§ 1.0 a.m.
§ Mr. T. L. Iremonger (Ilford, North)
It is my purpose to raise the subject of the valuation of private property compulsorily acquired by local authorities and, more particularly, the problem of public confidence in the system of valuation.
I submit that it is undesirable that such valuation should be attempted by the acquiring authority itself—that is, by its own employees—and preferable for it to be done by the district valuer, who is not employed by, or answerable to, the acquiring authority, but is employed by the central government. This is of special relevance just now while the details of the reorganisation of Greater London are under consideration and close scrutiny.
I want to make it absolutely clear at the outset that I am considering the comparative merits of the two systems and am not making any criticisms of one or the other which may cast aspersions on the integrity or competence of any employees of local authorities who may have to work a system which I consider is not desirable in the public interest.
We have a duty to consider these principles, and what is said must not be construed as a reflection on persons, many of whom I, like other hon. Members, represent in this House. I ask my hon. Friend, whom I thank for being here at this late hour with his usual patience and courtesy, to make an inquiry into this problem so that he may consider his own responsibilities in a matter which becomes ever more important as housing policy evolves.
1789 The fundamental principle is that a man must not be judge in his own case. That goes for local authorities, too, but some of them, including the London County Council, which is the largest local authority in the world, laugh at this principle. The horrid business of the compulsory acquisition of the property of private individuals (sometimes necessary but always regrettable) is rendered far more intolerable by the way in which it is sometimes carried out, for example in London today.
For who does the assessing for compensation in London? The interested party the buyer—and in London that is the London County Council. Most local authorities arrange for the valuation to be carried out by the district valuer, who is an employee of the Inland Revenue and not a servant of the acquiring authority. How different with the L.C.C.! That authority uses its own employees as valuation officers; those employees negotiate, and those employees assess. And let there be no quibbling about that the fact that they negotiate or bargain. They negotiate. And they bargain. They should, in fact, be called "negotiating officers". That would be much healthier, and a healthier atmosphere would prevail if they were frankly so called.
I should like to illustrate that point with respectable authority. I take, first, HANSARD of 20th February, 1962, when the hon. Lady the Member for Peckham (Mrs. Corbet) was speaking in the debate on the Government White Paper on the reorganisation of local government in Greater London. I am sorry not to see the hon. Lady in her place, but I made a point of giving her notice in writing at 10 o'clock this morning when I came to the House that I intended to refer to this speech of hers.
The hon. Lady said:There is a large staff of valuers who acquire land for the use of the Council, who negotiate to get the best terms. It is very necessary to have experience in London in dealing with large firms whose terms may be very difficult to arrange in the Council's interests.Note those words,negotiate to get the best termsandin the Council's interests".At that point, I intervened and said: 1790Would the hon. Lady confirm that she is saying that it is one of the advantages of the administration of the L.C.C. that the valuers do get the very best terms?The hon. Lady replied, very frankly:Yes. I would say that in the interests of the people the valuers should get the best terms they call, and that it is a good thing for the ratepayers."—[OFFICIAL REPORT, 20th February, 1962; Vol. 654, c. 283.]I further quote from the decision of Mr. J. P. C. Done, Fellow of the Royal Institution of Chartered Surveyors, of the Lands Tribunal, in the case of Ansaldi v. Stoke-on-Trent Corporation in 1960, quoted in 12 P. & C.R. at page 220, in which Mr. Done said of the local authority valuer thatDuring the cross-examination … he admitted that his valuations were the basis of negotiations … It was implied that he was bargaining, not valuing. It is desirable to distinguish his function from that of a district valuer who is an independent official whose duty is to assess value and advise, and try to conclude, a settlement at that figure.He went on to say that the local authority valueracts asthe local authority'sagent and he reflects the obligations of his principals to ensure that the ratepayers acquire property as cheaply as is reasonably possible.He said that the valuer and his principalswould only deserve censure if they adopted tactics designed to deprive humble owners of their properties at less than they know them to be worth. There is no sign of anything of that kind in these cases." (That is, the cases under consideration).It is, however, only fair to add that the judgment increased the valuation by 50 per cent. Therefore, as these authorities suggest, it is not any random reflection of mine that these are not so much valuation processes as negotiation.
The House will recognise, in the light of those illustrations, that there are bound to be pressures which must be resisted, and that they are all on the side of parsimony. For the good and faithful servant, public servant no less than any other, wishes always to please his master with a bargain in the market place. Economy is equated with virtue by the employers of public servants, who are the guardians of the public purse. as the hon. Lady the Member for Peck-ham so frankly revealed in the debate which I have quoted. And there is always the great shadow of a possible 1791 surcharge on the officer himself, whereas there is no retribution in his mind as a possibility for, in the words of the hon. Lady, "getting the best terms" or "making a good deal" or getting the property as cheaply as possible. None of these pressures operate on the district valuer, who is not answerable to the acquiring authority.
I am convinced that the honourable men who are employed in these duties as local authority valuers do their best to be fair. If one asks them, they say they are fair. But we have to be concerned with the impact of the processes of compulsory acquisition upon the public. The disappointed property owner who ruefully compares the price that he can get from the valuer with his own assessment of the value of his home is apt to echo Emerson, who said:The louder he talked of his honour, the faster we counted our spoons.We cannot really blame him, because although one may feel that every effort is made that justice should be done, it, quite clearly, is not seen to be done. This is a very nasty situation which should not be encouraged or tolerated. It is unfair to the owner, who may be forgiven for seeing the employee of the compulsorily acquiring authority as a kind of hired assassin moving in to the kill. But it is even more unfair—and we have a duty to protect these people in their professions—to the public servant himself who is placed in this invidious position.
To illustrate the mistrust to which I am referring, I quote from a letter from the chairman of a local residents' committee, all of whose members were under the threat of compulsory purchase—in this case by the London County Council, which happens to be the authority of which one has most experience if one represents a constituency in greater London. He said:The general impression is one of mistrust in the system. Owners believe that they are being forced into selling to the London County Council because the London County Council can be the only buyer at a price that the London County Council dictates. This appears to them to be the antithesis of fair play.It is representations of that kind which put into my mind the thought that this system does not altogether command public confidence.
1792 Quite apart from the pressures that operate on him, as exemplified by the quotation from the hon. Lady, who has first hand experience of this particular authority, the local authority valuer is less well equipped to do an efficient job than the district valuer, because the district valuer is automatically supplied with details of every property that is sold in his area and every lease that is stamped in the area, and facts and figures reach him from the estate duty office whenever probate is granted. The local authority valuer, on the other hand, depends on press reports of auction prices, records of his own past deals and "comparable" sales, as he calls them. He has no reliable gauge of the current trends of the whole free market. So it is not surprising if the compensation which he tries to negotiate is often considered by the seller to be unrealistic.
I should like to illustrate very precisely the standard of realism that prevails, and for that purpose I invite the House to look at the decisions of the Lands Tribunal in appeals against the London County Council. Between 1951 and 1960 the Estates Gazette Digest of Cases reports 22 cases against the London County Council. In only four of those cases was the decision in favour of the authority; in two cases the costs were split; and there were 12 cases in which a straightforward comparison of prices can be made between the authority's final offer and the Lands Tribunal award. In the aggregate in these twelve cases the sums offered totalled £109,517 and the sums awarded totalled £192,267. In other words, when the authority's offers were nut to an impartial test before the Lands Tribunal they had to be increased on the average by about 80 per cent.
Let us see what happens when an owner does not get to the Lands Tribunal. The general experience of estate agents—and I have spoken to many of them about this—who have had to negotiate compulsory purchase prices with local authority valuation officers is fairly represented by this example taken from the books of one estate agent, who is a member of the Royal Institution of Chartered Surveyors.
Over a range of 18 consecutive cases of his which I examined, the aggregate initial offers totalled £15.782. The final 1793 prices conceded totalled £17,945, an increase of about 12½ per cent. on the average. One might say that that represents a moderate difference in a matter where opinion is involved and where there is no absolute criterion. But the House should consider a further point.
In six of these 18 cases the negotiations took over a year; in four, over two years; in one case nearly three years. In the six cases the average increase was about 72 per cent. Thus a very important factor in getting a fair price is whether the victim of a compulsory purchase order, who is often in humble circumstances, can afford to wait, to hold on while his representative negotiates.
This problem of delay was the subject of an interesting article by Mr. Michael Llewellyn in the November issue of Property. He said that, generally speaking, the valuer's job is not very demanding, and added:Regrettably, this encourages a second-rate valuer to prefer 'the Council' as a way of life.Mr. Llewellyn said that the delay in completing purchases was hard to understand and that there seemed no reason why it should take more than a month. He suggested that the present procedure should be amended by arranging for reference to an independent arbitrator to be made as soon as it is clear that there is a dispute. He added:A few minutes' convervation over a telephone would quickly decide whether the parties are talking about the same figure. If not, immediate reference is the answer.A half-hour hearing, with both sides putting forward their evidence and accepting the arbitrator's decision would settle all the negotiations quickly and easily. Appeal to the Lands Tribunal would remain an additional protection, but it is doubtful if any more vendors would appeal than do at present.As a further example of delay I quote a letter published in the Estates Gazette on 24th July last concerning a compulsory purchase in which the L.C.C. offered £4,000 and eventually conceded £10,750, representing an increase of 150 per cent. This was after 5¼ years. The writer of the letter, an original letter from whom I have in my possession, said: 1794I feel very strongly that the Council could have made a reasonable offer in the first instance and in any case negotiations need only have taken a reasonable time.To be absolutely fair, I think that one ought to observe that this system can cut both ways. It is not always the case, in Greater London for example, that the squeeze is on the little man in this matter of valuation. The L.C.C. can, when it suits its books, be very generous indeed—to the big man.
I can give an example of that from my constituency, from the experience of my borough council. My borough council would very much have liked to have bought, for the housing of local people on its housing list, a private development on the corner of Longwood Gardens and Mossford Green in Barkingside, Ilford. But the borough council is subject to Treasury lean sanction, and that loan sanction is subject to the district valuer's valuation.
In that case the L.C.C. also wanted to buy the property—for housing people on its housing list who were not Ilford people at all. The L.C.C. was not subject to loan sanction by the Treasury, because it has its own borrowing powers under an annual Act which we passed in this House. Therefore it is not limited to the district valuer's valuation. The result was that my borough could have offered only the district valuer's value as its price, and was unable therefore to contemplate proceeding with the purchase, because it realised from a similar experience in the past that the L.C.C. was able to offer more. Thus another housing authority was able to get accommodation for outside people from the hands of the. local borough council.
For that reason alone I hope that in the reorganisation of the administration of Greater London the valuation practice of the L.C.C., for example, will be scrapped and not perpetuated by the Greater London Council, which will have considerable housing powers for a number of years ahead. It cannot fail to strike many people as invidious to have one law for the rich authority and another for the poor and different practices prevailing as between different authorities in the same area.
In the face of that sort of thing, it is understandable if the confidence of owners of homes which are compulsorily 1795 purchased, and of the professional men who try to represent these people, is somewhat shaky in the soundness and fairness of the system when they have to deal with local authorities who make their own assessment of values and are independent of Treasury control, however certain the individual vendor or his agent may be of the good intentions and personal integrity of the individual employees of the authority concerned. It is no wonder that people are deeply distressed—and to the point, as I know from personal experience, of being moved to tears.
The stock answer to all protests against a local authority being judge in its own case is that those who are subject to compulsory purchase can always appeal to the Lands Tribunal. That is true, but life is not as simple as that, as the monkey found when he closed his fist over the nut and could not get it out of the jar. Ilford Borough Council cannot appeal to the Lands Tribunal against the London County Council paying over the odds to the big property dealer and depriving the borough of a home for its own people in its own borough. And the little man who thinks that he is being squeezed cannot afford to hang on and wait. He often cannot afford to finance the delay of an appeal, because a dispossessed householder has to produce the cash for his new home, or lose the opportunity of getting it. To produce the cash he must secure the compensation for his old home quickly.
§ Mr. Anthony Fell (Yarmouth)
I hope that my hon. Friend will not mind my interrupting him, but I was wondering whether he can recall any other occasion on which he has taken part in an important debate of this nature when not a single Member of the Opposition has been present?
§ Mr. Iremonger
My hon. Friend has made his point and I would not want to gild the lily. Now that we have been joined by the hon. Member for Eton and Slough (Mr. Brockway), for whom we have a great affection and respect, I think that it would be only fair to say that we know that hon. Members on the other side of the House have more confidence than we have in the rightness of an all-powerful authority. We feel that it is better for people to manage their own business and affairs even if they do it 1796 in ways that we might not think that we would do it for them. I was making the point that a man who cannot afford to wait is often forced to take less than he thinks is right. Even when a home owner can afford the financial outlay there is often a deterrent against an appeal to the tribunal, in that he feels that he will have to pay the costs of the appeal if he loses. In that case one may say that he cannot have confidence in his case—but that is not the way in which life works. It would be fairer to say that in the case of London compulsory purchases the Lands Tribunal's record is such as to suggest that when the London County Council is challenged it is very rare for it to win, judging by the fact that in so many cases costs are awarded against it.
I do not want to weary the House, and I do not think that I can fail to do so by pursuing further points. I will just make a passing reference to the very strong representations that have been made by the National Farmers' Union, in a letter to the London County Council, in which the union quotes a statement made to the council by its general purposes committee. It was reported in the 9th November issue of the Estates Gazette. The following sentence appeared in the report, in the context of arguments dealing with compensation on compulsory acquisition:We cannot accept suggestions that the Council can in any sense be regarded as judge in its own cause.In this letter, which I can easily make available to hon. Members, the Farmers' Union makes a powerful case and points out how, in many vital cases where there is a discretionary power, the local authority is judge in its own case, and that these discretionary powers are often the ones which make the difference between fairness and unfairness, where strict legal interest in property does not in any way compensate for the disturbance involved. This applies in the case of small shopkeepers and farmers with short tenancies. The National Farmers' Union urges the London County Council to give as much publicity to the withdrawal of this assertion as it gave to the statement, and suggests that it should urge the Government to introduce the necessary legislation. Of course we cannot discuss that on the Third Reading of the Consolidated Fund Bill, because 1797 it would be out of order. I therefore make only a passing reference to it.
At the very best compulsory purchase creates an abnormal situation. The buyer knows that in the end he can take the property from the owner by force. This unhealthy situation disturbs the relationship of willing buyer and willing seller. It is neither necessary nor desirable that local authorities such as the London County Council should make matters worse by seeming to load the dice in their own favour. I submit that such local authorities should make a practice of handing over the negotiation and the assessment to the impartial district valuer. I hope that my hon. Friend, whom I thank again for his patience and courtesy in being here, will look into this matter with special regard to the reorganisation of local government in Greater London.
§ 1.29 a.m.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield)
Perhaps it would be of help if I opened my remarks by stating what I believe to be the principle involved here. A local authority, along with any other body, private or public, is—as I understand it—quite free to employ such agents as are reasonably necessary for the fulfilment of its functions. Legally, it can employ any agent it likes to negotiate a price in regard to any property deal or any other deal that involves a purchase or an exchange of money. Despite my hon. Friend's censure, I use the word "negotiate" quite deliberately. I do so because, although my practical experience of valuing is almost nil—once upon a time I had some academic experience of it—it has always struck me as one of the great fallacies of life to imagine that valuation can be regarded as an exact science.
What happens between a local authority and a private person, when they negotiate a price, is really precisely the same as that which happens between two private persons. If they can afford to be and are well advised, private persons will normally each employ a qualified valuer who will argue the price till they reach a figure at which each of them feels he is justified 1798 in advising his client that this is the reasonable figure to be paid.
The only reason, as far as I know, why local authorities, other than London, tend to employ the district valuer on these occasions is that all other authorities, in England and Wales, at any rate, are, as my hon. Friend knows, subject to Ministerial financial control, and it is the practice of Government Departments, though I do not think there is any statutory necessity, to base the decision on whether or not loan sanction is given, on the district valuer's estimate of the reasonable value. It is, therefore, of obvious convenience to employ the district valuer in the first place so that they do not have to get, so to speak, a second valuation made in order to confirm that a valuation, agreed by some other agent, is reasonable for the purpose of the loan sanction.
The only reason why the L.C.C. does not adopt this practice is that Parliament has thought fit to accept that the London County Council, because of the enormous budget which is normally involved, should not be subject to this same Ministerial control, but should bring forward each year a Money Bill for the consideration of Parliament. Therefore, it does not have to have in each transaction the district valuer's assessment of what is a reasonable price. It is entirely up to the Council, therefore, whether it takes valuers on to its permanent staff for this purpose, or whether it employs people in private practice.
My hon. Friend made the point that the district valuer automatically received large amounts of information from the Probate Office, from tax offices, and so on, which enable him to know the price at which any property in his area changed hands. He had very considerable advantages, therefore, over not only valuers employed by the County Council but indeed over any other valuers in private practice. I must admit that the thought of receiving all this information made my heart bleed a little for the district valuers. Whether they all assimilate it in the way my hon. Friend assumed I should not like to guarantee. However that may be, the valuer does not, of course, fix a price in the sense an arbi- 1799 trator does, and say, "This property is valued at £2,000." He just, like any other valuer, starts at a level which he thinks is about right, and then negotiates, and makes it clear from the start that this is a negotiable figure. The same process is involved in both cases.
I do not think it either fair or accurate to dub this particular procedure as the local authority or anyone else acting as a judge in his own case because the district valuer is no more of a judge in this case in the sense that he is an independent arbitrator than any other valuer which a local authority might employ. My hon. Friend censured this practice of London County Council as constituting one law for the rich and one for the poor. I do not think that is so at all. In the great majority of cases where the vendor is either a man of reasonable substance or has some property of substance which is involved, the Lands Tribunal affords an admirable body for arbitration of claims, if necessary, between the two sides.
I fully accept my hon. Friend's problem, which regrettably arises in other spheres of valuation where the vendor, perhaps an unwilling vendor, is a person of humble means and very naturally regards with considerable awe the prospect of incurring additional expense by going to the Lands Tribunal, to a court, or any other form of arbitration which will involve additional expense and the risk of losing. My hon. Friend will be aware that even under the Arbitration Act costs can be awarded, with the initial consent of the parties, against one or the other. The arbitrator, of course, has to be paid.
This is a problem which I think will not be solved by setting up further steps in the chain because it is these steps which in many cases frighten off the very people whom my hon. Friend wishes to help and who I think everyone in the House is aware do occasionally get perhaps a raw deal because they do not feel like battling with what they regard as authority—let alone incurring the additional expense involved in going to the Lands Tribunal or anyone else.
§ Mr. Iremonger
Would it not be much more satisfactory if this whole procedure were called negotiation and not valuation and if they were called local authority 1800 negotiators? Then we would know where we are instead of pretending that they are somehow God.
§ Mr. Corfield
I do not think from my correspondence that by most people any officials in my Department or any politicians are regarded as gods.
In any case the valuer usually invites the person to negotiate whether he is a district valuer or anyone else. I very much doubt whether there is any misunderstanding caused by the use of the word "valuer" instead of "negotiator." I have no doubt that if my hon. Friend perseveres he can get this word into more current parlance in preference to "valuer," but I have a feeling that tradition will beat him.
I am certain that the House as a whole is very much aware of the immense importance of, for want of a better term, the humble vendors, probably the unwilling ones, and of their being treated with the utmost courtesy in the sense that they certainly should not be frightened out of the procedures available to them and that they should be treated with a degree of generosity, particularly in some of the hard cases which occasionally arise from owner-occupiers in slum clearance areas where compensation is low. In other cases I think the Lands Tribunal system is admirable. It is very difficult to improve on it and I should want a great deal more evidence from records of cases to be convinced that the London County Council valuers are over-ruled more often than district valuers or any other form of valuer. However, I have no doubt that when a case does go against the L.C.C. or anyone else the lesson is learned, but I endorse strongly my hon. Friend's plea that the people who do not feel that they can afford these procedures—the risk of going to the Lands Tribunal—should always be treated with special care. It is my impression that they are, whether by the L.C.C. or district valuers, but he will appreciate that my Department has no direct or indirect responsibility for either.
The L.C.C. is entirely independent as to who it employs and what qualifications the employee has. The district valuers are the responsibility of my right hon. Friend the Chancellor of the Exchequer. However, if my hon. Friend 1801 cares to pursue his researches and if he can produce strong evidence to show that over the years there has been a considerable difference in the fate of valuations put on property by L.C.C. valuers and district valuers, then if he does no more than achieve publicity he may be serving a useful purpose. However, I do not think that he will find those researches either as easy or as rewarding as he may imagine.