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Acquisition of Property (Valuation)

Orders of the Day — Air Estimates, 1962–63 – in the House of Commons at 12:00 am on 12th March 1962.

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. J. E. B. Hill.]

12.27 a.m.

Photo of Mr Graham Page Mr Graham Page , Crosby

I want to call attention to the relationship between the district valuer and the ordinary citizen in cases of compulsory acquisition of land or in cases of voluntary acquisition by threat of compulsory acquisition to back it up.

The district valuer is an officer of the valuation office, and the valuation office is a department of the Inland Revenue. That may startle some people who have had to negotiate for the sale of their land to a local authority, because it is quite common for the district valuer to carry out all the negotiations for an acquiring authority such as a local authority. The owner of the land who is obliged to sell under these circumstances might be justified in thinking that in dealing with the district valuer he is dealing with a local authority servant. Indeed, he is not.

The district valuer comes under the chief valuer, whose office is in the east wing of Somerset House, and I am sure that within that office there is a most efficient and well qualified staff of valuers. So, the district valuer is the taxpayer's servant rather than the ratepayer's. However, whatever he is, I find that both private owners and local government officials speak of the district vaihier with somewhat bated breath, particularly when he deals with compensation for compulsory acquisition.

Time and time again, constituents and others who are not professionally advised complain bitterly to me that their land is being taken away at below its value. When I ask who has fixed the value they reply that it was the district valuer, and when one inquiries a little further one finds that the figure arrived at is perhaps merely the figure set out in the district valuer's first letter to the owner of the land suggesting negotiations for the purchase of it by the acquiring authority. It has never occurred to the owner to question the district valuer's figure.

How does the district valuer come into these transactions at all, they being transactions between the local authority and a private individual? I think it is in this way. The Minister relies upon the valuation office for his advice on questions of value, so the Minister encourages the local authority to seek the advice and co-operation of the district valuer and to seek that co-operation and advice throughout an acquisition plan. The district valuer comes into the transaction from an early stage. He advises the acquiring authority at the formative stages of any acquisition plan. He advises on what should be purchased and he reports to the Minister with estimates and so on. Having been in at the very start, he may then be requested by the local authority to undertake negotiations for a settlement of the compensation and undertake those negotiations on behalf of the local authority. Why should a servant of the central Government act for the local authority to the exclusion of the private individual? The district valuer is not employed by the local authority and is not paid by the local authority. He is not paid by the local authority for any specific purpose in carrying out negotiations. Why should his services not be at the command of both parties to the transaction, not only to the local authority?

If the ordinary citizen who is caught up in these sort of transactions gets past the point of thinking of the district valuer as the local authority servant, and realises that the district valuer is a central Government servant, he may then quite justifiably think that the district valuer is something of an arbitrator in the transaction. When he is disillusioned about that he feels perhaps that there is a ganging up on him by the central Government and the local authority.

That is the position when the district valuer is engaged by the local authority to carry out negotiations. Circular 59/59 on planning grants says in paragraph 14 (2): Whilst it is not a condition of grant that the negotiations for the acquisition of land or for the settlement of compensation should be undertaken by the District Valuer, his services for such negotiations will be available to local authorities on request. So the Minister encourages the local authority to engage the district valuer for the purposes of negotiating. The Circular goes on to say in paragraph H (3): Where it is proposed that the negotiations for acquisition of land should not be carried out by the District Valuer, the local authority will find it advantageous to obtain from him an estimate of the cost of acquisition or compensation and to consult him informally and keep him informed of the progress of the negotiations, particularly as to any circumstances which might affect the amount of the certificate either in an upward or downward direction. It is in these cases, where the local authority does not engage the district valuer to carry out negotiations for it, that the anomaly of his position is shown. Some local authorities decide not to engage the district valuer to carry out negotiations for compensation on compulsory acquisition; they employ their own surveyor to do the negotiations. That does not mean that the district valuer is not involved in the transaction. He is indeed involved. He must advise the Government Department as to loan sanction or grant-in-aid. The local authority negotiator goes to the district valuer at the outset and says to him, "What figure will you put on this property? What will you sanction eventually for loan or grant-in-aid, as the case may be?". The district valuer gives what he would call a provisional estimate.

Armed with that figure as a limit, the local authority negotiator will go to the owner of the land probably determined to get it for a less amount. Why should the local authority negotiator have that advantage over the owner of the land with whom he is negotiating? Why should not the owner be told what is the district valuer's provisional estimate? What right has the district valuer, as a public servant, to disclose to one party what he proposes to advise the Minister to do and to withhold that information from the other party to the transaction? He certainly does withhold it. If the private owner of the land went to the district valuer and asked him point blank, "How much will you sanction for loan or for grant-in-aid?", he would be refused that information.

When the owner of the property is eventually forced into accepting perhaps something less than the district valuer's figure, the local authority negotiator goes back to the district valuer, and I imagine that he says, "I have come to an agreed figure which is less than the figure which you gave us as a provisional estimate. I now want the certificate to the Minister sanctioning the loan or grant-in-aid at this lower figure".

I wonder whether the local authority negotiator ever tells the district valuer what the owner's arguments have been during the course of the transaction. Does the district valuer ever ask, or does he accept the information entirely from the local authority's negotiator? Does the district valuer ever go to the owner and say, "I valued this property at such-and-such a figure, which is more than the figure at which you have said that you will sell it"? Why should not the district valuer give that information to the private individual? If he does not, he is favouring the local authority in these transactions.

It may be said that the district valuer may properly reduce the figure, which he first gave, when he receives further information from the local authority. That, I think, is rather a naïve argument, because he receives that information only from the local authority. He never asks for information from the owner of the property before giving his certificate. Nor does the owner ever know what the local authority negotiator, in these circumstances, may have told the district valuer.

Suppose that the owner holds out for his price at a figure higher than that which the district valuer has stated as his provisional estimate. The owner never has a chance to put his case before the district valuer in an effort to get the district valuer's value set at a higher figure. That an owner can employ his own surveyor or that he has a right of appeal is no answer to this unfairness, as I believe it to be, in the negotiations, and it is no answer to the fact that he is put at a disadvantage in this way in the negotiations.

So the position is that when a local authority is negotiating direct with an owner for the compensation to be paid on compulsory acquisition of his property, the local authority can obtain a provisional figure from the district valuer for loan sanction, and therefore the negotiations are influenced by that figure. They are influenced adversely to the owner, who is denied similar information. Before finally certifying for loan sanction, the district valuer hears only the local authority's case and not the owner's case.

I hope that my hon. Friend will be able to dispel the fears which many feel that in these negotiations the dice is loaded against the owner when he is called upon to dispose of his land compulsorily.

12.41 a.m.

Photo of Mr Anthony Barber Mr Anthony Barber , Doncaster

As it appears that no other hon. Member wishes to speak, I should like, first, to thank my hon. Friend the Member for Crosby (Mr. Graham Page) for having given me notice of some of the points he has raised this evening. The statement on the Order Paper simply refers to the anomalies of the district valuer. I confess that if my hon. Friend had not given me some advance information I would have been very hard pressed to know exactly what he had in mind. He referred in his opening remarks to those concerned with the valuation of property, speaking of the district valuer with bated breath. After the remarks my hon. Friend has made this evening, it would not be surprising if in future it is the district valuer who speaks of my hon. Friend with bated breath.

Virtually all the points my hon. Friend mentioned arise from the sequence of events whioh occur when a local authority wishes to acquire a property or properties. In the ordinary course, it will wish to apply for a grant or for loan sanction to finance the purchase. In these oases, the district valuer will at some stage necessarily become involved. What my hon. Friend is concerned about is the rôle which the district valuer plays in this situation.

To understand this rôle it is essential to consider very briefly what the function of the district valuer is. The valuation office is as my hon. Friend said, a branch of the Inland Revenue Department. Apart from its responsibility for rating and valuation, the valuation office has a number of other functions which are exercised by valuation officers in local offices up and down the country. They include purely revenue functions, such as the valuation of land and houses for Estate Duty and Stamp Duty purposes, but it is not necessary for me this evening to go into details of this aspect of their work.

As regards transactions in land—and this is the matter my hon. Friend raised—the district valuer's primary function is to advise Government Departments where they are themselves acquiring land and also where they have to consider applications for grant or loan sanction on purchases by other authorities. It is in the discharge of these latter functions that the district valuer becomes involved in acquisitions by local authorities. Clearly, because public money is involved, the Government have a very real interest in the price which is paid for the land, but the district valuer's basic duty in these cases is to certify that the amount of the proposed purchase price is such that it shall be accepted by the Department for loan or grant purposes. Just as a mortgagee seeks professional advice before executing a mortgage, so the Government are entitled to, and receive, independent advice about purchases in which public money is involved. The local authority is free to employ whoever it wishes to conduct its negotiations. Some local authorities employ professional staff for the purpose. But since the district valuer in every one of those cases will have to be consulted at some stage, a good many local authorities find it convenient to ask him to conduct the negotiations, and that practice has continued for over 40 years.

It is not disputed that the local authority should be professionally represented in the negotiations, and I am told that in cases where the district valuer negotiates it is usual to inform the owner at the outset that costs reasonably incurred will be reimbursed upon the acquisition of the land. That being so, there is really no reason why the owner of land, the prospective vendor, should not himself be professionally represented. According to the information that I have been given, and this is an important point, the great majority of owners in negotiation with the district valuer are in practice professionally represented.

In this kind of case, the district valuer's negotiations are merely incidental to his main function, which is, as I have already mentioned, that of advising the Government Department concerned. The district valuer writes on his own note-paper, and I should have thought that it would be understood that he was an officer of the central Government and not of the local authority. Moreover, it is clear that he is not in a position to commit a local authority but that the object is to reach agreement at a price that he can recommend for approval. The district valuer is not an arbitrator between owner and local authority. As my hon. Friend has mentioned, in the event of a dispute the matter can be referred to the Lands Tribunal. Nevertheless, and this is very important, district valuers are aware that it is their duty in all instances to make an impartial assessment of the compensation that they consider to be properly payable.

As I have said, the arrangements under which a district valuer acts for a local authority at its request are of long standing, and it seems to me that those arrangements are based on practical common sense. They obviously meet the needs of many local authorities, and there is no reason for thinking that the bodies which represent property owners regard them as unsatisfactory.

I have so far dealt with cases in which the district valuer actually conducts the negotiations, but I want now to turn to the cases in which the local authority conducts its own negotiations. I understand that my hon. Friend considers that in those cases the position is unfair to the individual. The substance of my hon. Friend's criticism is that in such cases the local authority at the outset consults the district valuer about the sort of figure he is likely to approve for grant or loan sanction and that, with this knowledge, the local authority goes to the owner with the intention, according to my hon. Friend, of getting the property at a lower figure. My hon. Friend also referred to the local authority's negotiator urging the owner to accept something less than the tentative figure put forward by the district valuer.

It is no doubt true that in many cases the local authority starts negotiations below the figure which it expects to pay, but equally, no doubt, the owner starts at a figure higher than the one he expects to receive and, in the end, a figure acceptable to both parties normally emerges. That is the essence of negotiation. The reason why the local authority finds it desirable to consult the district valuer at an early stage is not hard to discover. As I said earlier, the district valuer in due course will have to approve the purchase price, and it is hardly necessary for me to elaborate on the difficulty and the embarrassment that could arise if a local authority's negotiations reached an advanced stage before it knew broadly what were the views of the district valuer.

My hon. Friend asked why the district valuer's figure should not be given to the owner; and whether representations by the owner which might affect the district valuer's view are passed on to him. The figure which we are now talking about is merely, of course, a provisional estimate made by the district valuer to the best of his ability and on the information before him at that early stage, and this is clearly understood by the local authority. He is not in a position to make a final valuation at that stage, and it is wholly wrong to think that thereafter his mind is closed to further argument which might cause him to revise his opinion one way or the other.

Valuation is not, after all, an exact science, and if the local authority cannot satisfy the owner of the property that the price which the local authority is offering is reasonable, they will usually go back to the district valuer and explain the difficulty to him. If information emerges during the negotiations which affects the valuation, the local authority should certainly inform the district valuer, and it is common practice for the local authority to keep in touch with the district valuer throughout the negotiations.

Photo of Mr Graham Page Mr Graham Page , Crosby

Would it not be possible for the district valuer to receive representations at that stage from the owner as well as from the local authority?

Photo of Mr Anthony Barber Mr Anthony Barber , Doncaster

I think it would be asking a great deal for the district valuer in these cases, where he is not himself negotiating, to accept representations from the owner direct, without the concurrence of the local authority. After all, the district valuer in these cases is not himself involved in the negotiations. He is only concerned to provide a figure which will, ultimately, enable the Government Department responsible to decide on the extent of the grant or loan sanction to be given. It is very different where the district valuer is himself directly involved in the negotiations. But where he is not they must be left to the two parties—the local authority concerned and the owner of the land.

Perhaps I can best illustrate what I have in mind in this way. My hon. Friend is a lawyer and will appreciate the dangers of arguing by way of analogy, but I would liken the position to that of a bank manager who is asked to make an advance on the security of some property which his client is proposing to purchase. The bank manager would not disclose, other than to his client, his provisional estimate of the value of the property—but he would certainly be interested in any new facts which came to light in the course of the negotiations and which might cause him to modify his estimate.

But one would not expect either the bank manager or his client, at the outset, to disclose the figure which was in their minds. I realise that there are many differences between this case and the negotiations we have been talking about, but it illustrates what I have been trying to explain. If the district valuer's provisional estimate was made available to the owner it would be only reasonable that the advice which the owner had received should be available to the acquiring authority, especially since it will be paying the cost incurred by the owner for obtaining professional advice.

Furthermore, the authority will more often than not be acquiring a number of properties at the same time. For example, in a large slum clearance area, possibly several hundred houses may be acquired. They may well be the property of a number of owners and the negotiations will determine the compensation properly payable in respect of each interest. The district valuer's initial provisional estimate will not, however, be broken down in this way. He will make this valuation by reference to the scheme as a whole and without of necessity knowing the details of the individual interests.

Finally, the owner has the further safeguard, referred to by my hon. Friend, that in the event of disagreement the case can be referred to the Lands Tribunal as of right in compulsory purchase cases and by agreement in other cases. I hope I have said enough in this short debate to bring some comfort to my hon. Friend and to satisfy him that the position is not quite as unsatisfactory as he suggested.

Perhaps I might just add this. If my hon. Friend or any other hon. Member who is concerned with these matters thinks that in any particular case the system is working unjustly, I hope he will not hesitate to let me know. The last thing the Inland Revenue wants is that such allegations should be made without there being the fullest inquiry Indeed, for this reason if for no other, I am grateful to my hon. Friend for having raised this subject this morning.

Question put and agreed to.

Adjourned accordingly at five minutes to One o'clock.