Earth Notes: On the UK CPO Consultation (2022)

Updated 2022-07-17.
UK central government is consulting on the operation of Compulstory Purchase Orders in England and Wales as will affect 16WW.
In the Cambridge Road Estate (CRE) redevelopment we risk having much of the less tangible value of our home (extensive energy efficiency works halving our energy consumption, garden front and back, street-level front-door, easy walking distance to two mainline train stations, busy town centre and many shops, green space and rivers) expropriated via the council who granted themselves planning permission, and handed to the directors and shareholders of their JV partner. The money likely to be offered to us as compensation would be unlikely to cover a similar property elsewhere to return us to a similar state to now. That is unreasonable and unjust. This is not about making money, it's about not being forced into a worse situation though no fault of our own...

I also care that the properties built in our place reduce fuel poverty and combat climate change, and won't need to be retrofitted in a decade or so. But that's outside the scope of this CPO consultation.

I may be missing the point that the consultation is seeking answers to. I may also be overly hopeful in imagining that responses may actually be read with a view to improving public benefit!

Green or not, given that 16WW and all its carbon-saving features will be trashed, it seems worth putting this on the record.

Response

Below is my response largely copy-pasted from the PDF emailed to me.

Some personal information is redacted, and a few typos/errors visibly corrected that were missed before submission. I pity the civil servant that will have to wade through those!

Submitted to Consultation on compulsory purchase - compensation reforms
Submitted on 2022-07-17 14:31:57
Respondent details

1a Please provide your details

Name:
Damon Hart-Davis
Organisation (if applicable):
Position (if applicable):

1b Please state whether you are responding as an individual or the organisation stated above

Individual

2 Please indicate whether you are applying to this consultation as a (select one option only)

Not Answered
If you selected 'Other' please specify:
Questions on further reform

3 Do you agree that there are schemes where capping or removing the payment of hope value will increase the viability of certain schemes and/or increase the public benefits delivered through the schemes?

Not sure

Please provide details and where possible examples of schemes:

All four combinations are possible (viability increased or decreased, public benefits increased or d[e]creased), Thus indeed it may make schemes viable on paper that overall have lower public benefit (ie by hurting some involved people more, and unequally).

4 Please provide any comments you may have as to the proportionality of capping or removing the payment of hope value balanced against the delivery of public benefits. Please provide any examples you have where you believe the public benefits would be such that it would be proportionate to impose such a cap or removal of hope value to a scheme.

Please provide comments:

An example: I live with my family in a home that is due to be CPOed as part of redevelopment to increase density on a local authority estate approximately threefold.

We risk having much of the less tangible value of our home (extensive energy efficiency works halving our energy consumption, garden front and back, street-level front-door, easy walking distance to two mainline train stations, busy town centre and many shops, green space and rivers) expropriated via the council who granted themselves planning permission, and handed to the directors and shareholders of their JV partner. The money likely to be offered to us as compensation would be unlikely to cover a similar property elsewhere to return us to a similar state to now. That is unreasonable and unjust. This is not about making money, it's about not being forced into a worse situation though no fault of our own..

The right to underpay us, so that we end up in a worse situation, may make the scheme more 'viable', but will hurt us more and the primary beneficiaries will be private not public.

At the very least this seems like a vast conflict of interest, which should be specially handled.

5 Do you have evidence of the extent to which hope value is currently claimed/paid generally in compulsory purchase situations?

No

Please provide details and where possible any evidence that you have as to whether hope value is more likely to be paid on particular types of schemes, for example from urban regeneration schemes to greenfield schemes or from housing schemes to transport schemes

I have discussed with lawyers and it seems clear that given an effective tripling of development value given the increased density, and the fact that the planning permission is already in the process of being granted, and the fact that the estate has been allowed to run down over many years, and the fact that at time of any valuation the place will be in the middle of a building site several years in, that fair compensation would be closer to the new development value to allow us to move to an equivalent property elsewhere, unencumbered. I have made clear to the local authority that we might accept a house swap under the right conditions, ie so that we don't 'profit' from any such action to allow the public good.

Note:

s323 LA 2011 inserted a new s14 into the Land Compensation Act 1961 and holds that if it could reasonably be expected that permission would be granted, then the valuation of the land proceeds not on the basis of hope, but on the basis of certainty.

Porter v Secretary of State viewed that a reasonable expectation is normally taken to mean at least a 50% chance, or at least the balance of probabilities. Therefore it could be argued that if there is a 51% chance of obtaining permission at the valuation date, then the reasonable expectation is that permission would be granted. Any uplift in value could therefore arguably be included in CPO compensation.

6a Do you think the public benefits of capping or removing hope value is more likely to arise in particular types of scheme?

Yes

6b Do you think any solution to this issue should be limited to particular types of scheme or apply across all types of compulsory purchase situations?

Yes

6c Please provide details in support of your answers to questions 6a and 6b

Please provide comments:

In the case I outline above, the conflict of interest in the local authority granting planning permission (an equivalent fragment of which I would have quite clearly been denied) to itself, in JV with a private organisation to which much of the extracted value will transfer rather than to the public good, seems to require special handling.

While I don't think that the subjects of CPO should be able to profiteer, neither should other participants such as the LA and/or their (private) partners. I have outlined above suggestions that I have made to our LA for a more equitable outcome preventing windfalls on either side. Individual CPO subjects should not be having to fight against this menacingly uneven balance of power.

(Some near neighbours will never be able to afford fancy lawyers, nor even be able to obtain a new mortgage to recover from such unreasonable action, for example.)

Questions on consultation proposal

7 Do you agree with the proposal to address this through the issue of directions for specific schemes as set out in this consultation?

No

Please provide comments:

(C)AAD should not be the only criterion for lifting compensation paid, since that avenue will only be known about by more sophisticated targets with good legal advice etc. Given my discussions to date with the LA and lawyers and councillors, I think that a fairer approach is putting people in as near an equivalent position as possible after the CPO, ie property with similar spec and amenities, without money necessarily changing hands, and avoiding the handing of acquired (eg development) value to (private) third parties rather than forming a public good.

8 Do you agree with the proposal that the directions could cap the payment of compensation at existing use value or at a percentage above existing use value (excluding the payment of compensation under other heads of claim)?

No

Please provide comments:

Because that may not achieve an equitable outcome. In this case land value is being approximately tripled and that excess can be siphoned off for third party private gain. The uplift to gain reasonable equivalence for the CPO target probably would not need to be all of that, but given market circumstances at the time (and the condititions under which valuations are made) it may need to be higher.

My suggestion is that any cap is based on the higher of (a) the usual "market+10%" formula increased development value and (b) whatever is needed to achieve reasonable equivalence as above capped at the development value.

9 Please provide any comments you may have as to: (1) whether it will be possible to identify certain, deliverable public benefits in applying for directions; (2) how it will be possible to link those public benefits to value captured.

Please provide comments:

10 Do you think that an acquiring authority should have to consult with affected landowners before seeking a direction from the Secretary of State?

Yes

Please provide comments:

Yes, in case of dispute with significant and reasonable grounds.

11 Do you agree that issuing directions should only be to schemes where the acquiring authority is also a public sector entity?

Yes

Please provide comments:

12 It might be possible for landowners to seek a planning permission so that development value applies under section 14(2)(a) LCA 1961 circumventing any cap applied under a direction. Do you think it should be possible for the directions to cap development value for any planning permission which falls under section 14(2)(a) where that planning permission is made after the “launch date” of the scheme or after the date the directions are issued if later? The launch date is defined by section 14(6) LCA 1961.

Not sure

Please provide comments:

I don't think that either the current landowner OR the putative acquirer should be able to make a windfall profit from the exercise of CPO powers.

13 Do you have any further comments as to how the process of seeking and issuing directions might work?

Please provide comments:

Question on alternative proposal

14 Do you think the proposals should go further and automatically limit the payment of hope value in compulsory purchase more generally or in relation to specific types of schemes?

Yes

Please provide details and justification as to why you think it would be in the public interest to go further and how the human rights considerations could be balanced in any different approach. Examples of types of schemes you think any further general application should apply to would also be helpful.:

I don't think that either the current landowner OR the putative acquirer should be able to make a windfall profit from the exercise of CPO powers.

My suggestion is that any cap is based on the higher of (a) the usual "market+10%" formula increased development value and (b) whatever is needed to achieve reasonable equivalence as above capped at the development value.

Question on the Equality Impact Assessment

15 Do you have any comments on the initial equality analysis?

Not Answered

If yes, please provide your views on the equality impacts arising from this proposal and any suggestions for how those impacts could be mitigated (please include any evidence you may have in support your views).: