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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