New Clause.—(ENFORCEABLE OPTIONS.) (Hansard, 29 June 1951)
HC Deb 29 June 1951 vol 489 cc1765-73

Notwithstanding anything in section one hundred and nineteen of the principal Act, a lease for the purposes of that Act shall include, and shall be deemed to have always included, an enforceable option to acquire or lease land for the winning and working of minerals.—[Mr. Powell.]

Brought up, and read the First time.

11.15 a.m.

Mr. Powell

I beg to move. "That the Clause be read a Second time."

There was a considerable discussion in Committee on whether and how enforceable options upon mineral-bearing land should be brought within the scope of Clause 26. Nevertheless, the problem is one of such importance that I feel that it needs no apology for suggesting that there should be a further discussion on this occasion, not least, perhaps, for the benefit of my hon. Friend the Member for Croydon, East (Sir H. Williams), who, unhappily, was absent from those discussions—

Sir H. Williams

Not absent; not authorised to be present.

Mr. Powell

—of whose presence in those discussions we did not have the advantage.

I am going to assume, without the necessity of proof, that there are substantial advantages for a mineral operator in being included within the scope of Clause 26. I think I may assume that, because otherwise we should not have had that Clause before us at all—at the request, primarily, of mineral operators. It must therefore be a benefit and an advantage to existing mineral operators to be covered by this provision, and a disadvantage to those who have been excluded. We must, therefore, assume that those types of mineral extractor—particularly, those engaged in quarrying lime, sand and gravel—who so often work under the principle of enforceable options, would have their operations facilitated if they could be brought within the scope of Clause 26, as this new Clause seeks to do by an alteration which it produces in the principal Act.

The Government have so far found difficulty in acceding to the request of the Opposition that this extension of Clause 26 should be made, and they have found difficulty on three grounds, with each of which I should like to deal. The first objection raised is that, by making an enforceable option an interest for the purposes of the principal Act, a new class of claim upon the £300 million compensation fund will be created. The second reason is that, if one seeks to have enforceable options brought within the principal Act, it is very difficult to draw the line between that class and other classes, and thus the floodgates are thrown open. The third objection is that in any case, the owner of an enforceable option can get his way by the compulsory powers existing under the Mines (Working Facilities and Support) Act and Section 42 of the principal Act.

May I deal briefly with each of these objections? First, it is alleged that, by adding this new Clause to the Bill, we should create a new set of claimants for compensation. As a matter of fact, I believe that to be wrong. It is perfectly true that the owners of the enforceable option could not make a claim for the development value of their option, because that option is not an interest for the purposes of the principal Act, but the owners of the land have presumably made a claim for the development value in those minerals, so that there are already claims before the Central Land Board in respect of the minerals to which the enforceable option applies. It is true that these claims were made by the landowners, and not by the owners of the option. Nevertheless, there is a corner or a niche within the compensation scheme already for that class of development value, so that we are not making any addition to the existing scheme of the compensation fund.

The only difficulty is that we are seeking to apply the machinery of Clause 26 to a case where the interest in respect of which a claim was made belonged at the appointed day, not to the operator, but to the landowner. I do not, therefore, think that there is any unsurmountable difficulty about that. The Minister has already envisaged in the regulations which he has so helpfully presented to the House cases in which the development rights are owned at the appointed day by a different set of persons from the prospective operators.

The explanatory note on Regulation 3 states that minerals are admitted in cases where they were not owned or leased by a mineral undertaker on the appointed day, and it gives us instances of cases where operations had been temporarily suspended—of course, that is not comparable—and also cases where the owner was associated with the mineral undertaker. Therefore, we already have in the Regulations provision for a very similar type of case to the enforceable option type where the owner, not himself an extractor or prospective extractor, owned the mineral on the appointed day and made a claim in respect of it. I submit, therefore, that there will be no administrative or technical difficulty in bringing the enforcable option within the machinery of Clause 26.

I pass now from that first Government objection—which I believe to be groundless—to the second, namely, that we should be opening the doors to all sorts of enforceable options which could claim to be brought within the scope of the principal Act. That really is a very difficult argument to take seriously, because the whole purpose of this Bill is to isolate a particular class of claims and to give them special treatment. We are isolating the owners and lessees of mineral-bearing land from all other types of owners and lessees by this very Bill. No one objected to the Bill on the ground that if we gave this treatment to mineral owners we should have other sorts of owners coming along for comparable Bills. It is equally difficult to argue that if we extend it to cover enforceable options in minerals, we shall have claims put forward by other sorts of enforceable options. It is easy to isolate the one case from the other, and we are doing it in other circumstances in this Bill. Therefore, I cannot believe that the Government attach much weight to this difficulty of keeping the floodgates shut.

Finally, we were assured that the owners of options would find no difficulty eventually in being able to carry on their operations on land to which the options apply, because they could get compulsory powers of purchase or lease and could have the terms of their agreements compulsorily modified by the existing machinery. I accept that that is so, but I would ask the House whether it is desirable to provide for a set of contingencies by means of the compulsory machinery of the Lands Tribunal and the High Court under the 1923 Act as amended, instead of doing it by the machinery of this Bill. With what sort of firms are we dealing? They are mostly smallish firms operating in rural areas who, for the most part, have these agreements and options with the local farmers and small landowners. I want, if I may, to read to the Committee one paragraph from a letter I have received from a typical developer of this type, which shows how he thinks the use of these compulsory powers would react in the neighbourhood in which he operates. It says: We are a rural industry and have a 'country outlook.' We make arrangements with our neighbours that the business tycoon would describe as naive. In a small community, often only a village, there would be uproar and everyone would take sides if we used the processes of law to acquire another's land at less than we had agreed to pay for it. In most cases we would refuse to do it, being reluctant to 'pull a fast one' on a man we have known and liked, and probably worked and played with all our life. Ergo, the price of our products will rise. Let us assume that these compulsory powers, if used, are adequate to secure for the owners of these options all the benefits which they would receive under Clause 26 were they within its scope. Is that really the right procedure for us to force upon the operator? After all, the same argument applies exactly to the owners and leaseholders already covered by Clause 26. Why do not we say to them, "It is all right. You need not worry about Clause 26 and these arrangements which have been so carefully negotiated. You could get just the same advantages by going to the High Court or to the Lands Tribunal under the 1923 and 1947 Acts."

The reason we have this Bill is that we know perfectly well that it would be fantastically inconvenient to use the compulsory machinery in order to achieve the same effects as we are getting here by the set-off process. I urge the Government to consider once again whether they cannot extend the machinery of Clause 26 to cover enforceable options.

Mr. Dalton

As Members of the Standing Committee will remember, we had a considerable discussion of this point in Committee, and I am afraid that, although this Clause is in a little different form from that moved in Committee, I still find it impossible to accept it, and I very much hope that the hon. Gentleman will not press it. The arguments against it are several. Perhaps the most important is that if this Clause were accepted, it would create a new class of preferred participants under the £300 million fund.

We have already been told from time to time that that sum is too little—I do not accept that—for the total claims. We have also been told by some of our critics that within the £300 million fund there are already too many preferred classes, and that therefore the ordinary claimant is going to get too little. In so far as these arguments have force, it is clearly undesirable and inequitable to include yet one more class of preferred claimants, and that is what this Clause would do. That is the first argument against it.

In the second place, although the new Clause no longer requires it to be necessary for the holders of mineral options to submit claims, as did the proposal put forward in Committee, yet it is still true that there would be a new block of claims coming forward. That would further trouble the time-table which, as I explained at an earlier stage, we are very anxious to maintain so that the payments may be completed by mid-1953, the end of the five-year period laid down.

Mr. Powell

But surely claims have been made in time already in respect of these minerals by the owners and not by the prospective operators?

Mr. Dalton

I appreciate that in this one respect there is some saving in the pressure on the time-table, but it is still true that a great quantity of these claims will be coming forward. That will mean still further delay, and a still further likelihood of our not being able to complete the operation by the due date. That argument has been diminished, but not entirely done away with by the new form of the Clause. There are further arguments against it which the hon. Member will have heard, but which I will re-state as the matter is now before a Committee of the whole House. There are many kinds of options, and I do not think it equitable to pick out mineral options for special treatment. There are also options in regard to building land. These are not brought into this and I do not think we can equitably distinguish here.

11.30 a.

Finally, the hon. Member for Wolverhampton, South-West (Mr. Powell) accepted, I was glad to hear, the proposition I made that a person affected would be able to take a series of alternative actions to safeguard his interests. He could negotiate through the terms of his lease in view of his liability for development charge. He could apply for compulsory purchase by the Central Land Board or by the local authority, or he could apply for a grant of compulsory rights. These are the three courses open to him. I think I informed the Standing Committee, and I now inform this Committee, that in fact the Central Land Board have assured me they would be prepared to consider their powers of compulsory purchase under Section 43 of the principal Act in a case of this kind. Therefore I think the principal interests of the option holders concerned are protected, and I hope that this new Clause will not be pressed.

Mr. Assheton (Blackburn, West)

I want to reply to one point. I fully understand the difficulties of the situation. My hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), who has been so very helpful to us in the Standing Committee and has paid so much attention to the matter, has put a strong case which I think in equity it is very difficult to overturn.

The Minister answered it, in effect, by saying that his own Act made it difficult for him to do justice to these people. He said that if we add to the number of prior claims, we shall damage the interests of the deferred stock holders, as it were, in this £300 million. On the other hand, we on this side of the Committee are not responsible for setting a limit of £300 million and, whatever is the fair sum of compensation, it ought to be paid. One cannot say in advance that one is not going to pay more than £300 million, because one does not know whether it is the right sum. While I appreciate the Minister's case, I suggest that the difficulty arises perhaps not so much from his own action as from that of Lord Silkin, who is no longer with us.

Mr. Derek Walker-Smith (Hertford)

I want to refer to what the Minister has said with regard to the point put from this side of the Committee on the question of the undesirability of extending preferred claims. That, of course, has been the argument from this side of the Committee dating back to debates on what is now the Town and Country Planning Act, during the Session of 1947. If the advice which was tendered from this side of the Committee had been taken, the difficulty would not have arisen.

What was said was that where there were these cases for exemption they should be treated as cases for exemption and excluded from liability to development charge instead of being taken care of by being given a preferred claim on the fund. If that course had been taken by the Chancellor—[HON. MEMBERS: "Not Chancellor."] I beg pardon. I must not say that evil associations corrupt the memory. If that course had been taken, it would not now be open to the Minister to make this point.

The other point is that of the alternative courses mentioned by the Minister as being open to the option holders. I think they would be unwise to count too highly at any rate on some of those courses. It may well be that on application to the High Court under the 1923 Act there would be some comfort. But they certainly would be unwise to build much on the activities of the Central Land Board under Section 43, because happily to date the Central Land Board have limited their activities under what many people in this country think to be powers that should never have been conferred upon them at all. Therefore, I do not think that is really more than a token right; at least, I hope it is not.

Mr. Molson

If the Minister were really anxious to meet the position on the point we have thought it again necessary to raise, I think he would find a solution to it by a study of draft Regulation No. 3, which he himself drafted and laid before the House for information. The effect of that Regulation is to give very wide discretion to the Central Land Board to enable them to have regard to the actual circumstances of the case. They are empowered to treat as the owner or lessee of the land persons other than those who are the actual quarriers.

It is possible, for example, for a director of a company to hold the land himself, and if he can satisfy the Central Land Board that he holds the land to enable the quarry or mining company with which he is concerned to have it as a reserve, it can be treated at the discretion of the Central Land Board as land which falls within the beneficent effect of Clause 26. Even in the case of a parallel agreement, that can be taken into account; and that shows how far the Government have thought it necessary or wise to trust to the discretion of the Central Land Board.

If the Minister will consider this matter between now and the time when the Bill goes to another place, he will find that within the general structure of the Regulation he has submitted to us there might be a way of dealing with the hard cases which I think undoubtedly exist. In asking that these cases shall be considered, we are not in the least desirous of opening the door to cases which are not reasonable.

Mr. Dalton

I never want to refuse to look at a thing again, even if I have looked at it several times already, as I have sought to do in this case. I gather that the hon. Member for The High Peak (Mr. Molson) now thinks there might be some amendment of the Regulations; that is, he thinks that if this new Clause is not pressed I might be able to find some way of so modifying Regulation No. 3 as to give, if not all, at any rate part of what is sought in the argument for the new Clause. If that is the proposal, I undertake to do so, without any commitment, but I see difficulties with the particular proposition in the new Clause.

Mr. Molson

I am inclined to think that, speaking on the spur of the moment, it would be necessary for the Act to be slightly widened to give the Minister power to include enforceable options in his Regulations. But the operative clause would be the Regulation which would give discretion to the Central Land Board to treat as being included within the beneficent effect of Clause 26 cases which they were satisfied it would be fair and equitable to include

Mr. Dalton

That is a new one on me. I can only undertake to look at it, and that I will do.

Mr. Mitchison (Kettering)

The difficulty about this idea is that an enforceable option is, of course, not an interest in land, because no one need exercise an option. I have yet to hear from those interested in this new Clause and in similar Amendments moved in the Standing Committee what the position would be when the option was not enforced and yet the man had taken rights under Clause 26 of this Bill while it was still an option.

Mr. Powell

I think the exchange which has just taken place between the Minister and my hon. Friend the Member for The High Peak (Mr. Molson) may well have taken us a good step further forward. I am inclined to agree with my hon. Friend that the possibility exists that something of what we have in mind could be achieved without amendment of the principal Act. I think that is supported by the fact that undoubtedly claims, by whomsoever made, for the development value of these minerals should have been made already under the principal Act, albeit by the owner on the appointed day. It may, therefore, be possible for the Minister to find some method of extending Regulation 3 to meet the arguments advanced from this side of the Committee, the force of which may perhaps have partially presented itself to his own mind. In view of the remarks which he has made, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

Bill reported, with Amendments as amended (in the Standing Committee, and on re-committal), considered.