HC Deb 07 April 1977 vol 929 cc1502-12

4.30 p.m.

Sir George Young (Ealing, Acton)

I welcome this opportunity of raising the case of Stanley Farrar, a constituent of mine who has lost £900 through the incompetence of the Ealing Borough Council. However, the villain of the story is not, for once, the London borough of Ealing but the Secretary of State for the Environment. Ealing Council, having admitted the error of its ways, asked the Department of the Environment for permission to pay the £900 to my constituent to put things right, and the Secretary of State has told the council that it cannot.

Caught between the long arm of local government and the torso of central government, my constituent finds himself right in the armpit. Both he and I hope that the Minister will announce this afternoon that the Department of the Environment has changed its mind, and that it will allow Ealing Council to make this payment. If he did this, the Minister would do something to enhance the reputation of his Department, which has been sullied by this particular incident.

The story revolves around the provisions of the Land Compensation Act Under these provisions, certain occupiers of residential premises are entitled to compensation, known as a home loss payment, of three times the rateable value of their premises when those premises are acquired by a local authority. The reasons for this enlightened provision are set out in the Department of the Environment's Circular 73/3. It reads: the intention of the special payment is to recognise the personal upset and distress which people suffer when they are compulsorily displaced from their homes either by compulsory purchase, redevelopment or any action under the Housing Acts". Part of the legislative small print was that a claim for a home loss payment must be made within six months of the occupier leaving his home. Another circular dealing with the Act is particularly relevant to our proceedings this afternoon. That is Department of the Environment Circular 160/74 dated 26th November, 1974: Local authorities are asked to take all necessary steps to ensure that those concerned are made aware of their rights in ample time to make their claims within the six month period specified. That is the general background, and I now turn to the specific case of Mr. Farrar. For over 20 years, my constituent lived as a tenant in a converted flat in a large house in Ealing. At the end of 1974, Ealing Borough Council was negotiating for the purchase of this house, and five others adjoining and in the same ownership, for redevelopment. In such circumstances, my constituent and the other tenants were entitled to apply for a home loss payment.

My constituent was visited by a council housing vistitor on the 21st November 1974. The housing visitor took down particulars of his tenancy and his rehousing requirements were discussed, but the housing visitor did not mention the question of any payment by the council resulting from the move. On 20th January, 1975, my constituent received a letter from the council offering him a tenancy in a new block of flats in Acton, recently acquired by the council, and the letter specifically stated that removal expenses and the cost of disconnection and reconnection of a cooker and telephone would be paid by the council. No mention was made of a home loss payment, thus ignoring the content of Circular 160/74. The council purchased my constituent's flat on 31st January 1975, and Mr. Farrar moved into his new flat on 10th February 1975.

In mid-August, he heard from another tenant that home loss payments were available, and he went to the council offices on 21st August to make his claim. He was informed in a letter on 22nd August from the town clerk's department that his claim was outside the six-month period. Mr. Farrar replied on 27th August saying that he was upset that his application was eleven days out of time and that he could not understand why he had not been informed of his rights. He said that he had had no knowledge of the Land Compensation Act until another tenant told him about it, and that all the other persons in the house who had moved to his block of flats had received home loss payments.

The town clerk's department, clearly struck with remorse, decided to apply to the Department of the Environment for sanction to make an ex gratia payment to the complainant. It had to do this since it was not legally able to make a home lost payment because the application was outside the six-month period. The housing department confirmed that it had not informed the complainant of his right to claim when writing to him on 20th January, 1975. The Department of Environment refused to sanction an ex gratia payment on 8th December, 1975, and my constituent referred the matter to the local government ombudsman.

Baroness Serota, the Commissioner for Local Administration in England, completed her report on 14th July, 1976. She found that Ealing Borough Council had not acted in accordance with the Department of the Environment's Circular of 26th November, 1974, to which I have already referred.

She also found further evidence of incompetence, in that a decision of the Housing Committee on 19th June, 1975, had not been implemented. That decision was that persons known to the council to be entitled to a home loss payment should be informed of their rights. Mr. Farrar was clearly one such person, but he was not contacted. I quote from paragraph 2 of Baroness Serota's report. It is clear in this case that the Council failed to inform the claimant and this amounted to maladministration causing the complainant injustice in that his claim for a home loss payment was out of time as a result. Armed with this unequivocal report from Baroness Serota, my constituent returned to Ealing Borough Council. The council considered the Baroness's report in September, 1976, and then asked the Secretary of State for the Environment, once again, to sanction a home loss payment. Unfortunately, the Department refused to reverse its earlier decision made in December, 1975, and it was therefore impossible for Ealing Council to make a legal payment to my constituent without attracting the attention of the district auditor.

When she heard about this, Baroness Serota was clearly upset. I quote from her letter to my constituent dated 24th November, I appreciate that this is an unsatisfactory outcome of the matter, especially for you … and she went on to say I can only add that I am extremely sorry that this matter has not had a happier conclusion from your point of view and can appreciate how you feel about this sorry story. Having fought this valiant battle single handed, Mr. Farrar came to see me on November 29th last year, and I wrote to the Secretary of State at the Department of the Environment on 3rd December.

I quote from that letter: I must draw to your attention a serious injustice which has been suffered by the above constituent. … Briefly, the Commissioner for Local Administration in England found Ealing Council guilty of maladministration, in failing to notify Mr. Farrar of his rights under the Land Compensation Act. As a result, he was not paid the displacement allowance to which he was entitled. In order to pay this sum, to rectify the injustice which has been identified by the Commissioner, Ealing Council need sanction from your Department to make the payment. This has apparently been refused. I find this decision totally unfair, and would ask you to remedy it. On 11th January, 1977, I received a reply from the Under-Secretary of State. He refused to reverse the decision. His argument, in a nutshell—which is perhaps the best place for it—is summarised by the following sentence in the letter: To authorise an ex gratia payment simply because he had not been informed by the Council of his eligibility would he effectively to allow the express provision of the Land Compensation Act, 1973, to be circumvented, tantamount to legislation by administration. It would both conflict with the general intention of legislation under which sanction can be given and would give rise to other anomalies. This is, of course, total nonsense. Basically, the Department is saying, first, that if it rectifies this injustice, it will suffer the administrative inconvenience of having to rectify other similar injustices as well; and secondly, that it would conflict with the general intention of legislation is clearly untrue.

The general intention of legislation was that Mr. Farrar should have a payment for home loss, and that the local authorities should notify those involved of their rights to such payments. To imply that it is the will of the House that Mr. Farrar should be denied his payment is quite obviously unrealistic, since all hon. Members would react as I have done if a case like this was brought to them.

Fortunately, while one civil servant in the Department of the Environment was busy defending the Minister's entrenched position by drafting the letter dated 11th January, another was selling the pass in correspondence with the Parliamentary Commissioner for Administration. The most powerful evidence for asking the Minister to reverse his decision this afternoon comes from the Fifth Report of the Parliamentary Commissioner for Administration. Case No. C. 476/V, which begins on page 75, involves an almost identical case. I quote from paragraph 1. The complaint concerns the refusal of the Secretary of State for the Environment to allow a Borough Council to meet a late claim from the complainant for a 'Home Loss payment'". In that case, the complainant had been displaced from his home by the local authority, and the local authority had failed to notify him of the availability of home loss payments. In paragraph 11 of his report, the Parliamentary Commissioner said but it seemed to me manifestly inequitable to him that, although the Council had been empowered to make home loss payments to claimants who had made claims within time after they had been told about the arrangements by the Council, the Council could not make a payment to the claimant whose circumstances were precisely those of his fellow citizens except that the Council had given him no information until it was too late for him to take advantage of it. I therefore asked the Department if they would review the whole case with a view to remedying an injustice which the Council themselves wish to remedy. I drew the Department's attention to the fact that the Council had acted in accordance with the Department's own repeated guidance in adopting a policy of advising potential claimants in this matter and acknowledged that they had themselves been at fault in omitting to notify the complainant. The guts of my case this afternoon come in the next paragraph, paragraph 12: The Department explained in reply that, while they would think it appropriate to give sanction under Section 161 of the 1972 Act, in some individual cases where there was a strong presumption of maladministration on the part of the local authority, they did not see the complainant's case in that light In that sentence, the Department has effectively thrown in the sponge in my case. For in the case of Mr. Farrar, there is not just a strong presumption of maladministration on the part of the local authority, there is admission to maladministration by the local authority and irrefutable proof of it in the Local Government Commissioner's report, which has been accepted by the local authority.

I have in fact referred this case to the Parliamentary Commissioner, writing to him on 18th January. As a matter of courtesy, I have informed him that I am raising this case on the Adjournment today and he has no objection to my so doing. He is not yet in a position to tell me whether he will be proceeding to a full investigation, and it is my hope that the response of the Government this afternoon will make his investigation unnecessary.

This is a sad little case, Mr. Deputy Speaker, of the innocent individual being conned by the bureaucracy. Mr. Farrar had no wish to leave his home; Ealing Council obliged him to do so because of its redevelopment proposals. Mr. Farrar did not know of the Land Compensation Act, and the local authority has admitted that it should have told him of it. Mr. Farrar suspected that Ealing Council had misbehaved, and proved that it had done so by taking it to the Local Government Commissioner. He has been right all along the road, and still he is denied the money that Parliament intended that he should have. It is cases like this that destroy the confidence of the citizen in the administrative machine, and the Minister now has an opportunity to start making amends.

The Labour Party is deeply committed to the principle of the Ombudsman. In the preface, entitled "The New Britain", to the 1964 Manifesto of the Labour Party, it is stated: and here in this manifesto is the answer to the Tory gibe that planning could involve a loss of individual liberty. Labour has resolved to humanise the whole administration of the state and to set up the new office of Parliamentary Commissioner with the right and duty to investigate and expose any misuse of Government power as it affects the citizen. I believe that that very section was prepared by the present Secretary of State for the Environment.

I have also looked up to see what welcome the Labour Party gave to the local government Ombudsman when his office was established. Speaking on behalf of the then Opposition, the hon. Member for Widnes (Mr. Oakes) said: We welcome any provision which gives the ordinary citizen redress against maladministration".—[Official Report, 12th November 1973; Vol. 864, c. 145.] I challenge the Minister to reconcile those statements with the action his department has taken in the case that I have brought before the House this after- noon. I urge him to end the parliamentary Session on a happy note by casting to one side the rather boring brief which I suspect his civil servants have prepared for him and by admitting that a mistake has been made in this case and that he has now authorised it to be put right.

4.45 p.m.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)

By leave of the House, I rise to speak for a second time in this Adjournment debate.

I well understand why the hon. Member for Ealing, Acton (Sir G. Young) thought it right to raise this issue in the House. Both the particular case to which he has referred and the wider issues which it raises—there are some wider issues involved—are indeed important.

As to a boring brief, I assure the hon. Gentleman that I have taken great care about this individual case. I recognise Mr. Farrar's feelings and assure him that his case, which has been forcefully put this afternoon, is taken on board by me. I hope that when I have finished speaking, although I shall not have good news, he will recognise that we do not treat this matter lightly in any way.

There is no disagreement about the basic facts involved. I accept everything said by the hon. Gentleman in his very strong speech. People who are displaced by actions of local authorities and who meet certain residential qualifications are entitled to home loss payments. There is no doubt about that, and that was the intention of Parliament. But it was also laid down that a claim had to be made within the six months' period which the Land Compensation Act 1973 allows. The Act is quite specific in providing that a claim must be made within six months of the date of displacement. There is no discretion to extend that statutory period or to accept claims made after the period has expired. Hence, where a claim is made too late to be admissible, the local authority cannot legally make a payment.

As the hon. Gentleman rightly pointed out, my right hon. Friend the Secretary of State has power under Section 161 of the Local Government Act 1972 to sanction expenditure by a local authority which might otherwise be subject to challenge by the district auditor. The House will recall that on two previous occasions—on 22nd May 1975 and 16th October 1975—the application of this power to home loss payment cases was discussed.

Where local authorities have asked for sanction to make ex gratia payments to claimants whose claims were made too late to be admissible, the personal circumstances of the individual have been considered by reference to certain criteria which were referred to by my hon. Friend the Under-Secretary of State, who said: simple ignorance of the home loss provisions is not in itself a sufficient justification for sanctioning an extra-statutory payment. The circumstances of the individual claimant must have been such that it would have been unreasonable to expect him to make a claim within the six months' period". By way of amplification, he added: One obvious example would be a case in which the claimant had been seriously ill or otherwise incapacitated. But it is difficult to generalise; every case has to be looked at on its merits".—[Official Report, 22nd May 1975; Vol. 892, c. 1799.] Those criteria to which my hon. Friend referred have been applied consistently since.

In the particular case raised by the hon. Member, Ealing Council sought sanction to make an ex gratia payment to Mr. Farrar, who was displaced from his dwelling in February 1975, but claimed a home loss payment some two weeks late. The application was considered and, after very careful reference to the established criteria, it was decided that sanction for an ex gratia payment was not justified.

The case was referred to the Commissioner for Local Administration. As the Commissioner noted in her report, at the time of Mr. Farrar's displacement the local authority had not adopted a practice of notifying people individually about possible entitlement to home loss payments. The legislation places no obligation on the authority to do so. However, in June 1975 the council changed its policy. Unfortunately, nobody thought about looking back to those—like Mr. Farrar—who were displaced before the policy change, but still within the six months' claim period, to see whether it might be helpful to remind them to claim if they had not already done so. The Commissioner's investigation found maladministration.

I well understand the council's decision to resubmit an application for sanction under Section 161 to the Department. The Department was naturally concerned about the Commissioner's finding of maladministration by the council. Much careful thought has been given to the question whether it would be justifiable in the circumstances to exercise sanction in favour of Mr. Farrar. The genuine concern which had led the council to request sanction, and its wish to put things right, were fully appreciated. Due weight was given to the sense of injustice and frustration which the claimant would obviously feel, and I assure the hon. Member that I have given further consideration to the case because of the Commissioner's judgment on maladministration.

But against that there were other factors to be taken into account. We have to have proper regard to the intention of the legislation. My hon. Friend made clear in the debate on 22nd May 1975 that, if the power of sanction were to be widely invoked and extensively applied, the effect would be virtually a circumvention of the statute—as the hon. Member quoted when reading his letter. The power of the Secretary of State given under Section 161 of the 1972 Act must be used only in exceptional circumstances and we must consider the consequences of any departure from the statute lest it gives rise to other and wider anomalies.

The case of Mr. Farrar was by no means unique. After much heart-searching, it was finally concluded that it would be wrong to treat it as an exception. It would cast doubt on the whole basis of the criteria referred to in the earlier debate in the House.

I readily acknowledge that this decision will seem harsh, but we have to consider this case in the wider context of the other applications to the Secretary of State. Each case is considered on its merits by reference to agreed criteria. To concede this case—however sympathetic we may feel towards Mr. Farrar—would be unfair to people in other cases where the criteria have been applied, or the criteria would have applied had an application been made.

I am very conscious of the strength of feeling on the issue generally. We are not altogether happy with the way in which the home-loss provisions are working, and we are looking at that aspect.

Sir G. Young

But does not the hon. Gentleman concede that this case is unique in that in no other case has the Commissioner intervened and found the council guilty of maladministration? If what he says is true, what does it mean when his Department would think it appropriate to give sanction under Section 161 of the 1972 Act in some individual cases where there was a strong presumption of maladministration on the part of the local authority"? What does that mean if it does not mean that it would give sanction in the case of Mr. Farrar?

Mr. Armstrong

I am interested in the case to which the hon. Gentleman referred, and I give him the assurance that I will take it up with my right hon. Friend the Secretary of State. We will look carefully at what he has said.

As I was saying, we are not altogether happy with the way the home-loss provisions are working and are looking at that aspect. We also have it in mind to ask local authorities to tighten their procedures for automatically notifying those people they displace about possible entitlement to home-loss payments. This should help avoid difficulties and hard cases in the future.

I am grateful to the hon. Gentleman for raising this matter and giving me the opportunity to explain the Department's general policy and practice. Even though I cannot offer him the encouragement for which he has asked today, I can assure him that the strength of his feelings is fully understood. I shall be making a very full report on the points he has raised to my right hon. Friend and other ministerial colleagues, and they will be given the fullest and most serious consideration.

Sir G. Young

Can the hon. Gentleman give me some idea of when he and the Secretary of State might come to a decision on this matter? I am grateful that he is to have discussions with the Secretary of State, but it would be helpful, particularly to the Parliamentary Commissioner for Administration, who is considering an investigation, if we knew when the Secretary of State's decision might be arrived at.

Mr. Armstrong

That is a reasonable request, and I am sorry that I cannot now give the hon. Gentleman a date. All I can say is that I regard this as an urgent matter, that I have been impressed by the strength of his representations, and that I shall be in touch with him as soon as possible.

Question put and agreed to.

Adjourned accordingly at six minutes to Five o'clock till Tuesday 19th April, pursuant to the resolution of the House yesterday.