The “compulsory purchase code” – the statute and case law encapsulating the myriad rules and traditions of compulsory purchase – is arguably 170 years old this year, with the Lands Clauses Consolidation Act 1845 still surviving on the statute books.
The chancellor announced in the Autumn Statement that the government would be consulting on changes to the “outdated” compulsory purchase system at the time of the 2015 budget.
The Law Commission thoroughly reviewed the compulsory purchase system and in 2003 and 2004 provided a reformed blueprint. This proposal should largely be adopted.
The UK compensation system is often criticised for not paying a premium to hasten settlement of claims. In fact it does, albeit in a limited way, through loss payments. These payments add up to 10% to the compensation payable, which seems like an attractive solution, but in practice 10% uplift gives both parties 10% more reason to dispute the compensation. A generalised uplift is not going to lead to a faster, fairer system.
Relocating a business or moving home is expensive. The law currently allows for an advance payment to help affected parties. There is no penalty if the authority does not make a payment. A system is needed so that the affected party has some redress if no payment is made.
The interest payable on compensation between the time a property is taken and when compensation is paid is set by statute at 0.5% below base rate. As the base rate is 0.5%, the interest on compensation is 0%. Historically this is an unusual situation, but a lower limit should be imposed.
The fundamental concept in compulsory purchase ensures land owners get a fair land price not affected by the development scheme, and protects the taxpayer from being “ransomed” by land owners looking for a windfall profit. However, it is one the most complex elements of compensation assessment. The Law Commission proposed a clear definition of what the “statutory scheme” should be, which is consistent across land valuation and planning assumptions. This definition should be adopted.
Compulsory purchase is an onerous but necessary tool to deliver the regeneration, infrastructure and housing the UK needs. To make the UK compulsory purchase system a faster, fairer tool for delivering 21st century growth, we need to enact the Law Commission proposals.
Paul Astbury, director, GL Hearn
