HL Deb 01 July 1991 vol 530 cc846-54

5.26 p.m.

Read a third time.

Clause 28 [Subsidence damage to which Act applies]:

Lord Cavendish of Furness moved Amendment No. 1:

Page 21, line 27, leave out ("Subject to subsection (2) below")

The noble Lord said: My Lords, in moving this amendment I should like also to speak to Amendments Nos. 2, 3, 4, 5 and 10.

British Coal introduced compensation for tenant farmers in its 1976 code of practice. Where the owner of land receives a depreciation payment British Coal will pay the tenant compensation based on Section 12 of the Agriculture (Miscellaneous Provisions) Act 1968. Section 12 provides that, in the event of compulsory purchase, the tenant will receive four times his annual rent by way of compensation. In the case of subsidence damage, British Coal pays a proportion of this based on the degree of depreciation. For example, in the case where the holding suffers 25 per cent. depreciation, and the tenant is not responsible for making good the damage, British Coal would pay the owner 25 per cent. of the value and the tenant 25 per cent. of his entitlement under Section 12; in other words, the equivalent of one year's rent.

There are two points to note. First, payments to tenant farmers apply only when British Coal makes a depreciation payment to the owner of the land in question instead of undertaking full repairs. As noble Lords will be aware, the main thrust of the Bill is to encourage repairs, and depreciation payments in respect of land will only be possible in exceptional circumstances. In fact, I understand from British Coal that it can only recall about 10 or so payments to tenant farmers in the past 10 years.

The second point to note is that in the majority of cases what happens is that the holding overall suffers a degree of depreciation. So, in the case of 25 per cent. depreciation, this is unlikely to mean that 25 per cent. of the farm is rendered unusable and the remaining 75 per cent. is untouched. It is more likely to mean that all of the farm suffers some degree of damage to the extent that the value of the whole is depreciated by 25 per cent. In other words, with subsidence damage it is quite possible that the overall acreage remains unchanged. This is clearly different from the compulsory purchase situation where land is completely lost. This is one of the reasons why it is not always sensible to try and treat subsidence damage as exactly analogous to compulsory purchase situations. The amendments I now propose go as far down this route as we feel is realistic.

These amendments do three main things. First, they move the basis for compensation from Section 12 of the Agriculture (Miscellaneous Provisions) Act 1968 to Section 20 of the Compulsory Purchase Act 1965.

Let me say a few words about the way that Section 20 of the Compulsory Purchase Act 1965 operates. Under Section 20, as read with Section 12 of the 1968 Act, the tenant gets a minimum of four times his annual rent. This is a non-taxable payment. However, should the value of the tenant's unexpired term or interest be greater than four times annual rent payment, the Section 12 payment will be "topped up" to reflect the added value of his security of tenure. What this means for the purpose of this Bill is that the tenant will get at least as much as he does at present and the possibility of more, depending on the precise circumstances of the case.

The second improvement achieved by these amendments is to remove the old Clause 28(2) which prevented a tenant farmer from receiving a Clause 28 payment if he had received any of the depreciation payment. As amended, the tenant will be able to receive both a depreciation payment (based on the extent of his liability to make good any damage) and a Clause 28 payment.

Thirdly, the new clause now entitles the tenant farmer to compensation for loss or injury in the event that he is displaced from the whole or sufficient part of his land. "Sufficient part", noble Lords will note, is no less than 0.5 hectares, and that figure can be varied by order of the Secretary of State.

In summary, Clause 28 will improve the present arrangements in three ways. The tenant may receive more compensation than before and, as I have indicated, cannot receive less than he would have done under the present arrangements. He will now be eligible for compensation for loss or injury in certain circumstances and will not be prevented from receiving a Clause 28 payment just because he received a depreciation payment in respect of the same damage.

It is also important not to consider the clause in isolation. I remind noble Lords that the Bill enacts British Coal's provisions for compensation for loss of crops (Clause 27) and also introduces new provisions for consequential loss. These provisions will also operate to the benefit of tenant farmers whose farms are affected by subsidence damage.

I should like to thank my noble friend Lord Stanley of Alderley for raising the question of compensation available to tenant farmers by tabling an amendment at Committee stage which he graciously withdrew when I undertook to consider the matter further. I hope that he will agree that the amendments that I now propose will achieve much the same effect as his would have done and represent a helpful improvement in the terms of compensation available to tenant farmers. I commend the amendment to the House.

5.30 p.m.

Lord Wise

My Lords, I rise briefly to express support for the amendment. In the formula in Clause 28 as drafted no account is taken of the value of the tenancy to the tenant. The amendment rectifies that and will result in a much fairer settlement to tenant farmers affected by coalmining subsidence. The amount able to be claimed under the clause as amended should be a fair reflection of the tenant's losses as the established principle of the statutory compensation code of compulsory purchase is taken on board to a degree.

At Committee stage, in response to the amendment put forward by my noble friend Lord Stanley, the Minister gave an undertaking to consider again the matter of compensation to tenant farmers affected by subsidence. If he thought that the Bill as drafted did not adequately compensate tenant farmers he stated that he would bring forward an amendment. That he has done. We are grateful to my noble friend for doing so and for the sympathetic way in which he has recognised the problems suffered by owners and occupiers of land when affected by subsidence damage. I hope that the amendment will find favour with your Lordships.

Lord Peston

My Lords, perhaps I may also briefly say how pleased we are that the Government have been able to move in this direction. The NFU is obviously greatly interested and is now much happier with the outcome.

As I understand it, the essential compensation point is the inclusion of "S" as part of the formula; that is, the additional contribution. Clearly "S" cannot be a negative number. As the Minister points out, either farmers do as well or, more likely, do better. We are happy to support the amendment.

Lord Campbell of Alloway

My Lords, I shall be brief in view of the acclamation that the amendment has already received.

Compensation is a difficult and complex subject. I believe that the Government and the Minister ought to be congratulated upon having made a difficult assimilation between the statutory provisions on compensation and the way in which, under Clause 28 as amended, they propose to deal with coal subsidence damage to tenant farmers. That was not an easy thing to do. The two concepts do not totally equate for reasons which your Lordships well know. By and large it is a fine piece of work and one on which I believe the Minister is to be congratulated.

Lord Cavendish of Furness

My Lords, I thank noble Lords. I believe that my noble friend Lord Wise spoke on behalf of the noble Lord, Lord Stanley of Alderley, who could not be in his place.

It was indeed difficult to draft the amendment. I am very pleased that we have been able to achieve the right balance. I beg to move.

On Question, amendment agreed to.

Lord Cavendish of Furness moved Amendment No. 2:

Page 21, leave out lines 31 to 47 and insert—

("P = (C+S) x D/V

where—

P is the amount payable under this subsection;

C is the compensation which, on the assumptions mentioned in subsection (2A) below, would have been payable to the tenant for the value of his unexpired term or interest in the land;

S is the sum which, on those assumptions, would have been payable to the tenant under section 12 of the Agriculture (Miscellaneous Provisions) Act 1968 (additional payments on compulsory acquisition of agricultural holdings);

D is the amount of the depreciation payment made to the owner of the land;

V is what would have been the value of the land at the relevant time if it had not been affected by the subsidence damage.

(2) Where the Corporation make a payment under subsection (1) above to a tenant who has been displaced from the whole or a sufficient part of the land affected by the subsidence damage, they shall also make to him a payment equal to the compensation which

  1. (a) on the assumptions mentioned in subsection (2A) below; and
  2. (b) on the further assumption that the displacement had been caused by the compulsory acquisition mentioned in paragraph (a) of that subsection,
would lave been payable to him for any loss or injury sustained by him.

(2A) The assumptions referred to in subsections (1) and (2) above are —

  1. (a) that the land had been compulsorily acquired at the relevant time;
  2. (b) that the tenant had no greater interest in the land than as tenant for a year or from year to year; and
  3. (c) that the land had not been affected by the subsidence damage.").

On Question, amendment agreed to.

Lard Cavendish of Furness moved Amendment No: 3: Page 22, line 8, leave out ("for the purposes of paragraph 3 of that Schedule").

On Question, amendment agreed to.

Lord Cavendish of Furness moved Amendment No.4: Page 22, line 10, at end insert— ("(4) In this section— the relevant time" means the relevant time for the purposes of paragraph 3 of Schedule 1 to this Act; sufficient part" means not less than 0.5 hectares or such area as the Secretary of State may by order specify; and any reference to compensation is a reference to compensation

under section 20 of the Compulsory Purchase Act 1965 or section 114 of the Lands Clauses Consolidation (Scotland) Act 145 (compensation to be made to tenants for a year

The noble Lord said: My Lords, I have spoken to Amendment No. 4 with Amendment No. 1. I beg to move.

On Question, amendment agreed to.

Clause 36 [Land drainage systems]:

Lord Cavendish of Furness moved Amendment No. 5: Page 30, line 30, leave out ("shall") and insert ("may").

The noble Lord said: My Lords, there are many places in the Bill where the Secretary of State has the power to make regulations or give directions. These are discretionary powers. Where matters can proceed sensibly without regulations I can see no need to make them. Should arrangements cease to work well, then it is important that the Secretary of State should have a reserve power with which to remedy matters. In my view, the existence of a reserve power will allow sensible and flexible arrangements to develop.

The only exception to this general approach is in this clause, and the only reason for that is that we have carried over the corresponding provision from the 1957 Act. In fact, so far as we are aware, British Coal and tie drainage boards have evolved sensible and equitable working practices over the years. Rather than make regulations for the sake of it, we should prefer to see these arrangements continue to evolve sensibly. We therefore propose making the regulation power in this clause discretionary, as is the case everywhere else in the Bill. I can, however, assure noble Lords that this power will be used should it prove necessary. I beg to move.

On Question, amendment agreed to.

Clause 38 [Reimbursement of successful claimants' expenses]:

Lord Cavendish of Furness moved Amendment No. 6: Page 32, line 23, leave out ("three") and insert ("four").

The noble Lord said: My Lords, in moving Amendment No. 6, I shall speak also to Amendment No. 7.

During Committee stage the noble Lord, Lord Peston, sought to increase to six years the period prior to the making of a claim within which it would be possible for a claimant to recover the costs associated with the preparation and prosecution of that claim. In reply, I agreed to consider this further on the grounds that, at least where records of condition are concerned, three years might be considered ungenerous. Having done so I am now bringing forward two government amendments which I hope it will be agreed fairly address this point.

The effect of Amendment No. 6 is to increase the period to four years. As I indicated in Committee, the problem is that beyond a certain point records of conditions will be too out-of-date to be of any use in the resolution of a claim. I have also explained that, because the standard of repair is to the claimant's reasonable satisfaction rather than the pre-damaged condition, such records of condition are by no means essential. Nevertheless a prudent householder may well commission such a survey on receipt of a Section 46 notice and, because of the delay in damage occurring, find himself unable to recover the costs. As I have indicated, Amendment No. 6 will increase the time period to four years, which I believe should be adequate in the vast majority of cases.

Amendment No. 7 enables the Secretary of State to go further than that should it prove necessary. It would enable the Secretary of State to prescribe different time-scales for different types of expenditure. For example, it would be possible to allow expenses for expert advice to be recoverable in the period three years prior to the making of claim, while at the same time allowing the claimant to recover expenses associated with a record of condition incurred at any point after the receipt of a Clause 46 notice related to the mining which caused the eventual damage. For the moment, however, a single four-year period would seem to be the least confusing for all concerned and this would be the immediate effect of these amendments, which I commend to the House. I beg to move.

Lord Peston

My Lords, I thank the Minister for fulfilling his promise to consider whether he could move in my direction. Four years is better than three years and I thank him for that amendment.

It is always difficult to understand such complicated clauses but I gather that in principle the Secretary of State could vary the number further. One hopes that that would be upwards rather than downwards. Should the Secretary of State make such an order, your Lordships would have an opportunity to talk about the issue because I understand that these orders are debatable. I repeat my thanks to the Minister for amending the Bill in this way.

On Question, amendment agreed to.

Lord Cavendish of Furness moved Amendment No. 7: Page 32, line 28, at end insert— ("(6) The Secretary of State may by order—

  1. (a) substitute for the period specified in subsection (4) above (whether as originally enacted or as previously amended under this subsection) such other period as he thinks fit; or
  2. (b) direct that that subsection shall not apply in such circumstances as may be specified in the order.").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 6. I beg to move.

On Question, amendment agreed to.

Clause 51 [Service of documents]:

Lord Cavendish of Furness moved Amendment No.8: Page 39, line at beginning insert ("Except as otherwise provided by regulations made by the Secretary of State,").

The noble Lord said: My Lords, I wish also to speak to Amendment No. 9. It is a minor amendment which benefits the claimant. As presently drafted the Bill provides for the Secretary of State to make regulations specifying how a notice should be served. The amendment sets out on the face of the Bill how a notice should be served. We have deliberately allowed the claimant to serve a notice on any British Coal office. Should there be an exchange of correspondence I should imagine that in practice the claimant would simply send notices back to the British Coal office that originated the matter. However, I would not wish to have a situation in which the claimant lost the original correspondence and was penalised for writing back to the wrong office. Hence the onus will be on British Coal rather than the claimant to ensure that notices reach their proper destination. Amendment No. 8 enables the Secretary of State to make regulations amending these arrangements should it prove to be necessary. I beg to move.

On Question, amendment agreed to.

Lord Cavendish of Furness moved Amendment No.9: Page 39, line 3, leave out from ("Corporation") to end of line 4 and insert ("by leaving it at, or by sending it by post to, any office of the Corporation").

On Question, amendment agreed to.

Schedule 6 [Farm Loss Payments]:

Lord Cavendish of Furness moved Amendment No.10: Page 53, line 40, leave out ("has received") and insert ("is entitled to").

The noble Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 1. I beg to move.

On Question, amendment agreed to.

5.45 p.m.

Lord Cavendish of Furness

My Lords, I beg to move that the Bill do now pass.

I wish to thank noble Lords for the careful consideration given to this Bill and for the constructive spirit with which it has been debated. I thank my noble friends Lord Renton, Lord Stanley of Alderley, Lord Wise and Lord Campbell of Alloway, the noble Baroness, Lady Seear, and the noble Lords, Lord Ezra and Lord Peston, for making the conduct of my first Bill through your Lordships' House a pleasant experience.

The Bill is the culmination of a long process of review and consideration which properly began with the report of the Waddilove Committee in 1984. I should like again to pay tribute to Lewis Waddilove and all the other members of his committee. Since its report we have had many discussions with outside bodies and have listened carefully to the comments made here and in another place. As a result, the Bill has been amended, most noticeably to improve the provisions dealing with blight, stop notices and consequential loss. Further changes have been made today, the most important of which concern compensation for tenant farmers and the claiming of expenses. As a result of these changes I believe that what started out as a good Bill is now a better Bill which will make a significant difference to those people whose properties and lives are affected by coal mining subsidence damage.

It is important to recognise that subsidence affects people. Where there are people there are sure to be problems. It is simply not possible to legislate for every single eventuality. This is where attitudes matter. I am pleased to say that British Coal has adopted a positive and constructive attitude to the formulating of this Bill and I am sure that this new attitude is as important as anything that can be achieved through the Bill. An example of this is British Coal's decision to introduce voluntarily a low-cost, speedy arbitration scheme for householders which will, I hope, satisfactorily resolve the great majority of disputes which arise. British Coal has also undertaken to make the operation of the new regime as open and transparent as possible.

I do not wish to sound complacent—attitudes can, after all, change—and I would remind noble Lords that we have taken regulation-making powers in many key areas and will use them if necessary. However, I am confident that the provisions of the Bill, together with the positive attitude of the corporation, will mean that subsidence damage will be dealt with sympathetically and, above all, fairly.

It has been rightly said that this is a well thought out and well drafted Bill. My final thanks go to the parliamentary counsel and the officials in the Department of Energy for their work on the Bill and for the help that they have given to me.

There is one final point that I should like to make. This Bill is in many ways a tidying up and consolidating measure. There is therefore one loose end which ought to be addressed. It is an issue which crosses party lines and on which individuals seem regularly to change their minds. I am talking of course about the vexed question of pronunciation: is it subsidence or subsidence? I have consulted widely on the issue and noble Lords will be pleased to know that I have the final, definitive answer. I fully agree with the noble Lord, Lord Peston, that both are right. It is on that note of consensus that I commend the Bill to the House.

Moved, That the Bill do now pass.—(Lord Cavendish of Furness.)

Lord Peston

My Lords, I am able easily to join the Minister in the atmosphere of consensus. It is a rare occasion, because all noble Lords liked the Bill and enjoyed the proceedings. No animosity needs to be expressed during this stage of the Bill. I too thank the Waddilove Committee and its chairman. The Bill was a model of consultation and shows what can be done. I agree with the Minister that both here and in another place a good Bill has been made better. Search as I might, I can find no party political side to it.

I agree with the Minister that attitudes are important and I am pleased that British Coal has strongly indicated that it will act sympathetically in all cases. As the Minister said, placing oneself in the position of a person who has suffered from subsidence, one realises that there is a great sense of personal loss and that something has gone wrong which needs to be put right. The Bill will help to achieve that. This might be the only occasion during my career in this House that I warmly support a Bill. I am glad to know that the Bill will soon pass.

Lord Campbell of Alloway

My Lords, the Bill ought not to pass without a word of appreciation for the quality of the draftsmanship. It has been mentioned but it is so greatly appreciated that it should be marked specifically. In addition, there has been a wide measure of co-operation and open-mindedness from my noble friend. As a result, two precedents have been set. First, care was taken not to over-legislate. I hope that the precedent will be followed in future Bills. The second is Amendment No 9, which relates to the sending of notices. I hope that in other Bills the interests of the subject will receive similar consideration. I thank my noble friend for his conduct of the Bill.

Lord Ezra

My Lords, when I was at the Coal Board over a decade ago, the largest amount of correspondence which I received was on the subject of subsidence. Incidentally, as regards pronunciation, I am glad to learn that both pronunciations are correct. But I find that on these Benches we tend to say subsidence and on those Benches they tend to say subsidence. I do not know whether there is significance in that. However, most of the correspondence which I received was on the question of subsidence. I do not believe that that was due to any reluctance on the part of the Coal Board, as it then was, to deal with the matter but due more to a number of uncertainties in the legislation. Therefore, I am particularly pleased to see this measure going through after a good deal of thought has been given to the subject not only by the Waddilove Committee but also by British Coal, whose code of practice is largely incorporated in this new provision.

I join with the noble Lord, Lord Peston, in saying that the Bill has been handled extremely effectively. There has been a rare degree of consensus. That is due not only to the way in which it has been presented but also to the way in which it has been handled by the noble Lord, Lord Cavendish. He has shown courtesy and a painstaking concern for the issues throughout.

I congratulate the noble Lord, Lord Peston, who admitted that he came to the subject knowing nothing about it. When he started to move amendments in Committee it seemed to me that he had now become an expert on subsidence. If he is looking for another job, no doubt a consultancy is awaiting him.

We have done a useful job of work. I hope that those in the future who may unfortunately suffer from subsidence will find that their redress is more effective than it has been in the past.

Lord Cavendish of Furness

My Lords, I thank noble Lords most warmly for their remarks, and commend the Bill to the House.

On Question, Bill passed, and returned to the Commons with amendments.