HL Deb 03 June 1948 vol 156 cc219-45

TOWN AND COUNTRY PLANNING (DEVELOPMENT CHARGE) (SCOTLAND) REGULATIONS, 1948.

LORD HENDERSON

My Lords, I beg to move that the Special Orders, as reported from the Special Orders Committee on May 12 last, be approved. The development charge regulations, of which there are two—one applying to England and Wales and one to Scotland, lay down the general principles which the Central Land Board must follow in determining development charges. One of the main principles of the Act is to vest all development values in the State and to reduce land to its existing use value. In order to achieve this proposition, the Act enables all valuation resulting from permission to develop to be collected by the Central Land Board in the form of a development charge. The Act leaves the amount of this charge to be settled by the Board, with no right of appeal, but Section 70 (2) requires the Board to have regard to the amount by which the value of land with the benefit of planning permission exceeds the value without it. The general principles to be followed by the Board in making their calculation are laid down in the Schedule to the regulations. These principles are based upon the assumption, to which I shall return in a moment, that the Board must charge the full amount of the increase in value attributable to planning permission.

The first principle, which is considered the governing principle, is that the development charge must be fixed at a level which will enable the land to be freely bought and sold at its existing use value. Paragraph (2) makes it plain that the Board must not charge more than the difference, calculated by normal principles of valuation between the value with and the value without planning permission. Paragraph (3) might seem at first sight to involve a contradiction. It provides that the development charge shall not be less than the amount referred to in Paragraph (2) unless, in the opinion of the Board, it ought properly to be less in order to comply with the governing principle. What it does in fact is to give the Board a certain discretion to depart from accepted valuation principles where they are not truly applicable. I must admit that I cannot at the moment give your Lordships an example of the kind of case which may arise, but undoubtedly the Board will meet exceptional problems, and this paragraph will enable them to deal with them. Paragraph (4) provides for modifications to the governing principle in its application to certain particular classes of land. Normally the bottom value for calculation of development charge is existing use value, but for a number of special classes of land in Part VIII of the Act—for example, land held on charitable trust and land of statutory undertakings—the intention of the Act is that the owner shall be entitled to something more than existing use value. For example, in the case of land held on charitable trust the bottom value for the purposes of calculating development charge will be its value for use prevailing in the locality. The Central Land Board are, therefore, given power in these special cases, where full application of the governing principle would produce results contrary to what the Act intends, to modify the governing principle as they think fit.

I have said that these general principles are based on the assumption that the Board must charge the full amount of the increase in value attributable to planning permission. This is not quite the conception which most of your Lordships had in mind when the Bill was before your Lordships' House, and I shall be asked how I reconcile this assumption with the statements made at that time about the desirability of having a flexible development charge. I may say at once that, as the Minister stated last week in a debate in the other place, there have been second thoughts on this subject. The view of the Department and of the Central Land Board is now that the flexibility we want can be secured by the normal processes of valuation. In valuing a planning permission to put up a particular kind of building, the valuer must have regard to all the relevant circumstances. If the building is going up in a locality where it is difficult to persuade developers to build, this factor will be reflected in the valuation, and the development charge will automatically be lower than it would be in, a locality where there was keen competition to develop. The flexibility will be there, but it will be in the valuation, and not in the percentage of development values that they will charge.

I will not detain your Lordships much longer, but there is one other explanation that I ought to give to prevent misunderstanding. I promised in Committee that I would do my best to see that provision was made, in calculating the development charge, for having regard to works carried out by the owner which enhance the development value of the land. I am sure there will be no difficulty about allowing the ordinary course of valuation for expenditure on improvements carried out after the appointed day. But the view of the Department is now that the right way to deal with expenditure before the appointed day is to give the owner special treatment under the scheme for distributing the £300,000,000. Any claimant who considers that part of the development value of his land is due to improvements which he has carried out at his own expense will be able to include a statement to that effect in his claim, and provision has been made for this to be done in the claims form. In this way, account will be taken of such expenditure. With that explanation I beg to move that these regulations be now approved.

Moved, That the Special Orders, as reported from the Special Orders Committee on the 12th of May last, be approved.—(Lord Henderson.)

LORD LLEWELLIN

My Lords, I suppose there was not a single member of your Lordships' House who took part in the discussions on this Bill when it originally came before us who was not considerably surprised to see this Order drafted in the way that it has been. When we were discussing these matters, on several of the Amendments we tried to raise we were told, for instance in regard to having some arbitration procedure, that that would be far too rigid, and it would be easier to leave the matter in the hands of the Central Land Board so that they could make the development charge flexible—making it perhaps 100 per cent. where they wanted no developments to take place, or, we understood, as low as 40 or 50 per cent. where they particularly wanted to push on with development. I do not think the noble Lord will say that I am in any way misinterpreting what was the understanding in the House when this Bill came before us. The noble and learned Viscount on the Woolsack said: But we have differed from them "— that is, from noble Lords on these Benches— in two respects. First of all, instead of saying that the landowner was to have to pay only 80 per cent., so that he shall have some inducement in developing we have this idea of the Central Land Board, which gives very much greater elasticity; instead of a rigid 80 per cent. in each case you get more elasticity, which I think is good. Now we are faced with a regulation which says that it is 100 per cent. in every case, which perhaps the Lord Chancellor thinks is bad, because it certainly shows no elasticity whatsoever in this matter.

Now we come to the explanation given by the noble Lord, Lord Henderson, who said that flexibility is provided by the normal process of valuation. I do not quite know how that comes about except, I suppose, by "tipping the wink" to the valuer before he does the valuation and by saying to him: "Look here, my dear fellow, you are going down to this area. This is the kind of area where we want development to take place. We do not mind if you are very reasonable in the development charge which you ultimately agree with the agent or the valuer of the owner of the land, because we want to get this land and we want this planning permission to be given. We do not want a large penalty imposed upon the person who is prepared to do what we want to do." I suppose that is the only way it can work. I do not like it, but I should prefer it to take place in that way rather than to have it as rigid as it is in these regulations. I still think it would have been far better for the regulations to allow the Central Land Board the flexibility which we all thought they were to be given when we were discussing the Bill.

May I again quote the Lord Chancellor? He is reported in Volume 149, column 829 in the bound volume—oddly enough column 835 in the unbound volume—as having said: The view I commend to your Lordships is that the Central Land Board—I have used the analogy often before—are like a large landlord who has something to sell, and they have not infrequently to arrive at the price they are going to charge for what they have to sell, the right to develop, by the process commonly known as the higgling of the market. So far as I can see, we are going to get higgling of the valuation; from what the noble Lord, Lord Henderson, has told us, that is what the system comes to. I do not believe that it will work in this rigid 100 per cent. way. There might be something to be said for the old idea that you would not charge more than 80 per cent. You would be far more likely to get a willing seller by adopting that figure than if you take away the whole 100 per cent. and allow a man only present user value and nothing more. It seems to me that in nearly every case, if you want development, you will have to take the land by compulsory purchase, which is a cumbersome way of doing it. If you give a man some small incentive to sell his land, you will surely be working the thing much better.

As it is, the Government have apparently made up their mind on this 100 per cent. We think that it is too rigid; that it is quite inflexible, and that this Order goes back on the basis upon which the Central Land Board was to work, as we all understood when the matter was discussed in this House. We believed that it might work in that way, but I am pretty certain that it will not work in the way now laid down in this regulation. What I believe has happened—and the Minister in another place just pulled the curtain up a little when he said that it was the Central Land Board with whom he had had great discussions—is that, having promised to "cough up" £300,000,000 the Treasury have come in and said: "We are going to get 100 per cent. of this additional charge every time." We know that the Central Land Board were to be a collecting agency on behalf of the Treasury. They have the upper hand, and it is financial and money-collecting principles that underly this Order of 100 per cent., and not proper principles of right town and country planning. For that reason we think the Order is wrong. However, we think it is just as well that it should be proved to be wrong in practice. So let us see how it works. I would be quite prepared to say that, before very long, we shall get a completely different basis from the regulation which is now before us. But if we were to throw it out now, everybody would say that we were premature and that we had no other method to suggest ourselves. At any rate, this is the Government's method on its second thoughts, and in this case I am quite certain the second thoughts are not best.

There is only one other matter on this Order to which I want to refer at the ment, and that is the case of developers, whether they are builders or not—a point about which the noble Lord himself spoke—who have spent a considerable amount of money on developing their sites, putting in sewers and manholes. They have then found that the land had been taken over during the war for farming. One case came to my notice where the land was prepared as a building site before the war but was properly taken for growing vegetables. The value now is back to that of its existing use as a market garden or as agricultural crop-growing fields. But the value of the developed land before the war was about £1,100 an acre. As this is crop-growing land, it is better than farm land far from the town, but its value is about £100 an acre. The value of the land was £1,100 an acre because these people had laid the sewers and some of the road, but they are liable to lose the whole of that money which is a direct contribution from them to the improvement of this land. The noble Lord has said that that will be taken into consideration. May I just ask him a question upon that matter? Will that consideration be given under the Treasury regulation dealing with who will come into the preferential classes? Is that when it will be done? I understand that the noble Lord assents to that. These categories will be included in the preferential classes for an early claim on the £300,000,000, and that matter will be dealt with in some other Order to come before us later. Is that right?

LORD HENDERSON

I believe it will not be in an Order. I think it will be dealt with in a somewhat similar way to the method adopted for near-ripe land. I am not sure whether it comes in an Order or whether it will be part of the scheme the Treasury will work out in dealing with the distribution of the £300,000,000.

LORD LLEWELLIN

I may be wrong about this matter but I thought that the Treasury scheme was laid before Parliament.

LORD HENDERSON

Yes, but it would not be in the ordinary form of an Order.

LORD LLEWELLIN

If the scheme comes, then we shall have to look and see whether this kind of case has been adequately dealt with in it. All I would say about it now is that there were very many hard cases put up in the course of the discussion on this Bill both here and in another place, and on practically every occasion, when he had no other explanation to give, the Minister in charge of the Bill said "That's all right, we will deal with these as preferential claims on the £300,000,000." Well, my Lords, there is going to be precious little of the £300,000,000 left for anybody else. We have put the preference shareholder so high that when we come to the order dealing with the minerals we shall find that the £300,000,000 is completely inadequate. Other claims added to the preferential class would necessitate some provision being made to increase the sum of £300,000,000. Therefore, although I welcome this piece of justice on behalf of these people, I think it may cause considerable injustice amongst other people who, but for all these preferential payments, could have got some compensation from this fund and now are likely to get very little.

From what I have said your Lordships will realise that I dislike this Order. It goes right back on all that was the basis of the discussions we had when the Bill was going through your Lordships' House, and it is extremely odd that the point had not been realised when the Bill was being discussed in this House. I should have thought that with a well-worked-out town and country planning measure—and we know this one was on the stocks for some time—the right time to tell us it was to be an inflexible 100 per cent. was when we discussed it on Second Reading and on the other stages. But it has not happened that way. We think it would have been better if it had been left flexible: we dislike the 100 per cent. I am quite prepared to make a little wager with myself that before any of us is much older there will be third thoughts and a new order; otherwise the whole of this new Central Land Board machinery will, in my opinion, break down.

4.33 p.m.

THE EARL OF SELBORNE

My Lords, I rise only to ask a question of the Minister, for I cannot attempt in my remarks to cover the whole field covered by my noble friend. The ambit of this Act was wide, and the change in the policy of the Government to which the noble Lord referred in introducing this regulation is so far reaching that I suggest we can obtain the best view of what is involved by taking seriatim individual cases which are within our personal knowledge. When the Bill was before your Lordships' House, I felt it necessary to intervene on behalf of the cement industry, of which I am Chairman and which is very much concerned in this measure. I want to ask the noble Lord whether, when he comes to reply, he will explain to us exactly how this change—the second thoughts, to which he has referred—affects these great industries, of which cement is only one. The point about industries of that sort is this: that one is quarrying land for a particular commodity in the land. In the case of cement, it is chalk or limestone and clay; but there are other analagous industries. After the quarrying of the commodity different articles are manufactured. In order to do that very expensive machinery has to be erected: in the case of a cement works, it costs something like £1,000,000 to build an average-size works. No one is going to spend that money without having first secured his raw materials, and therefore it has been the universal practice in this industry to buy, ahead of the erection of the factory, sufficient chalk and clay land to last the factory eighty years. That is very important. Unless one can obtain supplies of that size, one cannot hope to amortise the heavy initial capital expenditure involved.

When this Act was a Bill, and was going through Parliament, this point was raised. A man who buys a farm on chalk land for the purposes of a cement factory will first quarry one field; and while he is quarrying that one field, the other fields continue to grow corn, or whatever it may be. Therefore, when he has finished extracting all the minerals from the first field, he goes on to the second; he changes its use; and it becomes developed land. Therefore, under the terms of the Act, it becomes liable to a development charge. The point was raised and pressed very strongly, both in your Lordships' House by me and by other noble Lords, and also in another place as to whether people who have put up these great factories in order to win minerals from the land, and to manufacture them into a finished product, are to be required to pay twice over for their raw material. The Minister, in another place, dealt with this point. He said, speaking on Clause 76: This clause covers the case of mineral workers who have entered into long leases and contracts by providing for variation in the terms and conditions of leases to allow for the fact that there will be a development charge in respect of mineral workings. The intention is that the mineral worker shall be no worse off than he was before. Those are the words to which I should like to draw the attention of noble Lords.

I should like to ask, in the first place, whether that pledge still stands; whether it is still the intention of the Government that those who are working minerals for the purpose of manufacture, and for which a factory has been erected, are going to be no worse off than they were before. The "second thoughts" that the Government have had on this subject very much affect this point. So long as the Government were telling us that the Central Land Board were to be given a measure of flexibility in fixing their charges, whereby they could vary charges according to the circumstances of the case, then it was possible to argue that where a man had put up an expensive works it would be unfair to ask him to pay more for the raw materials that he had already bought. This regulation, however, gives no discretion to the Land Board, save in very exceptional circumstances. They are bound to charge 100 per cent. of the difference between existing user value and value after permission to develop has been granted. As I said just now, if we take the case of a company that have bought a farm of chalk or clay land, but which is under agriculture, when they finish extracting the mineral from one field they go on to the next field to obtain that mineral. By so doing, they are changing its use from agriculture to the winning of this mineral and therefore, under the terms of the Act, as I understand it, they are changing the use of the land, and a development charge would fall.

If it is the intention of the Government that that should happen, I would point out that two considerations arise. In the first place, if a company have bought their land eighty years ahead, in order to erect this very expensive factory, it would be very unfair to ask them to pay twice over for that land. Secondly, it would be inexpedient, because the inevitable effect would be to add to the cost of the manufactured article. In the case of cement, it would have this further repercussion. Perhaps the noble Lord is aware that there is at this moment a shortage of cement, due partly to the fact that for nine years during the war period it was impossible to build any new cement factories. Therefore, there has been a lag in the process of expansion and modernisation that had gone on before. It is also due to the fact that Hitler gave a very good advertisement to concrete during the Second World War, with the result that when people build now they are apt to use more concrete than before. Therefore, the demand for cement at present exceeds the supply, and it is desirable that people should be encouraged to build new cement factories in order to meet this continuous expansion of demand.

I suggest, however, that nothing is more likely to deter a man or a company from engaging in, or a man from promoting a company to engage in, this vast capital expenditure if he is to be in uncertainty as to what his raw material will cost him. For these reasons I suggest that it is most desirable that the noble Lord should, if possible, give an authoritative statement which will enable the industry to know where it stands. In this matter, I am speaking on behalf of the industry. I can assure my noble friend that there is grave anxiety in the matter, and he would be making a big contribution to the development of the industry, to the possibility of attracting new capital into it, and of its further expansion if he would allow the industry to know where it stands in this respect. I am not certain whether I am right in raising this point on this regulation, or whether it ought to be deferred until we debate the mineral regulations. However, it seems to me that it can be argued that it comes within this regulation, on account of the analogy that I have given about the farm, where one proceeds from one field to another. In any case, it seems desirable that the attention of His Majesty's Government should be brought to the matter at the earliest possible opportunity, so that they can let us know what their policy is.

I have been speaking about the cement industry, because that is the industry with which I happen to be connected, and about which I know, but the case of the cement industry is entirely analogous to that of several other industries which are in precisely the same position—for instance, the pottery industry, which requires expensive factories and considerable capital expenditure. No one would dream of incurring that outlay until he had first bought or leased his land. Sometimes the manufacturer has had to pay high prices for the land. Sometimes he has been able to buy under advantageous terms, at agricultural prices, and he has then erected his factory on the farm. In either case it would be unjust to ask him to pay twice over for his raw material; moreover, it would be inexpedient to do so, because that would inevitably raise the cost of the manufactured product. It would either send up the cost of building in this country or it would impede the sale of British cement in the export market. That is also true of all those other products. I submit that it is vitally necessary that these industries should learn from His Majesty's Government at the earliest possible moment where they stand in the matter.

4.46 p.m.

THE MARQUESS OF EXETER

My Lords, the point I have to raise is very small in comparison with those raised by the noble Earl, Lord Selborne. I am not quite clear with regard to the development charges on land which has been developed by the owner, where he has made roads and laid sewers and pipes and such like. Do I understand that the owner will have a claim on the £300,000,000? My other point is: When will that claim be met? I understand that the owner will have to wait five years before he receives anything at all. The consequence of that would be that the owner would be unable to continue to develop his land, thus holding up development because he had no capital to put into it. I think that that point should be cleared up. Where an owner has spent money on the development of land and has endeavoured to help the development of a town, it seems to me ridiculous that he should be penalised in this way. As I understand it, the 100 per cent. charge would have to be paid. Later on, as I say, in five years' time, he might get something of what may be left after everybody else has been dealt with. Anyone who knows anything about this business at all is quite convinced that £300,000,000 is perfectly useless. It would just about compensate the Metropolis charges and nothing would be left for the poor people outside and those with minerals.

4.49 p.m.

VISCOUNT GAGE

My Lords, there is one question I should like to ask which I do not think has been raised before. Unfortunately, the Minister of Town and Country Planning is not the only Minister who is interested in the control of building. The Minister of Health and the Minister of Works are both very much concerned with the control of building materials and in keeping down the cost of building. As we all know, if we are allowed to build a house at all it must conform to strict specifications regarding superficial area and overall cost. By the edict of the Minister of Health, in calculating the overall cost of the house the cost of the land must be taken into account. The exact words of the circular are these: Where the land is freehold and has already been acquired or is being acquired under a separate transaction, its cost, or where that is not known its value as assessed by the local authority, must be taken into account. The effect of this, in so many words, is to say that the more a man pays for his land, so much the less can he spend on the bricks and mortar of his house; the more expensive the site the worse the house that can be put on it. I can assure your Lordships that this is not a pure hypothesis on my part. The planning authorities have had all kinds of freak plans put before them—such as plans for building half houses, the other halves to be put up when building restrictions are relaxed, and plans for Nissen huts in all sorts of inappropriate positions; and we have had to balance between the urgency of housing and the interests of amenity. I am quite sure that this position will arise again when the nearly complete ban on all building which exists now is relaxed. So far as I can see, the effect of these regulations will be that the conflict between amenities on the one hand and the cost of land on the other will now settle down within the Ministry itself. We shall have the valuation side (the Central Land Board), trying to get as much as they can out of the would-be developer, thereby automatically reducing the amount of bricks and mortar he can put into his house. On the other hand we shall have the planning side, which I hope will stick out for houses of good design and good houses placed in appropriate places. That state of affairs will render it almost impossible for an applicant to build at all unless he can persuade the Central Land Board to charge him a nominal sum. With great respect, it seems to me a perfectly ludicrous position.

I think all of us speak rather patronisingly of the kind of development which was permitted after World War I, and perhaps we do not go very deeply into the causes, which are often quite obscure, why that happened. I venture to bring before your Lordships this point, which may appear to be obscure, but which I believe will permit and has permitted bad building after the war. I would therefore like to appeal to my noble friend, Lord Henderson, to take some action, either by instructing the valuers to take this matter into account (which I am afraid may not be very popular with the Treasury), or by the much simpler method of persuading the Minister of Health, in the interests of good planning, to modify his circular, the logic of which, so far as it necessitates the inclusion of the cost of land, is very difficult for me at least to appreciate.

4.53 p.m.

VISCOUNT MAUGHAM

My Lords, may I intervene as a mere lawyer who, unfortunately, does not own any cement works or even a colliery? This is a subject on which I made a considerable speech at an earlier stage, and now I will say only that I fully agree with what my noble friend, Lord Selborne has submitted to you. All I want to do is to try to induce my noble friend Lord Henderson to throw a little more light on the meaning of the Schedule. I have been concerned in the law for more years than I care to remember, and I have helped in the preparation of hundreds of documents. I have read this Schedule with great care, and I presume that the Schedule, in substance, will be put before any valuer who is charged with the duty of determining the question of the development charge. I assure your Lordships that I am not exaggerating when I say that I do not understand the way it is drafted, and I do not understand the way it will work; nor do I believe that any ordinary valuer will be able to understand it. I had a lot to do with valuations at one time, and I know how valuers approach various subjects, including the subject of valuing property. I hope I shall be able, quite shortly, to tell the noble Lord, Lord Henderson, what I do not understand.

The first paragraph of the Schedule is devoted, so far as England is concerned, to the one object of seeing that the development charge is so determined as to secure…that land can be freely and readily bought…at a price neither greater nor less than its value for its existing use. At present, that strikes me as being quite unintelligible, unless it refers to land as it exists before it is developed. To a lawyer's mind—and, I believe, to a valuer's mind—it would have no effect whatever with regard to the state of things when the property is developed. If you take property worth £1,000, and have a building worth £20,000 built upon it, the only thing that can be bought and sold in the open market is the land plus the house. You cannot in this country sell land divorced from the house or the factory, which may be worth £1,000,000, which stands upon it. Therefore this paragraph, as it appears to me—and I venture to think, with all respect, to anybody else who reads it carefully—is devoted to the question of the figure at which the development charge shall be fixed during the period before the building is put up. Naked land is often let with a house or premises which are going to be pulled down. That is what I make of paragraph 1 of the Schedule.

Then we have paragraphs 2 and 3, which are supposed to enable us to say what the development charge is to be. The first says that the charge must not be more than a certain amount, and paragraph 3 says that it shall not be less than a certain amount. Therefore, between the two, we ought to be able to find an answer to the question as to how one determines the development charge. But let us look into what the valuer has to consider. Paragraph 2 says: Development charge shall not be more than the amount which, to the satisfaction of the Board, represents the additional value, measured by normal processes of valuation of the land due to planning permission for a particular development. Here again we have the land, and only the land, to which there has been added a planning permission which allows certain premises to be erected on it. That paragraph says the charge shall not be more than the amount of the additional value. Then paragraph 3 says that the development charge shall not be less than the amount referred to in paragraph 2. So they are to be the same. There is no gap between these two; they are both exactly the same. One is to be not more than the amount of the additional value, and the other is to be not less than the amount mentioned in paragraph 2; that is to say, it is not to be less than the additional value: …unless[...] in the opinion of the Board"— and this is given for the benefit of the landlord— the charge ought properly to be less in order to comply with the Governing Principle…[...] And the governing principle is one which relates simply to an endeavour to procure the result that the land shall be freely and readily bought before any building is erected on it.

Well, how that governing principle is to enable the landowner to get anything under this provision in Section 3, strictly considered, I do not understand. I can make a good guess as to what is intended by this regulation, but, with all respect to those who have been concerned with the drafting of the regulation and to the noble Lord who is to reply on behalf of the Government, my submission is that really it ought to be clearer. It involves many millions of pounds, and I am sure I am not exaggerating when I say that many landowners who have land which is capable of development of a very substantial character are likely to lose large sums if the matter is left as it is now. I know what valuers do when they are given this sort of instruction. They do the best they can and in the end they make a guess which they hope will satisfy both the Board and the landowner. But it may be something that is very unsatisfactory to the landowner.

I would only remind your Lordships of this. These are regulations which are made by the Minister of Town and Country Planning. They are not like Orders in Council which involve a lot of paraphernalia before matters are put on a legally effective basis. The Minister of Town and Country Planning, for whom I have the greatest respect, can, whenever he likes, make additional or ordinary regulations which will show what he really means by the regulations now before us. Then, perhaps, we shall be reasonably satisfied that these very important regulations regarding the value of property all over the country have been made on a basis that ordinary human beings will be able to understand. I am sure that unless people have a great deal more knowledge of this matter than I have, they will not be able to understand them as they exist now. At any rate the noble Lord will be able, I have no doubt, to tell us what is meant by these three regulations. I have said nothing about the fourth, because I think that I can understand that. If he can elucidate these three in simple terms we shall be grateful. We have not to consider anything more than what the Government intend here to-day, and we hope he will let us know what these regulations mean.

THE DUKE OF BUCCLEUCH AND QUEENSBERRY

My Lords, I feel sure you will agree that anyone is justified in feeling anxious because the regulations associated with this very complicated measure seem likely to lead to serious effects and to stagnation. I am afraid that I find it difficult to follow the advantages and the simplicity which have been attributed to them. Not content with the confiscation of values far larger than those affected by the special levy in the Finance Bill, these regulations seek also to enforce a policy and to impose charges which will deter development by a great many people who have done their best in the past and who would continue to do so. I wish I could be told that that is not so. I rise only to ask for an assurance on one point—perhaps it is quite a small one. I wish to be assured that in no case will a person who proposes to develop his land be compelled to pay a development charge that is greater than the actual development value of the land. As I understand the regulation, the development charge will be 100 per cent. of the difference between the value of the land for its existing use, and the value of that same land with the benefit of planning permission for a new use. But it has been explained elsewhere that the "normal processes of valuation"—to quote the wording of the regulation—will permit the Central Land Board to exercise a certain elasticity in fixing development charge, and that this elasticity may be used to encourage or to discourage development in particular places or areas.

I am, therefore, anxious whether the elasticity permitted to the Central Land Board in the matter of valuation can conceivably or possibly be used to fix a development charge that is in actual fact higher than the true development value of a particular piece of land. If the "normal processes of valuation" can be used to encourage development in one place by the simple process of agreeing on a valuation that produces a suitable development charge, will there not be a temptation, in areas where further development is not particularly desirable, to insist on a valuation that will produce a high development charge—a charge that may possibly be in excess of the true development value? The second paragraph of the Schedule seems to deal with that point but there is, I think, uncertainty, especially if it is the case that there will be a sort of juggling of the valuations. It is, no doubt, reasonable to say that if a development charge is too high the developer will not proceed with his proposed development. In that event he may be subjected to a compulsory purchase order. But I feel that this situation would be unsatisfactory from several points of view, and I hope that the noble Lord who is to reply will be able to give some satisfactory assurance as to the exact position.

5.8 p.m.

VISCOUNT RIDLEY

My Lords, I, too, was very surprised at the general intention of this Order, particularly bearing in mind the long discussions which we had in this House at the time when the Act was passed. I wish only to ask for a little explanation of a phrase which was used by the noble Lord, Lord Henderson, in moving these regulations. He referred, I think, to "flexible valuation." I am a little confused as to what that should be. Paragraph 3 of the Order gives the Board power to vary the development charge, but does not refer to the valuation itself. If the valuation is to be made on any other basis than the actual present use value, there should be some guidance as to the other factors which will influence it. It is not, apparently, to be influenced by the existence of previous works in the form of sewers, drains, water pipes, and so on, as these, it is said, are to be treated as priority classes in claims on the £300,000,000. It is not, I imagine, to be based on the old conception of development value because land was adjacent to a town that was expanding or was in reach of a main road. But I feel the greatest difficulty in seeing how it can be based on a factor which was very much in the minds of everyone at the time when the Bill was discussed—namely, the desirability of influencing people or persuading them to build houses or other buildings in areas under town planning schemes where development is required. As I understand the Schedule, with all respect to the noble and learned Viscount, Lord Maugham, it seems to imply that there is one level everywhere, but that the Board have a discretion in giving a reduction. I would be grateful for some further information as to the meaning of the suggestion about flexibility in valuation. The flexibility seems to me to be in making changes. Valuation must be made on a definite series of factors, whatever they may be. Flexibility surely comes into the policy of the Board, acting under the direction of the Minister of Town and Country Planning, in making a series of changes in the charges. I hope the noble Lord can tell us something on that point.

5.11 p.m.

LORD SALTOUN

My Lords, as there was a discussion on a previous occasion on an Amendment of mine, moved for me, much more ably than I could have done it myself, by my noble friend Lord Llewellin, perhaps I may be permitted to say a word on this matter, and to ask a definite question of the noble Lord who is to reply. The noble Lord, Lord Henderson, said on the previous occasion: In calculating the development charge, due regard must clearly be had to works carried out by the owner which enhance development value. He himself gave instances of other developments, besides the construction of roads; and that, I may say, was exactly what might have been expected from the noble Lord opposite. I understand that since then there have been second thoughts, and it has been considered that out of the £300,000,000 some sum shall be assured to people whose land has been fully developed. In the past, there has been in my own country, I know, and I expect also in England, a great deal of wise and far-seeing development. When a man wishes to develop, he probably goes to the best town planner in his neighbourhood and has the whole thing carefully laid out. He then does all the necessary works for the development of that land. That has occurred in cases which I know quite well.

When that happens, and roads are constructed, they may be constructed by somebody out of his own resources or on borrowed money. The owner may borrow £10,000 or £20,000, and interest is being currently paid on it. In the normal course, before the passing of this Act, the man who had borrowed money would be in a position, as houses and land were developed, to repay that money and receive the interest on it from the land and the houses. Under these regulations, so far as I can see, there is no possible adjustment of the development charge to such a man, because such land to-day, if it went well before the war, will to-day go like hot cakes. The governing principle will rule there, and that man will have to pay full development charge. But the noble Lord who spoke for the Government said that that would be a charge on the £300,000,000, and the man would receive special consideration for the amount he had expended. I entirely share the view of my noble friend Lord Llewellin about a further charge of this kind on the £300,000,000, but the point I am making is this. Subject, of course, to an allowance for houses that have already been built, the sums laid out in the development of that land are perfectly liquid; they can be estimated to a penny. I understand that the full sum is to be a charge on the £300,000,000—or is it to be scaled down?

I should very much like some information on that. I should be still more grateful if my noble friend would ask the Government to give a little more consideration to that position, because, whether the money has been paid out of a man's own pocket or borrowed, the effect is exactly the same. I have not the eloquence which my noble friend Lord Selborne displayed to describe how wise it is to do what I think would be the honest thing, but I feel that anybody who does not receive full compensation for a business which has been cut off like that and taken over by the Government will have something to complain about in the matter.

LORD HYLTON

My Lords, I should like briefly to touch on a class of persons not yet referred to this afternoon—the owners of small building plots, of which there are an innumerable number all over the country. Many of these people bought their small building plots in perfectly good faith before the last war. They paid for them the full building value of that day. What will be their position? They will have development charge assessed on the present user value—that is, the bare value of the land at agricultural prices. Let us assume that that is £50. They paid perhaps £300 to £400 an acre when they purchased. What is to be the development charge on that class of owner? Is it to be 100 per cent. of the difference between existing user and user with permission to develop? Because that is a very large sum for people of small resources. If we take the figures I have just given, the difference between existing user and user with permission to develop would be somewhere between £300 and £400. One hundred per cent. is to be charged. I submit that that is an iniquitous charge.

I think some preference must be given to this class of small owner. Your Lordships have already been told that the preferred classes for compensation will be increased for all those with claims for development costs of estate development which has taken place before the appointed date. So we now have in the preferred classes the builders on leased land, the mineral owners, those who have recently paid estate duty on excess principal value and those with claims for expenses incurred in estate development to which I have just referred. So far as I can make out, there are six preferential classes already. It is perfectly clear that the sum allocated for total compensation will in no way cover not only those six classes but also the innumerable owners of small plots of land bought for building houses. I hope that in replying the noble Lord, Lord Henderson, will be able to give some assurance that this very large number of people of small means will be covered.

5.20 p.m.

LORD HENDERSON

My Lords, there have been very many points raised on these regulations. I will do my best to answer them, though I cannot guarantee that I shall be able to answer every one that has been raised. If I may, I will deal first with the point mentioned by the noble Lord who spoke last—namely, the case of the people who have bought small plots of land at the old unrestricted use value, who will be called upon to pay a development charge when they carry out their development. That type of case will come within the near-ripe scheme. As the noble Lord knows, the near-ripe scheme provides that if the land is developed within five years, the owners concerned can make their claim under the Treasury scheme and the amount will be credited to them. So there is no possibility of their paying a double development charge.

LORD HYLTON

I think the noble Lord will agree that they will have to pay the development charge before they are allowed to develop, or during development. They will have to wait five years, or maybe more, before they get any share of the compensation. Is that so?

LORD HENDERSON

No. The position is that they go on with their development, the development charge is debited against them and is met by the contribution they receive from the Treasury scheme. It is true that they do not get the payment until the Treasury scheme has been approved, but in the meantime they do not have to pay the second development charge.

LORD BALFOUR OF BURLEIGH

May I ask the noble Lord what will happen under those conditions if the £300,000,000 turns out to be insufficient?

LORD HENDERSON

I think the answer is that the Treasury scheme will come before Parliament, who will have all the facts before them as to what is to happen to the £300,000,000.

The noble Lord, Lord Llewellin, raised the question of the 100 per cent. He quoted certain statements which had been made in another place and in your Lordships' House regarding flexibility. It is perfectly true that we have not adopted the method which was first discussed of giving 80 per cent., 70 per cent. or 50 per cent. of the development charge. We are going to achieve the same result by a different method. The regulation will not be operated in a rigid way. May I indicate to your Lordships how I imagine it will work? It will be in this way. If a would-be developer went to the local planning authority to obtain a planning permission, he would say that he owned a piece of land, or that he was able to get a piece of land, and he wanted a development permission for a particular form of development. He would then ask what would be the development charge. The development charge would be fixed by the Board, and he would be told the amount. If he said: "I think that is too high a development charge," he would then be able to submit to the Board his reasons why he thought it was too high. As the Minister said in another place, they would be able to discuss it, and if the would-be developer or his agent were able to adduce reasons convincing the Board that they had been unreasonable in their charge, they would then reduce the charge.

I will take an illustration. Suppose the Board had suggested that the figure was £500, that would theoretically be the 100 per cent. charge. After discussing it with the would-be developer, taking into account the various arguments which he had adduced as to why the figure was unreasonable, and having been persuaded that it was unreasonable, they might then reduce the figure to an agreed figure of £400. That would be the 80 per cent. case which the noble Lord mentioned, if we were to adopt the method which was at first discussed. In this case the £400 would not be regarded as 80 per cent. of the original figure; it would be the 100 per cent. development charge. It simply means that the constant figure under the normal processes of valuation would be 100 per cent., but the actual amount which the 100 per cent. represents would be the figure agreed as the development charge. I think that shows quite definitely that there is flexibility under the ordinary processes of valuation to secure that the charge is not excessive. If the Board put their charges too high, they discourage development; and if they discourage development, the development charge is not made.

I suggest to your Lordships that if those circumstances were to obtain, objections would soon be made to the Central Land Board as to the method in which they were doing their work. The Minister of Town and Country Planning is responsible for the use to which the land is put; he is interested in planning and development. The Minister of Health is interested in housing, the President of the Board of Trade is interested in industrial development—factories, and so forth—the Treasury are interested in development charge revenue, and Parliament as a whole is interested in seeing that this Act is properly implemented. I suggest to your Lordships that if, as is suggested, the Central Land Board were to operate this in a rigid form, and to impose excessive development charges which discourage development, it would not be long before they heard about it.

VISCOUNT GAGE

May I interrupt the noble Lord to ask one question? Suppose a piece of land is put up for sale and a number of people are interested in it, will the rule be that the man who offers the highest development charge will always get the land?

LORD HENDERSON

I think that would depend, to some extent, on the form of development that was proposed.

VISCOUNT GAGE

I understand that the proposed development has to receive the consent of the planning authorities. But, subject to that, will it be the rule that the best bidder will get the land?

LORD HENDERSON

I imagine that it is bound to be so. Noble Lords will remember—indeed, it was included in the Act by an Amendment in this House—that one of the governing principles is that there shall be no undue or unreasonable preference or advantage given to one applicant over another. It seems to me—and I think noble Lords will agree—that in a case like that, if you are not going to exercise undue preference in favour of one competitor, it must go to the highest bidder. That is the way I imagine it would normally work. I would add that this principle of the 100 per cent. development charge was discussed with quite a large number of bodies interested in these matters—over 41 professional and other bodies. I understand, for example, that the Royal Institute of Chartered Surveyors were consulted—they speak with great authority on these matters—and they have agreed that the principles will, if they are wisely administered, be adequate to secure the objects which we all have in mind. I think the manner in which, as I have indicated, development charge will be fixed, and the ability of the would-be developer to make his own representations as to whether the amount is reasonable or unreasonable, indicate that the matter will be administered in a satisfactory way.

The noble Lord also referred to an undertaking, though I think that is rather too strong a word—I would rather say a statement—which I made during the Committee stage about the payment for works that had been carried through. I hope the fact that that particular hope has not been implemented in the regulations will not be held against me as a breach of faith.

LORD LLEWELLIN

Not if it is done in the next lot.

LORD HENDERSON

I must frankly admit that the hope which I expressed has not been fulfilled in the regulations. Let me say at once that, when this matter was discussed in another place, the Minister himself recognised that in one way or another account ought to be taken of this kind of expenditure. As I indicated earlier, it is probable that a large part of the land over which improvements have been carried out will already be swept up in the near-ripe scheme. In the Minister's view, it is much more equivalent to near-ripe than anything else, and it ought to be dealt with very much in that way. The Minister assured another place—and I want to repeat the assurance in this House—that it is a point which will be taken into account, because nobody would wish to deprive the owner of land of any benefit from any expenditure of this sort which he has incurred. As I say, the matter will come within the Treasury scheme, and the various observations which have been made, for example by the noble Lord, Lord Saltoun, will be borne in mind.

LORD SALTOUN

May I say a word on that? What the noble Lord has just said about the near-ripe scheme makes it more likely than ever that it will be possible to fix a definite ascertainable sum for the value, because where a house has been built, obviously the land next door will come in the near-ripe category. May I ask the noble Lord to bear that fact in mind?

LORD HENDERSON

I am quite sure that in working out the Treasury scheme, all essential points of that kind will be borne in mind. The noble Earl, Lord Selborne, raised the question about cement works and kindred works. I think he himself realised that, strictly, this was not the most appropriate place in which to raise the matter. There will be minerals regulations before the House before long—indeed, it is expected that they will be discussed in this House before the end of the month. Perhaps I may briefly indicate what is in mind. The minerals regulations makes provision in the case of the mineral undertaker who is a lessee for adjusting the lease in order to take account of the development charge, and in this way the mineral undertaker will be able to pass on the burden to the landowner. Where the mineral undertaker is also the owner of the land, the undertaker will be able to make a claim in the £300,000,000 scheme. As my noble and learned friend the Lord Chancellor said when the Bill was passing through this House, mineral undertakers who own their land will have to be given some form of preferential treatment in the £300,000,000 scheme, and it is intended to have a near-ripe scheme for minerals on the same lines as the near-ripe scheme which has already been announced for builders. The details of the scheme, however, have still to be worked out in consultation with the various industries concerned. I am therefore not in a position to make any further statement. I will see that the observations to which the noble Earl gave expression are brought to the attention of my right honourable friend the Minister, and I hope that the noble Earl will be content to leave the matter at this stage for fuller discussion later on when the scheme matures.

THE EARL OF SELBORNE

I am quite prepared to accept that explanation, but may I ask my noble friend if he can give an assurance that when he introduces the minerals regulations he will answer the rather detailed questions that I ventured to address to him this afternoon?

LORD HENDERSON

I can certainly give an assurance that, having had the questions put to me, I will do my best to come prepared to answer them. But he will realise that it is not entirely within my province to decide whether I shall be able to give him the answers he would like to have.

Finally, there is the very interesting and important point in connection with building, which was raised by the noble Viscount, Lord Gage. Again, this is not strictly a point which arises on these regulations, and the noble Viscount himself realised that, although I agree it is a good opportunity upon which to draw attention to the problem. The Ministry of Town and Country Planning have communicated the noble Viscount's, views on this point—and I would like to thank him for having given me advance notice—to the Ministry of Health. I am authorised to say that the Minister of Health hopes to be able shortly to make a statement in another place about the future of private building. I have no doubt that when the time comes, one of my noble friends will be making a similar statement in your Lordships' House. How cost of land and development charge should be dealt with is one of the points which will come under review. I hope that that tentative reply will afford some satisfaction to my noble friend.

The noble Duke, the Duke of Buccleuch, was a little concerned about whether paragraph 2 could be manipulated in order to secure a development charge higher than the true development charge. In point of fact, the paragraph itself is expressly designed to ensure that the development charge shall not exceed true development charge. The flexibility to which I have already referred operates with a view to easing the development charge in certain circumstances, but it does not permit of the development charge to be raised above what is a true development charge. The charge is directed to encouraging development, and not to holding it up. Planning control itself will take care that wrongful development does not take place. I think I have covered most of the points which have been raised—at any rate I seem to have exhausted all the points which I took down—and if I may now have the support of your Lordships, I would ask that the regulations be now approved.

On Question, Motion agreed to.