We broadly support measures that streamline and modernise the CPO process including flexibility surrounding the three-year time-limit in which a CPO can be used.
1. About the Local Government Association (LGA)
(a) The LGA is the national voice of local government. We are a politically-led, cross party membership organisation, representing councils from England and Wales.
(b) Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.
• As the consultation document rightly points out, Compulsory Purchase Order (CPO) is an important tool available to councils to assemble land and develop infrastructure needed to help deliver vital regeneration that helps local areas to prosper and grow.
• We broadly support measures that streamline and modernise the CPO process including flexibility surrounding the three-year time-limit in which a CPO can be used. While it is also good that the Secretary of State (SoS) will be able to provide conditional confirmation for a CPO, the Government should go further and remove the requirement for permission from the SoS to proceed with a compulsory purchase order. We would also welcome further reforms including stronger compulsory purchase type powers where permissions have expired, and development has not commenced; stronger/streamlined compulsory purchase powers to tackle empty homes; and powers for councils to direct the use of publicly owned land. In addition, planning departments must be sufficiently resourced and have an adequate supply of Compulsory Purchase Order expertise to be able to use a CPO when necessary.
• Councils recognise that the use of a CPO to acquire land should be used as a last resort, where it has not been possible to secure acquisition through an agreement with the landowner. It should be used proportionately in line with human rights and equalities legislation
• Removing the hope value in the Land Compensation Act 1961 would increase the viability of schemes and therefore increase the public benefits delivered. The most proportionate policy position for all parties is for land to be purchased at its existing use value. This protects the human rights of the landowner by receiving the payment that the land is worth in its current form, while also allowing councils to deliver their statutory responsibilities.
• The proposal to reform land compensation through the ability of councils to seek directions from the SoS to cap or remove the hope value on particular schemes is welcome, as this is an improvement on the current policy. However, we would like to see the reforms go further by removing the hope value from legislation entirely to ensure that hope value isn’t paid on any scheme, which would remove the need for a direction by the SoS. As a result of this, there would still be more use of CPOs in circumstances that warrant its use as a last resort, and at an earlier stage. This is because the cost of using a CPO would be reduced and the time taken to use a CPO would also be reduced.
• We expect councils to be able to provide specific examples in their response to this consultation.
3. Consultation Questions
Question 3: Do you agree that there are schemes where capping or removing the payment of hope value will increase the viability of certain schemes and/or increase the public benefits delivered through the schemes? Please provide details and where possible examples of schemes.
At present, the hope value inflates the price of land beyond its existing use value, with no regard for how the land will be used. Removing the hope value will reduce the cost to councils for assembling land via a CPO and will therefore make schemes more viable. This will only increase the public benefits delivered, as the delivery of social infrastructure and affordable housing will not be halted due to an inviable scheme; and for those schemes that are viable, more funds will be available to be invested into community infrastructure projects.
We welcome the removal of the requirement for acquiring authorities to pay the costs of landowners in seeking a Certificate of Appropriate Alternative Development (CAAD). In addition, the proposed reform of the Land Compensation Act 1961 to reflect normal market conditions in compensation payments by only allowing the equivalent of planning certainty for appropriate alternative development if a CAAD is obtained in relation to that AAD, is a welcome step insofar that it is an improvement on the current policy position which has no regard for planning certainty.
Question 4: Please provide any comments you may have as to the proportionality of capping or removing the payment of hope value balanced against the delivery of public benefits. Please provide any examples you have where you believe the public benefits would be such that it would be proportionate to impose such a cap or removal of hope value to a scheme.
To establish a fair price for land, it is vital that a balance is struck between protecting the human rights of the landowner and the ability of councils to deliver their statutory planning responsibilities to meet the infrastructure needs of communities.
The hope value inhibits a plan-led system by rendering schemes unviable and councils should not be penalised for seeking to carry out their duties and for seeking to deliver the Government’s ambitious housebuilding targets. It is not proportionate for the price of land to be inflated by the hope value to such an extent that makes it unviable for CPOs to be used in circumstances that warrant its use and in turn the centrepiece of the planning reforms – a plan-led system; and stronger measures to support regeneration – are unimplementable. Therefore, it would be proportionate for the hope value to be removed so that land is purchased at its existing use value to ensure that the regeneration commitments in local plans can be realised. This approach will ensure that the landowner receives a fair price for what their land is worth in its current form, while allowing councils to play a central role in driving regeneration, revitalising communities and creating the right mix of homes and jobs to enable them to thrive. This includes improving access to green space and nature, meeting net-zero ambitions; and providing the necessary infrastructure.
Question 5: Do you have evidence of the extent to which hope value is currently claimed/paid generally in compulsory purchase situations? Please provide details and where possible any evidence that you have as to whether hope value is more likely to be paid on particular types of schemes, for example from urban regeneration schemes to greenfield schemes or from housing schemes to transport schemes.
Question 6: Do you think the public benefits of capping or removing hope value is more likely to arise in particular types of schemes? Do you think any solution to this issue should be limited to particular types of schemes or apply across all types of compulsory purchase situations? Please provide details in support of your answers.
We do not have specific examples of whether capping or removing hope value is more likely to arise in particular types of schemes.
No. Implementing the solution to the issue of unfair land compensation should not be limited to particular schemes. To avoid confusion and gamesmanship, the solution to the issue of inflated land compensation which renders schemes unviable should be applied consistently to all schemes and compulsory purchase situations.
Question 7: Do you agree with the proposal to address this through the issue of directions for specific schemes as set out in this consultation
We welcome the proposal to address unfair land compensation by allowing acquiring authorities to request a direction from the SoS that, for a specific scheme, payments in respect of hope value may be capped at existing use value or an amount above existing use value where it can be shown that the public interest in doing so would be justified. This is an improvement on the current policy position as it will ensure that there are some checks and balances on the hope value and will provide an opportunity for land to be acquired at its existing use value. If this proposal is approved, it should be implemented quickly and when judged that the scheme is in the public interest, we would welcome a consistent response by issuing a direction at existing use value.
We would welcome guidance, including addressing how councils may go about applying for a direction; the requirements for demonstrating that the scheme is in the public interest; and the thresholds for determining whether payment of compensation is capped at existing use value, or at a percentage above.
However, the Government may go even further, by removing the hope value from legislation entirely, which would be the most equitable outcome for all of the stakeholders involved. There is an argument for a consistent approach by removing the hope value, to avoid confusion and reduce the processing time for applying a CPO, which is already a lengthily and cumbersome process. In addition, the current policy requirement for using a CPO is that it must be used to deliver infrastructure projects in the public interest, and on that basis a direction from the SoS is redundant and the hope value should be removed.
Question 8: Do you agree with the proposal that the directions could cap the payment of compensation at its existing use value or at a percentage above existing use value (excluding the payment of compensation under other heads of claim)?
Question 9: Please provide any comments you may have as to: (1) whether it will be possible to identify certain, deliverable public benefits in applying for directions; (2) how it will be possible to link those public benefits to value captured.
It will be possible to identify deliverable public benefits, in the form of the quantum of infrastructure and affordable housing that would be delivered by issuing a CPO to enable the acquisition of land at existing use value.
However, we are concerned that the acquiring authority may not, when seeking a direction, be able to provide the SoS with certainty over the level of compensation payments, as this can only be established later on in the process when planning permission has been granted and the obligation is agreed.
Question 10: Do you think that an acquiring authority should have to consult with affected landowners before seeking a direction from a Secretary of State?
It is right that the affected landowner, as a major stakeholder, is made aware that a direction is being sought, as this may affect the amount of compensation that is paid.
We would welcome clear guidance on the Government’s expectations for the consultation. The guidance should address what information the acquiring authority should provide and the policy position if there is a difference of opinion, for example if the landowner opposes the decision to seek a direction.
However, this consultation should be for information only and should not have any bearing on whether a direction is sought by the acquiring authority, nor the decision to issue a direction. This is because a CPO is only used as a last resort for the purpose of implementing a local plan which has been subject to through public scrutiny, and the purpose of seeking a direction is to make the scheme more viable.
Question 11: Do you agree that issuing directions should only be to schemes where the acquiring authority is also a public sector entity?
We recognise that the public interest in seeking directions is likely to be higher where they are sought by public sector entities, in comparison to acquiring authorities that are private companies. However, it would be useful to have the option to seek directions as a safety net for special circumstances in which there is a public interest which can be evidenced by private companies.
Private companies are not legally bound to the same standards as public sector entities, namely in relation to the Public Sector Equality Duty, which is set out in the Equality Act 2010. We would welcome a mechanism – which should be clarified in the Government’ guidance – that would require the acquiring authority to report on equalities when applying for a direction and for this to be taken into account when making a decision.
Question 12: It might be possible for landowners to seek a planning permission so that development value applies under section 14(2)(a) LCA 1961 circumventing any cap applied under a direction. Do you think it should be possible for the directions to cap development value for any planning permission which falls under section 14(2)(a) where that planning permission is made after the “launch date” of the scheme or after the date the directions are issued if later? The launch date is defined by section 14(6) LCA 1961.
The directions to cap development value should be applied consistently in circumstances that warrant it, without being subject to a legal gap which allows landowners to circumvent the cap.
Question 13: Do you have any further comments as to how the process of seeking and issuing directions might work?
The process of seeking and issuing directions must have regard to the full planning permission process and the process for using a CPO to ensure that unreasonable expectations are not placed on councils to supply information which would only be available at a later stage.
We look forward to the publication of comprehensive guidance which captures how the compensation reforms should be implemented.
We broadly welcome the proposal to give the SoS discretion to extend the three-year time-limit for implementing a CPO. This rightly introduces flexibility for developers that are bringing forward large and complex regeneration scheme in phases. The implementation start date for schemes that receive conditional confirmation must be later than those schemes that receive confirmation. For conditional confirmation, it must commence when the fulfilment notice is published. We look forward to seeing more information on how a developer may apply for an extension and the requirements that must be met for issuing an extension.
It is good that the role of the SoS, when confirming a CPO, is being expanded beyond ‘confirm’ or ‘reject’, with the proposal to allow conditional confirmation. This measure will enable more schemes to be brought forward with more certainty. We look forward to seeing more detail on the type of conditions that will be imposed and we would also welcome clarity on whether objectors will be allowed to submit representations during the condition discharge stage. It is vital that a new conditional confirmation process mitigates against a cumbersome, drawn-out process.
However, we would like to see the Government go further on reforming the role of the SoS. We would welcome the removal of the requirement for permission from the SoS to proceed with a compulsory purchase order. The default position should be that acquiring authorities can confirm their own compulsory purchase orders. As a backstop, the SoS could retain the ability to use his/her recovery powers in certain circumstances. This would reduce the processing time associated with using a CPO and councils would be able to intervene at an earlier stage to acquire land.
Following its inclusion in the Planning for the Future White Paper, it is good to see the digitalisation of the CPO process and the planning system more broadly. This should make the system more accessible to stakeholders and accelerate the CPO process, as it will be easier to share and access information.
Question 14: Do you think the proposals should go further and automatically limit the payment of hope value in compulsory purchase more generally or in relation to specific types of schemes? Please provide details and justification as to why you think it would be in the public interest to go further and what public benefits could be delivered if hope value was limited. Examples of types of schemes, for example regeneration, you think any further general application should apply to would also be helpful.
The proposals should go further by removing the hope value from the Land Compensation Act 1961 to ensure the compensation paid is aligned to the existing use value. This proposal has parallels with the use of compulsory purchase powers in Europe (e.g. Netherlands). As a result of this approach, we would see more instances of land being acquired by an agreement with the landowner, before a CPO is required. This is because it would restore the credibility of using a CPO as a tool to encourage and negotiate with landowners to release their land voluntarily at an early stage. But if a negotiated settlement is not possible, there would still be more use of CPOs in circumstances that warrant its use as a last resort, and at an earlier stage. This is because the cost of using a CPO would be reduced and the time taken to use a CPO would also be reduced. This would provide confidence in the sector that a CPO is an option that can realistically be used as a last resort and councils would be better placed to implement their plans to meet the needs of communities.
In addition to hope value reform, the proposals may go further to reform other aspects of CPO legislation:
• Stronger compulsory purchase type powers where permissions have expired and development has not commenced. This would be used as a measure of last resort and with appropriate safeguards to allow councils to tackle sites which have had planning permission for a long time but which have not been built out. The authorities would need to demonstrate plans for the development of the site within a reasonable period of time. As well as incentivising developers to complete a timely build-out their scheme after planning permission has been granted, councils will be confident that they can act promptly and decisively to acquire land that is vacant to meet local needs.
• Stronger/streamlined compulsory purchase powers to tackle empty homes. To support council endeavours to bring empty homes back into use, they should be able to acquire time-limited leaseholds, enabling them to undertake refurbishment work to properties and bring them back into habitable states. Councils could then recoup their investment through rental income over the set time period, and even acquire nomination rights, returning the properties back to their owners at the end of the lease. There should also be a removal of the requirement for councils to pay compensation on long-term empty properties – currently 7.5 per cent of the property value, up to £75,000 and enable them to formally share costs and liabilities with a third party. This would provide the community benefit of reducing empty homes and prevent the risk of anti-social behaviour. It would also be an opportunity to optimise local, unused assets to tackle the housing crisis.
• Powers for councils to direct the use of publicly owned land. There is a need to speed up the process of assembly of surplus land owned by different public landowners in an area. Changes to compulsory purchase legislation provide an opportunity to implement the recommendation in the Elphicke-House report to give councils a power of direction on publicly owned land. This will enable councils to fast-track acquisition of un-used public land in their area to support redevelopment or regeneration opportunities. The reduction in processing time will enable councils to acquire land at an earlier stage.
• Provide clarity on how Section 215 should be enforced when freeholds are owned by councils but with long leases held by third parties in the Town and Country Planning Act (1990). In relation to Section 215 of the Town and Country Planning Act (1990), clarity is required on how councils should enforce against properties in which they own the freehold. When notices are served, it is understood that these should be serviced on all those with an interest, but councils cannot serve notice on themselves. By providing clarity on this issue, councils will be better equipped to use this power when necessary.
A potential proposal that does not relate to legislation is as follows:
• Planning Departments must be sufficiently resourced and have an adequate supply of Compulsory Purchase Order expertise to respond to the needs of communities. Councils have highlighted that implementing the CPO process requires considerable resources to be of any significant use in facilitating town centre regeneration. Councils must be supported to access CPO expertise alongside a review into the CPO process and resource requirements. The LGA also has a role to play and can support capacity-building through our sector-led improvement offer. Previously we ran a technical masterclass for local authorities on understanding compulsory purchase orders and compensation.
Equality impact assessment
Question 15: Do you have any comments on the initial equality analysis? If yes, please provide your views on the equality impacts arising from this proposal and any suggestions for how those impacts could be mitigated (please include any evidence you may have in support your views).