Skip to main content

New Clause—(Compensation For Compulsory Acquisition After The Appointed Day)

Volume 437: debated on Monday 12 May 1947

The text on this page has been created from Hansard archive content, it may contain typographical errors.

(1) Any compensation payable in respect of the compulsory acquisition of an interest in land by a government department or a local or public authority within the meaning of the Acquisition of Land (Assessment of Compensation) Act, 1919. in pursuance of a notice to treat served on or after the appointed day (not being compensation which falls to be assessed in accordance with Rule (5) of the rules set out in section two of that Act) shall be assessed in accordance with the provisions of that Act as modified by the, provisions of this and the three next following sections.

(2) The value of any such interest shall be ascertained on the assumption that planning permission would be granted under Part III of this Act for development of any class specified in the Third Schedule to this Act, but would not be so granted for any other development; and where such permission has been granted before the date of the notice to treat for any such other development, then in so far as the development in question has not been carried out at that date, no account shall be taken of any additional value attributable to that permission:

Provided that where at any time before the date of the notice to treat permission for development of the land of any class specified in the said Third Schedule (other than development specified in paragraph r thereof) has been refused or granted subject to conditions, or, having been granted, has been revoked or modified by the imposition of conditions, it shall be assumed for the purposes of the ascertainment of the value of the interest in question that such permission would not be granted, or, as the case may be, would not be granted otherwise than subject to those conditions.

(3) Where the interest is acquired in pursuance of a purchase notice served under section seventeen of this Act, and it is certified by the Minister, on confirming the notice, that any building comprised in the land has become incapable of reasonably beneficial use, then if the purchase notice was served in consequence of the refusal of permission for development which would have involved the demolition of the whole or substantially the whole of the building, or in consequence of the revocation or modification of such permission, no account shall be taken for the purposes of this section of the value of the building except in so far as the value of any materials therein would exceed the cost of demolition.—[ Mr. Silkin.]

Brought up, and read the First Time.

10.15 p.m.

I beg to move, "That the Clause be read a Second time."

I do not think I need take up much time in dealing with this new Clause, the substance of which has already been discussed for some considerable time. It provides for the payment of compensation on the basis of market value, and it provides for payment being made on the basis of the existing use value of the land.

Question put, and agreed to.

Clause read a Second time.

I beg to move, as an Amendment to the proposed Clause, in line 12, to leave out from "development" to the end of line 15.

The Clause which the right hon. Gentleman has just moved lays down certain principles for assessing the value of land to be compulsorily acquired after the appointed day. In stating those principles, it prescribes the assumption that planning permission would be granted under Part III of the Bill for development of any Class specified in the Third Schedule of the Bill,
"but would not be so granted for any other development."
Then follow the words which we seek to exclude by the Amendment. We do not object to the provisions of the first part of that Subsection to which I have just referred, but the words which we seek to exclude would eliminate from considerations of compensation a planning permission given before the notice to treat. In regard to that, we say that the position is inequitable. I do not know what your intentions, Major Milner, are in regard to the following Amendment in the name of my right hon. Friend and others, which proposes in line 15, at the end, to insert:
"Provided that where land to which such permission relates is compulsorily acquired under this Section, that permission shall be deemed for the purposes of Sections nineteen and twenty of this Act to have been revoked on the date on which the notice to treat in respect of such land was served."
Perhaps it would be convenient if I were allowed to refer to that because, as the Minister will appreciate, the two matters hang together. We consider that it is inequitable to eliminate the position there specified from the computation of compensation because the granting of permission to develop in itself establishes a development value and, therefore, founds a claim to compensation. At present, with the inclusion of those words, that claim is excluded. Further, in the absence of the words which we propose to insert in the second Amendment, the following unsatisfactory result also arises. Where expenditure has actually been incurred on development for which permission has been granted in that way, the owner of the land in question is not entitled to compensation for abortive expenditure which is prescribed in Clauses 19 and 20, unless the compulsory acquisition of the land is in itself regarded as constituting revocation of planning permission for the purposes of this Clause. It is for that reason that we propose to import into the Clause the words that figure in the second Amendment.

I am sorry, but I cannot accept either of the two Amendments. In reference to the first, when the Clause provides that in assessing compensation no account should be taken of a planning consent which has not been acted upon, I think that is quite a proper provision to include. The planning consent may have been given a very long time ago. It may be a consent which the local authority will desire to revoke or which would have been revoked within the time permitted. For instance, it might be a planning consent to development in a green belt. One of the first things that the local authority would do would be to revoke a consent of that kind. Yet, if these words were deleted, it would mean that the owner could get the benefit of a planning consent which would be against the public interest. If he did get the benefit of that consent, would he not also, in equity, be liable to pay a development charge even though he had not carried out the development? If the consent is to be treated as if the consent had been acted upon, equally a development charge should be payable in respect of it. The Clause, as it stands, provides that no account should be taken of a consent which has not been acted upon, and there would naturally be no development charge payable.

As regards the second Amendment, the words proposed are not necessary. The fact is that in so far as a volume of expenditure is involved, that can be met, and will be met, in the ordinary way. It is covered by Clause 20, and with the Amendment that has now been accepted by the Committee, any kind of abortive expenditure can be provided for and there is no need for the inclusion of the words which it is proposed to insert. For those reasons, I hope the Committee will not agree to the deletion of the words proposed in this Amendment or to the insertion of the proposed words after line 15.

Do I understand from what the Minister has just said that the words in the second Amendment are redundant, because the land there specified would, in any event, come under Clause 20 in regard to revocation? That is the point which the Amendment seeks to make. If the Minister says the Amendment is redundant and that the principle there sought to be imported into the Bill is already in the Bill, by reason of Clause 20, I agree that there is an end of the Amendment, but I would press the Minister to be a little clearer on that point.

Yes. I think the position is that if the owner has started on the basis of his planning permission—that is what the second Amendment is designed to deal with—then insofar as works have been done, their value will be included in the purchase price insofar as a development charge has been paid, it will be refunded under Clause 66; and insofar as the owner has incurred other abortive expenditure of the kind covered by Clause 20, he will be entitled to claim for the loss. I am not clear whether the Amendment is designed to cover any other forms of expenditure, but the various types of expenditure I have described will be paid. I had difficulty in discovering exactly what the Amendment intended to do.

Amendment negatived.

10.30 p.m.

I beg to move, as an Amendment to the proposed Clause, in line 33, at the end, to add:

"(4) In ascertaining the value of any interest in land designated as land subject to compulsory acquisition it shall be assumed for the purpose of number two of the Rules in Section two of the Acquisition of Land (Assessment of Compensation) Act, 1919, that the land has not been so designated."
I have not by me the text of the Rules referred to, but the effect of them is that the price the land is worth is to be the price that it would fetch in the open market if sold there by a willing seller. These words, since 1919, have defined what we loosely term "market value," and it is Rule 2 which describes the psychological and material surroundings of an open market value. Of course, all compulsory purchases are, in a way, fictitious—there cannot be a willing seller if there is compulsory purchase—but for the purpose of finding the market value, one has to assume a willing seller and say what the land would fetch in the open market. All the incidences that affect land and value, and what a. willing seller would be likely to take for it, are well known. They have been considered by surveyors and valuers ever since the Act was passed in 1919, but this Bill introduces a new factor which may be supposed to be capable of influencing the mind of the so-called seller. It introduces a new factor into the open market price. That is the effect of the earlier Clauses of the Bill, which introduce the device of designation.

I will not, at this hour of the night, rehash the differences of view which have been expressed frequently both upstairs and here between the Minister and hon. Members on this side of the Committee as to the effect which designation for compulsory purchase of land has upon the fortunes of the landlord and upon the value of the land. The right hon. Gentleman has, with praiseworthy persistence, advocated throughout that this designation was a blessing to the landlord in that it gave him notice of the fact that his land was in jeopardy of being acquired, and that it was better to know the worst as soon as possible, rather than be left in doubt as to its ultimate destination. That argument, I have always thought, would have more force if the designation of the land were the only means permitted to public authorities of acquiring it, but that designation comes on top of all the other statutory provisions which enable land to be compulsorily acquired. So it adds nothing to the certainty of the landlord and, as we on this side think, it increases the jeopardy and the danger to his land.

If the right hon. Gentleman is right, and we are wrong, and designation is a great blessing to the landlord, enriching the value of his assets and really making everybody happier all round, then it would be an act of great self-sacrifice on my part to propose that this great blessing of designation should be disregarded in ascertaining the price. If the right hon. Gentleman is to be consistent in the argument he has so far resolutely advanced—I almost said obstinately, but perhaps "resolutely" would be the kinder word—then he must agree with this Amendment, because it is not, I understand, his intention to add an element to the calculation of the value of land which would undoubtedly inflate its price. As he has told the Com- mittee that designation of land for compulsory purchase would be such an added advantage, we are willing to accept his argument for once and ask that it be excluded from the terms of the value of land. That is on the supposition that the right hon. Gentleman is right, and I am willing to accept it for the sake of friendly relations and so on. I really think he is wrong, and if it be a fact that the designation of land has an adverse effect upon its selling market value, then I suggest, if the right hon. Gentleman means what he says by a willing seller, he should exclude from the conception of a willing seller the whole idea of designated or doomed land. Whichever side is right on the main theory—whether designation is a curse or a blessing—or on whichever side of the argument we stand, I think both sides can agree that the Amendment should be accepted.

I have never resolutely argued that designation adds to the value of land. It is an advantage to an owner to know that his land is likely to be acquired within ten years; that is an advantage, but I have never argued that it had any effect on the value. I agree with the right hon. Gentleman that it would be wrong for a local authority to take action which reduced the value of a person's land, and then to acquire it at the reduced value. That would be inequitable, and we should not be parties to such a procedure. Yet, I do not think that would be the case. Nor do I think any such Amendment as this is necessary. I believe that value for the purpose of compulsory purchase is the price which a willing buyer will pay to a seller. That, of course, is a hypothetical sum, which has to be calculated. I am in agreement with the right hon. Gentleman on some points, but in the circumstances, while I am advised that this Amendment is quite unnecessary and that recourse under the Acquisition of Land Act will give the right result, I am willing to look at this again. If any Amendment becomes necessary to achieve the position, I assure the Committee that it will be made at a later stage of the proceedings.

I thank the right hon. Gentleman for what he has said, but I must add that I am rather disturbed at his suggestion that the Amendment is unnecessary. This is a matter on, which none of us can be too sure. This acquisition of land is new to our law, and although I have not the advantage of the advice which the right hon. Gentleman has, I think that the fact that a piece of land has been designated will have an adverse effect on the value of that land. Before the land can be designated, he must be prepared to approve it, and it may be acquired within ten or fifteen years, as the case may be. If the designation is approved, the land will remain in the possession of the owner only for a limited period. I can see no harm in including the words proposed. I, myself, do not believe that by leaving it to chance, the thing which we wish to avoid will, in fact, not occur.

Amendment negatived.

Motion made, and Question proposed "That the Clause be added to the Bill."

If it is not intended to call the next Amendment on the Order Paper—in line 33, at the end, to add:

"(4) The value of an interest in land to which section seventy-four of this Act applies shall be ascertained on the assumption that the acquiring authority would be entitled to carry out the development specified in subsection (1) of that section and that such authority is acquiring the land for the purpose of carrying out that development."
—I wish to take this opportunity to raise the matter, which is of considerable substance and importance. Under Clause 74 of the Bill, the right hon. Gentleman sought to give special treatment to land which is colloquially described as "ripe." With regard to that land, there will be no liability to pay a development charge, and there will be no payment by way of compensation out of the £300,000,000 fund. But the "ripe" land within the definition of the Clause is land where the planning Permission is given under this Act, and also land where the development values are wholly or mainly attributable to the prospect of that development at the appointed day, and where a building contract is in force. I have summarised the provisions of Clause 74 for the reason that it is clear that in that Clause, the right hon. Gentleman is seeking to single out for special treatment land coming within that category.

What he has not done in this Bill, as yet, is to relate that part of the Bill to the part of the Bill dealing with compulsory acquisition. He is freeing the "ripe" land, in one part, from liability to development charge and a right to claim compensation, and making no provision for that category of land with regard to compulsory acquisition; because under this new Clause with regard to compulsory acquisition, what is going to happen? The owner of land which is in its true sense "ripe" is only going to obtain, by way of compensation, the value of his interest in that land, less his development rights. That is all he is going to obtain as a right. He will have a claim, which is unlikely to be paid in full, for the difference out of the £300,000,000 fund. That, I apprehend. to be the present position. So one reaches this anomalous situation, that the owner of "ripe" land is really excluded from this Bill so far as development charge is concerned, if he has the good fortune not to be subjected to compulsory acquisition. If, on the other hand, he is subjected to compulsory acquisition, he will get less than his land is now worth, because I do not think anyone suggests that people are going to get 100 per cent. of their claims from this £300,000,000 fund.

I have had brought to my notice during the interval since the Committee stage, a case with which the right hon. Gentleman may be familiar. It concerned a local authority for which he did some valuable work in days gone by. In my opinion, this case illustrates very strongly the force of my contention that, just as in Part VII of the Bill special provision is made for "ripe" land, so also there should be special provision made in the part dealing with compulsory acquisition. In this case, the local authority entered into a most solemn obligation by law. It made a deed whereby it gave permission for the development of a cleared site for industrial purposes The land is absolutely "ripe" for development, and but for the war, would have been developed by now. Now that land, if it is not compulsorily acquired, will not come within Clause 74, because the local authority, notwithstanding the deed, indicate that it is now their intention to zone that area for housing. They may be right in doing that, having regard to the present need. But the effect, of course, of the announcement of their desire now to acquire compulsorily this land, which they had agreed to let the owner develop himself, is going to place a very heavy burden upon the owner of that land. These cases are not likely to be small in number. I cannot but think that in many cases where land is ripe for development in its true sense, you will find also that the local authority is willing to acquire.

10.45 p.m.

I suggest to the Minister that where land is really ripe it is unfair to say, as he does under the Bill as it stands, that the owners of this land—it may be a charity, it may be people who have invested—shall in fact get less than the land is now worth, ripe as it is for development, because, within Clause 74, it has been selected as land for compulsory acquisition. I do not know what answer the right hon. Gentleman will make on this point. It is a point of substance and importance, and I hope that the Minister even at this late stage will undertake, if he cannot accept our Amendment, at least to make some provision for dealing specially with the compulsory acquisition of land which will fall within Subsection 1 (a) and (b) of Clause 74 and within the planning commission part of that Clause if the local authority does not change its mind as to what permission it would give.

The hon. and learned Gentleman has raised what appears to be a perfectly valid point, and one into which we shall certainly look with sympathy. There may be cases in which dead ripe land may be acquired but will not be able to share in the £300 million. There are two ways of dealing with that case. One is that the acquiring authority should pay a price which includes the development value of the land and should itself inherit, so to speak, the owners' right to carry out the development free from any development charge. The other is that the acquiring authority should pay a restricted use value only and later on, if it were liable to pay development charge, the owner should have restored to him the right to claim against the £300 million. The hon. and learned Gentleman has adopted the former alternative in the Amendment which has been put down. We need not go into it, but we did not think that the Amendment in the terms in which it was put down was apt to meet even the object which the hon. and learned Member has in view. We shall consider both alternatives and try to put down an Amendment in another place which will meet the point, in one way or another.

I am grateful to the right hon. and learned Gentleman. I am glad that he recognises that this is a casus omissus in the Bill, not intentional, but due to the complexity of this Measure. I was not aware that' the owner of ripe land compulsorily acquired could not have a claim against the £300 million fund. I would urge the Minister to make provision so that the owner of land which is really ripe, should receive a price which includes the development value rather than have a claim against the £300 million. I thank the Attorney-General for what he said and I shall be glad to hear of the result of his attention to this matter, because as the Bill now stands hardship will be imposed on a landowner in these cases concerning the acquisition of land.

We on this side of the Committee welcome the attitude of mind of the Attorney-General in the consideration of this subject. We are not, of course, here concerned with the particular words of the Amendment, which you, Major Milner, in your discretion have not seen fit to call, but we are discussing this question on the Motion, "That the Clause be added to the Bill." The right hon. and learned Gentleman said he was satisfied that there "might be" a case in which an inequitable result would be arrived at if this Clause remained as at present drafted. With all respect to him, I think those words should be altered. I should like him to substitute for them words to the effect that as the Clause at present stands, there will inevitably be occasions on which an inequitable result will be arrived at. My hon. and learned Friend the Member for Daventry (Mr. Manningham-Buller) referred to compensation but there the Attorney-General rightly said that under Clause 74 (1) the right to compensation out of the global figure under Part V of the Bill is excluded. The right hon. and learned Gentleman lucidly put before the Committee two alternatives as a possible solution of those difficulties. Might I reinforce the argument for the first of these alternatives. We on this side of the Committee—and it is one of the principles on which we approach the whole discussion of the problems raised under this Bill—turn our face against the enlargement of claims upon that global sum of £300 million compensation. We do not desire in any case to extort concessions by way of larger slices for any particular interest. Therefore, I urge upon the Government when giving this matter further consideration to lean towards the first of the two alternatives rather than the second.

The justification, if any ever existed, for a global sum as a method of compensation lies in the phenomenon of floating values, not ascertainable, to the degree to which development will take place. But where land is ripe for development there is no floating value, because it is settled on the land affected and we are able to give it a proper reckoning.

Question put, and agreed to.

Clause added to the Bill.