I Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary Introduction Planning and Housing CPOs 2003-2014 Compulsory Purchase Orders: 2015 update Summary Foreword 2 Introduction 4 Planning and Housing CPO Statistics 2012-2014 6 Effectiveness of CPOs – Implementation by Acquiring Authorities 13 Reasons why some CPOs fail – Secretary of State decisions 2009 – 2014 15 1 Contents Generally local authorities possessing compulsory purchase powers (ie “Acquiring Authorities”) use their powers sparingly and most make only one CPO in any given year. There is a small, but not insignificant, body of Acquiring Authorities that use their powers more frequently. This we consider reflects their positive experience gained from repeated success with CPOs and the allocation of resources such as dedicated CPO staff. Our Freedom of Information enquiries to Acquiring Authorities (for which we are grateful for the responses received) suggests however that in many cases there is an absence of an active “corporate memory” of how CPOs were used and what lessons have been learned. We would fight shy of suggesting that a statutory register of CPOs and their outcomes is required, but it is best practice for an Acquiring Authority to review how its CPOs have been promoted and whether identified objectives have been achieved. As our report went to press the Department for Communities and Local Government and HM Treasury have jointly instigated consultation on proposed reform to compulsory purchase processes. The consultation reiterates Government’s view 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 consultation also recognises the need for the compulsory purchase system to balance interference with third party rights whilst improving efficiency and delivery. The proposals therefore seek to streamline processes in a number of ways, including the introduction of timescales for key stages and decision-making, whist maintaining fairness to third parties. As our report identifies compulsory purchase is an effective tool for delivering change and regeneration but there is scope for improving delivery of properly made CPOs and that aim of the consultation is very much to be welcomed. Continued high success rates with both Planning and Housing Compulsory Purchase Orders (CPOs) and a recovery in the use of Planning CPOs demonstrates how compulsory purchase assists in driving urban regeneration and housing renewal. CPOs are demonstrably an effective tool in the armoury of local authorities. As can be seen from our latest research, Planning CPOs continue to drive regeneration, and facilitate development and redevelopment, particularly in urban areas. Although levels of usage remain lower than pre-recession figures, 2014 saw a significant recovery in the use of Planning CPOs, hopefully presaging the returning economic confidence and increasing viability of major schemes. Both Planning and Housing CPOs have very high success rates. In broad, headline terms we consider that it is reasonable to conclude that 95% or more CPOs are actively confirmed or result in acquisition by agreement being achieved. Moreover such rates have been achieved consistently, year upon year. Foreword To the extent that the making of Planning CPOs operates as a proxy for economic confidence – given that the making of a CPO is often representative of a key step in commitment by both the public and private sectors towards a major development scheme – the signs of renewed development activity are encouraging. In 2014 58 Planning CPOs were submitted compared with 36 in 2013 representing a 61% increase. Moreover although the hot spots for use of CPOs remain London, the Midlands and the North West, there is evidence that CPOs are being used nationwide. In addition, CPOs are used to assemble site for smaller schemes of considerable local significance. For example, 2014 has seen Planning CPOs made promoting major schemes such as the retail-led Whitgift Centre in Croydon, the Watford Health Campus, and housing-led schemes such as Barnet LBC’s West Hendon Regeneration Area and Phase 3 of the Edge Hill project made by Liverpool City Council. Housing CPOs are more likely to involve acquisition of individual properties or small groups or clusters. That they can be an effective, coordinated tool for housing regeneration and improvement is well evidenced by their use by Burnley Borough Council, which has utilised Housing CPOs extensively as part of its Vacant Property Initiative (“VPI”), addressing long-term vacant property as part of a targeted approach to housing improvement. CPOs must of course be used carefully and proportionately, having proper regard to the rights of affected third parties. Acquiring Authorities must demostrate that there is a compelling case in the public interest for a CPO to be confirmed. Frank Orr Legal Director T: +44 191 279 9086 E: frank.orr @bonddickinson.com Key contact Compulsory purchase powers are an important tool for assembling land needed to help deliver social, environmental and economic change.” 2 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary 3 • Planning CPOs are more likely to comprise more complicated schemes and attract objections than Housing CPOs; consequently Planning CPOs on average take longer than Housing CPOs to be determined. • Most confirmed CPOs are implemented by means of General Vesting Declaration (“GVD”) as opposed to using a Notice to Treat. This vests title in the Acquiring Authority when possession occurs. • Data derived from Acquiring Authorities in respect of implementation is incomplete but provisionally indicates: – up to 88% of Planning CPOs and 90% of Housing CPOs are being implemented by the statutory method or by agreement in the light of a confirmed CPO – at least 56% of Planning CPOs and 61% of Housing CPOs have resulted in completed schemes or schemes that are in progress – Acquiring Authority derived data of the timescales involved in the CPO process are consistent with DCLG/NPCU data. • The reasons why some CPOs are not confirmed range from the technical to evidential and include: – for CPOs generally: technical drafting errors; the availability of alternative solutions falling short of the need for compulsory acquisition; and failure to demonstrate that all Order land was needed – for Housing CPOs: the weight to be given to an Owner’s ability to deliver a comparable scheme; the personal circumstances of an Owner; and the Acquiring Authority’s failure to put in place delivery mechanisms for its preferred scheme – for Planning CPOs: a successful challenge to the assumptions underlying the viability of a proposed scheme; failure to demonstrate that a CPO was timely; evidence of planning impediments; failure to meet the tests in Circular 06/04; nonconformity with the Local Development Framework; and absence of an updated evidence base establishing quantitative need. In 2010, Dickinson Dees LLP (now Bond Dickinson LLP) published a detailed review of the use and success of Compulsory Purchase Orders (CPOs), particularly Planning1 and Housing2 CPOs. An update report was published in 2012. Among the key messages of the earlier reports were: • CPOs are a vital tool for regeneration. • Usage in 2009 was at its lowest for several years. • Success rates for both Planning and Housing CPOs were generally high. • There was a range of reasons, from technical to evidential, why some CPOs were not confirmed. This new report updates statistics of Planning and Housing CPO usage further to the end of 2014 and also looks at Secretary of State decisions between 2009-14 not to confirm CPOs, i.e. it seeks to identify the reasons why CPOs sometimes fail. In addition, the report takes first steps in analysing the extent and means by which CPOs are implemented and how successful they are in delivering schemes. The key findings of the main report include: • Many local authorities make use of compulsory purchase powers but generally do so sparingly. • Success rates for both Planning and Housing CPOs remain consistently high. • In 2013, the use of Planning CPOs fell to 36, the lowest level since 2003 (the first year covered by this study), but recovered significantly to 58 in 2014. • Use of Planning Act powers still remains lower than levels achieved pre-recession. • There is consistently more frequent use of Housing Act powers than Planning Act powers, with spikes in Housing CPO usage reflecting targeted programmes of use by one or two Acquiring Authorities. • For example, 2013 saw an increase to 92 CPOs using Housing Act powers, principally because of extensive use by a small number of Acquiring Authorities. This summary sets out selected key finding in respect of: • Statistical updates. • Analysis of implementation of CPOs. • Secretary of State decisions illustrating reasons why some CPOs fail. 1. Planning CPOs are principally those made under s.226 Town and Country Planning Act 1990 to facilitate the carrying out of development, redevelopment or improvement on in relation to land 2. Housing CPOs are principally those made under s.17 Housing Act 1985 to acquire existing houses or buildings which may be suitable as houses. Although Housing CPO powers also authorise the acquisition of land for the erection of houses, Planning CPO powers rather than Housing powers tend to be used for major residential schemes 4 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary Introduction 5 The change in the numbers of Planning and Housing CPOs submitted each year for the period of 2003-2014 is illustrated in Figure 2. In broad terms, the level of usage of Planning CPOs in 2009-2014 remains down from previous levels – at around three quarters of 2004-2008 levels. The level of usage of Housing CPOs, having been more or less constant over the preceding four years, took a significant upturn in 2013. Figure 2: Planning and Housing CPOs submitted from 01/01/03 to 31/12/14 20 40 60 80 100 120 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Housing Planning The total of Planning and Housing CPOs respectively submitted in 2012 were broadly in line with the preceeding two years 2010-2011. Thereafter the fluctuations in usage in 2013 and 2014 were more marked. In 2013, the 36 Planning CPOs submitted represents the lowest figure in all the years covered by this report, i.e. since 2003. In contrast, 92 Housing CPOs were submitted – the highest level for ten years. During the years covered by the survey, only 2004 demonstrates higher levels of usage. In 2014, 58 Planning CPOs were submitted. This is consistent with the 2011 and 2012 figures. 66 Housing CPOs were submitted. This is a drop of 29% from the 92 Orders submitted in 2013 but is in line with the general levels of usage from 2009-2011. The number of Planning CPOs submitted post-recession and economic downturn continues to be of a different order to the levels of usage witnessed from 2004-2008. To the extent that the use of Planning CPOs can be viewed as a proxy for economic/redevelopment activity and in particular as a barometer of economic confidence, then the confirmed lower levels of usage are perhaps unsurprising. Given the relatively lengthy lead-in times for most Planning CPOs we would suggest that the fall in 2013 to 36 CPOs reflects the ongoing economic uncertainty of the preceding 12 months. The subsequent increase in Planning CPOs in 2014 is in turn consistent with an improving economic outlook. Levels of usage of Housing CPOs are perhaps less representative of general economic activity and, as Figure 2 opposite demonstrates, are more volatile than those of Planning CPOs. The significant increase in 2013 to 92 Housing CPOs reflects more extensive use of CPOs by a small number of authorities, notably Burnley, as shown on page 12. 2012 2013 2014 Planning CPOs submitted (including those not determined) 46 (27 opposed) 36 (14 opposed) 58 (31 opposed) Housing CPOs submitted (including those not determined) 37 (13 opposed) 92 (23 opposed) 66 (22 opposed) Figure 1: Planning and Housing CPOs submitted 2012-2014 – totals Planning and Housing CPO Statistics 2012-2014 The figures for determination of CPOs broadly track the submission of CPOs. In 2012, responsibility for determination of CPOs transferred from the National Unit for Land Acquisition and Disposal (“NULAD”) to the National Planning Casework Unit (“NPCU”). Figure 3: Planning and Housing CPOs determined from 01/01/03 to 31/12/14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Housing Planning 20 40 60 80 100 6 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary 7 66% 64% 67% 14% 4% 4% 7% 9% 7% 9% 3% 2% 26% 18% Conrmed without modication (including referred to Acquiring Authority for conrmation) Conrmed with modication Not conrmed Withdrawn Other 2012 2014 2013 Figure 4: How Planning CPOs were determined 2012 – 2014 76% 14% 3% 3% 3% 9% 6.5% 3% 80% 1.5% 10% 7% 11% 1%1% 69% Conrmed without modication (including referred to Acquiring Authority) Conrmed with modication Not conrmed Withdrawn Inverted Other 2012 2014 2013 Figure 5: How Housing CPOs were determined 2012 – 2014 8 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary 9 Figures 6-9, which set out details of local authorities submitting CPOs, analysis of CPOs by region and average times taken to determine CPOs are not included here but are set out in the main report. However, selected figures of CPOs determined by region are shown here. North West South West West Midlands Housing 2 3 6 2 4 3 3 16 Number of CPOs determined in 2014 shown by former Government Ofce region North East North West South West West Midlands Yorkshire Humber East Midlands East London South East Planning 2 North East Yorkshire Humber East Midlands East London South East 1 3 23 8 3 4 8 1 22 Figures 4 and 5 show how Planning and Housing CPOs, respectively, were determined in 2012-2014. A detailed analysis is set out in the main report. Both Planning and Housing CPOs continue to demonstrate high levels of success. In addition, the fact that a CPO is listed as “not confirmed” does not necessarily mean that a CPO should be considered to have “failed”. In many cases it reflects an acquisition by agreement and request for an Order to be treated as not confirmed. For Planning CPOs these figures denote continuing high rates of success and indeed an increase in CPOs recorded positively as having been confirmed. The key points to note include: • Annual totals of confirmed Planning CPOs (both with and without modification) 2012-2014 are: 75%, 90% and 85%, respectively. • The percentage confirmed without modification 2012-2014 (including those referred back to Acquiring Authorities for determination) was remarkably consistent: 66%, 64% and 67%, respectively. • This compares favourably with 46% between 2003-2009 and 60% in 2010-2011. • Confirmation with modification is more variable: 9% in 2012; 26% in 2013 and 18% in 2014. • Whilst confirmation without modification remains more or less consistent, there appears to be a correlation between confirmations with modification and CPOs not confirmed/withdrawn. • This perhaps suggests that, where there is an objection to a CPO, potential outcomes may include: – modification of an Order as a result of more active scrutiny and/ or negotiation – “not confirmed” decisions where a CPO actively fails in the light of an objection – acquisition by agreement (with the CPO being either recorded as not confirmed or withdrawn). • 7% of CPOs in 2013 were recorded as “not confirmed”. This is consistent with 6% (2003-2009) and 8% (2010). • The 4% not confirmed in 2014 is slightly below average. 14% in 2012 is above average. Figure 5 indicates how Housing CPOs were determined in 2012- 2014. The key points to note include: • Success rates for Housing CPOs are consistently high. • Annual total confirmations 2012- 2014 (both with and without modification) are 90%, 89% and 80%, respectively. • Confirmations without modification (76%, 80% and 69% 2012-2014) (including those referred to the Acquiring Authorities for determination)3 are all higher than averages for previous years for which data is available: 62% (2003-2009), 61% (2010) and 68% (2011). • Confirmations with modifications (14%, 9% and 11% 2012-2014) were with one exception all lower than previous years’ data: 19% (2003-2009), 15% (2010) and 12% (2011). • The increase in confirmation without the need for modification and concomitant fall in the percentage of CPOs confirmed with modification may indicate improvements in the technical standard of Orders and increased familiarity with the statutory and policy requirements. • The annual totals of CPOs not confirmed in 2012-2014 were 3%, 6.5% and 7%, respectively. The latter two years were slightly higher than both the 5% average over 2003-2009, and 4% and 2% in 2010 and 2011, respectively. • The 3% of Housing CPOs withdrawn in 2012 and 2013 contrasts with 10% (2003-2009), 18% (2010) and 16% (2011). In that respect, the 10% of withdrawals in 2014 is more in line with the historic pattern. 3. As per the powers contained in s.14A Acquisition of Land Act 1981 10 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary 11 We have undertaken an extensive exercise requesting information from Acquiring Authorities as to if and how CPOs were implemented. Following confirmation, there are a number of potential scenarios that may apply, including: • Immediate acquisition by implementation of the CPO (by means of General Vesting Declaration (“GVD”) and/or Notices to Treat) – of all or some land comprised within the CPO; or • Acquisition by agreement notwithstanding that the CPO has been confirmed; or • Delay in acquisition – postponement of implementation; or • The CPO is never implemented. There are some caveats attached to these data as set out in the main report. Responses ranged from fully completed answers to all questions together with additional details and analysis on the one hand, to refusal either to acknowledge that the authority had made any CPOs or to decline to supply any data on the grounds of confidentiality on the other hand. Moreover, the incomplete nature of many responses reflects the somewhat varied nature of an Acquiring Authority’s “corporate memory” of the reasons why CPOs were undertaken and the outturns of the process. There is presently no statutory or other obligation on Acquiring Authorities to keep a register of CPOs made and/or confirmed or indeed to record the outputs of the process. We consider that whilst there would be benefits from a statutory obligation to keep a register of CPOs made and their respective outcomes, these would not necessarily be proportionate to the costs involved. However, as a matter of best practice, Acquiring Authorities may wish to keep such a record or register and may wish to complete a brief “lessons learned” report at the conclusion of the CPO Effectiveness of CPOs – Implementation by Acquiring Authorities process reflecting on how the CPO proceeded and identifying any best practice issues relevant to future use of CPOs. Figure 10 indicates that, as practitioners may expect, a GVD is the most common way of implementing a CPO. There is clear evidence that the majority of CPOs have been implemented by means of GVD, Notice to Treat or a combination of the two. The responses received indicate that 70% of Planning CPOs and 77% of Housing CPOs have been confirmed by means of the formal, statutory process. In addition, it is interesting to note that responses indicated that in 8.8% and 6.6 % of Planning and Housing CPOs, respectively, possession was obtained by agreement notwithstanding that a confirmed CPO was in place. These figures perhaps need to be treated with some caution, however, and are deserving of further analysis. (i) GVD (ii) Notices toTreat/ of Entry (iii) Combination of (i) and (ii) (iv) Agreement (v) No possession taken (vi) Unknown Planning 51.8% 2.6% 11.7% 8.8% 11.4% 13.6% Housing 69.1% 1.5% 6.2% 6.6% 8.8% 7.6% Figure 10: Method of implementation of Planning and Housing CPOs 2003-2014 The main report indicates how CPO usage is spread across local authorities. In broad terms, CPO usage continues to be spread widely but thinly. Many authorities use CPO powers, but do so sparingly. In particular, it has been relatively unusual for an authority to make more than one Planning CPO annually. For example, in 2013, 31 separate Acquiring Authorities submitted Planning CPOs. Of those authorities, 26 made a single CPO in that year. In comparison, in 2014, 40 separate authorities submitted Planning CPOs, of which 28 made a single CPO in that year. Acquiring authorities are more likely to make multiple Housing CPOs. By far the most prolific user of Housing CPO powers was Burnley BC which in 2013 made 21 Housing CPOs and in 2014 made 14. Burnley has used Housing CPO powers extensively as part of its Vacant Property Initiative (“VPI”). This initiative was particularly active in 2006-2009 and latterly in 2013 -2014 and has been used to address long-term vacant property as part of a targeted approach to housing market renewal. It is understood that around 70 properties have been subject to compulsory purchase in this way. Those acquired have been refurbished and sold, thereby bringing the properties back into use. Proceeds of sales were recycled back into the VPI. In line with previous reports, regionally London and the North West consistently have the highest totals of both Planing and Housing CPOs made. The main report also contains details of the time taken to determine CPOs. It will be little surprise to practitioners that opposed Orders take longer to determine than unopposed Orders. For example, opposed Planning CPOs take three times as long as unopposed Planning CPOs to be determined; and opposed Housing CPOs take between two and two and a half times as long as unopposed Housing CPOs to be determined. 12 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary 13 Reasons why some CPOs fail – Secretary of State decisions 2009 – 2014 By definition, CPOs are site specific. Moreover, each CPO stands or falls on its own merits. The onus is squarely on an Acquiring Authority to demonstrate that there is a compelling case in the public interest for compulsory acquisition and any Acquiring Authority commencing compulsory purchase is well advised to remind itself of the Secretary of State’s requirements in Circular 06/04 (currently being revised). We have analysed each case in which a Planning or Housing CPO has been not confirmed 2009-2014 and details of those cases are set out in the main report. Detailed analysis of the reasons why those CPOs failed or are not confirmed, are set out in the main report under the following headings: • Enabling power and objectives • Technical deficiencies • Procedural issues/Withdrawal of Order • Housing CPO evidential burden • Deliverability/Financial Viability/ Alternative Scheme • Acquisition by agreement • Failure to demonstrate need • “Not confirmed”/“Withdrawal” by consent. The reasons that are generally applicable to all CPOs include: • Technical drafting errors. There are some notable examples set out above. Moreover it has become apparent through more detailed analysis of correspondence between NPCU and Acquiring Authorities that errors persist, especially in the preparation and making of Order Maps which therefore, at the least, require modification. Acquiring Authorities should therefore take care to ensure that the Order and Map are prepared in accordance with the statutory requirements. • Use of wrong powers. This is rarely an issue with mainstream Planning and Housing CPOs. However, it can produce difficulties either where there is uncertainty about the nature of a proposed use and/or it does not fall neatly within a given power of acquisition. Cases that have caused difficulties included public open space, nature reserve, cemeteries etc. • Alternative solution not requiring compulsory purchase. An Acquiring Authority should consider whether there is an alternative approach stopping short of outright compulsory acquisition. For example, where the issue of public access and/or use of land for recreation is required can it be achieved by means of an appropriate access arrangement? • Failure to demonstrate that all the land included in the CPO was needed. This can be a consequence of a lack of certainty about the scale or design of the underlying scheme. Among the specific reasons why Housing CPOs failed were: • The Owners demonstrating (new or renewed) commitment to works or renovation. • In “evenly balanced” cases, and notwithstanding previous lack of commitment to works or renovation, the personal circumstances of Owners may carry considerable weight. • An Acquiring Authority’s failure to have in place delivery mechanisms for the carrying out of works or renovation, such that the Secretary of State may conclude that it remains speedier to afford the Owner an opportunity to implement his own scheme. Taking the combined totals for columns (i) – (iv) in Figure 10 represents a positive answer to whether implementation took place in respect of 75% of Planning CPOs and 83% of Housing CPOs. In addition, upon closer inspection and enquiry it appears that some responses stating that no possession was taken in fact have been in circumstances where in fact acquisition by agreement had occurred. Those figures therefore also require further examination. The unknown responses reflect gaps in the database. If the “unknowns” are discounted, the figures are 88% of Planning CPOs and 90% of Housing CPOs being implemented by the statutory method or by agreement in the light of a confirmed CPO. Figure 11 reflects an attempt to get to the heart of the question as to the extent to which Planning and Housing CPOs result in the delivery of the intended underlying scheme. 31% of Planning CPOs have resulted in completed schemes together with 25% of schemes being described as in progress. In comparison, 50% of Housing CPO schemes have been completed, with 11% being in progress. Where schemes are described as “not yet commenced”, that indicates that it is still envisaged that there is a likelihood or intention to carry out the scheme. In contrast, the “not undertaken” column reflects those schemes that will no longer happen or are unlikely to happen. Around 16% of Planning CPOs and 20% of Figure 11: Schemes undertaken pursuant to Planning and Housing CPOs 2003-2014 Not yet Commenced In progress Completed Not undertaken Unknown Planning 14.9% 25.4% 31.1% 15.7% 12.9% Housing 8.1% 11.1% 49.7% 19.6% 11.5% Housing CPOs are “not undertaken”. From the responses received, it appears likely that in terms of Housing CPOs, some Orders where the scheme has not occurred have, however, resulted in outcomes that were not anticipated at the outset, for example, by way of sales to third parties or otherwise, and have thereby delivered an alternative scheme. Figure 11 reflects initial analysis of the responses received. It is hoped that more detailed analysis will be undertaken in due course. 14 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary 15 This report was prepared by Frank Orr with assistance from Jonathan Bower, Antonia Murillo, Planning CPOs in turn failed for Kate Ashworth, Frances Everett and Will Budge. specific planning-related issues including: • The poor track record of delivery by an Owner notwithstanding, if the Owner could demonstrate renewed commitment to a scheme benefitting from planning permission, the Secretary of State may give weight to such commitment. • Failure of an Acquiring Authority satisfactorily to demonstrate that its proposed scheme was financially viable, either in whole or in part. • Failure of an Acquiring Authority to demonstrate that compulsory acquisition was needed at that present time or why redevelopment within a specific timeframe was a matter of urgency. • Non-conformity with adopted planning policy framework. • Existence of planning impediments, for example, the absence of planning permission, listed building consents or resolution of highways issues. • Failure of an Acquiring Authority to meet the tests in Circular 06/04 particularly failure to engage with objectors and to seek to acquire by agreement. • Absence of updated evidence base establishing quantitative need for scheme. 16 Bond Dickinson LLP Compulsory Purchase Orders 2003 – 2014: Summary www.bonddickinson.com Authorised and regulated by the Solicitors Regulation Authority for legal work. 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