Is it finally time for a fair CPO?

“The current law of compulsory purchase is a patchwork of diverse rules, derived from a variety of statutes and cases over more than 100 years, which are neither accessible to those affected, nor readily capable of interpretation save by specialists.” So, 20 years ago, began the first of the Law Commission’s reports on reforming the law of compulsory purchase. The commission’s review took the best part of three years and the two reports (one on compensation and the other on procedure) ran to nearly 500 pages.  The government at the time, while welcoming the reports, declined to take forward the proposed reforms, citing a lack of available parliamentary time.  Since then, successive governments have undertaken piecemeal reform to the creaking system, usually as an afterthought whenever they feel the need to tinker with planning. Since 2003, we have had four significant Acts which have sought to address specific issues, with mixed success. Equally significantly, the Planning Act 2008 allowed private bodies to seek compulsory acquisition powers alongside development consent for nationally significant infrastructure projects. Further reforms are proposed in the Levelling-up and Regeneration Bill currently before parliament. The use of compulsory purchase powers has increased significantly since 2003, with schemes like the London Olympics, Crossrail, HS2 and Hinkley Point, not to mention a swathe of highway improvement schemes, urban extensions and town centre regenerations affecting large numbers of individuals and businesses. Yet the system remains as opaque and – in places – unfair as ever.  The Law Commission’s announcement that it will begin a new review is welcome. Specialists will be hoping for clear proposals for consolidation and reform. A short article cannot hope to do justice to all of these but here are a top three. Consolidation  As the commission noted, the law is entirely inaccessible to anyone who does not specialise in it. It is spread over numerous statutes which cannot be understood without knowing the principles that the courts have developed and applied in interpreting them.  In my view, there should be two consolidating Acts of Parliament: one to deal with the process of compulsory purchase and the other with compensation. These should incorporate the principles set out by the courts and be supported by comprehensive plain English guidance.  Severance/injurious affection A good example of the obscurity of the law is severance and injurious affection. Where only a part of someone’s land is compulsorily purchased, they are entitled to claim for any reduction in the value of the land retained, including that caused by construction and use of the new scheme.  This entitlement derives from a single sentence in the Lands Clauses Consolidation Act 1845, on which an edifice of case law has been built. The easiest way of assessing severance and injurious affection is to undertake a “before and after” valuation – at the date of acquisition take (a) the value of the two parcels of the land assuming no scheme will be built and deduct (b) the value of the retained parcel with the scheme tobe constructed.  The major difficulty with this approach is that the valuer will usually not know with any certainty what the effect of the infrastructure will be on the value of the land until it is built or at least has been through detailed design and construction procurement. The requirement to undertake the assessment at the date of the acquisition when so little is known is a fertile source of dispute, particularly for schemes such as HS2 where detailed design has not been completed years after the land has been acquired. The 2013 Law Commission report sought a compromise whereby the valuation is undertaken at the date of acquisition, but on the date of determination hindsight can be used to take account of events (such as a design being in place for the infrastructure) that have taken place since.  Temporary possession  The compulsory possession of land on a temporary basis was so uncontroversial as to not merit a mention in either of the commission’s reports. While transport schemes used temporary possession of open land for construction compounds, they were usually able to agree a rent with the landowner and issues were rare. Under the development consent regime introduced in 2008, promoters have used temporary possession powers in increasingly imaginative ways, which are often obscure to landowners.  For example, Network Rail often uses temporary possession powers to construct environmental mitigation and then hands the land back with maintenance obligations. The ever-extending length of the construction period for HS2 means that temporary possession can stretch to decades.  The Neighbourhood Planning Act 2017 included provisions to extend temporary possession powers to compulsory purchase orders and to allow the government to set out a framework for their use. Six years on this has still not happened, amid concerns from infrastructure providers that a “one size fits all” approach will be detrimental in securing transport and energy projects.  This encapsulates the tensions the Law Commission needs to resolve in making its recommendations to parliament. The need to grow the economy and meet net-zero targets as quickly and cost effectively as possible is not always consistent with proper limits on the grant and use of compulsory purchase powers and of fair compensation.  Raj Gupta is a partner at Town Legal Photo by Maureen McLean/Shutterstock