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Mr. Clifton-Brown: The Minister helpfully responded to the intervention on my hon. Friend the Member for Spelthorne before lunch by providing a quote from the regulatory impact assessment. She said that she anticipated the overall costs of acquisition under the new arrangements to rise by 1 per cent. Can she explain the Government's underlying calculations? For instance, how many houses would she expect to be acquired in one year? The Government must have made some estimate in order to come up with 1 per cent. What was their thinking?
Mrs. Roche: We are not discussing the full cost of compulsory purchase in the round. This is a loss payment that is made on top of that for disturbance and the open market price for the land. I understand why the hon. Gentleman asks the question, but it is difficult to disaggregate the figure. However, we can try to estimate what it would do to the overall cost of the scheme. It will be right to keep it under review. That is why we have included the power for Parliament, if it so wishes, to revisit the matter. The debate has been helpful and constructive, and I urge the Committee to support the clause.
Mr. Clifton-Brown: I must ask the Minister—with the greatest good will, because she has been very courteous in her responses—for a little more financial information. Will she write to each Committee member and put a note in the Library about the direction of the trend for compulsory purchase? She
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did not tell us that when we discussed clause 73, and she has now mentioned the loss payments under clauses 74 and 75—I assume that she meant both, as she did not make that clear. In doing the arithmetic, she must have estimated the number of properties to be acquired. It would be useful to hear what the trend has been in the past five years and where the Government think it will go under these new, simplified and accelerated procedures. Will it increase, as one would expect? I would be grateful if the Minister would respond, perhaps in writing.
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The Minister mentioned clause 77 and the updating powers. It is in the nature of such matters for there to be a lag in updating them. I am not concerned about the percentages, because those will increase as the value of the property increases, but the maximum figures should be updated, particularly for those in low-value properties who will benefit most from the owners' loss payments and basic loss payments. Will the Minister clarify that matter, if not now, in writing?
I shall not urge my colleagues to vote against the clause. As the Minister says, the payment is in addition to the existing compulsory purchase payment for the value and disturbance. We therefore welcome it. It becomes less generous as one approaches clause 75, but we shall debate that when we come to it.
Question put and agreed to.
Clause 74 ordered to stand part of the Bill.
Clause 75
Occupier's loss payment
Question proposed, That the clause stand part of the Bill.
The Chairman: Although I am prepared to allow a free stand part debate, the amendments that were listed against this clause were debated in the last group, because there was a close relationship between the two clauses.
Mr. Clifton-Brown: We do need a little clarification. Whereas, under the previous clause, we were dealing with the basic loss payment, which was 7.5 per cent. of the value or a maximum of £75,000, in this clause we are dealing with the occupier's loss payment, which is 2.5 per cent. of the value of his interest, capped at £25,000. The same arguments apply, so I would press the Minister again about updating the maximum amount. We are to debate amendments on the matter later, but it would be helpful if the Minister would tell the Committee whether she anticipates updating the figure annually or in some other way.
I slightly pre-empted the clause stand part debate on this clause by saying that whereas the basis loss payments given in clause 74 are reasonably generous, particularly to those in low-value properties, those in clause 75 are not. In layman's terms, the proposal in subsection (8) of new section 33B of the Land Compensation Act 1973 of £100 per hectare not exceeding 100 hectares amounts to £10,000 for 250 acres, or £15,000 for 750 acres. That is £40 per acre and £20 per acre respectively. Considering that the
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current value of land is probably in excess of £2,000 per acre, it is minimal.
The Minister spoke earlier about compensating for the costs of removal. Some of the unreimbursed costs that I mentioned this morning, in terms of having to acquire a new farm and to build new buildings, will be far greater than £10,000 or £15,000. The payment is not very generous, and I do not think that it will encourage property owners to agree compulsory purchase arrangements quickly—nor does the National Farmers Union. However, we shall see whether the Government's judgment is correct.
The further that we move into the clauses, the less generous they become. The buildings amount given in subsection (9) of £25 per sq m or part of a sq m of the gross floor space of any buildings on the land is probably what a relatively low-cost building would achieve in rent in the city, where rents are—even in today's depressed market—currently between £20 and £60 per sq ft. That puts the capital value at between £2,400 and £7,200 per sq m. The building loss payments would amount to between 1 per cent. and 0.3 per cent. Considering that the acquisition costs of a compulsory purchase project are typically less than 25 per cent. of the total cost of the scheme, those payments are less than generous. It would be helpful of the Minister to show how she arrived at the figures and what she thinks that they will compensate for.
Mrs. Roche: Clearly we will want to keep this point under review and will update provision when necessary. The hon. Gentleman questioned the figure of 2.5 per cent. for the occupier's loss payment. That derives from the current home loss payment, under which owner-occupiers can claim 10 per cent. of the value of the interest that is being acquired. It complements the 7.5 per cent. payable as a basic loss payment on a ratio of 1:3 to give owner-occupiers a freehold interest in non-residential property, and makes a total loss payment of 10 per cent. of the value of their interest. It is based on the current home loss payment regime, which most people agree should stay as it is. It also seems right on the basis of fairness and equity.
Subsection (8) of new section 33B specifies that the basis for calculating the land amount is to be £100 per hectare for the first 100 hectares taken, and £50 per hectare for the next 300 hectares or part of a hectare, bringing the maximum payable to £25,000. As the occupier's loss payment is intended to compensate occupiers for the compulsory nature of the acquisition and the inconvenience of having to move at a time not of their choosing, the land amount is intended to provide a fair balance in the amount payable between freeholders and protected and other tenancies, which are of value, and farm business tenancies, which are not. It ignores differences in the values of different types of agricultural land, because the additional payment is intended to relate to the distress and inconvenience of being obliged to relocate farming operations rather than the intrinsic productive value of the land.
Mr. Clifton-Brown: I must press the Minister about how she arrived at the figures. Under clause 74, the maximum payment might be £100,000. There does not
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seem to be much equity between that—it would relate to a property worth £1 million—and the maximum of only £25,000 for the disturbance to somebody obliged to sell a farm.
Mrs. Roche: I understand the hon. Gentleman's point, but we cannot use the extra loss payment as a basis for capitalising on the value of the land. He referred to subsection (9) of new section 33B and city prices, but it deals with agricultural land. The sum of £25,000 to which he referred is additional to the £75,000 that is available for owner-occupiers in a special position. I hope that I have assisted the Committee.
Mr. Wilshire: The hon. Lady may have assisted some members of the Committee, but she has not helped me very much. I am old-fashioned; I still think in acres. I have difficulty with hectares, so I hope that the Committee will forgive me if I talk in a language other than that used in the Bill. My arithmetic is probably not much good, but my hon. Friend the Member for Cotswold said that we were talking about an extra 1 per cent. of the value of the property that had been confiscated. That maximum figure does not strike me as generous or fair, but parsimonious in the extreme.
An example comes to mind. It has nothing to do with Heathrow, except that it could be close to it. When talking about the price of agricultural land, those who come from the city are tempted to think that the rolling countryside is about £1,000 or less per acre and say how wonderful that is. I come from the edge of a great city, where the price of agricultural land is astronomic. A lot of the land outside cities can be small areas and used for market gardening and specialist production. It tends not to have agricultural holdings, huge farms and so on.
At one time, I had six acres of land, which had been a smallholding, used for agricultural purposes. It had attracted EU money—before I owned it, I hasten to add. If two acres from the six had been wanted for road widening, for example, the sheep that had been kept on the land could not have been moved a long way from the smallholding. If such an owner loses a couple of acres, he will be in serious difficulty. He could put a value on the two acres that had been compulsory purchased and confiscated, but he would still have to put the animals somewhere else because a certain number of them per acre would be unsustainable.
The land that had been confiscated might have been medium-grade agricultural land that was worth £2,000 an acre, given that it was the edge of the city, but to keep the sheep close to the owner's home so that he could deal with them at lambing time, he might have to buy land immediately next door to make up for the two lost acres. It could be that top-grade agricultural land was the only land available. The person had been compensated at £2,000 an acre, but the only other land that he could buy was at £3,000 per acre. The figure of 1 per cent. added to the value of the land that had been confiscated will not help him. He will end up with a
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holding that is not viable, because no cheap land is available.
The maximum additional compensation of 1 per cent. is not fair. The Minister has not dealt with such matters. She said that she was referring only to agricultural land and that some of the values used were city values. Let us consider buildings. A clapped-out barn in the middle of Northumberland might be worth only a small amount, but I assure the Committee that any sort of structure on agricultural land in places such as Surrey has an enormous value. Some of the prices paid are ridiculous. If compulsory purchase powers had been used on parts of my six acres, my barn would have gone. I would have been given the value of the barn, but the chances of finding another—certainly the chances of being given planning permission to put something up—would be virtually zilch. I would have lost my barn and have been paid 1 per cent. more as an attempt to solve a problem that I could not solve.
A 1 per cent. uplift is not much use, and if the figure of 1 per cent. in relation to buildings is correct, it is not much use either. The Minister has failed to convince me that the provision is sensible. I do not know whether she can add anything further, but I am full of reservations. I think that the provision is mean to the point of being utterly unreasonable.
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