The history of the calls for reform
Calls for compulsory purchase reform go back over ten years and more. Some changes to make it easier for local authorities to purchase land compulsorily were made by the Planning and Compulsory Purchase Act in 2004. The Act did not however implement all of the Law Commission's recommendations that it made following its comprehensive review and set out in its final report published in 2003.
Then followed a period of many years in which compulsory purchase reform was low on the list of priorities for law reform. There was still talk of regeneration and renewal and giving local authorities the capacity to undertake any activities considered to have a positive impact on the life of their local community as the reforms brought in by the by the 2004 Act, which included also substantial reforms to the planning laws, were bedding down.
At the same time there were early signs in the financial markets that not all was well. By 9 August 2007 central bankers became so alarmed by the lack of liquidity in the financial markets that the European Central Bank and the US Federal Reserve injected a combined 90bn dollars into financial markets.
What followed we all know; the UK suffered a double-dip recession which was the deepest since WW2 and which lasted for five quarters. There were fewer regeneration and renewal projects, fewer compulsory purchase orders to facilitate these projects and calls for reforms dropped down the agenda.
A number of Acts have played at the edges of a few topics, until the Planning Act 2008 led to a fundamental and successful change in how land assembly for nationally significant infrastructure projects is taken forward.
The housing crisis and reform moves back up the agenda
By 2008 the number of new homes being started had fallen to its lowest peacetime level since the 1920s. The growing realisation and focus on Britain’s housing crisis meant that government put the planning system under scrutiny as one part in the jigsaw to see house building accelerate; with that it was also time for compulsory purchase reforms to move back up the agenda. In the Autumn Statement 2014 the previous government announced, that in respect of compulsory purchase reform, it would (paragraph 2.49) “publish proposals for consultation at Budget 2015 to make processes clearer, faster and fairer, with the aim of bringing forward more brownfield land for development.”
Coinciding with the March 2015 Budget the Technical consultation on improvements to compulsory purchase processes (March 2015) was published. Read our briefing on the consultation here. The stated aims were to make the system clearer, fairer for both acquiring authorities and for those whose interests are acquired – and to make the process faster.
The Government noted that, “compulsory purchase powers are an important tool for assembling land needed to help deliver social, environmental and economic change” and that “used properly, compulsory purchase can contribute towards effective regeneration”.
The Housing and Planning Bill
It was not until after the Housing and Planning Bill was published that the government published its formal response to the Technical consultation, on 29 October 2015. Some of the reforms proposed by the consultation are now included in Bill clauses 111 to 139, including:
Right to enter and survey land
- For all acquiring authorities, provision of a general power of entry prior to a compulsory purchase order being made; to introduce a standard warrant provision in relation to the proposed new power of entry for survey; and to introduce a standard notice period of 14 days for entry for survey purposes.
This is a wider power than is currently available and would relate to the land which is the subject of the proposal or other land. At the moment only some acquiring authorities such as local authorities, urban development corporations and the Homes and Communities Agency have this power. The proposal is that the power would apply to all acquiring authorities.
- Clause 119 if implemented would allow the Secretary of State to delegate decisions to a planning inspector in certain circumstances.
The provision would allow a confirming authority to appoint an Inspector to act instead of it in relation to the confirmation of a compulsory purchase order to which section 13A of the Acquisition of Land Act 1981 applies (confirmation of order: remaining objections).
Given the perceived draconian nature of compulsory purchase we anticipate that this provision may prove controversial. Although a power to recall that delegation will be included, critics will raise the fear of a democratic deficit. One test of whether such decision can be delegated is whether it raises issues of no more than local importance.
The government's formal response to the Technical consultation was published on 29 October and therefore after the publication of the Bill. It acknowledges the reservations expressed by some respondents about the criteria for the delegation of decisions to Inspectors. It confirms that the government will consider further what criteria would be appropriate.
- Enabling provisions for the Secretary of State to develop targets and clear timetables for the confirmation stage of the compulsory purchase order process.
Currently, after a compulsory purchase order has been submitted to the confirming authority the process can be lengthy and the timescales for a decision unclear. The intention will be welcomed though it will have to be seen what the timetables will look like. Although regulations have imposed strict deadlines on all participants, there has not been a binding requirement on the confirming authority to determine a compulsory purchase order within an identified timescale. Clearer timetables for decisions by the Secretary of State and delegated decisions must be welcomed.
- Clause 120 clarifies that notices to treat and general vesting declarations may not be served more than three years after confirmation of the compulsory purchase order.
This would clarify that a general vesting declaration may not be made after the end of the period of 3 years beginning with the day on which the compulsory purchase order becomes operative. This will be a generally welcome clarification after the uncertainty on the issue created by case law.
Harmonising time periods for taking possession
- The provisions would do away with the preliminary notice of intention before a general vesting declaration may be executed, and draft clause 122 if implemented would extend the notice period of taking possession under the general vesting declaration procedure to a minimum of 3 months, from the current minimum of 28 days. Clause 123 would make amendments to extend the notice period for taking possession under the notice to treat/notice of entry procedure to a minimum of 3 months, from the current minimum of 14 days.
- Draft clause 124 would introduce new provisions to enable a person in possession of the land to serve a counter notice requiring the authority to take possession of the land on a specified date, which must be not less than 28 days after the date the counter notice is served.
The provisions if implemented would provide greater certainty for occupiers, both in relation to the extended time periods for notices of entry and also in allowing claimants to impose an entry date if entry has not been taken after the stated entry date.
Reform of advance payments of compensation
- The draft clauses make changes to the advance payments system to facilitate clearer claims and earlier payments and also require the payment of interest if the acquiring authority fails to make a payment on time. A new legislative provision will require the Treasury to specify in regulations the rate of interest payable.
Currently, an advance payment will only be paid when, or after, possession is taken by the acquiring authority. These provisions if implemented will assist claimants. The Secretary of State is given a power to make regulations which will set out the form and content for claimant's requests for advance payment or request to make payment to a mortgagee. The detail of these provisions will therefore be in the regulations.
Because statutory interest has been pegged at half a percent below base rate the effect from April 2009 has been that no interest has been payable on outstanding claims for compensation. The government's response to consultation published on 29 October 2015 confirms that it will set the prescribed rate at 2 percent above base rate.
High Court orders
- Draft clause 135 provisions clarify that the court has the power to quash the decision to confirm the compulsory purchase order as well as the power to quash the whole or any provision of the order itself.
If implemented the effect of the provision would be to allow for an order to go back to the confirming Minister for reconsideration in circumstances there the order itself is found to be sound but there is an error in in the decision to confirm the order. At present, if an error in law is made by the Secretary of State, an acquiring authority may find that it has to go back to square one and promote the whole compulsory purchase order (CPO) from the start, with the ensuing impacts on time, even though it has done nothing wrong at all in the process. The proposals for change, therefore, are to allow the Court to have a power to remit the CPO to be redetermined by the Secretary of State in appropriate circumstances, which must be welcomed.
Challenges to orders
- The Bill provides for amendments which would extend the time period allowed to implement a compulsory purchase order where an application is made to challenge the validity of an order.
The extended period would be for either (a) a period equivalent to the period from the date an application to challenge is made until it is finally determined or withdrawn or (b) one year, whichever is the shorter period. Where an appeal is brought, an application is not finally determined until the appeal is finally determined or withdrawn.
This provision will assist authorities which will usually wait to implement an order where a challenge is made leaving them with less time to implement the order.
Power to override easements and other rights
- Draft clause 137 would introduce a new power which would extend the existing powers to override easements and restrictive covenants under the Town and Country Planning Act 1990 and other legislation to acquiring authorities, such as statutory undertakers, which do not already have those powers.
Conditions and limitations on the power would apply. While the power is likely to be welcomed by promoters we anticipate that its appropriateness is also likely to attract some debate.
Material detriment claims
- Draft clause 134 it is stated is intended to harmonise (as far as possible) the approach to the treatment of material detriment under the procedures for taking possession.
The Bill would also allow the acquiring authority to enter and take possession in advance of any dispute about material detriment having been determined by the Upper Tribunal.
The government's formal response to the Technical consultation confirms that it will also take forward the proposal to allow acquiring authorities to disapply material detriment provisions when acquiring rights through sub-soil in their particular compulsory purchase order.
The Technical consultation noted that this was a problem for HS1, but subsequent hybrid legislation has solved this problem for the projects concerned by disapplying the material detriment provisions for acquisitions of subsoil. It noted that while this approach could also be followed for development consent orders and Transport and Works Act orders, it would not be possible for standard compulsory purchase orders unless specific legislative provision was made.
One of the most controversial proposals in the March 2015 Technical consultation was the stated intention to encourage public authorities to offer good levels of compensation. The consultation document suggested that early settlements can be reached if acquiring authorities are sensitive to claimants' expectations, "more reasonable initial offers" made and that better value for money from earlier settlement will speed up delivery by avoiding the need for compulsory purchase.
The consultation proposed that this change would be brought about though changes to guidance (not legislation) and this proposal is therefore not part of the current Bill. However, the government's formal response to the Technical consultation confirms that the wording initially proposed in by the consultation was further discussed and tested with key partners and that final wording has now been included in the updated guidance on the compulsory purchase process, also published on 29 October.
The new guidance cancels and replaces circular guidance 06/2004 as well as a number of further guidance noted which are itemised at the end of the new guidance. It now states that "(…) In order to reach early settlements, public sector organisations should make reasonable initial offers, and be prepared to engage constructively with claimants about relocation issues and mitigation and accommodation works where relevant." Further it encourages Acquiring authorities to take into account the overall costs of promoting a CPO and the savings that could be achieved when assessing the appropriate payments for agreements in advance of using CPO powers.
Our recently published research indicates that the use of compulsory purchase is a genuinely effective tool for delivering regeneration. Read our research here. Nonetheless, there is scope for improving the efficiency of the process whilst retaining safeguards and fairness for those who are affected by compulsory purchase. The Bill includes much that will be widely welcomed by practitioners and some elements that may prove more controversial. What is always difficult to assess in advance is the application of the law of unintended consequences.