INDEX

Subject Page

(At 4.16 p.m.)

THE CHAIR: Good afternoon, everybody, and welcome to this afternoon’s meeting of the High Speed Rail (Crewe – Manchester) Hybrid Bill Committee. We are this afternoon receiving a briefing on land compensation – well, land and compensation. So before we start, I’ll just say we’re obviously aware there’s a lot of slides here so if I can in a positive way encourage you not to speak to everything that perhaps is written on the slides, we will be able to obviously read them. They are being presented on the screens here. So I’ll commence by asking Tim Mould to kick us off, please.
MR MOULD KC (DfT): Thank you very much. Yes, to my right, is Michael Eckett. He’s a chartered surveyor. He’s the head of acquisitions at HS2 Ltd and I think 25 years’ experience in the profession, in property, land compensation and compulsory purchase. So he’s going to take you through the presentation.
THE CHAIR: Thank you. We may jump in and ask questions throughout.
MR ECKETT: Please do.
THE CHAIR: So you’re aware. Thank you. Michael?

Evidence of Mr Eckett

MR ECKETT: Thank you very much. So this afternoon I’m going to provide you with an executive summary comprising the main principles of the assessment of compensation for people with an interest in land, whose land is acquired or possessed by the promoter. I will then take you through the acquisition powers and policy, the statutory compensation, which you will hear referred to as the compensation code, and then, to finish, I will take you through the package of property schemes the Department for Transport has put in place to protect those living close to the proposed route from generalised blight.
Compensation is a key component of the Bill and is obviously a subject of significant interest to those who are affected by the proposed railway and you will hear a number of petitions on this topic from people who do not fit the criteria for a scheme, or do not like the timing of payments, or want to remove certain land from the Bill.
The entitlement to compensation and the amount affected parties are entitled to is set out within the compensation code. This is a mix of legislation and case law that dates from about 1845. I am occasionally asked by affected parties and, believe it or not, some of their practitioners to provide a copy of the code but there is no single document. It is complex but based on some important principles which you will have heard from Mr Mould in his opening statement.
The fundamental principle of compensation is that of equivalence. Compensation is there to put the claimant in the same position they were previously in so far as money can. They are to be no better off nor any worse off as a result of the compulsory acquisition. The benefit of the code is that it provides consistency and is the same basis and approach adopted by the promoter across all phases of the route. The code is also the basis of compensation used by local authorities, national highways and utility companies, all who have compulsory purchase powers.
As I said, compensation can be complex and, occasionally, it is necessary for disputes to be determined by a third party. The appropriate place for disputes to be determined is the Upper Tribunal (Lands Chamber). This can be expensive and time consuming and the promoter is a keen advocate of alternative dispute resolution—I will come on to that a bit later.
MR MOULD KC (DfT): Perhaps I ought just to say that during the course of your sittings, you may hear people talk about the Lands Tribunal. It’s the same thing as the Upper Tribunal (Lands Chamber).
MR ECKETT: Yes. I will also cover Scotland in part as the promoter takes powers to acquire land in Annandale to construct a maintenance depot.
The Bill, in terms of this presentation, does four things. It seeks powers to acquire land and to construct the Phase 2B works. The Bill when enacted will give outline planning consent for the proposed works. It identifies the land to be acquired. This is done by reference to the plans accompanying the Bill and are referred to as land within limits. The promoter can only acquire land inside those limits and has no powers to acquire land sitting outside the boundary drawn within the plans or set out in the schedules to the Bill. The Bill incorporates existing law on compulsory purchase processes and the existing law on compensation, as I say, which I’ll refer to as the compensation code.
Next slide.
MR MOULD KC (DfT): Can we just pause for a second, just while people read this one?
MR ECKETT: Yes.
THE CHAIR: You can continue.
MR MOULD KC (DfT): Thank you. Can you just tell us please, Mr Eckett, what’s the strategy for assembling land for the purposes of the Phase 2B project?
MR ECKETT: Sure. So, from experience, we’ve developed and improved the way we go about acquiring land and that’s learning from Phase One and Phase 2A. So the intention is to put in place what we know as an integrated land possession plan and that seeks to marry the requirements of the project, and the requirements of the people that construct the railway, and those that are affected.
What we seek to try and do is, through engagement and communication with the affected parties, to understand the business that they are operating and how we can go about acquiring land in the particular sequence that minimises the effect upon them and also to serve as few notices as possible. That has the benefit of providing the landowner with certainty. It also provides them with the highest amount of advance payment as early as possible so that they can actually mitigate the impact on their businesses and, as I say, also providing us with the land that we need when we need it.
MR MORRIS: Mr Eckett, could I ask a question or seek some clarification?
MR ECKETT: Sure.
MR MORRIS: When we were on the site visit, the first one from Crewe, and we looked at some of the major projects, my understanding was that the offer for some of those properties that were to be acquired was 120% of the value. How does that square with the basic principle of equivalence?
MR ECKETT: Sure. So, when we were on the site trip, what we saw were a number of properties that the Secretary of State already owns through the use of statutory blight where people have asked him to acquire properties. What we’re talking about here is where we’re going to serve compulsory purchase notices on other parties—on those where we don’t already own the land. And whether you have a blight notice or whether you are subject to a compulsory purchase notice, you’re entitled to the market value of the land and then loss payments, which can be up to 10%. So for those that are owner occupiers, they can get to 110%, okay? And we’ll come on to some of the detail later.
MR MORRIS: Okay, thanks.
MR HIGGINBOTHAM: Can I just check? When you’re talking about acquiring land, there’s clearly two ways you could do it. You could build in flexibility by acquiring quite a lot early on and then disposing once you know you don’t need it or you could go for a very minimalist approach and potentially have to acquire later. It looks like, from the third bullet point, you’re saying it’s the former. It’s acquire quite a bit and then dispose later. Is that right?
MR ECKETT: Yes, so that’s through engagement with landowners. What we did on Phase One was very much serve multiple notices for a just-in-time land delivery to the contractor, and that placed the greatest uncertainty on to the landowner and therefore made it very hard for them to plan and reorganise their businesses. So we’ve now come up with this integrated approach which tries to marry the interest of both sides and what that will have the impact of is acquiring a lot of land up front, early doors, which may mean that we acquire more than we need, and then that any surplus land will be sold off under the land disposal policy. But, as I say, that benefit is the landowner gets a significant advance payment early to enable to reorganise and reconfigure their business.
MR HIGGINBOTHAM: And could that landowner buy back the old land? Could they, in theory, make a profit by selling it?
MS MUMBY-CROFT: They get offered it first, don’t they?
MR ECKETT: There’s a phasing to this. So, initially, we’ll serve the notices and if the contractor doesn’t need all of it to start with, there might be the possibility that we would lease it back to the landowner to continue using it, if they can make economic use of it, and then when we take possession of it and finish our works, that’s the point at which we will then look to dispose of the land and, as you say, it’s under what we know as Crichel Down and, if it hasn’t materially changed, it would be offered back to the landowner and there are other exceptions that we’ll come on to.
MR MOULD KC (DfT): We’ve actually just had the slides run on a couple of slides out of order because this provides the answer to the question. So just pause while people read that. We’ll go back then.
So, Mr Eckett, you mentioned Crichel Down a minute ago, which members of the Committee will know is a very longstanding policy, being in existence, I think, since the early 1950s. And the first two bullets on this slide – is this right – they encapsulate the core basis for the Crichel Down rules as they’re called?
MR ECKETT: Yes, they do.
MR MOULD KC (DfT): Yes, and we can see that there are a number of exceptions to that policy in its application to HS2 and we can see at the bottom of the page that there’s a variation on that policy in relation to land in long-term agricultural use, which is intended, I think, to be of benefit to the former owner.
MR ECKETT: That’s right. That’s a development through discussions with interested groups on Phase One and 2A where, if land is in long-term agricultural use and will stay in long-term agricultural use, then we won’t take the argument that it’s materially changed and that it will be offered back to the original landowner.
MR MOULD KC (DfT): I think it’s also worth— just to root this in context for the Committee’s future sessions—the question you raise about the policy on land acquisition, buying and assembling the land on a precautionary basis or leaving it until just in time – that is an issue that is going to be raised by petitioners. I think the National Farmers’ Union, for example, has a particular position on that. So it’s worth having in mind that, to some degree, what we’ve just been discussing is controversial before you, yes.
MR ECKETT: So temporary possession and use. Work sites are typically required for a number of years but are not generally required permanently for the operation of the railway.
THE CHAIR: Only the railhead for example, yes?
MR ECKETT: Yes, the one we saw in Ashley. Yes, sir. Where it’s practical and economic, the Secretary of State may be willing to take that land temporarily, should the landowner request. Where work sites are required for, say, a couple of years or for a small utility diversion, it would be economic for him to take the land temporarily. But for main construction compounds, or such as the railhead in Ashley that we saw, which are required for a much longer period, it is unlikely to be economic to take them temporarily and the promoter will acquire them permanently, and the same goes for any sites that have got development potential. It tends not to be economic to acquire it temporarily.
MR MOULD KC (DfT): Can you just explain why that is?
MR ECKETT: So, what we do is we engage with the landowner and we do a cost-benefit analysis to work out what would the cost of land be to occupy it temporarily for the period of the works and then compare that to the cost of acquiring it and then selling it once it’s surplus at the end. And the economics, from experience, tells us that if a site’s got development value, it tends to be more economic for the Secretary of State to acquire it permanently.
MR MOULD KC (DfT): It goes to the value of deferred profits, effectively.
MR ECKETT: Yes, yes.
MR MORRIS: There’s a petition to make that a permanent acquisition, wasn’t there?
MR ECKETT: Say again?
MR MORRIS: That particular one, the railhead that we looked at.
MR ECKETT: So our approach would be to acquire it permanently, given the length of time that that is going to be occupied. But, as I say, it’s a site-by-site judgment that’s made by the Secretary of State and on the slide you can see there the factors that he will take into account when making that judgment.
THE CHAIR: But that would still be offered back to the original owner under the land disposal policy, would it?
MR ECKETT: So the first judgment we would make is whether the land is materially changed. So if the rails are being removed and it’s going back to agricultural land at the same level that it is today, then it’s unlikely to have been materially changed and would be offered back to the landowner.
THE CHAIR: Because, of course, when we did the HS1 visit we saw the old railhead site, which is now back as working farmland, isn’t it?
MR ECKETT: Yes, yes. There are other exceptions, though. So it’s not the case in Ashley but, if you were putting a work site together from multiple landowners and there was some benefit in selling that land pooled together, that might be an exception, which you then wouldn’t lend it or sell it back to the original landowner.
THE CHAIR: Okay.
MR MOULD KC (DfT): Shall we go on?
MR ECKETT: What we’re going to show you is a plan that is an illustration of the types of plans that you will see presented to you in evidence and it also shows the balance of needs to deliver the railway. So the purple land shows the extent of the railway or what we refer to as the trace. You will see on this particular slide – this is of nowhere particularly on the Phase 2B route; as I say, it’s for illustration – but it has a turnout like the features that you do see on this railway for the future provision of NPR or services to Leeds, and you’ll also see that in purple is things like the autotransformer station and balancing ponds which are part of the permanent railway infrastructure.
On this particular slide, there are multiple shades of blue. I think that’s just the way it’s coming across on the screen and there is only one shade of blue, which is the land that has materially changed and there is a need to manage that change or for the change to be maintained. This might be a new wildlife habitat that has been created or a new replacement woodland. This land can be potentially returned to the original landowner if they agree to maintain the habitat in an appropriate way.
The yellow land is likely to –
THE CHAIR: Sorry, when you say ‘returned’, does that mean sold back to them then—disposed back to them?
MR ECKETT: Yes.
THE CHAIR: So what would be the advantage for somebody? I’m trying to think why would somebody want to purchase back land they’d previously made a living off to maintain as a habitat? Would there be an incentive for them to do so and why?
MR ECKETT: So it’s intended that we would pay them some money in order to maintain that to the required standard and then, from a farmer’s perspective, they can get grants and other opportunities for having land that’s in environmental stewardship that isn’t used for agriculture.
MS MUMBY-CROFT: How long would you tie that in for then, if they had to make that agreement?
MR ECKETT: Initially, we’re thinking of 10 years and the mitigation management agreements are being discussed at the moment, but the original thinking is 10 years. We’ll see how it goes, how that relationship is working, whether the landowner is putting sufficient investment in place and then look to renew it if it’s working well for both sides.
THE CHAIR: Thank you.
MR ECKETT: As I say, the yellow land is likely to have been a laydown area or used for construction, but has not materially changed, so it can be restored to agricultural use and potentially sold to the landowner under Crichel Down. The railway shown on this diagram is partly on embankment and the green shows the landscape earthworks that can be returned also to agricultural use and then you’ve got a utility diversion shown in red. But it goes to show, as I say, the complex matrix of the parcels of land that we need to acquire to deliver the railway.
MR MORRIS: Presumably it’s conceivable if the railway bisects an existing set of fields that the farmer, the original owner, might think, ‘Well, access is too awkward’. Would he then sell that on to an adjacent landowner or an adjacent farmer who could better cultivate those agricultural fields that have been returned?
MR ECKETT: Henry, can I just move on to land acquired in part? To address that question, where we acquire part of a landowner’s field or farm, they are entitled to the value of the land that we acquire but they are also entitled to the depreciation in the value of land that they retain, either because it’s been severed or in some way would be affected by the operation of the railway and that’s called severance and injurious affection. We would seek to try and mitigate that as far as we could through the provision of accommodation works, which is new fence boundaries or new access gates, new access roads across a farm, but if the accommodation works couldn’t be delivered and the landowner wants the project to acquire it then there are statutory mechanisms for the landowner to ask the promoter to acquire the retained land and then we would do that at market value. And we’ve seen that a lot on Phase One actually, where the landowner has not been able to economically farm what’s retained and has asked us to acquire it.
MR MOULD KC (DfT): Now we’ll go back to slide 10, I think. We’ve finished with the map.
MR ECKETT: What we’ve done is put together a farmers’ and growers’ guide because there is lots of provisions within our information papers and code of construction practice that impacts on farmers and growers and, therefore, to put it into a single repository where they get ease of reference and that is an iterative document that again has been improved upon from our experience on Phase One and Phase 2A. It also sets out how we will go about the engagement and, as I say, communication with the landowner, in order to minimise, insofar as possible, the impact we have on their land holdings.
MR MOULD KC (DfT): And we have a slide that just sets out some basic components of that guide. So if we move on to slide 11, and we just pause for a minute whilst we take this one in.
And is there anything you want to add?
MR ECKETT: Yes. So, whilst the powers to survey land will come on Royal Assent, we have an extensive programme of geological investigation and environmental surveys that we want to do early in order to maintain the programme and therefore we seek, initially, to try and get access to land by agreement and we have quite a large proportion of the route under our control, if you like, to be able to do those surveys because those agreements have been successful. Where we don’t have agreement for whatever reason, we can’t reach an agreement, then we would use powers under the Housing and Planning Act to be able to enter on to land to do those surveys.
MR MOULD KC (DfT): I think we’re going to move on now, Mr Eckett, to a short overview of the compensation code. So we’ll move to slide 13 and a summary, I think, of the topics you’re going to cover.
MR ECKETT: That’s right. There is a different set of rules for parties who have land acquired and those that don’t but nonetheless are impacted in some way by the railway. So I’m going to start by covering the position in the code for those that have some land acquired or where we occupy part of their land.
MR MOULD KC (DfT): That’s slide 14.
MR ECKETT: There are six rules governing the payment of compensation and the most popular are rules 2 and 6, which I will cover, and then rule 5. Okay? So, as I said earlier, people are entitled to the market value of the land that we acquire for the scheme and that disregards any increase or decrease in value resulting from the scheme. So we work on the basis that the scheme has been cancelled and therefore there’s no depreciating impact on their land when we assess that value.
The landowner is also entitled to pool their land as they would do in the open market. So if it was a farm and it would be more valuable to be split into certain lots, they are entitled to lot it in an advantageous way and we would pay the higher amount of compensation, reflecting that lotting. They are equally able to benefit from planning. If there is planning consent in place or there is a likelihood of getting planning consent for higher value uses then they are able to benefit from that but there needs to be a consistency in terms of how that land is valued. So if it is valued on the basis of development, and they would need to vacate in order to achieve that development value, we then also wouldn’t pay disturbance compensation on top. Okay?
Rule 6 is that disturbance compensation and that is how the landowner gets equivalence in that it covers costs that they need to incur in vacating the land and acquiring other property from which to carry on their business or enterprise.
MR MOULD KC (DfT): We’re going to come on to some examples of that in a minute but shall we just deal with rule 5?
MR ECKETT: Yes. So the code has had to develop a way to deal with properties where there is no market value. So a property such as a church, which are not readily traded in the open market – you can’t ascertain the market value and therefore we have an alternative way of dealing with it, which is called rule 5 or equivalent reinstatement, and that is the provision of a replacement asset at the promoter’s cost. So the way to probably look at this is: if you had a cathedral building but there was only a congregation of five people within that, then it would be our responsibility to re-provide a place of religious worship for five people, not the physical asset that you might see. Okay? And there have been a number of examples of this on Phase One and 2A in terms of specialist schools, places of religious worship, sports facilities and clubs of that nature.
MR MOULD KC (DfT): Thank you. I’m now going to turn, with that, to a slide we saw a minute ago. So unless there’s anything you want to add, we’ll go onto disturbance, yes. Slide 17.
MR ECKETT: So, people displaced from land are entitled to disturbance compensation and that is the costs that are incurred that are a direct and reasonable consequence arising from the compulsory acquisition. They are entitled to acquire alternative premises, so fees and stamp duty. What we don’t pay is the cost to buy the new building or land. So they’re expected to use the proceeds of the value that they’ve been given for the land acquired in replacing the asset and that’s termed value for money. And the party dispossessed must act in a reasonable manner and mitigate their losses.
MR MOULD KC (DfT): So those are the principles and then we go on to the next slide with one or two typical examples. Slide 18.
MR ECKETT: Yes. I wasn’t going to dwell on this other than to bring out the point I’ve already brought out, which is that you get the cost of seeking suitable alternative premises but not the value of the alternative premises you acquire and then the promoter also pays the reasonable legal and surveying fees for the affected party to be professionally represented.
The next slide on statutory loss payments covers the addition of the 10% that I talked about earlier. So if you are an owner occupier of a residential property, you are entitled to a home loss payment, which is equal to 10% of the market value, up to a maximum of £78,000 and a minimum of £7,800. That is reviewed periodically and the last time it was updated was 1 October last year. For other properties which aren’t main residences, the freeholder is entitled to a basic loss payment of 7.5% of the market value up to a maximum of £75,000 and occupiers get 2.5% of market value up to a maximum of £25,000, and there are alternative means of assessing the occupier’s loss payment, depending on whether it’s agricultural land or just bare land without a building on it. And those are the rules specifically for England.
THE CHAIR: Could somebody have access to more than one of those?
MR ECKETT: Yes, so if you imagine –
THE CHAIR: As the occupier, the freeholder and the resident, I could potentially get 120%.
MR ECKETT: So in a circumstance whereby you’ve got, say, a 300-acre agricultural holding with your main residence as the farmstead, you could get your home loss payment in relation to the farmstead and you would carve out of your farm, effectively, the garden and landscaped area that you enjoy with the house. And then the business element – the enterprise element for the farmland – you could get the basic and occupier’s loss in addition, yes.
MS MUMBY-CROFT: Can you get the 10% of market value on more than one parcel of land if you owned two separate pieces on the route?
MR ECKETT: Yes. If we serve multiple notices, you can get a loss payment per notice.
MS MUMBY-CROFT: Okay.
THE CHAIR: They can’t get the home loss payment and the basic loss payment.
MR ECKETT: They could. So you could get the home loss payment over the farmstead and then the basic loss over the extra, over farmland.
THE CHAIR: Yes.
MR MOULD KC (DfT): But if it’s just a case of a dwellinghouse being acquired, you get the home loss payment, don’t you?
MR ECKETT: Yes, yes.
MR MOULD KC (DfT): So it’s only in those composite cases that you’ve just described that you’d have a broader entitlement, yes.
THE CHAIR: So the occupier’s loss is for a business occupier or for a tenant farmer or something like that.
MR ECKETT: Yes, that’s then occupation, yeah. Some people feel that, because this is a payment effectively for the inconvenience, some people feel that the percentages are the wrong way round because it’s the occupier that’s having to leave their enterprise or business that goes through the most disruption. But we apply the percentages as they are laid down at the moment within the compensation code.
MR VICKERS: Can I just take you back to the example you gave a minute or two ago about the cathedral?
MR ECKETT: Yes.
MR VICKERS: Let’s not assume a cathedral but a very substantial parish church – I don’t know – perhaps with a Saxon tower and going back to the 12th century or something. Yes, you can demolish that and replace it with a meeting place suitable for the congregation but, of course, the demolition of that building affects the character of the whole area and therefore the value of neighbouring properties. Would there be any compensation or right of redress in some way for that loss of value?
MR ECKETT: Again, so the first point to say is, when you get rule 5 equivalent reinstatement, you’re not entitled to a loss payment. So the church itself wouldn’t get a loss payment. That’s the first thing to say. The other thing to say is, if we’re acquiring the neighbouring properties with the church as an outlook and you value those properties disregarding the scheme, you’re taking into account, in the value, the setting of those properties and therefore reflecting the fact that they have that outlook and they’re a part of that community. Okay?
If those properties are not required for the scheme and we’re taking out the church, they can either avail themselves of some of the discretionary schemes that we’ll come on to, or they’re in the regime of compensation where no land is acquired, which we’ll come on to. So it’s quite complex, depending on the specific circumstances.
MR MOULD KC (DfT): Can we just be clear? Does the scheme involve powers to demolish any churches?
MR ECKETT: Not of the type described, no.
MR VICKERS: If it was a 1960s construction, which perhaps the locals would be glad to see the back of.
MR ECKETT: We do acquire, particularly around Manchester, some sort of third sector facilities where they are used for places of religious worship, but they’re more in the nature of an industrial building than a Saxon church.
MR MOULD KC (DfT): So the impact on character and community point, in the sense that I think you meant, would probably not be quite so –
MR VICKERS: Very much less, yes.
MR ECKETT: Yes.
MR MOULD KC (DfT): Thank you. We perhaps just ought to note – members of the Committee will, I’m sure, have picked this up – you see in the left-hand column there’s a reference to a minimum of £7,800 payment. That would be payable to any short tenant, wouldn’t it, who is displaced from their home.
MR ECKETT: Yes. So, if someone’s on an assured shorthold tenancy and they are displaced by the promoter, they would get the minimum of £7,800, yes.
THE CHAIR: But the owner of the property also gets the 10% home loss payment, or not?
MR ECKETT: In that circumstance, where you’ve got a tenant as the occupier, the freeholder would get the basic loss payment because they’re not in occupation. They’re not using it as their main residence.
THE CHAIR: Right.
MR MOULD KC (DfT): The critical trigger is the fact of displacement. So if you’re in occupation and you’re displaced, and it’s a residence, then you receive the payment on that account.
THE CHAIR: In occupation at what date?
MR MOULD KC (DfT): At the date on which the promoter takes possession of the property. So if your landlord serves notice to quit on you which requires you to leave six months earlier, you wouldn’t be entitled. There are some rules relating to the staggering effect of time but ordinarily it has to be dispossession in the exercise of powers under this Bill that is the operative cause of your having to leave your home.
THE CHAIR: So if the homeowner gives notice to the tenant before that point, the homeowner who doesn’t live there, so the landlord rather, just still gets the basic loss payment.
MR MOULD KC (DfT): Because they lose the property, yes.
THE CHAIR: Or if they move in the day before.
MS MUMBY-CROFT: So it would be in their interest to do that, wouldn’t it?
MR ECKETT: Well, to claim, you have to have had that interest for 12 months preceding.
THE CHAIR: So, you have to have been a resident for 12 months.
MR ECKETT: Yes.
THE CHAIR: Right, okay, fine.
MR MORRIS: This differential between freeholder and leaseholder or freeholder and tenant – that’s established in the –
MR MOULD KC (DfT): The source of the rules, you mean.
MR MORRIS: The compensation code.
MR MOULD KC (DfT): Yes. The Act of Parliament which establishes the current regime for loss payments in England is the Planning and Compulsory Purchase Act 2004, which made changes to the previous Act, which was the Land Compensation Act 1973. So these are firmly rooted in general legislation. The only thing that changes periodically are the values of the payments when they’re expressed in monetary terms. So those numbers that you see on the screen, £78,000 and £7,800, are increased periodically through statutory instruments.
THE CHAIR: Just to be clear on this – sorry, this is just labouring through this – but if I am the tenant and not the owner, I get the £7,800.
MR MOULD KC (DfT): If it’s your home and you are displaced, by virtue of the exercise of the powers under the Bill, from your home, then you will receive the minimum of £7,800.
THE CHAIR: But why would I get 10% of the market value if I’m not owner, if I’m just the tenant?
MR MOULD KC (DfT): If you own a tenancy that is valuable in itself, so if it’s a long tenancy, say it’s a long lease, and the value of that lease is more than £78,000, so 10% of the value of your tenancy would exceed £7,800, then you would receive that higher value. The reason I think that we’re emphasising for these purposes the minimum payment is that it’s important, as a matter of context, to recognise that this statutory payment extends to any person who has a right of tenancy, however short it may be, subject to the 12‑month minimum period.
THE CHAIR: Yes, I get that, but most people are on either an automatic renewing tenancy, a short-term tenancy or maybe a year or two. So how do you assess the value of my tenancy for a year if I’ve got three months left to run on it at the point the notice comes?
MR MOULD KC (DfT): Would that kind of tenancy tend to have a value or not?
MR ECKETT: That would tend not to have a value and therefore that’s where the minimum comes in.
THE CHAIR: So that’s where minimum £7,800 comes in, okay.
MR MOULD KC (DfT): Okay.
MR ECKETT: I just wanted to go on to the regime in Scotland, which is much the same but the rates are different. The home loss payments in Scotland are a maximum of £15,000 and a minimum of £1,500 and there is a slightly different regime for assessing the value. If you’re in a farm, you get a farm loss payment which is equal to the average annual profit.
THE CHAIR: What’s the history of the difference? Because it’s quite a difference, £1,500 to £7,800.
MR ECKETT: So, as I understand it, that is a matter that is devolved and that is the current status of the position in Scotland.
MR MOULD KC (DfT): So we move on then to some procedural matters on the next slide, slide 21.
MR ECKETT: So the assessment of compensation is made at the valuation date. This is generally the date that the land transfers from the owner to the promoter. For a blight case, it could be the date of agreement or the date that that is determined and in certain cases the valuation date is the date that the promoter takes entry on to the land where it uses a notice to treat as opposed to a general vesting declaration. Both of those are mechanisms on how the interest is transferred to the promoter.
The affected party is entitled to an advance payment. It used to be the case that the first payment of compensation the claimant received was on the date they gave up possession, but that has recently changed and now the position is that an affected party can claim compensation and be paid the advance payment two months after submitting a fully particularised claim or the later of the date that they receive a compulsory purchase notice.
So the new mechanism gives claimants money in advance, before they actually have to move and therefore they’ve got funds to help them in their relocation. And then any money that is outstanding, that’s not paid with the advance payment, earns interest at a statutory rate, which is prescribed at 0.5% below base. So, with the base rate today being at 4%, statutory interest is accruing at 3.5% on the outstanding sums of compensation.
I won’t go into the next one because I think we’ve covered short-term tenancies and the entitlement to compensation, unless you think otherwise, Tim.
MR MOULD KC (DfT): No, no, I think that’s right.
MR ECKETT: And then I’ll just touch on disputes. Experience tells me that by far the majority of cases are resolved by agreement but, occasionally, it is necessary either for the case to be referred to alternative dispute resolution or to the Upper Tribunal.
THE CHAIR: Just on that, so I’m getting my 10% of market value as the owner and occupier and I’m still unhappy. Do I have a right to go to use the tribunal or go through a –
MR ECKETT: Yes, yes. So the amount that you can refer to the tribunal is your market value, the amount of the disturbance, the amount of the loss payment and the amount of fees together with any injurious affection or severance that you might be entitled to. So any of those matters could be referred to the tribunal.
THE CHAIR: But the resolution to that couldn’t be I could get more, other than arguing that the market value on which you’ve based that figure is incorrect and I bring evidence to you which suggests that this is the market value.
MR ECKETT: Yes, yes.
THE CHAIR: I can’t just appear because I’m unhappy with 110%.
MR ECKETT: No, it would be necessary to present –
THE CHAIR: To prove some additional –
MR ECKETT: Both sides would need to provide evidence to support their case, yes. The promoter is a keen advocate, as I say, of alternative dispute resolution because it provides, or often provides, a cheaper and quicker resolution of matters and it has produced guidance, which has recently been updated, and it offers four types of alternative dispute resolution.
So mediation is a process whereby an independent person will bring the two sides together, and seek to identify the areas where they agree, and try and work a mechanism how they can resolve the outstanding items. It does not provide a determination that helps the parties to get to that position.
Expert determination, in contrast, is a third party making the determination, which is generally binding on the parties, and it would be a position invariably between the parties’ estimates.
Early neutral evaluation is a relatively new form of ADR in which an independent person or group, depending on the issues in dispute, so it could be a lawyer, forensic accountant or compulsory purchase specialist, or a group of those individuals, would give a non-binding view of the case that they have heard and that would then be a plank, if you like, for the parties to go away and reflect on the strengths of their case, and it can help in the resolution but it wouldn’t be a determination in itself.
And then we’ve also got the ability to refer small claims of less than £10,000 to the HS2 residents commissioner.
MS MUMBY-CROFT: Can I ask a question?
THE CHAIR: Yes.
MS MUMBY-CROFT: Who funds the alternative dispute resolution stages if they happen?
MR ECKETT: In the case of expert determination, we would go into that on the basis that each party pay their own costs and each party pay 50% of the expert’s costs. But you can agree with the expert that they will also make a determination on who pays the costs, depending on the performance during the expert determination. Okay? In the other examples, mediation, early neutral evaluation and the small claims to the residents commissioner, it is on the basis that it’s each party pay their own costs.
MS MUMBY-CROFT: Okay, thank you.
MR MOULD KC (DfT): Shall we go on to blight notices?
MR ECKETT: Yes. Safeguarding is fundamentally a planning tool and it protects the railway from competing development but what it does enable is a person sat within the safeguarding area, who has a qualifying interest, has the ability then to ask the Secretary of State to buy their property if the blight notice isn’t successful. The qualifying criteria is set out there and that is a core, really, of all of the discretionary schemes that we’ll come on to – has the same qualifying criteria. The Secretary of State may accept the blight notice or he can serve a counter-notice declining to purchase the land in its entirety or he can seek to only acquire part, and if we can’t reach an agreement on that, that also goes to the Upper Tribunal and similar provisions apply in Scotland. There’s a similar blight regime.
THE CHAIR: And land safeguarded for the scheme includes?
MR ECKETT: That generally is the land within limits. It doesn’t have to be. The safeguarding and the limits could be different. So generally the land that’s required, either temporarily or permanently, for the construction is sat within the safeguarding zone.
MR MOULD KC (DfT): It’s perhaps worth just saying that, in this case, the safeguarding which was applied to the route for the Golborne link, that safeguarding has been maintained by the Secretary of State and at the moment there’s no intention of removing that safeguarding. So those whose land falls within that, although the link itself is no longer to be pursued as part of the Bill – those who qualify on the basis of what you see on the screen will be able to continue to take advantage of the blight regime.
MR ECKETT: And just to bring that into context, we’ve acquired 53 properties to date on this section of the route under statutory blight.
THE CHAIR: But within the safeguarded land allocation, if I’m an occupier within that piece of land who’s going to be quite badly affected or is going to be affected, surely everyone’s going to serve a blight notice or are there plenty of examples of people quite happy to maintain their position?
MR ECKETT: We used to get a high volume of blight notices. Across all three phases of the programme, we would get five a week. That has significantly dropped off and I think people have realised that unless you have a life event, changing schools, changing jobs, and they’ve seen what’s happened to the east leg where the programme has gone out, they’re thinking that, actually, not necessarily – you don’t necessarily need to sell. You can continue to enjoy your property knowing that you could serve a blight notice at a later date.
THE CHAIR: And you can serve a blight notice up to completion or even afterwards.
MR ECKETT: So, in essence, the people that are in that safeguarded area are likely to be required for the railway. So what would generally happen is that the compulsory purchase notice then would overtake the blight notice.
THE CHAIR: I see. These are all houses or properties that are on land that’s absolutely going to be required.
MR ECKETT: Ultimately, yes.
THE CHAIR: And there’s no advantage, compensation-wise, in serving a blight notice or waiting for you to CPO. The compensation scheme is exactly the same and identical for both.
MR ECKETT: Yes.
THE CHAIR: Okay.
MR MOULD KC (DfT): Just to give a bit of context to the kind of issues that you are likely to hear from time to time, Mr Eckett, our experience I think is this, isn’t it, that the petitions around the blight regime tend to be from people who don’t quality, so they’re not occupiers? For example, they’re investment owners or they are occupiers of commercial premises where the rateable value of those premises exceeds the statutory limit and, from time to time, they petition the Committee to ask for a commitment to early purchase from the promoter. We try to resolve those kinds of issues by agreement but, from time to time, we’re unable to do so and you may find that one or two cases of that kind come before you.
THE CHAIR: If I own a property, I rent it out and I want to get out earlier, then?
MR MOULD KC (DfT): Yes, or I’ve got a thriving business which is in a property that has a rateable value of £100,000. I’d like to shift it and start again, free from the worries of HS2 and I’d like a swifter turnaround in that respect than I’m being offered at the moment by the promoter.
So shall we move on to the situation where no land is taken?
MR ECKETT: Yes. So, as Tim’s said in his opening statement, financial compensation is not available for disturbance resulting from construction of a project where that project is carried out properly in accordance with statutory powers and neighbouring properties have not been able to claim compensation unless the whole or part of the land is acquired, which we’ve discussed. Compensation is payable, though, under section 10, where the execution of the works under the Bill when enacted interferes with the landowner’s private rights and results in the diminution in the value of the retained land. And the type of rights that we commonly see is either a right to light that’s been interfered with or a right of way that’s been interfered with, and then that has an impact on the value. That’s the circumstances in which they can claim under section 10 and the compensation for that is the diminution in the value of land, and it doesn’t extend to disturbance compensation, loss payments or trade losses. Okay? So it’s a narrower regime.
THE CHAIR: Sorry to intervene again. So, for example, on our visit up to Crewe, the first place we went to was one of the ventilation shafts. The businesses around there are obviously going to be very heavily impacted by construction, potentially delaying – I think one of them was a – was it a transportation company or a delivery company? Anyway, say it’s going to delay their wagons in and out, that’s going to have a materially damaging impact on their business potentially. There isn’t any process of compensation for that.
MR ECKETT: So, I think there are two circumstances on that industrial estate that you’re talking about. So those that have a right of way – if they had a right of way over that road where we stood, that might entitle them to section 10 compensation for the diminution of value of the land.
THE CHAIR: It’s only if you take the right of way away, though, not interfering with it and causing delays.
MS MUMBY-CROFT: Also, that’s not a private right of way, is it, because that was a public road and it’s private rights of way, isn’t it, where that would kick in?
MR ECKETT: Yes, I don’t know whether it’s a public right of way or not.
MS MUMBY-CROFT: Yes, it looked like a road that one could drive down.
THE CHAIR: It looked like an adopted road, yes. Yes, it was a local authority adopted road. That was what it looked like.
MS MUMBY-CROFT: Yes, it’s private rights of way that are interfered with.
MR ECKETT: If it’s a public way or there are no rights interfered with, then there is no compensation for the impact of construction in terms of land compensation.
THE CHAIR: Is there loss of business compensation through other regimes?
MR ECKETT: We will come on to some of the discretionary schemes later that they may be able to avail themselves of –
THE CHAIR: So yes is the answer.
MR ECKETT: – in particularly atypical or special circumstances, depending on the nature.
THE CHAIR: Okay.
MR MOULD KC (DfT): We need to be clear. There’s no right. So if you have a business which is close by a major public works project and, firstly, no land of yours is taken and, secondly, no proprietary right of yours is interfered with, so your access on to the highway is unaffected –
THE CHAIR: Well, if you’ve dug my road up and I’m unable to get my goods in or out in the way I could before because of the work that is being undertaken by you, then I am being materially affected and my business is being materially damaged, potentially.
MR MOULD KC (DfT): This is one of the more difficult scenarios in what is already a difficult set of legislation. The law says that if, on analysis, the extent to which your route in and out of your premises, in and out of your gate, is affected in a way that is clear and distinct from the impact on users of the highway generally, then you may have a claim. So there’s a question of degree there which can cause real problems in the operation of the code.
Generally speaking, if you’ve got six months’ worth of roadworks outside your main gate, which means that for six months you have serious difficulties getting your lorries or your vans in and out, you probably will have a claim. But if the roadworks are taking place at the road junction 200 yards away, which means that, although you’re affected, you’re not really affected to any significantly greater degree than people who are driving around that area day to day in any event, you probably don’t have a claim. So this is one of those areas that is ultimately quite judgmental.
THE CHAIR: And on the former, is that through this process here, this section 10?
MR MOULD KC (DfT): Yes.
THE CHAIR: Not through the discretionary process.
MR MOULD KC (DfT): No, I’m focusing, as I say, on what you have as of right. What Mr Eckett is going to take you onto is a policy that the Secretary of State operates, known as atypical properties and special exceptional circumstances, where he has been willing, and has a policy of being willing, to look favourably on cases that are considered to be special or exceptional. But plainly that requires a decision by the Secretary of State, rather than being something you can go to court and say, ‘You’ve infringed my rights and I want compensation, please’.
THE CHAIR: How would you term that example you gave that would fall within this, potentially? Because examples given here are interference with the private right of way, which is obviously a private right, and a right to light, which again is a private right. How would you term that example for somebody who you said would be?
MR MOULD KC (DfT): If the access to your house is closed for a year, because a large trench is dug outside it, which means you can’t get inside it, you can’t get your car –
THE CHAIR: No, I understand that. I get the private rights of gaining access to my property. I’m talking about the business owner whose business operates off a public adopted highway which – for example, the ventilation shaft we looked at, as a possible – how would you term my right, if I’m that business owner who is affected for six months to a year, an extended period of being unable to access that public road without significant delays, and therefore a significant impact on my business? From what I think you said, Mr Mould, that is potentially a section 10.
MR MOULD KC (DfT): Yes.
THE CHAIR: So I’m just wondering, how is that termed, because the two examples given are private rights of way and people’s private right to light. So I’m wondering how that is termed.
MR MOULD KC (DfT): Oh, would you make it good, as it were?
THE CHAIR: Yeah.
MR MOULD KC (DfT): You would make the claim, either in advance or at the time when the interference began, and you would make the claim to the promoter, so in this case the nominated undertaker, and you would say, ‘You have interfered with my right of access to the highway. That sounds as in compensation under section 10, and I’d like to reach agreement, please, on the value of loss’. But I’m afraid I can do no better than to say whether the recipient of that claim – the nominated undertaker – would accept it or not would depend on their judgment of the circumstances. And ultimately the resolution of that dispute, if it couldn’t be resolved by agreement, would have to go to one of those routes that you heard about a few minutes ago.
But, as I say, I’m not going to shy away from it; it is one of those areas of the law of compensation which doesn’t have the kind of clear cut and clearly applicable rules that you might think it ought to have, which is why, 20 years ago, the Law Commission, when it last reported on the compensation code and the compulsory purchase code, recommended this was an area of the law that perhaps needed to be reviewed. We shall see whether that comes again in –
THE CHAIR: Twenty years later, it hasn’t been.
MR MOULD KC (DfT): Exactly.
THE CHAIR: It’s still quick in parliamentary terms.
MR ECKETT: I think it’s just worth saying, and Tim Smart will no doubt cover it, but that particular location, I don’t think the impact on those businesses will be as severe as –
THE CHAIR: No, no, I’m just using it as an example. I don’t know whether any of them have petitioned or what we’ll see with them. It’s just as an example of somewhere we were standing where it looked like there could be a big impact from a piece of work taking place for a very long period of time.
MR MOULD KC (DfT): It’s one of the reasons why, if I may say so, this particular promoter – I don’t know what happens with other major schemes – but this particular promoter looks very carefully at how it can minimise that kind of disruption. And you may find that some of the debate is about the extent to which commitments can be given in the form of undertakings and so forth, to give advance notice to seek to ensure that that kind of disruption is kept to the necessary minimum.
MR MORRIS: I was just thinking, Chair, you mentioned the first ventilation shaft from Crewe. Do you remember the second ventilation shaft, the 40-metre shaft?
THE CHAIR: Yes, those two houses.
MR MORRIS: Do you remember there was a kind of informal recreation area, and there was a terrace of houses and a business?
MS MUMBY-CROFT: Yes, there was.
MR MORRIS: If those properties were tenanted and the recipient of the compensation under section 10 would be the owner of those properties, would they still qualify under section 10 for noise disruption, from the vans and from the traffic movement?
MR MOULD KC (DfT): I think that was the point that Mr Eckett was making a few minutes ago. Compensation is not available under section 10 for disturbance from noise and the trucks.
MR MORRIS: Yes.
MR ECKETT: We’ll come onto that. There is compensation for those that have no land taken for the operation of the scheme, and that’s under part 1. And the first claim date for those people is 12 months after the operation of the scheme opens, so once the train is running.
THE CHAIR: I think Grahame’s point was about noise from construction in the construction phase. So unless they are a tenant whose tenancy has some value which can be determined, they wouldn’t receive compensation. Presumably, they wouldn’t receive compensation because they’d be a leaseholder, but the lease would have no value, if it’s a short term lease, for example.
MR MOULD KC (DfT): We’re in the field here, as we know, of people who are neighbours, if you like, of the works. And during construction, the law says quite categorically, provided that the works are being carried out – to use the legal jargon – with reasonable care and skill, you cannot claim compensation, monetary compensation, for the fact that you suffer from disturbance from construction noise, that you suffer from disturbance from light pollution, or whatever it might be. The policy of the law is that it’s reasonable to expect people who are affected in that way to accept it because the public interest demands that schemes which give rise, inescapably, to that kind of temporary – I use the adjective advisedly – that kind of temporary disturbance, to put up with it.
What the project is required to do – and this is where environmental controls and the compulsory purchase and compensation code interact –is to have in place a comprehensive regime of mitigation. And as you heard me say in opening, we have the code of construction practice; we have all the measures to control and mitigate the noise from construction. And that’s why, when you’re around London, looking at major construction sites, you see ‘we’re a considerate contractor’. We have our code of construction practice, just as major developers do for other developments.
THE CHAIR: I understand. You see, obviously, we’re coming at this from the point of view of Members of Parliament, representing our electorate, where we’ve all had cases of significant disruption for our residents and businesses, for which it may be only three months, six months, but we see things from that perspective of how do we help these people who are being impacted. And, of course, this is a much bigger scheme that’s going to go on for much longer. So you understand where our questioning and thinking is coming from on this. Martin?
MR VICKERS: Private rights of way can, in reality, become de facto public rights of way, can they not, by just general usage, as it were?
MR MOULD KC (DfT): Yes.
MR VICKERS: And I’m thinking of a particular case I had in my constituency a few years ago, where only one person in theory had got the right of way, but – I won’t say for time immemorial – but for as far everyone could remember, it had been a public right of way, and there was an endless dispute about this. I mean, legally, I presume, the only person who’s got any interest in this is the legal person with that private right of way, even though a neighbouring business, for example, could be affected by the closure, or closing off of, a private right of way.
MR MOULD KC (DfT): Yes. In terms of what we’re dealing with on this slide, the only person in your example who would potentially have a claim for compensation would be the owner of the private right of way. And, obviously, the scenario you envisage, which is where through long usage public rights have come into existence – for example, a footpath because people have been walking along it for 20 years or more – that wouldn’t displace the private right which pre-existed. They would simply come to sit alongside those. So the private right owner would, in your scenario, in principle have their claim under section 10.
And I should say, I very much take your point about the perspective that you take, and many people find it frankly very strange that the law doesn’t provide monetary compensation for disturbance. But that, I’m simply at pains to emphasise, is the policy of the law. And what the HS2 scheme does, along with other major works projects of a similar scale and intensity – what they seek to do is to mitigate, if you will, the rigour of the law in terms of the lack of financial compensation by ensuring that, as far as possible, they mitigate those effects, so that they are at least alleviated in that sense.
THE CHAIR: It’s taken me back to my land law classes from my LPC, so we’ll try and not get into one of those discussions. But we’ll try and move on. Last one, Antony, on this, I think.
MR HIGGINBOTHAM: Yes, I just want to be clear in my own mind. If we take that small strip of terraced houses in Crewe next to the vent shaft as an example, if they’re not entitled – they’re not in the compulsory purchase schemes or they’re not going to get that compensation – can they still apply to the Secretary of State for their property to be purchased anyway, because they’re impacted? Because I remember somewhere seeing that there was almost a – ‘I’m not directly impacted but can you buy my property anyway because I don’t want to live next to it?’ And separate to that question, irrespective of that answer, presumably they can still petition this Committee to say, ‘We’re not happy with the level of impact and the mitigations HS2 are proposing’, and so we would expect to see them. Is my understanding there right?
MR MOULD KC (DfT): On the second question, as to whether a property in that situation, which I understand to be very proximate to the works, and contending that the construction of that facility will give rise to a disruption to them – I’m not aware that there are any individual homeowners or tenants who have petitioned, but had they done so in that scenario, I think it highly unlikely that we would have sought to question their right to be here.
I think you’ll find that, if I remember rightly, there is a petitioner councillor – a local councillor, I think – who you’re going to hear from quite soon, who has raised certain concerns about the impact of that vent shaft. Whether she is raising noise disturbance from construction, I don’t know, but she’s certainly raising some concerns about open space. So that’s the second part.
The question you raised was about whether any of the non-statutory schemes would be. The answer, I think, is the only one that is likely to be of any potential relevance would be the so-called need-to-sell scheme. But if we are dealing with people who are in occupation on short tenancies, they wouldn’t qualify for that scheme. If they had a freehold, or they had a longer leasehold interest, which would be – what – in excess of three years, then they might qualify under that scheme. They would then need to show that, amongst other things, that they had what’s known as a compelling reason to sell, which might be because they need to move in order to take up a new job position, or because they had some particularly sensitive personal issues, such as, for example, a child with a respiratory ailment or something of that kind. But that, I think, is the only scheme that would potentially be available to them.
MR HIGGINBOTHAM: So, in that circumstance, someone on that group of houses goes, ‘I’m moving for work anyway, but I need to sell now, and there is a detrimental impact on the value of my house today’. Is that what we’re talking about?
MR MOULD KC (DfT): That would be the sort of scenario where the owner might then apply under the need-to-sell scheme. As Mr Eckett will tell you –
THE CHAIR: Only if they’re within the development land though, isn’t it?
MR MOULD KC (DfT): No, no, the need-to-sell scheme doesn’t have any geographical limit. It operates on the basis of a number of criteria. Shall we bring that up just to show them?
MR ECKETT: Yes.
MR HIGGINBOTHAM: That’s very helpful.
MR MOULD KC (DfT): I’m treading on Mr Eckett’s territory, which I shouldn’t do, but –
THE CHAIR: We’re just inquisitive.
MR HIGGINBOTHAM: That has answered my question.
MR MOULD KC (DfT): Well we’ll come back to that shortly in a minute.
MR ECKETT: The value would be disregarding the scheme, so it wouldn’t be a detrimental value they would get. They would get the unblighted market value if they were successful under that scheme.
MR MOULD KC (DfT): We ought to move on and I think we ought to emphasise, as we make the transition to the next slide, that we’ve been talking about the availability of compensation for those who neighbour the works, but don’t have any land taken during construction. Now we’re turning to operation.
MR ECKETT: So this was just to finish off a question I think we had earlier. So those neighbours that are impacted by the operational railway have the right to claim 12 months after the railway opens, and that is if the depreciation to the value of their property is called by a physical factor, such as noise, vibration, fumes or artificial light, as it says there.
THE CHAIR: Purchase isn’t an option under this scheme, is it?
MR ECKETT: This is the statutory position here. We’ll come on to the discretionary schemes very, very shortly.
MR MOULD KC (DfT): But the answer to your question is no.
MR ECKETT: I will cover very quickly the guidance, just say that there is guidance out there in addition to the information papers that we produce. The Department for Levelling Up, Housing and Communities produces its own guidance for affected parties as well as professional bodies like the RICS, and Central Association of Agricultural Valuers. And I think that takes us really, Henry, onto the non-statutory package.
So the Department has recognised that the scale and length of time this project takes to deliver – it has been necessary to go beyond the statutory framework, and it has a number of schemes that you will see there. And I think, once you just take that in, we’ll take you to the graphic that shows you the areas in which these things apply.
So what this graphic is trying to show is where the discretionary schemes are available. So if I start in the centre of the railway, and the centre of this image, you have the safeguarded area where people can apply to have their properties bought under statutory blight. In that zone, the Department has introduced something called express purchase that makes it slightly easier for those people to apply, and has softened some of the rules, which we’ll come onto. And that zone, from the centre line of the railway to the outer edge of the zone, is approximately 60 metres. Whilst this graphic shows very straight lines, in reality they aren’t as straight as you would see here because of that environmental corridor and utility diversions, and what have you.
Immediately beyond the safeguarded area, you have the rural support zone, and that broadly is from 60 metres from the centre line of the railway to the outer limit of 120 metres, where people within that zone can apply to have their properties acquired by the Secretary of State, and they simply get the unblighted market value. They don’t get the disturbance or loss payments. As an alternative to selling their property within that zone, they can also have a cash offer, which we’ll come onto. So if they don’t want to sell, as I say, they get a cash offer.
Outside of 120 metres, up to 300 metres, you have the homeowner payment scheme, which is three zones within that, again, of cash offers that will be made by the promoter, on Royal Assent, to homeowners. And then, as Mr Mould said earlier, the need-to-sell scheme is no geographic boundary. And that applies from 120 metres with no limit.
And we’ll just quickly run through each of those schemes with a little bit more detail. So, Henry, if we could go to express purchase. So the discretionary scheme called express purchase simply varies a couple of the statutory rules. So regardless of whether the property is needed to build the railway, as long as the property is fully within the safeguarded area, it’s not necessary for the owner to demonstrate that they’ve made reasonable efforts to sell, which is a requirement under blight. And also where part of a residential property is in safeguarding, express purchase will apply if part of the house itself is in safeguarding, or if 25% of the property is in safeguarding.
So it’s just a little bit of streamlining to make the process of selling to the Secretary of State in that zone easier for the affected party.
THE CHAIR: And, in that, I get the 10% potentially, don’t I, in this?
MR ECKETT: You get the market value and the disturbance and the loss payments that we talked about.
THE CHAIR: That’s express purchase. Rural support zone, then?
MR ECKETT: That’s within the 60 to 120-metre zone, and people in this zone have the same criteria that we looked at for blight, so three years. But here, there’s an additional criteria, which we refer to as ‘no prior knowledge’. So they’ll have needed to have owned the property prior to the announcement of the railway on 28 January 2013 and it needs to have been occupied for six months.
THE CHAIR: And in this zone, if it’s to sell, it’s just the market value, not at the 10%.
MR ECKETT: Correct. Equally, within this zone, they can take the alternative of a cash offer, which is 10% of the value of the property, subject to a minimum of £30,000 and a maximum of £100,000. And then the last bullet there is very much, if the property is worth £250,000, there’s just a streamlined way of getting the minimum cash offer. So we don’t have to do an inspection; it’s very much a desktop valuation that’s done.
The need-to-sell scheme, which as Tim said was boundless, has five criteria. It’s the same eligibility criteria as statutory blight, but the property, or the individuals within it, will need to be substantially affected by HS2.
THE CHAIR: Sorry to interrupt. Have we not missed out the homeowner payment scheme, the in-between one, because we’ve gone from rural support to need-to-sell. What about the homeowner payment scheme?
MR ECKETT: It’s just a different sequence. So the homeowner payment scheme is P4(37). So this is intended to allow homeowners in rural areas an early share in the benefits of the scheme, and they’re entitled on Royal Assent to a payment of somewhere between either £8,000, £16,000, or £24,000, depending on which zone they are in. And the ‘no prior knowledge’ equally applies here.
THE CHAIR: So the minimum payment in the rural support zone is £30,000.
MR ECKETT: Yeah.
THE CHAIR: And then in this, so we’re moving out, we’re then £8,000 minimum up to the £24,000.
MR ECKETT: So it goes £30,000, £24,000, £16,000, £8,000, as you move further away from the centre line of the railway.
THE CHAIR: And this is – sorry to get confused – in the rural support zone and the homeowner payment scheme, purchase is not an option. I just want to be really clear on this, right; is that correct?
MR ECKETT: In homeowner payment, purchase as a scheme is not an option, unless need-to-sell applies.
THE CHAIR: Right, okay, rural support zone?
MR ECKETT: You’ve got the option of selling or the cash offer.
THE CHAIR: But you don’t get the 10%.
MR ECKETT: Yeah.
THE CHAIR: Okay, right. It would be useful to have this on a little chart in some way, so you can compare them all, don’t you think? It’s a little bit confusing knowing exactly who in what section gets what and how. So I think if it was all on a graph or chart or whatever, a one‑page explainer, it would be really helpful.
MR ECKETT: Yes, we can pull that together for you.
MR MOULD KC (DfT): As a working rule – we’ll certainly do that – but as a working rule, you only get the 10% if you’re in statutory blight.
THE CHAIR: But it’s knowing whether you can sell, the compensation, and different amounts. Right, okay. So homeowner payments for this homeowner payment scheme, we’re clear on that. So need-to-sell.
MR ECKETT: That’s page 33. There are five criteria. As I say, the same eligibility criteria as statutory blight. There’s no fixed geography that you need to be substantially affected by HS2. You need to have made efforts to sell the property, without success, at a price – unless it’s at a price significantly lower than the unblighted market value. So you put your house on the market; if you only get very low offers, then that would satisfy this criteria. The no prior knowledge applies but you need the last bullet, which is a compelling reason to sell, so a change of job, divorce, some other reason why you need to sell the property.
And the applications are assessed by an independent panel who make a recommendation to the Secretary of State. As I say, where the application is successful, the purchase is at unblighted value only, no disturbance or home loss payments.
Then the Department have recognised that there will be atypical properties, or special circumstances of individuals, that don’t neatly fit within either the statutory regime or within one of the discretionary schemes, and have recognised the need for a different mechanism. So on a case-by-case basis, people can make an application under atypical or special circumstances. And the outcome of this can either be rejected; it can either be purchase at unblighted value only; it can be purchase with some relocation costs; or purchase plus the disturbance and home loss payments.
And I was just going to draw out two examples. So on Phase One we had a situation at Euston where there was a family living in a property overlooking the existing throat into Euston station, where the son suffered from chronic asthma, and medical advice that they procured and we obtained as well would indicate that the construction of the railway was going to have a significant impact on the health of the child. And in that case, it was accepted under special circumstances, because the very unique nature of the case. We paid the unblighted market value of the property, and also the special fitting out needed in the new property they were going to, to make it safe for the son in terms of his breathing.
THE CHAIR: So they otherwise may have applied through the need-to-sell scheme.
MR ECKETT: Yes.
THE CHAIR: But that would only have given them the market value of the house, whereas through this special circumstances/atypical, they received enhanced compensation, effectively.
MR ECKETT: Yes.
THE CHAIR: And just to be clear again, all these non-statutory packages, they commence at construction, or are they available now?
MR ECKETT: Homeowner payment is available on Royal Assent; the others are all available now.
THE CHAIR: Right.
MR ECKETT: The other example I was going to draw out of special circumstances atypical was a case in Phase 2B, where an individual had bought a property and during the acquisition process was completely unaware of HS2. He had planning permission to develop the property for a special needs residential accommodation and clearly realised pretty quickly that those plans were unable to come to fruition because of the scheme.
He applied under atypical special circumstances and we’ve agreed to buy that property early on full statutory blight terms because of where it was located. So that was an early purchase, effectively, because of the special circumstances that he found himself in.
THE CHAIR: And if the building of my house is in one of these zones, and my garden’s in the other, which one do I get?
MR ECKETT: So, if it’s express purchase, if any part of the property is clipped, you would be in express purchase, or if 25% of your property was in that zone, you would be within express purchase.
THE CHAIR: Express purchase is which bit again?
MR ECKETT: It’s a variation on statutory blight within the safeguarded area.
THE CHAIR: Right, okay.
MR ECKETT: Within the guidance, we do set out, where a property straddles particular bands, which band it goes in.
MR MOULD KC (DfT): In crude terms, you hope that your house is in the higher value of the bands – the actual building.
THE CHAIR: You need to know which one to apply to. I get that point. On the atypical, how do I apply to that then? Is that applied to just direct to the Secretary of State?
MR ECKETT: So Andrew Stephenson, when he was the HS2 Minister, did a review of land and property, and he made a number of recommendations. One of those recommendations was in relation to atypical special circumstances, as it wasn’t in his mind clear enough. So there is further guidance that’s been produced and examples of the types of cases where we have accepted them under atypical and special circumstances. And that guidance sets out how you would apply, which is effectively to raise the case with your case officer, or write in to HS2, and then we would find out the information, gather as much evidence, working with the claimant, as possible, and then we would present the case to the Department, and it’s decided upon by the Department.
THE CHAIR: I’m sorry to labour the point; I have to be very clear on things for me to understand them. To apply as an atypical property or special circumstance, I don’t have to be in any particular geographical zone, do I?
MR ECKETT: No..
THE CHAIR: It’s the same as the need-to-sell; it’s anybody.
MR ECKETT: Yes.
THE CHAIR: Okay.
MR MOULD KC (DfT): Just to root this in the context of your work, it’s this kind of case which is most likely to come to you on petition, because as you can imagine people who say they ought to be given some special treatment are often the most difficult to find a resolution to. And they’re the ones who may well have backed their application to the Secretary of State with a petition to you.
THE CHAIR: That’s what I was going to ask. So it’s possible for them to do both.
MR MOULD KC (DfT): Oh, yes, yes.
THE CHAIR: And if one resolves first, obviously the petition remains, but if we agree something in terms of the petition, and they get a better result from the special circumstances process, they can pick and choose which one.
MR MOULD KC (DfT): That’s certainly, in principle, correct, yes. The dynamic usually is, you can imagine, is this: that they will pursue their petition to you, if they’re not satisfied with the Secretary of State’s response, either because they haven’t had any offer, or the offer that they’ve had doesn’t, in their view, do justice to their special case.
THE CHAIR: So, how likely is it that we’ll have a petitioner who has a live application under this atypical and special circumstance section, or will that have been responded to ahead of the petition?
MR MOULD KC (DfT): Well, our aim will be to have responded to it in advance, so that the petitioner knows what they’re going to get from the Government, and can judge whether or not it’s worth their while coming to you and asking for more. But clearly it is possible that you may find that matters remain in negotiation to some degree. We will try and avoid that state of affairs because it’s not terribly satisfactory if you’re being asked, effectively, to mediate an ongoing negotiation. But I fear it has happened in the past and it may happen again.
THE CHAIR: Thank you. So rentback.
MR ECKETT: So all properties purchased by the promoter can be considered for rentback to the former owner provided the property complies with relevant standards and the costs of putting it into that standard aren’t prohibitively expensive. And then appropriate tenancies are offered, depending on the circumstances. We haven’t got them here but I can provide you with statistics of the number of properties that we have, and those that are rented back.
THE CHAIR: So you buy it off me and then you rent it back to me.
MR ECKETT: It’s an offer. So what we do find is people avail themselves of this scheme, because then they go into the market as cash purchasers, and then don’t have to have a complex chain.
THE CHAIR: So rent back for a short period.
MR ECKETT: Some do it for a short period for that reason; others have –
THE CHAIR: Equity released, effectively.
MR ECKETT: They then take a long-term lease from us, yeah.
MR HIGGINBOTHAM: Do they rent back at market rate?
MR ECKETT: Yes.
THE CHAIR: It’s effectively equity release. Okay, thank you.
MR ECKETT: I was just going to take you very quickly through how we ascertain the unblighted market value. So that’s a streamlined process. In statutory blight, the process is that two valuers – one for us, one for the claimant – present each other with evidence and negotiate. But a streamlined mechanism is there for the non-statutory schemes, and that is HS2 procure a valuer to produce a Red Book valuation. The claimant can choose a party to do a valuation. And then if the two valuations are within 10%, the average figure constitutes the offer.
If the two valuations are not within 10%, a third valuation is obtained, and then the closest two are taken, and the average of those, and that is how the offer is made.
THE CHAIR: That sounds reasonable.
MR ECKETT: We’ve covered homeowner payments and, therefore, the last slide, you’ll be pleased to know, is just about crop loss and streamlined residential blight. So, again, looking at the way that the schemes have operated and responding to feedback from stakeholders like the National Farmers’ Union and the Association of Agricultural Valuers, we’ve developed what we would refer to as a crop loss expedited payment scheme. Rather than a farmer submit evidence of what crop they had in the ground and the margin they were making, we take standardised gross margins for common crops, and it leads to a quicker payment for the famer.
And then under streamlined residential blight, the applicant can opt for the valuation technique that I’ve just described, because it’s quicker, and they can also apply for a fixed disturbance sum of £7,000, rather than having to incur the costs and then evidence what they’ve spent.
THE CHAIR: Okay, a bit confused here now. So we’ve got the normal blight process, then we’ve got express purchase, which speeds up the blight process. And then we’ve got the streamlined residential blight scheme. What’s the difference? Because you get the same amount with all of them, which is the market value plus 10% in the case of an owner occupier of a home. So why the three? I mean I get this is speeding up through the express purchase. What does this one do?
MR ECKETT: Part of it is the valuation, so it saves the two parties negotiating, which can take a long time for them to arrive at a figure.
THE CHAIR: How does it do that?
MR ECKETT: It adopts the non-statutory basis of appointing two Red Book valuers to produce a valuation, and then halving it if they’re within 10%. So streamlined residential blight opens up the possibility for the applicant to adopt that as the valuation method.
THE CHAIR: What’s the other method?
MR ECKETT: It’s a negotiated method. So the claimant submits their claim, together with comparables. Our agent would look at that.
THE CHAIR: Presumably on the basis of a valuation. Presumably, I’m the homeowner, you’re building a train through the middle of my bedroom, and I go out and get a valuation, don’t I? I don’t just come to you with a figure I’ve plucked out of the sky; I come with my valuation, don’t I?
MR ECKETT: The claimant will submit their claim. Invariably, it’s not based on a Red Book valuation in statutory blight. But this is a menu, if you like, of choices that the applicant can make, taking advice from their supplier, as to which way they want to go.
THE CHAIR: If I put my claim in under the other – not under this streamlined residential blight scheme, very helpfully termed – you’re going to fight me on the basis of a valuation, aren’t you, from a valuer?
MR ECKETT: Not a Red Book valuation.
THE CHAIR: What’s the difference?
MR ECKETT: It’s a marginal difference. In blight, we receive a claim, we appoint an agent, a property professional, to negotiate that claim, and they exchange ideas of value and of the comparables, and it is very much a negotiation.
THE CHAIR: And at no point in that anybody goes and gets an actual market valuation from a market valuer.
MR ECKETT: They might do to supplement their claim but it is rare. The alternative process is, you simply get two valuations and you halve them. There is no negotiation so it speeds up the process, if they’re within 10%.
THE CHAIR: The express purchase relies on the two valuers, two valuations.
MR ECKETT: Negotiated settlement, unless they opt for this –
THE CHAIR: How is that more express than the normal blight process then, because I’m now more confused than I was before?
MR ECKETT: The express purchase was an unfortunate term because all it does is take out two of the criteria from statutory blight. You don’t need to advertise the property and it has those criteria that if the property is clipped, or 25%, then we will acquire it rather than reject it.
THE CHAIR: It’s the ever so slightly more express purchase route. You should probably call it that. Antony?
MR HIGGINBOTHAM: Is there an independent team of people who help people impacted understand all of these schemes and come to a decision about which one applies, because I can imagine lots of people when they get that letter through the door that says, ‘Sorry, we need your house’, or, ‘Your house is within 30 metres of the high-speed rail line’, their stress level is already quite high. And then they get this whole smorgasbord of options to consider. Who is it that’s there to kind of talk of them through and go, ‘Right, this is what it would mean for you’? Because they’re not going to see all of what we’ve just seen.
THE CHAIR: We’ve acquired the greatest minds in Parliament for this Committee, and even we’re struggling. I hope that laugh, Mr Mould, was not a disbelieving laugh. I hope it was not one of disbelief. But it’s an important point that Antony’s asking: what is the support package to help residents access this, because a lot of people are going to be very confused. I know it’s already operating these schemes.
MR ECKETT: There is guidance out there. There are video tutorials online that we have produced to help guide people through it. But, equally, they can go to Citizens Advice, or there is a group of professional advisers that offer advice to affected parties up and down the line.
THE CHAIR: The worry would be in more affluent areas, or where you have households with perhaps more confidence in doing this – perhaps because of education or the jobs they do themselves – they’re more likely to know which is the best route for them to get them the best level of compensation, whereas people who are perhaps in less affluent areas, or perhaps lack the confidence to be able to go through this process, might end up losing out by accessing what they think is the quick scheme of, ‘Well this just gets it solved and I don’t have to go to the bother of finding a valuer’, and all the rest of it. And I think there’s a real risk there.
I don’t know how it’s panned out on Phase One, but I just think there would be a real risk that people could be disadvantaged.
MR MOULD KC (DfT): I think it’s fair to say – and we’ll check this with the guidance that’s given – that the starting point and the default position is, obviously, that we’re dealing with statutory blight, and that is a context in which people have statutory rights. Any owner-occupier whose house is subject to compulsory purchase, and who qualifies to serve a blight notice, is entitled to have the value of their compensation assessed in accordance with the statutory that Mr Eckett has pointed you to. And they’re entitled to go to obtain the necessary professional advice that they need in order to protect their position on that, and to recover the reasonable costs of having done so as part of their compensation.
Now plainly that implies, if someone decides that they’re going to put aside this streamlined scheme, and they’re going to go by the book, if you like, because they think that’s the only safe way of ensuring they get the full market value of their property, that implies that they’re going to have to spend some money upfront instructing a professional valuer, perhaps a lawyer, perhaps both, who can help them guide them through what is quite a complex process.
The project does make available money, as a matter of policy, to enable people to take initial professional advice and to cover the costs of doing that. There is an information paper that covers this and the project has now got a very mature scheme for providing people with, if you like, advance payment of professional and legal costs incurred. It’s usually capped at a certain level to ensure that it’s kept within reason from the point of view of the public purse. But I want to emphasise, if any particular person whose land is subject to acquisition and qualifies within the blight regime, if they wish to go through the established statutory process, then that is a choice that they are fully entitled to make. And none of these schemes is designed to chip away those rights. They’re designed, rather, to enable them, if they would prefer generally – in the interests of speed of getting a resolution, they’d prefer to go down this alternative route, it provides them with that option.
But they, of course, can say, ‘No, no, I’m quite happy to put up with the delay and the initial costs of going to agents because ultimately I want to make sure that the price that I get for my house, or my small business premises, or my agricultural holding, is a robust price that has been assessed’.
THE CHAIR: I think the point is, to be prepared to do that, and to have the confidence and sometimes perhaps even the financial capability or ability to be able to do that, varies via households.
MR MOULD KC (DfT): Yes.
THE CHAIR: And I think all of this only matters if there’s evidence that people generally receive a higher level of compensation through one route than the other, and I don’t know whether that’s the case. I think that’s what’s got us picked up, as people who obviously want to stand up for residents again and make sure that people aren’t being disadvantaged. So unless there’s evidence that one scheme provides less in terms of compensation than the other, then there’s not a problem. But I think we’re musing on it because we can see how it potentially could look like that.
MR MOULD KC (DfT): I mean, again, with a view to trying to reassure you a little further, you voice, if I may say so, a concern that has certainly been voiced on a number of occasions before previous HS2 Select Committees. And I think Mr Eckett touched a short while ago on the work done by Mr Stephenson, who was then I think the –
MR ECKETT: HS2 Minister.
MR MOULD KC (DfT): And one of the initiatives that he carried through not that long ago – I think it was just after the Phase 2A Bill had become law – was a view to making the arrangements for compulsory purchase and compensation much more focused on those affected. And HS2 Ltd is certainly charged with applying these statutory rules and these policies in a way that seeks to make life easier for the recipient. And obviously part of that is you have to be alive to the fact, as you say, that some people have got sharp elbows, some people can look after themselves, some people are much less able to do so, through no fault of their own, but just because they’re not used to dealing with this situation.
So what I will do is – it may be that it would be helpful to you if we were to provide you with a little more detail on that when we supply you with the matrix you asked for a few minutes ago.
THE CHAIR: I think that would be useful. I mean these schemes are all outwith the Committee, outwith anything we can do, but obviously now we’ve been alerted to it, we’ve obviously got those questions. Just to conclude on this portion, and I think we’ll make an end –
MS MUMBY-CROFT: Just for a wider understanding, if we could see some anonymised examples of some of that first contact with people who are affected, and how much information is on that literature about access to advice, and where they get that advice from. It would just be interesting to see that.
THE CHAIR: That’s a really good point, I think, if we could see some examples of the communications that goes out to somebody who’s affected by, you know, or served a notice by you. We haven’t actually seen any of that. So it would be interesting for us to see that.
MR MOULD KC (DfT): Yes.
MS MUMBY-CROFT: As Antony said, when your stress levels are up –
THE CHAIR: Yes.
DR CAMERON: And just, if there’s sort of amendments or adaptions you make for people who have special needs who you might be writing out to, who perhaps require to be communicated with in other ways, to make sure that they fully understand what’s happening..
MR MOULD KC (DfT): Yes, of course, we’ll prepare a note for you which covers those points.
THE CHAIR: I mean people who are coming to see us as petitioners have had a considerable amounts of correspondence with you in all likelihood, so it will be interesting to see some examples of what that correspondence looks like, just to inform us better when we meet these people, I think – when we meet petitioners, rather.
MR MOULD KC (DfT): Very happy to provide that.
THE CHAIR: Anything else?
MR MOULD KC (DfT): No. Thank you very much for bearing with us.
THE CHAIR: No, thank you. I think that’s been really – Members, no more points? – informative for us. Obviously, we’re coming at it new, so understanding how all these schemes operate is quite complicated. But that has actually been really useful for us. Mr Mould, Mr Eckett, thank you very much. And we’ll draw the Committee to a close there.