§ 10.31 p.m.
§ Mr. Nicholas Edwards (Pembroke)
My task tonight is to condense a long and complicated story and to explain why that story—the sale by the Ministry of Defence of the Dale sub-depot, an airfield in Pembrokeshire—makes it urgent that we should amend the Crichel Down rules.
It would be as well for me to summarise at the outset those parts of the rules that are relevant. They were first stated in this House on 20th July, 1954, by Lord Crathorne, then Sir Thomas Dugdale. He explained that agricultural land, if it was acquired compulsorily or under the threat of compulsion, should first be offered back to the former owner, not at a cheap rate, not by auction, butat a price assessed by the district valuer as being the current market price."—[OFFICIAL REPORT, 20th July, 1954; Vol. 530, c. 1192.]The rules were further refined over the years, and in 1957, for example, it was laid down that no sale to the former owner should be allowed in the case of land which, as a result of Government expenditure and development, had acquired a value materially exceeding its value for ordinary agricultural purposes. In 1966 land was excluded if it had planning permission for development other than agricultural, or if the planning authority said that such permission would be likely to be granted.
The rules were last restated by the then Financial Secretary to the Treasury, the hon. and learned Member for Lincoln (Mr. Taverne) on 19th January, 1970, when it was emphasised that they were to apply to landwhich is to continue in agriculture indefinitely ".—[OFFICIAL REPORT, 19th January, 1970: Vol. 794, c. 62-63.]So when dealing with Crichel Down cases we are concerned with the market value and with land to be used for agriculture.
I now turn to the actual events which have been the subject of investigation by 1694 the Parliamentary Commissioner as a result of complaints by the former owner, Mr. H. V. B. Lloyd-Philipps, and a tenant, Mr. E. G. Warlow. The 108 acres of land in question were requisitioned for military use in the war. By 1963 they were no longer required, and in 1965 the Pembrokeshire County Council told the Ministry that only agricultural use should be permitted and asked for the removal of all the buildings except one, a hangar to be used for farming purposes.
As a result of a planning appeal by Mr. Warlow and another tenant farmer heard at a public inquiry in 1967, the continued use of four additional buildings for agricultural purposes was allowed. The five hangars remain on the land today.
It is of some relevance that the inspector was influenced bythe argument put forward on grounds of agricultural need, since it appears to him that both appellants have made out a case for additional accommodation for their stock, storage and equipment.It is also relevant that the property is in a national park close above what is surely one of the most beautiful beaches in the whole of the United Kingdom.
In 1969 the Ministry asked the district valuer to open negotiations with Mr. Lloyd-Philipps' agents with a view to selling back the land to him as a previous owner. I quote from the account of the negotiations given by the Parliamentary Commissioner:…the Ministry, quite correctly, and in accordance with the Crichel Down rules, instructed the District Valuer to open negotiations with the former owner's agents. But I see from the papers that before this stage had been reached they had been concerned with the removal of buildings from the site; other than the five buildings which were permitted to remain for agricultural use. In connection with the sale and removal of the surplus buildings they had approached a Mr. Millard-Beer who was known to them to be interested in such disposals. I note that subsequently Mr. Millard-Beer had a telephone conversation with a member of the staff of the Defence Land Agent at Brecon, and it appears that, during this conversation, he expressed interest in the land as well as the buildings. I also note that the DLA, when writing on 18th December, 1969, in confirmation of the conversation, emphasised to Mr. Millard-Beer that the land would only become available on the market if terms could not be agreed for its sale to the former owner. But the papers show that Mr. Millard-Beer was not deterred by this reply and that on 10th January 1970 1695 he wrote to the DLA making a firm offer of £22,860 for the land.The DLA advised the District Valuer of this offer and he, in turn, advised Mr. Lloyd-Philipps' agents. The latter made an offer of £4,500… Subsequently the District Valuer advised the DLA that in his opinion the current open market value of the land was £22,680; that is, the price offered by Mr. Millard-Beer The Ministry asked the District Valuer what value he would have placed on the land but for the offer of £22,680, and the latter said he would have recommended a figure of £10,000.It seems clear that, without the intervention of Mr. Millard-Beer, the land would have been sold back to the owner for not more than £10,000 which was the district valuer's considered assessment of the land for agricultural purposes.
Faced with this extraordinary turn of events, approaches were made to members of the last Government and then, immediately after the General Election, by myself to the new Ministers. I questioned the correctness of the valuation and emphasised the importance of the planning aspects.
I have no criticism to make of the conduct of the case by my hon. Friend the Under-Secretary of State for Defence for the Royal Navy. Indeed I am grateful for the immense care he took over the case. From the first, my hon. Friend recognised that he was faced with a difficult and unusual situation, a situation that I shall argue was not envisaged when the Crichel Down rules were drawn up. His officials consulted both the Treasury and the Welsh Office. It was agreed that the land must be offered to the former owner, Mr. Lloyd-Philipps, not at a figure of £10,000, but at the market value established by the district valuer of £22,690. Mr. Lloyd-Philipps declined to pay that sum and the land was sold to Mr. Millard-Beer.
The Parliamentary Commissioner agrees that the district valuer had no option in the matter and he acceptedthe Inland Revenue's judgment that the market value of property is what a willing buyer is prepared to pay for it at the relevant time, and that in assessing market value, it is correct to take into account the price which is offered by a person to whom the land offers special attractions, even though he may be prepared because of this to pay more than the generality of prospective purchasers.In this case, such a special purchaser appeared in the person of Mr. Millard-Beer. 1696 and the Inland Revenue consider the District Valuer would have been failing in his duty if he had disregarded the higher offer even though it was in excess of his own first estimate.The Parliamentary Commissioner also reported that he was satisfied that the Ministry had acted in accordance with the Crichel Down rules and that there was no evidence of maladministration. Only on a subsidiary point did he find cause for criticism. He described the course of events in these terms:After Mr. Lloyd-Philipps had declined to buy back the land at the valuation of £22,680, Mr. Warlow wrote to the Ministry offering a price in excess of that figure. He wrote to another local resident a letter which appears to be seeking financial help in the purchase of the land and I note that this letter came into the possession of Mr. Millard-Beer, who passed it to the Ministry as evidence that Mr. Warlow was not a serious purchaser. On 5th January 1971 the Ministry thanked Mr. Millard-Beer for forwarding the letter and asked for his views on the draft of a letter which they proposed to send to Mr. Warlow. The letter, which was sent on 7th January, asked Mr. Warlow to state his maximum figure and required him to say whether he would he prepared to deposit this sum in full.We would all, I think, agree with Sir Alan's opinion when he said:It seems to me that it was neither proper nor necessary to invite Mr. Millard-Beer's comments on the letter they proposed to send to Mr. Warlow, who at that time was a prospective competitor for the land. I also consider that it was harsh to imply that they would require deposit of the full purchase price.I would go further and say that I consider it absolutely inexcusable behaviour by the officials concerned.
That, then, is the story, but it cannot be left there. Surely we must ask, first, whether it is right that market value should be dictated by a special and exceptional offer and, second, whether the value of the land for agricultural purposes was at the time anything like £23,000.
The House should note that the basis of compensation in the case of purchase by the Ministry would be as laid down in the Land Compensation Act, 1961, especially in Section 5 of the Act. That basis is, again, essentially market value, but market value modified in certain respects, in particular by the exclusion of the value to a special purchaser in certain circumstances
1697 I believe that this case—the sale of the Dale sub-depot—conclusively establishes the need for the Crichel Down rules to be amended so that they include a similar provision to Section 5 of the Land Compensation Act, 1961. What is sauce for the goose should be sauce for the gander. It is quite wrong that because a speculator is prepared to gamble heavily on a change in planning position an owner should be deprived of land at a price that would be obtainable for agricultural purposes.
Mr. Millard-Beer is in this instance such a speculator. I do not use the phrase about a constituent who is a well-known farmer and property owner in a derogatory sense. A man is entitled to speculate in land as in other property. He is entitled to risk his money in the expectation of a substantial gain.
When dealing with the district valuer, Mr. Millard-Beer maintained that he was buying for agricultural purposes. A letter from Messrs. Woosman & Tyler, the owner's land agents, dated 27th February. 1970, states that the district valuer had told them that a figure close to £23,000had been offered by a substantial farmer merely to use the site and buildings for agricultural storage which could probably just be squeezed into the present planning restrictions on the site for agricultural purposes.But it was not for agricultural storage that Mr. Millard-Beer wanted it at all. On 22nd April this year the land was advertised in theWestern Mailand described as:Ideally placed in relation to development taking place in the area. It includes five serviceable Hangars suitable for Helicopters or small aircraft.The agent's details, which I have with me, conclude with this description:This Site is ideally positioned near the Haven for the imminent development expected from Oil and Gas exploration in the Irish Sea or indeed for the further extension of the Oil Refineries or other Industry now active on both sides of the Haven. Already requests have been made for its use as a Helicopter Base for servicing Oil Rigs in the Irish Sea.I understand that the asking price was very substantially in excess of £23,000.
I am not clear whether the advertisement falls within the scope of the Trade Descriptions Act, but I certainly wish it to be put on record that the Pembrokeshire County Council and the Welsh Office have stated categorically that they would not agree to a non-agricultural use 1698 of the land, and no doubt potential purchasers will take note. In my view, any industrial or commercial development of this key point in the national park would be totally unacceptable.
Be that as it may, it seems clear beyond question that the land was bought as a speculation in the hope that planning permission would eventually be granted under pressure from the oil companies, or on grounds of the national interest. I therefore ask two questions. First, if the intention evidenced by that advertisement had been known at the time and the Land Compensation Act Act rules had applied, as I proposed, would not the district valuer have excluded that value because of its special nature? Second, if the intention evidenced by that advertisement had been known at the time, under the existing Crichel Down rules, would the district valuer have had to accept £23,000 as the agricultural value?
The truth is that it is not and never has been agricultural value; it is speculative value. If the speculation had been supported by the knowledge that planning permission was likely to be granted, the Crichel Down rules would not have applied and the land would not have been offered to the former owner. The fact is that it was offered and the written evidence establishes that the Ministry believed that it was selling agricultural land at an agricultural value. The district valuer too, believed it when he made his valuation.
In my view, both had been hoodwinked. Mr. Lloyd-Philipps and Mr. Warlow had been desperately unlucky victims of a set of rules drawn up to meet one situation but quite unsuited to deal with the strange speculative possibilities to be found when a great oil port and a potential oilfield bordered a national park. We cannot compensate them, but we must at least seek to prevent a similar injustice in future.
I know that the responsibility in this matter is not solely with my hon. Friend, but I ask him to consult his colleagues so that together they may consider whether changes may be made. I therefore warn my hon. Friend that if he cannot answer me in full tonight, I shall come back to him again after a suitable period to inquire what he has been able to do about it.
§ 10.49 p.m.
§ The Under-Secretary of State for Defence for the Army (Mr. Geoffrey Johnson Smith)
I am most grateful to my hon. Friend the Member for Pembroke (Mr. Nicholas Edwards) for giving me warning of the matters that he wished to raise tonight. They are the sale of the former Royal Naval sub-depot at Dale in Pembrokeshire to a purchaser other than the former owner under the Crichel Down rules; the method of fixing the current market value of the surplus land which was sold at Dale; and the resulting planning considerations when land in a national park is sold.
I should like to go into the history of the case. My hon. Friend has been scrupulous in giving his account and I do not dispute what he said, but we should have the Ministry's view in the record.
I should like to deal with the criticisms of the Parliamentary Commissioner for Administration. I think my hon. Friend will agree that, within the context of the case, they were accepted by the Department, and steps have been taken to ensure that nothing similar can occur in any future similar case.
The history of this case is complex. Briefly, the sequence of events is as follows. Part of Dale Castle estate was requisitioned for military use during the war. Some of the land was derequisitioned after the war but a piece of land of some 108 acres was retained and purchased for use as a naval sub-depot.
By the early 1960s the changing pattern of defence deployment meant that the naval sub-depot was no longer needed for defence purposes. The Ministry of Defence is bound to seek the maximum value for the sale of its surplus land, and this depends in large part on the planning indication or assumption of its future use. As a general rule land with an indication for commercial or industrial use will fetch more on the open market than land with an indication for agricultural use only.
Accordingly the Ministry of Defence asked the Pembrokeshire County Council in 1965 whether it would consent to the use of the land for any purpose other than agriculture and whether it would require the removal of all the buildings on the land. In reply the county council as the local planning authority ruled 1700 that the land must remain in agricultural use and asked the Ministry to remove all but one of the buildings on the land.
At that stage two licensees appealed against this decision of the local planning authority. Their appeals were heard in 1967 by an inspector from the Welsh Office. His recommendation, which was accepted by the Secretary of State for Wales, was that four hangars should also remain, making five in all. At this stage, therefore, the Ministry was about to dispose of land and five hangars with a planning indication for agricultural use only.
In 1969 the Ministry offered the land back to the former owner. Under the Crichel Down rules this offer had to be made at the current market price. This was fixed by the district valuer at £22,680, because an unsolicited offer of that amount had already been made. The former owner declined the offer and the land was sold privately for £22,680.
Those are the bald facts of the case. I shall now comment in more detail on certain aspects raised by my hon. Friend. As I have already said the land for disposal at Dale was offered back to the former owner at a sum assessed by the district valuer as being the current market price.
The Crichel Down rules have always included the provision that the land should be offered at current market value. There is nothing in the disposal of the land at Dale as far as I can see which calls for the review of the Crichel Down rules, which are the responsibility of the Government as a whole and apply to other Government Departments as well as the Ministry of Defence.
My hon. Friend contends that what he describes as speculative offers should not be allowed to determine market value. In particular he holds that the market value must have some relevance to the price of land and property in the neighbourhood. But the market price is not something that can be deduced from first principles. It is what a willing buyer is prepared to pay at the relevant time. If abona fideoffer has been made it muss be accepted as an indication of the current market price and cannot be disregarded merely because, as in this case, it was above the district valuer's original estimate. The Ministry had no choice in this case but to accept the district valuer's 1701 view that the current market price was £22,680.
It is well established following the case of the Commissioners of Inland Revenue v. Clay and another that in assessing market value it is correct to take into account the price which is offered by a person to whom the land offers special attractions even though he may be prepared because of this to pay more than the generality of prospective purchasers.
In this case such a special purchaser appeared and the district valuer would have been failing in his duty if he had disregarded the evidence of this offer, even though it was in excess of what he would otherwise have regarded as likely to he the market value of the land.
My hon. Friend also asked whether the district valuer's view of the market value in this case would have applied if the boot had been on the other foot— I make no complaint; this is a perfectly fair request—and the Ministry had been proposing to acquire the land on compulsory purchase.
My hon. Friend will appreciate that this is not essentially for the Ministry of Defence but is a matter for interpretation by the district valuer of the provisions laid down by the Land Compensation Act 1961. I have gone into this matter. I understand, however, that in arriving at the market value regard would have to be taken of any offer from someone for whom the land held special attractions. I have no reason to believe that the application of these rules would result in a markedly different assessment of the market value.
§ Mr. Nicholas Edwards
Is my hon. Friend challenging the statement by the Parliamentary Commissioner in his admirable report on this matter?
§ Mr. Johnson Smith
I do not think I am challenging it. He is not called upon to judge the Act; he is called upon, as he made clear in his report, to comment on the administration of the legislation. He said as much in his report.
My hon. Friend rightly commented on the Crichel Down procedure and then moved from there to the application in this case of the Land Compensation Act 1961, which does not come under that procedure. The Parliamentary Commissioner rightly felt that it was within his remit to comment not on the legislation but rather on its application.
§ Mr. Edwards
My hon. Friend must be fair. The Parliamentary Commissioner quoted the advice he had received from the Inland Revenue on this point.
§ Mr. Johnson Smith
Yes. If my hon. Friend says that what is sauce for the goose is sauce for the gander, I am trying to show that under the Land Compensation Act, 1961, the district valuer's view is that, in arriving at the market value, regard would have to be paid to any other offers. I have shown this clearly in what I said earlier. I should emphasise that, in arriving at the market value, regard would have to be taken of any offer from someone for whom the land held special attractions. That is my understanding of the 1961 Act. I have no reason to believe that the application of these rules would result in a markedly different assessment of the market value.
Lastly, my hon. Friend referred to the importance of planning considerations when land is being sold within a national park. This is a fair point to raise. There is a difference between a planning assumption or indication and planning consent. I have already explained that in order to get the maximum value for surplus land, it is usually sold with a planning assumption or indication. This is not the same as planning consent, as my hon. Friend knows. The grant of a particular planning consent is a matter for the planning authorities, not the Ministry.
The surplus land at Dale was, and still is, in agricultural use and I have no reason to believe that the planning authority will agree to any other use. Local planning authorities with responsibilities for national parks have a general duty, under Section 10 of the National Parks and Access to the Countryside Act, 1949, to exercise their development control powers with due regard to the purposes for which the park was designated. These purposes include the preservation and enhancement of the natural beauty of the park.
I am sure my hon. Friend will understand that the Ministry cannot be responsible for the future use of its surplus land. This is the responsibility of the local planning authority.
§ Question put and agreed to.
§ Adjourned accordingly at one minute to Eleven o'clock.