sir Malcolm said that compensation on 1947 values would never work in the case of compulsory purchase. He said that The Times said:There is nothing in the Bill to suggest that this difference between free and forced land sales may not in the long run wreck the whole basis of the scheme."—[OFFICIAL REPORT, 15th March, 1954; Vol. 525, c. 70.]Right hon. and hon. Members opposite cannot complain that they were not 600 warned. My hon. Friend the Member for It is Widnes (Mr. MacColl) described the true two-price system asa shocking injustice to perpetuate between one landowner and another."—[OFFICIAL REPORT, 15th March, 1954; Vol. 525, c. 79.]
§ Mr. Mitchison
Hon. Members say "hear, hear" now, but who is responsible? I dare say the hon. Member for Eastleigh (Mr. D. Price) was not, as he did not happen to be in this House at the time, but his party is directly responsible for having set up the two-price system and introducing this injustice, which did not exist under the 1947 Act. Does the hon. Member want to interrupt me?
§ Mr. David Price (Eastleigh)
§ Mr. Mitchison
Hon. Members opposite voted for this two-price system. They were led, I suppose, or seduced, or driven by the Prime Minister and voted in favour of the two-price system and against the idea of market value compensation. Now look how keen they all are on it. It is not surprising that when the hon. and gallant Member for Gloucestershire. South (Captain Corfield) introduced a Bill and it was discussed on 21st February this year, my hon. and learned Friend the Member for Leicester, North-East and my hon. Friend the Member for Widnes taunted them collectively and individually with their complete volte-face. What my hon. and learned Friend said bears repetition. He said:The two-price system is the product of the Conservative Government. It was voted for by hon. Members opposite who have now had the audacity to speak against the very thing for which they voted in the Government Lobby We on this side of the House voted against it and spoke against it, pointing out precisely the kind of difficulties which have been enumerated in speech after speech by hon. Member's opposite in the course of today's debate.I expect we shall hear them all again today. What was the right hon. Gentleman the present Minister of Housing and Local Government to reply? This is what he said:When the Government decided, in 1952, to abolish the development charge they deliberately decided to retain the restricted basis for compulsory acquisition—that is, market value for the existing use together with the development value which the land had in 1947. The Government did that recognising 601 that, since we were freeing private sales, there were likely to be difficulties in what has come to be called the two price system which would result. The Government believed at the time…Here we come to the get-out, or the then get-out—there may be another one today—…that we must retain the restricted basis for compulsory acquisition, at any rate for a time."— [OFFICIAL REPORT, 21st February, 1958; Vol. 582, c. 1616, 1623, 1624.]There is the get-out, but in 1952, and on the two Bills in 1953 and 1954, nothing whatever was said about a temporary retention or a temporary solution. The reason given by the Prime Minister, which I have quoted already, was:these values will have been created by the efforts of the community…In his opinion the restricted compensation was a fair thing. I agree that it was a quite illogical reason because the values so created are also reflected in private sales, but at least it is as true now as it was then; and the hon. Member for Henley (Mr. Hay), in objecting to this port of the Bill, regarded it as…the acceptance for all time of 1947…values."—[OFFICIAL. REPORT, 15th March, 1954; Vol. 525, c. 87.]That was in the debate on the 1954 Bill. It has been left for the right hon. Gentleman six years later to hint that it was intended only as a temporary settlement. Not a word was said about that at the time.
There is the case and it is proved—a mistake, obstinacy, no heed to warnings, and in the result, injustice and resentment. Then we get the usual Tory claim to credit for repairing their own errors and undoing their own misdeeds. How long have we got to go on with this kind of thing? How short is going to be the memory of people who have suffered that injustice, and either suffered it before it could be remedied—there has been some considerable interval in time—or now, and are invited to be grateful to the very people who were responsible for it?
I will not discuss this Bill in detail at this stage. It has a number of faults and there is one underlying trouble coming from what is commonly called "floating value". Compensation is to be assessed on the footing of certain planning permissions, that is to say in effect, on potential value on certain assumptions. That will certainly result in over valuation. If the Parliamentary Secretary, in 602 addition to reading Henry George, had also read the Uthwatt Report, he would have found in paragraph 23 a reference to land on the fringes of towns where this kind of thing really matters. That paragraph said:If we assume a town gradually spreading outwards, where the fringe land on the north. south, east and west, is all equally available for development, each of the owners of such fringe land to the north, south, east and west will claim equally that the next development will 'settle' on his land. Yet the average annual rate of development demand of past years may show that the quantum of demand is only enough to absorb the area of one side within such a period of the future as commands a present value.Just the same point arises within an area—one of the fringes—as between various owners of parcels of land, and the Uthwatt Report goes on to point out thatthe sum of the probabilities as estimated greatly exceeds the actual possibilities…the 'global' valuation—that is, the valuation of the area as a whole, which is what matters to the acquiring authority—must he less than the aggregate of the individual valuations when considered separately.I may add that it is not a question of estimating probabilities and of how accurate the estimate may be. That is fully allowed for in the Uthwatt Report.
§ Sir Colin Thornton-Kemsley (North Angus and Mearns)
Would not the hon. and learned Member agree that where land is to be compulsorily acquired for public purposes, the value has been settled upon that parcel of land and therefore its value is quite easily ascertainable?
§ Mr. Mitchison
No, I am afraid that I cannot agree with that. I will not trouble the House by reading the adjoining paragraphs of the Uthwatt Report, but, if I may respectfully say so to the hon. Member, I prefer both the reasoning and the conclusions of the Uthwatt Report. That point was very obviously present to the Committee, as appears, I think, even from the language which I have quoted.
We shall have to examine the point carefully in Committee and perhaps we shall have to examine it often, because cases differ, but, put very shortly, the difficulty is that, as the Bill now stands, the market value of an area of land to be acquired is necessarily less than the sum 603 of the market values of the parcels comprising that area. I see one hon. Member opposite looking puzzled, and I agree that this is a very difficult matter but I remind him of the composition of the Uthwatt Committee. It ought not to be lightly disregarded. It consisted of Mr. Justice Uthwatt, the present Master of the Rolls, one Past President of the Chartered Surveyors Institution and one Vice-President, and although the Vice-President made one or two reservations, I do not think, speaking from memory, that there are any reservations on this point. We have to pay some attention to that weight of professional opinion.
There are two other short points which I should mention as matters of comparative detail in the Bill. First, we shall obviously pursue the question of a change of intention afterwards. If we assume, as we must assume, that the local authorities genuinely intended to use the land for a certain purpose at the time of acquisition, and if a change of intention one way is to be corrected in favour of the vendor, is there any moral reason why a change of intention which operates the other way should not be corrected in favour of the acquiring authority? If I may put that in more human terms, it means in favour of the ratepayers.
I remind hon. Members of the sentence used by the Prime Minister and the reference to what he called "values created by the efforts of the community." I hope that hon. Members opposite will not forget this observation by the Prime Minister. He is their leader, or so I believe. It is also used in a rather narrower sense as to values which arise from planning and its legal consequences. Naturally enough, public authorities which are called on to pay compensation at prices which include betterment have felt it right and advisable that they should recover the element of betterment, not always from the particular people who received the price nor always from land in the same area, but somehow, and there is moral justice in that.
When my right hon. Friend the Leader of the Opposition said what the Parliamentary Secretary has quoted, he was surely saying something which should commend itself to everyone. There can be no sense in allowing landlords to have 604 it both ways. There can be no moral justice in allowing some landlords to benefit under certain circumstances and then, when the situation is reversed, refusing to permit the acquiring authority to have a similar right.
When landlords gain on increasing values, should they be allowed to keep the whole profit of the efforts of the community and then, when they have to sell, should they also be entitled to collect compensation for the results of those community efforts? That is what it amounts to.
There have been various devices to put this moral principle into effect. The Parliamentary Secretary mentioned some of them. There was the direct charge under, I think, the Snowden Finance Act; there was the set-off, the purchase and resale of adjoining property, which I think they called recoupment, and finally there was the 1947 Act, which dealt with the matter, for good or for ill, and removed the whole question from being a local question to a national administration. When the Tories scrapped the machinery of that Act they neither left nor provided any means of recovering betterment, and we gather from the Parliamentary Secretary today that they do not want such a means. That does not altogether surprise me. I have seen the wind blowing that way for some time. That was one of the reasons that we divided against those two Bills.
This Bill, of course, still leaves the gap unfilled, and it has been with great difficulty that we have resisted a very natural wish to put down the same reasoned Amendment again and to divide on it. We have decided not to do so, for two reasons. The first, which I have already mentioned, is that this is a limited Bill which seeks to remedy an error of the Government against which we warned them at the time. We should feel it hard on a dying Government to vote against them for accepting our rebuke, even if the leave the same gap unfilled; the moribund penitent has always been a figure who merits compassion.
The second reason goes beyond any question of Parliamentary procedure and I want to make it quite clear, even if in so doing I open the door to the usual Tory manoeuvre. Indeed, we have had the beginnings of it from the Parliamentary Secretary. Whenever the Tories have 605 a thoroughly weak case, as they have on this point, they spend most of the time in discussing Labour proposals and they do not forget the apocryphal maxim that "if you have no defence, abuse the plaintiff's attorney."
§ Captain F. V. Corfield (Gloucestershire, South)
Would not the hon. and learned Member agree that that is exactly what he has been doing in the past hour?
§ Mr. Mitchison
The difference is that I have a very strong case.
§ Mr. D. Price
Could we hear it?
§ Mr. Mitchison
I must go back for a moment to the Uthwatt Report, because in that Report, in dealing with betterment, the Committee made proposals which were not finally those adopted in the 1947 Act. In paragraph 293 the Committee recommended thatin view of the difficulties inherent in the present system of collecting betterment under the Town and Country Planning Act, 1932, and its failure to produce practical results "—I see the Parliamentary Secretary nodding, but that Act was passed and came into operation under the so-called National Government, which was Tory-controlled—that system should be abandoned in favour of our scheme for a periodic levy on increases in annual site values.I need not go into the details of the scheme, butBroadly stated"—as the Report put it in paragraph 313—our recommendation is that there should be a levy in respect of the increase in annual site value of each hereditament as revealed at each quinquennial rating revaluation over the datum annual site value (i.e., the annual site value as first determined for the purposes of the scheme).The Committee recommended, tentatively, a levy of 75 per cent.
I remind the House of the composition of that Committee, and though the Vice-President made some reservations on this particular point, whether we include him or not, a Committee of that composition is hardly likely to make impracticable or wild proposals. The Committee also recommended powers of compulsory purchase for recoupment, and the possibilities of purchase in advance of requirements are matters which we shall have to. consider in Committee on the Bill, if we can.
606 The scheme was not adopted in the 1947 Act, and the provisions of that Act were repealed by the 1953 and 1954 Acts, against which we divided on reasoned Amendments. But what has happened since them? In 1955 the Royal Commission on the Taxation of Profits and Income made its final Report in which the minority recommended the taxation of capital gains. Though most of the arguments in the Minority Report are primarily directed to questions of the increase of shareholdings, and so on, there is no doubt that those producing that Report intended to include land, if only because in paragraph 68 they recommended the exemption from a capital gains tax of gains arising out of the sale of owner-occupied houses to the extent of one residence for each taxpayer.
In 1956 the Labour Party published and adopted a pamphlet called "Towards Equality. Labour's Policy for Social Justice." In page 26 of the pamphlet it said:The large tax-free gains which can be made by dealings in industrial securities and real estate can be partly tackled by means of taxation. The arguments for bringing capital gains within the tax System have been fully, and in our opinion conclusively, stated in the Minority Report of the Royal Commission on Taxation. There are many small property transactions, however, which it would he difficult and, from the point of view of equality, unnecessary to tax. One instance is the buying and selling of owner-occupied houses. We should not propose to tax capital gains arising from these and other small transactions.Hon. Members will notice two points. One is that the Uthwatt Committee recommended a periodical levy and the Minority Commission a levy on unrealised profits. The statement, I agree, is uncommittal. I too shall be uncommittal. This is very much a question on which one wants the benefit of professional advice and Departmental experience. Some people have suggested a second Uthwatt Commission.
The second point is that such a levy on betterment by way of taxation would accrue, to national funds and not directly to local authorities. The answer to this is obvious. My party is also committed to a general review of the financial relations between the central Government and local authorities of which this question quite surely and obviously forms part. It must be obvious that on betterment no Opposition can provide a 607 detailed scheme without more light on the whole matter. The Labour Party has gone far beyond any precedent in detailing its proposals on many other matters and, in the interests of democracy, in publishing them in advance of an election. The party opposite remains in its usual elegant and shady obscurity.
§ Mr. Bevins
I am most grateful to the reference made by the hon. and learned Gentleman to the Labour Party pamphlet on equality. I have forgotten the date. I should like to ask him, because I think it is very pertinent to what he is saying, whether that proposal refers only to the taxation of realised betterment.
§ Mr. Mitchison
Of course it does. I have just pointed that out, and that the Uthwatt Report referred to a periodical levy. If I am asked, I will repeat it to the hon. Gentleman. I have just said that he really cannot expect an Opposition to produce detailed proposals on matters of this sort, and he will not get them from me or anyone else.
§ Mr. Bevins
Would the hon. and learned Gentleman agree that the recommendation of the Uthwatt Committee went very much further in its application than what is proposed by the Labour Party?
§ Mr. Mitchison
I think that in some ways it did, but my comment on that is that, if the Uthwatt Committee, composed as it was, considered its proposal practicable, is it really an objection to say that a proposal which in the hon Gentlemen's view does not go so far cannot be practicable? I should like him to think about that one.
I have just told the hon. Gentleman that the party opposite remains—I rather like this phrase—in its usual elegant and shady obscurity. The light is not yet fully cast on how best to recover for the community values that its own efforts have created, values that have not been created by the individual landowner concerned. In this proposal to tax capital gains I see something that is both practicable and just. The path towards social justice and equality is very often obscured and is sometimes very hard. But, surely, in the judgment of all right-minded people, that is the way to go, and the dawn lies that way.
§ 5.17 p.m.
§ Captain F. V. Corfield (Gloucestershire, South)
We have listened to a delving into the past by the hon. and learned Member for Kettering (Mr. Mitchison). I propose to get on with the future and try to do so rather more speedily. I was glad that the hon and learned Gentleman mentioned and quoted from the Uthwatt Report, because had his party read that Report a little more carefully when it introduced the 1947 Act it might not have brought the whole planning system into discredit and necessitated the 1954 Act. I can only say that when the hon. and learned Gentlemen's party learns to profit by its lessons it may have a chance of getting back at the next General Election, but not before.
Naturally, I welcome the Bill because, as my hon. Friend said, it follows very closely the principles that I have been advocating and which I tried to embody in a somewhat shorter Private Member's Bill. My welcome is all the greater because I personally know the tremendous legislative burden which my right hon. and hon. Friend have carried in the last two Sessions. I think it all the more creditable that they should now come forward with what is clearly a complicated and may be a controversial Bill.
As far as my own proposals went, I think it safe to say that the main criticism of them was that of oversimplification. I do not think that anyone would accuse my right hon. Friend of that in the present Bill. One of my colleagues came to me the other day and said. "I have got the Bill and the Explanatory Memorandum and I am now looking for the memorandum which explains the Explanatory Memorandum." I do not think that it is as bad as that. However, it is complicated and there are many points which, I hope, my right hon. Friend will explain later. Most of them are more appropriate to the Committee stage.
I want to concentrate on the relatively few matters which seem to affect the main objectives at which both my right hon. Friend and I have aimed. There is an analogy between proposals of this sort, which are altering the basis of compensation, and budgetary proposals. It is, therefore, necessary to provide against individuals, or possibly local authorities, carrying out evasive action between the 609 publication of the Bill and the Royal Assent. My right hon. Friend was right, therefore, to make the main provisions take effect from the date on which the Bill was published.
That brings me to a consideration of Clauses 12 and 13, which are designed to deal with old, long outstanding notices to treat. We have discussed old notices to treat on more than one occasion and it is not necessary for me to go into the details again today, but the fact that notices to treat which were issued before the 1947 Act are still outstanding means that when the transactions are eventually completed compensation will be based on 1939 values.
In my right hon. Friend's proposals, those notices to treat will not be affected until after the Bill has come into force, S3 that there will be a period, between the publication of the Bill and its receiving the Royal Assent, during which local authorities will be able to take action to bring the notices to treat not under the modern law, but under the pre-1947 law. U it is right that the main proposals of the Bill—the introduction of market value subject to the development plan, and so on, as a basis for compensation—should be dated with effect from 29th October, it must also be right in respect of old notices to treat.
A further consideration which arises from that is that the having of old notices to treat still with us, some of them twenty years old, emphasises the fact that in many cases of compulsory acquisition there is a considerable delay between the service of the notice to treat and the next stage in the process of acquisition. It may well be that a notice to treat served in the last year or so, prior to the publication of the Bill, will also remain outstanding for a number of years. There is a danger that in the next five or ten years we shall have two codes of compensation operating side by side.
It is precisely that sort of thing, that two-tier system—although the tiers will be different—which gives rise to those very genuine feelings of hardship and dissatisfaction all round. With those considerations in mind, and remembering that allegations have already been made —I do not know how true they are—suggesting that local authorities have made a rush to issue notices to treat since 610 I first raised the matter, in February, it may be worth considering whether a notice to treat is the right criterion on which to decide whether a transaction comes within the old or new provision.
There is much to be said for the expression which I used in my Bill, to the effect that it should come into operation to cover all cases where the compensation had neither been agreed nor determined. That would get over what may be a very grave difficulty, the continuance over the next few years of two parallel systems, often in considerable contrast and bound to give rise to much ill-feeling.
I welcome the terms of Clause 31, which, in a fashion not dissimilar from my own idea, attempts to deal with the very difficult problem of "planning blight", or "sterilisation", as it is sometimes called. I wonder whether the definition of "resident owner-occupier is wide enough in this case. There is something to be said for making that definition somewhat similar to that of owner-occupier in the Slum Clearance (Compensation) Act which is now part of the Housing Act, 1957. There is something to be said for including the immediate members of the owner-occupier's family.
I am not entirely satisfied with the reasons given by my hon. Friend for excluding commercial property and the land owner. I fully appreciate that the greatest hardship will arise in cases of owner-occupation where the owner has to move—possibly on being posted abroad in the Services or because of commercial activities, or having to move to another part of the country—when his only means of obtaining another house is to realise the capital value of his existing house.
Apart from the dangers, which my hon. Friend rightly mentioned, of commercial businesses trying to "unload", as he put it, when they were not doing very well, I foresee cases where hardship of exactly the same order and exactly the same type as that which arises with the owner-occupation of residential property will occur.
I had a case in my constituency which illustrated this. A couple ran a business in a property which became subject to planning blight. Shortly afterwards, the husband died and his widow became crippled with arthritis. She was ordered 611 by her doctor on no account to attempt to carry on the business. What capital she had—it represented all her savings—was tied up almost indefinitely in that little business. That was about four years ago. As far as I know, no further action has yet been taken and even if she eventually gets the market value, her personal representatives are much more likely to benefit than she is.
There is a case for considering a test of hardship. I know that my right hon. Friend does not like a test of hardship in these cases, as he says in his Memorandum, but I am not sure that it is as difficult to administer as is made out. This is a concept with which the courts are very familiar through rent control and so on. It is a concept which my right hon. Friend himself has recently used in the Landlord and Tenant (Temporary Provisions) Act, 1958.
In the case I have just mentioned, and in that of the landlord who, for a special reason, needs to cash in his capital, there is good ground for suggesting an extra test of hardship so that there would be the right to force a local authority to purchase—in certain limited circumstances. I know that local authorities are given power to purchase, but that need not be the same thing by a long way, because if a local authority does not like a price it has only to say that it will not purchase. It holds the whip hand very strongly.
I hope that my right hon. Friend will reconsider this matter. I know that we are given the analogy with long-dated Government stock, but that has the great advantage that there is a definite date for redemption, while with some cases of planning blight there is no indication of the date on which development will take place and on which the compensation will accrue due.
I am very glad that the Government have adopted the principle whereby the owner gets increased compensation when the purposes for which the land is originally acquired are changed in such a manner as to add to the value. The Opposition have made great play of the fact that this does not work both ways. Right hon. and hon. Gentlemen opposite seem to forget that the whole administrative set-up is very heavily weighted against the individual. It is the local 612 authority which will decide what it wants land for, and it can decide within fairly wide limits what planning permission to give, which sets the value.
However these Measures are worded, it is, in fact, compulsory acquisition, and the power is on the one side only. With that great power in the hands of local authorities, I do not think that it is unreasonable that they should make up their minds, and, having done so, if they then use the land for some less useful purpose, that they should bear the loss. This could be a very useful sanction in some of the shilly-shallying which goes on occasionally in connection with planning alterations.
I want to mention now two points which I tried to deal with in my Bill, but which I do not think that the Government Bill covers, at any rate, not directly. The first is compensation to the tenant of agricultural land. If a local authority or some acquiring authority, whatever it may be, definitely acquires the tenant's interest, it will, as I understand, pay the market value of the tenant's interest, in so far as that can be determined. I understand, however, that the normal practice in these matters is not to acquire the tenant's interest direct, but to acquire the landlord's interest and leave it to the tenant to obtain his compensation from the landlord under the Agricultural Holdings Act, 1948.
The Agricultural Holdings Act puts on the compensation a maximum of two years' rent. In these days, with security of tenure and the great difficulty of finding a farm to rent, I suggest that the value of a tenancy of an agricultural holding is very much greater than that in most cases. I know that this is primarily a matter for my right hon. Friend the Minister of Agriculture, Fisheries and Food, but I hope that my right hon. Friend the Minister of Housing and Local Government will consult with him and consider whether there is not a possible way of overcoming that particular problem in this Bill.
The second matter on which I think we should have further thoughts is the whole subject of compensation in slum clearance. As I understand, the basis of compensation in slum clearance remains precisely the same, namely, the value of the site. It is true that the value of the 613 site will be determined against the basis of market value, but, very often, the value of a particular site is said to be so small, the site not being capable of development as a single entity, that it is worth virtually nothing. Many nominal compensation payments of 10s. or £1 are made. I cannot see that there is anything in the Bill to alter this.
Where the land is to be redeveloped for housing, it will still be said that the sites are too small to have a value, whether it be market value or any other value; but I really do not believe that it is possible today to persuade anyone who is the victim of slum clearance that £1 or 10s. is a reasonable sum to be given for the site of a house. This whole concept has been gravely abused. I had a case very recently in which exactly that argument was used. A man was given £1 for the site of his house, on the ground that it was too small for development. It was turned into a car park, divided into three nice little car parks, and let to the same man for his office staff at £10 per year per park. This sort of thing will he st3pped by the Bill, but the basic problem will remain.
In many cases, about 40 or 60 small sires make up an aggregate area of very considerable value. Slum clearance areas are often situated near the centre of the older towns in areas where the land has very great value indeed. I do not believe that it is beyond the wit of man to devise a system of valuation which will enable the aggregate value to be apportioned between the original owners, on the one hand, and the local authority, to some extent, on the other. I freely admit that the local authority has, by exercising its powers of clearance, and so forth, created a good deal of the value, but it cannot possibly be said to have created all, or even by far the greater part of the value. There are cases where the value of a plot purchased for £60 may well be £2,000, or £3,000. It is quite absurd to say that that has all been created by the local authority or by anybody else. One cannot create that value unless one starts with the land, and the land, after all, has been taken from individual owners at, perhaps, £1 a plot.
I want now to say a word or two about betterment. We all recognise the sound, ness of the theory—it is a theory—that, where land is increased in value as a 614 result of public expenditure, the public should have some right to reimbursement, but none of the systems put forward to achieve this has ever really produced a workable or sound answer. Nobody has ever attempted to divide the effect on betterment of private development from the effect of public development, and I do not believe that it is possible to do so.
Moreover, nobody has ever taken "worsenment" into account. It is absolute nonsense to imagine that all development is beneficial. It is not. A great deal of development has very deleterious effects on neighbouring property. A noticeable example, of course, is what happens when aerodromes and places of that kind are built. Unless we take all those matters into consideration in any system, I do not think that it is a sound system. Until we can produce a sound system which will really work fairly, I do not believe that it is right to proceed with a system which throws the burden on a few individuals selected by the chance of whether or not their land is required for public purposes.
§ Mr. A. J. Irvine (Liverpool, Edge Hill)
I should like to hear the hon. and gallant Gentleman's answer to this point on the failure of efforts to collect betterment. In paragraph 30 of the Explanatory Memorandum, which refers to Clause 7 (3) of the Bill, it is explained thatWhen land is acquired compulsorily"—and there is a development scheme effected by the plan—the scheme for which it is taken may enhance the value of other land held by the owner of the land taken. The subsection provides that this enhancement shall be set off against the compensation paid for the land taken.Why should it be more difficult to assess other forms of enhancement than it is to assess that one? To assess the enhancement referred to in the Explanatory Memorandum is regarded as practicable. Why is it impossible and impracticable to assess the others?
§ Captain Corfield
I am not for a moment saying that it is impossible. All I am saying is that nobody, not even the hon. and learned Member for Edge Hill (Mr. A. J. Irvine) in his letter to The Times this morning, has yet put forward a system which, in my opinion, does that. Until we have such a system, I think that 615 it is absolutely essential that we should not throw the burden of the injustice on individuals.
In this argument about betterment, the hon. and learned Gentleman the Member for Kettering quoted the Leader of the Opposition as saying, amongst other things, that we must find this money from an imposition on the increment of the land value and not throw it on the rates. I suggest that the betterment effect of any development is essentially local. It does not affect a wide area. The only tax we have in this country which begins to reflect the effect of development is rates. I know that it is unpopular politically to say that one should throw it on the rates, but if one is really sincere about this system, the rate is, I believe, the only possible kind of tax on which it could be based.
§ 5.39 p.m.
§ Mrs. Freda Corbet (Peckham)
I am pleased to follow the hon. and gallant Member for Gloucestershire, South (Captain Corfield). I remember an occasion over a year ago when he sought to move an Instruction to the Select Committee on the London County Council (General Powers) Bill. At that time, the council wanted to pay, in respect of certain long-standing notices to treat, more compensation than was generally enforceable at law throughout the land. That is why I like to follow the hon. and gallant Gentleman. I am pleased to be able to say on behalf of my authority that we welcome this provision in the Bill and that we are always glad to obey the law of the land, but we in no way wish to be singled out.
§ Captain Corfield
I am sure that the hon. Lady would not take it as anything but a compliment when I suggest that perhaps it is not inappropriate that the great City and County of London should set an example.
§ Mrs. Corbet
I do not want to give away the secrets of the council, but the hon. and gallant Member would find, if he looked into individual cases, that a certain amount of generosity is exercised by the council. I was talking about having one law for the County of London and another for the rest of the country.
I am also rather pleased to be able in some slight measure to underline what the hon. and gallant Gentleman has just 616 said about slum-clearance compensation as affecting small parcels of land. I do not know of any payments as low as those mentioned by the hon. and gallant Gentleman because it just does not happen in my part of the world. I know, however, of areas that are valued very highly, at, say, £10,000 or £15,000 an acre, and a small house 1–40th of that in size being valued at £70.
I consider that to be wrong and I took the matter up with the valuers and discovered that this was something that the law laid down. I should be glad, therefore, if the Minister would consider the possibility of doing justice to the small individual owners of houses. I understand that if the land on which the houses stand has been in one ownership, that owner would receive the proper value of the land. I feel that that is a matter which ought to be looked into.
I should like to mention a few points on behalf of my authority which will probably be echoed by local authorities throughout the country. One is the age-old problem that none of us likes anything that will put an extra expense upon us, even though we do, as in this case, recognise the justice of the Measure abolishing the double set of values.
Incidentally, my authority has sometimes paid more than the market value and sometimes less than the market value, but, on balance, it feels that it does not cost it more money. Local authorities all over the country will be affected and the Government know that there is one way in which they can help. If they cannot give them any betterment, they could be a little more generous with their grants to local authorities. Local authorities today are pretty well over-burdened.
Authorities which are concerned with operating under this Measure are worried that land which is required for certain purposes will have an enhanced value because of the local authorities' own operations. In other words, houses will be built in parts of the country which would not have been built originally had it not been for the local authority's operations. Industry will go there not as a result of the operations but as a result of the encouragement, persuasion, and so on, that the local authorities will exert in order to get industry to their areas.
We feel that the Government should consider this matter to see whether they 617 can devise a way in which this extra value will not have to be paid. This is a serious matter because some of the authorities which are acting as receiving authorities and which are buying the land—I understand that up to the moment they are not receiving a grant in respect of the purchase of the land, but only in respect of the provision of water and drainage—are often very chary about entering into these schemes.
It has been necessary for my authority to add extra inducements to get them to carry on. For example, we have agreed on three occasions to make an additional contribution to the receiving authority by granting loans for five years at low rates of interest, lower than the rates which would be paid on the market. We have undertaken to make contributions towards the rate fund, and until the houses that are built are let we pay the interest on the capital cost, including the land cost of houses under construction. Therefore, not only will the receiving authorities have a bigger cost to bear— and often the product of their penny rate is very low—but so also will my authority, which uses these incentives to induce receiving authorities to carry on with very essential town development plans.
I appreciate the reason for Clause 14, although it is a little unfortunate that because one local authority did a certain thing the rest of the local authorities should be penalised. After all, in town development it is artificial stimulation by deliberate effort on the part of local authorities which creates the values that make it possible to put factories in areas where they would not have gone and where, by no stretch of the imagination, could an owner have obtained the industrial and commercial value for his land. It seems unfair that such a burden should be imposed on public funds. The Ministry realises that this is not fair, and for that reason comprehensive development areas and the new towns have been excluded. The Minister should realise that the same thing applies in town development.
I have one special question to put to the Minister. It may be that I am mistaken, but I am informed that under Clause 36 (2) the grant which it is proposed to make to highway authorities 618 would not, as the Clause is drafted, enable the Minister to give grants to the L.C.C. I am asked to say that perhaps the Minister might have another look at this matter to make sure that the council has not been inadvertently omitted because of repeals made by the Local Government Act, 1929. I hope that at some time the Minister will give me an assurance that he wishes the council to benefit from this Clause in the same way as other improvement authorities.
Finally, regarding the requirement that an applicant for town planning permission should either notify the land owner or advertise his intentions, my authority welcomes the fact that the Minister recognises that there is a problem here when a town planning authority is receiving applications in respect of the same piece of land by any number of would-be developers who have not the slightest user interest in the land at that moment. We are not certain how effective this proposal will be, and it appears, therefore, that it will need to be examined rather carefully in Committee.
Having made those remarks, to which I hope the Minister has paid attention, I should like to thank him for having dealt with some of the matters which have been raised by the local authority in the past.
§ 5.51 p.m.
§ Mr. David Price (Eastleigh)
It is always a pleasure to follow an hon. Member who speaks with such authority as the hon. Lady the Member for Peckham (Mrs. Corbet) does about the problems of the great City of London. I have very great sympathy with her in her plea for adequate compensation for the owner-occupiers of slum properties, and I hope that in Committee we shall be able to agree in finding some amendment to Clause 8 and to the Second Schedule. I suggest that my hon. and gallant Friend the Member for Gloucestershire, South (Captain Corfield), in Clause 7 of his Bill of last winter, took a juster approach to the problem than has my right hon. Friend in this Bill.
I am sorry that the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) has gone, because I wanted to answer one or two of the general political points he made. He made great play with the inadequacies of the 1954 Act. Indeed, there were many inadequacies in it, but I would suggest that, 619 as my right hon. Friends had to cope with the jungle which was the 1947 Act, the fact that they did not put it all right in one go is not to their discredit, in that they made an effort—
§ Mr. E. G. Willis (Edinburgh, East)
§ Mr. Price
All right, three goes.
When we remember the original 1947 Act, which nationalised development values, the fact that they took a number of Acts to denationalise development values is hardly surprising. Then there was the absurd fund of £300 million which was in perpetuity to deal with all future development. If hon. Gentlemen opposite would think back to what would have been the state of affairs of the property market in this country if, at the time of Domesday Book, we had had a Socialist Government in power—
§ Mr. Willis
There would have been no problems at all.
§ Mr. Price
—who, taking the greater purchasing power of the then money, would probably have put £30 million, or whatever the currency at the time was, aside, they will see the absurdity of the whole basis upon which their system went.
§ Mr. G. Lindgren (Wellingborough)
Will the hon. Member give way?
§ Mr. Willis
Which is a lot of rubbish.
§ Mr. Price
I am talking of the Act of 1947. One must inevitably talk rubbish on so rubbishy a subject.
However, as the hon. and learned Member for Kettering is not here, I will not detain the House with commenting upon his dissertations.
§ Mr. Gordon Walker (Smethwick)
I will take a note for my hon. and learned Friend of the hon. Gentleman's comments, if he likes.
§ Mr. Price
On 8th October I had the honour of introducing a resolution at my party's annual conference, at Blackpool, urging the Government to introduce, this Session, the fair market value for compensation upon compulsory purchase. I am happy to tell you, Mr. Deputy- 620 Speaker, that that resolution was carried unanimously. On that occasion I quoted Marcus Aurelius to my right hon. Friend. You will recall, Mr. Deputy-Speaker. that Marcus Aurelius observed:Do not act as if thou wert going to live ten thousand years. Death hangs over thee. While thou livest, while it is in thy power, be good.On that occasion I invited the Government to be good now, and I should like to thank the Government, on behalf of my party, for determining to be good very nearly now.
I should also like to congratulate my right hon. Friend the Minister and my hon. Friend the Parliamentary Secretary on the vast amount of legislative work that they have had to carry out, and say that although, in our Parliamentary system, it is the Minister who takes responsibility, I hope it is not constitutionally improper for me to ask whether he will convey to his Department the thanks of the House for the great efforts which the civil servants must have made to carry out his instructions and to prepare a Bill so quickly after his supporters in the House made it clear that they would like a Measure of this nature.
This is, as has been pointed out already, a very technical Bill, and its details are understandable probably only to lawyers. I find that even some hon. and learned Members seem to be in some doubt about one or two of the Clauses. However, some of us ordinary mortals are rash enough to rush in where lawyers fear to plead. I feel, therefore, that today it would be appropriate not to discuss the details of the Bill, but to go in for a general discussion of the problems of compulsory purchase and of what is just compensation.
I start from the basis that the existence of private property is just. I know some hon. Members opposite start from the contrary position. If one does that it follows that one will come to a contrary conclusion. That is a fundamental difference. Secondly, I go on the basis —I have high ecclesiastical authority for what I am now going to observe—that because property is privately owned it can still serve the common good. If we go back to the classical defence of property by the medieval scholastics we shall find the arguments in favour of my contention admirably deployed. I think 621 that one must make the approach that of justice and equity according to the natural law.
We accept on both sides of the House the necessity for compulsory purchase, but there are two parties to the deal, the community and the individual. If compulsory purchase is to be just it must, in my opinion, fulfil three conditions. First, it must be shown that compulsory purchase is necessary in the particular case, and that, I suggest, is covered by public inquiry with an appeal to the Minister, and an appeal on points of law to the courts of law. Secondly, the procedure used must fulfil the three conditions so admirably outlined by the Franks Committee, namely, openness, fairness and impartiality. Thirdly, compensation must be paid and it must be just. It is, I think, mainly on that last point that we shall continue to argue in the House.
Let us consider, what do we compensate for? I suggest to the House that we compensate for three things. First, we compensate for the expropriation of the property; that is to say, for a capital loss. Secondly, we compensate for the loss of the use of the property; in other words, we compensate also for the use value, whether of a house to be removed for road widening, or of a farm which has to be split for the making of a motorway.
§ Mr. James McInnes (Glasgow, Central)
Why does the hon. Gentleman start with expropriation of existing owners? Owners, say, 500 years ago probably expropriated the land. There was no compensation then.
§ Mr. Willis
The hon. Member, with the Domesday Book and Marcus Aurelius.
§ Mr. Price
—and the history of each bit of property. If the hon. Gentleman wants a lecture from me on the gradual development of property rights I should be. delighted to give it to him but that I should so sorely tempt your patience, Mr. Deputy-Speaker, and that of the House.
§ Mr. Willis
What would the hon. Gentleman say, then, of a local authority 622 in Scotland purchasing land for a public park, when the owner can produce no title deeds relating to it at all?
§ Mr. Price
The hon. Gentleman will not tempt me into arguing the property law north of Hadrian's Wall, because I am not competent to do so. He is always pointing out to the House that Scottish law is different from the English, and the English law, heaven knows, is complicated enough. I do not propose to get involved in title deeds in Scotland. I could advise the hon. Member how to delve back into the English law of real property, on the rights of landowners, when title deeds cannot be proved on paper.
§ Mr. McInnes
Scottish law is real law.
§ Mr. Price
Thirdly, a man should be compensated for the disruption and interference involved in dispossession—the pain and suffering, as it might be called. In the Bill, we are going back to the 1919 rules modified by various provisions which arise from the establishment of planning. Hon. Members opposite by their interruptions have made it clear that they see no evidence, or very little evidence, that the present basis of compensation is just. I considered that the case had been made overwhelmingly in the debate last February and by the arguments then employed.
I have had experience, not only in my own constituency, but from a large number of letters which I received since I had a certain amount of publicity by virtue of moving a motion at my party conference. I sent on the letters to other hon. Members when I could identify the constituency to which the correspondent belonged, but I was rather shattered by the tragedy of many of the circumstances that were brought to my attention by these unfortunate people.
I suggest that the aim must be just compensation. Modern economists have little to offer on the conception of the just price. We have to go some time back in history, to the days when people were trying to relate economics to morals and to arrive at just conceptions of value. The modernity of those late medieval scholastic thinkers was brought out very clearly by Keynes, in a certain passage in his "General Theory". Therefore, I would like to trespass on the patience of the House for a few minutes to suggest 623 how those medieval schoolmen can help us in our present problem of trying to find, as, I am sure, everyone, on both sides of the House, wants to do, a method of compensation that is just to both the individual and the community.
In those days, justice when applied in the social field was defined in three forms. There was general justice—that is, justice covering the relation of the individual to the community. It is what hon. Members opposite refer to as social justice, but that was not the end of the story. Secondly, there was distributive justice, which governed the relation of the community to the individual. Thirdly, there was the commutative justice which governed the relationship of man to man.
I suggest that general justice is satisfied by the existing law in respect of compensation, provided that it is amended in the light of the Franks Report. Parts III and IV of the Bill attempt to do this.
Distributive justice does not permit the burden of assisting the common good to fall unevenly on particular persons. As Luis Molina, in his treatise "On Justice and Right", laid down:To serve the common good it is not equitable that one element of the commonwealth be burdened more than others which can in their own degree and proportion contribute".That is why most hon. Members would, I think, agree that the present system, whereby we have two sets of value for land, is contrary to distributive justice. It is, in effect, an arbitrary capital levy on those people who are subjected to compulsory purchase. If we are to have a capital levy, and I personally am against one, I am sure that all hon. Members, on both sides, would agree that it should be a levy upon everybody and not merely upon those who happen by the chance of planning to be subjected to compulsory purchase orders.
Distributive justice also demands that a man should not get a lower price for his land because the community acquires it than he would get if he had sold it to another man. In other words, he should get the just price.
Commutative justice demands that we should determine the just price for compensation as if the land were being sold by one man to another. As Molina stated:Commutative justice consists in equality as to value between price and object.624 Therefore, we get down to the conception of what is the just price. The basis in the first instance is utility. Again, to quote the words of Molina:The just price of things is not judged from the nature of things in themselves … but inasmuch as they serve human use and are thereby valued by men…That is not only current use value, but the anticiptaion of development and use in the future.
Secondly, the just price is only arrived at in the open market. John de Lugo, the seventeenth century moral theologian, said thatValue rises and falls not with the valuation of this one or that one, but with the common valuation.That goes both ways, for the buyer and the seller.
The famous definition of Leonard Lessius was that the just price was the price at which goodswould be valued at a public valuation if they were openly displayed in the market place with the whole town coming together at the voice of the town crier.It therefore follows that the open market is one from which monopoly is absent.
If we accept that principle, it takes care of the extreme cases of betterment, on the one hand, which are covered in Clause 7, in which for example, the community suffers because the seller is in a monopoly position, or the alternative situation, the other way round, that the buyer—namely, the acquiring authority—itself enjoys a monopoly position. What we must try to do, and I hope that we shall examine the Bill closely in Committee to achieve for this purpose—is to remove the excessive bargaining power on either side, either on the side of the community, namely, the acquiring authority, or, on the side of the private citizen holding out for an unreasonable price.
The question of holding out for an unreasonable price is the difference between the conception of the just price which I am trying to put across and the open market price as it might arise in practice where a seller could hold out for a monopoly price. In getting the fair and just conception of the market price, one tries to get equality of power between buyer and seller. This, I would have thought, was a conception that would appeal at least to some hon. Members opposite as being fair.
625 Finally, in arriving at the just price, the necessity of one party is no reason for raising the price. Molina said thatthe necessity of the buyer confers no title on the seller to receive more than the common price".I end by saying—and I am sure the right hon. Member for Smethwick (Mr. Gordon Walker) will appreciate this—what St. Thomas Aquinas said in the Summa Theologica:Purchase and sale are seen to have been introduced for the common utility of both parties, since one needs the goods of the other…But what was introduced for the common good ought not to be more of a burden on the one than on the other; and so the contract between them ought to be established according to an equality.The Bill is a bold attempt to establish that equality and to relieve the private citizen who is the victim of a compulsory purchase order of carrying an excessive share of the burden of providing for the common good through compulsory purchase. In endeavouring to establish the just price, the margin of error should, in my opinion and in the opinion of hon. Members on this side, be in favour of the private citizen, for where the private citizen receives less than his due from the community, the reputation of the community as the custodian of justice is debased and. therefore, we all suffer.
§ 6.9 p.m.
§ Mr. M. Philips Price (Gloucestershire, West)
The hon. Member for Eastleigh (Mr. D. Price) has dealt with general questions of first principle and has not gone much into detail, which I do not criticise. He said, however, that he regarded the Bill as providing justice and fairness to owners, and he dealt with the whole question of compensation. He referred to the question of the unreasonable price which might be taken by owners under existing conditions, but I did not gather from him what were the methods by which he would deal with an owner who asked an unreasonable price.
We on this side of the House take the view that, although we do not oppose the Bill, because it rectifies certain injustices, it ignores one very vital aspect of the whole question—the question of betterment. The Parliamentary Secretary, when moving the Second Reading, 626 said that the Bill was "generally comprehensive", but that is just what we do not think it is. It deals with a part of this question, but it does not deal with something which we think is vital, and in the course of my remarks I hope to explain what I mean by this.
This Bill has been introduced in order to clear up the muddles and anomalies that arose out of the scrapping of the Silkin Act of 1947. Of course, we all know of cases—I have had some in my own constituency—of local authorities acquiring land for development and not being able to pay, even if they might have wanted to do so, a fair price to the owners for development, and, consequently, in some cases those owners have lost the value of the land which they had paid for. The hon. and gallant Member for Gloucestershire, South (Captain Corfield), in his Private Bill—in the debate on which I spoke and went so far as to say that the Bill should receive a Second Reading—tried to deal with this matter, but again dealt with only one aspect of the question, and left out the others.
Obviously, the present situation cannot be allowed to continue, because, in some cases, it hampers development. Local authorities, having acquired land which they need under the powers which they possess and knowing that they cannot pay more for it than the 1947 value, although it is worth more today, may hold up future development, waiting for some decision to be taken or some Bill to be introduced in the House, as this Bill has been. Therefore, it was necessary to go back to some other method, and this Bill goes back to the system of compensation, with variations from it and with its provisions brought up to date, of the 1919 Act which dealt with compensation for acquisition of land.
There is another good feature of the Bill for which one must give credit which is that it retains the system of planning, which I think we all here, and public opinion outside, now generally appreciate. We must ensure that no private owner shall exploit land in his own interests without consideration of a general scheme for the development of an area. Having said that, I must point out that the Bill will still permit an owner to get away with land values created by the community, without any contribution 627 either to the local authority or to the State. Moreover, I feel that the Bill may force up the value of land adjacent to land to be developed and thereby cause local authorities to put excessive valuations on land adjacent to that which they are to develop in future years. This, again, may hold up development.
The Bill may provide fairness and justice to owners, but in some cases it will certainly be unfair to local authorities. I have been reading the Bill carefully and trying to understand it, as well as the White Paper. The third paragraph of the Third Schedule seems to contain some complicated provision against increased values of adjacent land. I do not know whether these provisions are designed to meet the criticism I have just been making, but I am afraid that, to a layman like myself, they are so incomprehensible that I cannot say if they really will have that effect. I strongly suspect that if there are any guarantees or provisions against increasing the value of adjacent land, these provisions are inadequate.
As my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), in moving the rejection of the Town and Country Planning Bill, 1952, which did away with the Silkin Act of 1937. said:This Bill, I submit, abandons what has come to be regarded by many people as an essential principle in the planning legislation of these times—the link between betterment and compensation."—[OFFICIAL REPORT, 1st December, 1952; Vol. 508, c. 1128.]Just as the Act of 1952 failed in that respect, so this Bill fails in the same respect. What is true of that Act is also true of this Bill. The Government may say that they cannot reopen this question of betterment here, that it is too big and would require another Bill. It may be that it could not be included in a Bill of this kind, but I think that at least the spokesman on behalf of the Government might have given an indication that they are aware of this problem and will deal with it later.
It might, of course, be dealt with in a Budget, which, I agree, could not even be hinted at from the Treasury Bench today, even if that were the case. The question of betterment and unearned increment was dealt with in the Budgets of Mr. Lloyd George in 1909 and of Mr. Philip Snowden in 1930 or 1931. I 628 strongly suspect that the Government have no such intention at all. They have said nothing about it, and have not included it in the Bill. The Conservative Party has always disliked dealing systematically with betterment.
We have heard from the speeches of two hon. Members opposite who spoke from the back benches in this debate that attempts to deal with betterment in the past have failed. I agree that they have not been very successful, very largely, in the case of the Lloyd George Budget proposal of 1909 and the Snowden Budget of 1930, because of the very complicated valuations which this question of betterment may entail and which would have taken years to complete. The Silkin Act of 1937 certainly tackled betterment with a vengeance, by the simple process of annexing it to the State, but I feel that if went a little too far, because it deprived an owner of all interest in the improvement of his property.
Unless we are to have full-scale land nationalisation we must leave the owner with some interest in developing his land. To my mind, however, if there is a case for leaving some part of the increased public value of land to the owner there is an equal case for another part of the betterment value going to the State or the local authority. That has been the view of many experts in the past who have dealt with this question. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) referred to the Uthwatt Report of 1944. He quoted parts of it, and I should like to quote some others.
Paragraph 397 states:We recommend a scheme for a periodic levy on a proportion of increases in annual site values as revealed by quinquennial assessment made through the ordinary rating machinery…In paragraph 308 the Report recommends the taking of a fixed proportion of the increase of the site value, and in paragraph 311 recommends that that proportion should be 75 per cent.
The Times, in an article on this question on 8th August this year, said:A capital gains tax (on land) would certainly have to take less than 100 per cent. and might work on a sliding scale. It seems improbable that it will ever be feasible to secure all betterment of land to the State.These are the views of an important organ of public opinion which admits the 629 principle of betterment but says that the 1947 Act went too far in annexing the whole of the public value to the State, which I think is a correct criticism to make.
There are various ways in which this could be done. Periodical valuations of land for rating and taxation purposes are already made, I think every five years. It should not be impossible to levy a charge on an increased site value resulting from planning by the local authority and agreed to by the planning authority. That levy on the increased value should either be paid in a lump sum or be paid out over a term of years as an addition to Schedule A of the Income Tax. Or it might he in the form of a levy when the property is sold, or it might be both.
The Parliamentary Secretary suggested that we on this side of the House should go into details on what we propose. It is not the business of the Opposition to go into details at all but, when it criticises a Measure, to give an indication or outline of the kind of thing it would propose. Perhaps I have gone too far, but then I am not responsible except to myself and my constituents. Therefore, I think that I can go a little far in this respect and say that to my mind at least that is the kind of way in which betterment could be dealt with.
I am sure that it will go some way towards recouping either the Exchequer, who may be involved in grants, or the local authorities who under this Measure will have to meet increased charges as a result of the provisions in the Bill The Bill has some quite important provisions which we cannot oppose. It does away with certain injustices and anomalies, but it leaves out a very important aspect of this whole question of land values and betterment. As I see it, the task is to try to reconcile a territorial planning system with fair compensation to owners, and at the same time to acquire for the State or the local authority a part of the land values created by the community.
§ 6.25 p.m.
§ The Secretary of State for Scotland (Mr. John Maclay)
It is a rather interesting coincidence that the last two hon. Members to speak, my hon. Friend the Member for Eastleigh (Mr. D. Price) and the hon. Member for Gloucestershire. West (Mr. Philips Price) should have used quite frequently the expressions "just 630 price," "reasonable price" and "unreasonable price". Far be it from me to get into a discussion on whether personalities were involved in these allusions, but we had an interesting example of the two-price argument in the last few minutes. I do not think that the House will expect me to follow in detail what the two hon. Members were saying and I propose to concentrate largely on the Scottish questions raised by the Bill.
First, I should like to say a few words about the general purpose of the Bill. My hon. Friend the Parliamentary Secretary has explained how it remedies the injustice suffered in recent years by many people whose land has been taken by public authorities, an injustice which, there is some reason to believe, has sometimes resulted in a reluctance on the part of the authorities themselves to acquire the land best suited for their purposes. Although the difficulties have been less acute in Scotland, because in general the market value of land has diverged less from the 1954 Act value, all that my hon. Friend said applies, in principle, equally in Scotland as in England and Wales.
§ Mr. Willis
This is important in relation to what the right hon. Gentleman may say later. What is the evidence about this in Scotland? We have not had impressive speeches on the subject from Tory Members and quite a number of us on this side of the House do not know where the evidence exists.
§ Mr. Maclay
It is quite correct to say precisely what I have been saying—that the position has not been so acute in Scotland as in England, but it has been there all the same. It is difficult to show how precisely one gets evidence of this but when I say that there is reason to believe it I must tell the House that I have had remarks made to me about this problem—that it is in the minds of local authorities. They are worried about the difficulties that arise from the two-price system. All hon. Members who are in close touch with local authorities know that this has been an element in their thinking. I assure the hon. Member that I have had quite a lot of personal representations on this, not from local authorities but from others. I repeat that in the minds of some local authorities, at any rate, this is a matter of concern.
631 I do not propose to pursue these general issues. They will probably be discussed further in the course of debate and my right hon. Friend no doubt will have more to say on general issues which were also fully covered by my hon. Friend the Parliamentary Secretary in his opening speech. Therefore, I turn at once to the points in the Bill which are most relevant to Scotland.
These fall under two heads. The first is the effect of the Bill on Scottish administration, especially on land transactions undertaken by local and other public authorities in Scotland. The second relates to the form of legislation which the Government have chosen to adopt, by introducing a Great Britain Bill containing the necessary provisions for its Scottish application, rather than two separate Bills. The hon. and learned Member for Kettering (Mr. Mitchison) referred to this in his opening remarks.
It is not possible to make a firm estimate of cost to public authorities of returning to market value as the price basis for land acquisiton. Paragraphs 2 and 3 of the Financial Memorandum attached to the Bill do, however, give some rough figures, although the average increase of 25 per cent. which they forecast would certainly not apply to every transaction. It is an average.
Indeed, I would expect the average to be lower in Scotland than in England for, whatever the reasons may be, the private market in land appears to be rather less active north of the Border. In the country districts, where there is, in any case, little demand for land for development, the present price level is not likely to undergo much change. Nor is developed land in urban areas acquired for residential redevelopment, for example, in the course of slum clearance, likely to cost much more.
The main difference is likely to be on the fringes of towns where the market in land for development is most active. That was the point at which the hon. Member for Kilmarnock (Mr. Ross) rose earlier in the debate, and as I go on with my remarks he will find that I have tried to cover the effects as well as I can.
§ Mr. Ross
There was one important omission from the remarks of the right hon. Gentleman. He referred us to the 632 Financial Memorandum, but he will appreciate that we have been given no guidance as to whether they are purely English figures. We would welcome an estimate of what is likely to be the cost in Scotland.
§ Mr. Maclay
I am coming to that. I would remind the House that while the Bill, in terms, deals only with compulsory acquisition, market value ascertained under the Bill will, as a matter of administrative practice, become the permissible basis for land purchase by agreement also.
Coming to figures, the present position is that Government Departments are spending about £250,000 a year in buying land in Scotland for a variety of purposes. The additional cost, we estimate, is not likely to exceed a quarter of this amount, say, £60,000 a year. Local authorities are spending about £1¼ million, and on the same basis of a 25 per cent. average increase the extra cost may be around £300,000.
The biggest single item in local authority land purchase is land for housing, and perhaps I should mention that purchases of virgin sites cost about £500,000 last year. An increase approaching a quarter of this sum, say £100,000, may seem a sizeable amount, but it represents on the average only about £3 or £4 on the capital cost of each house built, or certainly less than 5s. per annum over the 60-year loan repayment period. Even in exceptional cases, which could arise where the cost of land is doubled by the Bill, the resulting additional annual charge is under £1 a year per house.
The second biggest item in local authority land purchases is land for roads, much of which, where classified roads are concerned, attracts a percentage grant from the Exchequer. The cost of land is relatively a very small part of the cost of most services, and, while an allowance for the new price basis will certainly be made in calculating "relevant expenditure" for the purpose of general grant, it seems that an addition of about £20,000 to this expenditure will be an ample allowance.
In these circumstances, there is no reason to fear that the development of housing or other important services is likely to be hampered by the Bill, or that 633 local authorities will find themselves faced with big increases in expenditure. Where major operations are in prospect as part of the programme for resettling Glasgow overspill, there are further safeguards at both ends.
The cost of land in central redevelopment areas is not likely to be much higher, and, in any event, deficits arising on redevelopment in Glasgow itself will continue to rank for 50 per cent. Exchequer grant under the Planning Acts, this having been especially preserved for major redevelopment in last year's Local Government Act. In town development schemes outside Glasgow, land transactions are one of the items admitted in the calculation of the deficit, to be expected in the early years of such schemes, which ranks for 75 per cent. Exchequer grant under the Housing and Town Development Act.
I turn now to the form of the proposed legislation, having tried to give its effects as briefly and clearly as I can. I am well aware that in addition to the opening remarks of the hon. and learned Member for Kettering there has been some comment on the decision of the Government to proceed by way of a Great Britain Bill. I believe, however, that the course we have adopted is, all things considered, the most advantageous for Scotland and Scottish affairs as a whole, as I will try to explain.
I do not wish to make too much play with predecents, for these can be quoted on both sides of almost any argument. However, we are certainly not without good precedents for the amendment in a Great Britain Bill of codes of law the main provisions of which are contained in separate legislation. I am thinking here particularly of the National Health Service (Amendment) Acts of 1949, 1951 and 1952, which amended both the original English National Health Service Act of 1946 and the Scottish National Health Service Act of 1947. These amending Acts, like the present Bill, dealt largely with matters of principle, where uniformity between Scotland and England was essential, and matters of structure were secondary or relatively unimportant. I do not think that there has been any serious criticism of these Acts.
The main concern of the present legislation is with rules of compensation which 634 must, in fairness to all concerned, be in essence the same in Scotland as in England. Indeed, the basic rules are contained in a Great Britain Act, the Acquisition of Land (Assessment of Compensation) Act. 1919, although they have since been amended in separate Scottish Planning Acts of 1945—not now operative in this field—1947 and 1954. The compensation provisions, however, were a very minor part of the 1945 Act, the main purpose of which was to confer new planning powers on local authorities; while the 1947 Act also dealt extensively with the functions of local planning authorities, local authorities having, of course, a completely different structure in Scotland from England and Wales.
I concede that the 1954 Planning Act dealt principally with questions of compensation, and other matters relating to land values, which had necessarily to be uniform throughout Great Britain. However, the parliamentary proceedings on that Bill showed clearly the problems which arise in attempting to legislate separately for Scotland and England on matters which, in fairness, must he dealt with uniformly. The Scottish Bill had very often, given the need for uniformity, to be kept in line with what was happening in the English Bill, in the interests of fairness to all concerned in both countries, although Scottish Members had, by the nature of these Bills, taken relatively little part in the proceedings on the English Bill. This time, the Great Britain character of the Bill is intended to secure that Scottish Members will play their part from the outset, and at all stages, in considering the common questions involved.
Under present arrangements it will be possible for Scottish Members especially interested in the present Bill to take an effective part in its Committee stage, although another Bill may be under consideration by the Scottish Standing Committee at the same time. Indeed, as far as I can see, the Scottish Standing Committee is likely to be fairly fully occupied with important legislation and business of a distinctively Scottish character. There is, for example, an important Bill for agricultural interests, as well as many others.
I would emphasise that the Bill we are discussing today, in practically all its provisions, is of common application to 635 Scotland and to England. The hon. and learned Member for Kettering said in his opening remarks that it would be a nuisance for Scottish Members to listen to English Members on their own subjects, and vice versa, but if hon. Members have studied this Bill they will have found that there are practically no parts of it which are not of common interest to both. The exceptional provisions applying to England only are Clauses 27 and 39, which do not need a Scottish equivalent; Clause 33, the Scottish equivalent of which appears as Clause 34; a very few subsections in other Clauses; and parts of Schedules where, for convenience, Scottish and English provisions are set out separately in full. I would emphasise that the principles are common throughout, and I am convinced that united discussion is the best way of getting the most satisfactory debating for everybody concerned in both countries.
At the same time, the Bill does not fail to deal with the very few special problems that arise in a special form in Scotland. As regards compensation, there is, for example, a special point about the Scottish superior, who in certain circumstances has a financial interest in the compensation payable to his feuar by an acquiring authority; while Scottish town development schemes have no exact equivalent in English statutes. If the hon. Member wanted them, I could give precise references, but I shall not unless he asks me to do so. I repeat that the number of cases in which there is any difference whatsoever is very small indeed.
So far, I have been dealing with this question from the standpoint of Parliament itself. There is, of course, another important standpoint. It is that of local authorities and others, not least the lawyers, who will have to operate the provisions of the Bill in Scotland when it becomes law. The main trouble, of course, as I recognise, is that many of the provisions of this Bill take effect by way of amendments to earlier Acts, some of which themselves have already been subjected to extensive amendment. This, I would ask the House to note, would have applied even with a separate Scottish Bill, and the real remedy is, of course, consolidation of all the relevant statutes. That is certainly a task to which 636 early attention should be directed, but I should be less than candid if I were to give the impression that the task could be overtaken sufficiently quickly to help those who will have to operate under the new Bill in the months following its passage into law.
Short of full consolidation, however, there is another possible means of helping Scottish authorities and lawyers which I have been looking at, and which could be invoked much more speedily. This would be to carry the present Bill through all its stages on to the Statute Book and then re-enact it in purely Scottish terms, as an Act applying to Scotland only. This was done in 1947, when the Acquisition of Land (Authorisation Procedure) Act of 1946, passed as a Great Britain Act, was re-enacted in Scottish terms as the Acquisition of Land (Authorisation Procedure) (Scotland) Act, 1947. If a repetition of this procedure seems desirable, the Government will certainly be willing to consider taking this course of action at the appropriate time.
I assure the House that it is the firm resolve of Her Majesty's Government to give Scottish Members every opportunity of playing their part in dealing with all legislation, particularly that legislation affecting Scotland. We have introduced this Bill as a Great Britain Bill because we are convinced, for the reasons which I have tried to set out as clearly as I can, that it is the best way of giving them that opportunity in the present context, having regard, I repeat, to the manifest unfairness —I think everyone will agree with this —that would be involved in the adoption of different principles for Scottish legislation and compensation in a matter of this kind.
I hope that I have covered the essential parts of what will be the effect of the Bill on land acquisition in Scotland and demonstrated what is so dear to all Scottish Members' hearts, getting on with slum clearance and overspill. Such operations will not be seriously affected. I therefore commend the Bill to the House.
§ 6.43 p.m.
§ Mr. James McInnes (Glasgow, Central)
I endeavoured to follow the right hon. Gentleman very carefully and I must confess that I thought he began 637 his speech by indicating that he had received representations largely from local authorities with regard to the dual price system. When my hon. Friend the Member for Kilmarnock (Mr. Ross) showed some indication that it was not the local authorities, the right hon. Gentleman then indicated that these were personal representations. Do I take it that by "personal" he means that the Scottish landowners have come to meet him, or is it merely a question of some friends who have desired to discuss the matter with him?
§ Mr. Maclay
I do not know whether the hon. Gentleman wants me to say again precisely what I said earlier, but he will be able to read in HANSARD what I did say. I do not want to overemphasise this point, but I did say that there is some evidence to show that there has been a reluctance on the part of local authorities to acquire land. I did not say that I had had representations from them. I said that in the normal course of my duties as a local Member of Parliament on the back bench as well as the Front Bench, and in moving about Scotland, as I have done a great deal, I have heard a number of comments that this is one of the difficulties in the back of people's minds when considering this very awkward question of the acquisition of land. I have had no formal representations from landowners or anyone else on it. I merely reported what the ordinary person would find if he went about discussing these problems.
§ Mr. McInnes
The position is just as I thought, that the Secretary of State has had no formal representations from local authorities in Scotland or from anyone else. That is the situation and I accept it. I would have thought that since local authorities would be involved in a sum of probably £300,000 or £400,000 in connection with the acquisition of land, the Secretary of State would have given us some indication that in those circumstances he was prepared to increase the extent of the contribution to local authorities under the block grant arrangements, but no such indication has been given by the Secretary of State.
§ Mr. Maclay
I made a very careful study of what would happen under "relevant expenditure." The hon. Gentleman may remember what I said about that in 638 the course of my speech, and also on the other point.
§ Mr. McInnes
Certainly under "relevant expenditure," and the right hon. Gentleman also indicated that local authorities get a 75 per cent. grant in respect of comprehensive redevelopment and things like that, but that is what they are getting now. It is not something extra to meet the situation that is arising out of the Bill.
I should have thought that the right hon. Gentleman might have made some reference in a Bill of this kind to the very important question of betterment. Obviously, he elected to ignore all that was involved in a matter of that kind and he concentrated a good deal of his speech on the question why there was not a separate Scottish Bill. I hope that I may be allowed to deal with that aspect as I proceed with my own contribution to this debate.
The Secretary of State confesses, of course, that the main purpose of the Bill is to establish fair market value compensation for land which is being compulsorily acquired. As I understand it from listening to the debate so far as it has gone, the reason for this fundamental change is that the two-price system for the acquisition of land has created untold hardship and injustice throughout the country. It is the dual price system, introduced in 1954 by the present Government—by the present Prime Minister—that has led to all the anomalies which evidently are taking place south of the Border, but I confess that there is very little evidence of that in Scotland.
Are we really satisfied that the fair market value which the Bill now provides is the real solution to the problem? I wish that the Conservative Party would make up its mind on this very vexed and thorny problem of town and country planning. We have had the 1952 Act to amend the 1947 Act, we have had the 1954 Act and we now have the present Bill, each attempting to improve on its predecessor, as it were.
I want to take the position as it stands today in respect of the 1952 and 1954 Acts and deal with the Scottish aspects of the Bill against that background. Candidly, having regard to the situation that exists in Scotland, I cannot understand why the Secretary of State for 639 Scotland agreed to the Clauses on fair market value being incorporated in the Bill and applied to Scotland. Is the Secretary of State in possession of some concrete evidence that there is widespread hardship and injustice in Scotland? He has not told us so. In fact, he indicated that he had had no formal representations at all. Yet here we have an English Measure, with Scotland tagged on, introduced on the basis—
§ Mr. Maclay
On the question of formal evidence, if a Government always wait for people to bring deputations, it is a poor form of Government. One has to do what one believes to be right on the basis of the knowledge that one has of the situation as it exists.
§ Mr. McInnes
When there are deputations to meet him, the Secretary of State never tells us about them, but when there are no deputations he says that he has had no formal representations. That is his technique.
I say categorically that there is absolutely no evidence of widespread injustice or hardship in Scotland under the existing town and country planning provisions, and there is no justification of any kind for introducing Scotland into the Bill in respect of the fair market value Clauses.
Ever since 1947 Scottish local authorities have acquired a considerable volume of land for housing, industrial and commercial purposes, and almost all that land—not entirely all—was acquired by agreement. In the City of Glasgow, which has built more than 52,000 houses since 1946, practically all the land was purchased by agreement, as was the land for the twenty-five industrial estates that we have in Scotland. When agreement is reached between a willing seller and a willing buyer, there is no question of hardship or injustice. I am not even conscious that private developers have ever experienced any difficulty in acquiring land. In fact, more private development in housing is going on in Scotland at present than there has been since the end of the war, and that does not indicate hardship or injustice to the landowner.
640 I concede that we have been able to reach these agreements because we possessed the instrument of compulsory purchase, and I hope that we shall always maintain that instrument when it comes to negotiating for land. Having said that, I would also say that in isolated cases—I emphasise "isolated cases" —where land has been compulsorily acquired there is no evidence that hardship or injustice has been created.
On reading the debate on the Private Member's Bill on 21st February I was a little surprised to find that the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley), whom we all regard as being an authority on town and country planning questions, took the opportunity to quote from four letters which he had received from county planning officers, one of whom had said that ever since the Tory Act of 1954 it had become extremely difficult for local authorities to acquire land by agreement. I believe that the hon. Gentleman, who represents a Scottish constituency, will agree that the four letters were from planning officers located in England.
§ Sir C. Thornton-Kemsley
Of course. We were dealing with an English Bill.
§ Mr. McInnes
It was a Private Member's Bill which sought to alter the situation. Even if it were an English Bill, the hon. Gentleman could have indicated, if he had the information, that the situation existed not merely in England and Wales but also in Scotland. I think he will agree with me that he found himself in precisely the position in which I find myself tonight, that there is no evidence of hardship and injustice in Scotland.
In the light of these circumstances, I cannot understand why the Secretary of State agreed to the fair market value provision being applied to Scotland. There is no case for it and no demand for it. I can only conclude that it is a concession to selected interests, to landowners, specially designed and dressed up to make it appear that the Conservative Party was not giving a concession to landowners but was actually dealing with an overdue social reform. The reform will cast local authorities in Britain an additional £8 to £10 million, and I regard that as money which is simply an unearned gift to landowners.
641 I hold the view that compensation at fair market value could be justified only if it were part of a system in which there was some balance resulting from the extraction of betterment from owners whose land had benefited as a result of the efforts and enterprise of the community. My hon. and learned Friend the Member for Kettering (Mr. Mitchison), in his excellent speech, made considerable reference to betterment and indicated that its collection could be achieved through the system of a capital gains tax.
Two matters disturb me. One is that of Glasgow's overspill problem and its relationship to town development legislation, the other is that of the abandoned properties in the City of Glasgow. Glasgow's overspill problem involves the transfer of about 300,000 people into the areas of seventy or eighty Scottish local authorities. The planning authorities in Scotland are the county councils and the large burghs. They had no knowledge of this problem when they submitted their development plans six or seven years ago. Is there not a danger that those seventy or eighty authorities, faced as they will inevitably be faced with increases in the cost of land acquisition, will be discouraged from making overspill agreements with the City of Glasgow?
Will not those authorities which have already entered overspill agreements, and which may be discouraged by the Bill from fulfilling their obligations under those agreements, be in some difficulty? Section 16 of the Housing and Town Development (Scotland) Act, 1957, gives the Secretary of State powers to deal with local authorities who default in their overspill agreements by taking action against them at the Court of Session. Does he intend to apply that procedure in the knowledge that the Government themselves will be responsible for local authorities defaulting in that way?
§ Mr. Maclay
If the hon. Member will carefully study what I have said, he will see that the effect of the Bill is very small indeed. I cannot believe that it will have any of the effects of which he is frightened.
§ Mr. McInnes
Surely the situation is as I have described it, since the right hon. Gentleman has taken those powers. However, would it not be grossly unfair if a local authority defaulted and suffered 642 legal action because of the action of the Government?
I do not understand the situation which will arise in connection with the abandoned properties in Glasgow. Glasgow has the unique problem of having hundreds of privately rented houses which have been abandoned by their owners—perhaps 1,500 to 2,000 properties. Despite all their efforts, local authorities have been unable to trace the owners, the ground superiors, or the bond holders. In those circumstances, how could a local authority serve the prescribed notice required in Part II of the Second Schedule? The right hon. Gentleman should consider giving Glasgow Corporation power to enable it to take over such houses, indemnifying it against any subsequent claims which may be lodged in a year or two by the ground superiors, the bond holders or the owners.
As everyone will agree, this is a very complicated Measure. It is complicated not only in its essential subject matter, but in its adaptation of an English Measure to Scottish conditions. It becomes almost impossible to comprehend its implications. The Bill consists of forty-five Clauses and eight Schedules, of which no fewer than thirty Clauses and live Schedules contain separate subsections or paragraphs dealing with the application to Scotland, many of those references extending to more than a full page of print.
This way of legislating is fantastic and displays a complete contempt and disregard for the recommendations of the Royal Commission on Scottish Affairs, which was appointed by the present Government and which reported in 1954. That Commission recommended that whenever a Statute might lead to difficulties of interpretation if applied to the whole of the United Kingdom, separate Measures should be enacted for Scotland and for England and Wales. The inclusion of Scotland in the Bill has aroused a good deal of hostility in the Scottish Press and has provoked letters from the legal profession, even to the Lord Advocate, which is unusual.
I commend to the Secretary of State and to the Law Officers an excellent article by Professor Smith, who holds the Chair of Civil Law at Edinburgh University. This article appeared in today's 643 issue of the Scotsman. Professor Smith clearly demonstrates the confusion and inconvenience caused by the habit which has recently grown up in Parliament of spatchcocking Scottish application in English Bills. How right Professor Smith is! We have had mining subsidence legislation, legislation on agriculture and we have had the Rent Act and now we have a Town and Country Planning Bill, all appearing during the tenure of the present Secretary of State. How different it was with former Secretaries of State, who at least had the courage to stand up for the principle that there should be separate bills for Scotland.
All of those Bills had a relationship to land. Surely the right hon. Gentleman knows that the law of land tenure in Scotland is radically different from that in England and Wales, and that in the past that difference has been used as one of the main justifications for having separate Scottish legislation. There is another and very important reason why we object to being tied to English Bills. Since this is a United Kingdom Bill it will go to a United Kingdom Committee, with the result that nine out of every ten Scottish Members will be denied the right and opportunity of participating in what is a very controversial Bill. Surely that is the very negation of democratic government. Indeed, in a United Kingdom Committee our Amendments are decided not upon their merits but by the swashbuckling votes of the Englishmen who are present. Had this been a Scottish Bill all seventy-one Scottish Members could have participated in it in the Scottish Standing Committee. That is what the Scottish Standing Committee is for.
§ Mr. Ross
My hon. Friend will appreciate that the Secretary of State has already denied us that right. All the Scottish Members are not allowed in that Committee when it is discussing legislation. He has already cut down the number.
§ Mr. McInnes
I am conscious of the changes that have taken place, as my hon. Friend said.
Why does the Secretary of State persist in spatchcocking Scottish legislation into English Bills? Is it because he is conscious of his own deficiencies? 644 Is it because he lacks the courage to face the criticisms of Scottish Members? He has never yet attended a United Kingdom Committee that was dealing with the Scottish aspects of a Bill. Unlike the English Ministers, who not only attend themselves but are fortified by the presence of their Under-Secretaries, the Scottish Secretary of State absents himself and sends along one of his underlings.
As it stands the Bill will be a nightmare to local government officials and others who are trying to interpret its full implications. In his speech this afternoon the right hon. Gentleman suggested that after all the proceedings are over arrangements can be made to print a separate Scottish Bill and make it available to local authorities, town clerks and others. We are not concerned with the way in which the Bill is printed; what concerns us is the fact that we have been denied an opportunity to discuss it. What does it mean to the people as it stands at present? Before anyone can ascertain its effects upon existing Scottish legislation he has to ascertain the effect of the Scottish application Clauses to English Amendments. It has taken me all my time to explain what it means.
That is the situation, and my hon. Friends and I feel very strongly about it. I make a last-minute appeal to the Secretary of State. If he cannot give us a separate Scottish Bill, will he say that the Committee stage will be taken on the Floor of the House? If he cannot do that, all I can say is may Parliament, in its wisdom, save Scotland from this spineless, speechless Secretary of State.
§ 7.15 p.m.
§ Sir Colin Thornton-Kemsley (North Angus and Mearns)
The hon. Member for Glasgow, Central (Mr. McInnes), in the course of a long speech, has made two main charges—[HON. MEMERS: "It was not long."] It is a speech that I hope I shall not emulate for its length.
§ Dr. J. Dickson Mahon (Greenock)
§ Sir C. Thornton-Kemsley
The hon. Member for Glasgow, Central made two main points. His first was that a case has not been made out for applying fair market value—he used that phrase two or three times—when land in Scotland is compulsorily acquired. Will he consider 645 the logic of his suggestion? He is suggesting that south of the Border there should be a Measure allowing fair market value to owners of property, but that north of the Border we should go on with the present system of market values tied to a price applicable to a rapidly receding past—to values applying in 1947.
§ Mr. McInnes
What I was trying to say was that the bulk of the acquisitions had been carried out by agreement. I should also have indicated that those agreements almost provided for fair market value. but they did not quite. The situation in England is entirely different.
§ Sir C. Thornton-Kemsley
The situation may he entirely different, but the code of compensation is exactly the same. Where land is acquired in the exercise of compulsory powers, or by agreement with the threat of compulsory acquisition behind it, it is at existing use value plus the unexpended balance of the claims for loss of development value under the 1947 Acts, assessed at 1947 prices. The year 1947 is receding further and further into the past, and the hon. Member is quite content to see a code based on fair market value operating south of the Border, where land is acquired compulsorily, and a code operating north of the Border which is already outmoded, and which bases its compensation in part by reference to 1947 values.
Yet the hon. Member is one of those who constantly ask industrialists to come to Scotland. How can we expect them to do so when we would be asking them to come to a country where the system of compensation is unfair as compared with that operating in England, where people will, in future, receive compensation based upon fair market values?
We have suffered in Scotland in the past from the fact that, unlike the situation in England, the big corporations—the colleges, and so on—have not invested money in agricultural estates. That has been done in England, to the great benefit of the rural economy. The Oxford and Cambridge colleges and other big corporations are very good landlords. That situation does not exist in Scotland because, in the past, its system has been bedevilled by the incidence of owners' rates.
We have now got rid of owners' rates. Are we to place another impediment in 646 the way of people whom we seek to attract to Scotland to help our Scottish economy? Are we to allow a fair compensation system to operate in England while an unfair system operates in Scotland?
The other point made by the hon. Member relates to the question of a separate Bill for Scotland. On the surface, this is an attractive idea. In the past, many of us, including myself, have paid lip-service to the need for Scotsmen to have their own separate legislation and, wherever possible, to have Bills dealing specifically with Scottish subjects. But I am convinced that the machinery of the House of Commons and our Committee system is not adapted to having two separate Bills, containing exactly similar Clauses, running in parallel, because one Measure would get out of step with the other. I am convinced that the solution lies in an alteration of our Committee system, if we are to have an arrangement where any legislation dealing with Scotland invariably goes to the Scottish Standing Committee.
I was glad to hear the two possible solutions suggested by my right hon. Friend. I do not pretend to understand the full implications of the first he mentioned. But I gather that it might be possible, after the passing of this legislation, to extract the purely Scottish provisions and present them, presumably to the House, in the form of a purely Scottish Bill which might be speedily enacted. The second matter by which I set great store is the hope that we shall be able, within a reasonable time, to consolidate all our town and country planning legislation relating to Scotland. We now have the 1947 Act and the 1954 Act, and when this Bill becomes law we shall have the 1959 Act. It will then be desirable that we should have a consolidation Measure applying only to Scotland.
I am surprised that the hon. Member for Glasgow, Central, with his attention to detail, failed to refer to one purely Scottish point. It is that, with the exception of Clause 1, the rest of the Scottish provisions do not come into operation until 16th May next year, whereas the provisions relating to England and Wales come into operation one month after the Royal Assent, which is likely to be given some time next summer. This 647 means that Scotland may well be behind England and Wales in this respect.
I understand the reason is that many of the relaxations of central control upon local authorities imposed by the Local Government and Miscellaneous Financial Provisions (Scotland) Act, 1958, operate from the beginning of the financial year, which is 16th May, 1959, and, therefore, it is convenient to have the further relaxations of control brought about by this Bill operating in Scotland at the same time.
I warmly welcome the Bill from a United Kingdom point of view and for a number of reasons. I consider it wise that market values should be in accordance with the limitations imposed by the development plans. It may be argued that the development plans so alter the incidence of values in different places, by allowing development here and denying it there, that they should be ignored if we are to arrive at the true value of any parcel of land. It is also said that the development plans are liable to be changed within five years, and, therefore, there is nothing immutable about them, nothing sacrosanct, and it would be unwise to pay too much attention to them as a basis of values.
But the development plans have been with us for some five years. Sales of land and property have taken place at values which have had regard to the limitations imposed by those plans, and I think that the Government are right to accept those limitations as a basis for market value under this legislation.
Another thing which pleases me is that in Clause 14, which states that where land is acquired for one purpose, and within five years is alienated by the acquiring authority for some other purpose which has a higher market value, the former owner, from whom it was acquired compulsorily, can be recouped to the extent of the increase in value. I consider that a good thing. But I suggest—perhaps this is a Committee point, but it is a good thing to give advance notice of some important Committee points—that five years is not a sufficiently long period.
Both the Scottish and the English legislation in 1947 contained provisions that where land is designated for compulsory acquisition, and the designating authority 648 has not acquired it within a term of twelve years, or eight years in the case of agricultural land, it can be called on to withdraw the designation or to purchase the land. I suggest that for this purpose those periods are more realistic than the period of five years mentioned in Clause 14 of this Bill.
The hon. Member for Glasgow, Central referred to a speech I made in connection with what is known as the "Captain Corfield Bill"—the Measure introduced by my hon. and gallant Friend the Member for Gloucestershire. South (Captain Corfield) and which had its Second Reading on 21st February of this year. The hon. Member for Glasgow, Central mentioned that I gave some evidence during the debate on that Bill—which I had acquired as a member of the Executive Committee of the Town and Country Planning Association—of the hampering effect on planning and the right use of the land of Britain because local authorities knew that in many cases real hardship would be caused to individuals were land compulsorily acquired on the present basis; and, for that reason, in many cases second-best and even third-best or fourth-best land was taken.
I give the point to the hon. Member for Glasgow, Central. My evidence comes from England, I have no evidence from Scotland, but in England there is a great deal of evidence that the present unfair code of compensation is militating against the proper and right value of the land of Britain—[HON. MEMBERS: "England."]—all right, England and Wales, and I welcome the Bill for that reason, among others.
Another point is the question of the date of the coming into operation of the new market value provisions. My hon. and gallant Friend the Member for Gloucestershire, South has drawn the attention of the House to this matter. He said that there is a good deal of evidence that ever since the introduction of his Bill there has been a greater number than usual of notices to treat. That has not happened uniformly over the country. I do not think that it has happened in Scotland at all, but evidence shows that in certain places in England local authorities have been getting in quickly, because they thought that there would be some legislation on these lines.
649 Even if that were not so it seems desirable that the new and, ex hypothesi, more favourable provisions should apply in all cases where purchase has not been completed by the legal vesting of the land in the acquiring authority. I want that point to be urged when we come to Committee.
The last point on which I would trouble the House is Clause 31, which provides that resident owner-occupiers whose land has been blighted by planning and over whose land there hangs the threat of compulsory acquisition because it has been allocated for a public purpose, may, in certain circumstances, serve a purchase notice upon the authorities. Why do the Government stop at the resident owner-occupier? It is made clear in the White Paper that the purchase notice procedure is not proposed on grounds of hardship. The White Paper goes out of its way to make that clear. The owner-occupier has power, in certain circumstances, to compel the local authority to buy his house because he will lose on the price, now that his land is designated for compulsory purchase.
Surely the same conditions apply in the case of a man who owns a shop or of an industrialist who owns a factory; or, for that matter, an investor in house property. He may want to realise his investment because he has an urgent need for money. The blight that has settled on his property makes him unable to do so. In an otherwise admirable speech, my hon. Friend the Parliamentary Secretary, talking about this Clause, said that he had been advised that 95 per cent. of the cases of hardship would be covered by the provisions for the resident owner-occupier, and that in the remaining 5 per cent. of cases the local authorities would be urged to buy in advance.
If that is the case, if the measure of the thing is only 5 per cent., why should we not apply the provisions of Clause 31 to other people who are just as likely to suffer hardship as is the owner-occupier? They will have been unable to sell except at a substantially lower price than if there had been no planning blight—there are also the hoops through which a claimant has to go under this Clause. The other people ought, in fairness, to be able to require the acquiring authority to proceed at once with purchase.
650 Having said that, I must add that this is a very good Bill. I am sorry that we cannot have a different Bill for Scotland, but I hope that we shall join in Committee in doing all we can to put these Committee points right. I welcome the introduction of the Bill.
§ 7.34 p.m.
§ Mr. E. G. Willis (Edinburgh, East)
The hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley) has reinforced one of the main points put by those of us on this side of the House who represent Scotland. We all know the knowledge that the hon. Member has on this subject and that he is in close contact with people who are likely to know the conditions touching this matter.
The hon. Member now admits that he is unable to produce any evidence that injustice exists in Scotland as was so widely talked about in respect of England and Wales. I have never heard a Conservative Member demand that such injustices could be rectified, and no Scottish Conservative supporters of the Government have been in the House today except for the hon. Member for North Angus and Mearns. He is the only Scottish Tory who has listened to the debate.
§ Mr. Willis
No, he is a National Liberal. He is the only Scottish supporter of the Government who has taken an interest in the Bill.
§ Mr. Maclay
What about the Scottish Members on the Front Bench?
§ Mr. Willis
I shall refer to them in a moment. They are Ministers.
Any attempt to elicit information from the Secretary of State for Scotland has met with most unsatisfactory answers.
§ Mr. Willis
We asked about local authorities, but the right hon. Gentleman said that he had no evidence from Scotland on the matter. He had heard from people as he walked around Scotland that the local authorities were not acquiring land because they thought that injustice might otherwise be inflicted upon people. We have spoken to local authority members, but I do not think there is much evidence of that at all. How many individual cases has the right hon. Gentleman 651 had forwarded to him as Secretary of State for Scotland? How many cases have hon. Members behind him sent to the right hon. Gentleman? To what extent has this appeared in the Press?
§ Mr. Maclay
I cannot comment on this. I could go on giving answers and the hon. Member would always go on saying, "It is unsatisfactory". I wonder how many times he has said that in the last three years? Can he deny that one of the reasons which causes great difficulty and delay, for example in putting a road through an area, is resistance to selling? Can he deny that that is affected by the price which the individual is to get? It is absolutely certain that that is so. I should have thought it was evident, from the number of objectors in the early stages to these various schemes and from the time it takes to confirm them. I am certain that it is so, and this has been confirmed by many people. It is in the Report of the Franks Committee that this is one of the major elements holding up important work and making things very difficult.
§ Mr. Willis
Some of those cases result from the machinery through which they have to pass. In other cases in Scotland, acquisition of land has been carried through on a basis of satisfactory agreement between seller and buyer. There is no volume of evidence of injustice being prevalent in Scotland. I am of the opinion that the Bill resulted from the pressure of English Members on both sides. The Government then said to the Secretary of State, "We must put you in", and he agreed. Having agreed, he accepted a subsidiary rôle all through by allowing Scottish legislation to be incorporated into a United Kingdom Bill and thus denying to Scottish Members the right to discuss the matter properly in the Scottish Standing Committee. I can understand his unwillingness to go to the Scottish Standing Committee on a matter like this because, in the light of the showing of the Law Officers on previous occasions, discussion on the Bill would have lasted for many months. I can understand that he was not eager to go through that process.
The right hon. Gentleman said that the difference between the compulsory acquisition price and the free market price in Scotland was very much less than it was in England and Wales.
§ Mr. Maclay
I did not say it was very much less; I said it was smaller.
§ Mr. Willis
If that is so, how does the right hon. Gentleman reconcile the figures he gave in relation to paragraph 4 of the Financial Memorandum? According to my calculation, the proportions in each case for Scotland were practically the same.
§ Mr. Maclay
I must ask the hon. Member to read very carefully what I said. I spoke as clearly and distinctly as I could and was very careful to qualify things and give things which were a matter of opinion. If he reads my speech, he will see that it is perfectly irreconcilable with what he is saying now.
§ Mr. Willis
The right hon. Gentleman said that it was smaller in Scotland for a number of reasons and he proceeded to give what he thought were the reasons. I agree that he did it in a very mild manner. He does most things in a very mild manner. That is one of our complaints. On occasion he ought to be something rather more than mild. All I ask now is how he reconciles that with the figures he gave in relation to the expenditure by local authorities in Scotland and paragraph 4 of the Financial Memorandum? According to my calculation, the two statements do not make sense, which leads me to think that the right hon. Gentleman has not very much evidence about this matter and, as we on this side of the House point out, does not know the facts.
Does he, for instance, agree with the English figure for free market value and say that the figure in Scotland is three or four times the value? We were given these facts in relation to England.
§ Mr. Maclay
I ask the hon. Member to read my speech. I said that sometimes it will double the value and that it can occasionally be higher. Obviously there are isolated cases, but I have given the facts so far as they could be ascertained in Scotland.
§ Mr. Willis
I heard what the right hon. Gentleman said. Does he agree with the Parliamentary Secretary who opened the debate that the provisions of Part IV, dealing with what he called planning blight, were put into the Bill 653 to deal with cases of hardship arising among owner occupiers and that those in Scotland were 95 per cent. of the cases in which hardship occurred? Does he agree with that also? We did not have this information for Scotland. The right hon. Gentleman did not give us quite a lot of information. Because he did not give us the information given by the English Minister, most of us on this side of the House are quite convinced that the Government have not got the information in Scotland to the extent to which it is available in England and Wales. That strengthens our case for having another look at this subject before introducing the Bill in Scotland.
It is quite fair to say that we are anxious to do justice to individuals the same as everyone else, but we have to bear in mind that the Bill will place added financial responsibilities on Scottish local authorities. I am not quite certain what those responsibilities will be, but the Bill will certainly place them on those local authorities. In addition to having the responsibility to act justly towards the individual, we also have the responsibility to act fairly to ratepayers and taxpayers in the community as a whole. Therefore, we are bound to ask whether the placing of this additional burden on local authorities in Scotland is the right thing to do unless something else is done to assist them to carry that burden by obtaining some return for betterment.
Undoubtedly one of the great condemnations of the Bill is the fact that it says nothing about that. The Government show no indication at all that they wish to do anything about it. They have not even said that they will look at it. If they said that they thought this was something which ought to be done and that it is fair for the community to recoup itself for the efforts and expenditure it incurs in creating these higher values, we might have been persuaded that the Government had something else in mind besides recoupment of the private landlord.
The Government have given no indication of that, nor promised to look at it. They simply say, "We give up". Whenever we come to questions dealing with land ownership we touch something which matters a very great deal to the Tory Party. We never get very far with 654 that. They are always anxious to respect those rights to the full. I wish they would respect some other rights of individuals equally. This is the one thing for which they will fight to the last ditch, but when it is a question of taking something from the landowners who have benefited at the expense of the community not a word is said about it.
We should never have had the Bill in Scotland. It is incomplete. We should have been given a better Bill which not only dealt with the question of fairer compensation, but with other aspects of the problem. We should have had the opportunity to deal with it as Scottish hon. Members dealing with the Scottish legal system and applying ourselves to producing a Bill in accordance with conditions in Scotland. We have had none of those things. For these reasons I think this is a very bad Bill.
§ 7.47 p.m.
§ Mr. Philip Goodhart (Beckenham)
I hope that the hon. Member for Edinburgh, East (Mr. Willis) and his compatriots will not feel insulted when turn from the problems of Scotland to the problems of blight. Early this year the Kent County Development Plan was published. One of the principal features of that plan was Parkway E, which runs through my constituency and which when built, perhaps in 1978, will we hope do much to relieve traffic congestion. Although it is not planned to start construction of that Parkway for nearly twenty years, the line of the route was shown in very great detail.
After the plan for the Parkway had been made known, a fairly major change was made in the route. This caused consternation and the officials at County Hall were approached. They made the fairly obvious point that, as construction was to take place so far ahead, "anything was likely to happen" to the route before the road came into being. A substantial number of people felt that their property was directly affected by the compulsory purchase actions and that they were threatened by the valuation officer. When the route was changed even more people felt that their property was threatened. Next, with the very true observation that anything might happen in the next twenty years, this consternation was spread much further afield.
655 Not only was consternation caused, but in several cases there was hardship. One of my constituents, a retired member of the Royal Air Force, used his gratuity and large part of his savings, on his retirement, to purchase a house which later was found to be on the supposed line of the Parkway. He took employment with a firm, which then decided to shift him to a different part of the country. He had to move. The house was a good house and he was able to find a prospective purchaser very easily. Then the question of the new Parkway proposal arose and it was discovered that the Parkway would run right through the kitchen of his house. Naturally enough, the prospective buyer of the house immediately withdrew, and for some time it looked as though my constituent, through no fault of his own, would lose a substantial part of his savings through a forced sale made under the threat of sterilisation. The provisions of the Bill will give this constituent and his neighbours good, fair and just protection against these circumstances, over which they have no control.
In welcoming the Bill, I particularly welcome the Clauses about publicity. I have a number of planning committees operating in my constituency and they do their job conscientiously and well. Despite the fact that they do the job conscientiously, a number of constituents come to me to say, "A planning decision has been taken and we knew nothing about it whatever, although it seriously affects the amenities of our property. Now that we know about it we find that the time for making our views felt has passed, and there is nothing we can do." This very sorry state of affairs will come to an end under the provisions of Clause 29, and as far as they apply in my constituency, those provisions should work well. We have a good and vigorous local Press. We have good and vigorous ratepayers' and residents' associations, who can draw the advertisements in the Press to the attention of residents.
There is, however, one possibly serious defect in the Clause. Clearly it will have no effect unless local residents can go to the town halls, look at the planning applications and see exactly what is involved. The Town Clerk of Beckenham wrote to me in the course of some corre- 656 spondence on this problem which we had some months ago. and I will quote what he said:I can see no objection to deposited plans being open to public inspection, but there is no provision that says that they are, and my opinion is that they are not. Legislation will be needed on this point.I ask my right hon. Friend whether he can clear up this point. Are there provisions of copyright which might hinder the free inspection of these plans by the public? If there is anything which local councils might interpret to hinder the inspection of these plans, then clearly the intention of the Clause will be entirely frustrated.
I should also like to welcome Clause 30, which deals with planning applications in respect of property not owned by the man who is making the planning application. As I understand the law at the moment, if I drive to the North and on the way pass the houses of the right hon. Member for Smethwick (Mr. Gordon Walker) or the hon. and learned Member for Kettering (Mr. Mitohison), and if I decide that they would be admirable places for building a small plant for turning out sticky labels, I can submit a planning application without the right hon. Gentleman or the hon. and learned Gentleman knowing anything about it at all. A member of our local planning committee, who has been a member of the committee for some time, has had five planning applications put in front of him in respect of property which he owns, and each time the first thing he has known about these applications has been the request that he should pass them.
That is nonsense and, in addition, is a great waste of the local planning committee's time. I have heard it said that about 40 per cent. of the planning applications which are received by local committees would never arise if it were required that the consent of the owner should be obtained to the application being made.
Clause 30 goes a considerable way towards rectifying that nonsensical situation, but I am a little disturbed by subsection (ii, c) which, it seems to me, would largely negative the intention of the Clause. At the beginning of the Clause very sensible procedure is set out for notifying owners, but in subsection (ii, c) we find that it can all be evaded by merely submitting a certificate saying that one 657 has not carried it out. It is not even necessary to say why one did not carry out those provisions. I hope that that may well be amended in Committee.
A few days ago I was talking to a senior land valuation officer, and I asked him what he thought of the Bill. He said, "It may make our job easier. That I do not know. It will certainly make it a great deal more pleasant, because the people with whom we have to deal will no longer feel that we are trying to rob them."
§ Mr. Deputy-Speaker (Sir Gordon Touche)
§ Mr. Ross
On a point of order, Mr. Deputy-Speaker. We were led to understand that there would be a Scottish interlude in the debate. Is that interlude over? If so, does not this prove completely that this kind of Scottish participation at all stages in a Bill of this nature is an absolute farce?
§ Mr. Deputy-Speaker
Hon. Members representing various parts of the country are called in a debate such as this. A certain number of Scottish Members have been called and I am now calling a Welsh Member for the first time.
§ 8.0 p.m.
§ Mr. Arthur Probert (Aberdare)
I can reassure my hon. Friend that, as you have said, Mr. Deputy-Speaker, I am the first representative of a Welsh constituency to speak in the debate. I shall not detain the House for long, because I know that other hon. Members wish to speak. The hon. Member for Beckenham (Mr. Goodhart) will, I am sure, forgive me if I do not comment on his arguments. I listened to him attentively and agreed with most of his remarks. I am concerned, however, with a particular part of the Bill.
Most of us are agreed that this is a highly complicated and difficult Measure. I am told, although I was not a Member of the House at the time, that when the 1954 Act was being piloted through the House by the present Prime Minister, very few people in the country understood the Bill. It was alleged, so I am told, that the Prime Minister, who was then the Minister responsible, himself did not understand the Bill.
658 I shall not waste time in recrimination. although I agree with my hon. Friends, and especially my hon. and learned Friend the Member for Kettering (Mr. Mitchison), that the present anomalous position of compulsory purchase is one of the direct results of the 1954 Act, for which the Prime Minister was responsible. We have often seen the Minister and hi; Parliamentary Secretary "carrying the baby" and often it is not a very pleasant offspring. During the time that I have been a Member of the House, we have had the Rent Act and the financial provisions of the Local Government Act. Now, we find that the Minister and his Parliamentary Secretary are courageously trying to rectify some of the errors for which their own Prime Minister is responsible.
This is a complicated Measure. If each one of us discussed most of what it includes, we should be here until well after Christmas. I am fully and painfully aware of the basic principles dividing the two sides of the House in this matter and I agree with my hon. Friends that the Prime Minister fouled the whole basis of compensation by his 1954 Act, with the inevitable consequence of greater hardship that need not have occurred.
Having said that, I wish to confine my few further remarks to Clause 31. It is about twelve months since I first raised this issue on the Floor of the House. At that time, I instanced many cases of hardship which occurred to owner-occupiers, not merely in my constituency, but in the whole of South Wales. That was done during a debate on the Report on Government Action in Wales. I am exceedingly proud, incidentally, of the high incidence of owner occupation in South Wales. I impress upon the Minister and his supporters, when they make so much of a property-owning democracy, to remember that in the area of the United Kingdom where Labour representation is strongest, owner occupation is highest That is something of which I am proud.
In the earlier debate, I gave many instances of hardship, which I shall not weary the House now by repeating, am sorry that the Parliamentary Secretary is not in his place. I have had consultations with him on this matter and on one occasion my hon. Friend the Member for Rhondda, West (Mr. Iorwerth Thomas) and I put certain 659 suggestions to him. I wish to express our gratitude to the Parliamentary Secretary and to the Minister for having seen that some of those suggestions, at least, have been included in Clause 31, which goes a long way to remedying some of the problems which occur in planning blight. I do not want to suggest that it is only because of my efforts that the Clause has taken its present form—far from it. I have listened to debates on the matter and I realise that many other hon. Members have been equally concerned.
At one time, I worked in a department of a local authority and was concerned with planning applications. I say quite unequivocally that, despite all our problems of dealing with betterment and the rest, I know of no other difficulty in town and country planning legislation which has caused so much embarrassment to local authorities, and, indeed, to ratepayers, as the worry inflicted upon owner-occupiers in areas which are under what might be called the shadow of a development plan. It is self-evident from what has been said even today—and the hon. Member for North Angus and Mearns (Sir C. Thornton-Kermsley), who referred to it on a previous occasion, has done so again tonight —that throughout England and Wales, this problem has made the position impossible. Many instances have been cited of progressive local authorities which have to shelve their development plans when they refuse to implement them because of the hardships involved. That is an impossible position.
There are, of course, other consequences of the so-called planning blight, which is the primary cause of an owner occupier's inability to sell his house at a reasonable price. This causes a freezing of the mobility of labour. I know of several instances in my constituency of people who wished to go away to other parts of the country to work being unable to do so because they could not dispose of their houses.
Another hardship which I must stress is that which arises when elderly people find that the house they occupy has become too big for them, their families having grown up, and they would like a smaller house. They cannot sell their large house because it has become unsale- 660 able and they do not have the money to purchase a smaller house. Consequently, their property is unsaleable and they have to continue paying high rates. In the large cities—I have consulted friends of mine on this matter—where the housing shortage is acute, this is a serious problem.
Many of us could put numerous questions on the Bill, but I do not propose to do so. I ask the Minister, however, to consider three questions, which I will put as briefly as possible. First, is the Slum Clearance Compensation Act, 1956, affected in any way by the provisions of Clause 31 or any other of the provisions of the Bill?
My second question comes in the form of a suggestion. Would it be possible for a prospective seller to receive a certificate from the local authority indicating its acceptance of responsibility under Clause 31? I know that when the Clause becomes law, a local authority will have that responsibility, but such a certificate, if available, would prove of great benefit to the seller, to the prospective purchaser and, I would add, to a building society which may be encouraged to grant a mortgage. More importantly, it would relieve local authorities of much unnecessary purchasing. It is inherent in the Clause that they have to purchase. As we all know, a development plan is merely a plan. Although property or an area may be designated for compulsory purchase, it is often the case that the plan is not fulfilled. It is, therefore, possible for a local authority to purchase property which in the end it does not require.
In this connection, I believe that, if the right hon. Gentleman felt that he could deal with it, it will be as well to advise the building societies to treat this certificate as some degree of security for a mortgage. This would be a simple piece of machinery which might go a long way towards smoothing out some of the difficulties that occur.
There is another point I wish to raise. I am not quite certain, as the Clause stands at present, what will be the position of an owner-occupier who might be the subsequent owner-occupier after the operating date of the Bill. If the present owner-occupier succeeds in selling his property, what will be the position of 661 the new owner-occupier who at a later date might find that he cannot sell the property at a reasonable price? I do not know what the position will be in circumstances of that kind.
In the speech which I made twelve months ago, I referred to certain paragraphs of the Report of the Franks Committee, and indeed the Parliamentary Secretary referred to them today. I agree with the hon. Gentleman that Clause 31 will go a long way to remove the obstacles referred to in those paragraphs. Perhaps this will be more reassuring to some of my hon. Friends, with whom I have had some discussion about the Bill, Personally, if the only thing in the Bill were Clause 31. I should he a very happy man—far happier, indeed, than I am with all the other provisions in it.
Our prerogative in this House has been and still is to alleviate hardship wherever it occurs, and I therefore make no apologies for saying that I am chiefly concerned with the position of the owner-occupier. If, incidentally, we find—and we are fearful on this side of the House about this—that the wealthier sections of the community benefit undeservedly, I shall still say that I am chiefly concerned with the poorer sections. I feel that we should deal with this undeserved benefit by some taxation measure.
I have stated that our primary duty is to see that hardship is removed, and in view of the attempt to do this in Clause 31. I am very grateful to the Minister for its inclusion, for it will remove one very serious degree of hardship. Anything that I and my hon. Friends, as well as hon. Gentlemen opposite, can do to help to remove this hardship will only be fulfilling part of the duties which we undertake when we come here to represent the people who sent us.
§ 8.13 p.m.
Mr. Harold Gorden (Birmingham, Selly Oak)
Owing to the lateness of the hour, I propose to truncate my remarks as much as possible, as a number of other hon. Members wish to contribute to the debate. I want to take this opportunity of sincerely congratulating the Minister on introducing the Bill, and to associate myself with the remarks of some of my hon. Friends who, in congratulating my right hon. Friend and the Parliamentary 662 Secretary, have asked that the staff in the Ministry of Housing and Local Government should also be congratulated on carrying out the large amount of work that they have had to do during the past year or two.
It is wise to mention these congratulations to the Minister because of the accusations which were levelled against him not many months ago when he introduced another Bill. He was said to be heartless, inhuman and cruel; and I would remind hon. Members opposite that these remarks and their attack upon him went further than this House. They caused people outside to believe these stories about the Minister and to feel very bitter against him. Some of us on this side cannot forget that, because it was a personal attack, and has since proved to be entirely unfounded and not really worth while at all, except for political purposes. I hope that the people will long remember that vicious attack upon my right hon. Friend.
In particular, we should note today that the Minister has brought in a Bill which is quite contrary to the other Bill to which I referred, or at least to the way in which it was described. This is a very human Bill to alleviate suffering; let us be quite fair about this. There are many people who cannot afford to see their property devalued or confiscated on what is supposed to be a compensatory valuation. The word "compensation" has been very much misused in legislation up to date. It has not been compensation by any manner of means, and I do not accuse the Opposition entirely in this matter, because my own party has joined in this misuse of the word. Now, at last, I see that it is to be given its proper meaning, and that there is to be justice in it, because without justice the word "compensation" does not mean anything.
I am rather worried about the Clause relating to blighted property, and as to whether five years is the right term to put upon it. I am also concerned whether we have got the right description for blighted property. I know of property in Birmingham which is blighted not because of a recent planning approval, though some of it is, but because a bus route is being introduced along the very narrow road on which this property 663 stands, very near to the edge of the pavement. For that reason, the property has a very low value. But it is the same local authority which causes the buses to go there which has devalued that property very considerably because of it. I would, therefore, ask the Minister to look again at the term of five years.
Although I support the Bill, I agree that we should not go in for retrospective legislation. It would be so easy, in this Measure, to legislate retrospectively, but one of the difficulties is to fix the time if we are to put the clock back. We can only be sorry for the people who have to lose by devaluation of their property, as happened to some last year, and I have had to write to some of my constituents who have been waiting to see, as I have, what this Bill provides, and tell them how sorry I am that it will not help them. Some of them are very poor people, who have to live on the old-age pension and National Assistance.
There was a case which was quoted in a Socialist newspaper, not very long ago, of a widow aged 86 who had lived in her property for fifty years until the property was taken over for demolition. The amount of compensation to be paid to her was £25, and although that has been decided since 1948 she has not, up to this year, received the money from the local authority. It means very much to her, because she was drawing £2 13s. 6d. a week in National Assistance, and she has waited since 1948 for her compensation of £25, which would be a fortune to her and which would help her considerably in her difficulties. This is the sort of thing that we have to put up with.
Birmingham, of course, has acquired property on any pretext whatever. It has been acquiring far more property than it needed, and has caused a lot of hardship through acquiring properties under this, that or the other Act. I hope that the Bill will slow down the corporation, because some of the properties which it has taken will not be needed for a good many years to come. Hardship is imposed on people because they can no longer move from a house. I will quote one other case.
A woman, because of housing difficulties, paid £350 for a house. She had to borrow the money from her parents. They loaned it to her because she in 664 tended to pay it back at £1 a week, but along came the local authority and took over the property ten years before it needed to do so. The local authority owes the woman £65—because this is yet another case where the local authority has not settled—for a perfectly good house which has been taken over just because it does not come up to modern standards.
The woman has not received the money owing to her, but she has to pay the local authority rates and has to pay £1 a week to her parents. These are great hardships on ordinary people, and it is they who suffer most. I am very grateful to the Minister for introducing the Bill.
§ 8.21 p.m.
§ Mr. G. Lindgren (Wellingborough)
Far be it from me at this late hour to enliven the debate and bring some colour to it. If it were any other Member than the hon. Member for Selly Oak (Mr. Gurden) I should be tempted to go after him in real style, but really it is just humbug to talk about congratulating the Minister. What is he to be congratulated upon? He is only clearing up the mess which the Prime Minister created under the 1954 Town and Country Planning Act.
§ Mr. Graham Page (Crosby)
Will the hon. Member allow me?
§ Mr. Lindgren
At least two other hon. Members wish to speak and I am answering the hon. Member for Selly Oak. The £20 which this poor widow is to receive is on the basis of compensation fixed by the Tory Party under the 1954 Act.
§ Mr. Lindgren
I will deal with that. I know that the hon. Member for Selly Oak is not quite so vicious as the hon. Member for Corby.
§ Mr. Page
Crosby. Perhaps now that he has named the wrong constituency the hon. Member will allow me to interrupt and ask him what the compensation would have been between 1947 and 1954.
§ Mr. Lindgren
It would have been very much the same.
§ Mr. Lindgren
It would have been the market value, just the same. I shall 665 have to deal with the fundamentals even at this late stage in the debate. The Tory Party is the landlord's party. It is not in the House to look after poor widows but to look after the landlords. Why have we had to have planning legislation? It is because Tory landlords for generations misused the land. They abused the countryside and made a mess generally of land use.
It is only when we come to a war, when the Tory Party gets a little anxious because men are in the Forces and know how to use arms, that it promises that the injustices of the pre-war days will be put right. There is a whole list of reports by committees and commissions set up by the Tory Party during the inter-war years. But it is admitted that it was only during the war, because the Tory Party was then promising that after the war the pre-war ills would be righted, that it called for the Scott, Barlow and Uthwatt Reports. If land usage was not in a mess, why did the Tories call for those Reports? During the war, the Coalition Government, which was predominantly a Tory Government, accepted the general principles of all three Reports. We have heard a great deal about the Town and Country Planning Act, 1947, but the 1947 Act was the implementation of war-time promises by the Tory Government.
§ Mr. Lindgren
The 1947 Act is in general principle the implementation of the Scott and Barlow Reports, but I do not know why I should address the hon. Member for Crosby rather than address the Chair. Perhaps if I turn towards the Chair the hon. Member will not be quite so eager to interrupt.
All planning legislation prior to 1947 had failed. Every piece of planning legislation had been ineffective. Even the Measure passed in 1932, which we tried to work as well as we could during the pre-war years, failed. All the time we were working on interim development orders. We failed in planning because we failed to deal with the basis of planning, which is that if permission to develop is given considerable development value arises, whereas, on the other hand, if a person is refused permission to develop he suffers not a loss but the opportunity of making a profit which he otherwise might 666 have made. Therefore, in the course of planning permission or planning refusal, two persons can suffer unfairness as between one and the other. The 1947 Act was the first Act of Parliament which made planning possible on a fair, equitable basis, citizen by citizen, because it dealt with compensation and betterment.
The mess that we have seen since the passing of the 1952 Act has resulted entirely from the basis on which the Tory Party works and from its tenderness towards the landlord. Now the Tories are cutting out the entire basis of the 1947 Act. They have dealt with this subject in the 1952, 1953 and 1954 Acts. Two sets of values in the sale of land have been created. This is unfair to a person who has land acquired by a local authority rather than by a private buyer. We on this side of the House said in 1947, and again in 1952, that these two sets of values were unfair and now the Government are righting that injustice.
Look at the position in which the Tory Party has placed the citizens of this country. By the 1952 Act and subsequent Acts it denationalised the development value of the land of the country and gave it back to the landlords. [HON. MEMBERS: "Hear, hear."] Hon. Gentlemen opposite say "Hear, hear", but landlords have no right to development values. Who creates the value in land? Not the landlord but the people who come to a locality. As most hon. Members know, I am associated with Welwyn Garden City. When Ebenezer Howard bought the land, he bought it for £40 an acre. Land is now being sold in that area in the region of £30,000 an acre. Why is there this difference? Because when Ebenezer Howard bought it for £40 an acre it was God's green fields and no one was there. Now there are 26,000 people living there. There has been development in roads, sewers and everything else. So it is the community which creates the value in the land, and the landlord takes it all.
This Government have given back all future developments rights to landlords, but inasmuch as some provisions of the 1947 Act are still applicable, if there is a denial of the right to development and an entitlement to compensation, the taxpayer pays. So all the advantages of development are given to the landlord, and where there is an entitlement to compensation, the taxpayer pays. If anyone 667 can see any greater opportunities available for giving preference to one class of the community at the expense of another, I would like to know of them.
The part of the Bill putting right the dual values we must accept, but this is the wrong way to do it. The only satisfactory way of dealing with the question of land use and planning is by getting back to the general principles of the 1947 Act. I hope that after the next General Election, when a Labour Government are again in power, we shall get back to those principles.
Again, look at the unfairness that has arisen over the change in the basis of compensation and in allowing development charges to landlords. We are now doubling the costs in some cases, particularly in rural areas, because do not forget that it is the smaller urban and smaller rural districts which will be hardest hit by this Bill. The hon. Member for Norwich, South (Mr. Rippon) is closely associated with the London County Council. This Bill will not make a considerable difference to the London boroughs and to Birmingham, but it will make a considerable difference to the smaller rural and urban boroughs.
The Financial Memorandum states that this will mean an extra 25 per cent. on the cost to the local authorities. That is true on the average, but to many it means far more, and so this burden will be placed on the hard-pressed ratepayers of this country, and not in the main for the benefit of the widow referred to by the hon. Member for Birmingham, Selly Oak, but for the benefit of the large landowner.
There were references earlier to the acquisition of land for road making. May I point out to the House that the driving through of a road creates improvement values on either side. So where this takes place at the expense of the ratepayer, excessive compensation is given for the purchase of the land and there is added also value for the land on either side because it is made frontage land with access to a main road.
We shall not divide the House against the Second Reading of the Bill tonight, mainly because of the provisions referred to by my hon. Friend the Member for Aberdare (Mr. Probert). In general, however, the Bill is wrong in priniple. It 668 has arisen from the wrong action of the Tory Government in undermining the 1947 Act, and we shall not get planning on to a correct basis again until we get back to the principles of that Act.
§ 8.35 p.m.
§ Mr. Geoffrey Rippon (Norwich, South)
I think that the hon. Member for Wellingborough (Mr. Lindgren), as always, has enlivened our debate. At times he was a little intemperate, but we are not altogether surprised at that. I think that even if men in the forces learn to carry arms it is clearly unlikely that he will persuade anyone to go to the barricades over the law of compensation and town planning.
It has been interesting this afternoon to listen to one speaker after another from the Opposition benches say not merely that they will not divide against the Bill but that it is a Measure which they have been advocating for years, at any rate, so far as the two-price system is concerned. I think that this will be news to the public, as it is news to many of us here, but, no doubt, it is one of the items of Labour policy which has struck the electorate with all the force of a soggy pancake.
I was interested in what the hon. Gentleman had to say about betterment. We all appreciate that that is a difficult problem. My own feeling about it is that every proposal which has been put forward for reaping betterment has created far more difficulties than benefits, and I do not think it is really possible to do very much more than carry out the setoff provisions in Clause 3.
§ Mr. Mitchison
I spent a considerable time earlier in the debate in pointing out, hope with force and certainly in detail, that the Tories put in the two-price system and that they refused to accept fair market value as the criterion. Instead of talking about Labour policy, to begin with at any rate, perhaps the hon. Member would tell us whether they were right or wrong then to refuse what they are accepting now.
§ Mr. Rippon
I am sure that they are right now. I do not want to job back as the hon. Member for Wellingborough has been doing throughout his speech. I am merely saying that what has been said by speakers opposite, including the 669 hon. and learned Member for Kettering (Mr. Mitchison), will be news to the public, as it is news to many of us here.
Turning to what the hon. Member for Wellingborough had to say on the subject of finance, I think that he will have noticed from the Financial Memorandum.hat this is a matter which will be taken care of under the general grant. I agree with him that the position so far as the large authorities, the county councils and the county boroughs are concerned will be very much easier than for the smaller authorities, and that is a matter which, no doubt, will be well worth looking at in Committee.
I think that we should all be grateful to the Parliamentary Secretary for the very clear and lucid way in which he explained this complex subject. We are all very conscious of the tremendous amount of preparatory work which has been done by the Minister and his Department, in fulfilling the pledge given last February, that the Government were inquiring into this matter and would consider how best to amend the law.
It is clear from reading the Bill and the Explanatory Memorandum that the Government have done everything possible to hold a fair balance between the rights of the individual and the needs of the community. I think that, whatever criticism is made in detail today or during the Committee stage, there is widespread acceptance, both in this House and in the country as a whole, of the basic principle that land compulsorily acquired should be bought at its open market value, and that is true also for local authorities.
I was glad that the hon. Member for Peckham (Mrs. Corbet) made so clear the views of the London County Council on this principle. There is a great and growing resentment as a result of the fact that valuation of land and property to be sold to a public authority has been not only a different but a very little understood process compared with the valuation of land to be sold privately.
There is no doubt that the existence of the two-price system has cause much misunderstanding and bitterness and it is a very good thing that we are so united about this in the House today. When that misunderstanding is allied with a sense of injustice at the price to be paid 670 for land compulsorily acquired, then inevitably the whole system of compulsory purchase tends to fall into disrepute. I believe that process was damaging to the real interests of the country and to good planning.
I am sure that public authorities as well as private landlords will benefit from the adoption of a fair code of compensation. More land will be acquired by agreement. Planning will be speeded up. Friction existing between the public and local authorities will be diminished. Above all, justice will be done to those dispossessed of their property in the public interest.
There are two tests by which legislation should be judged. First, is it just? Second, is it capable of being generally understood? The Bill satisfies the first test, but I am by no means certain that it satisfies the second. I think the Bill fully deserves a Second Reading. I am sure it is pursuing the right policy. I would not by any means grudge the draftsmen a tribute for their skill and ingenuity, but I do not believe it is always a good thing for legislation to be too ingenious and too detailed.
An objection to the Private Member's Bill introduced by my hon. and gallant Friend the Member for Gloucestershire, South (Captain Corfield) was that it consisted of only six pages whereas the present Bill has seventy-seven. My view is that it is unwise to judge legislation by its length. It was said that my hon. and gallant Friend's Bill over-simplified "fair market value" and involved sweeping away forty years of case law. I will not argue tonight whether sweeping away forty years of chaotic verbiage is or is not a simplification, but what I am inclined to think is that the Bill as it now stands may create new and avoidable complications.
I may be wrong about this, because I am sure that the general aims and objects of the Bill are sound, but I am not satisfied that in order to modify the rules of the 1919 Act to fit them to a system of comprehensive planning it is necessary to have Clause after Clause hingeing on development for which planning permission might reasonably be expected to be granted in the opinion of the planning authority and the Minister.
671 This point has already been raised in a forceful letter in The Times of 8th November written by Mr. Elliot FitzGibbon, a man with great practical experience of these matters. First, I think there are great practical difficulties in relying too closely on development plans for this purpose, and if we do we can expect every review of them to bring a host of objections designed to protect compensation claims, so that on the one hand we shall reduce now the number of public inquiries into compulsory acquisition but we may increase the number of objections to development plans, Secondly, it seems to me unfortunate that when Part III of the Bill does so much to implement the recommendations of the Franks Committee we should place so much reliance on the planning authority's certificate and the Minister's decision for the purposes of Part I. I have a feeling that if when the Franks Committee was sitting this provision had been in force it might have had something to say about it.
I think Mr. FitzGibbon successfully posed the problem, but I do not think he has found the solution. It may be that I cannot suggest one either. He suggested that all that is necessary is to adopt the formula contained in Section 85 (4) of the 1947 Act and simply assume that planning permission will be granted for any development by virtue of which the use of the land will he made to correspond with the use which prevails generally in the case of contiguous or adjacent land. I do not think that is an adequate solution, but I would ask the Government to consider the possibility of a more simple and straightforward amendment of the 1919 Act Rules for the assessment of compensation which are set out in the Annexe to what I think we all agree has been an extremely helpful Explanatory Memorandum.
Rule 2 might read something like this:The value of the land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise; provided always that in assessing the potential development value the tribunal shall
That is, in effect, a reasonably slight modification of the existing law. Point (a) is in the Bill already, point (b) allows the tribunal to have regard to contiguous use but does not bind it, and (c) would enable it to have regard to the provisions of the development plan.
- (a) assume that planning permission would be granted in accordance with the proposals of the acquiring authorities;
- (b) have regard to the prevailing use of contiguous or adjacent land; and
- (c) have regard to the provisions of any development plan in force at the date of the notice to treat."
Valuation is not and cannot be an exact science, and in any event the other rules give the Lands Tribunal a very wide discretion in coming to a fairer assessment of compensation, in default of agreement between the parties, in the light of the circumstances of each case. However complicated the provisions which we include in the Bill, in the end it will be a matter of fact which someone will have to determine in the light of facts of each case. The discretion given to the Lands Tribunal could be safely extended. The Franks Committee made no criticism of the working of the Lands Tribunal and reported that virtually no criticism of it was received.
In this case, it may be that the term "tribunal" causes some misunderstanding and confusion. The Lands Tribunal is in effect a court which acts judicially and which is held in high regard and from which, in the ordinary course of events, there is a right of appeal to the Court of Appeal and, if necessary, the House of Lords. In assessing open market value, it would have regard to the very considerations which we are trying to set out in so much detail in the Bill, but it would have a discretion. It it had that discretion, we would avoid the planning authority and the Minister being judges in their own cause, and we would obviate the danger of development plans becoming arbitrary measures of value.
Bearing in mind the fundamental need to have a comprehensible code of compensation, further misunderstandings are likely to arise if we maintain the provision limiting the operation of the Bill to notices to treat served after 29th October this year. I am bound to say that I disagree with my hon. Friend the Member for Selly Oak (Mr. Gurden). The ordinary objections to retrospective legislation do not apply in a case of this kind. It is obviously impossible to reopen cases where compensation has already been paid or agreed, but I cannot see any fundamental objection to providing that the 673 Bill shall apply to all outstanding notices to treat, compensation being determined as at present on the basis of the value of the land at the date of the notice to treat, subject, of course, to the welcome special provision dealing with long-standing notices to treat.
I know it is not an easy matter, but it would be a great pity if, having recognised the difficulties caused by the existing two-price system, Parliament proceeded to pass a Bill meaning that we would have two parallel and different codes of valuation in operation for several years to come. There are many other aspects of the Bill which deserve consideration and commendation, but I must leave them to other speakers. It was said of Franklin and Lincoln that they never made a speech for more than ten minutes. That is a very good rule, but they never had to contend with modern legislation.
§ 8.48 p.m.
§ Mr. J. A. Sparks (Acton)
I listened with interest to the hon. Member for Norwich, South (Mr. Rippon) and to his plea for justice for the individual. The difference between the two sides of the House is that hon. Members opposite are not much concerned with the interests of the community. They are more concerned with the private interests of people, many of whom can well look after themselves, while our concern is for the community.
It is important that we should not forget the wider implications involved in this matter. In the Financial Memorandum some astounding figures are given to show the effects the Bill will have. Government Departments buying land will find the costs of acquisition increased by between £1 million and£1½ million a year. On the basis of 1957–58 values local authorities which have to acquire land will find that the additional capital cost of acquisition will amount to about £8 million. In addition, in respect of the acquisition of roads by the Ministry of Transport and the Secretary of State for Scotland, an additional £1 million will be required, and in respect of Clauses 31 and 33 Government Departments will find themselves paying an extra £2 million, approximately, each year for the acquisition of land. The cost to local authorities of acquiring owner-occupied property under Clause 31 is not stated, except in 674 relation to the increased grant anticipated from the Exchequer being offset by rents and income which may be received from such owner-occupied property as may be taken over.
To the extent that we can collect these figures together, we find that a sum of at least £12 million will be involved. It will cost local authorities and Government Departments an additional £12 million to acquire the land necessary in order that their functions may continue. That £12 million represents value which landowners have not created but which has been created by the community and local authorities, by the expenditure of public moneys. That sum will be handed over, in the main, to landowners, many of whom are very rich men, and most of the value will accrue to land situated on the boundaries of towns which are in a stage of development.
Hon. Members opposite appear to think that that is quite natural and normal, and that the landowner is entitled to take the benefit of something that he has done nothing to create. I do not regard this handing over of £12 million to private individuals as being justice. There is a stronger term that I should like to use, but I had better not mention it in this House.
§ Mr. Sparks
Sooner or later the problem will have to be tackled comprehensively. I do not believe that it is beyond the wit of man to devise a means to recover for the community the land values which it creates. Hon. Members opposite may disagree, and think that private individuals should pocket the money. That is the gulf between us. However, even the party opposite may have to do something abate this situation before many years elapse, because the fact remains that the development plans which now exist have automatically enhanced the value of a great deal of land, particularly land which lies near towns in the stage of development. I have not the time to discuss whether all these development plans were necessary; that point has already been dealt with by my hon. and learned Friend the Member for Kettering (Mr. Mitchison).
The mere fact of the production of development plans has enhanced the value of the land. In addition, the value 675 will increase as local authorities spend money on the development of housing and factory sites and the extension of towns. These local authorities will be required to spend a great deal of money on such developments and then, when they require more land to continue that work, they will have to pay the private individuals from whom the land is purchased at a value which has been created by the activities of the local authorities themselves.
Therefore, I think that eventually the cost of putting into operation their own development plans will be so great that it will be impossible for local authorities to carry the resulting financial burden. That is one of the reasons why before 1947 we had unregulated development in many of our towns. Local authorities found it impossible to control that development in the interests of the community. By these measures hon. Members opposite will make it almost impossible for development plans to be executed, because of the heavy financial commitments falling upon local authorities.
At the moment it is difficult for local authorities to acquire land in advance of their requirements. Normally the Minister will not sanction the acquisition of land unless local authorities have an immediate use for it. A very good proposition is contained in Clause 33 of the Bill. The Explanatory Memorandum states:This Clause extends the powers of local authorities in England and Wales to buy land compulsorily for purposes of town development. They will now be able to buy ahead of immediate requirements if the Minister is satisfied that they will need the land within ten years. This provision gives power similar to that which authorities already have under the Housing Acts, and will in some measure enable them to avoid paying for values created by their own expenditure as the town development progresses.All honour to the Minister for including that provision. It will save local authorities considerable sums of money if they are to be allowed to acquire land immediately, to be used for purposes which may not eventuate until, say, ten years later. They will be able to control this problem created by the growing financial burden resulting from the acquisition of land for their own purposes. I appeal to the right hon. Gentleman to make it possible for local 676 authorities to be able to acquire land in advance of their requirements, not merely for housing purposes but for all purposes. They will thus be able to avoid having to pay very much more for the land than if they had to wait for five or ten years before they did it.
The Bill puts right in some respects anomalies in the existing system, but I am sure that the right hon. Gentleman will agree that the proposals do not provide a solution for the main problem which underlies the Bill. Sooner or later the problem will have to be tackled, despite the fact that there have been failures in days gone by, if local authorities and the community are to carry out their responsibilities.
§ 9.0 p.m.
Mr. James MacCol1 (Widnes)
One of the strangest remarks in the debate was made by the Parliamentary Secretary, when he paid tribute to the helpfulness of his hon. and gallant Friend the Member for Gloucestershire, South (Captain Corfield). That was a most amazing example of kissing the rod.
The House will remember what happened last February. The hon. and gallant Member introduced his most embarrassing Private Member's Bill. The Minister implored, begged him, to withdraw it and told his hon. and gallant Friend that in no circumstances could he advise Government supporters to support the Bill. In the event, the whole of the party behind the Government went into the Division Lobby against the advice of the Minister and in support of the Bill.
The Minister, after taking that firm stand and being decisively rejected, now finds himself called upon to introduce a Bill which, in many substantial ways, resembles the Bill of his hon. and gallant Friend the Member for Gloucestershire, South. I was about the only hon. Member who stuck up for the Minister. That was a dangerous thing to do at that time. I begged my hon. Friends to be kind to the Minister, who was getting knocked about a good deal for something that was not his fault. He had been left as a catspaw to rescue the Government out of the mess in which the Prime Minister, by his earlier incursion into these complicated matters, had left them. It was a bit hard on the right hon. Gentleman the Minister of Housing and Local 677 Government that he should get the blame for something that was not his fault. It is a danger, and I recognise that it is a danger. The right hon. Gentleman and his hon. Friends are in an exposed position and there is a great temptation to give them a kick. I do not want to rub in too much the point that was made by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). This is entirely a matter of the mess that the Government have been making. I would not now rub in this fact except that it is so characteristic of Government policy.
I remember once going to a primary school to present a medal to a small boy who had cleverly and courageously rescued another boy from drowning. I did my best to improve the occasion, in very moving words. Afterwards, the headmistress said, "I wish you wouldn't lay it on so thick. All my 10-year-olds will now be pushing small boys into the pond in order to get prizes for rescuing them." That is exactly what the Government do. They go round from one field of activity to another pushing unfortunate people into ponds and dragging them out again, amid the frantic cheers of the Government publicity agents.
This is precisely what has happened here. The trouble here is entirely the fault of the Government. That point has been made again and again in the debate, and I do not want to repeat it, except to observe that the hon. Member for Norwich, South (Mr. Rippon) fell into the same trap when he tried to say that in some way we were responsible for the trouble.
There are three errors, coming one after the other, which the Government have made and which have led to the present mess. The first error they made was to wreck the 1947 Act. I am one who is not ashamed to say that I think the 1947 solution to this problem was not only a courageous solution, but was a workable solution, which would have solved these problems if it had been given a chance. The point was made earlier in the debate that development charges were unpopular. I think that that was due to the fact that people had to pay charges before they collected compensation out of the £300 million.
It was said that it discouraged development, but I think that the two things which discouraged development were, first, the 678 Earl Fitzwilliam case, which held up compulsory purchase until it was settled, and as soon as it was settled in favour of the Central Land Board the Government stepped in and abolished the Board. The second thing which discouraged development was building shortages. Either was sufficient. in itself to discourage development without the 1947 Act procedure being responsible. Once they had wrecked that, it was extremely difficult to know how to recover from their impetuous action.
The second error was the two-price system, about which we made our criticisms in 1954. They have been repeated and reinforced this afternoon. The Government made the error of establishing the two-price system, which was bound to lead to these feelings of injustice and unrest. Then the Government wasted their time between 1954 and 1958. The 1947 system was a complicated and difficult system, but it was established after a long and careful examination of the position. The blessed trinity of Uthwatt, Barlow and Scott produced portentous, complicated and careful Reports on the whole matter, the Coalition Government produced a White Paper on the Control of Land Use and the Labour Government produced a White Paper and a Bill.
The present Government have done nothing in the way of looking at this porblem since 1954. If they had said, in 1955, "We realise that this is a temporary solution we realise the inherent instability of the two-price system and, therefore, we are now going to set up another Uthwatt Committee to see whether there is an alternative to the 1947 and 1954 solutions of the problem", they might have produced a serious and considered Bill. They have done nothing but drift until a back bench revolt last February forced them, precipitately, without due consideration, to produce this rather hotch-potch Bill.
The Bill will not really do as much as people think it will do. There has been a lot of talk about the iniquities of not getting full market value, but the hardship does not come from not getting market value for it comes from what one pays for an alternative piece of land when dispossessed by compulsory purchase. That is affected by having the two prices. If there is a consistently lower price in the market it does not 679 make it any less difficult for the dispossessed person than if there is a higher price in the market, but, the Government having got themselves into the position of the two-price system, clearly something had to be done. That is why we shall not prevent the Government from scrambling out of the mess, into which they have got, by voting against the Bill tonight.
This distinction between keeping the two-price system for planning restrictions and abolishing it for compulsory purchase will, I think, be very dangerous. The Parliamentary Secretary said that he has not had very much complaint about it. That is rather like the old-fashioned idea of curing a boy's toothache by beating his backside. If we cause so much trouble by having the two-price system on the bigger problem of compulsory purchase, people do not very much concern themselves with planning restrictions, but if we remove it in the case of compulsory purchase I think we shall get a good deal of complaint where compensation for planning restriction is based on 1947 development value.
As I understand—I may be quite wrong about this and, if so, the right hon. Gentleman will be able to correct me—we are to have the extraordinary situation that if the planning authority, in making restrictions, goes so far that it tips the balance sufficiently for it to be possible for the landowner to make an application under Section 19 of the 1947 Act for the purchase of the land, then full market value is paid. But if the restrictions keep sufficiently short of Section 19 for only compensation to be payable and not purchase price, then the owner will be limited in the amount he gets, and that will make a considerable distinction between one landowner and another, which is precisely the injustice which the Bill is supposed to remedy.
I welcome the provisions for reducing the price in the case of comprehensive development areas and designated new towns. That is extremely sensible and admirable, but it is very hard luck on the landowner who happens to be in a designated new town, because he will get less than his neighbour across the road in the area outside the town, and he will make sufficient complaints and write enough letters to Members of Parliament about that.
680 I do not blame the Government here, because these difficulties are inherent in the problem unless we have a comprehensive system. The trouble about the Government, as so often is the case, is that they have not faced up to the idea of going back completely to a free market, which is probably the logical and sensible thing for them to do if they are consistent. They have shrunk from doing that, but have left themselves in a position of hedging here and hedging there to make compromises as between the two systems. The result will be that we shall continue some of the unjustices which already exist.
It is a little difficult to understand how we shall calculate market value, and no doubt in Committee we shall have the chance to look at it a little more carefully. There are three possible assumptions, which the Parliamentary Secretary mentioned. The first two are fairly easy to understand, but the third assumption is the hypothetical and imaginary one where we invite the planning authority to try to think of what possible planning permission it might give under hypothetical circumstances. Surely that will lead to extraordinary anomalies and make market value, not the price paid in the market, as the public believe, but the result of an extraordinarily complicated piece of imaginative thinking on the part of the district valuer. It will not be a figure that one can test by going out to look at the market, which is what people think.
I therefore believe that we shall still have very many of the difficulties which arise at the moment, the feelings of injustice which arise at the moment and the feeling that land values are complicated, theoretical and arbitrary. They will not be rooted on any kind of firm basis of market price. At the same time, we shall provide a very heavy burden upon the public authorities and a lot of undeserved money for people at the expense of the public, the local authorities and of the ratepayers. That, again, is how the Bill fits in with the general picture of Government legislation.
My hon. Friend the Member for Aberdare (Mr. Probert) expressed the view that what the Bill did for the little man, for the owner-occupier, made it worth while risking the fact that other people would get a lot out of it, and that is an understandable point of view. It is, however, a rather dangerous view, 681 because it is precisely what happened when the Government introduced de-rating of commercial property.
Then we had the most harrowing accounts of widows with their little grocery shops who would have crippling rates to pay. Heartrending pictures were put before us of the little man struggling to keep his head above water. Behind it all, what happened was that the banks, the insurance companies and the chain stores made enormous amounts out of the rate subsidy, which is what it amounted to. This business of having the big corporations and the big landowners stalking behind the skirts of the widow is something about which we must be careful.
§ Mr. Probert
I am sure that my hon. Friend does not wish to misrepresent me. What I said was that if wealthier sections of the community benefited undeservedly from these provisions, taxation measures were the best way to cure the evil.
§ Mr. MacColl
I was not wanting to quarrel with my hon. Friend. I was coming on to say that I agreed with him about the importance of dealing with the owner-occupier. The sensible way to tackle this problem is precisely to tackle first the problem of the hardship case. On this we all agree. There is a case for saying that the owner-occupier is in a different position from somebody else, because, in the first place, he is immobile. He usually has to live in a particular area; he cannot move away. He is, therefore, very much open to hardship. The other person, however, is in the position of an investor who sinks money in land or property and is not tied to one place. The first answer, therefore, is to help the owner-occupier by ensuring that he does not suffer through compulsory purchase.
The hon. and gallant Member for Gloucestershire, South scoffed at the Government's suggestion that hardship could not be dealt with and said that hardship would be easy to administer. That was because the hon. and gallant Member wanted to extend Clause 31 to cover industrial and commercial interests as well as owner occupiers. If it is easy to administer hardship to extend it, the same method 682 could be used also to deal with the particular cases of owner occupiers. More justice would be done by having some system of equivalent reinstatement for the benefit of the person affected.
One of the main causes of the hardship that arises is that if a person who is faced with compulsory purchase wants to buy another house in which to live, he has to pay the full price. Therefore, if compensation was based on equivalent reinstatement and the person affected was offered somewhere else to go, this would meet the special difficulties to which I am referring.
That is not a case for paying out large sums to people who will get compensation, not for something which they have bought, but for something which they hope to have. That is the whole point about the difference between development value and existing use value. Under the 1947 Act or the 1954 Act, a person has always been paid for what he possesses at current value. If premises are used as a house or shop, that is an existing use and that is the use for which the owner is paid. He gets paid at current prices for it. The problem is whether it is right to use the same kind of yardstick for paying somebody for something which is hypothetical. It is the hope that eventually one will have a supermarket on one's ploughed field—and why should the ratepayer have to pay enormous compensation to somebody who has a ploughed field simply because he hopes that some day there will be a supermarket on it?
If the House feels that that is an extremist and wild point of view to adopt, may I make my own humble contribution to the quotations from the Prime Minister which have been given us so frequently today? I was much honoured in the debates in 1952 because the Prime Minister sufficiently recognised my existence to interrupt me. I felt that that was the big moment in my public career —that I was thought of sufficient importance for that. We were talking about this problem of the two prices. He said:I said that there was a great difference between the position where there was a question of the existing use value being taken and a man deprived of a home or a farm, and this question of a potential profit. They are two absolutely separate points."—[OFFICIAL REPORT, 1st December, 1953; Vol. 508. c. 1170]683 I think that the Prime Minister was right. I think that anybody would agree that, in common justice, they are two quite different things.
My other great authority for making this distinction is no less a person than the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley), who was speaking in one of his English moods. We are always honoured by the hon. Gentleman, who is bivocal. At one time he will be talking on an English Bill and talking at great length, and at another talking on a Scottish Bill and talking an equally long time. This was an English Bill, and the hon. Gentleman was honouring us with his expert views. This is a quotation from the debate in 1954, and the hon. Gentleman was talking about compensation on 1947 values. He said:I am led to think that such theoretical injustice as there may be in basing compensation for compulsory acquisition upon values back in 1947 is outweighed by the administrative convenience of being able so to do in view of the fact that these values are already made and agreed.But I am not so sure about the theoretical injustice of the business. Ever since the 1947 legislation, landowners have not expected any more."—[OFFICIAL REPORT, 15th March, 1954; Vol. 525, c. 118.]That is the really important point, and that is the difference between the owner-occupier and the ordinary investor in property.
The investor in property goes to the hon. Member for North Angus and Mearns for his professional advice, and the hon. Gentleman tells him the position, what the risks are of compulsory acquisition, and that is one of the factors which are taken into account in the price which they pay for the land. These gentlemen are businessmen. They know precisely, and they are advised by people like the hon. Gentleman, who can tell them precisely how much weight to give to the chance and how much to knock off the price. The poor owner-occupier is in a very different position, because he is not able to pay for the professional advice of the hon. Gentleman. He is, therefore, sometimes liable to make unwise bargains or to be compelled by the housing shortage to make them.
What are we to do about it? That is the problem which the Government have to tackle. I believe that the effect of the Bill is bound to be to increase very 684 much the need for local authorities to buy ahead of their needs. That is the point made in the White Paper and was also the point made by the Parliamentary Secretary when he said that, in the case of people who were suffering from planning blight, but who did not come within the four corners of the Clause, the local authorities should be encouraged to buy in advance. I welcome that most warmly, but I should like to know whether, if it is right for the local authorities to help the small property owner, they are to be allowed to buy ahead to protect themselves from the large property owner. The one is as important as the other.
If a local authority is going into development in the future, if it is not to be held up to ransom by people who say, "We are going to have a multiple store or a super-market in the middle of the ploughed field", it must be able to buy the ploughed field, ten, fifteen or twenty years before it thinks that development will reach it. That is the only way in which we can be sure that the result of the local authority's wisdom and the efforts that it and the whole community is putting in development shall come to the public.
People talk about this sometimes as if it were just a question, on the one hand, of local authorities developing the value of land and, on the other hand, of private people. That is not right. The question is whether the effort of the community —private businessmen, workers living in an area, the local authority, the people who provide the services, the doctors and everybody else—is to be added to the value of the land for the benefit of the landowner or to go back to be shared by those people through the local authorities who are the representatives of the community.
It is a much bigger question. It is not just allowing local authorities to cut out their little share in the form of betterment. The important question, which is social justice, is that the whole of the increment and the betterment not due to the efforts of an individual landowner should come back to the community. That is the big and very fundamental point which separates our approach to the problem from that of the Government.
I hope that the Minister will be charitable and allow local authorities to buy 685 land in advance. He ought to consider whether he can allow them more discretion to buy more land without coming to him for leave. All the toil and sweat of the Local Government Act was to give local authorities more freedom. Here is a field where, surely, they ought not to have to wait for the right hon. Gentleman to produce his permission. I think that it would encourage them to plan, looking ahead and looking after the interests of their community, if they were given freedom to do this.
I think that it is right not to vote against the Bill. We all recognise that this is a pitiful mess which, owing to the blunderings of the Prime Minister, has caused a great deal of hardship, quite unnecessarily, to deserving people. I would say, therefore, that from the ambulance side, the need to rescue people and prevent hardship, we ought not to appose the Bill on Second Reading. But we ought also to make perfectly clear that we are well aware, and the whole country is well aware, that behind the necessary part of the Bill is a very calculated and cynical design to see that a great deal of money goes from the public to people who do not deserve it and do not need it.
§ 9.29 p.m.
§ The Minister of Housing and Local Government (Mr. Henry Brooke)
Those closing words of the hon. Member for Widnes (Mr. MacColl) are totally untrue. The purpose of a Second Reading debate is to discuss the principle of a Bill. It is certainly gratifying to the Government that practically nothing has been said from any quarter against the main simple principle of the Bill. It is true that there have been some carping criticisms from the other side of the House on points of detail and omission, but that carping criticism is in marked contrast to the almost universal welcome which the Bill has had from the public outside. Indeed, I am grateful for the way it has been received by the Press and by the public. The preparation of so far-reaching a Bill as this is a considerable undertaking, and I know that the officials who serve all Governments equally faithfully will be gratified by what has been said about their hard work by a number of hon. Members.
In past months I have read a great deal of the assertions of the Liberal Party that it is Liberals who stand up 686 for the rights of the individual in these matters. I cannot help noting, therefore, that almost entirely throughout this debate the Liberal benches have been entirely empty and that not one Liberal Member has attempted to contribute to our discussion.
It is interesting, and pleasing too, that the local authority world, though it will have to pay more as the result of this Bill, nevertheless has approved its general principles. There has been very little criticism in those quarters, and, instead, a general recognition that it is an impediment to good local government if a local authority, seeking to do what is in the public interest in some acquisition of land, is nevertheless forced by law to permit such injustice to an individual that it is intolerable to public opinion. Where that has happened, local authorities in many cases have swerved away, and consequently the public interest has not been served.
In reply to the hon. Member for Acton (Mr. Sparks), who I am sorry is not in his place and who alleged that this was a Bill to benefit landowners who are very rich men, may I say that I am perhaps in a better position than himself to see individual cases, because they have come to me when a compulsory purchase order has been before me for confirmation. I have read my inspector's report on the inquiry, and I have appreciated how great would be the potential hardship to individuals of obviously no great substance if I confirmed an order for which, on public grounds, there was a good case to be made—and yet where, if I did so, there was no question that the individual concerned, a man of no great substance, would have a grievance against Parliament; and we would have no defence whatever by which we could assert that justice was being done to him. It is to do justice to owners of all land, and to all kinds of owners of land that the Bill has been introduced.
Nor do I believe for one moment, as the hon. Member for Acton alleged, that local authorities will be frustrated by the Bill in carrying out their duties. The Bill marks a return to the 1919 rules for compensation, but it takes into account the fact that since 1919 we have had set up an elaborate system of planning control; and that leads to a number of complicated Clauses in the Bill, to which 687 my hon. Friend the Member for Norwich, South (Mr. Rippon) referred in his admirable speech.
I do not dissent for one moment from what was said by the hon. and learned Member for Kettering (Mr. Mitchison) about the credentials of the members of the Uthwatt Committee, but a great deal has happened since that Committee reported. This system of planning control has been established, and the circumstances now are wholly different from those which existed then. I submit to the House, therefore, that if one were to raise an argument against the Bill on what the Uthwatt Committee said, one would probably from the outset of one's argument be out of date.
§ Mr. Mitchison
I am much obliged to the right hon. Gentleman for giving way. He explained to us the reasons for his repentance and he is now turning to other matters. Before he goes on with them, would he at least admit that this is repentance and that the Prime Minister has been thrown out with the bathwater?
§ Mr. Brooke
I remember the hon. and learned Gentleman said in his speech that the moribund penitent has always been a person who merited compassion. I am inclined to think that he is moribund but not penitent.
§ Mr. Mitchison
I have no reason to be; the right hon. Gentleman has.
§ Mr. Brooke
I say that because he harks back to the time of the 1947 Act, and I believe that he still has faith in the development charge. The mess that we are clearing up is the mess left by the 1947 Act. The 1953 and 1954 Acts went some way in that direction and now this Bill is needed some years later, in the light of present circumstances, to complete that process so far as we can. If I were to presume to say that there will never be another Bill on this subject, it would indeed be dangerous; but certainly we are now setting right a major injustice, which came into existence in this country initially through the working of the 1947 Act.
The main Opposition demand in this debate has been that provisions on betterment should be included, and I will come to that before I sit down. In addition, a number of specific points have been raised by hon. Members on both sides. 688 I am grateful to them and I should like, so far as I can, to answer them.
My hon. Friend the Member for Norwich, South urged that legislation should not be too detailed and said that if it were so it might create new and unavoidable complications. Of course, if the legislation is vague it also may create work for lawyers. The object of the Bill is to try, so far as we can, to enable valuers and all concerned to put a precise figure where they are called upon to do so and not to have to guess.
I shall be very willing indeed in Committee to listen to my hon. Friends or to other hon. Members who have suggestions for improving these detailed, complicated Clauses. I am not claiming that every letter of the Bill is sacrosanct. I shall welcome the assistance of all hon. Members on both sides in Committee in seeing if we can improve it. It is an honest attempt and, I think, a successful attempt on the part of the Government to legislate comprehensively over this field.
My hon. and gallant Friend the Member for Gloucestershire, South (Captain Corfield), who certainly has made for himself a position of leadership in this respect, questioned the provision in Clause 1 that the new basis of compensation should apply to all cases where notice to treat was served after the introduction of the Bill. He suggested that it might extend to cases where notice to treat had been served previously but the transaction had not been completed. I think that he had some such formula as that in Clause 12 in mind.
It is, of course, an accepted principle that compensation is assessed on value as at the date of notice to treat, and if his suggestion were adopted we should have the new basis applying as from all sorts of different dates in the past according to the particular notice. I think that that would lead to confusion, just as much as my hon. Friend the Member for Norwich, South and other hon. Members think that it will lead to confusion, and we should have two systems of compensation running concurrently. I am very anxious to go into all these matters, but I warn the House that one cannot clear up a mess like this, which has been going on for ten years, and guarantee in advance that one can eliminate every single case of hardship.
689 I shall certainly take note of what my hon. and gallant Friend said about Clause 12. I do not think that we shall have local authorities suddenly reviving the comatose compulsory purchase orders that go back ten to twenty years, and seeking to complete the proceedings before the Bill has reached the Statute Book. But let us examine that further in Committee. It is certainly not the Government's intention that that should happen.
Curiously little has been said in the debate about Clauses 3 to 6. These were referred to in a letter in The Times, which some hon. Members have mentioned. The suggestion there was that they were altogether too complicated, and that we might cut out the complexities and rely simply on prevailing use value. My hon. Friend the Member for Norwich, South perceived that there were defects in that proposal. The value of land in the open market depends almost entirely on what can be done with the land. The market, therefore, is concerned more with prevailing future use than with prevailing existing use. If the suggestion in the letter were adopted, it seems to me that if one had a case where land was being bought in an area at present entirely agricultural, but allocated in the development plan for housing, then the prevailing use would be agricultural. If the suggestion in the letter were adopted, the 1947 Act formula would give only agricultural value. That seemed to the Government to be unfair, and the provisions in the Bill would secure housing value. Indeed, these complicated provisions are designed not to put more power into the hands of the Minister, as the letter alleged, but to make as sure as possible that justice is done to the individual.
I should like to take up the point about the treatment of comprehensive development areas. The hon. Member for Acton and other hon. Members had that in mind. In such an area radical changes are to be expected. For instance, the layout of the roads may be completely altered. If the compensation were to be based in detail on the new layout, manifest unfairness would result. Under the Bill, the valuer will have to take account of the range of uses proposed in the plan for the comprehensive development area, but in valuing a particular piece of land he will have 690 to ignore the new layout and the new use proposed in the plan for that piece of land. Instead, he will have to find the value of the land for whichever of the new uses proposed might reasonably have been permitted if there had been no scheme of comprehensive development.
That sounds complicated, but, briefly, this is what it means. If there are two people owning adjoining houses in an area of comprehensive redevelopment and the houses front a main road in which similar houses have already been converted into shops, and the two houses, not yet converted, are compulsorily acquired, they will both be dealt with on the same basis; that is, they will be given a value as though there were permission for shopping development on the old main road frontage and as if there had been no scheme of comprehensive development. If we did not make these provisions, the two houses might be given completely different values if there were different uses under the new layout for the two neighbouring sites.
One or two hon. Members referred to the question of new towns. I know there is some interest in that subject, and I should like to explain what will happen. Within the designated area of a new town under the Bill we shall go over to current market value subject to the exclusion of any increased value or any loss of value due to the development or prospects of development in the course of construction of the new town. This provision will be found in Clause 7. As an example, a plot of land in a designated area which has planning permission for the erection of a house would be bought at the price that such a plot would fetch in a private sale as though any roads and sewers or other services provided in the course of the development of the new town did not exist and as if there was no development corporation to provide them. The demand for housing land would be judged as the demand which there would have been without a new town. I realise that this sets a difficult task, for the valuers, but I am assured that they can undertake it.
It will mean that a landowner can argue that even if the area had not been chosen as the site for a new town, it was so obviously a place for development that the original small town, onto which the new town was grafted, would have 691 grown anyway, and that would have given the land development value.
I shall now deal with the difficult question of slum clearance sites. I know that there is strong feeling that some small sites are now getting only £1 or 10s. value in compensation. The Bill makes a difference, because it removes the conception of existing use value. Under the present provisions, the valuation has to take account of what could be put back on the original site, and very often that is too small for a house of present standards.
The compensation payable under the Bill will be the price which the cleared site would fetch in the open market with planning permission for the future use which would have been permitted if the local authority had not made a compulsory purchase order, but subject to the limitation that it will not receive more than the full market value which the house would have had if not unfit.
The effect will be that where the future use is to be commercial or industrial, there may be a considerable increase in compensation; and where the future use of the land is to be housing, it will depend on the character of the area and the strength of the demand for the land. If the area is attractive for housing, compensation will be increased.
§ Mr. MacColl
I am not clear about the working if the use is to be industrial. If it is a case of one or two houses being demolished, will the procedure be to take the value of the whole site as developed industrially, and then take the factor of the value of that zone?
§ Mr. Brooke
No. The procedure will be to take each site by itself, but to assess its value having regard to whether it is to be redeveloped for housing, or industry, or whatever it may be.
The trouble is that some of these slum clearance schemes are in areas where there is very little demand at present and where it is extremely hard for anybody to establish that there would be any private purchasers in the market for the land. This is a matter which should be further examined in Committee, but I cannot let pass the suggestion that under the Bill a local authority may be able to buy a dozen plots for £1 a piece and then sell the whole for £3,000.
§ Sir James Duncan (South Angus)
My right hon. Friend has referred to a cleared site. Does the value which the owner gets include or exclude the cost of clearance?
§ Mr. Brooke
In England—and I am speaking only of England—if a compulsory purchase order is made, the cost of demolition is not charged to the owner of the site.
There were questions about Clause 14 and the limitation to five years of the period during which an additional payment could be claimed by the owner if what might be called an improved planning permission were given in the interval. The Government view is that five years is a reasonable period. Some of my hon. Friends have argued that it should be longer. That is a Committee point. I cannot accept the argument from the Opposition that if a local authority, having freely decided to buy some land, then decides to use it for a less profitable use than was at first intended, it should be able to claim back from the owner some of the purchase price. That seems to be nonsense. It fails to make the necessary distinction between the man who is acting voluntarily and the man acting under compulsion.
Part II frees local authorities from a number of aggravating controls. I cannot give an unqualified promise that local authorities will always be given loan sanction for advance purchase, but the whole of Part II is an indication of the Government's general view that local authorities should have greater independence in carrying out land transactions by agreement. Local authorities can naturally only buy within their statutory powers; they cannot speculate in land. But it may well be that when the Bill is passed local authorities acting prudently will desire to buy more extensively in advance than they have hitherto. That is part of the answer to the hon. Member for Peckham (Mrs. Corbet) who raised questions about town development. The rest of the answer is in Clause 33, which gives local authorities the same freedom to purchase in advance for town development purposes as they already have for housing purchases.
Not much has been said about Part III, which implements a number of Franks Committee recommendations. I trust that that means that our action is wholly 693 acceptable to the House. I was especially glad that my hon. Friend the Member for Beckenham (Mr. Goodhart) approved Clauses 29 and 30. He asked whether the public had a right to inspect plans deposited with applications for planning permission. The answer is that the public have not the right to inspect the plans, but they can inspect the register of planning applications, which, however, gives only brief particulars of the proposals.
I now come to the question of planning blight. I am grateful for the approval which both sides of the House have given to these provisions. The statutory right to claim that the local authority shall purchase is limited to owner-occupiers because we believe that they suffer the principal hardship. The owners of property for investment purposes are not under the same compulsion to sell and to realise cash as is the owner-occupier who needs to move elsewhere.
I would point out, however—since this has not been fully appreciated either in this debate or outside the House—that there is a change in Government policy which will affect this whole field. Outside the statutory provisions local authorities and public authorities generally will have discretion to purchase in advance other types of property besides the residential owner-occupied property. Hitherto the bias of Government policy has been against their doing that. Loan sanction has been grudgingly given, and Exchequer grants have not been available until the actual development took place. Now, by Clauses 35 and 36, and a promise of a change in administrative policy, all that is being reversed, and the Government will in future be encouraging local authorities to meet cases of hardship by purchasing in advance.
Nevertheless, I appreciate that this will deserve further discussion in Committee. I would only ask hon. Members not to put local authorities in a position where they may have to take over the property of any industrial or commercial firm which chooses its time for unloading upon them.
I also promise the hon. Member for Peckham that I will look into the point she raised in connection with Clause 36.
§ Mr. Ross
Does the right hon. Gentleman intend to make any reference to the fact that certain Scottish speeches were 694 made? Are we not to be given the dignity of a reply?
§ Mr. Brooke
I think that those points were replied to as the debate proceeded. My right hon. Friend the Secretary of State for Scotland explained the Scottish Clauses, and I dare to forecast that some attention will be paid to the Scottish provisions in Committee.
I wish to devote my closing words to what appears to be the main argument of the Opposition, that some provision regarding betterment should be introduced. I noticed that the hon. Member for Wellingborough (Mr. Lindgren) said that we should go back to the principles of the 1947 Act, though when the 1953 legislation was before the House he said that he was prepared to admit that the 1947 Act had not quite worked out in practice. Most of us will take that as an understatement.
§ Mr. Mitchison
Principles and practice are different.
§ Mr. Brooke
Principles and practice are very different. The hon. and learned Member for Kettering, who murmured that, used in his speech phrases such as the whole profit of the efforts of the community." It is quite impossible, as was said by my hon. Friend the Parliamentary Secretary in his excellent speech, to proceed on the basis of oratorical phrases. One has to translate them into action. Anybody who seriously wishes to put up proposals for the reclaiming of betterment must address himself from the outset to certain practical questions.
Is betterment to be taxed on the occasion when it is realised, or is there to be a periodic tax, whether it has been realised or not? Is any betterment to be taxed or only that part which has not been created by the owner's expenditure or efforts; and if the latter, who is to make the distinction? How is it to be made in practice? Is all unearned betterment to be taxed, or only the unearned betterment of the development value; and, above all, betterment since what date? That question is fundamental, and if we take a date in the past, how on earth are we to know what the value then was?
Any political party which advocates a system of betterment and shirks practical 695 questions of that kind is simply misleading the public. The hon. Member for Gloucestershire, West (Mr. Philips Price) said that the Conservative Party has always disliked dealing systematically with betterment. There may be truth in that, but the Socialist Party has tried to deal systematically with betterment and has utterly failed. We are not going to seek in this Bill to do something which we believe to be impracticable and which would have the fatal defect that it would end up by treating different owners differently, according to whether they were selling voluntarily or under compulsion. Common sense says that if one's land is taken compulsorily, one should receive some special recognition of that fact. The Opposition say that for land taken compulsorily, a person should receive less and not more. That appears to us to be the essence of injustice, and it is justice which we seek to establish by this Bill.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).