Earl of Lytton
Main Page: Earl of Lytton (Crossbench - Excepted Hereditary)Housing and Planning Bill
Earl of Lytton Excerpts
The Earl of Lytton
“(7A) Guidance referred to in subsection (7) must include a requirement for the developer to pay development value for land that is compulsorily purchased for housing as part of any nationally significant infrastructure project.”
The Earl of Lytton (CB)
My Lords, I will speak to both amendments in this group. Amendment 119B was first tabled in Committee by my noble friend Lord Cameron of Dillington. It was then adopted by me, but in the event was moved by my noble friend the Duke of Somerset—it has been passed round like the parcel to some extent. Having read the Government’s response in Committee, I felt that it was important to retable these two amendments. I express my thanks to the Minister for the fact that her department has been kind enough to talk with the Compulsory Purchase Association, at whose suggestion I tabled a large number of other amendments, which it now feels it is unnecessary to pursue further. The association explained to me that it felt things had gone about as far as it could reasonably expect. That accounts for some of the other amendments that were put down in my name recently, which I withdrew before the end of last week.
My first amendment, Amendment 119B, arises because of the proposal in this part to facilitate construction of up to 500 dwellings as part of a “nationally significant infrastructure project”—which I take to mean linear schemes such as railways, roads and pipelines, as well as more locally contained schemes, such as airports or perhaps offshore wind farms. The significant common factor about those is that they all attract the use of compulsory purchase powers as the main way in which they can be facilitated. To that extent, what are proposed to be the powers of the Secretary of State in planning terms here are closely intertwined with the process of compulsory acquisition.
This amendment touches on the manner in which the Secretary of State may make orders—on which I understand that there is consultation, but we do not know the outcome of that, and the Bill merely makes paving provision.
It is, however, a trifle hard to see what intrinsic functional or planning component of an airport, a railway, a major road or a wind farm scheme would be furnished or somehow augmented by the erection of up to 500 houses, either nearby or, perhaps even more suspiciously, some way off. I am tempted to point to the slightly absurd situation of a wind farm seven miles out to sea and the 500-house enabling development somewhere onshore. However, one can envisage situations where certain types of national infrastructure might be entirely inimical to housing amenity—such as airports.
On the question of compulsory powers—I am treating the question of the Secretary of State’s prerogative here and compulsory powers as part of the same algorithm— standard compulsory purchase and compensation practice suggests that, of the effects of a scheme facilitated by compulsory purchase, an addition in value to the claimant’s land solely as a result of the scheme of works and not capable of being otherwise achieved should be disregarded in the compensation calculation. The point is settled law under what is known as the Pointe Gourd principle.
Furthermore, any element of value that could and would be reflected in the general market properly forms part of the compensation package, including what the noble Viscount described as hope value in answer to a similar amendment in Committee. However, it is one of the defences of a property owner faced with compulsory acquisition that the land to be taken is, objectively measured, in excess of what is operationally required for the scheme itself—this being a protection against what I might slightly crudely referred to as cutpurse activity in the name of the state. I should like the Minister to say whether this important safeguard is to be retained.
In Committee, my noble friend the Duke of Somerset explained that there are more than 170 bodies, mainly privatised utility companies, with compulsory powers. Those are in addition to the traditional acquiring authorities in the form of government agencies, county, borough and district councils. This is of increasing relevance. Many of these are straightforward commercial enterprises conducted for and making large profits. The amendment is designed to invite the Minister to disclose the intention behind the proposition in the Bill.
By way of further explanation, I mention that many linear features—motorways would be a common category—are achieved by a series of staged compulsory purchase orders, each one a separate order. One might imagine a situation where several lots of 500 houses might spring up along the way. The important further question I have to ask is whether the term “nationally significant infrastructure projects” is synonymous with what one might refer to as “scheme”, as opposed to something else, because if it is something else, all sorts of things follow. If the purpose in the Bill is not to cross-subsidise a scheme of infrastructure works by gaining potentially profitable acres, whether on the cheap or otherwise, then what? I invite the Minister to tell us that, too.
If such a cross-subsidy is the intention, it is hardly small. Five hundred dwellings at an average plot value of £90,000 equates to £45 million in land value. Clearly, physical access to land providing this bounty is unlikely to be facilitated by the national infrastructure project itself. It will at best be tangential to it—perhaps a piece of land severed from it or in some other way altering its character. The potential for stretching the construct of “scheme” and what may usefully be swept under its coat-tails is in point here.
Even without a compulsory purchase scheme attached, what of the effect of 500 houses on local communities and their planning objectives? Several consequences might flow from a cross-subsidy scenario. We can be clear on what some of them would be. We can be fairly certain that a cross-subsidy, if that is what it is, will not provide any affordable housing, because the very nature of the cross-subsidy is to maximise the offsetting gain. It will respect neither local nor neighbourhood plans because, intrinsically, these schemes will override them. The housing will not necessarily be in the same location nor have any functional connection with the infrastructure project itself—that is, unless we get a better definition of “project” and “scheme” as terms of art. It certainly will not be transparent, because of the complicated and often opaque characteristics of infrastructure scheme accounting and development finance.
In effect, this provision in the Bill is capable of providing not only for the bypassing of congestion and constraints on progress by freeing up provision of infrastructure but bypassing elements of local democracy and principles of fair value for the compulsory giving up of land. In Committee, the Minister mentioned the philosophy of equivalence in compensation, and I agree with him to a degree, although fair market value is not necessarily the same as equivalence as interpreted by such bodies as HM Revenue and Customs.
There is another custom that I should like to raise with him, which arose long ago in the context of land acquired under wartime powers but which the Government of the day subsequently sold for high value at a later stage when it was no longer needed for its original purpose. It caused a furore about government profiteering, and the ministerial commitment that followed became known as the Crichel Down code. My family benefited from that code, having had land taken from it for the construction of a military airfield. It is—potentially, at any rate—disreputable practice for any Government to set about profiteering by dint of compulsory powers. It also sends a very undesirable message about attitudes, which will simply embed resentment, non-co-operation and mistrust.
The compulsory code and the facility of compulsory purchase are important and valuable tools for public authorities in procuring the assembly of land and the delivery of essential infrastructure. I want to make that very clear. For many years, I practised as a surveyor in the Inland Revenue valuation office, dealing with a lot of compulsory purchasing for something that was then referred to as the A27 Folkestone to Honiton trunk road. It is sad to recall that it reached neither Folkestone nor Honiton and has various gaps in the middle which continue to cause problems to this day, but that is an aside. My association with this area of activity goes back some way. I referred to the doughty Compulsory Purchase Association. I am not a member but I certainly applaud its persistence in trying to make sure that we have sensible solutions to all those points.
If we are to have a system that is not mired in uncertainty, acrimony and adversarial position-taking, that is workable in terms of freeing land and creating infrastructure and that local authorities are not frightened to contemplate using, as well as something that is not wide open to abuse at the hands of some privatised utility whose pay-and-profit structure may come before the needs of society, this part of the Bill needs clarification. That is what I seek in the first of these amendments.
Amendment 128YAR—I paused when I saw that acronym and wondered whether this was a reference to my West Country roots, where “yar” seems to be one of the expletives that one hears very commonly—provides an overarching duty of care. The need for this arises because of the manner in which the current compulsory purchase process can be manipulated to the detriment of the claimant. There are many examples of this across the country. It looks as though the Government have, at last, realised there is an issue with late payment as they have agreed to take certain steps. I am very grateful to the Minister for that. However, I still feel that this marker of fair dealing and honest measures should be in a Bill of this sort. The amendment does no more than go some small way to redressing an abiding perception of unfairness and imbalance when claimants are faced with an acquiring authority seeking to acquire land. I beg to move.
Viscount Younger of Leckie (Con)
My Lords, the noble Earl, Lord Lytton, has helpfully expressed concerns about landowners losing out from any uplift in land values when the compulsory acquisition of land is sought for housing as part of an application for nationally significant infrastructure. He has also raised the important issue of how claimants are treated by acquiring authorities. I recognise that these are also issues of concern for members of the Country Land and Business Association, who met the Minister for Housing and Planning last week to discuss these matters and our proposals for further compulsory purchase reforms, which are now out to consultation, which the noble Earl alluded to. We welcome these discussions with the CLA and look forward to receiving its further thoughts in response to the current consultation.
I turn first to Amendment 119B. We had quite an interesting short debate, particularly with the intervention just now from the noble Lord, Lord Campbell-Savours. In response to the noble Earl, and taking account of the comments from the noble Duke, the Duke of Somerset, I can only reiterate the main points of the response to the amendment made in Committee. A key principle under the Land Compensation Act 1961 is that compensation is offered at the open market value of the land. The open market value will take into account the effect of any existing planning permissions, and any that might be given in future in accordance with the planning assumptions in the 1961 Act. Any increase or decrease in value that is due solely to the scheme that will acquire the land—for example, a nationally significant infrastructure project including related housing development—is disregarded. The same principles apply irrespective of the powers under which compulsory acquisition is granted.
Amendment 128YAR would introduce a statutory duty of care to be owed by acquiring authorities to claimants. I agree completely with the noble Earl, Lord Lytton, that those whose land is being taken by compulsion should be treated fairly and with respect. I also listened carefully to the comments from the noble Lord, Lord Cameron, and I know that stretch of the A303 reasonably well. I also respected the comments made by the noble Duke, the Duke of Somerset. However, I do not think that imposing a statutory duty is necessary to achieve that fairness and respect. Instead, the way forward is to set out clear expectations for acquiring authorities’ behaviour in dealing with claimants in guidance, and to ensure that the system itself is fair to claimants. We have done the former already: updated guidance was published in October 2015. The latter is being addressed through measures in the Bill; provisions on lengthening the notice before entry and earlier advance payments will make the system fairer for claimants. We are also consulting on further proposals to ensure that claimants receive fair compensation, to further encourage the prompt payment of advance payments and to ensure that claimants in areas with high rateable values are not systematically excluded from issuing blight notices.
As I am sure the noble Earl will appreciate, Amendment 119B would require a fundamental change to the provisions for assessing compensation for land compulsorily acquired in the Land Compensation Act 1961. For that reason, we will be unable to support this amendment. On Amendment 128YAR, as I have explained, the Government do not consider that a statutory duty of care is necessary. I know the noble Earl will be disappointed by this, but none the less I ask him not to move his amendment.
However, I emphasise that we will of course be happy to continue our engagement with the noble Earl and other interested parties, should they wish to discuss these matters further, particularly in relation to Amendment 128YAR, as it may be possible that more can be done through changes to guidance.
The Earl of Lytton
My Lords, I thank the Minister for that, particularly for his comments on the second of the two amendments, which seems to be a profitable suggestion and an appropriate way forward. I very much appreciate the opportunity of taking him up on that as matters proceed. In a sense, it is one of those “motherhood and apple pie” amendments. I make no apology for that because the overarching purpose and geometry of how these things are dealt with is important, as indeed corporate social responsibility might be in any other walk of life.
I am entirely unsurprised that the Minister does not go with the first of my amendments, Amendment 119B. I am equally entirely unsurprised that the noble Lord, Lord Campbell-Savours, disagrees in forthright terms with what I have suggested. The reality is that all sorts of businesses and individuals profit in one form or another from windfall gains, and it is a truism that those windfall gains do not coincide with the circumstances in which they could feed into the support of the needy and the underprivileged, particularly in housing terms, other than through the intervention of the state. That is a perfectly proper way of doing it.
Lord Campbell-Savours
Can the noble Earl answer the simple question that I asked? Why should a landowner whose land is worth between £15,000 and £20,000 a hectare suddenly, at the stroke of a pen designating one of these areas, find that his land can be worth anything from £1 million to £7 million per hectare? How can that possibly be justified?
The Earl of Lytton
My Lords, I am not sure that I know the answer to that. The point that I was trying to get at in the process of this amendment was the question of who profited from the 500 houses. The short answer is that very large gains are made by dint of the market. The noble Lord may wish to take the view that the market should be overridden—a view that I feel certain many would share on his Benches. It does not happen to be my view and we will have to agree to differ on how this is to be dealt with. I entirely respect his view and I can see the social pinch point here, but I am trying to look at this as an economic model rather than in terms of who gains out of it.
I have gone on long enough about this and it is certainly not my intention to divide the House on it. I therefore beg leave to withdraw the amendment.