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Lord Smith of Leigh: My Lords, I shall raise two issues on the amendment. First, I was not clear from the outline of the amendment given by the noble Lord, Lord Hanningfield, how it cuts across the right that property owners have under existing legislation. Compensation is payable to householders, not on a voluntary basis but on a compulsory basis under the Compulsory Purchase Act 1965 and the Land Compensation Act 1973. I am not clear whether we are asking for additional compensation for particular groups of owners. Are they getting double the money that other people get? I was not clear on that, and I hope that the noble Lord can help.

I wish to challenge the presumption on which the amendment is based. It assumes that airport expansion or development will have a negative impact on property prices. I challenge that very rigorously. Airport development is a catalyst for economic activity, investment, new jobs and higher incomes in the areas immediately surrounding airports. The increased wealth and new job opportunities increase demand for property conveniently located near the airport, and generally prices tend to rise rather than fall. The experience in Manchester is evidence of that. The area of the conurbation experiencing the highest house prices is south Manchester, which is conveniently located for the airport. People do not move away from airports. The Minister will know from his experience in Oldham that house prices in Oldham do not reflect the distance from the airport. Far from it; other factors comes into play. There is a presumption in the amendment that is wrong. House prices may well rise because an airport expands. When an expansion is announced—a new runway or a new terminal development—clearly some local people will not like it. We understand that.
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Lord Hanningfield: My Lords, the problem is the blight envelope. There is no definite site for the runway, so the potential envelope for the development of the airport covers a very wide area. It is not that the houses will be lived in; they could well be demolished. People just do not know. Those are the people who are blighted. There is a cut-off and other people are just over the other side. It is not that those houses will be lived in and become valuable assets later on; they probably will not even exist, all depending on the siting of the runway. They are blighted for some years because of the uncertainty of the situation. That is why the scheme of compensation is not seen as adequate by local people.

Lord Smith of Leigh: My Lords, I thank the noble Lord for his intervention, and I think we can understand that. What scheme of compensation does the noble Lord regard as being adequate? A limit must be drawn somewhere. Presumably wherever the line is, be it three miles further down from the current line or whatever, there will be someone over the road from that line and they will think it is not fair and they will want more money. Clearly, there are short-term effects of any development, and one has sympathy with individuals affected by this case. Legislation is there to protect people who are adversely affected by any development—whether at an airport or another development—and I think that protection should be adequate.

Lord Davies of Oldham: My Lords, I have a long response, because this is an extremely difficult issue. I am grateful to my noble friend, who has reduced my response by a third. He emphasised in such a cogent way that of course the noble Lord, Lord Hanningfield, can identify issues with regard to airport blight, but it would be a far cry from reality if we looked on the development of all airports as bringing nothing but blight to their localities—very far from it.

I hear what the noble Lord says about the proposals regarding Stansted, but I recall that Stansted was first developed with its first runway nearly 30 years ago. The same kind of arguments could have been put at the time; I am not sure whether they were as I do not have that power of total recall that is necessary on such occasions. I remember gloom and doom suffusing quite a large part of the area, even among people living some 25 miles or 30 miles away, who subsequently would say that the airport has produced very real benefits as well. After all, a lot of people who live in the vicinity of airports earn their living through the airport. So I am grateful for that context, although I am going to address the noble Lord's amendment and stick strictly to the issues.

The issue of generalised blight is presently before the courts, primarily in connection with the voluntary blight compensation schemes introduced by the operator of Stansted airport, but potentially with wider implications. A permission hearing in that case took place on 13 and 14 December, resulting in a decision by the judge to refuse the claimants
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permission to apply for judicial review. We believe that the claimants will shortly be seeking permission for leave to appeal to the Court of Appeal. In view of this, I do not think that it is appropriate for me to comment further on the particulars of any specific schemes to address generalised blight. I am therefore obliged to step away from that illustration.

This is a difficult and complex issue that cannot be addressed in the way that the amendment suggests. Let me make the obvious proposition, which is the bedrock of my argument: why should airport development be singled out in this way? I know that as we are discussing the Civil Aviation Bill the noble Lord is properly discussing airport blight, but the concept of generalised blight is extensive and not only airports generate that issue. The operation of the property market as a whole has long been dependent on the general acceptance that the ownership of any land or property carries with it an associated risk that external factors may give rise to conditions adversely affecting its enjoyment or eventual resale value, and the assumption of caveat emptor applies.

A wide range of factors—natural and man made—can result in property blight. The noble Lord is identifying one factor. Generalised blight can occur before the true effects of the proposed development are known, and in many cases even before a planning application is submitted. An issue that can arise in some cases is finding the right balance between accepting such risks as inevitable—a concomitant risk of property ownership—and compensating those whose private interests are being threatened by schemes intended for the wider public good. The law already provides for compensation where land would be taken by the proposed development; for example, where compulsory purchase would be necessary. The noble Lord will recognise that we have law covering such eventualities.

In addition, the law already provides for compensation for loss of value arising from certain indirect effects of future development during construction, such as construction noise or dust, under the Compulsory Purchase Act 1965. Additionally, under Part I of the Land Compensation Act 1973, those affected by future development, including airport development, but whose land will not be taken by the development, can claim compensation for loss in the value of their property attributable to the operation of the development. But this does not apply until 12 months after the development has been used for the first time; for example, 12 months after a new runway is brought into operation.

It is an important and necessary principle of statutory blight compensation under Part I of the 1973 Act that it is assessed after the works have been completed and brought into use when the true consequences, both positive and negative, can be assessed objectively. This is not the case with generalised blight, which depends primarily on the attitude of potential purchasers of a property to a proposal for development nearby, which furthermore may not be granted planning approval. Such attitudes
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are highly susceptible to misperception, misrepresentation and uncertainty. In many cases generalised blight can be the result of all three. It can also give rise to a current of anxiety and in some cases even to irrational concern which, in turn, can undermine the strength of the property market to an unwarranted degree.

While proposals for development may coincide with a reduction—or indeed an increase—in property values, the causal link between the proposed development and depreciation or, in some cases, appreciation is much more difficult to establish than in the case of statutory blight. It was in recognition of these factors, during preparation of The Future of Air Transport White Paper, that discussions were held with major airport operators to consider what steps they could take on a voluntary basis to help stabilise the housing market around their airports if proposals for new runways were taken forward in the White Paper, with the aim of helping those worst affected and with a genuine and urgent need to move.

The position is set out in paragraphs 3.18 and paragraphs 12.13 to 12.17 of the White Paper. For example, it says in paragraph 11.41, in the case of Stansted airport, that:

That is exactly what the British Airports Authority has done. It has consulted on and put in place three schemes to address different aspects of the generalised blight arising from the proposals for a second runway at Stansted. The schemes are similar to others in the past in connection with major road and rail proposals, such as the channel tunnel rail link. BAA has brought forward similar voluntary schemes at Heathrow, Gatwick, Edinburgh and Glasgow. The airport operator at Birmingham is currently consulting on revised voluntary compensation schemes and the operator at Luton is expected to bring forward its own proposed mitigation measures shortly. These voluntary schemes do not affect the statutory rights of property owners in due course.

Beyond the clear policies set out in the White Paper the Government contend that they should have no role in determining the scope or terms of non-statutory schemes brought forward by airport operators to address generalised blight. They are, necessarily, voluntary schemes for the reasons I have explained. The main concern and causal factor where generalised blight is associated with proposals for new airport runways is anxiety about future aircraft noise. It is sensible therefore for voluntary blight schemes to use forecasts of future noise to identify areas likely to be affected. One consequence of that approach is that some people in areas forecast to experience low levels of aircraft noise feel aggrieved at not being included within the scheme, which is intended for those who experience higher levels. However, voluntary generalised blight schemes that are not related to recognised causal factors can have the perverse effect of spreading generalised blight and making the situation worse.
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The effect of the amendment would be to bring generalised blight within a statutory planning framework for the first time, but it would do so for one economic activity only: civil airports. The Government contend that that is the basis why the amendment should be rejected. Generalised blight is not an issue unique to airport development. It can arise from any major development or infrastructure project. The effect, therefore, would be discriminatory. Other comparable areas, such as other transport modes, heavy industry, chemicals manufacture, waste disposal and energy generation, would continue to be subject to the established position, while civil airports alone would be expected to compensate for generalised blight, whether or not the perceived risk of depreciation in property values was soundly based.

The effect would also be discriminatory in other ways. Where airport expansion involved the development of new surface access infrastructure or major improvements to existing road and rail infrastructure, as it often does, the amendment is not clear as to whether the owners of properties said to be blighted by the airport-related road and rail proposals should also be compensated under the airport scheme. Indeed, would that be necessary, to avoid unfair discrimination, even though road and rail infrastructure seldom serves just one role, such as an airport?

If the effects of the airport-related road and rail proposals were included in the airport compensation schemes directed by the Secretary of State, the result would then be discrimination between property owners affected by airport-related road and rail proposals but not those who suffer road or rail proposals elsewhere. That also would be unfair and irrational. The effect of the amendment would be to place a major obstacle in the way of airport development, due to the potentially high costs it could bring to any project, but more so, the high degree of uncertainty as to what those costs might be in the absence of a clear causal link between the effects of the proposed development and property values. It would deter airport operators from bringing forward proposals for airport expansion, which would harm the competitive position of UK civil aviation and damage the wider economy.

The amendment would also make it difficult for airport operators to consult properly and widely on their development proposals at an early enough stage—when genuine options are on the table—to allow for the views of consultees to be taken into account. Consultation is indeed a requirement in many cases, but, if consultation were to carry the risks and burden of compensating for generalised blight, that would obstruct the necessary development of the nation's infrastructure and export to other countries the jobs and the wealth to which my noble friend Lord Smith referred.

Finally, the territorial application of the proposed amendment is not clear. Although most aspects of civil aviation are reserved matters, most local planning matters are devolved.
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I conclude by saying that successive governments have looked at the matter closely. That happened most recently when we considered planning and transport issues between 1997 and 2001, when relevant Ministers found good reasons not to introduce legislation that would bring generalised blight in the statutory framework. We all know the consequences of generalised blight; we all recognise the social and economic problems that obtain there, but we have looked at this very closely, and we reached our judgments on the basis that it would be wrong to introduce, as this amendment would, for one relatively narrow area of economic and planning activity compensation for a concept that is much wider than the noble Lord has indicated. I hope that he will feel able to withdraw the amendment.

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