Housing and Planning Bill Committee

WRITTEN EVIDENCE SUBMITTED BY BIRMINGHAM CITY COUNCIL (LEGAL SERVICES) (HPB 117)

COMPULSORY PURCHASE REFORM - HOUSING AND PLANNING BILL

Advance Payments Proposals

The Council believes there should, be no change to the main principal of these payments, and that they should only be made by the acquiring authority (AA) on or after taking possession of the land. There are a number of benefits to this:

i) A claimant’s loss will have "crystallised" at this point and it is a much better date at which to properly assess compensation. Prior to an AA taking possession a claimants loses may be minimal or the full extent of loss is not clear. In such circumstances only limited information can be provided or validated by the AA and so any advance payment being 90% of the AA estimate is likely to be low.

ii) Prior to the date of possession, a claimant could seek an advanced payment, but subsequently dispose of their interest prior to possession being taken by the AA. The AA is then put to additional cost and expense in seeking to recover such payments. There is a potential for fraud if a payment can be claimed in advance, or other abuse of process.

iii) Often it is not until after confirmation of a CPO that final funding for the scheme is approved. This is frequently the case with highway projects, but also in our experience of working with private sector developers, who request the Council to make a CPO on their behalf; such developers will not have final Board approval for all land acquisition payments until such time as they request the Council to make a general vesting declaration.

iv) There is always the possibility of the scheme for which a CPO is made not proceeding. Many schemes did not survive the 2008 crash and proceed to implementation, although CPOs had been confirmed for them. In such circumstances, if advanced payments are made prior to the schemes cancellation, that money is lost to the public purse, whereas if an advanced payment had not been compelled prior to taking possession, those funds may have been transferrable to other projects with a higher likelihood of proceeding.

v) I understand that there has been criticism of the advanced payment regime where local authorities do not make advanced payments in a timely manner; however I believe the proper response is not to change the date of when those payments are made, but to ensure there is a proper sanction against local authorities that do not comply with time limits. The Council supports the proposals in the bill to allow for this.

vi) The one exception could be where there is a genuine case for relocation and a genuine intention to relocate. However even in such cases Birmingham’s practice is to agree the making of interim payments and to ensure timely negotiation early on, so that a sufficiently long relocation period can be accommodated both to the start of the scheme, and to enable the party relocating to complete that process. The relocation of the Westley Richards Gun Factory was successfully carried out to facilitate the Selly Oak New Road scheme. Phased payments were made enabling the new factory to be purchased and fitted out prior to vacating the original premises required for the scheme.

 Note in respect of general vesting declaration procedure:

1. Clause 121 introduces Schedule 7 of the Bill (at paragraph 6), which amends the Compulsory Purchase (Vesting Declarations) Act 1981 so as to remove Section 5(1) (which provided for the two month waiting period before which a GVD could not be made).

2. The advert of confirmation is now to include:

i. the preliminary notice warning of the effect of a general vesting declaration, and

ii. the form for giving information which is designed to be completed by owners and occupiers and returned to the acquiring authority.

3. The Council notes that Section 5(2) of the Compulsory Purchase (Vesting Declarations) Act is not to be repealed, meaning that the only time constraint in respect of the making of a general vesting declaration, is that the CPO must be operative. Before the Bill was introduced, the 6 week challenge period to the High Court would run at the same time as the 2 month waiting period, giving time for any challenge to halt proceedings before a GVD was made.

4. Under the provisions of the Bill, however, because the operative date of an order is the date of the publication of confirmation, this means that there is no statutory bar to the acquiring authority making a general vesting declaration the day after the publication of the confirmation.

5. The Bill does not clarify what impact this change will have upon the challenge period and the practice of returning forms for giving information.

i. The challenge period: Whilst many acquiring authorities are likely to be cautious, and await the end of the 6 week challenge period before they execute and serve a GVD, there is no statutory restriction which prevents the authority risking proceeding with a GVD within that challenge period.

ii. Forms for giving information: There is no hiatus built into the procedure which allows time for the forms for giving information to be returned and collated.

6. In practice, in order to avoid the additional delay which will be built into the process by the requirement to give a three months’ notice rather than 28 days’ notice of vesting, acquiring authorities are likely to be put under pressure to proceed as quickly as possible by serving the GVD immediately after the order has become operative, taking the risk that a challenge may be lodged between the time the GVD was executed and the time the land vests.

7. If this is done, owners and occupiers would receive two sets of notices, hard on the heels of each other, informing them first of the confirmation and then, immediately, of the general vesting declaration which will, in three months’ time, vest the land.

8. This truncated procedure, if it becomes commonplace, would give rise to two concerns:

i. The "breathing space" after confirmation, when owners and occupiers realise that the process is definitely going ahead, is lost. Birmingham queries whether this is a good development of CPO practice.

ii. It appears that the forms for giving information may, if acquiring authorities do proceed to ignore the challenge period, be entirely redundant: they are likely to simply cause confusion (the letter at confirmation stage enclosing them and asking for their return may be followed immediately by notices of vesting, which make the forms redundant)

9. The legislators are asked to reconsider this stage of the proceedings.

December 2015

Prepared 8th December 2015