RESTRICTION ON COMPENSATION: ENGLAND AND WALES (Hansard, 30 April 1985)

§ The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane)
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this we are to discuss Lords amendment No. 2.

§ Mr. Macfarlane
One of the primary purposes of this Bill is to remove the right to compensation under the provisions of section 169 of the Town and Country Planning Act 1971 for adverse decisions on planning applications for extensions to blocks of flats in existence on 1 July 1948.
As I explained on Second Reading, the necessity for the Bill arises largely from the manner in which these compensation rights were being exploited following the decision of the Court of Appeal in the Peaktop Properties case, where the proposed extensions took the form of an additional storey of flats.
The Bill was originally drafted with this specific abuse in mind, and covered cases only when the proposed extension would lead to the creation of additional flats. Concern was expressed, notably by my hon. Friend the member for Kensington, (Sir B. Rhys Williams), who has taken a close and rigorous interest in the Bill, that it would be possible to get round this provision, for example, by adding an additional storey which would convert the top floor into maisonettes, without creating additional units. He argued that we should therefore also cover cases where an extension would increase the size of any individual flat by more than 10 per cent.
I undertook to consider that point, and a Government amendment was put down and accepted in another place with a corresponding amendment to the equivalent Scottish legislation.
Before suggesting the acceptance of these amendments, I should like to take this opportunity to make a more general comment. There has been virtually total agreement from all sides in both Houses to what we are doing in the Bill—I am grateful for the Opposition's support—and we have received support in dealing with what had clearly become a flagrant and unacceptable abuse.
I recognise that some Members of both Houses would have liked us to go further, and to deal with other compensation provisions in the 1971 Act which can be regarded as obsolete and no longer in line with current needs and which are also capable of being abused. Although it is quite reasonable, and indeed essential, to deal with an obvious abuse without warning, any wider changes to these very complex provisions require careful thought, and ought to be the subject of proper consultation. 224 For this reason, we have felt it necessary to resist all attempts to widen the scope of the Bill, however worthy they appeared to be at first sight.
I am, however, happy to repeat the assurance given in another place that the Government will now undertake an urgent review of compensation provisions in the 1971 Act. We intend to issue a consultation paper by the summer to enable all the relevant issues to be fully debated. If, as a result of this review, we conclude that further amending legislation is indeed required, perhaps coupled with appropriate amendments to the general development order, the necessary Bill will then be introduced at the earliest opportunity. By proceeding in this way, I hope that we can find a balance between the various interests which commands widespread acceptance.

§ Sir Geoffrey Finsberg (Hampstead and Highgate)
My hon. Friend the Minister will be aware that Peaktop was in my constituency and that, with my hon. Friend the Member for Kensington (Sir B. Rhys Williams), I have tried to persuade the Ministry to act in this way. The possibility of approaching the matter in this way was my hon. Friend's idea and the amendment should stop such things happening again.
I accept that it would not be possible at this stage to go further. However, I hope that my hon. Friend will be fairly rigorous in the timetable he sets for response to his consultation document. The British Property Federation does not always act as fast as it is capable of doing, and I find that early closing dates concentrate the mind wonderfully. I therefore ask my hon. Friend to put an earlier date than perhaps his officials will try to advise him to impose on this occasion.

§ Sir Brandon Rhys Williams (Kensington)
I should like to thank my hon. Friend very much for the way in which he has responded to the need that arose in inner London, and outside London as well, because of the abuse of the law which became possible and which is causing very great concern to local authorities, which might find themselves liable for the payment of possibly huge sums running into millions of pounds in terms of compensation.
The question of possible retrospection in legislation has been touched on in another place. It is, perhaps, important to mention the word here and to ask my hon. Friend if, before our short debate concludes, he will make very clear what the Department's thinking is. We look forward to the consultation paper which has been promised by the summer and we expect a review by the Government which may contain recommendations on possible abuses which escape the legislation the House is about to endorse.
I sought to introduce a Bill in the House on 7 December 1984 to restrict the liability of planning authorities for the payment of compensation under the provisions of section 165 or 169 of the Town and Country Planning Act 1971. I had to consider very carefully whether it was appropriate to introduce legislation in that way because by so doing I was serving notice on all the people interested in exploiting this possibility for abuse that Parliament was taking an interest in the matter and might act. It did, of course, give them the opportunity of rushing in applications which they hoped would escape the provisions of any legislation which might be brought in.
My hon. Friend responded extremely quickly because the Department's Bill—the Town and Country Planning (Compensation) Bill—was tabled on 24 January and it 225 was intended by the Department—absolutely rightly, in my view—that it should have immediate effect. I sought to amend the Bill after Second Reading because I thought that it had an obvious gap in it and my hon. Friend has responded in exactly the way I hoped by accepting an amendment in the other place which fully meets my particular anxiety. I hope that this is so, but there are very ingenious people who are hoping to make a great deal of money even now by finding lacunae even in the present legislation.
If it were found that through errors of drafting or for some other reason there were still gaps, I think that the House would be entitled to seal them retrospectively. We have served warning that we are not prepared to tolerate these abuses and, if people are so ingenious that they are able to find ways round the law, I think that what Lord Skelmersdale said in the other place was right. He said: if any legislation proposals should need to include a retrospective element because of further abuse, I feel confident that your Lordships would again overcome your normal dislike of such legislation and give it your blessing."—[Official Report, House of Lords, 4 April 1985; Vol. 462, c. 365.] I would like it to be made very clear by my hon. Friend that that represents the Department's view; that of course we in this House all dislike retrospective legislation just as much as it is disliked in another place, but that, in the particular circumstances, that would be something that the Department would be prepared to introduce.

§ Mr. John Fraser (Norwood)
We have supported this Bill because we do not like to see people making money from the exploitation of rights in land to which they have contributed nothing. I agree with the hon. Member for Kensington (Sir B. Rhys Williams) that there was a gap, that Homer nodded and that we can now nod it home.

§ Mr. Macfarlane
With the leave of the House, may I say that I am grateful for the remarks of the hon. Member for Norwood (Mr. Fraser) and for his support in closing the loopholes. With the benefit of the discussions in the other place and of the contributions from my hon. Friends the Members for Hampstead and Highgate (Sir G. Finsberg) and for Kensington (Sir B. Rhys Williams), we have got the legislation right. I accept what my hon. Friend the Member for Hampstead and Highgate has said, as he has taken a close interest for more than a year or so in this timetable. A rigorous appraisal is essential over the ensuing months, and I shall put a firm date on that so that the research can be completed as soon as possible.
Like my hon. Friend the Member for Kensington, I read column 365 of the debate in the other place on 4 April and I am aware of the commitment, which I think I echoed in my opening speech on Second Reading. I am happy to repeat that assurance, and we shall undertake this urgent and rigorous review. The compensation provisions of the 1971 Act require that. We are anxious to proceed and I hope that those ingenious people to whom my hon. Friend the Member for Kensington referred will recognise that the Government mean business, and that the House means business. What will now go on the statute book will act in the best interests of my hon. Friends' constituents.