§ Order for Second Reading read.
§ 3.51 p.m.
§ The Financial Secretary to the Treasury (Sir Edward Boyle)
I beg to move, That the Bill be now read a Second time.
I think it a tribute to those who framed the war-time War Damage Act that it has stood the test of fifteen years after the war before this very small amending Bill has been found necessary. In fairness to the House, I think that at the start of my remarks, which I will make as brief and as clear as I can, I ought to say that I recall a distinguished speaker from the Opposition Front Bench warning new Members at the start of this Session that they might have to sit through somewhat arid debates; so if they are reminded of that remark at the end of my speech they cannot say that they were not warned beforehand.
This Bill is concerned with buildings which sustained war damage involving "total loss" as defined in Section 7 of the War Damage Act, 1943. That is to say—I think that this a fair layman's way of putting it—buildings which it would have been uneconomic to restore to their former shape. Where war damage has caused total loss, the appropriate payment under the 1943 Act was what was called a value payment and the amount of a value payment has always been the depreciation in value caused by the damage, assessed by reference to prices ruling on 31st March, 1939, and increased by 45 per cent.
The War Damage Commission, the body responsible for making payments in respect of damage to land and buildings, was authorised by a direction issued by the Treasury in May, 1945, to make, in addition to a value payment, a payment of cost of works for the removal of useless remains from total loss sites, and to assess the value payment on the basis that the site was cleared of such remains.
I can explain quite simply what is the purpose of this brief Measure. The 1945 direction has recently been found to be ultra vires and the purpose of this Bill 1299 is simply to revoke this direction to validate past payments made by the Commission in consequence of this direction, and to authorise the Commission to make payments for clearance on the same basis in the future.
I think that the House would wish me to say a few words about how the 1945 direction came to be made. This was a number of years before I came to the House and even, I think, before the right hon. and learned Gentleman the Member for Newport (Sir F. Soskice) became a Member of this House.
§ Sir E. Boyle
Yes, it was two months before.
The point is that by the middle of 1944 the Commission had completed the first stage of its work of classifying all damaged properties as eligible either for a cost of works payment or a value payment. The next stage was the issue of provisional estimates of the value payments to owners of total loss properties. Here, the Commission immediately found itself up against a difficulty which arose from the presence on war damaged sites of useless remains.
The amount of a value payment is the depreciation in value caused by the war damage; and to arrive at the amount of the depreciation the Commission has always had to assess the value of property in its state before the war damage, and in its state after the war damage. At the time when the valuer inspected the property he might find useless remains still on the site or, alternatively, they might have been removed by local authorities in the exercise of their emergency powers. But where a site still had remains on it, the after-damage value would be assessed on the basis of what was called an encumbered site—that is to say, the value of the site as at 31st March, 1939, less the net cost of clearing the remains at that date.
Clearance by local authorities under their emergency powers was treated as war damage, and where they had cleared the sites the after-damage value would be assessed as a site cleared of remains. Of course, the effect of local authority clearance of useless remains was normally, as the House will realise, to increase 1300 the value of the property after damage and, therefore, to decrease the amount of the value payment. But there were other cases where the presence of useless remains decreased the value of the property after damage, and this increased the amount of the value payment normally by the 1939 net cost of clearance.
As I think the House will realise, this state of affairs caused inequality of treatment between different owners; the owner who had his site cleared for him by the local authority received, in effect, the current cost of clearance, while the owner left with an encumbered site could not receive in his value payment more than an allowance related to the 1939 cost of clearance.
In the circumstances, the Commission came to the conclusion that the only fair and practical way of removing this inequality was to pay for the actual cost of clearance when the work was done by the owner and to value all sites after damage on a cleared site basis. I use the words "cleared site basis", by which I mean a site cleared of debris and useless remains of buildings and structures, but in the normal case disregarding foundations, site concrete and retaining walls which were regarded as an inherent part of the site.
Accordingly, the Commission asked the Treasury to issue a direction under Section 20 of the Act to enable this to be done. Section 20 empowers the Treasury to give directions to the Commission for securing that in relation to a number of matters the provisions of Part I of the Act should be executed in conformity with the public interest. To give effect to such directions the Commission has power, where war damage in respect of which a value payment would otherwise be appropriate is made good in the public interest, to make a payment of cost of works in respect of the works executed in the public interest.
At the time when the Direction was made in 1945, in the view of the Commission and that of the Treasury, it was reasonable to say that there was a definite public interest not only in securing equality of treatment of claimants, but also in having war damaged sites encumbered with ruins made ready for redevelopment as soon as conditions permitted; it had been recognised early in the war that the clearance of bombed 1301 sites for the sake of making them tidy, and so maintaining public morale, was desirable in the public interest.
In May, 1945, the Treasury issued a direction, Direction No. 11. I do not propose to weary the House by reading it out, but I will make this comment. If hon. Members look at the direction, they will see that the powers given in it were not to be exercised where they would have caused injustice to the owner.
For instance, if the owner, at the time of damage, had since sold his property at a figure which was reduced because of the presence of useless remains, it would clearly be unfair to assess the value payment on a cleared site basis, and to allow the new owner to claim the cost of clearance from the Commission. The same argument applied to sites compulsorily acquired by public authorities while still encumbered with ruins. In these cases, the after-damage value was assessed on an encumbered site basis, and the 1939 cost of clearance was reflected in the amount of the value payment to the original owner.
Now I should say a brief word or two about the practice of the Commission under this direction of May, 1945. When the Commission came to make its formal determinations of value payments, the notices of determination included a statement that the Commission was empowered to make, in addition, a payment of the reasonable net cost of clearance, and that the value payment had been calculated on this basis. This meant that owners of sites still encumbered were able to sell them in the open market with a prospective right to claim the cost of clearance from the Commission; but in cases of authorities with powers of compulsory acquisition the Commission was not empowered to pay this claim until October, 1958. The Commission interpreted the Direction No. 11 as authorising it to pay for the cost of removing loose debris resulting from the bomb and standing remains which detracted from the after-damage value; that is to say, such remains which the local authority would have removed under its demolition programme.
Later, however, there came about some easing of building restrictions, and large scale redevelopment of total loss sites became practicable. The Commission extended its practice to cover the 1302 cost of removing foundations, site concrete, and so on, provided that these remains were structurally unsound, and only in so far as the unsound remains got in the way of the development that was being undertaken.
Recently, in considering the scope of its commitment, the Commission took legal advice on certain points, and was advised that Section 20 (1) of the War Damage Act could only authorise payments of cost of works for making good war damage, and the clearance of remains could not in itself be considered to be making good war damage. It follows from this that the direction and the bulk of the Commission's payments made under it were, in fact, ultra vires, and it was that legal ruling which led to the present Bill.
I ought, in fairness to the House and out of courtesy to the right hon. and learned Gentleman, to explain why it took so long to discover this point. As I understand the position, the War Damage Commission and the Treasury took legal advice on the matter in 1944, when the Commission encountered the difficulty of dealing with total loss sites encumbered with rubble, and the Treasury direction was based on the legal advice that was then received. As a result of that, it did not occur to anyone to question its legality. But in 1958 the Commission took counsel's opinion as to the scope of its powers under this direction, and in this opinion, counsel also cast doubt on the vires of the direction itself.
I see the right hon. Member for South Shields (Mr. Ede) in his place. Perhaps he feels as I do, that this is rather like the kind of difficulty that sometimes arises out of our system of public education. I will not pursue that point, but sometimes it does take a remarkably long time for a legal problem to be fully brought out into the open.
§ Mr. Ede (South Shields)
I was wondering how high in the judicial system the person who gave the original ruling has now reached. Can we be informed?
§ Sir E. Boyle
I cannot give the right hon. Gentleman an answer to that question, though, on this point, I thought that it was only right for me to be truthful with the House about what actually happened.
1303 This matter was reported to the Treasury, and legislation was devised which we had hoped to introduce immediately after the General Election. But the present time has proved to be the earliest occasion on which we have been able to seek Parliamentary authority for past and future payments.
I very much hope that it will not take very long to pass the Bill through both Houses of Parliament in order to put ourselves right with the law. I think that we should be able to pass this amending legislation into law reasonably soon. The Treasury has authorised the Commission to continue its former practice in the meantime. Nobody, I am sure, will doubt but that this is perfectly reasonable and sensible.
I should now say a few words on the Bill itself. Subsection (1) of Clause I revokes the direction, but validates all payments made by the Commission in consequence of it. That is perfectly straightforward. Subsection (2) authorises the Commission to make payments for clearance in the future, and, in the very rare case where the value payment has not already been determined, to assess the value payment on a cleared site basis. The clearance payments will not be cost of works payments as defined in the War Damage Act, but will be assessed in the same manner as cost of works payments, and will be payable to the person who incurs the cost of carrying out the work.
Subsection (3) defines the works of clearance for which the Commission may pay, and puts on a statutory basis the practice approved by the Commission since the 1945 direction was issued. It excludes remains which, in the opinion of the Commission, can reasonably be used in reinstatement of the building, and remains which cannot be so used, but which the Commission is satisfied do not interfere with the proposed reinstatement or redevelopment of the site. This latter class, is, generally speaking, foundations and other works below the lowest floor level of the old buildings, and is often located in parts of the site which will not be covered by the new buildings.
In conclusion, I should like to say that it is never a pleasant task for any Minister, senior or junior, to have to come to the House and ask for a validation 1304 Measure of this kind, and to have to admit that we have been acting outside the law; although I think that I can fairly say that since the mistake was discovered we have been reasonably prompt in coming to the House and asking for the situation to be regularised.
I should like to take the opportunity of paying tribute to the work which the War Damage Commission has done since it was set up by the original War Damage Act in March, 1941. The Commission has paid over 4 million cost of works claims and nearly 180,000 value payment claims. Its total payments to date, are in the region of £1,255 million. Payments in the last calendar year were £13½ million, and it is clear from the facts and figures which I have seen that payments of this order must continue for a year or two longer. The cost of clearance payments is estimated at £2½ million, and that includes the whole of both past and future payments. This is a very small amount in relation to the total of war damage payments.
The administration of war damage payments has been in the hands of a largely independent body which, while subject to general directions, has been responsible for practice and day to day administration. In administering such a complicated Measure as the War Damage Act, there has, naturally, been room for some controversy, and this has increased with the passage of time. But the War Damage Commission has carried out a very large and difficult task with a very small amount of friction. I therefore trust that Parliament will see fit to accord the Commission and its public the justice and convenience which the present Bill offers.
§ 4.9 p.m.
§ Sir Frank Soskice (Newport)
I think that the Financial Secretary has explained the purpose of this rather small Bill in a manner which nobody would seek to describe as arid, or unnecessarily arid. He has clearly indicated how the mistake arose, and I think that he will have satisfied all of us that, as soon as it was discovered, he took appropriate measures to come to the House and ask its authority to put the matter right.
Before I rose to address the House, I was relieved to discover that the Order was made in May, 1945. Therefore, so far as I am concerned, it was cutting 1305 it a bit fine, but the illicit Order was used during the period of the Parliament of. 1945–51 as well as later, and, therefore, I am bound to concede that the Law Officers, during the course of that Parliament, were not less negligent than were their successors.
Obviously, the right thing to do is to put the matter right. I should like to know from the Minister, if he would be so good as to tell us, how much of the £2½ million is attributable to money paid out already unlawfully under the Order, and how much is estimated for future payments. He said that the war damage payments will last for something like a year longer. I suppose that these payments will continue for approximately that time, although I imagine that most sites have been unencumbered of debris and remains.
I think that we all agree that of the many Measures which have been passed since the beginning of the Second World War, the War Damage Act, 1943, and its predecessor in 1941 were among the most complicated. There are a number of others, for example, the Town and Country Planning Act, 1947, and similar Measures. It would be surprising if, occasionally, their provisions were not misinterpreted and advice given that something could be done within their scope which afterwards was found to be defective. This is a typical case of that sort. I should have thought it was a mistake which could easily be made when one considers the wording of Section 20 (1) of the 1943 Act and the complementary subsection (3).
As far as I am concerned—and I think that I speak for all my hon. and right hon. Friends—I do not think we would offer any objection at all to giving the Bill a Second Reading. I should like to compliment the Minister for having explained so clearly how the mistake arose, what it consisted of and satisfying us all that he has come to the House at the earliest possible moment to put it right.
§ 4.12 p.m.
§ Mr. James H. Hoy (Edinburgh, Leith)
I wish to say a few words about the Bill because, although my right hon. and learned Friend the Member for Newport (Sir F. Soskice) described it rather small, it is an unusual Bill. Having had to 1306 take legal opinion which you, Mr. Speaker, will be able to appreciate more than most back-benchers, one cannot help feeling a little surprised to find that we were misled when the Measure which this Bill amends was put through the House.
The Minister said that even at this late date the War Damage Commission has had to provide another £13½ million for war damage. In my constituency, Leith Town Hall was one of the earlier casualties of the war. Apparently. Edinburgh Corporation and the War Damage Commission have not yet reached agreement about how much is to be paid. I can well understand the difficulty which might have arisen, but I should like to know from the Minister whether, if we agree to a Second Reading of the Bill, it will facilitate the negotiations going on between Edinburgh Corporation and the War Damage Commission with a view to providing cash necessary to build a new town hall in Leith. It would be the one public hall we have in Leith.
I raise this matter with all due deference to my right hon. Friend the Member for Easington (Mr. Shinwell), who accuses the Scots of being a little parochial. Whatever he may say, this is important to a community like mine. I should like to feel that if I assent to the Bill being read a Second time the War Damage Commission will hurry on with the agreement with Edinburgh Corporation so that we can have the town hall which has been denied to us for so many years.
§ 4.15 p.m.
§ Sir E. Boyle
I speak again by leave of the House in reply to the two speeches which have been made.
I am very grateful for the extremely courteous speech of the right hon. and learned Member for Newport (Sir F. Soskice). I can say in answer to the question he put that the Explanatory and Financial Memorandum attached to the Bill says that the cost of all past and future payments is unlikely to exceed £2½ million. It is not possible to be more precise than that, because the payments made hitherto have, in error, been regarded as cost of works payments and not separately accounted for.
It is virtually impossible to separate them now, but, in the opinion of the War Damage Commission, supported by the 1307 evidence of recent months since we contemplated introducing this Measure, the past payments amount to rather less than £2 million and the amount of future payments will not exceed £½ million.
In answer to the hon. Member for Edinburgh, Leith (Mr. Hoy), I do not think that I should ever accuse him of being particularly parochial as Scotsmen go, if I may put it that way. I do not think that the Bill will make much difference to the question he raised, but if he will write to me on it I shall make inquiries and see if anything can be done.
§ With those words, I commend the Bill to the House.
§ 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).