HC Deb 09 January 1996 vol 269 cc116-22

Motion made, and Question proposed, That this House do now adjourn..—[Dr. Liam Fox.]

10.29 pm
Mr. Jacques Arnold (Gravesham)

I am most grateful to Madam Speaker for granting me this debate this evening. The House has heard over the past seven years a long and sorry catalogue of statements about the environmental impact of the channel tunnel rail link project across the fair county of Kent. Since 1988, blight has been with us, particularly in the borough of Gravesham, but also throughout Kent. The blight originally cut a swathe across my constituency by the villages of Istead Rise and New Barn. For two years, massive blight hit those areas, and British Rail ran a rather generous scheme of buy-out, which was invoked for dozens of properties.

In the autumn of 1990, a new announcement was made that the route would be switched to a line closely parallel with the A2. The new route affected a minimum of properties, some 10, at Henhurst road and Scalers hill in the parish of Cobham. The relevant railway promoter, British Rail's Union Railways subsidiary, showed considerable caution in the light of its previous massive compensation costs. Over the years, I have had to fight for every compensation and buy-out case. All have concerned domestic properties inhabited by their owners.

I have called the debate tonight because of two complex cases involving small businesses which have resulted in the collapse of the businesses, at great cost to the owners. Both cases have been aired before the Select Committee which is considering the Channel Tunnel Rail Link Bill, but they represent such injustice to what may be termed "little people" that I thought that the House should be made directly aware of them. I should like to ask my hon. Friend the Minister for Railways and Roads to find the means of giving early redress for loss arising directly out of the actions of what were then this country's nationalised industries—British Rail and its subsidiaries.

The first case relates to Mr. and Mrs. Colin Winzar of The Nook, Scalers hill, Cobham. The proposed line of the new route of the rail link went through their house, which was to be demolished by a deep cutting. They bought the property in September 1990, only one month before the announcement of the route. They secured the loan to buy it with a non-status mortgage over the property. Their intention to convert that mortgage to a standard one and to finance further business loans on the free equity of the house was frustrated, because all lenders viewed the property as blighted and effectively worthless as security for borrowings.

Mr. and Mrs. Winzar were at that time proprietors of two profitable companies, an industrial cleaning company and a company of stonemasons. They had contracts with, for example, the corporation of the City of London, Thames Water and a project on Middlesex guildhall, opposite this place across Parliament square. Their inability to raise finance meant that significant contracts were lost; borrowings were impossible; Union Railways refused to make any advance payments on a future purchase—so insurance policies were cashed in. However, all their attempts to keep the businesses going failed, with the result that the companies ceased to trade in April 1995. Mr. and Mrs. Winzar now exist on income support, and suffer growing overdrafts.

The second case is that of Mr. and Mrs. Smith of Mallard cottage, Old Watling street, Cobham. Their house is also in the direct line of the route of the rail link. It will disappear into a wide cutting which is proposed for Ashenbank wood, a site of special scientific interest, the destruction of which would be a dreadful act of vandalism. Mr. and Mrs. Smith have occupied their property since 1987, and they had a thriving business importing and selling flowers wholesale. Their success led to expansion, and they planned to extend the property.

However, in late 1990 they planned to move the business elsewhere to have scope for expansion. They then found that their property was unsaleable because of the rail link blight. They also ran into business difficulties, due not least to the recession and to bad debts and also to the inflexibility of their property in being able to act as security for them to raise finance. That resulted in the company going into terminal decline.

Ironically, Union Railways—despite representations that I made at the time—would not come to an arrangement, because of the varied financial difficulties to which the company's own blight had contributed. As a result, the business has collapsed. Mr. Smith and his young family now exist on income support, with considerable debts around their necks. In both these cases, the families stood on their own feet and created small businesses of their own. They have been ruthlessly bulldozed on to the scrapheap by a massive national project—one could call it a pan-European project.

Because this is a novel project—it is the first major new railway in this country for more than 100 years—and because it is unprecedented in this century, the House has not made provision for cases such as this, which have had disastrous consequences for those two families. Two reports have been published on the side effects of the project—the ombudsman's report on the channel tunnel rail link and blight and the Select Committee's report on the rail link and exceptional hardship. The latter report states that it should be possible to distinguish a small number of cases of exceptional hardship.

In the two cases to which I have referred, it has been calculated that Mr. and Mrs. Winzar lost £450,000 between the forfeited house and incurred debts, while Mr. and Mrs. Smith lost some £235,000 on their home, plus a considerable sum in terms of their destroyed business. The House should look at the value of domestic properties for which provision is made for compensation and the total of their loss—including the debts incurred and the equity the families had in their businesses—and see that compensation is given.

Debates on the Channel Tunnel Rail Link Bill in the House and on the channel tunnel rail link itself over many years have made it quite clear that there is an overwhelming majority on both sides of the House for the channel tunnel rail link project. So be it. If there is to be such a project, the full costs should be financed by the promoters—who are shortly to be identified—and even, if necessary, by the taxpayer if the House thinks that this is an excellent project. The House is not entitled to finance a massive project effectively at the expense of small householders and small business men who just have the immense bad luck to find that their properties are located in the direct path of the channel tunnel rail link.

I ask my hon. Friend the Minister and the whole House to find very rapid means to compensate my constituents. They are entitled to look to us for compensation that would allow them to rebuild their shattered lives, and enable them to bring back a semblance of normality and earn a living.

10.38 pm
The Minister for Railways and Roads (Mr. John Watts)

I thank my hon. Friend the Member for Gravesham (Mr. Arnold) for bringing this important matter to the attention of the House and for the eloquence and conviction with which he has presented the problems of his constituents, with which, I am sure, the whole House will have sympathy. I appreciate the concerns of property owners and businesses who are affected by major infrastructure projects such as the proposed channel tunnel rail link. Blight and compensation are difficult matters that have occupied the House to a considerable extent.

Parliament's most recent substantive consideration of the general law regarding compensation and blight was, of course, during the passage of the Planning and Compensation Act 1991. As my hon. Friend is aware, generic issues such as compensation and blight are currently being considered by the Channel Tunnel Rail Link Bill Select Committee. The Committee has received a large number of petitions and has heard a great deal of evidence on the issues, including the representations made by my hon. Friend's constituents, that are the subject of tonight's debate.

The Committee will, of course, reach and announce its decisions on generic issues in relation to the Bill in due course. In what I have to say about the specific cases raised by my hon. Friend, I do not wish in any way to pre-empt the recommendations of the Committee or the decisions we shall reach in relation to those recommendations.

I fully understand my hon. Friend's particular concern about the difficulties faced by his constituents, Mr. and Mrs. Winzar and Mr. and Mrs. Smith. Although not identical, both cases involve failures of businesses with loans secured on properties affected by the channel tunnel rail link project. I understand that the difficulties arose during the period of generalised blight affecting the project. I shall say more about that and the current position on the investigation by the Parliamentary Commissioner for Administration in a moment. It has, however, been the policy of successive Governments not to remedy generalised blight.

Once the rail link route was safeguarded, the properties of my hon. Friend's constituents became eligible for voluntary purchase within the terms of the national compensation code. Again, I shall say more about the voluntary purchase scheme operated by Union Railways Ltd. later, if time permits. I believe, however, that Union Railways has made every reasonable effort to help Mr. and Mrs. Winzar and Mr. and Mrs. Smith through their difficulties, within the scope of current compensation arrangements.

Mr. Jacques Arnold

My hon. Friend's reference to generalised blight is accurate. However, if the blight is caused by plans, written on maps, which involve going straight through people's houses, although the blight is generalised, it is specific and lethal for the people concerned.

Mr. Watts

I acknowledge the force, of my hon. Friend's point. He will understand, however, that there has always been a distinction between generalised blight, which arises before a project has been defined and a route has been safeguarded, and the situation once a route has been safeguarded, which triggers the statutory provisions that the House has enacted.

Looking at the cases in a little more detail, I understand that Mr. and Mrs. Winzar purchased their property in 1990. It is very close to, but not on, the line of the proposed rail link route. However, the property has been included in the limits of deviation for the scheme and has been safeguarded because, in the opinion of Union Railways, construction of the new line would make living in the property intolerable.

In accordance with the national compensation code, Union Railways therefore offered to buy the property at the market value it would have enjoyed if the rail link proposal did not exist—that is, the unblighted value of the property. It also offered a home loss payment and disturbance costs, with payment of Mr. and Mrs. Winzar's reasonable legal and agents' fees. Unfortunately, the total offer made by Union Railways proved insufficient to cover the mortgage and loans on the property raised in relation to the business. As the price offered to Mr. and Mrs. Winzar reflects the unblighted value, any loss in value since the property was bought in 1990 reflects a general fall in house prices since that date, and not the effects of the scheme.

I understand that Union Railways has offered to go to arbitration over the valuation, and to pay the initial costs of it. It has also proposed that Mr. and Mrs. Winzar should be free to come back on a new valuation date at any time if they wish to withdraw from arbitration. In addition, the company has agreed to an extended completion period limited to 12 months as a protection against the property market falling. Completion could still be on the basis of the valuation at the time of purchase so that any rise in the property market would benefit Mr. and Mrs. Winzar.

Mr. and Mrs. Smith are in a similar but not identical position. I understand that they bought their property in 1987 and remortgaged it in 1989 to finance an expansion of their business. It is on the line of the proposed rail link and therefore became eligible for purchase under Union Railways' voluntary purchase scheme as soon as the route was safeguarded.

Again, Union Railways offered Mr. and Mrs. Smith the unblighted market value of their property and other payments in accordance with the national compensation code. It has also offered arbitration and to pay the costs of it, together with the possibility of Mr. and Mrs. Smith withdrawing from arbitration and recommencing within 12 months, in the hope that a rise in the housing market would benefit them.

Finally, Union Railways has offered to allow Mr. and Mrs. Smith to continue to occupy the property for a fixed period on payment of a rent which would effectively be deducted from the completion price. It has not been prepared, however, to allow Mr. and Mrs. Smith to continue to occupy the property rent-free.

Subject to agreeing valuations, the offers made by Union Railways would leave my hon. Friend's constituents in no worse a position than they would have been had they sought to sell in the absence of the rail link. Indeed, they would get the benefit of additional payments under the national compensation code—home loss payments, disturbance costs and legal and agents' fees.

Mr. Arnold

Will my hon. Friend clarify one point? Were my constituents to come to a settlement over the domestic properties, would it prejudice their rights to subsequent compensation in respect of the losses to their businesses that arose directly out of the blight?

Mr. Watts

I can reassure my hon. Friend that, if his constituents agreed terms of compensation within the provisions which are available now, and if, as a result of the further work which we are undertaking and on which we will consult with the Select Committee on the Parliamentary Commissioner for Administration, we are able to agree and implement a scheme to provide compensation in circumstances of extreme hardship such as the Parliamentary Commissioner and the Select Committee described, and if Mr. and Mrs. Winzar and Mr. and Mrs. Smith were eligible to be considered under the terms of such a scheme, their right to be considered would not be prejudiced by the fact that they had agreed to the purchase on the basis which is currently being offered to them. I hope that that is a reassurance to my hon. Friend and his constituents.

To ensure that no avenue has been overlooked, I shall also ask Union Railways to look again at these two cases to see whether there is anything further that can be done within the voluntary purchase scheme and the national compensation code.

I shall now deal with the general question of the blight effects on and compensation arrangements for properties and businesses during the various phases of the channel tunnel rail link project.

In common with all major infrastructure projects, the rail link project was subject to what is described as generalised blight, which is the blight that may arise in the early stages of a project while options are being examined and worked up, and consultation is taking place. It ceases at the point at which a project becomes sufficiently well defined for the expected land requirements to be identified on a plan and safeguarded from development.

It has been the policy of successive Governments that there should be no remedy for generalised blight, and it is significant that Parliament did not take the opportunity to decide that generalised blight should give rise to compensation during the passage of the Planning and Compensation Act 1991.

The House is aware of the Parliamentary Commissioner for Administration's report on the channel tunnel rail link and blight, which relates to the generalised blight phase of the rail link project. I was grateful for the opportunity to inform the House of the current position on that report, and on the subsequent report of the Select Committee on the Parliamentary Commissioner for Administration about the channel tunnel rail link and exceptional hardship, during the debate initiated by my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) on 14 December.

On this occasion, I simply reiterate that, in the response to the Select Committee given by my right hon. Friend the Secretary of State for Transport on 1 November, the Government concluded that they had to continue to resist the Parliamentary Commissioner's finding of maladministration in this case, and that any new principle of administration implied in the Committee's report was unacceptable, but that the Government were prepared to consider afresh whether a scheme might be formulated to implement the Committee's recommendation that redress should be granted to those affected to an extreme and exceptional degree by generalised blight from the channel tunnel rail link during the period June 1990 to April 1994, and how such a scheme might operate.

The Government agreed to look again at the possibility of a compensation scheme out of respect for the Select Committee and the office of the Parliamentary Commissioner, and without admission of fault or liability. We also made it clear that the Government would have to consider seriously the possible costs of such a scheme, which cannot yet be established, and that we could not make an open-ended commitment on an uncosted basis, in view of the Government's responsibilities to the taxpayer.

I know that hon. Members and their constituents are keen to know as quickly as possible the outcome of our consideration of whether such a scheme might be formulated. However, at this stage I have nothing substantive to report since the debate on 14 December, except to say that we will make as speedy progress as we can, taking account of the Government's undertaking to consult the Select Committee as proposals are developed and the need to consider seriously the costs of the scheme.

There are many important factors to be looked at, including an acceptable definition of extreme and exceptional hardship, the basis on which any compensation might be paid, the scope of any scheme and its practical operation, and the likely cost of administering any scheme and of compensation to be paid. Until the process of fresh consideration is completed, it is not possible to say whether or what new compensation arrangements might apply or to know whether Mr. and Mrs. Winzar and Mr. and Mrs. Smith might benefit from any such arrangements. I have already assured my hon. Friend and the House that any eligibility that they have to be considered under the terms of such a scheme would not be prejudiced by their earlier agreement of terms for the purchase of their properties under the arrangements that are currently in place.

As with all major infrastructure projects, compensation arising from the rail link is calculated in accordance with the national compensation code. In the case of the rail link, statutory powers for property purchase will not exist until enactment of the Channel Tunnel Rail Link Bill.

However, since the route was announced and safeguarded in 1994, Union Railways Ltd. has been operating a voluntary purchase scheme which mirrors the statutory arrangements. All the properties that are within the surface safeguarded zone for the rail link qualify for voluntary purchase by Union Railways Ltd. on the same terms as under compulsory powers. The option of independent arbitration on valuation difficulties, through the President of the Royal Institution of Chartered Surveyors, also applies. The private sector promoter of the rail link project, when appointed, will be contractually obliged to continue the existing voluntary scheme until statutory powers are available.

For residential owner-occupied properties which are outside the surface safeguarded areas and which are not required for the construction of the railway, Union Railways Ltd. is operating a separate discretionary purchase scheme. Hon. Members will be aware that my hon. Friend the Under-Secretary, the Member for Epping Forest (Mr. Norris), announced on 19 July the publication of new guidelines for the Union Railways scheme, while announcing new guidelines to be used by the Highways Agency in its consideration of applications for discretionary purchase of property in respect of road schemes. The intention was to ensure that both sets of guidelines were broadly comparable.

The main features of the scheme are that applicants must have a qualifying interest in the property, which must not have been bought with foreknowledge of the rail link project; the enjoyment of the property must be likely to be seriously affected by the construction or use of the rail link; the property owner must provide evidence that he or she has made reasonable efforts to sell at a realistic market price; there must be a pressing need to move, for example as a result of financial pressures, medical conditions or employment elsewhere; and purchase is at the discretion of Union Railways Ltd., which will not normally purchase unless a property is seriously affected by both diminution in value and noise.

When purchase is agreed under the discretionary arrangements, it is at the full market price unaffected by the project. Again, the private sector promoter of the rail link project will be required contractually to continue the discretionary purchase scheme until one year after the rail link opens, at which point the provisions of the Land Compensation Act 1973 will apply.

Under part I of that Act, any loss of value of homes caused by the physical effects of the new rail link in operation may qualify for compensation. This is a statutory right which will be claimable 12 months after the rail link comes into operation.

In conclusion, I again commend my hon. Friend for raising the question of blight and compensation arising from the rail link generally, and for drawing attention to the specific problems of his constituents. I hope that my comments will have given him some little assurance.

Question put and agreed to.

Adjourned accordingly at seven minutes to Eleven o'clock