High Speed Rail (London - West Midlands) Bill - High Speed Rail (London - West Midlands) Bill Select Committee Contents


6  The Need to Sell scheme and compensation

Compensation schemes

107. There are essentially two types of compensation on offer to those affected by the railway: the existing statutory compensation provisions and a discretionary package. The discretionary package was delayed because the consultation on the initially proposed package was found to be defective in a 2013 High Court decision.[28] [29]

108. The latest discretionary compensation package was launched on 16 January 2015 and we were briefed on it by the Promoter on 19 January 2015.

DISTINGUISHING COMPENSATION CASES

109. Those people whose land is required for the building of the railway, and who are compelled to move, are entitled to the full, unblighted market value of their property, together with moving costs including stamp duty and a 10% home loss payment. Those who wish to take advantage of the Exceptional Hardship, Need to Sell or Voluntary Purchase schemes, and who have some element of choice in whether to move, do not receive such moving costs, or the home loss payment.

110. Many are understandably aggrieved at this. The cost to the public purse of paying a premium together with moving charges and stamp duty to those not compelled to lose their property would be considerable. We recognise that some distinction should be drawn between those who can be forced to move and those who choose to do so. Furthermore, compensation schemes should avoid incentivising sales, thereby creating more community blight than already exists. Having regard to that, and to the balance that must be struck between the interests of potential compensation claimants and those of the taxpayer, the Government's position is not unreasonable.

111. That said, a number of property owners will face situations so adverse, despite their property not actually being required for the railway, that their degree of choice will be minimal. The Promoter recognised in the April 2014 decision document on consultation[30] that special cases exist, and counsel for the Promoter confirmed that these are intended to be part of the overall scheme.[31] Examples, we believe, include those whose properties will be particularly close to or surrounded by long-term construction activity. The Homeowner Payment Scheme assists some in that category. In a limited number of further such special cases we believe the Promoter should offer an element of extra compensation, although not such as to equate their cases with compulsory purchase cases. We want to know how many applications have been made for special case compensation and how many have succeeded.

Previous 'Exceptional Hardship Scheme'

112. The Exceptional Hardship Scheme, replaced in January 2015 by the Need to Sell Scheme, was intended to permit those substantially adversely affected by the project to sell the home they had lived in to HS2 Limited if they were unable to sell it with urgency on the open market, without substantial discount, and would thereby suffer exceptional hardship. We heard a lot about experience of this, including the high proportion of rejections, and the perception that the scheme placed excessive evidentiary demands on applicants. Joe Rukin of Stop HS2 described it as the 'Exceptionally Hard to Get Scheme'.[32] Ultimately, there were 152 successful applications and 361 rejections, representing an approximately 30% success rate.[33]

113. Evidence from Sandy Trickett, senior caseworker to Dan Byles MP, suggested that up to six weeks' work could be involved in preparing an Exceptional Hardship Scheme application:

    We're talking about bank statements, all building society accounts, pensions wherever possible, every sort of income that's coming in, every bit of outgoing, to the nth degree. It's very, very intrusive and a lot of elderly people don't feel comfortable sharing that detail. They think it's a real intrusion.[34]

    She told us that the complicated application forms had resulted in fees of several thousand pounds being charged for assistance with completion.[35]

114. We heard about an applicant who was refused despite having taken a job involving a six-hour commute from Warwickshire to Hampshire.[36] That kind of case is unacceptable.

New 'Need to Sell' Scheme

115. The Need to Sell Scheme which has replaced the Exceptional Hardship Scheme is intended to be more accepting, and it should be. It requires a "compelling reason to sell" which the guidance notes explain covers those who will face an unreasonable burden if they are unable to sell. Urgency is not a condition.

116. We want the scheme to extend in practice to those having a justifiable reason to move, including those motivated by their "age and stage" in life. The desire to release capital to assist family members is one such motivation, and there will be a wide range of others. It is right that applications be supported by appropriate evidence, but to recognise the trauma experienced by some applicants the evidential requirements should be less onerous. Some humane discretion is called for.

117. For example, there should be a mechanism whereby those in areas of particular blight can avoid the need repeatedly to approach local estate agents for evidence of inability to sell. We have written to the independent panel charged with assessing Need to Sell applications, inviting them to work from a set of assumptions on inability to sell in certain such areas. The application materials should be amended so that evidence of estate agents' outright refusal to market is a clearly stated alternative to obtaining valuations. There should not be any need to provide extensive financial data where the grounds of application do not justify it

118. We have asked that HS2 write to everyone whose application under the Exceptional Hardship Scheme was rejected, inviting them to consider applying under the new scheme. We have also sought information on how extensively the schemes have been advertised. Rejections under the new scheme should endeavour to help applicants consider how to make a successful further application rather than take a negative approach. HS2 Limited should improve their approach to helping applicants.

119. The new scheme must allow successful applicants the choice of whether to pursue sale or other options such as the Alternative Cash Payment. At present, the time limit for exercising a successful application is three years. Re-applications thereafter should be considered with understanding and without undue process provided genuine reason to move remains. The scheme's requirement for a "compelling reason to sell" should not be interpreted so strictly that it is effectively open only to those who have decided that they must move soon, and not those who are only genuinely considering it. We believe that a sensible approach on this can lead to a greater number of established residents deciding to stay.

120. We expect the independent panel to tell us and the Secretary of State if they feel that their terms of reference constrain them to make what they believe to be unfair decisions.

121. On 28 February 2015, Dan Byles' caseworker, Sandy Trickett, sent us a dossier of cases of alleged procedural defects in the valuation and compensation process. We have heard from Jeremy Lefroy MP about similar matters.[37]

122. The dossier raised several matters. One was inconsistency between grounds of refusal for a sequence of applications under the Exceptional Hardship Scheme. The first applications were refused on one basis, with other grounds accepted. Later applications were refused on the basis of the previously accepted criteria. There may have been changes of circumstance, but if not this inconsistency cannot be right and requires investigation.

123. Another issue was the lack of an adequate expedited process in cases of terminal illness. The new scheme must rectify this. We expect urgent applications to be considered urgently.

124. A further issue was that of alleged defects in valuation procedure, including inadequate surveying, inadequacies in comparative valuation and alleged intransigence over appropriate valuation amounts.

125. In addition, there was the issue of the questionable sensitivity with which certain applications had been handled.

126. There is a case to answer on these matters. On the face of it, some of what has happened was wrong and unjust, and we are concerned that it may be symptomatic of an approach being adopted across the whole route. We do not intend to expose individual cases to public examination, but we have written to the Government asking for a report back.

Phase Two cases

127. Compensation for Phase Two matters is not strictly a matter for us, but we accept that our decisions on Phase One compensation might have some consequences for future Phase Two petitioners. We heard a number of petitioners who are located close to the currently proposed Phase Two route; many of them from Staffordshire. Two Staffordshire Members of Parliament, Sir William Cash MP and Jeremy Lefroy MP, also addressed us.[38]

128. Unsurprisingly, we heard that there are blight issues despite the Phase Two route not having been finalised. The uncertainty deriving from the lack of a defined route has probably increased the extent and longevity of blight. Phase Two is at present covered only by an Exceptional Hardship Scheme which is essentially the same as the similar such scheme which operated for Phase One. Applicants under this scheme are experiencing many of the problems that Phase One applicants endured. Some 45%[39] of applications have succeeded—higher than for the Phase One scheme, although not overwhelmingly so.

129. The Promoter told us that the scheme is designed to avoid generalised blight.[40] Whilst we accept this up to a point, we believe that the greater gestation period of the Phase Two project is imposing heavier burdens on property owners even than for Phase One. We do not wish to see a growing number of people taking significant cuts to the value of their homes if they are compelled to sell or have to sell urgently.

130. For that reason, the incoming Administration should make an early decision on whether to proceed with Phase Two and, if it decides to proceed, quickly finalise the Phase Two route. As soon as possible thereafter, the Promoter should implement a Phase Two Need to Sell scheme. In the meantime, the efficiency, effectiveness and equity of the existing Exceptional Hardship Scheme could usefully be reviewed.

Going forward

131. A substantial proportion (10-15%) of the cases we heard should be capable of being addressed through a properly working compensation scheme. This should alleviate much of the stress and hardship we heard about. The Select Committee cannot assess the working of the new Phase One Need to Sell scheme without evidence of how well it is working, however. We encourage petitioners who have a wish to move or to be able to move to apply or at least prepare to apply under the Need to Sell and/or other schemes before coming to the Select Committee. We expect that our successor committee will monitor outcomes and seek reports back.

132. We would like the Promoter to try to consider and find an equitable way to deal with cases such as:

·  property owners who did not apply under any scheme but who have already sold at a substantial discount owing to blight (for example, the Strachans (794), the Normans (760) and the Edwards (1049)), taking into account whether the Promoter adequately notified potential claimants at the time (on which point we have sought a report back) and the degree of choice available to the owners;

·  property owners who did not apply under any scheme and who sold at a discount, but who die before they can pursue recourse;

·  widows or widowers whose wish to sell arises from the death of their former spouse (or partner).

133. Consideration should take into account whether people in the first two categories listed in the previous paragraph could and perhaps should have applied under the Exceptional Hardship or Need to Sell schemes. So that people who have applied are not disadvantaged, there needs to be some recognition that applications under those schemes should be the primary means of redress. That recognition could take the form of a rebate to take into account that a claim might not have succeeded.

134. We want to see the Need to Sell Scheme working—effectively and fairly—long before the end of the Select Committee process. We want a progress report in time for the recommencement of the process after the general election. Applicants may have to accept some element of detriment, but there must be substantial improvements. A primary aim of the scheme must be to give many residents the confidence to stay, ensuring continuity and coherence within their communities. We have not ruled out the possibility of directing implementation of a property bond scheme if such improvements are not forthcoming.


28   R (on the Application of) Buckinghamshire County Council and Others -v- Secretary of State for Transport, 15 March 2013 Back

29   Railways: HS2 Phase 1, Standard Note SN316, House of Commons Library, February 2015 Back

30   Department for Transport, Property Compensation, Consultation 2013 for the London - West Midlands HS2 route: Decision document, Cm 8833, April 2014 Back

31   Oral evidence taken on 23 February 2015, para 510 [Mr Mould QC (DfT)] Back

32   Oral evidence taken on 25 November 2014, afternoon, para 190 [Joe Rukin] Back

33   https://www.gov.uk/government/publications/hs2-phase-one-exceptional-hardship-scheme-applications-statistics  Back

34   Oral evidence taken on 20 November 2014, paras 350-352 [Ms Trickett & Ms Clutten] Back

35   Ibid. para 364 [Ms Trickett] Back

36   Ibid., para 370 [Ms Trickett] Back

37   Oral evidence taken on 3 March 2015, morning, paras 202-203 [Jeremy Lefroy MP] Back

38   Oral evidence taken on 2 March 2015 para 274 [Sir William Cash MP] and oral evidence taken on 3 March, morning, para 195 [Jeremy Lefroy MP] Back

39   https://www.gov.uk/government/publications/hs2-phase-two-exceptional-hardship-scheme-applications-statistics  Back

40   Oral evidence taken on 2 March 2015, para 250 [Mr Strachan QC (DfT)] Back


 
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Prepared 26 March 2015