HL Deb 21 February 1985 vol 460 cc781-800

10.58 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Avon)

My Lords, I beg to move that this Bill be now read a second time.

It is the last of the four Second Reading debates today. I am sure that we shall have a useful discussion despite the late hour. I am told that variety is the spice of life, and as President Reagan said last night, "My goodness! she is a difficult act to follow".

The law relating to town and country planning is often regarded as a complicated and rather dull subject, mainly of interest to those whose business is the development of the land. In fact, planning law affects all of us, and proposals for the development of land can arouse considerable passions at a local or even as your Lordships know from the recent debate on the proposed third London airport—at a national level. One of the more obscure by-ways of planning law relates to compensation: this too can occasionally give rise to situations which create public anxiety and concern. When this happens, it is the Government's task to look at the way in which the law is working, and to take any necessary corrective action.

Normally compensation is not paid for the refusal of the planning permission that is required before land can be developed. The local planning authority can consider the proposal in the light of all the relevant factors, and balance the interests of the developer and of the wider community, without having to ask itself whether it can afford to refuse the application, if this is the right thing to do. But in May 1983, in the case of Camden London Borough v Peaktop Properties (Hampstead) Ltd, the Court of Appeal decided that compensation would be payable in certain circumstances for the refusal of an application to build an additional storey onto an existing block of flats.

To explain this decision, I need to refer to the provisions of Section 169 and Schedule 8 of the Town and Country Planning Act 1971. There are equivalent provisions in Scottish planning legislation. Section 169 provides that, if certain types of applications are refused or granted subject to conditions (there has to be an appeal to the Secretary of State first) and this has an adverse effect on the value of the land, compensation is payable. The types of development to which Section 169 applies are set out in Part II of Schedule 8, and they include the enlargement by up to 10 per cent. of a building which was in existence on 1st July 1948. That is the appointed day for the Town and Country Planning Act 1947 which was the foundation of current planning law. In the Peaktop Properties case, the local planning authority argued that the right to compensation did not arise when the proposed extension involved the creation of new self-contained flats; but the Court of Appeal rejected this interpretation of the statutory provisions.

I will not bore the House with a detailed historical account of the origins of these provisions. The clue is to be found in the heading of Schedule 8, which reads "Development not Constituting New Development". When the 1947 Act introduced modern planning control, it was considered that some classes of development ought to be regarded as part of the existing use of the land, and that the landowner ought not to lose entirely his right to carry them out. It followed that, if permission for such development did have to be refused under the new planning system, compensation should be paid. Indeed, in most of these cases, a planning application no longer has to be made because they are covered by the provisions of the general development order, about which I shall be speaking in a moment. However, extensions to flats are not covered by the GDO, and the refusal of permission for a 10 per cent. extension of a block of flats in existence on 1st July 1984 still creates a potential compensation liability, as the Peaktop Properties case demonstrates.

It could be argued that the provisions of Section 169 and Schedule 8 date back to an era when planning controls were still something new, and that they represent a transitional arrangement which was needed at the time, but has now served its purpose. That is not the case that I am putting forward. We recognise that the right to compensation under these provisions is capable of affecting property values, and should not be taken away without very good reason. But in the case of penthouse flat extensions we believe that there is clear evidence that these compensation rights are being abused.

A report prepared by a group of residents associations suggests that before 1983 there were on average three or four penthouse flat applications each year. In 1983, the year of the Peaktop decision, there were 12. Last year there were 21, and information coming from correspondence and press reports suggests that the increase has been continuing. It is suggested that this is because economic factors are now favourable to such extensions, and I am willing to accept that this is part of the explanation. But it is not the whole story.

Twelve months ago, there was a widely publicised seminar entitled "Section 169 Town and Country Planning Act 1971—A Cascade of Gold for every Building Owner". The brochure referred to Great possibilities for compensation for the owners of buildings which existed in 1947". There were sessions on "the pre-requisites for a successful claim for compensation" and "How to secure compensation". In short, the whole purpose was to encourage the making of applications which did not relate to genuine proposals for extensions, but which were intended to be refused so that they could provide the basis for a substantial claim for compensation.

My Lords, is it surprising that the number of applications have been rising in the last 12 months? Moreover, the worse the application is in planning terms, the more harm it does to the appearance of the block; the more it overcrowds an already densely populated area, the more it adds to the problems of street parking, the greater the chance that the planning authority will be forced to refuse it despite the financial consequences. It may be said that this is a problem limited to a few central London boroughs. But, even if this is so, the residents associations' report to which I have already referred suggests that there are over 2,000 privately-owned blocks of 10 or more flats built before 1984 in Inner London, and that the potential total compensation bill could be of the order of £60 million. I do not believe that the House can allow an abuse of this magnitude to continue.

As I have made clear, our case for amending Section 169 rests on the way in which the provisions relating to penthouse flats are being abused, rather than on any argument that the provisions are obsolete. Two consequences follows. First, the action that we are taking needs to have immediate effect. We cannot allow time for a flood of speculative applications to be made while the Bill is going through Parliament, so that, by the time it has been enacted, most of the damage has already been done. We have therefore provided for the amendment to Section 169 to operate from the date when the Bill was introduced—an unusual provision, but one that is certainly not unprecedented, particularly in fiscal legislation.

Secondly, the Bill has been narrowly drafted, so that the amendment to Section 169 is limited to the specific situation highlighted by the Peaktop Properties case. Indeed, it has been suggested that the Bill has been too narrowly drafted on this point, and that it needs to cover other types of extensions of blocks of flats which involve increasing the cubic content of individual flats by more than 10 per cent., but without any increase in the total number of units. We are considering this point, and we may well need to return to it at Committee stage. But we do not consider that we should go wider than this. It might be possible, for example, to abuse the provisions of Section 169 in relation to office extensions. If such abuses arise, we shall need to deal with them. But it is no light matter to take away compensation rights in this way. We consider that we should do so only where there is clear evidence that they are being abused in a particular way.

I now turn to the other half of this Bill, and to the provisions relating to Section 165 of the 1971 Act. When a landowner wishes to develop his land he will often need to apply to the local planning authority for permission to do so; but not always. He may find that permisssion for this type of development has already been given in a development order, made by the Secretary of State under Section 24 of the 1971 Act. I have already made a passing reference to the Town and Country Planning General Development Order 1977, commonly referred to as GDO, which grants permission for no less than 23 classes of development, including a good number of those which appear in Schedule 8, which range from the erection of gates, walls and fences and minor house extensions to quite significant extensions to industrial premises. A development order is a statutory instrument, and Parliament controls the use of this power through the negative resolution procedures.

Like any other statutory instrument, a development order can be revoked or amended. Section 165 provides that where, first, planning permission for the development of land has been granted by a development order; secondly, that permission is subsequently withdrawn by the revocation or amendment of the order; and, thirdly, an application for planning permission for the same development is then refused or granted subject to conditions, then, on those three cases compensation is payable to the applicant for losses which are directly attributable to what has happened.

The reasoning behind this provision is perfectly sound. The landowner may already have incurred expenditure in reliance on the GDO permission. He might have begun to draw up plans and buy materials, or he might even have reached the stage of letting a contract. If he is then stopped halfway through, it is reasonable that his direct losses should be reimbursed. Unfortunately, Section 165 at present goes much wider than this. It contains no reference to any time limit; so it does not matter when the development order was revoked or modified. A landowner may be able to obtain compensation for the refusal of a planning application simply because, many years previously, development of that type was permitted under the GDO. The fact that he had no intention of using the GDO right when it was available—and, indeed, may not even have owned that land at that time—will not debar his claim.

Until recently there was little concern about the operation of Section 165, mainly because the General Development Order had rarely been amended in a restrictive manner. In 1983, however, we removed development likely to involve the presence of a notifiable quantity of a hazardous substance from the permitted classes. Local planning authorities, while welcoming the additional power to control such development, were concerned about the potential compensation liability if applications had to be refused or conditions had to be imposed. We have no reason to believe that industrialists have abused these provisions; indeed, it would hardly be in their own interests to do so. Nevertheless, we ought to take the opportunity to correct the defect in the legislation. The Bill therefore provides that the provisions of Section 165 will apply only when the application for planning permission is made within 12 months of the revocation or amendment of the development order (or, in the case of past revocation or amendments, within 12 months of Royal Assent). After that period, the compensation liability will cease.

Why 12 months? Our intention is to limit compensation to real out-of-pocket losses and to exclude notional reductions in land values. If a person has begun to incur expenditure on a development scheme permitted under the GDO, and the order is amended, it seems to us that 12 months provides adequate time for a planning application to be submitted. If an application cannot be submitted within 12 months, this suggests that the landowner had not begun work on his scheme before the order was amended, and has not therefore suffered any out-of-pocket losses justifying compensation. It is a rough and ready test, but we have quite simply been unable to find any better way of achieving the same objective.

It has been suggested that a 12-month period is too short for certain kinds of development involving a long lead time. It should be remembered, however, that development order rights are not taken away out of the blue: almost invariably there is a period of consultation, which alerts landowners who may be affected to what may happen. If there are cases where this is still insufficient, any necessary further advance warning can be achieved by deferring the operative date of the GDO amendment. The hazardous development amendment, for example, did not come into operation until six months after it was laid, for precisely this reason. We believe that it is preferable to handle each amendment according to its particular needs rather than making an across-the-board increase in the one-year period, so increasing the scope for abuse in the case of those relatively minor types of development for which a planning application can be worked up quite quickly.

I would not claim that this is a simple Bill, although it does have the merit of being short. The provisions relating to Section 165 of the 1971 Act and its Scottish counterpart are designed to cure a defect: those relating to Section 169 are aimed at stopping up a very limited abuse. I commend the Bill to your Lordships. I beg to move.

Moved, That the Bill be now read a second time—(The Earl of Avon.)

11.14 p.m.

Lord Lloyd of Kilgerran

My Lords, in rising to support the Second Reading of this Bill may I first of all congratulate the Minister on the clear and careful way in which he has presented this short, complicated and technical Bill. It is a Bill having serious financial implications, and, as the Minister has said, is mainly directed to removing the heavy financial liabilities for local planning authorities, involving perhaps millions of pounds, arising largely from the Peaktop Properties case. That case, of course, was in relation to the development of large blocks of flats that had been built prior to 1948. I therefore accept, as stated by the Minister and in the other place, that there is clear evidence that there has been serious abuse of the compensation provisions of the Town and Country Planning Act 1971.

However, a consideration of the financial provisions of this Bill raises problems as to what should be a fair balance between its provisions and the rights of individuals who have an interest in the property, particularly in view of the long list of developments at present permitted without the permission of local authorities or the Secretary of State under the well-known Town and Country Planning General Development Order 1977, No. 289, to which the noble Minister has referred, and which is affectionately known to practitioners as the GDO.

In view of the lateness of the hour, and as there are many experienced speakers waiting to follow, I propose only to draw attention to a few general matters where amendments to the Bill may be desirable in order to prevent hardship to certain classes of owners. The first relates to the length of the period of 12 months included in Clause 1 of the Bill as subsection (1A) of Section 165 of the Town and Country Planning Act 1971. As the Minister has described, when planning permission granted by a development order is withdrawn a further application must be made within 12 months if it is to qualify for compensation. For certain industries, such as the farming industry and developing small businesses, this period is far too short.

I do not propose at this late hour to go into details to substantiate this, but I would point out that the pattern of farming practices may change quite rapidly these days. Dairy farming is being given up, as your Lordships have heard, with sheep farming being substituted; and, as I know from my own experience in relation to farming in Wales, horses are then bred instead of sheep. Therefore, a period of 12 months, in the circumstances in which small farmers in particular find themselves, could be damaging. Again, I shall not elaborate the point, but the pattern of business arrangements of small firms may also change, and, again, this period is too short.

My present view is that, so far as farming and certain small businesses are concerned, three years would be more reasonable when dealing with developments permitted under Class VI of Schedule 1 to the GDO. That class is entitled "Agricultural buildings, works and uses". I also submit that a much longer period should be adopted in dealing with parts of another class, Class VIII, which is entitled "Development for industrial purposes". I am also advised that some flexibility in regard to the period concerned should be given in relation to some developments under Class III, which relates to changes of use and particularly applies to shop premises; and also under Class IV, which is entitled "Temporary buildings", particularly in connection with farming and small businesses.

I come to the second amendment proposed, set out in Clause 1(2). These amendments, as the Minister has clearly indicated, are specifically directed to developments of blocks of flats in relation to which there has most certainly been abuse. The problem arises from the wording to be found on page 2, where, in relation to the definition of a building subparagraph (a) states that this applies where, the building contains two or more separate dwellings divided horizontally from each other or from some other part of the building"— and sub-paragraph (b) reads: the enlargement would result in an increase in the number of such dwellings contained in the building". Now if I may be personal for a moment, I have a particular instance in mind of a school on the Isle of Wight where we have in about 70 acres a complex of buildings comprising art galleries with boys' dormitories, to which are attached a house master's house and another dwelling. Two dwellings are attached to this complex. We have in mind to build another dwelling to house a house master or research persons in relation to the contents of the art galleries. It may be therefore that that kind of development would be caught under the words of the Bill. The school concerned has charitable status, and it seems to me that this is not the kind of building to which dwellings have been added that is contemplated under this Bill. I suggest therefore that the word "contains" in line 3, page 2 of the Bill, might be more suitably modified by having substituted for it the word "comprises". However, that is a matter for the Committee stage. I may be wrong in the example that I have been given and perhaps the problem does not really arise. Other difficulties may arise under this proposed amendment in relation to charitable and historic buildings, but I see that the noble Lord, Lord Montagu of Beaulieu, is to follow me and so I shall desist from pursuing that argument further.

The long delay by the Government in bringing forward this legislation is somewhat extraordinary, having regard to the notice they have had of the potential abuses of the compensation clauses of the Act of 1971. I therefore crave that fact in aid in saying that no peremptory action should be taken to defeat the rights of legitimate owners of lands who wish to develop their activities and have difficulties in complying with the year period. However, there are other points on which, if it were not so late, I could have elaborated, but I do not propose to detain the House any longer in regard to this Bill. I support the Second Reading.

11.23 p.m.

Lord Montagu of Beaulieu

My Lords, this is a Bill that clearly must command support from all parties. It deals with two glaring anachronisms in present legislation, and closes the door on a distasteful piece of exploitation. I strongly support the Bill, but speak tonight representing the views of the Historic Buildings and Monuments Commission and therefore must declare an interest.

Before commenting in detail on the Bill, I think that I speak for the whole heritage world tonight when I say how delighted they were to have heard the announcement by the noble Earl this afternoon that the Government have decided to place at the disposal of the National Heritage Memorial Fund no less than £25 million to ensure the long-term future of Kedleston, Weston and the Chippendale furniture at Nostell Priory. It certainly nails the lie that the Government are not prepared to support the heritage.

Our view is that the Bill does not go far enough. Brevity is a fine thing and this Bill has all the merits of being short and succinct. But in confining itself so rigorously to two specific anachronisms it fails to deal with the problems that these two sections—Sections 165 and 169 of the 1971 Act—cause to the heritage. I must explain shortly why I think the Government need to widen its scope. I was delighted to hear from the noble Earl that perhaps amendments will be sympathetically received at Committee stage.

The architectural heritage is important to us all. It consists not just in single buildings of great intrinsic value and interest, but in groups of buildings which may individually be of minor interest but which, taken as a whole, make up the familiar and beautiful local scene. Legislation therefore permits and encourages local authorities to designate what are known as conservation areas; those of architectural and historic interest whose character and appearance ought to be preserved. This was a brilliant conception; the intention being to enable groups of buildings to be preserved without applying the full rigour of statutory listing to each and every building individually. The commission fully supports this concept, not only with its mouth but also with its purse; we are spending around £7 million a year on grants to buildings and conservation areas, with the active support of local authorities.

However, some of those same areas are now at risk from Sections 165 and 169. They are at risk because—understandably, I fear—local planning authorities are loath to reject a planning application if rejection would give rise to a claim for compensation. Thus, bad planning decisions have been taken, and will continue to be taken, simply to avoid the likelihood of compensation. I argue, therefore, that the Bill in its present limited form wastes a first class opportunity for protecting the heritage. It tackles important issues, but does not go far enough.

I now turn to Section 169. My noble friend has already explained the circumstances in which compensation can be claimed. One of the main qualifying factors is that the building must have been in existence in 1948—and I am sure your Lordships will agree that this test is one that historic buildings invariably satisfy. Then the proposed development must require planning permission. In city centres many rear or side extensions within the 10 per cent. tolerance will be within two metres of a boundary wall and therefore will need permission; or the building may be used, not as a residence but as, say, offices or shops, in which case a planning application must be made. In all these circumstances refusal of consent can give rise to a claim for compensation.

I shall give some examples. The Bill before us excludes from compensation a roof extension, if the building is used as flats and if the extension will be used as an additional and separate flat: good. But what if the building is used as offices and the new top floor will add extra office space? A roof excrescence is no less unsightly because a particular house is used as offices rather than as flats. It is the building and not just the way it is used that concerns me and my colleagues in the Historic Buildings and Monuments Commission.

Take the case of pairs of villas standing close to the street, but with gaps between; "critical gaps" is, I believe, the planning term. Through them is a view of gardens, probably trees, and possibly a uniform brick boundary wall at the rear. If the gaps are filled with garages and side extensions, those views will be lost. If planning permission is refused, compensation may be payable. It, in a uniform street, compensation is paid to one owner, then the chances are that, inevitably, all the other owners will rush in their applications in the expectation of receiving a similarly lucrative refusal.

I say "lucrative refusal" advisedly, because in London compensation can be very heavy. It is all a question of land values. In other parts of the country the cost of the proposed building work may usually equal, or even exceed, the increased value of the property, but not in London. Here even refusal of consent for hard-standing for cars in front gardens could lead to substantial claims. With current interest in Section 169 we can expect more and more applications to be followed by claims for compensation.

I ask your Lordships to consider what the progressive loss of front gardens would do to pleasant eighteenth and nineteenth century streets. How will local objectors understand that, even when there seems to be a cast iron case against a planning proposal, permission is still given? I hope your Lordships agree that it is not enough to amend Section 169 only in the limited way now proposed. This section poses a real threat to the integrity of conservation areas within our historic cities. To amend it without removing liability for compensation in respect of listed buildings and conservation areas would be to tackle only half the problem.

However, under Section 165 as it stands, the local authority is liable to pay compensation in respect of losses directly attributable to imposition of the Article 4 direction. In short, it can make a direction, but, if as a result, it decides to forbid unsuitable alterations in the conservation area, it may face a claim for compensation. I refer there, of course, to GDOs, about which there has been a lot of talk already.

My noble friend has explained the Government's view that in the case of amendments to a development order, compensation should still be payable within a year of a change, but not afterwards. Pari passu, exactly the same arguments should apply to Article 4 directions. I ask your Lordships to agree that a longstanding Article 4 should be treated in the same way as a long-standing change in a development order. I understand that there may be some effect on agricultural land, and I listened with interest to what the noble Lord. Lord Lloyd, said.

In short, I welcome this Bill, but regret that it does not go far enough. Two sections of the 1971 Act are to be amended in a limited way that fails to deal with difficulties for the heritage. I think that it is a wasted opportunity. Frankly, I can see no merit in such a blinkered approach. I am confident that at Committee stage all parties will unite either to support a Government amendment or another amendment to take account of the points that I have made.

11.31 p.m.

Lord Sandford

My Lords, I welcome the Bill and I am grateful to my noble friend the Minister for explaining its genesis and origin. It is right to respond to abuses such as the Peaktop case with appropriate legislation once they have been revealed, but it is always a mistake to legislate on the basis of a particular abuse or a particular incident. It is much wiser to look at the whole code of compensation in this case. I am grateful to my noble friend for the indications which he gave earlier this week that that is what the Government now intend to do and for the assurance that he gave in his speech that they will indeed do so when we reach the Committee stage, either by way of further amendments to this Bill or assurance that the matters such as those which my noble friend Lord Montagu has just raised will be taken care of in the planning (miscellaneous) legislation which will follow shortly after.

All that I want to do at this late stage in the proceedings is to mention three aspects which I personally would want to see attended to at the Committee stage and which I know that the Association of District Councils is keen to see tackled. The association deals with all the development control in England and Wales outside the conurbations. I do not now want to say anything more about the urban aspect—the conservation areas—because my noble friend Lord Montagu has said all that needs to be said on that. Perhaps tonight, though, my noble friend Lord Avon might confirm that, in dealing with the point of my noble friend Lord Montagu, we shall be dealing with the situation in Scotland as well. The Bill is clearly drafted with Scotland in mind, and I take it that anything we can do for conservation areas in England and Wales will cover Scotland, too.

I should like to pursue again, but very briefly, the reference to the countryside made by the noble Lord, Lord Lloyd, a moment or two ago. I recall recommending, when I was reviewing the national parks 12 years ago, that the landscape area special development orders should apply in all 10 parks and not just two. We have made some progress in that recently the Ministry of Agriculture has been claiming credit for having withdrawn its opposition to that extension, so that now, after 12 years, we are in a position shortly to be applying that order in the other 10 national parks. From examples that I have seen of rural abuses of this compensation period, it is clear that that extension needs to be taken further into the areas of outstanding natural beauty. I do not want my noble friend to reply to that point tonight, but I should like to give him notice that it is something that we shall want to pursue and discuss at the next stage.

The third and last point which I should like my noble friend just to take notice of tonight is the need for the liability to pay compensation, when it arises, to fall in the right quarter; that is to say, when it arises from changes in national policy, leading to adjustments of the general development order, the compensation should be met by central Government funds. But when it arises as a result of an Article 4 direction, say by a local planning authority, then of course it should fall on the local authority. We want to have that distinction clear. We also want to establish the fact that when compensation comes to be paid by the local planning authority that expenditure does not count against their financial targets. Those are the points which I think need further attention at Committee stage.

11.36 p.m.

Viscount Craigavon

My Lords, I, too, certainly support this Bill. I was going to make a fairly long speech encouraging the noble Lord down a road which he has already in his speech indicated he is exploring. I take his assurances in that regard. It is the area of Section 169 and the 10 per cent. relating to residential property, as well as the addition to Clause 1(2) to restrict the expansion of individual flats. If the noble Lord could produce an amendment on this point, I should be extremely grateful, as would the Royal Borough of Kensington and Chelsea, which is prompting me and, I believe, the noble Lord, too.

I hope that the noble Lord will feel free to backdate in any small amendment that he introduces to the date of publication. That would be for the reason that he mentioned—to avoid speculative applications being made in the next few days and weeks until the Bill is passed. I am grateful to the Minister for what he proposes, but I should add that I still might produce some small amendments at Committee stage.

11.37 p.m.

Lord Coleraine

My Lords, I, too, welcome this Bill. I so much agree with what has already been said that I am able to be brief. I particularly welcome Clause 1(2) and the equivalent provisions for Scotland, which deal with the pernicious rash of applications to put whole floors of new flats on top of existing blocks. I know many people in blocks in central London who for years have been subjected to the uncertainty of not knowing whether or not their landlords, or perhaps the owners of that part of the sky immediately above their roofs, were going to succeed in their game of cat and mouse with the local authority and be given permission to put a whole new floor of flats on top of their blocks, with all the upsets and worries that the building works would cause. This is just one of many factors which have for years now bedevilled flat dwellers in central London, and the Government's initiative in bringing forward this Bill to resolve the problem is very much to be welcomed.

However, I wonder whether the Bill goes far enough in this respect. I have two points to make. The effect of the Bill is to be retrospective, but I should like the House to consider whether it is to be retrospective enough. Developers who have paid large sums of money for what amounts to chunks of sky with hope value have done so with the clear knowledge that if they lose their planning applications and collect compensation, they will have very satisfactorily cheated the community.

In his Second Reading speech in another place my honourable friend the Under-Secretary of State said: We seriously considered covering applications already in the pipeline… However, we reluctantly concluded that that would represent an unacceptable degree of retrospection, and open us to the charge of confiscatory legislation. We believe that the provisions of Clause 3 are a reasonable balance between the conflicting interests".—[Official Report, Commons, 5/2/85; col. 901.] I should like to push this point a little further, just to see whether the door is on the latch, if not ajar. Any developer who has paid good money for air space will be retrospectively affected by this Bill. In my mind there is no particular magic about the making of a planning application, and so I do not see why a developer who has made an application should be favoured over one who has perhaps been more restrained and has not got round to making it.

I would submit that the better cut-off point in the planning chain would not be the moment at which planning permission is applied for, but the date on which, in accordance with Section 169 (1) of the Town and Country Planning Act 1971, the Secretary of State has refused the application or granted it subject to conditions. It is only on that later date that the speculator has acquired any rights to compensation. If the Bill is amended to provide for this later date to apply, Parliament will not have confiscated any actual vested right. It is true that the developer will have incurred expense, but I do not think that it will be difficult to provide that the developer should be reimbursed his direct expense in getting to the stage of having his schemes turned down by the Secretary of State.

Like the noble Viscount, Lord Craigavon, I also detected that the door is definitely ajar as regards the 10 per cent. point. I consider it very important indeed that the provisions of Clause 1(2) should relate not just to additional flats put on top of buildings, but also to increases in the size of existing flats. I would ask my noble friend whether Clause 1(2) is intended to deal also with buildings that are used not as blocks of flats but possibly as private hotels or as boarding or lodging houses. It seems to me that these types of houses should be brought within the provisions of the Bill. I have some doubt as to whether they necessarily qualify as dwellings. With that, I indicate my strong support for the Bill and wish it a good Second Reading.

11.42 p.m.

Baroness Gardner of Parkes

My Lords, I support the Bill, and have been asked to do so by the London Boroughs Association. From my own personal knowledge of living in the centre of London, I have seen these applications and these changes in the skyline as blocks of flats have acquired a new top floor. I know the problems that have been caused for local residents. Indeed, these permissions have almost always been granted on the grounds that it would be too expensive for the council to refuse them.

For some years I served on the Historic Buildings Committee of the Greater London Council. We frequently came across the problem to which the noble Lord, Lord Montagu, has referred. One house in a nice terrace of listed buildings would apply for a roof change or roof extension that could upset the whole harmony. I remember that, at that time, the officers were very reluctant to let the word get around that if the application was refused compensation could be sought. They feared that many people who had no need or who had not intended to extend their property would apply purely for the compensation. Conservation areas are particularly important. I should like to see that point taken into account.

I do not know that I agree with the noble Lord, Lord Montagu, as regards low-level rear extensions. We must bear in mind at all times that in many cases people living in the centre of London today have young families and need additional space. If the time comes when we force all our local people out of houses which end up simply as pieds-à-terre for foreigners in the middle of London, it will be a shame. There has to be a compromise point. But the Bill does not prevent the local authority or the listed building authority granting permission in a sympathetic case. The Bill is simply to deal with the financial abuse whereby people take advantage of the scheme and cash in on it.

The London Boroughs Association points out what it considers to be defects in the Bill. As I shall be abroad at the time of the Committee stage, I should like briefly to mention them. It considers that it is inequitable that compensation should be payable by a local planning authority when, at the same time, a situation could exist in which a residential property value has been enhanced by the making of a direction. The planning policy behind making directions would be nullified if, because of the risk of high compensation, the planning permission were then granted.

It believes that central London is affected very adversely, and it hopes that an amendment to the Bill will be brought forward providing a new Clause 1(2). I place this on record tonight so that the Minister will be able to think about it. It would say that no compensation claim under Section 165 may arise with regard to any development rights in respect of residential premises curtailed by the issue of a direction under a development order. That refers to Section 165. The association is also unhappy about Section 169, and thinks it does not go far enough.

Many speakers tonight have made the point that 10 per cent. of an individual flat is quite different from 10 per cent. of a total block. I think that it might be fairer—this is a personal point, my own view, and is not put forward by the London Boroughs Association—to have 10 per cent. of an individual flat or so many cubic feet, in the way that now applies to dwelling-houses; because 10 per cent. of some flats might be a very tiny space and not enough to improve people's living conditions.

The London Boroughs Association says that the Bill does not deal with unneighbourly development. I am very worried by the suggestion that unneighbourliness should be a big feature in planning. In the past year I have built a house in central London. It was actually a case of rebuilding, because the house disintegrated and had to be demolished and rebuilt. When I applied for planning permission, naturally my neighbours all objected. Some had good grounds and others had very spurious grounds, or very doubtful ones. This was particularly so in the case of the lady who objected on the grounds that if I had a window looking out I might see her going up and down her stairs without her clothes on, as was her constant habit. I found that a very poor reason for my not being allowed to have a window in the back of my house. I might add that that lady has now left the area.

However, a short time later, when I had my permission and my house was under way and being constructed, I received notification of developments that would be looking out on me. The man in the house behind me wanted to put in new windows looking into my garden. My instant reaction was a defensive one, in the same way as the other lady's reaction to me had been defensive. I said to my husband, "We cannot have a new window looking into our garden". My husband's reply was, "Of course we can. We are all living in such close proximity here already that if we cannot develop a tolerance for our neighbours and an acceptance that everyone has the right to a window, we are going to be just as bad as that other person was to us". We made no objection, and the window is there. The people concerned use the room a great deal and cause no bother or inconvenience at all to us.

I find the anxiety on the part of the London Boroughs Association that there should be some coverage about neighbourliness or unneighbourliness, in terms of planning and compensation, a perhaps slightly worrying concept, because neighbourliness is always something you think about if you are the person who is going to be affected adversely. No one stops to think about it on the other side. If you are the one who is wanting a little extra living space to enable your family to remain in a much-loved home, your attitude is quite different.

I should like to bring in another point on this issue. I know areas in central London where lovely listed squares can be affected adversely by changes in their roof line because those squares were built before the 1948 date. Near them, modern houses built after that date—say, in 1950, or up to 1960—do not have the right as a permitted development (I think this is correct) to carry out the same changes in their building. It seems to me that there are at the moment a lot of anomalies between listed buildings and newer buildings, and perhaps there will be an opportunity to look at those.

I have mentioned the fact that I should like a certain size, and that is certainly something about which the London Boroughs Association is most concerned. That association wants the limitation set at 10 per cent., of a particular flat. As a personal addition, I would add "or a certain dimension, whichever is the more suitable". However, we must realise that this Bill does not in any way prevent a local authority from granting planning permission; it is simply a financial measure to ensure that people do not cash in on existing provisions.

11.50 p.m.

Lord Graham of Edmonton

My Lords, I join in the general welcome that has been given by everyone to the useful measure that is before us. Certainly there will be no opposition from these Benches to the Second Reading of this Bill. This is one of those occasions when I would certainly want to express my appreciation to the Minister present this evening and to his ministerial colleagues. I have in mind, in particular, Mr. Neil Macfarlane in another place. I, like all noble Lords when matters are debated in another place before they come here, read the Hansard of the other place. I have spoken to my colleague Mr. David Clark who handles these matters there, and he has shown me correpondence that has taken place since the Committee stage in that place. I want the Minister to understand how deeply I appreciate the care and concern of his ministerial colleague Mr. Neil Macfarlane who quite clearly is very sympathetic to the general concern that has given rise to the amendments. If I am correct, I think that he referred to them in the other House as minor and technical amendments. Nevertheless, they are important and significant.

I am always impressed by the assiduousness with which local authorities draw to the attention of Members in both places matters to which I certainly had not given any thought. However, when one is told of them one appreciates that they are very important and we ought not to lose the opportunity to raise them. The Minister must take on board tonight that there are a number of people who, in genuinely seeking to protect the interests of those who they have the responsibliity to serve, see this not as the last opportunity, but as an opportunity to try to urge the Minister to make the Bill do more than it actually does.

I wish to try to avoid going over the ground and the explanations which have been excellently given by the Minister, and which have been pointed up by other colleagues here. Certainly the Minister and his colleagues were right to appreciate the significance of the Peaktop experience in 1983. Personally, I should have thought that it must have come as a shock. Nevertheless, once it happened one can immediately see the significance. The Minister has drawn attention tonight to the way in which a seminar was held, which was advertised quite frankly. People were told that, if they did not know that there was something they could get away with, they were on a winner both ways—they either got their permission, which enhanced the value, or, if they did not, they got somebody's money, be it the taxpayers' or the ratepayers' money. They had nothing to lose. I believe that the noble Baroness, Lady Gardner of Parkes, also pointed up this matter.

I am aware of the point concerning the London Boroughs Association, which is absolutely fair, and also the point concerning the Royal Borough of Kensington and Chelsea and the London Borough of Haringey—which is not very far away from either the noble Baroness, Lady Gardner of Parkes, or myself. They used as an illustration the correspondence of the London Boroughs Association and the correspondence of the borough of Kensington and Chelsea. They also illustrated that in the London Borough of Haringey there were some very unhappy possibilities. One of the problems is that people are referring to what is likely to happen without being able to be specific. There is a fear that the situation will snowball. The Minister gave us one or two illustrations of how it could grow and grow. Of course there could be absolute catastrophic consequences for a borough which had tried to follow the right course of action from a planning point of view. It could find itself in a dreadful situation.

One of the authorities that have been in touch with me is the AMA and in connection with Section 169 dealing with planning permission matters (one of the illustrations to which I am referring) it says: One London borough obtained Counsel's Opinion that liability to compensation is a material consideration in considering a planning application under Section 29 of the Town and Country Planning Act 1971 and that it is a consideration which must be weighed by the Council against any planning objections which may arise on a particular development". The noble Baroness, Lady Gardner of Parkes, mentioned that. As an ex-chairman of a planning committee, I can see a planning officer quite properly telling the committee and the town clerk that before they decide to refuse this application they must take into account the financial consequences. That is their job. The chairmen of planning committees must be faced with a terrible dilemma if, in trying to do the right thing by the built environment they land the ratepayers with a big bill.

Perhaps I could quote in aid the areas of outstanding natural beauty. I am grateful that the noble Lord, Lord Skelmersdale, is in his place because we had a very useful exchange over the Prussa Cove/Higher Kenegie problems which arose out of the manner by which it was possible, despite an area being designated an area of outstanding natural beauty, for people to exercise their rights, or attempt to exercise their rights, and yet act contrary to the spirit of the area of outstanding natural beauty.

The case I want to cite was brought to me by Lancaster City Council. I have seen some photographs of the development here. Again, the noble Baroness, Lady Gardner of Parkes, said that we should live and let live for the sake of good neighbourliness. I have here photographs of someone's house which has had built next to it five black polythene tunnels in which mushrooms are growing. We all know how mushrooms are grown; they are kept in the dark and covered with fertiliser.

Let me briefly illustrate the dilemma facing Lancaster. In 1984 the owner made a planning application for permission to erect buildings of 15,000 square feet to produce large quantities of compost for use on sites elsewhere. Permission was refused. Strong local representations were made against the proposal. The county council regarded it as being contrary to structure plan policies aimed at protecting the AONB. Amenity organisations also made representations.

However, following refusal of permission, the owner commenced work on five different sites. One of these is an extension to the existing steel-framed building and is to be used for the filling of trays with compost. The remainder are for blocks of growing sheds. These are semi-circular "tunnels" of black plastic 2.5 metres high and 17 metres long, each set in blocks of five.

Then we come to implications. The Article 4 direction has been confirmed by the Secretary of State. It has the effect of requiring development which could otherwise have been undertaken as "agricultural permitted development" to be the subject of a planning application. However, any refusal of planning permission or requirements imposed through planning conditions will then potentially involve the payment to the owner of compensation by the city council. It will not have any effect upon the buildings already under construction.

The compensation to be claimed—in response to action following an Article 4 direction or a discontinuance order—may be on the basis of disturbance to the business, including loss of profits. The sum involved may therefore he quite substantial.

As an ex-chairman of a planning committee, I can see myself agonising not just over the aggravation. I believe the noble Lord, Lord Montagu, pointed out how a planning committee which decided to allow the development, because it was looking after the ratepayers' interests, would be in trouble with the general residents because it had granted planning permission. In other words, we have a series of anomalies. I fully support almost everything that has been said, particularly the remarks of the noble Lord, Lord Montagu, who made a good case about Article 4 directions. I agree with him that the Bill ought to put Article 4 directions on the same footing as changes in a development order. Where an Article 4 direction is made by a local authority, claims for compensation by owners ought to be limited to one year from the directions coming into force.

There have been a number of points made. The Minister needs to take it on board that we are happy that this Bill be given a Second Reading because it puts some things right. We shall not be party to any action which delays the passage of this Bill. We want the Bill to be passed because it puts right some anomalies. But between now and Committee stage, when amendments may be put down and debated, the Minister should think seriously, and I noted with appreciation that he indicated some amelioration that will come. When we see the words, they may be satisfactory to a large extent. But there are other matters which have been raised that the Minister ought to look at carefully to see whether it is possible to have the minimum number of amendments. I think in terms of the allusions made by Mr. Neil Macfarlane and the Minister himself; and I believe that the noble Lord, Lord Sandford, alluded to the possibility that something may be said about the prospect of including some matters in other legislation as a better opportunity to put right some of the things we are talking about.

Before I sit down, may I refer to the absence of my noble friend Lady Birk? As the House knows, she takes a deep interest in these matters. She is not able to be here this evening, but certainly she will be here at the Committee stage and will want to take a full part in it. We on these Benches welcome the initiative of the Minister in trying to put right (and I believe he has substantially put right) many things that are wrong. But when it comes to the question of the 10 per cent. we support its application not merely to the building of the flats but to the extension of the buildings as well. We look forward to some helpful words from the Minister now, and we want to help him to make sure that this is a better Bill when it finally leaves this House.

12.3 a.m.

The Earl of Avon

My Lords, I am grateful to all Members of the House for their generous welcome of this Bill. I assure the speakers tonight that I have no intention of keeping anybody in the dark, or, indeed, of covering anything in fertiliser! I look forward to the discussion of a number of issues at Committee stage. If tonight I find that I have not covered any particular factual points, I shall write. The noble Viscount, Lord Craigavon, in his short speech, asked whether we would look at the retrospective point. We are considering the amendment, and we shall be doing exactly that. At the moment it is in course of discussion with my colleagues to see what we can do about it. I am sympathetic to the noble Viscount's point.

The noble Lord, Lord Lloyd of Kilgerran, spoke about the landowners. The amendments to the GDOs are widely publicised, particularly in the technical press. If the landowner has a scheme in hand which is dependent on a GDO permission and the GDO is then amended to take the permission away, I find it inconceivable that the landowner will not hear about this for 12 months. If he has no intention of using his GDO rights and is ignorant of their existence, I accept that he may not learn about an amendment to a GDO quite so quickly, but in this event why should he get any compensation? He has, after all, not suffered any real loss.

On the noble Lord's more specific point about the Isle of Wight, at the moment I do not believe that any compensation will be payable under Section 169, but I shall certainly look into this again. The noble Lord asked a little about the farming industry. It is suggested that the farming industry works on a basis of five-year development plans, and would therefore be prejudiced by the 12-month cut-off period in respect of compensation under Section 165.

I should have thought that a farmer in the middle of such a plan would be able to get his planning application in within 12 months of a GDO amendment. If permission was then refused, he would retain his compensation rights. If it were granted, he would have a further five years to carry out the development. Moreover, as I pointed out in my speech, GDO amendments are not normally made out of the blue. If there is a problem, nevertheless it seems preferable to tackle it by giving extra notice of the GDO amendment. That is by deferring its operation date rather than by increasing the 12 month period, and opening up scope for abuse in respect of changes relating to development with a much shorter lead time.

My noble friend Lord Montagu was kind enough to give me advance notice of what he was proposing to say this evening and this enables me to give a considered reply to his points. First I should say that I fully share his concern about the architectural heritage, but there is one point that we should bear in mind at the outset. In the case of buildings which are listed as being of architectural or historical interest, any alteration to the building requires listed building consent as well as planning permission. Listed building consent can be refused without creating a compensation liability under either Section 165 or Section 169 of the 1971 Act.

I recognise that this still leaves the important question of extensions to buildings which are not themselves listed but which contribute to the character of a conservation area. My noble friend has made two requests. First, that the extension of any building in a conservation area—his specific example was a building used as offices—shall not attract compensation under Section 169. In this Bill we have to balance planning considerations with property rights. As I said in opening this debate, we have felt justified in acting against extensions to flats because the provisions of Section 169 are clearly being abused. In the case of extensions to other buildings such as offices, we have no evidence of abuse—indeed we know that the property world regard Section 169 as of considerable importance in relation to perfectly legitimate office improvement schemes. We are not dealing with outdated rights which can simply be taken away without doing any harm—we are dealing with a very specific abuse. It may be difficult to meet my noble friend on this point.

However, he also raised a point in relation to Section 165. He argued that a "long standing article 4 direction" should be treated in the same way for compensation purposes as a revocation or modification of a development order, and the 12 month time limit should be imposed. Most article 4 directions are directed against a specific development proposal which is already in hand, and in such cases the imposition of a 12 month time limit is likely to have no practical effect. But if there are long standing article 4 directions, made to give general protection to conservation areas rather than in response to a specific development proposal, then there may well be a case for doing what my noble friend suggests. We will doubtless have an opportunity to consider this further during the Committee stage.

My noble friend Lord Sandford asked if any amendment would cover Scotland. Yes it will, though that will depend on the drafting of the amendment of course. If landscape area special development orders give rise to compensation under Section 165, the 12 mnth cut off period in the Bill will apply. The third point that he raised was that compensation arises not from the amendment of the GDO but from a subsequent refusal of planning permission by the local planning authority. The 1971 Act provides for such compensation to be paid by the local authority and we see no justification for central Government to pick up this particular bill.

My noble friend Lord Coleraine spoke about retrospection. This is indeed a delicate arm. We think that Clause 3 gets it right. We do not at the moment have an amendment in mind. The 10 per cent. extension point I believe I have already covered in my remarks. The Bill does apply to the current abuse regarding flats, as indeed I mentioned.

I accept that some planning authorities will have rooftop flat applications already before them. Where the landowner has already done his part of submitting the application I believe that it would be wrong to take away his right to compensation retrospectively. Moreover, this could mean that authorities who had delayed giving a decision on such applications would escape a compensation liability while those who had determined such application promptly would be at risk. This, I believe, would not be right.

My noble friend Lady Gardner of Parkes put forward very strongly, I thought, the case which she said the LBA had asked her to make. On point one, I think we have discussed this already. On point two, I thought that she herself argued against it and then rather tore it up. However, on argument three, I would again agree with her totally. The noble Baroness asked about listed buildings. The refusal of listed building consent does not attract compensation.

I should like to thank the noble Lord, Lord Graham, particularly for his kind remarks about my honourable friend Mr. Neil Macfarlane. He also introduced the subject of Haringey, for which I have sympathy. He mentioned the subject of mushrooms. As I believe he will recall, we went out to consultation last year on a number of proposals for amendment to the order, including proposals to amend Clause 6 in respect of livestock buildings. We are now considering very carefully the important issues raised by the response to our consulatation paper. I am delighted to hear that the noble Baroness, Lady Birk, may be back in the fray on the Committee stage of the Bill.

Lord Graham of Edmonton

My Lords, she will be back.

The Earl of Avon

My Lords, when I say "in the fray", of course I know we are all in such harmony that I look forward to a very charming Committee stage. I think that what I can suggest to the Committee is that it is necessary here to keep a balance all the time. It is one of those occasions where we have to try to make sure that all the interests are looked after. I shall read Hansard with care and see to what extent we can help as a Government. I beg to move that this Bill be read a second time.

On Question, Bill read a seond time, and committed to a Committee of the Whole House.

House adjourned at twelve minutes past midnight.