New Clause. — (Provisions as to licensed premises purchased under this Part.)

Orders of the Day — Town and Country Planning Bill – in the House of Commons at 12:00 am on 9th October 1944.

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Where land purchased under this Part of this Act comprises premises in respect of which an old on-licence is in force, the following provisions shall have effect—

  1. (a) the purchasing authority. before purchasing the premises, may undertake that in the event of the renewal of the licence being refused, they will pay to the compensation authority towards the compensation payable on such refusal under the Licensing (Consolidation) Act, 1910, such contribution as may be specified in the undertaking, and any sum payable by the purchasing authority in pursuance of such undertaking shall be treated as part of their expenses in purchasing the land;
  2. (b) if, after purchasing or contracting to purchase the premises, the purchasing authority intimate to the licensing justices that they are willing to surrender the licence, the licensing justices may refer the matter to the compensation authority and that authority, on being satisfied that the licence, if not surrendered, might properly have been dealt with as a redundant licence, shall contribute out of the compensation fund towards the compensation paid by the purchasing authority in respect of the purchase of the premises a sum not exceeding the compensation which would have been payable under the Licensing (Consolidation) Act, 1910, on the refusal of the renewal of the licence.—[Mr. W. S. Morrison.]

Brought up, and read the First time.

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

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

This Clause deals with justices' licences and enables the expenses arising on the redisposition of these licences to be equitably shared by arrangement. The provision is a common form one to this extent, that it is in the Housing Act of 1936, in which Section 47 reproduces these provisions; so the Clause introduces nothing new. The position is that if the compensation authority decide to refuse renewal of a licence compensation must be paid to the interested party, and there are rules for assessing that compensation. If the compensation authority and the interested parties cannot agree, the matter goes to the Board of Inland Revenue to be determined, and afterwards there can be an appeal to the High Court if necessary. This Clause provides for the purchasing authority and the compensation authority sharing between them in suitable cases the cost of acquiring these licensed premises. Paragraph (a) of the new Clause provides that a purchasing authority may undertake before purchasing licensed premises that if the renewal of the licence is refused they will make to the compensation fund such contribution as has been specified in the undertaking. That enables them to fix up in advance a just apportionment of the expenses. Paragraph (b) provides for the case in which the purchasing authority has already purchased or contracted to purchase the premises. In that event they may intimate to the licensing justices that they are willing to surrender the licence. The justices may refer the licence to the compensation authority, and if they are satisfied that the licence is surrendered there might be a contribution towards the expense from both parties. In other words, if the purchasing authority are prepared, in effect, to do the work of the compensation authority by acquiring the premises and offering to give up the licence, it is reasonable that some part of the cost of acquisition should be met by a contribution from the compensation fund.

Photo of Sir Richard Wells Sir Richard Wells , Bedford

I regret very much that this Clause should be introduced in this planning Bill, although I admit that a similar Clause was in the Housing Acts of 1930 and 1936. The Clause appears to be not only very technical but very involved. Local authorities are entitled to get part of the purchase price out of the compensation fund, but though the Clause gives them the right to repay what they have taken out there is no obligation to repay. I should have thought that that procedure was very unusual in any legislation. It will probably give rise to a good deal of litigation. The Minister said there was nothing new in this Clause, but it seems to me there is something new. The compensation fund was built up for the purpose of doing away with redundant licences. Owing to the war a great many licensed premises have been destroyed by enemy action and the position has changed, and I think it is unfortunate that this Clause should be brought forward at this time. The Home Secretary recently set up the Morris Committee to report upon war damage to licensed premises and their reconstruction, and in paragraph 101 of their Report they deal particularly with this question of bombed houses and compensation. I would like to read that paragraph, because it explains the whole position and gives the view expressed by what I regard as a very important Committee. It says: The question arises whether arrangements of this kind should be supplemented by the use of the machinery provided in the Licensing Act for the extinguishment of licences with compensation. After full consideration of the matter we have come to the conclusion that this would not be appropriate and that this machinery should be suspended in designated and associated areas. Although the word 'redundancy' does not occur in the Licensing Acts it is generally accepted that the main purpose of the Licensing Act compensation machinery is to deal with licences which are considered to be 'redundant,' namely, surplus to the needs of the locality. The principles on which licensing justices and compensation authorities assess redundancy which are inevitably based on the practice of normal times of gradual developments and change, have little relevance in areas of serious war damage. In this connection it may be noted that the activities of the licensing justices and the compensation authorities have been greatly diminished during the war; thus the number of refusals of renewals by the compensation authorities throughout the country, have fallen from 321 to 273 respectively in 1938 to 59 and 48 respectively in 1942, and in only one of the war damaged areas for which witnesses were seen had any renewals been refused with compensation during the years 1941 and 1942. Moreover we understand that some 75 out of the 152 compensation authorities have made no levy at all in 1943 and many others have made levies far below the maximum scale. It seems reasonable to infer from this that most authorities feel that they cannot exercise their functions during abnormal periods. These considerations apply with even greater force to the situation consequent on the replanning of areas of serious war damage which will involve so many changes and readjustments that it will be impossible to assess the situation on the basis of pre-war redundancy. Now this Clause is a direct contradiction of the findings of that Committee, and I thought the Minister would very likely leave this matter over until the new clauses on compensation came forward, when he might reconsider the whole point. It is unfortunate as, owing to war conditions, so many houses may be abolished.

4.0 p.m.

Photo of Mr Francis Bowles Mr Francis Bowles , Nuneaton

The Minister in moving the Second Reading of this Clause referred to the fact that compensation would be paid to interested parties. He did not specify the interested parties. Is he bearing in mind only the licence-holders or the people on the other side of the counter, who are very interested indeed? I know perfectly well that the hon. Member for Bedford (Sir R. Wells) was concerned with the compensation to be paid to licence-holders, but I would point out that as a result either of a shortage of alcohol, or of the blitz, the licence-holders do not mind whether they are open or not, whereas the ordinary members of the public have been up in arms about it, summer after summer. I hope the Minister will see some way by which the interested parties—that was the phrase he used but it is not in the Clause—will in some way, either in the form of a subsidy or by a reduction in the price of alcohol itself, be satisfied.

Photo of Sir George Courthope Sir George Courthope , Rye

Surely this compensation fund consists of moneys provided by the owners of licensed houses, principally the brewers, for another purpose quite distinct from that which is in contemplation in this Bill. It was in order that when redundancy occurred, and the licensing magistrate decided that certain houses should be abolished, there should be an equitable compensation from the fund provided for that purpose by the owners of all the licensed houses. I cannot see that there is any element of justice in taking sums from this fund in order to pay for the ruins of houses which have been damaged by enemy action, and to which I understand this new Clause refers. I hope the Minister will give some further justification for this looting from the fund other that that which he has given up to now.

Photo of Sir Geoffrey Hutchinson Sir Geoffrey Hutchinson , Ilford

I am not quite sure what my hon. Friend the Member for Nuneaton (Mr. Bowles) meant when he proposed that the Minister should provide compensation for the persons who need the supplies on the other side of the counter. I should have thought that, if it were thought desirable that compensation should be provided either for my hon. Friend or anyone else on the other side of the counter, the Minister of Town and Country Planning was not the right person to do it. This Clause seems to me to be much simpler and more reasonable than my hon. Friend the Member for Bedford (Sir R. Wells) regarded it. As I understand it, this Clause is not restricted to licensed premises which have been destroyed by enemy action. It may extend to licensed premises which have not been destroyed by enemy action but which the planning authority, in the course of the acquisition of an area of extensive war damage, may deem it desirable to acquire. Of course, when they acquire licensed premises which are a going concern, they will have to pay compensation for them, and one of the questions would be, how much should they pay for the loss of the licence? Now it may be more convenient, if the licence is not renewed, for the owner of the licence to apply for compensation to the compensation authority, and the planning authority, as I understand it, may regard that as a preferable course. If they do that, under this Clause they may undertake to refund to the compensation fund a sum which represents the value of the loss of the licence if the renewal of the licence is refused. I take it that they would take account of the point raised by my right hon. and gallant Friend the Member for Rye (Sir G. Courthope), when he drew the attention of the Committee to the fact that the compensation fund is provided by the licence owners themselves for redundant houses, and if a house becomes redundant by reason of the planning authority intervening and acquiring it, then it seems to me that this provides a reasonable procedure for enabling the planning authority to contribute to the compensation fund a sum which will have to be paid by the compensation authority for the refusal to renew the licence. In those circumstances, I should have thought that this Clause was a reasonable addition to make to this Bill, and would meet the case which is likely to arise in a very fair and reasonable manner.

Photo of Captain William Strickland Captain William Strickland , Coventry

The last speaker seemed to refer only to paragraph (a) of this Clause. Paragraph (b) provides however, that if the local authorities acquire the licensed premises, they shall be able to draw from the compensation fund provided they are willing to surrender the licence. Is there any legal obligation there upon the local authorities that, during the time they hold the licence, they shall themselves contribute towards the fund as the owners of the house, and that that shall be a charge which can reasonably be put on to the rates? It would be totally unfair for them to participate in the provisions of the compensation provided by the trade itself, unless they themselves, as owners acquiring these premises, became contributors to the fund.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

Surely the Clause fully protects the compensation fund in that matter because it says: the licensing justices may refer the matter to the compensation authority and the licensing justices would be the competent body to decide whether in fact the local authority has been reasonable in surrendering the licence or not.

Photo of Captain William Strickland Captain William Strickland , Coventry

I think the hon. Member will agree that the words "may" and "shall" become somewhat involved in legislation.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

But as the licensing authorities would normally be the body to decide the question of redundancy, they are the persons who ought to decide such a matter.

Photo of Captain William Strickland Captain William Strickland , Coventry

I am very sorry to interrupt again, but it seems to me that the point is this: We are in agreement on both sides of the Committee on this, that if the licensing authority has the power to award compensation to the local authority then surely, in reverse, the local authority should be liable to a contribution to the compensation fund. Is there legal provision to recover that from the rates?

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

The first paragraph says that the local authority shall make a contribution to the compensation fund in certain circumstances where they have acquired licensed premises. In paragraph (b), on the other hand, the local authority can become a recipient of compensation from the compensation fund but only provided that the licensing justices have determined that in the light of new circumstances the premises should become redundant. If, on the other hand, a local authority merely surrenders its licence because it no longer wants to exercise it, I doubt very much whether the fund will be liable to pay any compensation at all. The licensing justices would, I imagine, take such a point into consideration in determining whether, in fact, the question of compensation should be referred to the authority. I think in both cases the licensed premises are covered.

Photo of Captain William Strickland Captain William Strickland , Coventry

I am sorry to interrupt my hon. Friend but it distinctly says: if, after purchasing or contracting to purchase the premises, the purchasing authority"— not the licensing authority— intimate to the licensing justices that they are willing to surrender the licence … then they are to draw compensation.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

I do not understand this Clause but I hope the Minister does because, under the first paragraph, the purchasing authority … may undertake … and, if they "may undertake" they land themselves in expenditure. If they do not "undertake," they free themselves of all expenditure. If they had it in their minds that the licence of the licensed premises is to be discontinued, obviously they would not give any undertaking but would wait for paragraph (b) to operate, in which case the compensation, instead of coming out of the rates, is going to come out of the levies, which I understand are made under the Licensing Act of 1904.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

No. May I call the hon. Member's attention to the words: … the licensing justices may refer the matter to the compensation authority and that authority, on being satisfied that the licence, if not surrendered, might properly have been dealt with as a redundant licence … which I should think is perfect protection, because compensation will come only if the category is one of redundancy which would have occurred in normal circumstances.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

I think my hon. Friend has missed the point. If they give the undertaking under paragraph (a), the licensing authority are then involved in expenditure. If they hold back on the assumption that the licence is likely to be declared redundant by the magistrate, they draw from the fund. Obviously, no local authority will act under paragraph (a) and run the risk of paying something when, under paragraph (b) they had a chance of picking up something. If I were a local authority, I would act under paragraph (b).

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

But they cannot help themselves.

Photo of Sir Geoffrey Hutchinson Sir Geoffrey Hutchinson , Ilford

The hon. Member for South Croydon (Sir H. Williams) has overlooked the fact that under paragraph (b) the compensation authority contributes out of the compensation fund towards the compensation paid by the purchasing authority in respect of the purchase of the premises.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

In other words, out of the publicans' levy or the brewers' levy, whichever you call it. Nevertheless, under paragraph (b) the local authority can get some money, and under paragraph (a) they are bound to pay out money. Nobody will work under paragraph (a) if they think they can get something under paragraph (b), and I cannot understand why paragraph (a) exists as long as we have paragraph (b).

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and Eastern

As far as I can judge, the hon. Gentleman is misreading both paragraphs. Under paragraph (a) the purchasing authority must make the decision before purchasing the premises. Once that act is complete, and only after that, does paragraph (b) come into force. There is no alternative. After that, paragraph (b) comes into force.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

My hon. Friend is still rather confused. He talks as though the local authorities will make the exercise of options to buy licensed premises a habit. The local authority can do no such thing. The local authority is going to buy licensed premises only where such purchase is a part of their development plan.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

We are dealing with such cases.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

That is precisely where that will come into operation, where the local authority becomes the purchaser of licensed premises. As the owner of them, the local authority is under an obligation to pay to the compensation fund which, in fact, it will do.

Photo of Mr Aneurin Bevan Mr Aneurin Bevan , Ebbw Vale

If my hon. Friend will permit me. This is what paragraph (a) says: they will pay to the compensation authority towards the compensation payable … Even if they get a renewal, they still have to pay to the compensation authority and they can charge the amount which they would have to pay in compensation to the development scheme itself.

4.15 p.m.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

The hon. Member has got it wrong. Paragraph (a) applies when they think that the licence is going to be cancelled. Therefore, they give an undertaking that they will make certain payments. Under (b) it is not a question of the licence being cancelled, but of the local authorities, of their own volition, surrendering the licence. If, on their own volition, they surrender and then the justices do something, they draw out of the brewers' levy: under (a) they have to make a payment into the fund; and I do not see how the two things make sense.

Photo of Sir Geoffrey Ellis Sir Geoffrey Ellis , Sheffield Ecclesall

There may be nothing in the compensation fund. Then (a) will be the only way.

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

I hope that the Committee will let me proceed with this Clause, on the understanding that I will have a look at the various speeches that have been made and see if I can do anything to meet the position. This matter is highly technical, and refers to the licensing code of 1904. As I understand it, if you want to get rid of the licence, because it is redundant, and not because of any objection to the character of the licensee or anything of that sort, the authority that comes in at that stage is not the justices, but the compensating authority, which has a fund, which is fed by levies.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

The justices come in first.

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

Yes, they say that the licence is redundant; and, when they decide that it is redundant—and provided that that is the only ground on which they refuse it—they refer the matter to the compensating authority. The compensation fund is made up of a levy on licences. Therefore, the compensating authority is liable to contribute to the fund, like everybody else. This provides for an arrangement between the compensating authority and the purchasing authority when, in fact, the purchasing authority is doing, or has done, part of the compensating authority's work. Either when it proposes to buy the premises, or when it has bought the premises and proposes to give them up, it says, "You ought, from the compensating fund to make some contribution." I think that my right hon. and gallant Friend the Member for Rye (Sir G. Courthope) and other hon. Members take the general view about (b) that this is really, as far as the compensating fund is concerned, to be raised by levies from the trade, and that, under paragraph (b) of this Clause, it is proposed to draw from that fund for what is really a planning purpose. If they look at paragraph (b) they will see, in line 14, that the governing words are that the compensating authority on being satisfied that the licence, if not surrendered, might properly have been dealt with as a redundant licence, shall contribute. … That is to say, if I have grasped this right, as I think I have, that where the compensating authority themselves have come to the conclusion that this is a proper case where a redundant licence ought to be compensated for, they can make a contribution to the purchasing authority, which has bought it and is willing to give it up. I do not think, subject to what my hon. Friends may think on reflection, that there is much wrong with that. It seems to me that the compensating authority have first to be satisfied that the licence is redundant, and then, and only then, can they make this contribution. It is their duty, as guardians of the compensation fund, to refuse any contribution until they have made up their minds that it is the sort of licence for which there would have to be compensation in any case.

Photo of Sir Richard Wells Sir Richard Wells , Bedford

Is my right hon. Friend going to deal with the Morris Report?

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

I will certainly look at the point.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.