Clause 74 - Basic loss payment
Planning and Compulsory Purchase Bill
10:15 am
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I beg to move amendment No. 420, in
clause 74, page 48, line 5, leave out '7.5%' and insert '15%'.
Mr David Amess (Southend West, Conservative)
With this it will be convenient to discuss the following:
Amendment No. 421, in
clause 74, page 48, line 6, at end insert—
'(2A) The Secretary of State may from time to time by regulations prescribe different amounts for the purposes of subsection (2) above.
(2B) The power to make regulations under subsection (2A) above shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
Amendment No. 422, in
clause 75, page 49, line 10, leave out '2.5%' and insert '5%'.
Amendment No. 437, in
clause 75, page 49, line 12 at end insert—
'(d) the land and building amount.'.
Amendment No. 436, in
clause 75, page 49, line 13, leave out subsection (3).
Amendment No. 423, in
clause 75, page 49, line 14, leave out '£25,000' and insert '£50,000'.
Amendment No. 424, in
clause 75, page 49, line 14, at end insert—
'(3A) The Secretary of State may from time to time by regulations prescribe different amounts for the purposes of subsections (2) and (3) above.
(3B) The power to make regulations under subsection (3A) above shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
Amendment No. 438, in
clause 75, page 50, line 13, leave out subsection (3).
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
We had a long debate on clause 73, but I make no excuse for that, because it is one of the most important clauses. It sets the context and framework for the whole of part 7 on compulsory purchase. We now move on to deal with the loss payments, which is a new concept.
As we shall see from later clauses, loss payments will form a relatively small percentage of the total amount that will be paid in compulsory purchase. They have been introduced to speed up the system and make those whose properties are being acquired feel less aggrieved, less likely to object and more likely to comply with the procedure. I am sure that my hon. Friend the Member for Spelthorne will not like it, but such people will feel that they have been treated more fairly if they are given generous compensation.
The purpose of the amendment is to probe that generosity. Compulsory purchase often represents only 20 per cent. or 25 per cent. of the total cost of a project. Whether the payment to the individual whose property is being acquired is 1 per cent. more or less makes relatively little difference to the total cost, but it can make a huge difference to the person whose home is being acquired. The odd £1,000 or £2,000 extra under the loss payments could make a great deal of difference.
The National Farmers Union states that to convince claimants that they are being treated fairly and to deter unnecessary objections, loss payments must be set at a sufficiently generous level to encourage such behaviour. It says that there is already an issue relating to whether all costs are being adequately covered, and cites one or two examples of how losses can be incurred when a farm is compulsorily acquired and the losses are not covered. For example, when a farm is acquired, the farmer probably has to go out and acquire a new farm, and he might be competing with other farmers in the area who have had their land acquired as well. The
land price is driven up, and the farmer has to pay more than the market price that he obtained for his farm. That loss is therefore not covered.
There are other types of loss. If a farmer loses his tenancy, he has to go out into the market where, if he is lucky, he can, as a result of various negotiations, replace the controlled tenancy under the Agricultural Holdings Act 1986 with a farm business tenancy under the 1995 Act, but that is likely to be for a shorter term and involve less security. When a barn is acquired, it is acquired at market value, not at replacement value—again, there is a loss. The loss payments are in some way intended to make up the balance. The purpose of this large group of amendments is to probe the Government about the levels and percentages that they have set for the loss payments. I will go through the amendments and probe the Minister about that.
I know that there are powers later in the Bill to vary the percentages and total amounts. That is welcome, because surely over a period of time, with inflation, the limits and percentages may well become out of date and inapplicable. It would be interesting to know why the Government have arrived at such percentages now. Amendment No. 420 would amend the 7.5 per cent. mentioned in proposed new section 33A(2)(b) of the Land Compensation Act 1973 to 15 per cent., which might be fairer. We could retain the £75,000 limit mentioned in the Bill, but simply make it fairer to those who own properties that have been acquired at fairly low values. They could get an initial higher payment and the overall limit could be capped so that those who own large value properties would not necessarily be paid any more.
I suspect that that amendment No. 421 is probably not necessary because of a later clause, but I would be grateful if the Minister could confirm that. Amendment No. 422 refers to clause 75, page 49, line 10 and proposes that 2.5 per cent. be replaced with 5 per cent. It would be interesting to know why and how 2.5 per cent. was arrived at. If one looks at the table in proposed new section 33B(8), which relates to the area of land, one sees that it has been quite cleverly set out. If one does some calculations, and talks about it in ordinary parlance that most people understand—in other words, if one talks about acres rather than hectares—one realises that it is £10,000 for 250 acres: only £40 per acre. That is for the first 100 hectares. For the next 100 hectares, the amount is only £15,000 for 750 acres—£20 per acre. We are talking about pretty small payments.
Those payments are in addition to what would be paid for the total value of the land. However, the normal value of land, even in the current agricultural depression, usually exceeds £2,000 per acre in most areas of southern England, so we are talking about values of about 1 to 2 per cent. Those are small values.
I do not wish to deal with amendment No. 437. Proposed new section 33B(2)(b) and (c), which say ''the land amount'' and ''the buildings amount'' respectively, probably already cover that. It would be otiose to try to amalgamate them in a subsection (d).
The purpose of amendment No. 436 is to leave out new subsection (3), which deals with the £25,000 limit
that may be paid to an occupier for loss of agricultural land. When compared with a farm's total value, £25,000 is a very small amount. Even a 100-hectare farm, which is relatively small, is worth £500,000 at £2,000 per acre for 250 acres. However, we are talking about an additional loss payment of only £25,000, which is 0.5 per cent. of that amount. I wish to ask the Minister precisely why that maximum amount has been set.
The purpose of amendment No. 423 is to increase that maximum amount from £25,000 to £50,000. Those are all matters of judgment as to what the maximum amount should be, and how generous one must be to achieve one's objective. In my experience, most people who have their property compulsorily acquired end up out of pocket. They never quite have all their losses or all their removal costs reimbursed. Somehow there is always a mechanism that means that occupiers are reimbursed for certain things only. Therefore, as my hon. Friend the Member for Spelthorne said, if the state is acquiring land, it is to be hoped that those powers will be used as a last resort. If they are to be used, and somebody is to lose his farm or his home, the least that the state can do is to make a generous loss payment.
I do not believe that we should always follow everything that the Irish Government do, but they signed an agreement—
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I shall not be led down that path, Mr. Amess, or I shall certainly be ruled out of order. I am not sure that I agree with the hon. Gentleman in any case.
As I was saying, the Irish Government agreed with their farmers to pay a fixed co-operation payment of 5,000 punts per acre on top of their standard compulsory purchase payment. I know that the punt is not worth the same as the pound, but that is still a substantial payment. As a matter of judgment, it would be interesting to know how the Minister thinks that the Bill's proposals compare to the Irish Government's arrangement.
Mr Tony McNulty (Parliamentary Under-Secretary, Office of the Deputy Prime Minister; Harrow East, Labour)
They are in the euro.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
The Minister corrects me. However, they were not in the euro in early 2001 when that arrangement was negotiated. I cannot remember the exact date when the euro came into operation. I presume that the arrangement that came into effect in 2001 had already been renegotiated. I cannot remember the exact timing.
Amendment No. 424 would enable the Secretary of State to vary the total limit and the percentage of the loss payment. I think that clause 76 covers that.
The amendments seek to probe the Government's thinking on how they arrived at the loss payments. The Minister did not answer my questions on financial considerations, or on anything to do with compensation in clause 73. Before we finish this part of the Bill, it would be useful for the Committee to have some idea of the public sector expenditure implications that the Bill will introduce, especially in
respect of loss payments. That will be an important consideration when we decide whether we feel that they are adequate, and therefore that the clause should be allowed to stand part of the Bill.
Mr Matthew Green (Ludlow, Liberal Democrat)
I shall praise both the Government and Conservative Members, which will shock them. ''Typical Liberal,'' they will say. Well, there we are. I am pleased that the Government are incorporating the idea of loss payments into the Bill. The hon. Member for Cotswold mentioned certain circumstances, but he did not touch on the fact that when land or a building has been acquired, if the landowner wants to acquire similar land elsewhere to continue his business, he will face legal costs in respect of that transaction. Landowners are not currently covered for that, so I welcome the introduction of loss payments.
I also welcome amendments tabled by Conservative Members. I accept that some of them are not worded ideally, but they are probing amendments. While I support the simplification of the compulsory purchase elements, I agree with the sentiment that the state needs to cover the likely losses that people may incur when their land is compulsory purchased. I look forward to hearing the Government's justification of the clause. Some figures to which it refers, especially the 2.5 per cent. on agricultural land, seem low. A proposal to increase that deserves scrutiny.
To overcome the problem of people feeling so aggrieved about compulsory purchase, a reasonably generous sum would be welcome, and would assist the process, rather than a figure that is regarded as below the bare minimum. There would be less resistance to compulsory purchase, because pre-negotiations would be based on what the person was likely to receive through compulsory purchase and the loss payment. A more generous allowance would encourage an earlier settlement, without having to go through legal proceedings, which I am sure all members of the Committee would regard as a satisfactory conclusion.
Mr David Wilshire (Spelthorne, Conservative)
My hon. Friend the Member for Cotswold reminded me of the first 10 years that I spent in this place, when I was much involved in the affairs of Northern Ireland and the Republic of Ireland. All my friends in the Republic wish that they had never heard of the euro and want go back to the punt. However, I would be ruled out of order if I pursued such an interesting matter.
There are one or two general issues concerning the principle of loss payments that need ventilating, but they are more appropriate to be debated when we discuss clause stand part. I shall not mention them now—unless you are minded not to have a stand part debate, Mr. Amess. For the moment, I shall stick to the amendments. Amendments Nos. 436 and 438 both relate to clause 75. I shall need guidance at some stage on whether we can have two stand part debates on clauses 74 and 75, or whether you want to wrap the debates together, Mr. Amess, because the amendments jump between the clauses.
The amendments would delete the limit on the maximum amount that will be paid. Before the Minister points it out, I accept that we could have tabled an amendment to clause 74, which also contains
the principle that the Bill should state that the maximum payment will be X. We are not debating what the amount should be, but questioning why there should be a maximum amount. I need to hear a justification for that before I can support either of the clauses, and through amendments Nos. 436 and 438, I invite the Minister to tell us why there should be a maximum payment. What is wrong with paying what the property is worth?
I turn now to amendment No. 420, which relates to clause 74, and amendment No. 422, which relates to clause 75. I accept that if the Government want to be pedantic, they could say that we could have tabled yet another amendment to subsection (2)(a) of the proposed new section 33B of the Land Compensation Act 1973 under clause 75, which is another example of a percentage being mentioned. I could be uncharitable—I try not to be—and say that the percentages have been plucked out of the air, but I doubt that. If they had been, my guess is that they would have been the same.
Why did the Minister settle on those percentages? One is 2.5 per cent. and the other is 7.5 per cent. I suspect that a great deal of thought has been given to them. It may sound pedantic to ask: why not 2 per cent., rather than 2.5 per cent.? Somebody, somewhere must have done some calculations and arrived at a conclusion. If we are to support the Government and settle for 2.5 per cent. and 7.5 per cent., we must hear the argument in favour of those figures. I might have been the author of the amendments, but I accept that tabling amendments simply to double the percentages is but a means of triggering the debate. I am not accusing the Government of plucking figures out of the air, but I will readily admit that in doubling them I was guilty of that, to test the Government's arguments. I hope that the Minister does not simply say that our figures are wrong, because I want to know why hers are right.
On amendment No. 437, my hon. Friend the Member for Cotswold said that he thought that it was not necessary to add at the bottom of the list in new section 33B(2) the words
''the land and building amount''.
I do not know whether that would be a sub-subsection. I can never get the jargon right. I have a suspicion that sometimes the value of the land is one figure and the value of the building is a different figure, whereas their value together is quite different. At the moment, the payment would be whichever of the two sums was the higher.
From my own experience of buying a home comprising both land and a building, I learned rapidly that the combined value of the land and the building is often in excess of the value of the land or the building, and that they are complementary to one another. If the Government do not want to pay according to the combined value, they should tell us why. My hon. Friend has made the point about generosity, and I shall return to that on clause stand
part. If the Minister resists the amendment that would add
''the land and building amount'',
there has to be a very good reason for doing so, because that would be departing from the generosity principle that my hon. Friend adduced for us.
Amendments Nos. 421 and 424 would prescribe different amounts. It is perhaps ironic that my hon. Friend and I are putting forward yet more powers for that jackboot dictator, the Secretary of State, but I am trying to be helpful to the Minister. She has missed some rare occurrences of my trying to help her Government, but I do so occasionally. The amendment would get the Government off the hook of the inflation that they are stoking up for the next year or two, which will make them more mean than they are at the moment. I hope that the Minister will accept help from whichever quarter it comes.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I am sorry to interrupt the flow of my hon. Friend's speech, but I must take him back to his point about land and buildings. It is a good argument and it will become increasingly important over time, particularly in the south of England, where people will pay a significant premium for houses that have a bit of land with them, because they will start to become a scarcer commodity.
Mr David Wilshire (Spelthorne, Conservative)
As the owner of a house with land, I sincerely hope so—but perhaps that is declaring an interest. The Government, who do not like people having a pleasant home in the countryside, are using their dictatorial powers to demand that concrete be spread all over people's back gardens in order to meet some artificial targets. I accept that that is the Government's policy, and making people suffer that awful future is one more reason for generously compensating them. My hon. Friend is absolutely right.
Amendment No. 423 seeks to double the maximum amount payable. I will not go to the stake to defend the figure of £50,000; it is just a figure that has been tabled to trigger the debate. However, not even I can imagine that the Government are so stupid as to pluck the figure of £25,000 out of the air. Somebody somewhere must have had a very good reason for setting £25,000 as the maximum amount. The figure may reflect what the Government—who want to interfere in all our lives—think any individual in society ought to be allowed to have. That may be the philosophy behind it. There must have been a reason for setting a figure of £25,000, and I would be eternally grateful if the Minister would tell us what it was.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
Let me see what I can do. I feel that the Opposition have been a tad ungenerous in not welcoming the new loss payment scheme, which is a great improvement on the scheme that we were left by our predecessors. The scheme will greatly assist landowners. However, I will leave their lack of generosity aside.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
May I, for the avoidance of doubt, put on record the fact that the official Opposition do indeed welcome the loss payments.
The purpose of the amendments is not to be mean-spirited but to probe the Government's thinking on the levels of payments in the Bill.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
I accept that. Let me try to respond to the points that have been raised. I do not think that I need detain the Committee on amendments Nos. 421 and 424. The hon. Member for Cotswold has referred to them already. They are redundant because, as the hon. Gentleman will agree, if we read to the end of clause 77 we see that the new section 33K already provides the regulation-making powers that he seeks. Indeed, the hon. Member for Cotswold has welcomed them.
I turn to amendments Nos. 420, 422 and 423. It may help hon. Members if I outline the rationale behind the provisions that hon. Members are seeking to change. I understand that the purpose of the amendments is to probe that rationale. In setting the limits, our aim was to provide appropriate recompense for the impact on an owner of losing their assets at a time not of their choosing, and to offset the costs involved in compulsory acquisition by the benefits of speedy implementation. The subject of legal fees was raised, and they would be covered by the disturbance payment.
We hope that the additional loss payment will create greater good will among those whose properties are directly affected, so that they settle their compensation claims more quickly than might otherwise have been the case. That would clearly be in everyone's interests. The hon. Member for Cotswold mentioned the previous financial position of local authorities; he will know that that issue is covered in the regulatory impact assessment.
We set maximum figures because we do not consider that an ever increasing level of loss payment as the value of the asset increases is justified. The impact of the loss on the owner of the interest is unlikely to increase in proportion once the value goes into seven figures. Opposition Members will have deduced—indeed, they have said—that the maximum sum payable to an owner-occupier under the Bill's provisions is £100,000. That comprises a £75,000 maximum basic loss payment and a £25,000 occupier's loss payment to be paid if a person is also the occupier of the land. The sum will be payable where the value of the claimant's interest reaches £1 million. As Opposition Members have said, that would always be a matter of judgment based on experience. In our judgment, that figure represents the value of the kind of premises that might be occupied by the upper end of the range of small to medium-sized businesses.
The hon. Member for Spelthorne said, quite reasonably, that he imagined that the Government did not pluck the figures out of the air. He is right. The figure of 7.5 per cent. for the basic loss payment was derived from the current home loss payments regime, under which residential owner-occupiers can claim 10 per cent. of the market value of their interest in the dwelling. The smaller figure reflects the fact that those with an interest in non-residential property who are also in occupation of it will be entitled to claim an occupier's loss payment amounting to at least 2.5 per cent. of the value of their interest. That is modelled
closely on the existing home loss payments regime and it is provided for under the arrangements that would be inserted by clause 75. Thus, like a residential owner-occupier who was eligible to make a claim for a home loss payment, those who own an interest in and occupy a non-residential property will be entitled to claim a total loss payment of 10 per cent. of the value of their interest.
The notional three to one split between the basic loss payment and the occupier's loss payment is intended to reflect the fact that it would be expected that those with a valuable interest in the property would need a larger inducement to encourage them to co-operate in land assembly projects. I would have thought that the hon. Member for Cotswold, who speaks for the official Opposition, would understand that.
Home loss payments will remain at 10 per cent. There is no pressure for that percentage to change, and there is reasonably widespread agreement on it. I have to say, therefore, that we would need to see some convincing justification for specifying a different percentage under the new system. The 10 per cent. figure has been seen as a reasonable uplift for those unquantifiable losses caused by the element of compulsion; without justification, any more would seem like a free gift at the expense of the public purse. Opposition Members would expect the Government to be prudent with the public purse, and to use their best judgment about what is acceptable in the circumstances.
Nevertheless, if in the light of experience the Government believe that the percentages or maximum payments ought to be amended, they can make the necessary changes by using the regulation-making powers set out in new section 33K, which will be inserted by clause 77.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I am grateful for the Minister's cogent explanation of how the Government arrived at the percentages and maximum upper limits. However, before the hon. Lady finishes on this subject, will she tell the Committee how she expects the maximum limit to be updated? Will it be updated in line with inflation or with property values, which generally exceed inflation? Clearly, over a period of time, even with inflation at its current low level, those figures could rapidly become outdated and insignificant.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
Obviously, we shall have to see how the new regime goes, but the figures would probably be updated in line with property values; the hon. Gentleman has made an important point.
By contrast, the intention of amendments Nos. 436 and 438 is not to increase the maximum amount payable, but to remove the limit completely. For the reasons that I have already set out, the amendments would, if they were accepted, cut across the whole purpose of the new loss payment regime.
The purpose of the new regime—it is important that I spend just a minute explaining it—is to make some allowance for the upset, discomfort and inconvenience of being required to leave a property or give up an interest in it at a time not of the owner's or occupier's choice. I am grateful that the hon. Gentleman
recognises that that is an improvement on existing arrangements. We do not believe, however, that there is justification for an ever increasing level of recompense as the value of the asset increases.
The distress and inconvenience suffered by a claimant is unlikely to keep increasing in proportion with the value of the property. Our proposals, therefore, are aimed at giving the greatest benefit to the owners of small and medium-sized businesses, often family owned, for whom the loss of particular business premises may be keenly felt, if a family has put a great deal of time and effort into those premises. Such individuals are likely to have invested a great deal of emotional capital in their business.
I understand the spirit in which the amendments were proposed, but the changes suggested would give an ever increasing benefit to those often large corporations, with extensive land holdings and valuable assets, for which loss of the land compulsorily acquired may be less significant—certainly as regards emotional factors. Our proposals are designed to reflect the provisions of the home loss payment regime.
Mr Matthew Green (Ludlow, Liberal Democrat)
I follow exactly what the Minister says. I agree that there should be an upper limit for large landowners. The opposite case, however, is that if the value of a property is very small—£10,000 or £20,000—the maximum payment of 10 per cent. will be a tiny amount, which may not cover the extra losses that we have been discussing. Rather than establishing a flat rate, would the Government not consider some sort of sliding scale to be more appropriate?
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
I understand that point, but we must be clear about the purpose of the home loss payment. It is to compensate for the inconvenience of land being acquired at a time not of the owner's or occupier's choice. I am unsure whether a sliding scale could measure that. We do not believe that an open-ended regime would make the best use of the public funds available for land acquisition to facilitate regeneration or major new developments, such as much-needed infrastructure projects, in which the private sector will almost inevitably be involved.
The difficulty with amendment No. 437 is that it would give agricultural occupiers a bigger bite at the cherry than everyone else, by allowing them to receive a payment consisting of both the land and building amount, where that exceeded 2.5 per cent. of the value of the occupier's interest in the land. It would be unfair to favour agricultural occupiers over others in that way, and we can see no reason for giving anyone such an excessive sum. That would be especially relevant if the proposal to remove any upper limit to the amount payable were accepted.
The land amount and the buildings amount are each intended as alternatives where the value of the occupier's interest is very low—for example, in the case of a tenancy from year to year. The payment amounts have been calculated to take account of the fact that they are alternatives, designed to cover cases in which the occupier has very few buildings but extensive
landholdings, or vice versa. For those reasons, payment of a combined sum would be as unjustifiable as the removal of a ceiling on the maximum sum.
This has been a helpful debate, which has exposed several important issues, and I ask hon. Members to vote against the amendments if they are pressed to a vote.
Mr David Wilshire (Spelthorne, Conservative)
I have just one more thing to say about the specifics of the amendments, on which the Minister may wish to comment further. I listened with great care to her, and understood the arguments that she deployed. Because my disagreement with them is general, I shall explain why I do not agree with them when we come to clause stand part—with one exception.
The Minister's argument for a maximum figure was that with ever rising property values, there must come a time when using a percentage figure becomes unreasonable. I do not follow that. I understand what she is suggesting, but she is inviting us to draw a distinction between the cost of property or land, which will go up, and the cost of other things, which presumably will not. She is saying that at some point the two will part company. That is not logical. The Minister describes a case in which there would be a maximum figure, irrespective of what happens in the future—unless we return to a means of altering the figures.
I press the Minister to think again. If it is right to start with a percentage of the value of the land or the buildings, I do not understand how it logically follows that there can be a cut-off point. The values of land and buildings tend to be linked to inflation. If inflation applies to them, it applies to everything else, and it would be reasonable that all values would go up. The Minister certainly has not persuaded me that a maximum figure is justified.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
Near the end of her comments, the Minister dealt with the issue that my hon. Friend raised about taking the value of land and buildings together, because the value of the house with land may be greater than the value of the separate parts. She skated over it, and I would be grateful if she would clarify the matter. According to normal valuation principles, the two would be valued together, and one would usually expect payment on that basis. It may not apply under loss payments—that may be a different matter—but that is how a basic valuation would work.
The Minister did not explain how the limits are to be amended. I am absolutely certain that they will have to be amended. She helpfully said that she thought that they would be amended in relation to property values. That is the correct way, of course, but it takes time for such things to go through the bureaucratic mechanisms that are involved. I can well envisage three or four years elapsing before the Government take the appropriate procedures through clause 77 to amend the limits. I am concerned about that.
Finally, it should be a general principle with compulsory purchase that a person is put in the same position after the purchase that they were in before. In other words, they should be able to purchase an equivalent property with the money that they have been given for their property. I have provided some examples to do with farming, in which farmers and tenants suffered losses for which they were not compensated. If that becomes an increasing trend and the Government realise that it is happening, I hope that they will review the maximum values for farming and increase the loss payments to cover some of the items for which there has not been compensation.
However, having said that, we have had a long debate on these relatively straightforward amendments. As I said in my intervention on the Minister, we welcome the loss payments. They are a useful addition to measures that already are in place. Therefore, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I beg to move amendment No. 419, in
clause 74, page 48, line 8, leave out from second 'a' to 'case)' in line 9 and insert—
'(a) a freehold interest, or
(b) an interest as tenant from year to year, or
(c) an interest as tenant for more than a year
and in cases (a) and (c) above'.
This is a very simple, straightforward technical amendment that would deal with a legal point. We believe that it is the Government's intention to make agricultural tenants eligible for basic loss payments. However, as they are tenants from year to year, they could fall through the qualifying interest definition in proposed new section 33A(4). The amendment would rectify that risk, and I would be grateful if the Minister would confirm whether she agrees with it.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
I shall try to be brief, as the hon. Member for Cotswold was commendably so.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
You know what it is like, Mr. Amess; lawyers are never brief. My apologies; I shall earn myself the unpopularity of not only Opposition Members but my hon. Friends.
I must tell the hon. Member for Cotswold that there is a mistake in the drafting of the amendment. It mentions ''cases (i) to (iii) above'', but I assume that it should refer to cases (a) and (c). [Interruption.] I take it from the hon. Gentleman that that is so.
Mr David Wilshire (Spelthorne, Conservative)
I am confused. The Minister says that there is a flaw in the amendment because it mentions cases (a), (b) and (c) instead of cases (a) and (c), when in fact, the amendment says:
''cases (a) and (c) above''.
Have I been confused by what the Minister said? Was I not listening carefully enough, or has the Minister made a mistake?
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
I understand from my colleagues that the amendment was certainly not that way originally. Anyway, perhaps we should move on. I think that the hon. Member for Cotswold changed it.
Mr David Wilshire (Spelthorne, Conservative)
On a point of order, Mr. Amess. In the marshalled list of amendments before me, which is dated 28 January—that is today—the end of amendment No. 419 says:
''and in cases (a) and (c) above''.
Can you confirm that we are debating what is on that list, irrespective of what might have been tabled or printed elsewhere, or will we have to refer back to some other document, Mr. Amess?
Mr David Amess (Southend West, Conservative)
Order. I can help the hon. Gentleman. The amendment is correct as on the amendment paper; originally, there was a printing error.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
That is a great help. I was about to say that I have taken instructions; that takes me back a few years. The amendment was originally printed wrongly, but it has clearly now been printed correctly. I accept completely that Opposition Members have before them the amendment in the correct form.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
Just to clarify matters, I may have led the Minister down the path of temptation, because I, too, was reading from a previous version of the amendment paper. I am grateful that we have confirmed that there was a printing error, and that it has now been corrected.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
I am grateful to the hon. Gentleman—
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
Yes.
Mr David Wilshire (Spelthorne, Conservative)
Will the Minister accept that I am sorry if I implied that she had made a mistake? Clearly, she did not; someone else did. I hope that I did not imply that she was wrong.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
Not at all. The hon. Members for Spelthorne and for Cotswold are generous, as always.
I take it that the intention behind the amendment is that in the case of a tenant from year to year, there would be no requirement for qualifying interest to subsist for a period of at least one year. Let me explain why I am not sure that I see the point of the amendment. If a claimant occupies property under a tenancy from year to year, he or she will have an interest that subsists for
''not less than one year'',
and therefore will qualify for a loss payment under the clause—provided, of course, that the claimant's interest is being acquired compulsorily, as that is one of the qualifying criteria set out in new section 33A(1) as inserted by clause 74. If, however, a claimant's interest is not being acquired compulsorily, they will not qualify for the loss payment. Given that a tenancy from year to year could simply be allowed to lapse once a relevant CPO had been confirmed, or that it could be terminated in another way, such as by notice to quit or surrender, it would be for the acquiring authority to decide whether to include such an interest in the CPO. It is worth noting that the value of a tenancy from year to year will in any case be minimal,
so the basic loss payment and the occupier's loss payment based on the value of the claimant's interest would also be minimal. If the interest is acquired compulsorily, the tenant could benefit from an occupier's loss payment calculated on the land amount or the buildings amount.
Where a tenancy is terminated or surrendered instead of the interest being compulsorily acquired, compensation may still be payable to the tenants. For example, they may be entitled to compensation under the Landlord and Tenant Act 1954—I spent some of the more boring months of my life working on that—the Agricultural Holdings Act 1986 or the Compulsory Purchase Act 1965.
However—this is the pertinent point, and I apologise to the Committee for taking so long to reach it—it would not be appropriate for us to extend the loss payment regime to cover people whose property is not being acquired under compulsory purchase powers. That would open up a wide field on which it would be difficult to impose boundaries.
I say to the hon. Member for Cotswold that I understand the spirit in which the amendment was tabled. However, although it looks simple on the surface, it opens up a complex issue. I hope that he will accept my explanation and withdraw the amendment.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
The Minister mentioned section 11 of the Compulsory Purchase Act 1965. Fortunately, it just so happens that that has come into my possession. Reading it very quickly, I think that it says that the notice to treat has to be served only on the landlord, not the tenant, although I may have got that wrong. I accept the Minister's explanation. If she makes it crystal clear that there is no danger that tenants can fall through the loss payments regime because of the wording of the clause, I will have no problem and will immediately withdraw the amendment.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
I referred to section 20, not section 11. I said that people might be entitled to compensation under that where a tenancy was terminated or surrendered instead of being compulsorily acquired, so we feel that those interests are covered. If it is compulsorily acquired, that is a different matter, but compensation may be available through other avenues.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
This is a technical matter, and I should like to look carefully in Hansard at what the Minister has said. I am sure that if we still have doubts, we can return to them on Report or in another place. For now, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr David Wilshire (Spelthorne, Conservative)
May I make it clear, as my hon. Friend the Member for Cotswold has, that I support the principle of the new loss payment scheme? It should perhaps have been introduced some while ago. [Hon. Members: ''Ah!''] One reason why I spent so
long on the Back Benches was that I used to say things that were critical of the previous Government, but I shall let that be. No one is perfect. My party is slightly less imperfect than this Government, but that is a different issue.
What concerns me about the principle of a loss payment scheme is that, whereas we need such a scheme, I am afraid that the Government are not going about it correctly. Under various amendments, we have heard about the introduction in a sense of the attitude that applies to rate support grant settlements, which involves the use of a formula. In this case the formula is the percentage: we consider that x per cent. is okay or that y per cent. is okay, and we will apply that across the board. When somebody qualifies for a payment, a formula is used to calculate the amount rather than use common sense and judge individual circumstances. My experience of a formula in any situation, whether for rate support grants, council tax or for the payment of compensation, is that sooner or later it will come a cropper. There is always an instance when it is blindingly obvious that more is due than the x per cent. that the formula allows.
There is no provision in the clause that the above formula is no substitute for common sense, and that is to be regretted. Somewhere along the line, the Government of the day, whatever their political colour, will find themselves embarrassed if they stick to that arrangement. I do not see what is wrong with using market value. I know that some in Parliament do not like the market, but it is possible to establish the value of losses. Many people specialise in working out a realistic figure for losses in all sorts of circumstances. One need only consider the insurance industry, which constantly deals with complicated claims. It is possible to assess the cost of rebuilding, for example, although, of course, it is very difficult to put a value on pain and suffering or on the loss of profits. However, the private sector is not subjected to a formula; it is subjected to negotiation. Therefore one arrives at a realistic figure in each case that is acceptable to the insurer and to the claimant. It should not be beyond the wit of man, and certainly not beyond the wit of the Government and the civil service, to come up with a formula of words rather than a formula of figures to deal with the issues that arise after a valuation of a property has been made.
I am against formulas in principle; the market value has something to offer. I am also concerned that the clause contains no reference to replacement values. It is all very well to ask, ''What are you losing? You are suffering some inconvenience and interruption and we realise that you would rather not go, so we will pay you something for it.'' However, there is no real understanding that because you are being forced to move on you will have to replace the value of what you have. It may appear to be like for like, but because of the circumstances it is not.
Because we are so close to finishing, Government Members may have thought that they have avoided hearing about Heathrow airport for a whole morning—[Hon. Members: ''Oh no!'']—but I am sorry to have to disillusion them. The planning of
terminal 5 provides a wonderful example of a replacement issue.
When terminal 5 was being planned, the value of some cottages beside the sewage works, where terminal 5 is being built, had to be decided. You can imagine that a group of cottages between two runways next to a sewage works had a value that was much lower than that of nice cottages with a garden not next to a sewage works between two runways at the world's busiest international airport. Bit by bit, the owners were winkled out, often against their wishes, until one family remained. It had reached the stage when compulsory purchase powers were being contemplated against the remaining family. The family merely wanted to move to a little house with the same square footage and the same amount of garden near their families. They lived at the western end of the airport and the rest of the family was living to the south of it in Ashford in my constituency. The difference in value between being bought out next to the sewage works and moving to the same thing in highly desirable Ashford was astronomic.
If a formula had been applied, even if it involved a topping up because of the inconvenience, the difference in value would have been such that it would still have been impossible for that family, whom I represented, to move into a maisonette or bedsit. Because the public sector was luckily not involved in compulsory purchase, BAA was persuaded to say to those people, ''We get the message. Go and find yourselves a like-for-like, same square footage, same-size garden house and we will buy it for you if you give us what you own at the moment.'' That is what I mean by replacement.
That situation will occur time and again with compulsory purchase. I am amazed that the Government have decided to refer to the fact that under certain circumstances the replacement costs are the costs that shall be followed when it comes to compensation.
Sir Paul Beresford (Mole Valley, Conservative)
My hon. Friend was not on the Bill for the channel tunnel rail link, but the Minister's attitude is completely opposed to that taken by the Labour party when it was in opposition. At that stage, there was an open purse, so perhaps there will be some relief on the Heathrow issue.
Mr David Wilshire (Spelthorne, Conservative)
Yes; my hon. Friend is absolutely right. I have mentioned Heathrow, but I do not wish what I say to be too taxing for Government Members.
The concept of generosity should be included in the Bill. All too often, the reason for compulsory purchase is the need to speed something up. There are two ways to speed things up. When the French built the channel tunnel rail link, the French Transport Minister said, ''When you're going to drain the swamps, don't consult the frogs.'' One can go down the route of not consulting, taking jackboot powers and building railway lines, or one can use compulsory purchase. Compulsory purchase requires loss arrangements with which the concept of generosity helps. When dealing with the amendments, the Minister argued that it was up to the Government not to squander taxpayers' money, a point with which I agree, as I am sure that
she expected me to. As a general point, however, paying over the apparent odds does not necessarily mean a bad deal. I therefore thought that the clause would refer to that point.
I have another example of what I have in mind from my constituency. One of the busiest bits of the M25 runs through my constituency, and every so often the Government of the day decide that it would be a good idea to widen it again, which does not seem to solve the problems but nevertheless we go through the experience on a routine basis. Not too many people live near the M25, which is a relief, but the last time they discussed acquiring the necessary land compulsorily the proposal would have affected a dog kennels. Time and money were saved when someone had the good sense on this occasion to say, ''We will buy the kennels at a realistic price.'' Compulsory purchase was not necessary because a sensible price was negotiated. The owner of the land was pleased to sell it, and he made it his business to go to neighbouring properties to ask them not to complain because he wanted to get his cheque as quickly as possible. The process therefore served to keep people quiet.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
As it seems that my hon. Friend will be talking when the Committee adjourns, will he press the Minister for an answer when she comes back on the number of houses that she expects to be affected by the clause and the public expenditure implications, about which we have heard nothing. Will she come armed with that information for this afternoon?
Mr David Wilshire (Spelthorne, Conservative)
I am grateful to my hon. Friend, who has obviously given the Minister notice. When he rises to speak in the clause stand part debate she will know what he is going to say. With the lunch break coming, she will have plenty of time to go away and, rather than having lunch, work out the figures to inform my hon. Friend.
The notion of generosity needs to be included in the clause. The Minister might want to portray it as my arguing for using more taxpayers' money than is necessary. To screw people down to the lowest possible price will often result in delay, attempts to provoke a dispute and the need for a public inquiry. The net result will be such disputes going on and on and on. It would be harmful if a development were frustrated. If the public inquiry and the dispute go on long enough, given the inflation that the Government are in the process of stoking up, in the end even the base figure that has to be paid will be higher than it would have been had they been generous in the first instance.
Mr David Amess (Southend West, Conservative)
Order. This is not the moment for the usual exchange of courtesies, but I shall not be with the Committee this afternoon. Besides congratulating the hon. Member for Wansdyke on his birthday and again congratulating the hon. Member for Ludlow and his wife on the birth of their baby daughter, I should congratulate all the members of the Committee on the way in which they have conducted themselves. I want to thank all members of the Committee for the courtesy that they have shown me. Finally, and perhaps most importantly, I should like to thank the Clerk and her
team for keeping us in good order. I shall now adjourn the Committee.
Mrs Barbara Roche (Minister of State, Office of the Deputy Prime Minister; Hornsey and Wood Green, Labour)
On a point of order, Mr. Amess. I know that this is not really the right time for such comments, but as you will not be in the Chair for our afternoon sitting, before you adjourn the Committee this morning I would like to put on the record my thanks to you for your chairmanship, and your unfailing courtesy and good humour. I shall convey my thanks to others, including your co-Chairman Mr. Pike, later today.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
Further to that point of order, Mr. Amess. May I associate myself with the Minister's words of appreciation to you, as we shall not see you this afternoon?
Mr Matthew Green (Ludlow, Liberal Democrat)
Further to that point of order, Mr. Amess. I join the Minister and the hon. Member for Cotswold in thanking you for your chairmanship, and your assistance to us in the weeks for which we have considered the Bill in Committee.
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Two o'clock.