HL Deb 18 June 1963 vol 250 cc1179-91

2.53 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Hastings.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD MERTHYR in the Chair.]

Clauses 1 to 3 agreed to.

Clause 4 [Short title, commencement, construction and citation]:

LORD SILKIN moved, in subsection (2) to leave out "be deemed to have come into force on 25th February, 1963, but". The noble Lord said: I beg to move Amendment No. 1 and with it, I think consequentially, will go Amendment No. 2. Clause 4, provides in subsection (2), among other things, that this Act shall be deemed to have come into force on February 25, 1963. This is not yet an Act, but, under this clause, it is already in operation and affects the rights of people who in good faith acquired their land in the belief that the law as it stood would remain as at the time when they acquired it.

The last thing I want to do in this House is to come forward as a protector of landowners, because I believe that land prices are far too high; and I shall have something to say on that subject in a fortnight's time. Nevertheless, neither I nor my Party have ever been in favour of confiscation. We believe in fair compensation, and we believe in justice to all sections of the community. If it is necessary to curtail the rights of individuals—as we think it is, and as is being done under this Bill—then we feel that it should be done in a proper way and at the time when the Bill is passed, rather than on a date prior to it.

This Bill is going to affect the rights of individuals who have acquired land, who may have put up buildings upon it, made plans, instructed architects and incurred expenditure, in the belief that they would be able to carry out certain developments. I do not think it is the desire of Parliament that people who quite properly exercise their rights under the law as it stands should be penalised before a Bill has been passed by Parliament. Yet as from February 25 such people will be treated as if this Bill was actually passed. This means that people who, in good faith, have acquired their land and made plans, and who have possibly obtained planning permission and, as I have said, even instructed builders to go ahead, will now be treated as if this Bill were law. I understand that they would not have got planning permission and I withdraw that remark; but at any rate they would have made their plans, instructed their architects and put forward an appliction for planning permission. These people have bought their land and incurred this expenditure in good faith, but all that will become abortive and, as the Bill stands, they will now be treated as if it were already in operation.

Nothing that I say is intended to be in opposition to the principle of the Bill. The principle is sound. It puts right what I think has become an abuse of the 1947 Act (or, to-day, the 1962 Consolidation Act), and I have no objection at all to the principle, but I object to the time when it comes into operation. The purpose of my Amendment is to secure that the Bill comes into operation only on the date when it is passed. This, of course, is the general principle. I think that we all dislike retrospective legislation, especially when it penalises individuals who have acted in good faith. It is for that reason I have put down these two Amendments.

Amendment moved— Page 4, line 7, leave out from ("shall") to ("shall") in line 8.—(Lord Silkin.)

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD HASTINGS)

There are two reasons for making the Bill operate from the date of introduction. The first reason is the possibility of evasion. The aim of the Bill is, as we all agree, to put right defects in existing legislation. If there had been warning of this there would have been an opportunity to take advantage of the defects before legislation remedying them came into effect. In this respect the Bill is analogous to a change to stop up a tax loophole. There are many precedents here for operation from the date of introduction.

The Bill is not retrospective. The noble Lord referred at the end of his speech to "retrospective legislation", but the Bill is not retrospective, in that it does not affect either cases where planning permission was granted before the date of introduction or cases where compensation rights were established before that date. In the field of tax legislation, in order to prevent abuses—and this Bill has been introduced to prevent an abuse—operation from the date of introduction is quite common. The guiding principle here is that evasion must be prevented, and this is the object of the Bill. But it goes only so far as is necessary to achieve this purpose. For instance, it allows purchase notices served before the date of introduction to go through on the old basis of compensation. Moreover, nothing in the Bill affects development for which permission has been granted.

The second reason is that the Bill affects property values from the moment of introduction: first, in respect of compensation for compulsory purchase under Section 15(3) of the Land Compensation Act, 1961, where one of the assumptions to be made in assessing compensation on compulsory acquisition is that permission would be granted for Third Schedule development; and, secondly, in respect of market values, because it reduces the range of development for which an owner might hope to get compensation in one way or another if he were refused permission. I would remind noble Lords that we are talking in both cases of a strictly limited field; in other words, of cases where permission to develop is refused, and this would apply mainly in central London and only comparatively seldom elsewhere. Therefore, I hope your Lordships will appreciate that it was necessary to make the Bill operate from the date on which its provisions became public knowledge. Otherwise there would have been a discrepancy between market value and compulsory purchase value until the date of Royal Assent. There is, of course, a recent precedent for taking this sort of step, in the Town and Country Planning Act, 1959, which changed the basis of compensation on compulsory purchase from existing use value plus compensation for loss of development, to current market value, and did so as from the date of introduction of the Bill. That change was beneficial to property developers, and this one goes in the other direction. But there was no complaint on the previous occasion.

The noble Lord, Lord Silkin, has spoken of hardship to developers who have bought their property, as he said, in good faith, and here I think we must be clear what precisely this means and what this hardship in effect amounts to. The Bill is in general terms, but its main practical effect relates to office development in central London. The complaint made by the noble Lord can have substance only if a developer bought an office site with the intention of rebuilding with a substantial increase in floor space, and yet failed to take the precaution of obtaining planning permission before he committed himself to the purchase. It is, of course, common knowledge that outline planning permission can be obtained before the actual purchase of land, and without going to the expense of drawing up detailed plans, thereby incurring professional fees.

The noble Lord, Lord Silkin, has referred—I am not sure whether he did so in moving this Amendment, but he did so when we were discussing this matter on Second Reading—to the question of compensation if planning permission is not forthcoming. But anybody relying on such a right must surely have taken professional advice, and must have been informed that the right to compensation is not absolute. It is true that a claim might succeed on the basis of a 10 per cent. increase in the cube amounting to no less than a 40 per cent. increase in floor space. But that is precisely why we are amending the law. In any case, there are discretionary elements in the existing law, and a developer who is relying on rebuilding for his profit must have known that his prospects of obtaining compensation if permission was refused depended on the service of a purchase notice.

The Minister has a measure of discretion in his treatment of purchase notices. He will not confirm a purchase notice unless he is satisfied that the statutory conditions are fulfilled, or he may grant a limited permission instead of confirming the purchase notice. Therefore, in redevelopment cases nobody can be certain that there was an absolute right of compensation, and anybody who bought land for the purposes of redevelopment without first obtaining planning permission was taking a calculated commercial risk.

Finally, I would suggest that the transfer of the effective date of this Bill from February 25 to the date of Royal Assent, as proposed by the noble Lord's Amendments, would make little practical difference in respect of cases of so-called hardship, unless one were to assume that there would be a scramble of planning applications which could, after all, be designed only to defeat the whole purpose of this Bill. Therefore, I hope that the noble Lord, in view of my explanations, will see fit to withdraw his Amendment. But, failing that, I trust that this Committee will reject it.

LORD SILKIN

I am very grateful to the noble Lord for the very full explanation he has given of the purpose of Clause 4. Although there are a number of matters on which I could take issue with the noble Lord, broadly speaking I think he has made his case. In those circumstances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Schedule [Condition treated as applicable to rebuilding and alterations]:

3.6 p.m.

LORD MOLSON moved, in paragraph 1, to leave out "by more than ten per cent." The noble Lord said: This Amendment does not affect at all the question of planning permission. It affects only the compensation which the planning authority may have to pay if it refuses planning permission for certain extensions. The provisions of the Third Schedule to the 1947 Act, which is what I am seeking to amend, were designed to simplify the operation of the Uthwatt financial provisions which have now been repealed. The provisions originally had this effect. An owner redeveloping his building or adding to it might increase its volume by 10 per cent. without incurring development charge, and consequently he could not claim against the State in respect of such development any share of the £300 million of compensation.

When the Act of 1954 abolished the Uthwatt system, the £300 million fund and all claims against it, owners were still left with a right to compensation directly or indirectly, if the planning authority refused permission for an extra 10 per cent. of cubic capacity. This originally applied only to buildings erected before the coming into operation of the 1947 Act, but as a result of some temporary aberration Parliament extended this right in 1954 to all buildings subsequently erected. This meant that so soon as an owner had erected a building up to the limit of the volume for which he had planning permission, he could apply for an extra 10 per cent., and if he were refused he could claim compensation. There is no wonder that the present Minister, speaking on this Bill in another place, said that this made nonsense of planning. The Bill terminates that right.

As regards pre-1948 buildings, this Bill introduces a further limitation. I have said that under the 1947 Act there is a tolerance of 10 per cent. in cubic space, and if planning permission for this is not granted the right to compensation from the planning authority may arise. Under this Bill, if planning permission is given for an extra 10 per cent. of floor space, that will exclude all claim to compensation. I do not think I need go into the complication of the difference between Part I and Part II of the Third Schedule, except to say that in one case the claim to compensation arises directly, and in the other indirectly.

This substitution of floor space for cubic space in respect of compensation is a long step in the right direction. It is a belated acceptance of a suggestion made by my noble and learned friend the present Lord Chancellor when he was serving on the Standing Committee in another place in 1947. I asked specifically for this change in the law when I introduced a Motion on this subject on November 28 last year, and so, naturally, I greatly welcome this Bill for what it does. The importance of changing from volume to floor space is shown by the fact that, as a result of new technique in building, a 10 per cent. increase in cubic content may mean an increase of 40 per cent. in floor space. So this narrowing of the scope of compensation will be useful; but it does not go far enough.

Since I spoke last November we have learnt a lot more about the gravity of the problem of London congestion, for the Government have issued their White Paper (Cmnd. 1952), London—Employment: Housing: Lend, and that is the chief source of our information upon this subject. I hope your Lordships will not be bored if I give a few of the figures showing how far we are already committed to a great increase in office accommodation in central London. This White Paper tells us that, whereas in 1939 office floor space in central London amounted to 87 million square feet, by mid-1962 there had been a net increase of 27.8 million square feet, or 32 per cent. We were threatened with a further increase by 1970 or 1972 of some 35 million square feet, but this Bill should have the effect of reducing this increase by 15 million square feet, to 20 million square feet. That is a calculation made by the London County Council and the Town and Country Planning Association, and was quoted, without criticism, by the Minister in Committee on this Bill in another place.

When we consider the existing congestion in London, surely we should not be satisfied to allow this prospective increase of 20 million square feet, which is enough to accommodate in central London a further 40,000 clerks, and possibly more. My Amendment, therefore, proposes to abolish, in the case of pre-1948 buildings, the 10 per cent. tolerance which is already being abolished in the Bill in the case of post-1948 buildings. This would mean a further reduction of 5 million square feet, and we should still be left with a prospective increase in office accommodation of 15 million square feet.

Recently, the comparatively newly created Standing Conference on London Regional Planning issued a Report on this subject produced by its Technical Panel. That emphasises again the gravity of this problem, and perhaps I might quote just one or two sentences from the conclusions. The Report says: As matters stand at present, the planning authorities are already committed to office developments which could provide space for another 400,000 workers in the conurbation while other employment there is not thought likely to change much". Then, after a few more sentences which I need not quote, it says, dealing with the future: The three factors of total population growth, population redistribution and employment growth at the centre will result in still greater numbers travelling even further to work in central London than is the case today. That surely indicates the importance of making this Bill more drastic than it is at the present time.

I have only one other thing to say. The Government, when resisting in another place an Amendment in the same terms, used the argument that some elbow-room for further growth in London and elsewhere was desirable. That argument is quite unsound, because nothing in this Amendment prevents a local authority from giving planning permission if it thinks it desirable. All this Amendment does is to provide that, if planning permission for an extension is refused, that should not give rise to a claim for compensation. It is merely carrying one step further the principle which is embodied in this Bill. I beg to move.

Amendment moved— Page 5, line 6, leave out ("by more than ten per cent.")—(Lord Molson.)

LORD SILKIN

May I first of all congratulate the noble Lord on having attained the high office of President of the Town and Country Planning Association? It is a very important office indeed. The body is a very important body. It takes a tremendous interest in development all over the country, and has been a very great influence for good. It has been quite influential, as I know, in many ways all to the good. I am very glad indeed that the noble Lord has accepted that office, and that he is showing the first evidence of it in moving this Amendment. I should have liked to be able to support him, but, quite frankly, I find it difficult to do so, and I should like to give my reasons.

In the first place, he has based his argument almost entirely on the problem of London and of offices. Both the noble Lord, Lord Hastings, and he have talked as if this were a Bill about London offices. There is not one word in this Bill about London, not one word about offices. It is a Bill which has general application throughout the country, and is related to all types of buildings. If, in fact, the noble Lord's Amendment had been limited to offices in London, or in other places where it was undesirable that further office accommodation should be provided, he would have had much greater support from me, but I cannot accept that the limitation which he seeks to provide in the Bill should be operative against all buildings anywhere in the country.

One of the reasons why this tolerance of 10 per cent. was provided in the 1947 Act was actually to encourage people, when they came to rebuild their dwellings or other buildings, to build at a higher standard. We realised that a great many of the houses and other buildings which had been destroyed or damaged by enemy action—and it was those with which we were largely concerned at the time—were too small, and that to provide satisfactory new accommodation the developers should be given some tolerance; and we thought 10 per cent. was reasonable. We were pressed to provide an alternative of 1,750 cubic feet, and I think we agreed to that. But none of us, not even the wisest of us, ever visualised that, in dealing with cubic feet, we were in fact providing far more accommodation than we had intended, and we certainly did not visualise the problem of office accommodation in London.

Now, as I said, if this Amendment had been confined to the problem of office accommodation in London I, and I am sure my friends also, should have been delighted to support it. I would say even now that if the noble Lord is prepared to withdraw his Amendment and at a later stage of the Bill bring in some Amendment which would deal with undesirable extensions and not treat them all alike, desirable or undesirable, I think we might do some business.

LORD MOLSON

May I be allowed to interrupt the noble Lord? He says "desirable or undesirable" extensions. But this does nothing to affect the power of the planning authority to give planning permission or not; the whole conception of planning is that the planning authority should decide what is desirable and what is undesirable.

LORD SILKIN

That is so; but this is a definite disincentive to putting up more satisfactory accommodation, and it is taking away one of the inducements to people in the 1947 Act to put up more satisfactory accommodation. That is what I am personally objecting to. I still say that if we could have an Amendment which is directed at the evil, which we all recognise, of too much office accommodation, not only in London but in many of the other large towns; if we could deal with compensation in those cases; if it were possible to frame an Amendment which would be confined to those cases, I should myself be very happy to accept it. There is the case of the non-conforming user, with buildings which are actually in existence but which do not conform with what is desirable or what is in the new plan. Here I should be prepared to go further than the noble Lord and provide that compensation should be based only on what is the proper use of that land and not on the actual use.

All these things want consideration. I am quite sure that the Amendment, as it stands, is undesirable, although I agree with the noble Lord that some kind of Amendment to the Bill might be possible which would be directly related to the evil that both he and I have in mind. For those reasons, I hope that further consideration will be given to this problem at a later stage of the Bill; but I think it would be a great mistake merely to pass this Amendment on the assumption that the Bill deals only with London offices.

3.23 p.m.

LORD HASTINGS

The noble Lord, Lord Molson, argued—summarising very briefly at the end of his speech—that, in effect, once the existing rights under the Third Schedule are attacked by introducing a limitation on the increase in floor space in use, it therefore makes sense to make the limitation absolute, thereby allowing local planning authorities to prevent any increase in floor space above existing levels without running the risk of incurring compensation. He said, in effect, that this could not possibly do any harm, because it would not prevent local planning authorities from allowing more development at their discretion. The Bill does not do this because its aims are limited in two senses. First, its purpose is simply to rectify certain defects in the working of the 1947 Act, thus restoring its effect to that originally intended. In the second place, the Bill is not intended to enable local authorities to prevent all future growth, even in offices in central London; and the reasons for that were set out clearly in the White Paper on London: Employment: Housing: Land which was mentioned by the noble Lord, Lord Molson.

May I deal with the first problem, the question of the defects in the existing law, which of course we were speaking about in connection with previous Amendments? It was a basic principle of the 1947 Act that owners should be left with the right to enjoy the current use of their property as it was at the appointed day. But this was never tied rigidly to the exact conditions existing at that time. Owners were clearly intended to have a certain amount of elbow-room and these notional existing-use rights are set out in the Third Schedule. These amount to more than the status quo of 1948. One obvious example is the right to rebuild on a site that may have been vacant then, perhaps as a result of war damage; another, the one we are concerned with, is the right to add 10 per cent. on rebuilding. It was the clear intention of the 1947 Act to leave with the owner this 10 per cent. elbow-room; and we know in what unforeseen way this 10 pet cent. became abused, especially in relation to office development, and became 40 per cent. in floor space.

The aim of the Bill is to get back to the situation originally intended in 1947. It does this by qualifying the cubic tolerance with a floor space limitation. It is a very dfferent thing to attack the whole idea of a tolerance which Parliament clearly intended that owners should have. We are merely correcting an abuse and bringing back the law to that state in which it was originally intended to be. If we were to abolish tolerance altogether, that would be a matter of principle; and it is not the aim of the Bill to alter a principle which is now long-recognised and established in this country in the world of property, property values and property development. It is not only that this machinery of the Third Schedule to the original Act is outdated, because development charges are no longer concerned; but, of course, the Third Schedule is an integral part of the valuation and compensation code under the Planning Acts and it comes into other things, such as the assessment of compensation on revocation of planning permission and on compulsory acquisition.

The noble Lord, Lord Silkin, made, very effectively, part of my speech for me, and I am most grateful to him. He pointed out that this Bill, although we have concentrated on office development in Central London, is not concerned solely with that problem. It is a general Bill affecting the whole country; and, as he reminded us, one of the purposes of the 10 per cent. tolerance was to allow for better and more modern building throughout the country and, as a result, to encourage development. That affects offices as well as private houses and flats, and we do not want to alter that.

The second point I would put to the noble Lord, Lord Molson, is that he is raising a matter of principle. What he is proposing would affect the whole question of property rights and property values in the country, and we do not feel that this is the Bill in which to tackle that very much wider subject. If the idea is to abolish altogether compensation for redevelopment I would point out that that is a very much bigger subject and I would ask him to think most carefully about that. But that is not, I hope, the noble Lord's intention; it is certainly not the intention of the Government, and we could not accept that approach to this general Bill. We feel that the line taken in the Bill is a reasonable one, having regard to all the circumstances. The Bill will certainly help local authorities in the difficult areas and it has been welcomed for this reason. Finally, it presents without injustice—and I would emphasise this in view of what the noble Lord, Lord Silkin, said on his previous Amendment about justice for property holders and developers—a sensible basis for proper control. I hope that the noble Lord will feel I have answered his Amendment convincingly, and that he will be able to withdraw it.

On Question, Amendment negatived.

Schedule agreed to.

House resumed: Bill reported without amendment; Report received.