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This is the fourth time that I have raised the issue of compensation for businesses that will have to be relocated from the Olympic site. It is a matter of some sadness that I have had to raise it four times, but I am afraid that I have still not received the answers that I am seeking.
No two businesses on the Olympic site are the same. Some are freehold, some are leasehold; some are owned by sole proprietors, and some by publicly quoted companies. I suspect that the vast majority are leasehold, and it would be very easy for their leases to be terminated and for the companies to be relocated. Many of them are in storage, and it would simply be a question of moving the contents of the business from one site to another.
The Minister is well aware of the constituency case that I have raised, so I shall not dwell on it, other than to say that it concerns a proprietor-owned freeholder who is experiencing severe difficulties in relocating. The Minister, to his credit, has said that he takes a keen personal interest in these matters, and has made all the right noises. Both he and the Mayor have said that no business will be disadvantaged. There is a lack of clarity, however, in exactly what is meant by that.
The briefing that we received from the London Development Agency for the debate in Westminster Hall last week set out exactly what the agency's statutory responsibilities were in this regard. They include,
Again, the LDA framework is general in its outlook without being specific as to exactly what kind of compensation might be available. A briefing helpfully provided by the Greater London Authority for today's debate states:
"The Mayor and LDA remain firmly committed to ensuring that the process of land acquisition for the Olympic Park development does not disproportionately disadvantage those with current interests in the land."
Let us take the example of a business that has to be relocated. It would have to remarket itself, relaunch itself and retrain staff. It would inevitably suffer losses. I have one simple question for the Minister, if I can get his attention. Will the items that I have just set outhe might have missed them, but I am sure he has heard all this beforebe covered? In an earlier intervention, he said that the LDA was Exchequer-funded, and that is quite right. So the power flows from the Government to the LDA to the dispossessed business. Does the Minister believe that the LDA has the power and the funds to provide complete compensation to a business in the situation that I have just described? In other words, would it cover the costs not only of relocation but of relaunching and the inevitable loss of profit? These are simple questions, and I would be grateful if the Minister could give me clear yes or no answers.
Jo Swinson: I have a great deal of sympathy with the points raised by the hon. Member for Croydon, South (Richard Ottaway). In the Westminster Hall debate on this issue last week, he set out very eloquently the concerns of his constituent and the business that he runs. There has been a huge amount of support for the games from the business community and from individuals in London and the rest of the UK, but we need to ensure that the business community will be compensated appropriately.
The amendment raises certain questions. How is the compensation to be applied? What levels will be set? Where is the money to come from? Ultimately, who is to be the judge? Businesses have set forth their case for being injured by the games and suggested the amount of compensation that they believe to be appropriate. The Sunday Express on 27 November carried the example of a concrete-crushing business that had claimed that it needed £20 million of compensation. It had been offered £1.5 million, so there was obviously a difference of opinion as to what the business should be entitled to.
Certain unscrupulous companies or individuals might seek to benefit unduly from the games by submitting cases that do not have sufficient merit, and we need to find a way of arbitrating all the cases. One sensible suggestion is that we should appoint an independent arbitrator who could address the problem. They would evaluate the loss to the business and examine the case that had been presented. Each business will probably have a unique case. The arbitrator's judgment could then be presented to the Department or agency that would be required to pay the compensation. That would present an accurate and fair fee for transferring land to the games, and a process in which all those involved could have faith. About 300 businesses might be affected, and such a process could instil faith in them that they would receive the compensation that they were due.
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We spoke earlier about the sound financial management required to ensure that the games come in on budget. I am sure that all hon. Members would agree that we must ensure that those businesses that will genuinely be affected can get the support that they need. At the same time, however, we must ensure that the LDA is not held hostage and that we do not leave ourselves vulnerable to ever-escalating costs. I suggest that an independent arbitrator would provide a good answer to this problem.
I went to visit some of the businesses involved on 17 November. I tried to approach the meeting with an entirely open mind, but I came away feeling considerable sympathy for much of what they said. I shall try to encapsulate for the Minister what appeared to be the three problems involved. First, I do not want to party political, but there were issues surrounding the conduct of the LDA. I suspect that the LDA did not expect us to win the bid in Singapore, and thus might not have done all the necessary workfor reasons that we can all understandto identify and secure alternative sites. There were countless stories of unreturned phone calls, unanswered letters and messages left hanging in thin air, which clearly did not help one iota.
Secondly, some surveying firms were acting both as compulsory purchase valuers and as agents for prospective new sites, which is a serious issue. The Minister will know perfectly well that that is a straightforward conflict of interest and should never happen. Finally, the very fact that the Olympic site is such a large industrial site has, for obvious reasons, made replacement properties difficult to identify. Furthermore, post the bid, the supply of similar land is considerably scarcer, thus pushing up values. Any settlement must therefore be based on post-bid land values, not on the values existing prior to the Singapore decision.
It was clear from my meeting that a realistic settlement could be reached on the basis of the cost of the replacement site, plus the necessary construction cost, plus an element of dislocation. We do not intend to press the amendment to a vote tonight, but the Minister should be in no doubt about the scale of the problem. The suggestion of an independent arbitrator is helpful, and some such initiative would prevent positions becoming entrenched. If they do become entrenched, without Government intervention, I fear that a solution will be hard to find.
Clause 4(5) ensures that everyone whose land is injuriously affected by Olympic construction works will be entitled to a fair amount of compensation. That provision will apply to businesses in the same way as it applies to home owners. Compensation will be calculated on the basis of depreciation in the market value of the land affected. In the event of dispute, there will be a right of appeal to the Lands Tribunal. That puts the Olympic project on exactly the same footing as other major construction projects undertaken by public bodies. The Olympic delivery authority will pay compensation, rather than the London Development
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Agency, as it will be directing the works on the LDA's land. The responsibility will go to the ODA when this Bill, I hope, becomes an Act. Under an earlier amendment, all the work and contracts operated by the LDA will go to the ODAI hope in an efficient and effective way.
In adopting that approach, the Bill is entirely consistent with the precedent set in other contexts, including the channel tunnel rail link project. I understand where the hon. Member for Croydon, South (Richard Ottaway) is coming from. He is concerned to make sure that businesses get a fair deal, and I support that aim. We also want to ensure that people are fairly compensated. We do not want to make the Olympics a special case, however, compared with other large-scale public construction projects.
The amendment would create a special case by widening the class of people entitled to compensation to cover all those whose interests are affected, however indirectly and regardless of whether they are land owners or tenants in the land affected. That is too broad an approach. Its effects are uncertain, but it is likely to result in a multiplicity of claims and to prove very expensive. It is much better to rely on several decades of case law in this area to provide what is acknowledged to be a fair and reasonable compensation scheme for those who deserve compensation. We have provided the necessary hook in the Bill to ensure that that is the case.
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