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1 Response of the Law Society of England and Wales to the consultation issued by the Department for Communities and Local Government on further reform of the compulsory purchase system May 2016 The Law Society 2016 Page 1 of 6

2 PREFACE 1. The Law Society of England and Wales ("The Society") is the professional body for the solicitors' profession in England and Wales, representing over 160,000 registered legal practitioners. The Society represents the profession to parliament, government and regulatory bodies and has a public interest in the reform of the law. 2. The Society welcomes the opportunity to respond to this consultation. 3. This response has been prepared by the Society's Planning and Environmental Law Committee. Its 21 members are tasked to "keep under review, and to promote improvements in, planning law, practice and procedure (including related areas of law such as listed buildings and conservation, highways, nature conservation, water resources, drainage and flood risk, compulsory purchase and compensation) and environmental law and procedure". RESPONSE General comments 4. While the proposed reforms are to be welcomed overall, the Law Society regrets the absence of any commitment to the consolidation or restatement of the law relating to compulsory purchase and compensation. Each of the principal Acts the Land Compensation Acts of 1961 and 1973, the Compulsory Purchase Act 1965 and the Acquisition of Land Act 1981 will all have been extensively amended on several occasions even before the present reforms are implemented, and their interpretation relies heavily on case law. 5. Furthermore, the body of legislation in force in relation to compulsory purchase dates back as far as The fact that the law of compulsory purchase and compensation impinges upon important European Convention on Human Rights provisions relating to the protection of the rights to family life and the enjoyment of property, should make a consolidation or restatement project a priority. To illustrate the confusion that the current assortment of legislation can give rise to we would draw specific attention to our comments on consultation question 13 and the proposal to repeal section 15 (1) of the Land Compensation Act Q1: Do you agree with the proposal to codify the no scheme world valuation principle in legislation? 6. We agree that the decisions in Waters and Spirerose have only served to emphasise the continuing difficulties and uncertainties in interpreting the no-scheme world valuation principle arising from the mixed statutory and case-law basis of the principle as currently formulated. Given that the House of Lords and the Supreme Court have had two attempts at clarifying matters and have endorsed the desirability for placing the rule on a new statutory footing we consider that codification is to be welcomed. Q2: Do you consider that the proposal by the Law Commission (Rule 13) should be used as the basis on which to take forward amendments to the relevant legislation? 7. We have reviewed the relevant sections of the Law Commission s Final Report Towards a Compulsory Purchase Code : (1) Compensation, especially Part VII: Statutory Projects Problems and Solutions and Appendix D The No-Scheme Rule History. In our view the analysis set out there remains valid and we support the proposal to adopt the Law Commission s Rule 13 as the basis for a comprehensive statutory restatement of the principle. The clear the decks approach embodied in paragraph 1 is a vital component in ensuring the success of the restated principle. 8. We consider that there are two steps that should be considered in conjunction with the adoption of a restatement of the principle: i. The Government should make clear its policy approach to the formulation of the restated rule. The consultation paper's analysis of the issues that the rule is intended to address is not as comprehensive as that undertaken by the Law Commission in its original The Law Society 2016 Page 2 of 6

3 ii. Consultation Paper and set out again at paragraphs 7.7 and 7.8 of the Final Report (1) Compensation. This could be done in conjunction with revised guidance on Compulsory Purchase and it is to this we now turn. Although DCLG has updated its Guidance on compulsory purchase process and the Crichel Down Rules for the disposal of surplus land acquired by, or under threat of, compulsion (October 2015), the most recent Guidance on Highways CPOs is a Department of Transport Circular dating back to 1997 (Department of Transport Circular 2/97 - Notes on the Preparation, Drafting and Submission of Compulsory Purchase Orders for Highway Schemes and Car Parks for which the Secretary of State for Transport is the Confirming Authority). Likewise there is a lack of guidance for situations where CPO powers are exercised by statutory undertakers. We consider that the operation and understanding of the CPO system would be improved by a new comprehensive joint circular in digital format. Q3: Do you agree that the date on which the scheme is assumed to be cancelled should be the launch date, not the valuation date as proposed by the Law Commission? 9. We agree with the use of the launch date as the date on which the scheme is assumed to be cancelled. In the context of the no-scheme world" the use of the launch date is closely related to the confirmation process and thus the scheme details submitted as part of the case of compulsory acquisition. This is also in line with the House of Lords decision in Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] RVR 215, although that could of course be reversed by legislation. 10. The further proposal, later in the paper, to require acquiring authorities to publish the notice of confirmation within a specified time limit will assist in tying the scheme closely to that which was considered during the confirmation process. We also observe that the adoption of the date on which the scheme is assumed to be cancelled as the launch date is consistent with the reformulated planning assumptions in sections 14 and 15 of the land Compensation Act 1961 introduced by section 232 of the Localism Act Q4a: Should the definition of the statutory project be extended to include an enabling power which would allow specific transport infrastructure projects to be identified that are to be disregarded within a defined area, over a defined period of time? 11. We agree that in principle an acquiring authority could be required to pay market values that, depending upon the valuation date, reflect an increase in value due to other publicly funded infrastructure. We think that the case for an extended definition of the statutory scheme should have to be made out during the confirmation process and should be open to challenge during the confirmation process at a public inquiry or examination. This would require, in our view, either the acquiring authority specifying in the CPO the extent of the extended definition which would then be open to objection or the conferring of a power on the confirming authority to make a direction or issue a certificate when confirming the CPO specifying an extended statutory scheme. The latter approach would require an application process to accompany the submission of the CPO for confirmation. Q4b: If yes, do you have any views on how the wider definition should be expressed? 12. We think that a test linked to viability is an appropriate one in principle. This could be amplified by making it clear that the public investment must demonstrably be the catalyst for the type of development proposed coming forward at that time. We suggest that the Government should consider conducting further research from property and development experts to determine a suitable methodology for an acquiring authority to demonstrate viability or catalytic effect to support a proposal for an extended statutory scheme. Q5: Should other types of infrastructure schemes also be included within an extended definition of the statutory project? 13. We agree that transport schemes are likely to be those with greatest effect in creating viable projects. However, it is not inconceivable that other public investments, for example a major The Law Society 2016 Page 3 of 6

4 educational development mainly funded by the public purse might also have a similar effect. Perhaps an alignment with items of infrastructure that would qualify for inclusion in a Community Infrastructure Levy (CIL) charging schedule would avoid drawing the limits of this provision too narrowly. Q6: Do you agree that for the purposes of assessing compensation the whole mayoral development corporation area and all development in it should be disregarded in the same way as it is for new town and urban development corporations? 14. We agree that a mayoral development corporation area should be treated in the same way as a new town or an urban development corporation area. Q7: Do you agree that the compensation payable to those with minor tenancies should take account of the period for which the land occupied by the claimant might reasonably have been expected to be available for the purpose of their trade or business? 15. We agree with the proposals to address the unfairness arising from the Bishopsgate principle. Q8: Do you agree that the current loss payments should be adjusted as set out in paragraphs of this consultation paper? 16. We agree with the proposed adjustment of loss payments to reflect the greater inconvenience suffered by occupiers as a result of compulsory purchase. Q9: Do you agree that the method of calculating the buildings amount should be changed to the net lettable area? 17. We agree that the use of net lettable area is a better basis for calculating the buildings amount. Q10: Do you agree that the penal rate of interest should be set at 8% above base rate while debt remains unpaid? 18. We agree that 8% above base rate is an appropriate basis for the interest payable on late payment of an advance payment. Q11: Do you agree with the proposal to increase the qualifying rateable value limit to serve a blight notice in London? 19. We agree the principle that broadly similar properties should be entitled to serve a blight notice regardless of property values. Q12a: Do you consider there are other parts of the country that may need a higher rateable value limit? 20. If the basis of broadly similar properties qualifying to serve a blight notice is followed then consideration could be given to setting rateable value limits on a regional basis, or using a different measure altogether based on property size. Q12b: If yes, please state locations where a higher rateable limit should be set 21. This is a matter for property valuation experts. Q13: Do you agree we should repeal section 15(1) of the Land Compensation Act 1961? 22. We agree section 15(1) of the Land Compensation Act 1961 is effectively redundant and should be repealed in the interests of clarity. However, it seems remarkable that the effects of section 14 as inserted by section 232 of the Localism Act 2011 do not seem to have been appreciated by the drafters of that amendment. The current proposal therefore appears to be an object lesson in the consequences of the present piecemeal and scattered structure of the statute book on compulsory purchase and compensation. The Law Society 2016 Page 4 of 6

5 Q14: Do you agree that we should repeal Part 4 of the Land Compensation Act 1961? 23. We agree Part 4 of the Land Compensation has fallen into desuetude and should be repealed. Q15: Do you agree with the proposal to allow the Greater London Authority and Transport for London to promote a joint compulsory purchase order? 24. We agree that the GLA and TfL should be able to promote joint CPOs. Q16: Do you agree that the proposal should also apply to new combined authorities with mayors? 25. We agree. Q17: Do you agree that all acquiring authorities should have the same power to take temporary possession of land? 26. We agree with a general power for acquiring authorities to have power to occupy land temporarily. The frequency with which this power was included historically in private works Acts and subsequently in Transport and Works Orders and Development Consent Orders suggest that this is a long-standing lacuna in CPO powers. It should be made clear, however, that this is not a form of acquisition, only occupation without any change in ownership, and so should be characterised as temporary occupation, not temporary possession. Q18a: If introduced, do you agree that the power should be based on precedent and model provisions and if so, which ones? 27. The provision is well-precedented in Transport and Works Orders and Development Consent Orders. Q18b: If not, what would you suggest instead? 28. See preceding answer. Q19: Do you have any views on whether modifications to the standard advance payment regime are required for temporary possession cases? 29. Although it should be possible to receive advance payment for temporary occupation, the length of occupation is not often known at its start for example, being linked to the time taken for associated works and so is more difficult to calculate than for permanent acquisition. If a long period is assumed and the land is then not occupied for such a length of time it may require the repayment of a substantial amount of the advance payment. On the other hand if a short period is assumed then the advance payment may not be worth having. Q20: Do you agree that a target timescale should be introduced from confirmation of an order to the date the notice of confirmation is published? 30. We agree a timescale should be introduced to avoid uncertainty and for the reasons connected with the functioning of the restated no-scheme world rule as noted in our reply to Q3 above. Q21a: If introduced, do you agree that a 6 week target unless the Secretary of State agrees a different period is appropriate? 31. We agree that six weeks strikes a correct balance. We are uncertain of the circumstances where it is envisaged that the Secretary of State (or the Welsh Ministers) would agree a different period. The Government should clarify if the power is a general power to vary the period by statutory instrument or a power to vary in individual cases? If the latter, we would The Law Society 2016 Page 5 of 6

6 support some flexibility as circumstances may arise where delays arise due, for example, to the production of modified plans. Q21b: If not, what should the target timescale be? 32. See preceding reply. Q22: Do you agree with our assumptions that: a) ransom payments where land is required on a temporary basis are likely to be small and limited in number? 33. We agree that such ransom payment are likely to be unusual. With the increasing attention to EIA the general practice now is to include all the temporary occupations as full title acquisitions which will later be offered back. b) there are likely to be 2 or fewer transport projects associated with regeneration promoted by public sector acquiring authorities backed by business per year? 34. We tend to disagree and think that this may be an unwise assumption. Numbers could fluctuate widely over time. Q23: Do you have any evidence in relation to: d) the scale of windfall payments to claimants where a compulsory purchase regeneration scheme is facilitated by transport improvements by the public sector? e) the number of compulsory purchase orders likely to be affected by each proposal? f) the impact on compensation payments for each proposal? 35. We were unable to compile sufficient evidence during this consultation period but would be happy to reconsider the question at a later stage. Q24: Do you agree with our assumptions on the impact of the proposal to reverse loss payment share for landlords and occupiers? 36. We agree. Q25: Do you have any further comments on the likely impact of these proposals on business interests both for the acquiring authority and claimants? 37. Please see our general comments at the beginning of this response. Q26: Do you consider that there are potential equalities impacts arising from any of the proposals in this consultation paper? Please provide details including your views on how any impacts might be addressed. FOR FURTHER INFORMATION The Society would be pleased to offer such further advice as may be appropriate. For more information, please refer to the following contact details. Officer's Name: Duncan Neish Officer's Title: Policy Adviser to the Planning and Environmental Law Committee Officer's address: duncan.neish@lawsociety.org.uk Officer's Telephone number: The Law Society 2016 Page 6 of 6