Localism Bill

Lord Boyd of Duncansby Excerpts

Tuesday 7th June 2011 Lords Chamber

[Lord Boyd of Duncansby]

My Lords, I declare an interest as a Scottish solicitor who is registered to practise in England and Wales. Part of my practice is in planning matters and I am also a legal associate of the Royal Planning Institute. My noble friend Lord Beecham drew our attention to the size of this Bill. In those circumstances it might seem perverse of me, and unwelcome to your Lordships, to address an issue that is not in the Bill, but it relates to the planning assumptions that underpin the assessment of compensation on compulsory purchase.

Let me tell the House why I am addressing this issue at this stage. In 2002 the London Borough of Wandsworth served a purchase notice on a company called Greenweb Ltd for a small piece of land to preserve its status as a public open space. Both the local authority and Greenweb were agreed that the market value of the land was £15,000. Greenweb had in fact paid £30,000 for this piece of ground. Greenweb contended that under the statutory rules it was entitled to considerably more. Indeed, it said that it was entitled to £1.6 million—over 100 times the value. The issue went to the Lands Tribunal and from there to the Court of Appeal, which, with great reluctance, upheld the landowner’s claim and Greenweb Ltd found itself with a windfall of more than £1.5 million in profit for a £30,000 outlay. Though that case may be an extreme example of the perversity of some of the rules on compensation and the injustices that can be created, it is an example nevertheless.

The injustice is not just on the side of local government. Another case, decided by the House of Lords in 2009, Transport for London v Spirerose Ltd, arguably produced an injustice on the other side. In that case, the House of Lords said that the landowner was entitled to £400,000 for the land that was the subject of the compulsory purchase order. The Lands Tribunal and the Court of Appeal had valued the land at £608,000, the difference being in the assumptions that were made about the planning permission that was granted, the House of Lords saying that all that the landowner was entitled to was “hope value”.

The law on compulsory purchase and compensation is a minefield of complexity, a mixture of statute overlaid with judge-made rules and again overlaid with statute. In 2002, the noble and learned Lord the then Lord Chancellor referred both the procedural and the compensation issues to the Law Commission. In 2003, it published its final report on the compensation issues. That report was well received. Regrettably, the previous Government did not find time to implement the report’s recommendations. This is not the time or the place to try to implement all of them, but there is a need to address one aspect which underpinned both the cases that I have mentioned and produced the most difficult results: the planning assumptions that are made in assessing compensation.

In Committee in another place, Barbara Keeley moved amendments which would rewrite the planning assumptions in the Land Compensation Act. The amendment had the backing of the Compulsory Purchase Association and the Royal Institution of Chartered Surveyors and was in accordance with the recommendation on planning assumptions contained in the Law Commission’s report. In response, the Minister, Greg Clark, very helpfully said that he would reflect seriously on what had been said and consider representations with an open mind. Since then, I am pleased to say that—as reported to me at least—good progress has been made. There was a meeting between the CPA, RICS and officials of the government department, and they have been encouraged by the positive nature of the exchanges. An impact assessment has been drafted, and there seems to be general agreement that no concomitant changes or amendments are required, an issue which concerned the Minister in Committee.

I hope that this matter can now be addressed. There is widespread agreement as to the nature of changes that are required and the need to effect them now. In the Court of Appeal judgment, all three judges expressed the hope that parliamentary time would be found to address these issues. Lord Justice Buxton said that if government were not prepared to act, local authorities, faced with uncertainty and deprivation of scarce funds, must exert political pressure to correct the anomaly.

We will return to this issue in Committee. Those who have promoted the change in the law have been greatly encouraged by the Government’s response so far. I hope that that will continue. Certainly, if the Government decide to bring forward amendments to the Bill, they will have my full support in doing so.