HC Deb 17 April 1962 vol 658 cc463-72

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]

2.15 a.m.

Mr. George Thomas (Cardiff, West)

I wish to raise a matter of prime importance to the City of Cardiff and one which I believe may prove to be of considerable concern to people in other parts of the land. The problem is so urgent that I cannot apologise for taking the time of the House at this hour.

In the Riverside Ward of the Cardiff, West constituency a slum clearance area was defined on 5th March, 1962, and 115 houses have been made the subject of compulsory purchase and slum clearance orders. I understand that five of these houses have been condemned as unfit for human habitation. One of them, in Ann Street, was purchased two years ago by a man seeking to get a home for his sick and elderly mother and for his brother. He was then told that it was not in a planning area scheduled for redevelopment. In North Morgan Street—a small street which I visited at the week-end—there is an ex-Service man who three years ago was granted a mortgage of £600 to last for fifteen years. His house has already been condemned.

According to the Press in South Wales, the South Wales Echo, in particular, the Chief Public Health Inspector in Cardiff has said that 29 of the 115 houses are fit for human habitation and that 86 of the houses which he inspected were unfit for habitation. The clearance area includes 22 owner-occupied and unfit houses, five of these on council mortgages and three of them on private mortgages. There are three fit houses in the clearance area on which the council have granted mortgages which are still outstanding, and all of these loans were granted, I believe, between May, 1955, and September, 1959. The South Wales Echo stated on Tuesday, 3rd April, that at the time the loans were made there were no proposals for slum clearance affecting them before the City Council.

I acknowledge at once that there is a great deal of slum property in this area. Indeed, earlier in the year, in the life of this Parliament, I referred to slum property in the area. By a slip of the tongue I then referred to Wells Street, which certainly ought not to have been included in the speech which I made, but in Wellington Street and adjoining streets there is property which is not fit for human occupation. I visited a house on Saturday where a terrible stench is coming from the sewerage system. I am accustomed to visiting houses in Grange-town and Canton where the houses are so damp that they are dangerous to the lives of the people concerned.

In our great city, as in other great cities, there is a lot of private property which is not fit for human habitation but in Which people are compelled to carry on their existence. But those houses are not condemned, nor will they be unless there is a slum clearance order or unless a redevelopment area is scheduled. There is no demolition order for the people living in that other private property.

The basis of compensation for houses included in development areas is confusing in the extreme to those concerned. First of all, there is only site value for unfit houses—nothing for the bricks and mortar. There is site value, plus a payment of up to nine times the rateable value or the amount of money spent on maintenance during the preceding five years in excess of 1½ times the rateable value, whichever is the greater, for well-maintained houses. The full market value is paid for fit houses. There is full compulsory purchase value, less site value, for houses purchased between 1st September, 1939, and 13th December, 1955, which are acquired by the local authority before 1965. I cannot understand why the amount of compensation should depend on the date that the house is bought or the date on which the local authority buys it. It is unjust to decide the compensation on the date of purchase.

There are other serious issues that I wish to raise, and to Which I have drawn the attention of the House in a Motion on the Order Paper which has been supported by a great many of my hon. Friends. Five of the people whose houses have now been declared unfit for human occupation were three years ago granted mortgages by the Cardiff City Council. The same Council has now moved in to declare those properties unfit for human habitation, which means that the residents who have the responsibility of paying the mortgage for the remainder of the period of 10 or 15 years respectively will have no compensation for the bricks and mortar of their homes and will merely get site value, probably amounting to £25. At the very least, this indicates a strange incompetence in the local government affairs of Cardiff.

I love Cardiff too dearly to want to say harsh things about it, but I am certainly not unaware that my duty is to say harsh words about the administration of local government when it is causing such hardship and injustice to thrifty people whose only offence is that they are struggling to buy their own homes.

I understand that the policy of the Cardiff City Council in granting mortgages is to call in the valuation officer. In this instance, four valuation officers were employed. No doubt, they were professionally qualified people, and on their advice the corporation gave the mortgages for 10 and 15 years respectively. But it is also the policy of the authority, when granting a mortgage, always to grant it for 10 years less than the expected life of the building. That means that the authority must have been guided by its valuation officers to believe that the life of these houses would be 20 and 25 years respectively.

I am creditably informed that the public health inspector is not called in when the local authority is considering the giving of a mortgage, but that the authority is concerned only with the verdict of the valuation officers. If that is so, as I believe, it is a very gross example of a lack of liaison between local government departments.

Some people say that it is wrong to object to the granting of mortgages on the basis of the valuation officer alone because it might prevent the corporation from giving mortgages on these old properties. I believe that it would be far better not to give a mortgage on a property which any health inspector could have said he would be likely to condemn in three to five years. I saw a house on Saturday which is far in excess of advantage to some other properties that have not been condemned in the City of Cardiff.

I wonder what redress is open to my constituents who have been put in a position of owing a debt for a property which will be non-existent? These are people who had the right to believe that they were dealing with an honourable negotiator. When any solicitor in Cardiofl has a client seeking to buy a house he must go to the local authority and say, "Is this in a slum clearance area?" Apparently the authority, on the other hand, does not have to go to its health inspector and say, "Is this house to be condemned as unfit for occupation?"

Before he grants permission for the slum clearance order to be operated in this ward, will the Minister hold a public inquiry at which the facts concerning the granting of these mortgages can be brought to light? Can he hold out any hope to those whose houses are stated to be well maintained or in a fit condition that they will have a more adequate basis of compensation than now seems possible under the terms of the 1957 Act? I realise that that was an improvement on what went before, but with the cost of property rocketing it is unreasonable to destroy a well maintained house without giving the owner-occupier an opportunity of sufficient reward so that he can buy a house in another part of the city.

Will the Minister give an indication of the policy of Her Majesty's Government concerning those who have obtained their mortgages not from private societies but from local authorities, for I believe that there is something immoral and deeply wrong about a local authority granting mortgages for a period of years and then, three years later, itself condemning the house on which it granted the mortgage but expecting the payments to be continued? It offends our sense of fair play, and although the Minister of Housing and Local Government and Minister for Welsh Affairs told me in a Written Reply today that the question of compensation is not one for him but for other people, the local authorities concerned or the Lands Tribunal, I hope that we shall have from the Treasury spokesman tonight a warning to local authorities throughout the land that this sort of treatment of people buying old property will not be tolerated.

It is unjust. It may be the result of an accident. But these folk, unless there is intervention, will have to carry a burden for ten years which will be a burden that rankles in the breast of everyone in Cardiff.

2.34 a.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Geoffrey Rippon)

I quite understand why the hon. Member for Cardiff, West (Mr. G. Thomas) has raised this matter tonight. It is a highly controversial local issue and both he and his constituents can be sure that my right hon. Friend has been alerted to the strength of feeling that has been aroused. The hon. Member for Cardiff, West has seen to that, aided by the Western Mail and the South Wales Echo, to which he has referred.

My difficulty tonight—and I am sure the hon. Gentleman will appreciate the position—is that it is not possible for me to comment in any detail on the particular case with which he is concerned. As I understand the position, Cardiff City Council has been preparing a slum clearance scheme for the area in question—particularly the Wellington Street-Cambridge Road area—for some time. It was, however, only last Monday, 9th April, that the council formally declared a clearance area and resolved to proceed by way of compulsory purchase order. At the moment, therefore, there is nothing before my right hon. Friend and the order has not yet been submitted for confirmation. Until the order is confirmed by my right hon. Friend it is of no effect.

I think that what the hon. Gentleman wanted was an assurance that before the order was confirmed there would be a public inquiry. I think that I can, in the circumstances of this particular case, and in the light of the feeling which we know has already been aroused, give an assurance that there is no question of my right hon. Friend confirming this order without a public inquiry.

Mr. G. Thomas

I am very much obliged.

Mr. Rippon

Thus every opportunity will be given to those who feel strongly about the proposal to put their views to the inspector at the inquiry. I can assure the hon. Gentleman that my right hon. Friend will take fully into account all the representations which may be made to him before any decision is taken.

At this stage I clearly cannot comment on all the issues involved because my right hon. Friend in dealing with the order must act in a quasi-judicial capacity. There are all sorts of matters which have to be considered when such an order is inquired into. Quite apart from its general merits, it may be argued that even if it is confirmed, certain properties should be excluded altogether, and of those (that are included there may be disputes as to the reason for their inclusion, which is a matter which may well affect the amount of compensation ultimately payable in relation to each particular property. I know what the hon. Gentleman said about many people being confused about the basis of compensation. Therefore, I may say a word about that aspect of the matter.

When a council has declared a clearance area under Section 42 of the Housing Act, 1957, there are three types of property which may be included in the compulsory purchase order—first, houses unfit for human habitation; secondly, properties within the clearance area which are so congested—in the words of the Act, "badly arranged"—as to be prejudicial and dangerous to health; and thirdly, properties which are encircled by or adjoining the clearance area which need to be demolished in order to allow the satisfactory redevelopment of the cleared area as a whole.

The basis of compensation in the last two categories that I mentioned—the badly arranged properties and the properties outside the clearance area which need to be included for satisfactory redevelopment, those which are often called grey land—is the market value of the property taking into account assumptions about planning permission provided for in the Lands Compensation Act, 1961. It is only in the case of those houses which are ultimately declared to be included in the order because they are classified as unfit, often known as the pink land, that the owners are compensated under Section 59 of the 1957 Act, on the basis broadly of current market cleared site value plus what they may get by way of well maintained allowance if that is appropriate under Section 60 of the 1957 Act.

There are also the special provisions of the Slum Clearance (Compensation) Act, 1956, now incorporated in Part II of the Second Schedule to the 1957 Act, which were passed to avoid the severe hardship to persons who purchased in the period of extensive shortage between 1st September, 1939 and 13th December, 1955, and who could not then foresee the slum clearance drive which has now been initiated. There are other provisions dealing with business premises, which I shall not go into tonight.

Whatever the basis of the compensation payable in these particular cases—and here the hon. Gentleman was right—determination of the amount is not a matter for my right hon. Friend. In the ordinary course of events, it is for agreement with the acquiring authority. If agreement cannot be reached, either party can refer the matter to the Lands Tribunal, which is the statutory body given the responsibility of determining disputes about compensation.

I would only add—this may be important in many other cases—that professional fees reasonably incurred in preparing a claim for compensation may be added to any compensation paid, other than a payment for good maintenance. I should like to emphasise this point because, although it is stated in the notices sent to every owner, people do not always realise that they are entitled to some professional help in formulating their claims.

Now perhaps I should say something about the point made by the hon. Member about the policy of the Government and the position of the law in relation to outstanding mortgages on compulsory acquisition. In determining the compensation payable, there is no provision under the law as it now stands for giving special treatment to persons who are still paying off mortgages. I cannot tonight go into the question of amending legislation, but there are clearly difficulties, which I am sure the hon. Member appreciates, in treating owners who happen to be in the course of paying off mortgages more generously than those who have bought their property outright. Moreover, where there is a mortgage it makes no difference to the owner's pocket whether the mortgagor is a local authority, a building society, a bank or a private individual.

However, it is obviously a fact that, where the money is borrowed from the local authority which is the acquiring authority, this may cause, to say the least, some embarrassment, but I do not think I could go further than saying that in general—I cannot comment on the particular case, because I do not know the circumstances—one would expect a local authority to be careful about advancing money on property that may be included in a slum clearance scheme. It is very difficult to generalise about these matters. Difficulties may well arise whenever circumstances lead to a change in the order in which areas are selected for slum clearance or to an acceleration in the rate of clearance. I can well envisage circumstances in which a local authority would not know at the time it made a grant how its programme might develop.

It should also be borne in mind that there may well be circumstances—I do not suggest that this applies in Cardiff—in which people who buy properties which may be included in slum clearance areas in the future do so with their eyes open. In effect, they take a chance. First, the price may be quite low and may be regarded as a better bet than paying rent over a period of years. They may well hope for an occupation of ten or fifteen years, but even if the gamble that the house will not be demolished for such a period does not come off they then place reliance on the responsibility which falls on the local authority to re-house the people affected by the scheme. They may feel in all the circumstances that it is a fair bargain and a fair chance, and they take it knowing full well what they are doing.

As I have said, I cannot say how, if at all, the considerations which I have dealt with tonight affect the particular case which may come before my right hon. Friend. I can only reiterate that there will be a public inquiry if the order, as one assumes, comes to my right hon. Friend for confirmation. Such an inquiry would afford the proper opportunity to hear and to weigh all the arguments of the kind that the hon. Member has dealt with.

Mr. G. Thomas

Can the Minister say whether there is any hope at all for people whose mortgages are still outstanding, since, I understand, the auditor could come upon the local authority if it overlooked the money that was due?

Mr. Rippon

There is no provision in the existing law for additional compensation to be paid to people who have a mortgage outstanding. They can be in no better position than those who have paid off their mortgages. There might be circumstances in which a local authority might write off a debt on the ground that it is not recoverable. In ordinary circumstances, however, where it clearly could be recoverable, where it might be thought that the local authority had a duty to recover public money which had been lent, the authority might be in difficulty with the auditor. Again, however, I should not like to pronounce upon a specific case.

Mr. G. Thomas

I thank the Minister.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Three o'clock a.m.