HOUSING (COMPENSATION PAYMENTS) (Hansard, 1 November 1965)

§ Mr. Graham Page (Crosby)
I want to draw the attention of the House to the plight of the owner-occupiers of small dwellings whose homes are in clearance areas and who are now threatened with compulsory purchase orders—their plight because of the advice given by the Minister of Housing and Local Government to local authorities in this connection.
I said those "who are now threatened with compulsory purchase" but "purchase" in this connection is rather a euphemistic word for confiscation of a building without compensation. It has long been the law, now consolidated in the Housing Act of 1957, Section 59, that compensation for a house in a clearance area is no more than the site value of the house, the value of the land as a site cleared of buildings.
There are many houses in clearance areas which are not worth the cost of demolition and the clearing away of the rubble, but, on the other hand, there are those with many more years of life as decent dwellings but which are condemned because they do not come up to the standard of statutory fitness laid down in Section 4 of the Housing Act, 1957. Very stringent standards of fitness are laid down by that section.
When the first full-scale slum clearance drive in British history was started by a Conservative Government in the 'thirties, the then Government relieved the hardship resulting from those confiscatory provisions by instituting special payments for dwellings which had been well maintained.
In that first slum clearance drive, when about 1½ million people were rehoused between 1933 and 1939, the Conservative Government were dealing with some really bad slum conditions. The vast majority of houses which were demolished in those days were tenanted houses and in bad condition. The owner-occupier was a rare bird in those areas of slum clearance of the 'thirties. But times change, and by the time we reached 836 1954, when another Conservative Government started the second full-scale slum clearance drive in British history, high standards prevailed, and clearance orders were applied to properties which previously would not have been called slums.
The important point is that during and after the war many people had bought homes for themselves in these areas, small houses in the old urban areas, perhaps to replace homes from which they had been bombed out during the war, or perhaps to set up home after the war with the gratuity which a man received on his release from the Services.
Many of those were purchased in the old urban areas which were ripe for clearance and redevelopment. On them the general law of confiscation of bricks and mortar, if the property was in a clearance area, fell extremely harshly, particularly on the owner-occupier who had, for example, mortgaged his house and then found it taken away from him at site value, which might well be about one-twentieth of the real value of the house. He was left, then, to pay for the mortgage, while at the same time having to find himself another house and pay for it either by mortgage payments or rent.
With the rehousing from slum property of somewhere about 60,000 people in 1954, planned to rise to 200,000 people per annum by 1958, in that slum clearance drive under a Conservative Government in the 1950s, compensation hardship cases became a real problem. There was a Mr. Pilgrim who, having his property taken away from him, in a state of frustration and depression committed suicide. The Conservative Government introduced in 1955 a Bill to relieve that kind of hardship. It became the Slum Clearance (Compensation) Act, 1956, which is now embodied in Section 61 and the Second Schedule, Part II, paragraphs 4 and 5, of the Housing Act, 1957.
That Act did two things. First, it improved the well-maintained payments introduced back in the 1930s. Secondly, it gave full compensation to those who had purchased their houses during the 1939 to 1955 period. But those people who had purchased dwelling-houses during that period, in order to obtain the benefit of full compensation, even though 837 they found that their houses were in slum clearance areas, were obliged to show that they were occupying their houses on the 13th December, 1955, that they bought them on or after 1st September, 1939, and before 13th December, 1955, and that at the time that they were compulsorily purchased they were occupied still by the persons who had purchased them or members of their families, and that they had been compulsorily purchased from them before 13th December, 1965, which is a date now only six weeks ahead. So, those people who were given the benefit of full market value compensation because they purchased them between 1939 and 1955, will—if their houses are taken away from them—lose that right unless the purchases take place before 13th December next. That, as I say, is only six weeks ahead.
I must admit that the words used in the particular paragraph of the 1957 Housing Act, "has been purchased" were rather vague and ambiguous. It was right to make the legislation temporary for a matter of ten years, with the intention of reviewing it; it was, after all, passed for special relief to wartime and post-war buyers. The rather general phrase, "has been purchased", would not have been immaterial if the Government had made a statement of future policy in good time before 13th December, 1965. Who, after all, could have imagined when drafting a Bill in 1955, that any Government would be so crazy in 1964–65 as to run the period of the Act right up to the eleventh hour without any statement at all of future policy? I use the word "crazy", but, not only that; I would say thoughtless and careless about all concerned.
Those faced with a compulsory purchase order, their houses being in a slum clearance area, form one section of the problem, but there are also the problems of the local authorities in carrying out their slum clearance duties and their duties to their ratepayers generally. There must be thousands of properties subject at this moment to compulsory purchase orders and for which negotiations are going on about the price at which the properties are to be purchased. These are properties occupied by owners who purchased in the 1939–1955 period and who will get compensation for the "purchase" if it is made by the acquiring 838 authority before 13th December, 1965. The Parliamentary Secretary knows that if the purchase is not made before that date, the owner will get only site value and perhaps a "well maintained" payment; but that can amount only to a tenth, or even a twentieth, of the proper market value of the property.
What action before 13th December will earn an owner full compensation? Is the property which is compulsorily purchased under these circumstances said to be "purchased" on the date of the compulsory purchase order? On the date of confirmation of the order, or the date of the service of notice to treat? On the date of an informal agreement for sale contained in correspondence, on formal exchange of contracts, or at the time of the agreement of the price or compensation figure, or on completion of the transaction by transfer or conveyance?
Any of these occasions could be the point at which the property could be said to have been "purchased" and because of this problem of what is to be the accepted date of purchase, some local authorities have asked for the guidance and advice of the Minister. In his reply, the Minister has said that it means the date on which compensation is agreed between the parties or, in the event of a dispute, which is fixed by the Lands Tribunal. Well, we can write off the latter part of that advice because nobody can possibly get a Lands Tribunal decision in the next six weeks.
So, the Minister has said, in effect, that the date is that when the compensation price is agreed between the parties. I must say that I exclude from my complaint those who purchased less than 15 years before the compulsory purchase order relating to their property, because last week the Minister made special mention of those people. That leaves, however, all those for whom the Conservative Act of 1956 was intended to provide relief; that is, those who purchased during the war and the immediate postwar years. They are to be put in an extremely difficult position by this advice of the Minister because what can be more disastrous to them than this ruling, that "purchase" means "when the price is agreed"? It must be remembered that it takes two to make an agreement. What incentive has one side, the acquiring authority, to agree to the price at all 839 when, if it holds out until 13th December, it can get the property at, perhaps, one-tenth to one-twentieth of the price it would have to pay if it agreed that price now?
I want to make it clear that any local government officer who spins out negotiations in these circumstances is acting quite property. It is his duty to his council and to the general body of ratepayers that he should obtain the property at as low a price as possible, and if he carries on his negotiations so as to get the property after 13th December at site value, instead of agreeing the price now and paying out full compensation value, he is doing his duty. I do not complain about that at all. I do complain about the interpretation which the Minister has placed on the word "purchased", thereby encouraging local authorities to take this course of delaying the agreement of price until after 13th December.
An owner-occupier in these circumstances is forced to accept whatever the local authority may now offer. What could be more unfair than that—or more completely wrong? I use the word "wrong", because I think that the Minister's interpretation of the word "purchased" is wrong. A compulsory purchase order is first made by the local authority. It is then confirmed by the Minister, and, under the Fourth Schedule to the 1957 Housing Act, it becomes operative six weeks after confirmation. That, surely, is the date of purchase. This is a purchase by order. Surely the date when the order comes into operation is the date of purchase. Moreover, if that were the right interpretation of the word "purchased" in the 1956 Act, it is a date that is uncontrolled by those negotiating over the price.
Let me assure the Parliamentary Secretary that we are not here dealing with "wicked wealthy land owners" but with the owner-occupiers of little dwellings in the range of £400 to £1,200. The sort of case now under negotiation of which I have examples is the house which the owner-occupier values at £1,000; the local authority, with a compulsory purchase order at its back, offers £500. The site value, even with the well-maintained payment, is only £100. As 13th December approaches, how can the owner-occupier keep on pressing for that 840 £1,000 which he thinks his property is worth? He will have to agree to the £500; he will get no more than £100 if he does not so agree before 13th December.
If the Minister does not withdraw the advice he has given to local authorities that "purchase" means price agreement and say that "purchase" means the operative date of the compulsory purchase order, I should not be surprised in the least to hear of another Pilgrim suicide over frustration and disappointment in having property taken away at site value. I am sure that the Minister would not be happy to have another Pilgrim case on his conscience.

§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl)
I know that the hon. Member for Crosby (Mr. Graham Page) has strong and by no means universally held views on the subject of compensation for slum clearance. When, earlier in the Session, we debated a Private Member's Bill to extended market value compensation, he spoke with vigour and, indeed, claimed some share in the parentage of that Bill. It was clear as the debate went on that in this matter the hon. Gentleman did not altogether have the agreement of his hon. Friends, and I think that many hon. Members opposite saw rather more clearly than he did some of the difficulties that arise over this question. We are in a particular difficulty at the moment in discussing it because we are on the Adjournment and cannot go into a disquisition on possible legislative changes. In a way, that is a pity because I am being scolded for the drafting of a Bill for which I did not have any responsibility.
The question of the meaning of the word "purchase" is not one of policy but one of legal meaning. The hon. Member knows that it can be tested in the courts if the Minister's advice is wrong. When he gave that advice, my right hon. Friend was trying to be helpful because local authorities wrote to him and were concerned about what would happen if houses affected by current orders were not purchased before the present Act expires. One interpretation was to say that one did not need 841 to wait for formal completion of purchase but put forward the date and not postpone it. I think it was clear from the Answer to the Question by my hon. Friend the Member for Oldham, East (Mr. Mapp) that in future it is proposed that the date will be when a house is included in an order, which I think is a more liberal and humane way of tackling the problem than the present arrangements.

§ Mr. Graham Page
Does the hon. Gentleman mean that it will refer not only to properties mentioned in that Answer, but generally to properties about which I have been speaking? Is the purchase after the date of the compulsory purchase order?

§ Mr. MacColl
The hon. Member is getting too far, because he is trying to cross-examine me about what is to be the legislation in the new Session and that it would be quite improper for me to discuss. It is a matter we can look at on Second Reading of a new Bill in the next Session.
I think there will be provision for mortgage relief in cases where people are in difficulties and they will be able to apply to the court for help. At the moment we are at the end of an experiment with the present legislation, which I agree produced anomalies but, as was clear from the debate we had, they were anomalies inherent in the whole problem. Once we start defining a particular collection of people to be helped by giving them market value we shall get into difficulties because that does not meet other people's problems. It is not an easy problem to tackle.
Another point which came out of the debate was the effect on slum clearance and the problem of bringing into slum clearance areas owner-occupied property which seemed to be in tolerably good condition. The Central Housing Advisory Committee has a sub-committee under the chairmanship of Mrs. Denington, Chairman of the Housing Committee of the Greater London Council, which is looking at this problem of standards of housing fitness. I know something of what that sub-committee is doing and it is getting on with its inquiry. Although I do not 842 know when it will produce a final report, I hope that what it contains about standardised tests for fitness will be helpful and have implications on the question of compensation.
There are provisions whereby local authorities can make ex gratia payments in cases of particular hardship or where decisions of local authorities caused people to buy properties they would not otherwise have bought. In those cases my right hon. Friend encourages local authorities to interpret their powers liberally in order to meet cases of particularly severe hardship.

§ Mr. Graham Page
May I press the hon. Member on this point? I am not pressing him to say anything about legislation. The Minister said in his letter that the words "has been purchased" should be interpreted to mean the time the price is agreed. He has now said, replying about another batch of property, that the date should be the date at which it is included in the compulsory purchase order. Will not the Minister say in respect of property now affected by this date, 13th December, that "purchase" means the date that that property was included in the compulsory purchase order and not the date when the price was fixed?

§ Mr. MacColl
That is the difficulty, because in order to do what the hon. Member wants him to do, the Minister has to introduce legislation, and that is what he proposes to do. What the hon. Member is asking him to do is to interpret the present Statute in a way which suits the hon. Member but which may not be the right interpretation. I do not think that the Minister can do that. Certainly I will draw his attention to the particular problem which the hon. Member has raised about property which may not continue to be covered and see whether it is possible to make any changes, but these would have to be legislative changes, because my hon. Friend's advice is based on what he and his advisers think is the meaning of the Statute.