HC Deb 22 February 1973 vol 851 cc850-6

The basis of compensation under a compulsory purchase order or subsequent to the giving of a notice of blight shall be the market value one month previous to the date on which the first planning proposals relating to the area concerned were published, adjusted to constant prices at the time of payment.—[Mr. Sutcliffe]

Brought up, and read the First time.

Mr. John Sutcliffe (Middlesbrough, West)

I beg to move, That the clause be read a Second time.

I cannot claim alas, that the clause has been drafted by a solicitor, but it is best illustrated by the example of Middles-brough. Much of the town centre has already been torn down and redeveloped, but much remains to be torn down. There is a large area of residential housing that is being swept away by the Tees-side Poly-technical Extension Development, which affects about 600 households. Some houses have already been purchased by the council, and some remain to be purchased beween now and 1981.

Over the past three years, I have had considerable correspondence from constituents and others complaining that the value of their property or businesses has suffered from planning decisions, planning blight. This led me to ask my right hon. Friend last summer whether he would give the owners of property and businesses the right to apply at the outset of planning blight for a certificate of minimum value equivalent to the market price and, in respect of business, an assessment of goodwill.

I seek by the clause to achieve the same result. Whatever the virtues of the Bill, and it has many, it does nothing to ensure a proper basis of valuation. Surely it has been shown by bitter experience that market value is a meaningless concept once a private house has been effectively removed from the market by a compulsory purchase proposal.

The Secretary of the Tees-side Polytechnic Action Committee which is seeking to protect more than 1.800 people whom it represents in Middlesbrough and who are affected by the extension to the polytechnic, wrote to me about the Bill: The pecuniary fringe benefits are of minor importance if the valuation is unrealistic. … the fact that redevelopment plans exist or even rumours that such plans may be formulated, immediately reduces property values and makes selling difficult. Should not valuation officers be instructed that when valuing for compensation under these circumstances they should totally ignore this reduction in value caused by impending redevelopment? The award for each property ought not to be less than the amount the property would have realised if develoment had never been thought of, and the area remained unaffected by planning blight."— Even that is less than reinstatement value. This point is at the heart of all the bitterness caused by compulsory purchase. Is it too late to have some such clause included in the Land Compensation Bill? I hope that my right hon. Friend will say that it is not too late.

It is serious enough for people to have their homes taken away by the community, however necessary that may be for the common good, and in that way people obviously suffer. But it is terribly wrong that people should be made to suffer twice by getting knockdown prices for their property, especially at a time when property values overall are steadily rising. The difference can be significant, especially to a person—and this goes for most people—whose home is his or her principal or only investment.

I shall not weary the House with endless examples of constituents of mine who have suffered in this way but I instance a constituent who is a 50-year-old nurse and who was offered £4,800 less than an independent valuation of her property considered to be the proper price prior to planning blight.

In other case the local authority expected to purchase property advertised in 1970 for £1,250 at a price, after blight,, of only £800. I suggest that valuation should be based on current value one month before the onset of planning blight. This would ensure full market value.

If my right hon. Friend can suggest any other better way of securing the objective of elementary justice—I know that he has a fertile mind in these matters—I shall be content. However, I ask him not to ignore the grievous sense of injustice which is felt about this matter.

Mr. Gordon Oakes (Widnes)

I think that the House will have some sympathy with the hon. Member for Middlesbrough, West (Mr. Sutcliffe) in what he is trying to do regarding blight. Does he realise that as the new clause is drafted it could work the other way at this time of inflation?

The Government, I think rightly, are trying to compensate at market value rates with a general view to reinstatement. Therefore, in most instances the market value at the date when a compulsory purchase order is made should reasonably adequately compensate a person, with the additional payments in the Bill, for the acquisition of new property.

I wonder whether the hon. Gentleman realises what could happen if the new clause is taken literally. Suppose a first planning application were made three or four years ago for a new road, or whatever it may be. Under this mandatory clause the district valuer must take into account the value of the house at that time, which would be 1969 or 1970. In such circumstances there could be a severe loss on the property, which I am sure the hon. Gentleman would not want.

Mr. Sutcliffe

The hon. Gentleman has omitted to mention the last part of the clause, which deals with this very point. It says that the valuation should be adjusted to constant prices at the time of payment. That would take care of the inflationary process.

Mr. Oakes

If we do that we are coming back to market value; we are adjusting the new clause back to the market value at the time.

I hope that the Minister will look at this point because it is valid. I am not trying to deprecate the hon. Gentleman's argument; I am trying to point out that it could work in reverse, and I am sure he would not want that to happen. I wonder whether a clause could be introduced in another place to give substance to what the hon. Gentleman is trying to do, but, for example, saying that there could be an option between the price at the time of the first planning application or current market value, whichever is the greater. I think that would meet the point that the hon. Gentleman is trying to make without creating a mandatory and possibly difficult situation whereby a person lost because of the rising value of property over what can be a considerable period between the first planning application and the actual compulsory acquisition.

I should like to hear from the Minister on this important question of blight and whether compensation can be given so that a person does not lose twice over: lose by the property being blighted and lose in compensation because it has been blighted and having to live in those blighted conditions for the years between the first planning application and the compulsory acquisition.

11.45 p.m.

Mr. Graham Page

My hon. Friend the Member for Middlesbrough, West (Mr. Sutcliffe) is complaining more about the valuers and the valuations than about the law. It is perfectly clear by law that what he is asking should be taken into account is taken into account. What he is asking should be left out of account is legally left out of account. Section 9 of the Land Compensation Act, 1961, provides: No account shall be taken of any depreciation of the value of the relevant interest which is attributable to the fact that (whether by way of designation, allocation or other particulars contained in the current development plan, or by any other means) an indication has been given that the relevant land is, or is likely, to be acquired by an authority possessing compulsory purchase powers. So, in valuing the property, one disregards the scheme in development, for acquiring the property, and the value is treated as if that scheme had never been mentioned.

We have extended substantially in this Bill the occasions of blight—that is to say, the occasions when the owner of property can serve on the acquiring authority a notice requiring that authority to purchase his property from him, since, because of certain action by that authority, the value of his property has been reduced, and he cannot sell it at the reasonable price that he could have expected in the absence of the scheme concerned.

But we have not extended the occasions of blight as much as the new clause would require. As I read it, under the new clause, blight would occur when the first planning proposals relating to the area concerned were published. This is considerably extending the occasions on which a purchase notice could be served. It is taking the value of the property back behind the occasions on which the law now recognises—and will by the Bill in future recognise—that there is blight.

If my hon. Friend is seeking to provide a safeguard for persons whose interest in land is being compulsory acquired from the effect on property values of whatever scheme is underlying the acquisition, that safeguard is already provided, by Section 6, as well as by Section 9, of the 1961 Act. To that extent, the new clause is unnecessary.

Moreover, the proposal that compensation should be based on market value one month previous to the date of the publication of planning proposals in the area and then adjusted to constant prices at the time of payment seems to me to be fraught with difficulties. It would be very difficult, if not impossible, to find any yardstick which would not produce as many anomalies as my hon. Friend is seeking to overcome.

On the other point in the new clause, that is, to provide for compensation to be assessed by reference to values relevant at the time that payment is made, my hon. Friend has perhaps overlooked the moderately recent case of Birmingham Corporation v. West Midlands Baptist Trust Association (Incorporated) 1969. Previous to that case, one used to think that the right point at which to assess compensation was when the notice to treat was served. But that case has now laid it down that compensation should be assessed at the time at which the acquiring authority takes possession, or at the time when the compensation is agreed. This must surely be at a much later date than one month before the scheme is published. Therefore, one would have to find some formula for adjusting the price, taking into account, I suppose, in an imaginative way the inflation between the time of one month before the scheme was announced and the time the payment is made. One is drawing much nearer reality if one assesses at the time the decision is taken or the compensation agreed. The result of the clause would be to encourage delaying tactics by claimants in order to get some sort of adjustment to the price.

Another thing which my hon. Friend has overlooked, which is provided in the Bill, is the entitlement to a 90 per cent. advance payment of compensation within three months of a claim being made on or after the entry by the acquiring authority. I think that this would meet many of the hardships which my hon. Friend has explained have occurred in his area to those threatened.

Mr. Sutcliffe

It may be that the law is clearer on this than what happens in practice. I cannot believe that there is so much smoke without fire. What is happening in my part of the world, Middlesborough, is that from the moment when a planning proposal is published an area is blighted. A compulsory purchase order may not be made for another two years or more. Values suffer from the moment of publication in the Press. It is not, therefore, the value at that moment of a business which thereafter begins to be blighted. It is the value assessed when the district valuation takes place.

Let us consider the instance of a shop. There is undoubtedly a feeling that the district valuation does not take account of the fact that a shop may remain in business while the houses surrounding it are being vacated. The business of the shop is being lost in the meantime. When the shop comes to be assessed for good will the proper value is not arrived at.

Mr. Page

I cannot believe that the valuers in Middlesborough, West, so misinterpret the law. If I understand my hon. Friend correctly, he is saying that first the proposal is published, and thereby the value of the property concerned in that proposal is reduced. It may be a year or more before one reaches the stage at which a purchase notice can be served, before it is legally blighted. My hon. Friend says that during that period the value of the property has dropped.

That is quite irrelevant when considering the compensation to be paid, because one disregards that proposal right from the beginning. It is not a matter of taking the value of the property at the time it is blighted and saying that this is a lot less than it was just before the scheme was published. One disregards the scheme altogether. The existing law meets my hon. Friend's point.

No one thinks that he has been awarded sufficient compensation. There is always the issue of whether it is sufficient. We are all familiar with constituency cases in which people consider that they have not been paid sufficient compensation for their property. But the law clearly provides exactly what my hon. Friend wishes it to provide. If things are as he says, I am afraid that there must be some failure in the application of that law.

Mr. Nicholas Winterton (Macclesfield)

Will the Minister comment on a constituency point that has come to my attention? An owner-occupier is living in a house built only about 10 years ago. He is finding it difficult to sell it because of a proposed road that will probably not be built for another five or six years. He contracted to buy another house in the belief that he would be able to dispose of his own. He is not able to do so. The local authority refuses to take any responsibility for it, although it is a local authority road. How does the Bill help a person in such a situation?

Mr. Page

The Bill does not and the previous legislation does. I have to advise the hon. Member's constituent to serve a purchase notice on his local authority and fight it out.

Question put and negatived.

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