Department of Transport (Property Purchase)

– in the House of Commons at 12:51 pm on 17th May 1995.

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Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I am glad to have this opportunity to raise the issue of the Department of Transport's discretionary purchase of property blighted by proposed road developments. My interest in this, as I shall explain, arises from my constituency experience, but I believe that it is a matter of very much wider importance than that affecting just my constituents.

In my view, the way in which we obtain our transport infrastructure can be described as nothing less than highway robbery at the expense of those who happen to have the misfortune to be near a proposed road development. The reality is that such people are seriously affected and, if the proposals for discretionary purchase were properly implemented, the cost might run into not tens of millions of pounds but hundreds of millions of pounds; therefore, I understand that my hon. Friend the Minister of State may be under some inhibitions from the Treasury when he replies to the debate. I should stress that that would be the gross cost. If initially the discretionary purchase of the properties took place—as I believe that it should—once the road was built it would be possible for the Department to re-sell them to new owners and recoup part of the cost.

Let me stress that I am not concerned with compulsory purchase, which is a far from perfect system and has problems associated with it. I am concerned essentially with discretionary purchase. As my hon. Friend the Minister will know, because I have raised this matter in previous Adjournment debates, it arises from experience in my constituency of Worthing where there is a proposal to develop the A27. For many years, I have maintained that the A27 should have a real bypass, completely avoiding the town of Worthing. The Government's so-called preferred route cuts the town in two and involves the demolition of a number of properties. The scheme's effect on many other properties is considerable.

My hon. Friend the Minister will know that there has been a public inquiry into this matter, and I remain strongly of the view that there should be a real bypass. We are awaiting the inspector's report after the inquiry, which lasted a year or so, and I hope that, in the light of it, we will have a satisfactory decision from my hon. Friend.

The question of discretionary purchase has some impact on the choice of route and the cost of alternative routes. I shall come to that in my concluding remarks.

Over a long time I have pursued with Ministers individual cases of properties affected by the Government's preferred route. I am concerned that such cases should be decided by ministerial discretion and I have received replies from Ministers about many cases. However, some months ago, I discovered that the Highways Agency was proposing to reply instead of a Minister, which was highly objectionable. These issues are not merely ones of finance: whether a property should be purchased may depend on the occupant's need to obtain money at short notice, perhaps to repay debts, or on his need to move to a different place to get a job, or his health might be affected by the construction work or by pollution from the road once it is built.

Decisions ought to be matters for ministerial discretion rather than for official discretion. I am glad that the present Secretary of State has now accepted that, although I understand that he has given the responsibility for dealing with these discretionary matters to the Under-Secretary, my hon. Friend the Member for Epping Forest (Mr. Norris). I am glad that my hon. Friend the Minister for Railways and Roads is to reply today, since he has overall responsibility for the development of the roads programme.

The essential matter that we must consider is the improvement, as it seemed at the time, that was brought about by section 62(2) of the Planning and Compensation Act 1991. It states that the highway authority may acquire by agreement land the enjoyment of which will in their opinion be seriously affected by the carrying out of the works or the use of the highway". Many of the problems we face and the reasons why some of the deserving cases have been turned down stem from the Government's interpretation of that expression in the Act. The interpretation has been extremely restrictive. The Government have said that they will generally consider only those cases where property is within 100 m of the centre line of the proposed road. That proposed road may be six lanes wide. Considering only properties within 100 m of the centre line disregards the impact on those further away.

The legislation refers to whether the development will have serious effect. The Department has interpreted that by asking whether the impact on those in the house will be intolerable. Clearly, "intolerable" is a much tighter criterion than "serious". It is a tougher standard to meet. Instead of abiding by the wording of legislation as it has been approved by the House, the Department has sought to reduce its impact.

I want to refer to a report by the ombudsman, which is typical of a number that I have received on other constituency cases, about the way in which the Department has arrived at the guidelines used to decide whether a property should be purchased. I shall quote from the report and give the flavour of it because I have rarely seen such a damning report. It revealed the internal workings of the Department with regard to the way in which the guidelines were interpreted. I want also to deal with the court case that was decided in June 1994. It also has significant relevance to this issue.

The ombudsman's report said: Guidance on the operation of the discretionary scheme was published on 17 January 1992. It seems to have been internally contradictory. On the one hand it said that for property within 100 m of the centre line of the proposed road the presumption should be that it would be seriously affected … On the other hand it also said that property within the 100 m zone would be treated as outside the scope of the legislation if the reasonable expectation was that the levels of traffic noise or construction noise would not be such as to qualify for noise insulation. The ombudsman found that the discretionary criteria were inconsistent and contradictory.

The report also said that there was an inconsistency between what was published in the highways manual and what was published in the Department's press notice. It said that if constituents sought to fill in form G1, which is relevant to discretionary purchase, it was wrong if the notes given to them made no reference to the criteria by which a serious effect would be judged.

It was pointed out also in the report that the agreement to purchase would be approved by the headquarters of the Department of Transport but that a decision to reject would be taken only by the regional office; in other words, the rejection cases were not normally going to head office, let alone to Ministers.

It was pointed out that some of the questions that the Department asked constituents to answer were so confusing that even an official who sought to amend matters got things the wrong way round. One of the questions involved a double negative. The ombudsman pointed out that that was not a helpful way of putting questions to applicants. The whole history of the matter shows that the way in which the guidelines were determined can be described only as a shambles. As a result, a number of bad decisions have been made.

Some strange excuses were produced, too. For example, the ombudsman pointed out that the crucial press notice was not withdrawn for five months after its content was found to be seriously flawed. He was told that there were legal reasons why he could not be given a proper explanation, but when he asked to see the legal advice, it turned out not to exist. For all these reasons, I believe that the criteria that have been used are not adequate and that the guidelines clearly need serious revision.

However, the main point concerns a case that has been decided in the courts.

Photo of Michael Lord Michael Lord , Suffolk Central

I am grateful to my right hon. Friend for giving way in this short debate. I shall be brief.

I am dealing with what is probably the worst case that I have ever had as a constituency problem and it involves exactly the point that my right hon. Friend is raising. A man's life has been completely ruined by blight.

As a member of the Parliamentary Commissioner for Administration Select Committee, which looks after the ombudsman, I have looked into the question of redress and compensation even in cases where the letter of the law has been strictly observed.

I point out to my right hon. Friend that both my hon. Friend the Minister of State, Treasury and Sir Patrick Brown, the permanent secretary at the Department of Transport, have made it clear that, even where everything has been done correctly, maladministration can still be shown.

In Committee, I quoted the Minister of State, Treasury as telling a previous meeting of the Committee that failure to mitigate the effects of strict adherence to the letter of the law where this produces manifestly inequitable treatment, that will now be an example of maladministration. I asked Sir Patrick Brown: Will you now confirm that? He responded: Yes, Mr. Nelson was speaking for the Government.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I understand my hon. Friend's point and I am glad that the Select Committee has looked into that subject. The crux of the matter is that the Department of Transport established certain guidelines, the first of which states: The Department will use its discretion to purchase … where it judges it would be intolerable for the occupier to remain in the property during works or once the road is open. The guidelines go on to list a number of other factors that need to be taken into account, but the fact is that the form to be filled in within the Department is much more restrictive. It asks: Does the property lie within 100 m of the proposed centre line? As I said, I do not believe that that has anything to do with the legislation; it is a purely arbitrary decision by the Department. The form also asks: Was the road scheme known at time of purchase of the property? The next question is: In the Department's view (based mainly on forecast noise levels), will the enjoyment of the property be seriously/intolerably affected?". If the answer is no, the other criteria are not examined.

In fact, the crucial criterion, which the courts took into account, is what has happened to the value of the property. Clearly, enjoyment of the property is seriously affected if one finds that, as a result of the road scheme—whether the property is 100 m or half a mile away—one cannot sell it at the price that applied before the scheme was introduced. I am happy to say that the courts are also of that view.

In the case of R. v. Secretary of State for Transport ex parte Owen and another, the court criticised the Department in a number of respects. The judgment states: It seems to me that the question of the effect, serious or otherwise, of the diminution of value was never fully or properly addressed. A subsidiary judgment states: whatever view one takes of the guidelines issued by the Department …, and at best they have been characterised as ineptly drawn, they seem to me at least to support one view, which in any event I for my part would readily have arrived at, namely, that any significant depreciation of property consequent upon a road scheme indicates of itself that, looking at the matter prospectively, the scheme has a serious effect on the enjoyment of the land. In other words, the court decided clearly that, if the value of a property has fallen as a result of a scheme, discretion should be exercised. My hon. Friend the Minister knows that I have a large number of such cases in my constituency.

I understand that the financial implications of accepting this even in my constituency are substantial and are likely to be massive across the country as a whole, although, as I said, one must take into account the eventual net cost rather than the gross cost. There will be resistance from the Treasury, but the cost is merely a reflection of the extent to which individuals living on the line of route are suffering.

I believe, therefore, that the Department should change the guidelines—I understand that they are under review—and must take into account the effects of a scheme on the value of a property. It has nothing to do with whether the property is 100 m from the centre line of the road and nothing to do with the noise or whether it will be intolerable; it has everything to do with whether the value of the property has declined. I hope that my hon. Friend the Minister will be able to accept my view, even recognising the financial consequences. The cost should rightly fall on the public purse; the effect of the Government's decisions should not fall on the unfortunate individuals who just happen to live near the line of route.

I know that time is short, so I shall deal now with another crucial point. The Department has already purchased a number of properties, which is welcome, but the way in which it has handled the affair is far from satisfactory. Even in a small close in my constituency—one with perhaps a dozen houses—it is possible to find that eight have been purchased while four have not. The tenants whom the Department has put in the purchased houses have, in many cases, been highly unsatisfactory. Some have criminal records and have to be evicted, so the area has been run down. I fear that that will continue for a long time.

If it is accepted that discretionary purchases should be made because of the reduction in the value of a property and the other criteria that I have mentioned, there will clearly be important social and economic effects. In fact, the choice of route will depend on how much the Treasury has to pay to purchase the relevant properties.

The public inquiry to which I referred has been examining the arguments for more than a year. I should stress that the bypass route will be largely in tunnels, to avoid possible adverse effects on the downs. The result of the investigation shows that, in purely financial terms, the arguments may seem fairly finely balanced. None the less, I believe that the case for the bypass remains overwhelming. However, if one takes into account the true effect on constituents, or if one were to quantify the cost to the Department of purchasing the properties affected by the road construction and the road itself once it is built, the balance goes very much against the preferred scheme advocated by the Government in favour of the real bypass route.

I hope that a rapid decision will be made in favour of a bypass. Perhaps my hon. Friend the Minister can tell me when he expects the inspector's report to be received and when he expects to make a decision. I hope that it will not be very difficult for him to accept my contention in the light of the court case that the depreciation in value must be taken into account in deciding whether there has been a serious effect on a property, and to accept that the case for the bypass, which would involve the destruction not of vast amounts of property but of only four houses, is now absolutely overwhelming.

Photo of Mr John Watts Mr John Watts , Slough 1:18 pm, 17th May 1995

I am grateful to my right hon. Friend the Member for Worthing (Sir T. Higgins) for providing an opportunity to debate such matters, which are of grave importance to his constituents and of great interest to a number of right hon. and hon. Members. I recognise the concern felt and the genuine hardship experienced by those who are affected by proposals to carry out public works in their vicinity.

My right hon. Friend has referred to the statutory provisions for compulsory purchase and to the fact that property owned by some people does not have to be needed for a scheme to be seriously affected by it. It was precisely to deal with such cases that the House extended, by way of the Planning and Compensation Act 1991, the discretionary purchase powers, which used to be more limited. Now public bodies and highway authorities may, in advance of a scheme, use their discretion to buy property if the enjoyment of it will, in their opinion, be seriously affected by the scheme.

Since February 1992, the Department of Transport and latterly the Highways Agency have used those powers where they have considered that motorway and trunk road proposals seriously affect nearby properties. The Highways Agency operates the scheme in accordance with guidelines which were first approved by Ministers. It is intended to ensure fairness, consistency and rationality of treatment across the country. As my right hon. Friend knows, my hon. Friend the Minister for Transport in London, who also has responsibilities for local transport and road safety, oversees the operation of the scheme. As my right hon. Friend said, my hon. Friend undertook that responsibility following my right hon. Friend's very powerful representations that there should be ministerial involvement in the final determinations made on applications under the scheme.

My right hon. Friend raised a particular case which was the subject of an investigation by the Parliamentary Commissioner for Administration. I must acknowledge that the Highways Agency was at fault, first, in not processing the application quickly enough, and, secondly, in failing to pay proper heed to the medical condition of the applicant. I am pleased to inform the House that all those matters have since been remedied and the agency has now agreed to purchase the property. Clearly, my right hon. Friend's constituent is owed an apology for the way in which the case was handled and I gladly give that apology today.

Inevitably, some applications under the discretionary scheme have had to be rejected; but I can inform the House that offers to purchase have been made in more than 70 per cent. of the qualifying cases where there has been judged to be a serious effect under the present guidelines.

On the cases associated with the A27 improvement scheme raised by my right hon. Friend, the Department of Transport and the Highways Agency between them have considered 174 fully completed applications for discretionary purchase from my right hon. Friend's constituents. Of those applications, offers to purchase have been made in respect of 118 properties and 47 have been rejected. The balance of nine is accounted for by applications that have not yet been decided.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

Is it the case that, in considering those applications, the Department has not taken into account the question of the depreciation of value in the property, even though the courts have decided that it ought to do so? Unless my hon. Friend amends the guidelines to cover that point, all that will happen, given the court decision, is that all my constituents will have to bring individual cases, saying that the courts have decided that the Department must purchase.

Photo of Mr John Watts Mr John Watts , Slough

I shall come shortly to the implications of the judgment in the Owen case, to which my right hon. Friend referred. I have reminded the House that discretionary powers are exercisable only where the enjoyment of the property will be seriously affected. Up until the applications brought by Lieutenant-Colonel Owen in the Court of Appeal last year, it was generally considered that enjoyment of land and property could be seriously affected only by physical factors, such as noise, dust, and vibration. The current guidelines were based on that premise. The House will know that, in coming to their decision on the Owen case, the Court of Appeal judges concluded that, in addition to physical factors, diminution in value should also be considered when assessing serious effect.

I confirm that the Highways Agency has complied with the Court of Appeal judgment and redetermined Colonel Owen's application. Following that judgment, the Highways Agency undertook to review and revise the discretionary purchase guidelines, taking into account the Court of Appeal judgment relating to diminution in value. That review has taken longer than I would have wished, but I hope that the House will understand our concern to get it right and to have guidelines that can be applied even-handedly to both road and rail proposals. We are in the final stages of considering new guidelines and I hope that an announcement will be made shortly.

The decision-making process in respect of discretionary purchase has two stages. First, we must determine whether serious effect arises. To comply with the Owen judgment, we will in future take account of physical factors and diminution of value in making that initial judgment. The second stage is to determine whether to exercise discretion where an application satisfies the serious effect test. I am not in a position today to say anything more about how that second stage in the decision-making process will be determined, but I hope to do so shortly.

During the period since the Court of Appeal judgment, the Highways Agency has continued to operate the pre-judgment guidelines and to buy property where there has been serious effect from physical factors and severe hardship has arisen from an inability to sell homes at a reasonable price. I reaffirm the advice that I gave to the House on 28 April 1995 that all applications made since the judgment, which have been considered and rejected under the present guidelines, will be reconsidered under the new guidelines when they are published, which, as I have already said, I hope will be very soon. Consideration is also being given to the treatment of applications made and decided before the Owen judgment, and I hope to be able to make an announcement on that aspect, too, in the near future.

My right hon. Friend has rightly drawn attention to the proposal to improve the A27 trunk road between Worthing and Lancing. As he knows all too well, that is a heavily congested stretch of road linking a number of major towns along the south coast and it is the only east-west trunk road in the south-east, south of the M25. Investigations to determine the route began in 1972, but it was not until 1993, after public consultation on four options, that the scheme reached the public inquiry stage, which opened on 28 September 1993 and ended on 24 August 1994.

I understand that the inspector is making good progress and we expect to receive his report early in the new year. It would be inappropriate for me to try to anticipate its contents, but I am sure that my right hon. Friends the Secretaries of State for Transport and for the Environment will give the findings careful consideration before coming to their decision.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

Is my hon. Friend seriously saying that the inspector will take 18 months to report?

Photo of Mr John Watts Mr John Watts , Slough

I am afraid that there is a correlation between the length of the public inquiry and the time that it normally takes for an inspector to consider the evidence presented to him and to reach his conclusions and report on them to my right hon. Friends.

Photo of Michael Lord Michael Lord , Suffolk Central

A few moments ago, I referred to an horrendous case in my constituency. The gentlemen's house was not devalued; it was rendered absolutely unsaleable, which removed his collateral for his business. His house is completely ruined and he is in a desperate state. As my right hon. Friend says, time is of the essence. While we sit talking about it and inspectors are pottering around, such people are waiting for important news to drop through their letter boxes. Please may we have some real urgency?

Photo of Mr John Watts Mr John Watts , Slough

Certainly no one would be more pleased than me if the production of inspectors' reports were speeded up so that we could make firm decisions.

My right hon. Friend also suggested that the economic evaluation of the scheme may change as a result of the operation of new guidelines on discretionary purchase. I can assure him that such matters will be reviewed when my right hon. Friends the Secretaries of State for Transport and for the Environment make their decision following receipt of the inspector's report. I assure my right hon. Friend that we shall proceed as rapidly as possible in publishing the guidelines and we shall take full account of the points that he has made in this debate.