High Speed 2 (Compensation)

Cheryl Gillan Excerpts

Tuesday 21st October 2014 Commons Chamber

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

I am grateful for the opportunity to raise the issue of compensation for those adversely affected by High Speed 2. I thank colleagues for being here alongside me, as well as those who were unable to attend but have contacted my office. Since its announcement, and in common with others such as my right hon. Friends the Members for Aylesbury (Mr Lidington) and for Buckingham (John Bercow), I have received numerous representations from people affected by HS2. The theme, I am afraid, is a common one: despair at the current compensation arrangements and a feeling of powerlessness from people who think they cannot influence the process.

Since HS2’s announcement, I have consistently pushed for a fair and generous compensation package. Sadly, despite six public consultations and four years of anxiety for my constituents in Chesham and Amersham and for other colleagues’ constituents, the current proposals for compensation remain as inadequate as ever. However, before the Government’s announcement of their response to the latest consultation, I wanted to give the Minister one more chance finally to listen to people and to put things right.

There have been promises from Ministers. The overriding principle of this project ought to be that no one should have to suffer a financial penalty or be trapped in their home because of HS2. That view is shared by many of us, including my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who is currently on paternity leave but who would otherwise have been present. Unfortunately, the reality shows that that is not the case. Some properties have been on the market for years, and people are trapped and unable to move on with their lives.

Notwithstanding those ministerial promises, the compensation schemes to date have been woefully derisory, and people are facing substantial financial loss. The Transport Secretary promised that compensation would be “full and fair” for “those most directly affected”, and the Prime Minister told me personally that compensation schemes would be “generous and fair”. Given that other major infrastructure projects are in the pipeline, it is time for a rethink on compensation. I hope that the Minister will respond positively, with the aim of introducing fairer arrangements.

[Mr Jim Cunningham (Coventry South) (Lab)]

I appreciated the fact that when members of the HS2 Committee visited Coventry and Kenilworth, they allowed me to accompany them and explain the situation to some of my constituents. As for the question of negative equity—I know that the right hon. Lady will agree with me about this—some people in the Coventry area who have invested their life savings will not qualify for any form of compensation.

[Mrs Gillan]

The hon. Gentleman has made a very valid point, and I shall say more about it shortly.

There are problems with the current compensation proposals. They will compensate only about 2% of those who live within 1 km of HS2, or within 250 metres from a tunnel. As the hon. Gentleman has just pointed out, despite widespread evidence of blight, the vast majority of people affected by HS2 will not be compensated fairly, because the Government have consistently linked the scheme to distance from the line and have ignored the wider effects. HS2 Action Alliance has calculated that only about 172,000 people will receive any kind of compensation, although more than a million live within 1 km of HS2 and many are being adversely affected.

[Frank Dobson (Holborn and St Pancras) (Lab)]

In my area, around Euston, people will be living next to the biggest construction site in Europe for 10 or 15 years. They will be living within a yard of the works. However, they will be entitled to no compensation at all. As the right hon. Lady will know, uncertainty is a major source of blight. The revised proposals for Euston were supposed to be presented next month, but that has now been postponed until after the general election.

[Mrs Gillan]

The right hon. Gentleman and I have stood shoulder to shoulder across the House on this issue. There is no party divide on it. I know that my right hon. Friend the Member for Uxbridge and South Ruislip (Sir John Randall) is similarly concerned, as are many other colleagues. The point is well made.

According to estimates in data commissioned by the Government from PricewaterhouseCoopers, the average loss to a homeowner is 20% up to 500 metres from the line, 30% up to 300 metres away, and 40% up to 120 metres away. Moreover, that blight is not temporary. PwC says that it will be at its worst until at least 2023. The Government have failed to recognise that, or the fact that the scale of suffering extends well beyond the line itself.

As things stand, there is not even sufficient compensation for those living above tunnels. HS2 Ltd believes that home owners are not unduly affected by tunnels, but my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright), for example, informs me that the property market in his constituency tells a very different story. There is no compensation for those affected by construction, although it will inevitably be very extensive in impact and duration. Constituents of my right hon. Friend the Member for Aylesbury (Mr Lidington) in Wendover and Stoke Mandeville live very close to the safeguarded area and the proposed construction sites, but they do not qualify for compensation under the boundary rules. It is grossly unfair that they should be expected to endure the disturbance of construction and operation as well as putting up with a loss of value to their properties unless they can prove an exceptional need to sell. Some of my right hon. Friend’s constituents say that estate agents simply refuse to place their properties on the market and that potential purchasers have been refused any mortgage on properties because of HS2. This is emblematic of the broad injustice of the current compensation measures.

The compensation schemes announced and operating to date are also problematic. The exceptional hardship scheme and the need to sell schemes have been arduous and complicated for many of our constituents, and in my view they are often wholly unjust. The lack of consistency in the decision-making process has been incredibly frustrating for those involved, and the accuracy of valuations has been the subject of contention in many areas. There has been little transparency in this process. The latest proposals—the alternative cash offer and the home owner payment—offer poor value to the taxpayer and involve arbitrary sums that bear little relation to the actual loss suffered by the individual.

[Nigel Adams (Selby and Ainsty) (Con)]

I support the principle of the alternative cash offer for those living within 120 metres, but the scheme simply does not work for those living beyond that line. Does my right hon. Friend understand the concerns of my constituent, Mr Watson from Church Fenton, who e-mailed me earlier today to say that he was not at all happy to lose £95,000 from the value of his property? He described it as writing a cheque to the Government for £95,000 only to receive a Government refund of £7,500. That is neither full nor fair.

[Mrs Gillan]

My hon. Friend is absolutely right. Phase 2 will affect his constituency, and the problems that we are having with phase 1 will come back to haunt us all on phase 2, so it is good that he is raising these matters early on behalf of his constituents. He is absolutely right to suggest that the alternative cash offer applies only to a limited number of home owners. As the payment is based on a 10% loss and is capped at a maximum of £100,000, it is completely unreflective of the true loss in property value. It is not a strong enough incentive for people to stay in their homes.

[Jeremy Lefroy (Stafford) (Con)]

May I return for a moment to the exceptional hardship scheme? A constituent of mine, having arrived at a value that was supposed to be fair, was then asked by HS2 to reduce the figure by £20,000 so that it could get the property into a rentable state. That is neither fair nor reasonable.

[Mrs Gillan]

My hon. Friend’s example speaks for itself.

[Mr Dominic Grieve (Beaconsfield) (Con)]

I wholly endorse what my right hon. Friend is saying. The fact is that many people in my constituency have homes of very high value, but the compensation bears absolutely no relationship to the investment that they have made in purchasing the home, or to the fact that in many cases the properties are heavily mortgaged and that their losses will be colossal—running into millions of pounds in many cases.

[Mrs Gillan]

My right hon. and learned Friend makes an important point. Those people have worked hard, saved and invested in those properties.

[Sir William Cash (Stone) (Con)]

My right hon. Friend is making an excellent speech. Those of us who are between Birmingham and Manchester are extremely glad that we are going to have the opportunity to petition and to have our case heard by the High Speed Rail (London - West Midlands) Bill Select Committee, and we are grateful to her for everything she has done.

[Mrs Gillan]

I thank my hon. Friend. I glad to see that the Chairman of the Committee, my hon. Friend the Member for Poole (Mr Syms), is in his place. I note that there are many hon. Members here tonight, and I welcome those who have just come into the Chamber. It is important to put these points to the Minister in as forceful a way as possible.

The home owner payment scheme proposes to give home owner payments to those living between 120 metres and 300 metres from the line. This once again limits compensation by distance from the line. It also does little to assist the functionality of the property market in affected areas. The payments on offer are too low and, as the effect of inflation is not considered, they might be inaccurate as well.

Like other colleagues, I have many farmers and landowners in my constituency, and none of the schemes properly addresses the impact of HS2 on them. I deal with a number of organisations, including the Country Land and Business Association and the National Farmers Union, that are campaigning hard to ensure that affected landowners receive fair and timely compensation, and I hope the Minister understands the special problems facing farmers and growers. He is a farmer himself, so I am hoping for that special understanding.

[Mrs Caroline Spelman (Meriden) (Con)]

I am sure my right hon. Friend is aware that for many farmers the difficulty is that they are compensated at agricultural prices, but where land is taken beyond the actual requirements for the track, there is of course speculative value in that land, and does she agree that it is important that land-take is kept to a minimum?

[Mrs Gillan]

My right hon. Friend makes a valid point and I entirely agree.

Concern has also been expressed to me by colleagues, and, indeed, Mr Speaker, about the fact that compensation has only currently been offered to owner-occupiers. Owners of second homes or those living in social housing receive no recompense, in spite of having to endure years of disruption and intrusion in an identical fashion to homeowners. If HS2 goes ahead, I would like to see four main changes on compensation and a greater safeguard for those affected.

First, I and many others have always supported the introduction of a property bond scheme, as proposed by HS2 Action Alliance, where the Government act as a purchaser of last resort, and whereby buyers have the confidence to buy properties on the open market at unblighted prices. I believe this scheme would provide greater functionality of blighted property markets, and a better deal for all constituents.

PricewaterhouseCoopers’ March 2014 report on a potential property bond scheme concluded that it was a fair option, assuming it has a generous boundary. Regrettably, there has been a continual reluctance to adopt this option by Ministers, in spite of widespread backing. The Department for Transport has rejected this scheme in the past because of “money risks”. However, figures from PwC demonstrate that the figures are not prohibitive, and given the clear benefits of this scheme in terms of supporting normal market activity, I would ask the Minister to reconsider this scheme carefully once again and recognise its obvious advantages for both the market and those affected.

Secondly, the “need to sell” scheme needs revising to remove the financial hardship criteria to allow those who are unable to sell their properties because of HS2 to be free to move. Thirdly, the boundaries of the voluntary purchase scheme should be widened to a distance greater than the 120 metres, reflecting the true levels of blight and to match the payments actually made under HS1.

Fourthly, the whole compensation package should take into proper account blight in urban areas, over tunnels, and those who will suffer extensive construction disruption. In particular, the Treasury should reconsider once again the possibility of introducing stamp duty exemptions for affected properties to re-stimulate the property market.

Finally, if this project ever reaches its construction phase it will cause blight and disruption still to be identified. I believe that to protect my constituents, and all our constituents who are affected by HS2, we need an additional safeguard. I propose that the construction code should be added to the Bill in order to implement a binding and comprehensive duty of care that sets standards and time scales for the conduct of HS2, its contractors and sub-contractors during construction. An independent ombudsman should be appointed to adjudicate swiftly on abuses and with powers to compensate those adversely affected.

The current £50 billion budget for HS2 is currently being paid by the taxpayer, but it is also being paid at the expense of those who will suffer as a result of this project. Government have a duty of care to ensure that those blighted by this highly disruptive infrastructure project are fully and appropriately compensated. A failure to do so is not only insulting, but also sets a worrying precedent for inadequate mitigation for future schemes.

The Minister will have noticed tonight that I speak not just for my own constituency, but for many others, and I urge him to listen to our electors and do the decent thing by people whose lives have been turned upside down by this risky, poorly managed and ill-conceived project.

To borrow, and slightly change, the words from “Macbeth”, “If it were done when ‘tis done, then ‘twere well it were done properly.”

--- Later in debate ---

[Mr Goodwill]

That is precisely why we are putting these compensation schemes in place. We also have an exceptional hardship scheme in place for phase 2. To the end of September 2014, we have purchased 32 properties at a cost of £15.1 million.

Following the property compensation consultation in 2013 for the London to west midlands HS2 route, the Government decided to use five criteria to select the most appropriate long-term discretionary property compensation packages for phase 1 of HS2. Those criteria are: fairness; value for money; community cohesion; feasibility, efficiency and comprehensibility; and the functioning of the housing market. Accordingly, the Government announced on 9 April the long-term compensation schemes that would be introduced for phase 1. They included express purchase, which I have already mentioned.

[Mrs Gillan]

The Minister will correct me if I am wrong, but did I hear him cite the word “fairness”?

[Mr Goodwill]

Precisely. Fairness is at the heart of our approach—fairness to those who have to move because their properties are being demolished or are so close to the line; and fairness to those who want to stay in their communities and maintain community cohesion.

We announced a voluntary purchase offer that would be available to people up to 120 metres from the railway in rural areas. Eligible owner-occupiers between the safeguarded area and 120 metres will be able to ask the Government to buy their homes at the unblighted market value. The scheme will be opened to applicants by the end of 2014 following further consultation on supplementary cash payment schemes.