Clause 74 - Basic loss payment
Planning and Compulsory Purchase Bill
10:15 am
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—