Council leader's dismay at Government's refusal to fix 'broken law' » Housing » 24dash.com

Wandsworth Council leader Edward Lister has reacted with dismay after ministers announced they were not planning to fix a "broken law" that he claims could force taxpayers up and down the country to shell out millions of pounds to property speculators.

Councillor Lister warned that the Government's continuing failure to repeal an outdated and obsolete part of the Land Compensation Act 1961 could cost town halls dearly.

His concerns centre on a little-known clause in the Act which was used by a property company last year to claim £1.6m compensation because they had been refused planning permission to build homes in a small park in Battersea on land that as an open space was worth only £15,000.

The company, Greenweb, was able to claim this windfall because homes had once stood on the land – until they were destroyed in a Luftwaffe bombing raid in 1940. After the war the homes were not rebuilt and the land – known locally as Fred Wells Gardens - had evolved into a small green amenity space for Battersea residents.

During the compensation hearing in the Court of Appeal last summer, it emerged that civil servants and ministers had been repeatedly warned for 15 years by senior judges, the Law Lords and by the Law Commission that action was needed to remove this "utterly absurd" law from the statute books.

Following this, Councillor Lister wrote to Communities Secretary Hazel Blears and urged her to change the law. He also called on her to fund the compensation from central Government funds because of the "continued failure by Government to carry out a simple repeal to remove an anomaly which has been flagged up on several occasions over the last two decades."

He added: "Council taxpayers in Wandsworth are having to part with £1.6m not because of any rational reason but only because successive Governments have failed to act when they have been told that they should act. The blame for this disgraceful waste of public funds lies firmly with central Government."

But a reply written by junior minister Sadiq Khan dismissed this plea and confirmed that the Government had no plans to amend or fix the law.

Mr Khan, who is also the MP for Tooting, stated: "We are, of course, aware that there are some anomalies still in compulsory purchase and compensation legislation….I am also aware of the concerns expressed by the Law Commission.

"However, you will appreciate that this is a very complex area of law…. and…. given the many other priorities for Parliamentary time, I do not foresee an opportunity to enact the reforms relevant to the Greenweb case in the near future.

He added: "I am afraid that the department is unable to contribute to your compensation payment."

Councillor Lister said: "It is astonishing that the Government intends to do nothing to fix this broken law, which has unfairly forced taxpayers in this borough to fill the pockets of property developers.
 
"They have been repeatedly warned over many years that this was a ticking timebomb of a law that would one day explode, and now that it has, ministers are effectively saying they couldn't care less, even though other town halls in London and around the country could suffer the same expensive fate.
 
"And because they won't pay a penny towards the fallout from their inaction and incompetence, every council tax payer in the borough, including people in the minister's own constituency, will have to fund this absurd compensation bill."

In the original Court of Appeal hearing last summer, three senior judges were reluctantly forced to dismiss the council's appeal against an earlier ruling by the Lands Tribunal that compensation was due to Greenweb. All three said the ruling was unsatisfactory and one described it as "utterly deplorable".

Lord Justice Stanley Burnton said: "This is a conclusion I feel compelled to reach, and I do so most reluctantly."

Lord Justice Thomas said: "I agree. The conclusion is inevitable given the wording of the Act.  It is, however….. a highly regrettable conclusion for the tax payers of the London Borough of Wandsworth.  Those taxpayers, not, it seems, the Government in Whitehall, must now fund a payment of over 100 times the value of the land under legislation which should have been amended through the initiative of the relevant Department in Whitehall in accordance with the recommendations of the Law Commission and the observations of Lord Oliver."

He added: "I too would hope that Parliamentary time could be found to effect an amendment at the earliest possible opportunity; any business case or cost benefit analysis would demonstrate that a very small amount of Parliamentary time and a very small cost in civil service time in the Department (which should have acted long ago) was all that was needed to avoid the risk that tax payers of other municipalities would have to fund windfall gains to developers which cannot, on any rational basis, be justified."

Lord Justice Buxton also agreed. He said: “I find that outcome utterly deplorable."

He added: "The recommendation of the Law Commission…might on one view have been seen as something of a tidying-up provision. The Law Commission was not faced with, and did not set out, the possibly dire consequences of this legislation, which are demonstrated in practice in this case.  That may be why the recommendation has not been acted on. But another very weighty authority has also urged the review of these provisions….Lord Oliver, speaking for a unanimous House of Lords, described the provisions as an anachronistic relic, and urged their reconsideration. That was fifteen years ago. Lord Oliver’s call has not been heeded.
 
"This case shows that it must be heeded now.  If the Government is not prepared to act of its own motion, local authorities, who are faced with the unmeritorious deprivation of very scarce funds that occurred in this case, must exert political pressure to achieve the correction of the anomaly."

Fred Wells Gardens has been used as a public open space since 1979. After the homes there were destroyed in the Blitz, the site was cleared in 1948. Between then and 1979, prefabricated buildings stood on the land, but when these were removed the now defunct Greater London Council (GLC) obtained planning permission to designate it as a green space.

When the GLC was abolished, its assets, including Fred Wells Gardens, were disposed of by the London Residuary Body, which sold the land to a private developer in 1988. This developer tried to obtain permission for housing but was rebuffed by Wandsworth Council, which wanted to see the land remain as a small park for residents in this part of Battersea.

In 2001 the developer sold the land to Greenweb for £30,000. Their attempts to get a similar planning permission were refused not only by Wandsworth but also by the Secretary of State following a public inquiry.

The land by this stage was valued at just £15,000. However, the company’s lawyers applied to the Lands Tribunal in September 2007 for compensation under the 1961 Act. The tribunal awarded Greenweb £1.6m on the basis, that even though there had been subsequent planning consents for the land to be designated as open space, a planning permission had once existed for a development there, even though no houses had been present on the land for more than 60 years.