§ ALLEVIATION OF HARDSHIP ARISING IN CERTAIN CASES WHERE COMPENSATION FOR OWNER-OCCUPIED RESIDENTIAL PROPERTY IS LESS THAN FULL OPEN MARKET VALUE.
- (1) Where a local authority acquires owner-occupied residential property which forms part of an area of town development (as referred to in Part I of Schedule 1 to the Land Compensation Act 1961), and where the compensation payable is less than full open market value, then, subject to the provisions of this section, the local authority acquiring the property shall (if so required by the vendor) provide an interest free loan to the vendor not greater than the difference between the compensation paid and the full open market value of the property acquired by the local authority.
- (2) The said loan shall only be made if and when the vendor completes the purchase of a replacement residential property for his own occupation within two years of the completion of the acquisition of his property by the local authority.
- (3) The replacement property shall be situate in the vicinity of the acquiring local authority.
- (4) The said loan shall not in any case exceed 90 per cent. of the value of the replacement property which value shall be assessed and certified to and at the expense of the authority by a competent professional valuer to be instructed by the authority.
- (5) The said loan shall automatically become a charge on the replacement property and must be registered as a Land Charge against it or, in the case of Registered Land, recorded in H.M. Land Registry.
- (6) The said loan shall be repaid—
- (a) if the vendor ceases to reside in the replacement property;
- (b) on the death of the survivor of the vendor and his spouse:
- (a) that if the vendor ceases to reside in the replacement property, in circumstances where he sells it and within 12 months completes the purchase of another replacement property then the local authority which first acquired the original property shall on request grant another interest-free loan within the terms of this section which shall thereupon become a charge on the property under this section and be subject to the other provisions of this section;
- (b) the replacement property may itself be replaced as contemplated in this proviso without limit to the number of occasions
106 until the death of the survivor of the vendor and his spouse.
- Any apportionment of value for this purpose shall be decided in the manner provided in subsection (8) of this section.
- An Arbitrator under this section shall be appointed by agreement between the parties or in default of agreement by the President for the time being of the Royal Institution of Chartered Surveyors.—[Mr. David Mitchell.]
§ Brought up, and read the First time.
§ Mr. David Mitchell Basingstoke)
I beg to move, That the Clause be read a Second time.
Right hon. and hon. Members will be aware that Basingstoke is an important town. Not only because Gilbert and Sullivan drew attention to it, but it is of special importance regarding town and country planning, because it is one of the most forward towns being built under the expanded towns procedure in the Town Development Act, 1952. It takes a large number of Londoners in for rehousing at present.
First, I will explain the problem which has arisen in the application of compensation relating to expanded town purchases and then I will set out the method which the new Clause proposes for dealing with it. The 1961 Compensation Act, under which compensation is assessed in cases of this kind, provides that the local authority—or the district valuer in valuing on behalf of the local authority—has to disregard the increase in value which has been caused by the decision to make it into an expanded town. When one examines the situation one can see justifiably the idea in Parliament's mind when it laid down this provision in the original Act.
For example, if a farmer has a large farm and the planning authority decides to create a new town in and around that farm the value of his land may rise suddenly from £400 an acre to perhaps 107 £40,000 an acre—or to £4,000 an acre if it is a smaller development. I can appreciate the feeling that existed in the House in 1961 that the happy farmer who owned that land ought not, suddenly, to get this vast increase in capital wealth as the result of a decision over which he had no control. There was an obvious sense of justice and fair play in the original legislation.
But when that argument is applied in the case of an expanded town—where a population already exists, with all the interwoven activity that is associated with the neighbourhood—the effect is very different. The best way to explain the situation is to mention the case which was drawn to my attention by two constituents, who asked me, "What are we to do? The most dreadful thing has happened to us. We have discovered that our house and garden is required by Basingstoke Corporation for their town expansion." I said, "I am very sorry. Although I understand how these things happen, nevertheless, you will receive compensation which will enable you to buy a house somewhere else."
We then proceeded to discover the amount of compensation to which they were entitled, and we found that because, in valuing the property, the district valuer had to disregard the increase in value occasioned by the fact that Basingstoke was an "expanded town", the compensation paid was totally insufficient for them to rehouse themselves in the same locality.
In other words, such a person would have to pick himself up from the town where he had lived and worked all his life and move miles away into the country, where land prices were not inflated by the value of the new town. In fact, a new town of the size of Basingstoke can affect the values of land in all the villages within a radius of eight miles. In such a situation the person concerned has to move right away from his friends, neighbours and work if he is to obtain a similar property to that which he had before.
On a number of occasions I have suggested to this Minister of State—and gave him notice of this new Clause—when he was in his other guise as Financial Secretary to the Treasury that the 108 district valuer at Basingstoke might have been unreasonably tough in his negotiations and in his valuation of the property in the town. As a result of my plea an investigation was undertaken, although I am by no means happy with the result, as the Minister of State knows.
But that is not the point I am raising now. The point is that the answer which came from the Government was to the effect that there was nothing wrong with the valuer's valuation; that was correct. The fact was that the law was unfair. Now the Minister has been transplanted from the Treasury and from being able to say that the financial assessment was correct to another field where, as Minister of State for Housing and Local Government he has an opportunity to put right the wrong which is still being done as a result of the existing form of valuation.
I hope that the hon. and learned Gentleman will seize his opportunity and accept the Clause. I am not a parliamentary draftsman. If parts of the Clause are not phrased as they should be I shall be happy to accept from the Minister an assurance that, suitably adjusted to fit in with the correct draftsman language, he will bring in a new Clause of his own at a later stage, when the Bill goes to the Upper House.
Perhaps I may illustrate the need for my new Clause by giving two examples. The first example concerns the Elston family. Mr. Elston is a retired naval man. He retired to a site in Basingstoke. I have a photograph which I can give the Minister if he would like to see it. It is a nice situation, facing south with a good view over open country. Mr. Elston had his couple of acres. He kept rabbits and pigs and had some fruit trees. He was enjoying a nice, quiet retirement in a delightful spot.
The valuation of his property was about £3,500. If he wants to buy an equivalent property in the Basingstoke area it will cost him about £5,500—approximately £2,000 more than he has received in compensation. As a result, he has had to sell up and move away from Basingstoke. I am appalled to have to tell the House that far from his being able to find an equivalent property a little distance from Basingstoke he now has to live in a caravan with his wife, in their old 109 age. This cannot be the sort of thing that the House intended.
The other example is a more tragic one, which should persuade the Minister that he cannot delay this matter any longer. It concerns the Ilsley family, who lived on a similar smallholding. Mr Ilsley was ill advised, or well advised—I do not know which—to buy himself a bungalow on the other side of the road which was not subject to compulsory purchase and was similar to that in which he had previously lived. Again, it cost him £2,000 more than he received in compensation. This fact weighed upon him so much and the financial difficulties that it brought with it caused him so much sadness and wretchedness that he committed suicide.
Mr. Ilsley's case aroused a great deal of local concern and worry and brought home to me the need for a change in the law. That is why I have put down the Clause and why I beg the Government not to delay but to seize this opportunity of putting right the injustice that arises in the situations.
The method I suggest in this Clause is quite simple. There would be a good case for saying that in the circumstances we should allow the people concerned to obtain the full market value. If a person's property is devalued because of development he does not receive compensation, and in my view what is good for the goose should be good for the gander. But I have put forward a much simpler and more moderate case. I suggest that such people should be given an interest free loan to enable them to buy equivalent property just for the length of their lifetime. Not so that they make a capital gain. It would simply enable them to live in an equivalent property for the remainder of their lives.
In subsection (1), the Clause provides that the local authority should make this interest free loan. This would not be a great hardship for a local authority because it would have bought land cheap at the old price, before values were inflated by the development. It is also selling expensively at the inflated values caused by the town development. It makes all the capital appreciation which comes from the increase in value because of the new town.
Subsection (2) limits the loan to alternative property which is bought within 110 two years. Subsection (3) limits it to a property bought within the vicinity of the local authority area in which the man or woman previously lived. The purpose of the Clause is to help people who are otherwise forced to move.
Subsection (4) is a security to ensure that the local authority can eventually be fully repaid. Subsection (5) provides for a charge against the deeds of the property, giving adequate security for the loan. Subsection (6) makes the loan repayable when the man or his wife, whoever is the survivor, dies. Subsection (7) apportions properties which are partly residential and partly commercial, such as shops with living accommodation above. Great hardship can be suffered in such cases. Subsection (8) provides for arbitration.
This is a matter of considerable interest and urgent need in the Basingstoke area and in other areas which have not reached our advanced stage of town development. I hope that the House will agree that the Clause should be accepted, since it is an example of moderate, inexpensive, simple justice.
§ Mr. A. P. Costain (Folkestone and Hythe)
I support my hon. Friend the Member for Basingstoke (Mr. David Mitchell), because this is a very good compromise in a difficult situation. This problem arises not only in the case of new town procedure but in many others. I do not know why the Government will not pay reasonable compensation for a property which they need for their own benefit. If they fail to do that, my hon. Friend's alternative is very reasoned, and I think that the Minister of State is bound to accept it.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
I am grateful for this new Clause. There is no provision in the computation of compensation in compulsory purchase for the person concerned having to live further from his job. My hon. Friend the Member for Basingstoke (Mr. David Mitchell) mentioned the personal hardship involved in having to move when compensation is inadequate to enable the dispossessed person to buy a similar property in the same area. There is also the financial hardship which can result and can probably be avoided only by such a measure as this.
111 If someone has to move eight or 10 miles—that means 16 or 20 a day travelling to and from work—simple arithmetic will show how much that would be in a year, and it is a considerable expense. Apart from the inequity of having to move, not because there is no accommodation, but because the compensation is inadequate for the accommodation which is desired, my hon. Friend's proposal of an interest-free loan is the absolute minimum which the community owes the dispossessed individual or family. As it is a loan which would be paid back on the death of the survivor of the family unit, the local authority or the community would get a magnificent bargain, even if the full wording were accepted.
I hope that the Minister of State will not say that the Clause applies to any property, large or small, since the principles of justice are not particular to given sizes of property but have general application. I hope that, whatever brief, ending with advice to reject the Clause, the Ministry may have produced as a reply to my hon. Friend's able speech, the hon. and learned Gentleman will thrust such a brief where is properly belongs, into the waste paper basket, and advise us instead to accept the Clause. It is the minimum which, in justice, is owed to those suffering the distressing experience of dispossession. Even if no financial hardship is involved, it is still very distressing.
§ Mr. MacDermot
As the hon. Member for Basingstoke (Mr. David Mitchell) has said, this is not the first time that he and I have debated problems arising from compensation payable to his constituents because of the extension of that town. Our previous debates arose chiefly out of his wholly unjustifiable attacks on the district valuer, as a result of which I instituted a special inquiry which completely failed to support his allegations. I am sorry that he still, by implication, appears to want to attack the district valuer.
The hon. Member then put into my mouth today words which I have never used, saying that I had told him, "It is not the fault of the district valuer, but of the law, which is unfair." I have never said that the law is unfair. I told him that the district valuer merely takes the law as he finds it and that if the hon. Member thinks that it is unfair he can 112 change it. But he should not put words into my mouth. I know that he is asking today that the law should be changed.
The Government have made it clear that this is a planning and not a compensation Bill. It contains some compensation provisions, because it was inevitable, when we changed to the structure plan system, that we should revise the provisions for compensation for blight so as to fit them into the new planning system. The compensation provisions in the Bill are a necessary consequence.
Many proposals are being mooted for revision of the compensation code in the 1961 Act—which, I would remind the hon. Member for Folkestone and Hythe (Mr. Costain), is their Act and not ours. I do not want to be thought to be prejudging the present consideration of these matters. The hon. Gentleman has persuasively argued this proposal, which is contained in the Memorandum submitted by the Chartered Land Societies to our Ministry and it is already being seriously considered in the Government. This is a very complicated field and not a matter which can or should be dealt with piecemeal.
That can be illustrated here. The hon. Member for Basingstoke is attacking one of the basic principles of our compensation code, a principle of considerable antiquity and which is to be found in the rules contained in the 1919 Act—that is, that where land is publicly acquired for a particular scheme of development, any alteration in the value of that land in consequence of that scheme is to be disregarded in assessing the compensation. One may criticise that, but it is a basic principle running right through our compensation code and it would not be right for us to deal piecemeal, in the way the hon. Gentleman is seeking us to do, with that principle.
Underlying the principle, and the reason why it has been found in all our compensation Acts, certainly since 1919, is the fact to which the hon. Member for Basingstoke alluded: that where a public authority itself, by its own action, is enhancing the value of land, it does not seem reasonable that, when it is acquiring that land, it should have to pay the enhanced value resulting only from its development. In accordance with the general principle of our compensation 113 code, what is payable is the market value as it was before the scheme affected the value of the land.
The solution which the hon. Member for Basingstoke has proposed follows closely the proposals which have been put to us by the Chartered Land Societies and I would prefer, therefore, not to comment on that one way or the other, except to say that they are receiving attention along with the many other matters to which our attention has been drawn.
The hon. Member for Basingstoke referred to the position in his constituency. There have been some problems. He raised some, and some have arisen out of the compensation payable under this type of development. They have, in the main, been problems concerned with owners who have had to sell the smaller type of substandard house. I am not alluding to any cases to which the hon. Gentleman referred, because I am not familiar with the details of those cases. Nevertheless, it is in this sphere that the problem about which he was speaking arises.
As the hon. Member for Folkestone and Hythe (Mr. Costain) said, this problem is not confined to new towns or town development schemes. It can also arise in slum clearance. In our White Paper published the other day we accepted the principle of paying the market value on owner-occupied houses in slum clearance schemes. It would still leave this problem, however, in the sense that people getting that market value might, where an area is being redeveloped, find it difficult to find another comparable property in the same area at the same price. Such property may not exist.
§ Mr. Costain
From the rehousing point of view, had they been tenants of a council they would have been found alternative accommodation. Are we not penalising those who have been thrifty and, as a result, have bought their own homes?
§ Mr. MacDermot
We are not penalising them. We are paying them the value of their property as it is on the market. One might say that because of the situation of compulsory purchase they will be put to other expense or have to move from the area. Nevertheless, from 114 the point of view of the assessment of compensation for the value of the property concerned, they are getting the market value, which is the general principle accepted throughout the compensation code.
The hon. Member for Tiverton (Mr. Maxwell-Hyslop) raises another factor in suggesting that we should compensate people for extra travelling expenses incurred at their new abode. I do not know how far he would carry this complication. If they moved nearer to their work and had less travelling expenses, would he have them give credit for that when assessing the compensation payable on the value of their homes? In any event, this all departs from our basic principles of compensation.
§ Mr. Maxwell-Hyslop
I was not saying that compensation should give given for travelling to and from work. I was saying that because people are put to this extra expense when they cannot rehouse themselves locally, our proposals should be adopted so that they could rehouse themselves locally and would not be put to additional expense for which there is no compensation.
§ Mr. MacDermot
For the reasons I have indicated, this is not a Clause which the Government could accept in this Measure; and, in any event, we could consider the question of legislating on it only within the context of a revision of the compensation code.
§ Mr. Allason
The hon. and learned Gentleman is correct in saying that the provisions of the 1961 Act are complicated. Our fear is that when compensation is assessed it tends to be done by rule of thumb. Too often I have heard the fraction "half" mentioned and one hears that half the normal compensation shall be paid in respect of new towns. This is a highly dangerous principle to follow and is not in any way related to the 1961 Act.
The Minister explained that the increased value of land due to a development scheme should not be paid in compensation. That may be so, but the fact remains that in a new town or in neighbouring towns new houses and building plots are roughly at the same value. One would, therefore, expect that 115 for a going concern, so to speak—a house, garden, and so on—full compensation should be paid because there is no added value as a result of the coming of the new town, except where there is a large garden, in which case I accept that a considerable increase in value might occur. Although one would expect full compensation to be paid for a building plot or one house, my hon. Friend the Member for Basingstoke (Mr. David Mitchell) pointed out that compensation has been roughly half of what one would expect to be the actual figure, and this is bound to cause suspicion.
Had the Minister said that he had investigated the cases of compensation mentioned by my hon. Friend, and that a fair market value had been paid, his arguments against the Clause would be strong, but he said no such thing. One is left with the suspicion, therefore, that inadequate compensation is paid as a result of the 1961 rules.
The danger here is that what is happening will get around. The Government will suffer in the long run, because expanded new towns must be in the interests of the nation. If the news gets around that inadequate compensation is paid in the event of land being taken as the result of an expanded town scheme, the local inhabitants will not want to know about such a new scheme. In North Devon recently a general poll was held on the question of an expanded town scheme and it was rejected by the local inhabitants, who said that they did not want the expanded town.
I appreciate why the Minister does not want to deal with the matter in this Measure, but I wish that he had given a warmer welcome to the proposals of my hon. Friend the Member for Basingstoke.
§ Mr. David Mitchell
I am very disappointed that the Minister should have turned down such a very reasoned and fair proposal on the ground that it would be a breach of a principle which was enshrined 40 years ago in other circumstances. I wonder when it was suddenly decided by this Government that because something is hidden in about 40 years of antiquity it must automatically be right in regard to future events? In any event, my case is not one of old prin- 116 ciple but of practical humanity and of righting an injustice which I see day by day in my constituency advice "surgery", or deal with by post—
§ Mr. Mitchell
I am interested to hear the hon. Member's intervention, but, in fairness, it should be stated that the problem has not existed for that length of time, and was not foreseen by those who enacted the compensation legislation.
I am interested to hear from the Minister that the Chartered Land Agents' Society has made proposals similar to mine. I was not aware of that fact, but I am glad that, independently, we have arrived at the same conclusion. I hope that that may fortify the Minister into taking his brief back to his Ministry and asking his officials there to read what has been said in this debate, not just by myself but by my hon. Friends; and to see whether they cannot produce some practicable proposals for alleviating the problem in the form of new Government legislation in the course of months, not years ahead.
I urge the Minister to look at this problem quickly. How many tragedies must we have? How many cases must I have of people coming to me in tears? How many cases must I have of people who are driven literally to a doctor's surgery because of their troubles, anxieties and worries in this connection? How many cases before we have Government action?
§ Question put and negatived.