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Orders of the Day — Land Compensation Bill

Part of the debate – in the House of Commons at 12:00 am on 27th November 1972.

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Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South 12:00 am, 27th November 1972

My remarks will not be concerned primarily with the effects of the Bill on the road programme or with that fascinating topic of the public ownership of land. I trust that the right hon. Member for Sheffield, Park (Mr. Mulley) will forgive me if I do not follow him except to the extent of making one point on each of those subjects.

First on the question of the road programme, I hope that my right hon. and learned Friend will endeavour to bring forward the plans for roads much further in advance of the date on which it is hoped to commence operations than has been customary hitherto. I gain the impression far too often when attending public inquiries into new roads that time is too pressing for the road authorities to take into account seriously the various alternatives that may have been suggested by objectors and that the operation is more of a public relations one than a serious effort to ensure that the best route is adopted, bearing in mind that the object of today's exercise is to redress the balance between the environmental and the transport aspects of roads.

On the fascinating topic of the public ownership of land, I merely comment that I have heard these arguments very often before but never yet have I heard an admission that, if we are to have any commercial activity, let alone any form of occupation of a house that even begins to resemble owner occupation as we understand it, other interests in land than the freehold interest will have to be created which will be subject to precisely the same market forces as the freehold and the long leasehold are today.

The basic problem we face on land compensation is to try to put those whose property is acquired compulsorily into the same position, as far as finance can do that, as they would have been in if they had been allowed to remain in possession. In other words, the man who has his house acquired expects, and has the right to expect, to be put into a position financially as near as may be which will enable him to acquire an alternative house which provides him with as nearly as possible the same facilities and the same amenities.

We have not managed to do this over the last two or three years. The reason is inflation. Only when the unfortunate "compulsory vendor" has known the approximate price he would get for the house to be acquired could he start looking for an alternative; and by the time he found it he was operating in an entirely different set of values, always higher.

We must try to find a means of meeting this problem—I was about to describe it as an evil. I do not think that that word is too strong. Over and over again I have had in my constituency and in my professional activities cases of people who accepted a price which at the time of acquisition was probably a fair market price; but, because of the shortage of houses in an area and because a house, unlike a pair of shoes, cannot be bought in an afternoon they have been unable to find within a reasonable period a replica of their house in a similar area at that price.

My right hon. and learned Friend the Secretary of State and my right hon. Friend the Minister for Local Government and Development will recall that in the early days compensation was based on the value to the owner. Latterly it became market value plus a 10 per cent. payment in recognition of the fact that, whatever Acts of Parliament may say about willing sellers, they are seldom willing. That used to be called the insult payment.

I strongly urge my right hon. and learned Friend to consider whether we should not return to that 10 per cent., or some other percentage over and above the current market value, to allow for the inevitable pause that must take place between acquisition and purchase of replacement property. I do not think this is a necessary payment where compensation is based on the expectation of planning permission for a development which gives a much higher value than the existing use to which the land is put. Where, as in the case of roads is almost invariably the case, market value is the market value for the land in its existing use, there is an overwhelming case for some extra payment to meet the inevitable change in value between acquisition and purchase of replacement property.

The other aspect I want to touch on is the contrast not only in the Bill but in the existing code of compensation for acquisition of farm land and for the acquisition of other types of property. In touching on the problems of the agricultural community I hope that no one will suggest that I am in any way devaluing the very considerable improvements that have been made in the other spheres or that I do not welcome them fully. I think that many of them were long overdue. The majority, if not all, of them were things which my right hon. Friend the Minister for Local Government and Development and I pressed the then Government to include in the 1959 Act.

When we come to Clause 27, which deals with the farm loss payment, the noticeable thing is that it is confined to somebody with an owner's interest, and as owner's interest is denned later as the freehold interest or a tenancy granted or extended for a term of years of which no less than three years remain unexpired on the date of displacement, that does not help the ordinary tenant in England. The problem is different in Scotland when the customary form of tenancy is a leasehold interest but the English and Welsh practice for many generations has been a year-to-year tenancy.

In subsection (6) we are told: No farm loss payment shall be made by virtue of the displacement of a person from any land if he is entitled to a payment under section 12 of the Agriculture (Miscellaneous Provisions) Act 1968. That is the section which gives some form of compensation to the tenant—I believe it was up to four years rent. With the introduction of this clause we have two different bases for compensation for what is broadly the same head of compensation. The 1968 base is the rent which I have never felt was at all satisfactory, and the present base is one year's average profit which is a much more sensible base for both purposes because it is the base on which for other businesses of a more urban nature one works out the loss of goodwill where loss of goodwill has to be included in the disturbance payment. The most obvious example is the relatively small shop which depends upon attracting people from a particular neighbourhood who know the proprietor and so on.

There are, however, other cases in which clearly the location of a business very much affects its goodwill, and if it is to be moved, that loss of goodwill is an acceptable subhead for compensation for disturbance. To carry that further, in the event of the business being entirely wound up through acquisition, and the goodwill being permanently lost, because it is not transferable—there may not be another shop in the area perhaps—the compensation for complete cessation of business is based on so many years purchase and the average year's profitability.

I hope that my right hon. Friend will not dismiss too easily the anomalies which are growing up in the agricultural world as something to be settled by his right hon. Friend the Minister of Agriculture, Fisheries and Food in relation to tenure. This is basically a matter of compensation. Here is an opportunity where we should try to see whether we can work out a sensible code whereby the farmer, whether he be tenant or owner occupier, can have proper compensation for complete cessation of business if this is the result of the acquisition.

We are up against a rather extraordinary paradox that whereas we can at least expect, and in most cases do so with confidence, that the quantity of houses, offices, shops, etc., is constantly increas- ing, what is absolutely certain is that the quantity of farms is decreasing and will continue to decrease. It will decrease not only because it is basically farmland that takes the burden of all this development, whether it be roads or anything else, but because the whole economic trend of farming is towards bigger and therefore, fewer agricultural units.

We have a situation in which the farmer is displaced and has almost certainly got less chance of re-establishing himself than the shopkeeper or the person who runs an office. Yet this is not recognised as such. I do not go all the way with the National Farmers' Union belief that the answer is to regard the tenant farmer's interest as a notional lease, although under the security of tenure provisions he has in effect the expectation of a life tenancy.

I do not go all the way with that, for this reason. It is important to remember that the security of tenure provisions of the 1948 Act were introduced for one purpose only—for the benefit of good husbandry, and not particularly for the individual tenant or anybody else. As a result, the farmer had a considerable extra value in his land, with his ability to give vacant possession, something that he could and does sell without in any way compensating the land owner. Therefore, it would be wrong to equate this entirely with a lease, because at the end of the day the State would be paying the landlord the full freehold value and the tenant the whole leasehold value on top. There is, however, a strong case for sensible provisions where the farmer is likely to have to cease his business altogether and this for the reasons that I have given could well be more often than not. I hope this opportunity will be seized.

Finally, one further point. At the end of the Explanatory and Financial Memorandum to the Bill we are told: It is estimated that the only significant increase in public service manpower will arise in the Valuation Office of the Board of Inland Revenue I hope my right hon. Friend has not neglected the fact that this type of increased scope of compensation, bringing in more people for injurious affection, for example, more people under the blight code and so on, all of which is immensely welcome and very much overdue, will mean more work for the Lands Tribunal. The delay between getting a case ready for hearing and the actual hearing is well over 30 weeks, I believe, and much longer than it ought to be. I hope it will be realised that one of the problems in the acquisition of land is not merely the financial amount in the long run but that to smaller people in particular it creates enormous anxieties. Until they know what they are going to get, and how they can plan their future as a result, it is very difficult indeed to put those anxieties at rest. I hope my right hon. Friend, with the Lord Chancellor, will bear that point very much in mind.