Orders of the Day — Mr. R. Massey (Blight Compensation)

– in the House of Commons at 9:45 pm on 18th June 1996.

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Motion made, and Question proposed, That this House do now adjourn.[Dr. Liam Fox.]

Photo of Mr Peter Fry Mr Peter Fry , Wellingborough 10:14 pm, 18th June 1996

I have introduced this matter for consideration only after protracted correspondence between my constituent Mr. Massey and myself, and between myself and the Highways Agency and the Ministers responsible for roads and for local government. There has also been correspondence between Mr. Massey and a host of public servants. The failure to make any impact, stretching back well into 1994, necessitated my bringing the case to public attention.

The Higham Ferrers and Rushden A6 bypass was dreamed up before the war, was thought to have died and was forgotten, only to be resurrected in recent years—a welcome, if somewhat unexpected, resurrection. There was such little faith in it ever being built that, when my constituent Mr. Massey bought his house in Elizabeth way, Higham Ferrers, in 1970, he tells me that his solicitor did not bother to tell him that the road was a possibility. The local council built some bungalows for the retired, which will be well within 100 yd of the new road.

I do not want, however, to spend time arguing the road's merits. It is broadly welcomed as being needed, and I am grateful to my hon. Friend the Minister for Transport in London for his help in ensuring that it is to be part of the private finance initiative, and moves are being made to seek tenders. Like all such projects, however, some people have suffered. One of them is Mr. Massey.

There are three main concerns. The first is road blight generally. It has increased as a result of the slowdown in new road construction. Uncertainty as to if, as well as when, a project is to be built has grown. Secondly, the guidelines for discretionary purchase under section 246(2A) of the Highways Act 1980 have never been especially generous, but, as amended after the Owen case, they have become much less generous. The statutory and other preconditions seem to ensure that the minimum number of houses will be included in the scheme. Thirdly, as it stands in law, the assessment system for council tax purposes has no mechanism to reflect severe reductions in value resulting from road blight.

I will take those points in turn and relate them to Mr. Massey's case.

Road blight can have the most disastrous effects on an individual's finances. Mr. Massey says that, even with the general drop in market values, his house should be worth nearly £80,000 on independent estimates, but an agent puts its current value at £65,000. That is a serious matter for my constituent. There is no guarantee that he could sell even at £65,000 before the road is built, which, at best, is still two years or more away. Made redundant more than five years ago, he wished to sell his house to invest the capital in a new business. He is now in his 60s, but will receive no pension until he reaches the age of 65, so he has been living off his savings.

In the normal course of events, Mr. Massey could have sold his house, moved and invested, but the bypass plans, together with the legislation on discretionary purchase, have produced the present unfortunate position. Even if the date for building the road is fixed, his loss is established, as it will take property prices some time to recover. By then, Mr. Massey, like all of us, will be a few years older.

There is a need to assess possible purchase guidelines on a more sympathetic premise than currently exists. Mr. Massey's first application for his house to be bought met the condition regarding the closeness of the new road of less than 100 m from his home and the hardship criterion, and it was tacitly accepted that he also met the requirement of not being able to sell his property.

At that time, the one criterion that Mr. Massey did not quite meet was the estimated level of traffic noise by the year 2013, which was calculated at 63 dB to the human ear. The level set by the Highways Agency at which noise has a serious effect is 68 dB. The agency quotes 62.5 dB as the level at which communication starts becoming difficult, and 70 dB as reflecting the noise made by a passenger vehicle travelling at 60 km per hour at 7 m, yet Mr. Massey—like all of us—is supposed to accept a higher level in his home.

We are all aware of homes in which communication becomes difficult, but I never realised that it had to meet a standard set by the Department before compensation for road noise became applicable. It could provide an excuse for all sorts of silences in all kinds of families. Even a noise level of 63 dB is clearly an inconvenience.

Mr. Massey has pointed out in a number of letters that the estimated noise level is based on traffic flows and density 17 years ahead, in 2013. The Department's forecasting record is not encouraging. From my years on the Transport Select Committee, I know that previous forecasts by Ministers, before my hon. Friend began his tenure in office, have been dismally wrong—well on the low side.

The figure given for 2013 must be a guess, and is probably a poor one at that. The Department has admitted the possibility of a 20 per cent. error either way in some of its other traffic forecasts. In Mr. Massey's case, that would mean that he could suffer noise levels well above those estimated—even approaching that of a modern twin-engine jet—by the year 2013, which is so far away that such an estimate is realistic in view of Mr. Massey's present problems.

No wonder my constituent feels that the rules or guidelines are made to ensure the minimum number of purchases. My opinion is that the guidelines have been drawn too tightly. If one meets all the criteria, bar one that depends on an unprovable forecast, one does not qualify for purchase consideration. That seems extremely hard law.

It is obvious from all the communications that the Highways Agency has considerable sympathy with my constituent. In a letter dated 9 February 1995, the agency's Mr. Keith McKenzie wrote: I am sorry to have to give you a disappointing decision after so lengthy an exchange of correspondence. However, there is a slight possibility that this decision may be subject to review now that the Highways Agency's application for leave to appeal to the House of Lords in the Lt Col Owen case has been rejected. New guidelines are being prepared, but I am unable to say when they will be introduced, or exactly what they will contain. However, the main effect of the changes will be that the Highways Agency will need to take into account loss in value of the property attributable to a proposed scheme when assessing whether its enjoyment is seriously affected, and therefore whether it falls to be considered for discretionary blight. Your case will be reconsidered when the new guidelines are introduced. A change was necessary—as quoted—because the Highways Agency lost its case against Colonel Owen of Gloucestershire.

What in fact happened? When the new guidelines were issued, there were some sweet-sounding phrases, such as each application for discretionary purchase will be considered on its merits". Further on in the document, after listing three major factors constituting "severe effects", it states: The factors listed in these guidelines are not exhaustive. Other factors or combination of factors may cause serious effects and this Agency will take these into account when considering your application". The net result of the changes, however, was that they were not helpful. Instead of an applicant having to show that no offer for the property was received within 5 per cent. of the unaffected market value, as under the old guidelines, the figure was raised to 15 per cent. So much for the hints of a promise to Mr. Massey that a change might help him.

I believe that the whole basis of discretionary purchase needs to be re-examined. There seems to be a case for special consideration in cases of exceptional financial hardship, such as Mr. Massey's. Perhaps it should not be necessary to meet all the criteria to be considered for purchase.

As for council tax valuation, Mr. Massey's local council and the district valuation officer have been sympathetic, but say that they have no power to do anything. I realise that my hon. Friend the Minister is not responsible for this part of Government policy, but I hope that he will pass on my concerns to his colleagues at the Department of the Environment. It is bad enough to see the value of one's house falling because of market forces, but to see it fall much further because of road blight, to have no redress and still to have no chance of even a lower council tax valuation and banding only adds insult to injury.

I see my constituent's case as follows. He has been injured because he became redundant, because he is prevented from helping himself, and because of the operation of the law as it is now interpreted. The insult is that the Highways Agency gave him hope that the change in the guidelines might be beneficial. In fact, it made matters worse.

My constituent and those in a similar position deserve consideration. They deserve another look at the guidelines, and they deserve better.

I hope that I have shown that Mr. Massey has a real problem and a justified sense of injustice. My purpose in raising this matter is my belief that it illustrates a very real issue for very many people. Governments, whether local or national, take decisions—to build roads, to alter the lines of roads and to improve roads—which impinge greatly on the lives and finances of families.

To my mind, we have not yet shown, under any Government, the necessary concern or taken the necessary action to help many of those families. I believe that fact is a challenge for my hon. Friend the Minister and for his Department and its policy in the future.

Photo of Mr Steven Norris Mr Steven Norris , Epping Forest 10:27 pm, 18th June 1996

I congratulate my hon. Friend the Member for Wellingborough (Sir P. Fry) on securing this opportunity to discuss this case, which, as he rightly says, is of wider interest to many hon. Members, precisely because people such as Mr. Massey have been affected.

It is important to start by setting out the principles on which the Department will compensate those who are affected by schemes introduced by the Highways Agency. Similar arrangements exist for schemes introduced by local authorities, but it might be more appropriate to concentrate in this case on matters relevant to my Department.

The general principle, as my hon. Friend has rightly said, is that, where properties are required for a scheme and where the property falls within the line that the road scheme will take, the property will be acquired at value. A compulsory purchase order mechanism exists to ensure that a scheme can proceed once it has achieved the necessary powers. Clearly, there will be those" who have properties which are not on the line of route but are adjacent to it, and that is what we are concerned about tonight.

Parliament quite properly recognised that there needed to be a system that would compensate such people for loss in value. However, I do not believe that it is unreasonable to accept the proposition that it will never be possible to compensate every owner whose property might be affected to a slight degree by a new scheme. Were we to attempt to do so, we would rapidly enter a world in which government would be wholly unworkable, and in which the cost of new pieces of infrastructure would be unaffordable.

The general principle is clear, and is contained in part I of the Land Compensation Act 1973. It establishes that, a year after a scheme is opened—a year after a road has been built—a property owner, subject to certain qualifications about being in residence and so on, who can establish that there has been a diminution in value will be compensated for that diminution.

In the direct context of Mr. Massey and the Higham Ferrers and Rushden bypass, let me make one thing clear. A year after the opening of the scheme, Mr. Massey would have an unequivocal right to compensation under part I of the Land Compensation Act.

If that is so, we turn to the proposition that, in addition to those powers, discretionary powers should be available to the Secretary of State. The circumstances about which we are concerned are those where, essentially, the individual cannot wait. I say that because I suspect that, quite frequently, the nature of discretionary purchase is not as well understood as it might be. I can understand why that is so, because emotions can run high in such matters.

If we are to have a scheme that advances the claim that Mr. Massey would be able to make under the Land Compensation Act, we need to establish certain things. First, we need to establish that Mr. Massey had no foreknowledge of the scheme when he purchased his property. Secondly, we need to prove that the scheme will have an effect, which it is not possible to determine exactly, because the road has not yet been built.

My hon. Friend talked about how one calculates the effect of noise. If he will allow me, I must tell him, gently, that I disagree with his view on that. Having established that there is a loss of value, a further test needs to be applied, and that is the test of a pressing need to sell. It is the pressing need to sell that ultimately determines that it is right in equity for Parliament and the Department to authorise the purchase of an individual's property in advance of the scheme even being built.

Let me deal with the calculation of loss of value. As my hon. Friend said, following the reassessment of the guidelines in the wake of the Owen judgment, two elements remain to be proven. One is the effect of noise on the scheme. He said that calculations that predict noise levels many years ahead may be inaccurate. I do not think that I do him any injustice by recalling that he said that they may be wildly inaccurate. That is true, but I remind him that the purpose of using a predictive, rather than an actual, calculation is twofold.

First, because the scheme has not been built, all calculations of noise level must necessarily be predictive. Secondly, it would be unfair to the occupier of a property to assess noise only at the point at which the scheme was first opened. A date many years in the future is picked precisely because traffic builds up over time.

Although I admit that such predictive science is inexact, I know that my hon. Friend, with his experience, will acknowledge that the officials who make such calculations do so as objectively as they are able. The test is good for the people concerned, because they get the benefit of the doubt in respect of the growth of traffic on a piece of road, even though it is unlikely to happen for many years.

In the case of Mr. Massey, much depends on the assessment both of noise and of diminution in value. On noise, I believe that there is no disagreement between Mr. Massey, his agent and the Department on the proposition that the predicted noise is unlikely to reach the levels that are generally considered to trigger the threshold for discretionary purchase.

On diminution in value, the position is more marginal. I can put some figures on the case that my hon. Friend made. The district valuer, whose opinion is the important one in such cases, assesses the unaffected value of Mr. Massey's property at £70,000, and the affected value at £60,000. He thus calculates a diminution in value of 14 per cent. While 14 per cent. is a material difference, it is less than the figure of 15 per cent. that my hon. Friend mentioned, which was in turn drawn from paragraph 3(a) of the new guidelines.

My hon. Friend said that 15 per cent. is rather higher than 5 per cent. He is right, but in calculating serious effect and diminution in value, it is necessary to establish that the diminution in value is significant. He will accept that, if one asks for a valuation from any three private valuers, there will be a margin of difference of about 10 per cent. That sort of fluctuation can be tested any day, in any town, anywhere.

So the figure of 15 per cent. is designed to indicate the figure at which there has been beyond doubt not merely a difference in valuation but an undoubted diminution in value arising from the prospect, if not the reality, of a scheme. That said, the difference in this particular case is 14 per cent. Taking account both of the fact that the noise calculations would appear to indicate that Mr. Massey's particular property will not suffer to the extent of the increase in noise normally taken into account in schemes such as this, and that the value of his property will not be diminished by more than 14 per cent. according to the district valuer's calculations, the Highways Agency has concluded that Mr. Massey's claim cannot be met. Let me be clear that it cannot be met on the grounds that he has not passed the tests of serious effect by way of noise or diminution in value.

I appreciate that the decision will come as a disappointment to Mr. Massey. I understand that he has suffered the loss of his job and that he seeks to use the proceeds of the sale of his property perhaps to re-establish himself in some business for the future. I am therefore concerned that my hon. Friend should be given every opportunity to prosecute his case.

Although I have not so far been made aware of any exceptional circumstances which would enable me to change my opinion in this case, if my hon. Friend believes that there are exceptional factors which have not been made known to the agency or to me or given adequate consideration, I invite my hon. Friend to write to me about them, and he and I will discuss the matter further.

I am, of course, concerned that, if it is agreed that the affected value of Mr. Massey's property should be £60,000 if he markets the property properly with a view to sale, he ought to be able to receive that figure. If, after he has properly marketed it, the indications are that he is not able to receive that sort of consideration, I should certainly wish to look at the case again.

I am extremely grateful to my hon. Friend for, as he rightly says, raising an extremely important subject, which is of interest to every Member of the House of Commons. I hope that he will accept that, having wrestled with such difficult cases for several years, I know that we will never be in a position to satisfy all those who feel aggrieved by the existence of a scheme—particularly one which, as he has every right to say, has a long history of not becoming a reality. Nothing is more frustrating.

In this case, I am satisfied that the guidelines have been properly applied, and, with regret, I concur with the officials, including Mr. McKenzie, who have been in touch with Mr. Massey. I fear that I cannot at this stage exercise discretion on his behalf. I simply underline the fact that, if circumstances prove not to be as predicted or assumed, I should be very happy to go on discussing the matter with my hon. Friend.

Question put and agreed to.

Adjourned accordingly at seventeen minutes to Eleven o'clock.