Orders of the Day — Slum Clearance (Compensation)

– in the House of Commons at 12:00 am on 31st July 1957.

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11.59 p.m.

Photo of Sir Alexander Spearman Sir Alexander Spearman , Scarborough and Whitby

The subject that I want to raise quite briefly at this late hour is the compensation paid for houses that are taken over under a compulsory purchase order. I am speaking particularly of houses in four areas in Scarborough and in Bank's Yard and Hamilton's Yard, Whitby—although it does apply to houses in other towns throughout the country.

I realise that the State has the right and duty to acquire property when it is important in the public interest so to do, and to protect the taxpayer or ratepayer from paying a fancy price by fixing arbitrarily the price that will be paid. But I maintain that they must be scrupulously careful, if they fix the price, to see that it is a fair one.

It is sometimes thought that owners of small houses and property are rich, ruthless plutocrats who make a lot of money out of it, but in my experience most of these houses are owned by people who have put all their savings in one or two houses, and, indeed, a constituent who came to see me last week had put all he had into one small house, for which he is now told he is not to get anything at all, or only £1.

I think that the Ministry's inspector is sometimes rather harsh in his judgment on these houses, in that I have seen houses in Scarborough which he said are of no value, but which I would have thought are in a condition to justify their getting a payment as being well-maintained.

But tonight it is not on the value of the house that I wish to speak, but on the value of the site on which the house stands. In the statement made at the inquiry at Scarborough in November, it was shown that there were 40 houses to be taken over, whose average site amounted to 78 square yards. There were 13 that amounted to 76 square yards, and eight which were rather smaller. Now, land for building purposes on the outskirts of Scarborough is valued at about 10s. a square yard. In the centre of this town—and it is rather a fine town—I would have thought that 15s. a square yard was a fairly low price, and I have taken that figure allowing for the fact that demolition expenses had to take place. If it is being used for commercial purposes, I think it is worth at least 30s. a square yard.

If we take a house standing on 78 square yards. at 15s., the value is £58, and if at 30s., to be used as a warehouse or for commercial purposes, it is £117. But the people who are compelled against their will to sell these houses are not given half or even a twentieth part of that amount. They have been offered £1 for the site for each of these houses, and my constituents, not unnaturally, asked me why this is so.

The only answer I have been given is that under the Housing Act, 1936, it was said that these sites must be valued on the assumption that they were to be used only for rebuilding purposes—the rebuilding of houses—and not for commercial purposes. But the byelaws in most towns prohibit houses from being built on sites as small as that, so that, in fact, the State so arranged it that the sites have no market value. It seems rather like a man winning a game by changing the rules in the middle.

In the largest area in Scarborough, if those 40 houses all belong to one man, then, as a valuation for commercial purposes, it would be worth £4,680; but if, as in fact is the case, they belong to a lot of different men, they get only £1 each, or £40 between them.

This opens up possibilities of undesirable speculation. Supposing that a shrewd speculator heard that houses were to be compulsorily purchased and went to their owners and said, "Last year the chaps got only £1 each; I will give you £5"; supposing that he bought 40 houses at £5 each, that would cost him £200 and he might get £4,680. The whole area in question is one acre and that in the middle of the town is being bought for £61. That is not the price of good farm land. It is not the council's fault. It is the fault of the artificial conditions which are imposed on the valuer.

I am not asking the Minister for a decision tonight. Only a very small amount of money is involved, but an important principle is involved, whether we should establish a precedent of taking over houses without compensation. I ask him to say only two things. The first is that he believes that there is no sin in being a landlord and that if, in the public good, houses have to be requisitioned, there will be no discrimination against the landlord, any more than there would be against any other property owner. The second is to tell me that this matter will be considered entirely afresh.

That is what I ask and I profoundly hope that he will make those two statements.

12.6 a.m.

Photo of Sir Isaac Pitman Sir Isaac Pitman , Bath

The point I wish to raise will also be shortly made and it is identical with that of my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman). It, too, relates to a clearance area scheme, the Snow Hill clearance, in Bath. Equally, in that case derisory figures have been paid as compensation. My case is even worse, because the highest figures is 20s. per house and the lowest is 1s. per house. Again, in my case the council is very anxious to pay reasonable and fair compensation, but has been debarred from doing so by the Minister's Department under threat of a surcharge if it pays more than those ridiculously small figures.

Before the war, when slum clearance areas were established, Section 25 of the Housing Act, 1936, applied. Under that provision 5s. a square yard at pre-war prices was paid and 15s. a square yard at present prices, it is generally agreed, ought to be paid in the new conditions. As my hon. Friend said, 15s. a square yard would give a very considerable sum per acre, compared with less than £50 per acre at which the property is being purchased by the local authority.

The Town and Country Planning Act. 1947, was intended to be an improvement on the 1936 arrangement. It was contemplated, with that Act, giving a development value which would depend on the use to which the land might be put. If the land was used for shops, instead of houses, it could be a very much higher figure that the 15s. a square yard about which we have been talking.

The position now is that the two Acts have to be taken in conjunction. Under the 1947 Act, there is a critical date which is, or was, 30th June, 1949. In Bath, the decision to declare the area as a clearance area was advertised in the local Press 23 days after that date, and I believe the Minister is under the impression, wrongly, that in that case the 23 days are relevant and make the case not correct. In point of fact, a direction under Article 5 of the Provisional Town and Country Planning Act General Interim Development Order, 1946, had been made as early as June, 1946, and there is clear proof of that. Certainly, as early as 1939 the clearance scheme was postponed because of the outbreak of the war.

It is just not true that it is not open to the Minister to allow—indeed, I would say that he really has to provide for it—a payment on lines which are fair and reasonable and not the derisory lines at present adopted. At any rate, we in Bath can quote actual examples in Leicester, Plymouth, Exeter, South Shields, and Camberwell, where the district valuer has been allowed to make an interpretation which gives the right values and not these derisory values.

I would ask the Minister genuinely to go into this matter and consult my hon. Friend the Member for Scarborough and Whitby and myself to ascertain whether something can be done to redress a very real grievance which is sincerely held by the people of Bath, by the council, and by everybody who knows the case, and is not confined to the owner-occupiers of these houses.

I should like to read to the House from the recent Report of the Committee on Administrative Tribunals and Inquiries, known as the Oliver Franks Report. In paragraph 278, in page 61, page 61, it says: One final point of great importance needs to be made. The evidence which we have received shows that much of the dissatisfaction with the procedures relating to land arises from the basis of compensation. It is clear that objections to compulsory purchase would be far fewer if compensation were always assessed at not less than market value. It is not part of our terms of reference to consider and make recommendations upon the basis of compensation. But we cannot emphasise too strongly the extent to which these financial considerations affect the matters with which we have to deal. Whatever changes in procedure are made dissatisfaction is, because of this, bound to remain. So I join with this very important Committee in making a plea to the Minister to use his undoubted administrative facilities in this respect to ensure that a fair compensation is given in these cases and the ones in Scarborough and elsewhere.

12.14 a.m.

Photo of Mr Reginald Bevins Mr Reginald Bevins , Liverpool Toxteth

Perhaps I might say first, in reply to the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), though he is not present, that I will certainly draw to the attention of my right hon. Friend the observations which he had to make earlier.

Secondly, I would say how grateful I am sure the whole House is to my hon. Friends the Members for Scarborough and Whitby (Sir A. Spearman)and Bath (Mr. Pitman)for the exemplary brevity which they have displayed in putting forward their case. I shall try to emulate it. Both expressed their disquiet about the level of compensation for freeholds payable under compulsory purchase orders for slum clearance. This is a matter of valuation assessment rather than a matter for my right hon. Friend, and in the event of a dispute between the parties there is a right of appeal to the Lands Tribunal.

I think that in fairness to my hon. Friends I ought to go a little further than that and to indicate that as far back as the Housing and Town Planning Act, 1919, it has been a fundamental principle of all slum clearance legislation that where houses are unfit for human habitation it is wrong that local authorities should have to pay compensation for the bricks and mortar. That, I think, is right, and certainly it has always been acceptable to the House. There are certain modifications to this general rule to which I will refer in a moment, but, generally speaking, compensation has been limited to the value of the site of the cleared buildings.

Since it is the site alone which ranks for compensation, the method of valuation for compensation is that which is common to all compulsory acquisitions. It is as laid down in the Town and Country Planning Acts of 1947 and 1954. The compensation is made up, first, of the value of the site restricted to its present value plus the development value of the site, if any, valued as at 1st July, 1948.

It may often happen that sites on which slum property has stood are in themselves too small to permit of redevelopment. This is a point on which my hon. Friend touched earlier. They may be too small to permit of redevelopment for either the existing use or any other use within the standard of the existing byelaws. It is in those cases that the existing use value of the individual site of land may be held to be purely nominal. In other words, the structure itself is unfit and the bricks and mortar are held to have no value, and what remains—that is to say, the site itself—has practically no value, because it would be impossible to develop it within the standard of the byelaws.

It also often happens that these sites suffer from such factors as bad access and overshadowing by over-congested buildings in the locality. In addition, there are sometimes ground rents chargeable on the land, which, naturally, have the effect of diminishing the value of the site.

Sometimes these reasons combine to reduce the compensation payable to a very small amount, and in such circumstances it is only when the local authority has itself acquired a number of these sites and has, as it were, married the sites together into one large site that the authority is able to undertake a rehousing operation over the areas as a whole. It is then that the site gains in value for development.

Where a number of adjoining sites happen to be in the same ownership, where one person owns a terrace of unfit houses, half-a-dozen or a dozen in a single street, for instance, valuation would be made on the basis of what that owner could put back on the site within the framework of the existing bye-laws. For example, it might be permissible within the scope of the byelaws to build on every second site or every third site. Where an individual cleared site is capable of being redeveloped as a site within the local byelaws, the compensation payable would be very little less, if any less, than the current market value of the land.

Briefly, what I am pointing out is this: according to the law of the land as it stands at the moment, compensation is composed of two elements, first, existing use value, which may be nominal owing to the factors which I have mentioned, and, secondly, development value, which in these cases is often negligible. All this is not to say that there are not modifications to the general rule of compensation to which I have referred.

Governments in the past have introduced provisions which have been designed to mitigate cases of special hardship. For example, in 1956, as the House knows, there was the Slum Clearance Compensation Act, which attempted to lessen the hardship imposed on owners of single properties purchased immediately after the war, often at inflated values. As a result of this piece of legislation, those owners were able to secure not merely compensation for site value but compensation for the property itself.

It is also the case, as my hon. Friends know, that my right hon. Friend's inspectors, when holding these inquiries in different parts of the country do have regard to well-maintained properties, and there is provision for what we call "well-maintained payments" which are made to the landlord or the tenant according to who has been responsible for the maintenance. Under the 1954 Town and Country Planning Act there is what is popularly called the "Pilgrim Clause" and, extended to that, very briefly, there are provisions for ex gratia payments in certain circumstances.

My hon. Friend the Member for Bath referred very briefly to the Franks Committee, which recently reported. That Committee, I understand, included in its Report the recommendation that there should be the possibility of an appeal to the Lands Tribunal on questions of fitness rather than on questions of compensation. No doubt, that particular recommendation will be most carefully examined by my right hon. Friend and his colleagues in the Government, but the terms of the reference of the Franks Committee did not embrace the general question of compensation in the case of compulsory acquisitions, and although there was some small reference to that point in part of the Report, it did not, as I say, fall within the terms of reference.

All I can say in this very brief intervention is that I have listened, not without sympathy I do assure my hon. Friends, to what has been said, and that while I can give no undertaking that the Government will take action on the lines requested by them, I hasten to assure them that we do not regard all, or even some, landlords as wicked men. I shall certainly draw my right hon. Friend's attention to what has been said tonight.

Photo of Sir Isaac Pitman Sir Isaac Pitman , Bath

We have not asked for any action, or undertaking to act. The only undertaking for which we have asked is that he would consult with us and go thoroughly into the matter. Do I understand that my hon. Friend would or would not be willing to do that?

Photo of Mr Reginald Bevins Mr Reginald Bevins , Liverpool Toxteth

I think that my hon. Friend knows me too well not to realise that I am always happy to consult, at all times, with any hon. Member on this vexed question. I shall certainly take the opportunity to have a consultation with him.