Money For Nothing? CPO Compensation Reform, Land Value Capture

To what extent might the state choose to tax land owners, through reducing their compensation entitlement, in order to facilitate the provision of housing or infrastructure, rather than subsidise that provision through more general tax raising? How can the state capture land value gains created by its own infrastructure provision, or due to its own strategic planning for development?
These questions are central to a number of current areas of public policy thinking, including:
– Using compulsory purchase 
– Land auctions and land value capture charges
– Benchmark land values in viability appraisal
– CIL reform
There are some confluences arising in this area between current Conservative party thinking, other political parties, Transport for London and Shelter to name but a few. I’m not sure that land owner interests have yet joined all the dots. Developers may wish to partner more closely and regularly with local authorities with compulsory purchase powers, but in other situations should also be aware of the risks ahead for their businesses if additional costs are not sufficiently predictable as to come off the land price or if they cause land owners simply to hold rather than sell. 
Using compulsory purchase

Compulsory purchase is already a practical mechanism for securing land where there is a compelling case in the public interest for interfering with private property rights. Of course it isn’t easy, and will never be. The power is draconian. The necessary procedural safeguards to protect against its abuse make for a slow, procedurally technical process and for uncertain outcomes.

Another disincentive for local authorities can be the significant compensation costs payable, given the fundamental principle that the land owner is entitled to what the value of his interest would have been were it not for the compulsory acquisition (the ‘equivalence’ principle). Even where compensation liability is being underwritten by a developer partner, the extent of compensation is:
– likely to affect whether the project is viable after all; and
– not ascertainable until all parties are too far in to back out due to the leisurely pace at which a compensation figure is determined (both pre- and post-reference to the Lands Tribunal, aka Lands Chamber of the Upper Tribunal). 
The Conservative manifesto, published on 17 May 2017, refers to compulsory purchase in this one paragraph:
“We will enter into new Council Housing Deals with ambitious, pro-development, local authorities to help them build more social housing. We will work with them to improve their capability and capacity to develop more good homes, as well as providing them with significant low-cost capital funding. In doing so, we will build new fix-term social houses, which will be sold privately after ten to fifteen years with an automatic Right to Buy for tenants, the proceeds of which will be recycled into further homes. We will reform Compulsory Purchase Orders to make them easier and less expensive for councils to use and to make it easier to determine the true market value of sites”

I am guessing that what is planned goes further than making the current system work better. Changes are being considered which would enable in some circumstances greater use of compulsory purchase and, in some circumstances, acquisition at lower values than the equivalence principle would suggest. 
The February 2017 Housing White Paper says this:
“2.43 Compulsory purchase law gives local authorities extensive powers to assemble land for development. Through the Housing and Planning Act 2016 and the Neighbourhood Planning Bill currently in Parliament we are reforming compulsory purchase to make the process clearer, fairer, and faster, while retaining proper protections for landowners. Local planning authorities should now think about how they can use these powers to promote development, which is particularly important in areas of high housing need. 

2.44 We propose to encourage more active use of compulsory purchase powers to promote development on stalled sites for housing. The Government will prepare new guidance to local planning authorities following separate consultation, encouraging the use of their compulsory purchase powers to support the build out of stalled sites. We will investigate whether auctions, following possession of the land, are sufficient to establish an unambiguous value for the purposes of compensation payable to the claimant, where the local authority has used their compulsory purchase powers to acquire the land.

2.45 [ ]

2.46 We will keep compulsory purchase under review and welcome any representations for how it can be reformed further to support development.”
Note the references to encouraging the use of compulsory purchase where development has stalled, and investigating the use of auctions to establish land value (more on that later in this blog post).
Revealingly, in the week before the publication of the manifesto there was a press release with this passage in its “notes to editors”:
“To further incentivise councils to build, the Conservatives also intend to reform compulsory purchase rules to allow councils to buy brownfield land and pocket sites more cheaply. At the moment, councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not. As a result, there has been a more than 100% increase in the price of land relative to GDP over the last 20 years and the price of land for housing has diverged considerably from agricultural land in the last fifty years. Between 1959 and 2017, agricultural land has doubled in value in real terms from £4,300 per acre to £8,900 per acre, while land for planning permission has increased by 1,200%, from £107,000 to just over £1,450,000. Local authorities therefore very rarely use their CPO powers for social housing, leaving derelict buildings in town centres, unused pocket sites and industrial sites remain undeveloped.
I’m guessing at the following policy strands for a future Conservative government from these various statements:
1. Further encouragement for use of CPO powers in the right circumstances, including particular encouragement where a “Council Housing Deal” is in place (guaranteeing social housing with a fixed-term right to buy for tenants) and possibly where private sector development is shown to have stalled (link this and the “delivery” elements of the Housing White Paper and this could be quite a stick to wield).
2. Further process reform likely.
3. Reform likely of the process for determining the compensation price to be paid, so that (1) figures are known earlier on, (2) the land auctions model is followed (see later in this blog post) to determine values in appropriate circumstances and (if those ‘notes to editors’ are to believed) (3) in some circumstances authorities will be able to acquire land for less than it is worth (possibly ruling out hope value unless planning permission or a certificate of appropriate alternative development under section 17 of the Land Compensation Act 1961, has actually been obtained). 
The last point (still speculation) has caused consternation and excitement in equal measure. The principle of equivalence is at stake, but equally this opens up the prospect of securing land for development at an undervalue so as to achieve affordable housing at no cost to the state. Money for nothing (unless you are the land owner). Shelter for example have been lobbying for a similar approach. Their May 2017 paper Financing the infrastructure and new homes of the future: the case for enabling acquiring authorities to purchase land for strategic development under a special CPO compensation code May 2017 lobbies for Government to:

enable acquiring authorities to purchase land for strategic development under a special CPO compensation code. This would involve three changes:

1)  An amendment to the National Planning Policy Framework to allow planning authorities to designate land for strategic development; 

2)  An amendment to Section 14 of the 1961 Land Compensation Act to disregard prospective planning permissions on land designated for strategic development; 


3)  An amendment to Section 17 of the 1961 Land Compensation Act to restrict the use of certificates of alternative development on land designated for strategic development.”

Shelter’s delight at the references in the Conservatives’ recent policy announcements is plain to see from their subsequent 16 May 2017 blog post Compulsory purchase and council homes – a new direction for housing policy?
Do the Conservatives really intend such a radical market intervention, or do they misunderstand how the compensation system currently works? The reference in the press release’s “notes to editors” that “councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not” is of course wrong. The prospect of planning permission for development in the “no scheme world” is taken into account in arriving at a valuation but the existence of a planning permission is never assumed. 

However logically necessary the concept is, the “no scheme world” (or “Pointe Gourde”) rule been much criticised for being difficult to apply in practice. Its complexities were most recently explored by the Supreme Court in Homes & Communities Agency v JS Bloor (Wilmslow) Ltd  (22 February 2017), where Lord Carnwath said this:
The rule has given rise to substantial controversy and difficulty in practice. In Waters v Welsh Development Agency [2004] 1 WLR 1304; [2004] UKHL 19, para 2 (“Waters”), Lord Nicholls of Birkenhead spoke of the law as “fraught with complexity and obscurity”. In a report in 2003 the Law Commission conducted a detailed review of the history of the rule and the relevant jurisprudence, and made recommendations for the replacement of the existing rules by a comprehensive statutory code…”

Lord Carnwath had himself of course chaired that review. Too late for the litigants in Bloor, now finally, by virtue of section 32 of the Neighbourhood Planning Act 2017  (which introduces new sections 6A to E into the Land Compensation Act 1961) we have a codified version of the “no scheme world” rule. (The compulsory purchase provisions within the 2017 Act are well summarised by David Elvin QC in a paper  to the 2017 PEBA conference). 

New section 6E has refined the rule so that it is now more difficult for claimants to rely on increases in value of their land created by the transport project for which the land has been acquired, where regeneration or redevelopment was part of the justification for the transport project. 
The big question is whether a more radical manipulation of the “no scheme world” rule might be possible, even if it parted from the principle of equivalence. After all, if land for development could be secured at little more than agricultural value…?
It would be mightily difficult, indeed controversial to the extent of potentially being counter-productive, if land is to be acquired without prolonged legal wrangling. If in the real world your land has hope value for another form of development, why should that be ignored? However, in fact it’s not legally impossible.
Article 1 of the protocol to the European Convention on Human Rights states as follows:
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. 

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

(Incidentally, the Conservative manifesto confirms: “We will not repeal or replace the Human Rights Act while the process of Brexit is underway but we will consider our human rights legal framework when the process of leaving the EU concludes. We will remain signatories to the European Convention on Human Rights for the duration of the next parliament.“)
The European Court of Human Rights interprets Article 1 of the protocol so as to require compensation to be paid in relation to the confiscation of property. In Lithgow v UK  (European Court of Human Rights, 8 July 1986), a case arising from Labour’s nationalisation of various industries under the Aircraft and Shipbuilding Industries Act 1977, the court said:
“The Court further accepts the Commission’s conclusion as to the standard of compensation: the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference which could not be considered justifiable under Article 1 (P1-1). Article 1 (P1-1) does not, however, guarantee a right to full compensation in all circumstances, since legitimate objectives of “public interest”, such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value”.


Whilst a distinction was drawn in the case between state nationalisation of industries and the compulsory purchase of property, the same basic principles apply. It is clear from this and other cases that individual states are given a margin of appreciation to determine what is in the public interest. For example:
Sporrong and Lönnroth v. Sweden  (22 September 1982) (a case about longterm blight caused by ‘zonal expropriation permits’)
 “…the Court must determine whether a fair balance was struck between the demands of the general interests of the community and the requirements of the protection of the individual’s fundamental rights…
James v UK  (21 February 1986) (a challenge brought by the trustees of the estate of the Duke of Westminster to leasehold enfranchisement under Leasehold Reform Act 1967):
“Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is “in the public interest”. Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment both of the existence of a problem of public concern warranting measures of deprivation of property and of the remedial action to be taken… Here as in other fields to which the safeguards of the Convention extend, the national authorities accordingly enjoy a certain margin of appreciation.” The Court went on to find that the aim of the Leasehold Reform Act 1967, namely greater social justice in the sphere of housing, was a legitimate aim in the public interest



Similarly, in theory a mechanism might be arrived at which in some way disentitled land owners in some circumstances from achieving a full market value for their land. But the circumstances would need to be carefully circumscribed and the reaction of most land owners would be to fight rather than one of flight. 
It is not as if compulsory purchase compensation is presently particularly generous, even with the additional loss payments (capped, even for owner-occupiers, at the lesser of 10% of the compensation payable and £100,000) that were introduced by the Planning and Compulsory Purchase Act 2004 specifically to sweeten the pill for land owners and make compulsory purchase less contentious! Do we really want more uncertain situations such has arisen at the Aylesbury Estate, with the Secretary of State rejecting  a CPO made by the London Borough of Southwark, on the basis of the prejudice that would be caused to leaseholders by the inadequate level of compensation payable to them, and now reportedly  having consented to judgment following a challenge by the council, such that all concerned now face a re-opened inquiry?
Furthermore, if these amended compensation principles are only to apply to, for example, Council Housing Deals, how will dispossessed owners be able to recover their property, or further compensation, if the land ends up not being used for the restricted purposes for which the land was taken?
Lastly, that manifesto reference to making it “easier to determine the true market value of sites”. Does this suggest a simplification of compensation principles? Or an overhaul of the timescales for determining compensation liability? Transport for London have recently suggested (in the paper referred to in the next section of this blog post) that the Government might make “the process of acquiring land through compulsory acquisition more transparent by:

* Introducing an independent valuation panel to determine the market value of the land based on the ‘no scheme’ principle set out in the Neighbourhood Planning Bill 2016 

* Establishing (early in the land acquisition process) an objective and transparent evidence base on alternative development potential in the absence of the scheme, for such a panel to determine ‘no scheme’ market values, for instance through the use of a modified section 17 certificate”.
Land auctions, land value capture charges

The passage quoted earlier from the Housing White Paper refers to “auctions”. Academic Tim Leunig has been promoting  the idea of “community land auctions” for a long time and indeed the idea was toyed with in the early years of the coalition government, whilst to a number of us it seemed naive in its assumption as to how planning actually works:
“The council first asks all landowners to name the price at which they are willing to sell their land. By naming a price, the landowner gives the council the right to buy the land for 18 months at that price. The council then writes a development plan. As now, they will take into account the suitability of the land offered for development, but will also consider the price of the land, and the likely financial return to the council.”
Transport for London has more recently been promoting a more sophisticated “development rights auction model” as a method of capturing land value increases created by transport infrastructure improvements. Their 20 February 2017 land value capture report , summarises it as follows:
“For zones with high development potential (particularly for housing) with multiple landowners, the Government, TfL and the GLA should consider the development rights auction model (DRAM), a new land value capture mechanism. 

The key features of the development rights auction model are: 

* The integrated planning and consenting of land use and density in a defined zone around a major new transport facility, in parallel with the planning of the transport scheme 
* The introduction of a periodic development rights auction, in which development rights over land put forward (voluntarily) by landowners are auctioned in assembled packages to a competitive field of developers. Gains above a reserve price are shared between the participating landowners and the planning/auctioning authority. No development taxes (such as CILs or s106 payments) are payable under this scheme. All non-operational but developable public sector-owned land within the zone is entered into the auction as part of a standard public sector land pooling arrangement 

* The introduction of a high zonal CIL for those landowners who wish to self- develop rather than participate in the auction 

* The use of reformed compulsory purchase order (CPO) powers (following successful passage of the Neighbourhood Planning Bill 2016) to deal with holdout problems that threaten to stall development, together with further consideration of other options as discussed in the report”.
The Government’s 8 March 2017 budget announcements included a memorandum of understanding  entered into with the GLA, that says this:
“At Budget 2016, the government invited Transport for London (TfL) to bring forward proposals for financing infrastructure projects from land value uplift. 

The government has agreed to establish a joint taskforce bringing together the GLA, TfL, London Councils, HM Treasury, Department for Transport (DfT) and Department for Communities and Local Government (DCLG) to explore the options for piloting a Development Rights Auction Model (DRAM) on a major infrastructure project in London.

Should a pilot of DRAM be agreed, it will be jointly evaluated by London and the government to review its effectiveness and determine whether a similar model could be applied to other infrastructure projects.”


I can’t presently relate the DRAM initiative to the reference in the Housing White Paper (quoted above) to establishing land value via auctions in CPO situations, following possession. What on earth is that a reference to?
TfL’s February 2017 paper has various other more radical policy suggestions to capture infrastructure-related land value increases, including changes to SDLT, to retention of business rates and a new “land value capture charge” This would “capture a proportion of the premium paid to landowners by new purchasers or tenants of residential property for access to new transport facilities“. (Shall we call a tax a tax though, folks?). 
There is also a current RTPI research project The Use of Alternative Land Value Capture Mechanisms to Deliver Housing in England and Wales.
Benchmark land values in viability appraisal

One of the most contentious issues in relation to developers’ project viability appraisals (carried out for the purposes of seeking to agree reductions in the scale of section 106 affordable housing and other obligations) is the benchmark land value that should be applied as a cost input. Clearly it should not be the actual market value (which would lead to circularity) but equally it should not be just the existing use value (EUV), which would not reflect reality and would result in schemes being assumed to be viable when in reality they would not be because the land would not be made available at the assumed benchmark value. 
The 2012 RICS guidance, Financial Viability In Planning  , advises that it is appropriate to take into account alternative use value (AUV):
“Site Value should equate to the market value subject to the following assumption: that the value has regard to development plan polices and all other material planning considerations and disregards that which is contrary to the development plan.”
As summarised in my 1.12.16 blog post  , the London Mayor is seeking to move away from accepting AUV, preferring an “EUV+” approach, ie existing use value “plus premium”, with the methodology for calculating the premium left undefined, and therefore a recipe for continuing debate. 
In practice, surely any attempt to pitch EUV+ at less than AUV is equivalent to restricting the application of the “no scheme world” rule – a policy intervention to apply that shortfall for public purposes. Except that with viability negotiations, it could of course lead to development simply not proceeding. Is there then a stalled scheme and grounds for compulsory purchase? The extent to which this sort of economic intervention is acceptable needs to be carefully limited and defined. 
CIL reform

There have been rumours that the reason why the Government parked in February any response to the CIL review team’s report was that the new ministerial team had started to think about whether in fact any replacement for CIL should encapsulate land value concepts (memories of the planning gain supplement anyone?). There is certainly no mention of CIL in the Conservative manifesto. Certainly the policy priorities as between CIL and affordable housing need to be reconsidered. 

If we weren’t in such dire straits, we could of course go back to a position where the state invested in social housing and funded public services without weighing the costs so heavily on land owners and developers. In the meantime, over the next five years we’ll definitely see answers emerge to those questions I posed back at the beginning of this overlong post. 
Simon Ricketts 20.5.17

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From The White Paper Mountain, What Do We See?

After so long we have reached the top of the mountain: the white paper and accompanying documents have all been published today, 7 February 2017. However, now we see a series of further peaks on the horizon. 
A good way into the white paper itself, Fixing Our Broken Housing Market, is to start at the back end. From page 72 you have the detailed proposals listed, including a series of proposed changes to the NPPF and other policies which are now the subject of a consultation process from today until 2 May 2017. The consultation focuses on a series of 38 questions but some of the questions are potentially very wide-ranging. Further consultation is proposed on various matters, including 
– housing requirements of older people and the disabled

– Increasing local authorities’ flexibility to dispose of land at less than best consideration and related powers

– Potentially increasing fees for planning appeals (up to a maximum of £2,000 for the largest schemes, recoverable if the appeal is allowed)

– Changes to section 106 processes (with further consideration being given to dispute resolution “in the context of longer term reform”)

– Requiring housebuilders to provide aggregate information on build-out rates and, for large-scale sites, as to the relevance of the applicant’s track record of delivering similar schemes

– Encouragement of use of CPO powers to support the build out of stalled sites. 

There is a supplementary consultation paper on planning and affordable housing for build to rent  containing a further 26 questions, with a consultation deadline of 1 May 2017.
There are responses to previous consultation papers and reports:
– Summary of responses to the technical consultation on implementation of planning changes, consultation on upward extensions and Rural Planning Review Call for Evidence  (including a u-turn on the previous idea of an upwards extensions permitted development right in London, now to be addressed by policy). 
– Government response to the Communities and Local Government Select Committee inquiry into the report of the Local Plans Expert Group 
There is plenty to get to grips with, for example:
– the housing delivery test and new methodology for assessing objectively assessed need

– an understandable focus on whether the applicant will proceed to build out any permission and at what rate, although with a worrying reduction of the default time limit for permissions from three to two years

– Homes and Communities Agency to become “Homes England”. 

It is also reassuring to see the Government applying real focus to build to rent, reducing its emphasis on starter homes – and also reducing its reliance on permitted development rights. 

However, it is surprising how much still remains unresolved. We will apparently have a revised NPPF “later this year” but for much else the start date looks to be April 2018, for example a widened affordable housing definition including watered-down starter homes proposals (no longer a statutory requirement and with reference to a policy target of a minimum of 10% “affordable housing ownership units” rather than the requirement of 20% starter homes previously proposed) and a new methodology for assessing five year housing land supply. 

Liz Peace’s CIL review team’s review of CIL: “A new approach to developer contributions”  (October 2016 but only now published) remains untackled. The Government’s response will be announced at the time of the Autumn Budget 2017. 

Decision-makers will need to grapple very quickly with the question as to the weight they should give to the white paper as a material consideration, given the Government’s clear policy direction now on a range of issues. 


Simon Ricketts, 7.2.17
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Hillingdon JR: Lucky Strike Out?

In R (London Borough of Hillingdon & others) v Secretary of State  (Cranston J, 30 January 2017) the Government achieved an impressive strike out of the first challenge to the proposed third runway at Heathrow, following the Government’s 25 October 2016 announcements. My 15 October 2016 blog post Airports & Courts wins no prizes for predicting a series of such challenges.  
Following the strike out, the draft Airports NPS  was promptly published on 2 February for a 16 weeks’ consultation period. 
However, was this somewhat of a lucky win? The Government’s position, accepted by Cranston J, was that the effect of section 13(1) of the Planning Act 2008 was that there can be no legal challenge of a Government announcement of a decision to publish a draft NPS, but that any challenge instead has to be made within a six week window following final designation of the NPS.
Section 13(1) provides as follows: 
“A court may entertain proceedings for questioning a national policy statement or anything done, or omitted to be done, by the Secretary of State in the course of preparing such a statement only if –



(a) the proceedings are brought by a claim for judicial review, and

(b) the claim form is filed [before the end of] the period of 6 weeks beginning with [the day after] —

 
(i) the day on which the statement is designated as a national policy statement for the purposes of this Act, or



(ii) (if later) the day on which the statement is published.”

So was the 25 October 2016 announcement something done “in the course of preparing” an NPS? Hmm.
Was the operation of section 13(1) intended to be so different from sections 23 and 25 of the Acquisition of Land Act 1981, which provide for a six week deadline for challenging a compulsory purchase order from publication of notice of its confirmation and the exclusion that a CPO otherwise “shall not, either before or after it has been confirmed, made or given, be questioned in any legal proceedings whatsoever“? So, according to the 1981 Act, no challenges before the CPO has been made but the Supreme Court in R (Sainsbury’s Supermarkets Limited) v Wolverhampton City Council  (12 May 2010) has entertained a judicial review of a council’s resolution to make a compulsory purchase order. Is the drafting within the 2008 Act distinguishable from the 1981 Act? Even if it is, where is the logic? With CPOs the widely understood risk of JR of the resolution to make a CPO, before section 25 cuts in to prevent further challenges until the order has been finally confirmed or rejected, is the reason why acquiring authorities commonly seek to leave as little time as possible between that final resolution and making the order. There is no reference in Cranston J’s judgment to this (surely) analogous process

.

Whatever the rights and wrongs, the decision to go for a strike out – always high stakes, given the risk of adding to the time needed to dispose finally of the challenge or at least the risk of egg on face – has so far proved to be the right one, although I do not know whether the claimant local authorities plan to appeal. Even if cleared for take off, the proceedings would in any event face a bumpy ride give that judicial review is a remedy of last resort and it could be said that the claimant authorities should first be making representations to the draft NPS before resorting to litigation?
It was a good week all round for Heathrow. By a decision letter dated 2 February 2017  the Secretaries of State for Communities and Local Government and Transport allowed an appeal by the airport, permitting enabling works to allow it to implement “full runway alternation during easterly operations” (ie, basically, regular easterly departures from the northern runway), after a June 2015 (yes 2015) inquiry and initial refusal by Hillingdon Council in March 2014 (yes 2014) of the airport’s planning application.  
Finally, a post script on challenges to CPO decisions, and to my 22 September 2016 blog post Regeneration X: Failed CPOs. Local Government Lawyer reports that after an oral hearing Collins J has granted Southwark Council permission to challenge the Secretary of State’s decision not to confirm the Aylesbury Estate CPO, Dove J having previously refused permission on the papers. Collins J apparently also “proposed that a meeting should be held between the two parties before any litigation began, considered that it would be unlawful for Southwark to offer more than was allowed under the Compensation Code, and recognised that the decision had significant knock-on effects for other schemes“. It would be no surprise at all to me if the decision is eventually overturned. 
You may now unfasten your seat belts.

Simon Ricketts 4.2.17

Personal views, et cetera

Level Playing Fields: Football Stadia & Planning

Professional football throws up such planning dilemmas. Stadia developments, usually now accompanied by a panoply of other uses, are space-hungry beasts, with extreme peaks in terms of traffic movements and noise. Football clubs are powerful institutions, often not driven by rational economic considerations, able to generate letters of support for their proposals from around the globe and with inevitably strong local political connections. And each club is effectively a monopoly: if a club says it needs to move or expand, what is a council to do? Who is going to blow the whistle?
It’s a particularly interesting week ahead for sports planning fans:

Chelsea


Chelsea FC’s proposed redevelopment of Stamford Bridge to create a new 60,000 seat stadium, with a direct link to Fulham Broadway tube station, is to be considered by the London Borough of Hammersmith and Fulham’s Planning and Development Control Committee on 11 January 2017 with a recommendation for approval. Whilst there are a variety of objections from local residents and groups as well as objections from the Royal Borough of Kensington and Chelsea and the Royal Parks, 12,000 people signed and sent in standard form postcards supporting the development, including 6,449 from outside London as well as 2,481 from outside the UK – how much weight should be given to this sort of managed process?

Luton Town
Now here’s a curious situation. Luton Council’s submission version of its local plan, currently under examination, allocated a site just off junction 10 of the M1 for the relocation of league division 2 Luton Town FC from its Kenilworth Road Stadium. The site known as south of Stockwood Park, has been the club’s favoured relocation choice for many years. The club acquired it in 2015. There is a separate site in Luton town centre, known as the Power Court site, which is allocated for retail led development (although at submission stage the council made a modification to introduce the possibility of an element of use class D2 assembly and leisure). 
The club has now decided that it does not wish to build a 15,000 seat stadium on the south of Stockwood Park site and instead wishes to build a 17,500 (rising ultimately to to 22,500) seat stadium on the Power Court site. In August 2016 it made planning applications  for a stadium and associated development at the Power Court site and for retail and mixed use development at its out of town south of Stockwood Park site. The applications have not yet been determined.  
Luton Council wrote to the local plan inspector on 22 November 2016 to indicate that, as it has “clear and unequivocal statements from the landowner to the effect that a stadium will not be developed” at the junction 10 site it had decided at a council meeting on 15 November 2016 to remove from the south of Stockwood Park allocation references to a 15,000 seater stadium and related facilities. 
The local plan inspector is holding hearing sessions on 10 and 11 January 2017 to pick his way through the position and has issued supplementary questions for the sessions in the light of the turn of events. 

Millwall
The land surrounding Millwall’s New Den is the subject of a planning permission for the New Bermondsey mixed use development project, being promoted by Renewal Limited, which owns most but not all of the site. Renewal has been working with Lewisham Council to bring the scheme, which includes 2,400 new homes, community sports facilities, health centre, premises for a local church, business space and studios and enhanced public realm, to fruition. Renewal and Lewisham assert that the scheme will complement and support the club’s activities at the stadium. 

However, the club and its supporters oppose elements of the Renewal scheme, asserting that the proposals would jeopardise the status of its youth academy which would in turn jeopardise the future of the club at the New Den. The Council’s Mayor and Cabinet decided on 7 September 2016 that a CPO should be made but, following pressure (including the 27,000 signature Defend Our Den campaign), the decision was called in under the Council’s internal procedures and the Council’s cabinet is due to reconsider the decision at a meeting on 11 January 2017, albeit with, again, a recommendation that the Council should use its CPO powers. 
The issue has reached the national press, with a Guardian story  on 5 January breathlessly headlined “Millwall admit council scheme could force club to leave Lewisham”. The Council has published its own Questions and Answers  document.
Three different stories, from three different leagues. But familiar themes. How can clubs’ reasonable needs and the aspirations of their fans be mediated as against other planning objectives? And who determines need?
Simon Ricketts 7.1.17
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Devo West Mids

Connecting the dots as to the Government’s policy announcements is never easy for all of us on the outside, trying to work out what they may turn out to mean in practice. 
An evidence session today with the West Midlands Land Commission was a good excuse for me to get to grips, belatedly, with what changes devolution may bring to planning and compulsory purchase in the West Midlands. 


Background

The West Midlands Combined Authority  was formally established on 16 June 2016 by virtue of the West Midlands Combined Authority Order 2016 . It comprises 17 local authorities and three LEPs and follows a devolution agreement dated 17 November 2015  .

The WMCA is to be chaired by a directly elected Mayor. The election is due to take place on 4 May 2017. Andy Street is to step down from his job as John Lewis chief executive to stand, as the Conservative candidate. Sion Simon is the Labour candidate. 
The devolution agreement includes the following statements in relation to planning:
“Planning powers will be conferred on the Mayor, to drive housing delivery and improvements in housing stock, and give the same competencies as the HCA.

“The Combined Authority and its constituent authorities will support an ambitious target for the increase in new homes, and will report annually on progress against this target. To ensure delivery of this commitment, the Shadow Board of the Combined Authority and the government agree that: 


    * Existing Local Authority functions, which include compulsory purchase powers, will be conferred concurrently on the Combined Authority to be exercised by the Mayor. These powers, which provide the same competencies as the Home and Community Agency, will enable the Combined Authority to deliver its housing and economic growth strategies. The government will bring forward further proposals for consultation in the New Year and will, as part of that consultation, discuss how they can be applied to support housing, regeneration and growth. 


    * The Homes and Communities Agency and the Combined Authority will work together to develop a joint approach to strategic plans for housing and growth proposals for the area. 


    * The government will work with the Combined Authority to support the West Midlands Land Commission. The West Midlands Land Commission will ensure there is a sufficient, balanced supply of readily available sites for commercial and residential development to meet the demands of a growing West Midlands economy. It will create a comprehensive database of available public and private sector land, identify barriers to its disposal/development, and develop solutions to address those barriers to help the West Midlands meet its goal to deliver a significant number of additional new homes over the next 10 years, and to unlock more land for employment use. The Combined Authority will also be able to use their proposed Land Remediation Fund to support bringing brownfield sites back into use for employment and housing provision”. 

WMCA’s ambitious objectives are set out in its Strategic Economic Plan  and include a “higher level of housebuilding than is currently provided for in development plans”. 
A Scheme for the Mayoral West Midlands Combined Authority was published on 4 July 2016 for a consultation period which closed on 21 August 2016. It seeks equivalent powers to establish mayoral development corporations, with the agreement of the relevant LPAs, as the London Mayor currently has. It also seeks, for its area, the same planning and compulsory purchase powers as the Homes and Communities Agency. 
The West Midlands Land Commission has also been set up, with terms of reference  to consider “what measures could be initiated and undertaken to ensure an improved supply of developable land from both a strategic and regional perspective”. 
WMCA has begun to work on specific strategic sites. It published on 19 October 2016 its Greater Ickneild and Smethwick housing growth prospectus. An application for housing zone status is to be made. (Although – is it just me? – the Government’s housing zones announcement 5 January 2016  is very vague as to the implications of HZ status other than the potential for an element of Government funding). 
Implications
What sort of planning powers WMCA will have to encourage, cajole and coordinate the work of its member authorities? Increased housing numbers will not come without real interventions and a new approach by all involved – in which I very much include the Government. After all:
– the Birmingham City Plan is still on hold following the previous Secretary of State’s 26 May 2016 holding direction as a result of concerns expressed by Sutton Coldfield MP Andrew Mitchell as to the proposed release from the green belt of land for the development of 6,000 homes

– we are still waiting for numerous measures to be fleshed out pursuant to the Housing and Planning Act 2016, including permission in principle and also the enticing mystery that is the concept in section 154 of “planning freedoms schemes”

– there is still no sign of the amended NPPF with its stronger policy support for development on brownfield sites. 

Will the WMCA be given CPO powers equivalent to the very wide powers that the HCA has by virtue of section 9 of the Housing and Regeneration Act 2008, or will it at least have a working arrangement with the HCA whereby the HCA will use its powers at the authority’s request? The section 9 power is much wider than LPAs’ normal “planning purposes” CPO power in section 226 of the Town and Country Planning Act 1990 as it can be used to achieve the HCA’s broader objectives as set out in section 2 of the 2008 Act:
“(a) to improve the supply and quality of housing in England, 

(b) to secure the regeneration or development of land or infrastructure in England, 


(c)  to support in other ways the creation, regeneration or development of communities in England or their continued well-being, and 


(d)  to contribute to the achievement of sustainable development and good design in England”

The use, or threat of use, of section 9 as against suitable sites which are not brought forward for development by their owners, might well be effective – particularly when taken with acquiring authorities’ possibly improved position against owners’ “no scheme world” compensation arguments by virtue of clause 22 of the Neighbourhood Planning Bill. 
Interesting also to see the London-style “Mayoral development corporations” proposal in the July Scheme document. But what about possibly developing other London-style structures, including the referral to and potential call-in by the Mayor of applications for strategic schemes?
So many unfinished legislative changes and policy announcements. As E. M. Forster (who died in Coventry – sole tenuous thematic link to blog) might have said: 
only connect
Simon Ricketts 24.10.16
Personal views, et cetera

Building Homes By CPO

This blog post supplements a 27 October 2016 Planning Futures event  hosted by City University on the role of compulsory purchase in solving the planning crisis.
Any discussion like this needs to be in the context of wider legislative and policy initiatives in relation to the operation of the planning system, of seeking to ensure that development is viable and of the role of the public sector in delivery. There is a risk that it is treated by professionals in a silo as a specialist discipline, rather than as an inherent part of the planning system.
Compulsory purchase is not to be considered lightly. But it shouldn’t be written off as a potential tool in the right circumstances. 
LPAs commonly have various concerns over use of theIr CPO powers – that the process
– is time intensive

– is costly

– can be politically sensitive

– needs specialist experience

– gives rise to compensation liabilities

– should be a last resort. 

Much of this true. However the power in section 226 of the Town and Country Planning Act 1990 is there to be used and there is detailed, relatively up to date (2015), guidance. Whilst the procedure is still not simple (it never will be), substantial improvements are being made to the legislative basis. 
Without the threat of CPO, will some, otherwise suitable, sites come forward? Allocation is not always enough to secure development. Indeed, radical thought: should permission in principle under the Housing and Planning Act 2016 in some circumstances come with the threat of CPO if development doesn’t proceed without good reason? The threat could be made clear by the LPA when placing land on its brownfield land register or in any other allocation intended to lead to permission in principle. 
Compulsory purchase is a tried and tested process with city and town centre retail-led schemes, where there is familiarity with the steps and approach to be taken by LPA hand in hand with its developer partner, with the developer partner meeting costs and compensation liabilities by way of an indemnity agreement. Properly drafted, such agreements can avoid difficulties in relation to the duty to secure best consideration in section 123 of the Local Government Act 1972 (Standard Commercial Property Securities Limited v Glasgow City Council  House of Lords, 16 November 2006) or in relation to public procurement (see my previous Section 123…Go!  blog post for more). 
Nationally Significant Infrastructure projects of course have the benefit of the bespoke DCO process under the Planning Act 2008, under which compulsory powers are routinely secured. 
In contrast, CPOs are not so common for housing-led schemes but there is no fundamental reason why this is so. 
Recent and forthcoming improvements to the compulsory purchase system include:
– Those in the Housing and Planning Act 2016  (eg wider powers to enter and survey land and tightening timescales, including timescales for securing advance payments of compensation)

– The imminent freedom under section 160 of the 2016 Act for NSIPs to include related housing on the same infrastructure development site or close to it, with a 500 homes cap having been consulted upon in October 2015.

– Those in the Neighbourhood Planning Bill  (eg facilitating temporary possession of land, codifying and limiting the no scheme world principle and enabling GLA/TfL acquisition of land for joint purposes – no doubt to be relied upon so as to maximise the potential for housing development unlocked by Crossrail 2 when the Hybrid Bill for that scheme comes forward). 

The Act and Bill were both preceded by detailed consultation papers, in March 2015  and March 2016  respectively. 
The changes are for a reason – because the Government wishes to see the powers used!
I assume that there is also appetite from private sector developers willing to partner with LPAs through the process, where significant sites can be unlocked as a result. 
Other bodies of course have CPO powers that can be used to bring about more homes, for instance the Homes and Communities Agency’s wide powers in section 9 of the Housing and Regeneration Act 2008, as well as the Mayor of London and his Mayoral Development Corporations. There is also the intriguing power in clause 48(1) of the HS2 Bill  :
“If the Secretary of State considers, having regard to the relevant development
plan, that the construction or operation of Phase One of High Speed 2 gives rise
 to the opportunity for regeneration or development of any land, the Secretary 5 of State may acquire the land compulsorily”
Obviously there are still pitfalls in the CPO process. I referred to some of them in a recent blog post, Regeneration X: Failed CPOs  since when we have had the Seaton Carew decision letter  dated 13 October 2016 , where the Secretary of State rejected a CPO on the ground that a planning permission (for a community and leisure based project) not rooted in planning policy was not a sufficient basis for use of section 226. Whilst there will always need to be a compelling case in the public interest to justify compulsory purchase, are the Aylesbury Estate and Seaton Carew instances of where the tests are being applied too strictly, or perhaps even an indication that the legislation and guidance should be reviewed again to assess whether the bar is in fact set too high?
More generally, shouldn’t more encouragement (and funding) be given by Government for the use of compulsory purchase to deliver housing sites, whether this is either by way of 
– LPAs either acting for themselves where they have access to funding, or backed by private sector developer partners, to deliver specific schemes or 

– the HCA and other bodies with regeneration CPO powers looking to assemble sites and bring them to market?

Although it seems not to be a popular idea with Government so far, let’s also not forget the potential for expanding by legislation the scope of the DCO process to encompass the very largest urban extension and new settlement proposals. 

Simon Ricketts 28.10.16
Personal views, et cetera

Regeneration X: Failed CPOs

The Secretary of State’s decision letter  dated 16 September 2016 in relation to the Aylesbury Estate CPO has major implications for all regeneration schemes, including the approach that LPAs should take to planning applications. However, in my view it was not unsurprising in the light of other recent decisions. 

The whole of the decision letter is worth reading but I quote the most relevant passages below. It will be seen that the critical failings of the proposals in the eyes of the Secretary of State were (1) the impacts on displaced leaseholders who might not be able to remain in the area and (2) the potentially disproportionate or at least unassessed effects of the proposals on specific protected groups under the Equality Act 2010. 
 “20. the options for most leaseholders are either to leave the area, or to invest the majority of their savings in a new property. Article 8(1) [of the European Convention on Human Rights – right to respect for private and family life] is therefore clearly engaged. In relation to Article 8(2) (which permits interference which is proportionate when balanced against the protection of the rights and freedoms of others), the Secretary of State finds that the interference with residents’ (in particular leaseholders’) Article 8 rights is not demonstrably necessary or proportionate, taking into account the likelihood that if the scheme is approved, it will probably force many of those concerned to move from this area.

21. For elderly residents, who are of an age where they would probably be unable to obtain a mortgage to make up any shortfall and their future earning potential is likely to be limited, using their savings and other investments would severely limit their ability to choose how they spend their retirement and the use to which they put their savings and investments. The leaseholders are not obliged to accept either of the options to them (shared ownership or shared equity) to stay on the Estate, and could potentially purchase a property on the open market. However, many of the leaseholders will probably be unable to afford these options and will have to move away from the area. The likelihood that leaseholders will have to move away from the area will result in consequential impacts to family life and, for example, the dislocation from local family, the education of affected children and, potentially, dislocation from their cultural heritage for some residents.

22. Article 1 of the First Protocol of the ECHR entitles a person to peaceful enjoyment of their property, but also stipulates that this provision does not impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest. As mentioned below, the Inspector in this case found that the interference with residents’ peaceful enjoyment of their property was not necessary to control the use of property in accordance with the general interest, and accordingly that the interference with Article 1 of the First Protocol was not proportionate (IR422). The Secretary of State agrees that interference with the residents’ human rights is not proportionate in all the circumstances.

23. In making this decision, the Secretary of State must give due regard to the need to (a) eliminate unlawful discrimination, harassment, victimisation; (b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; and (c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it. Protected characteristics are: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. This arises from the Public Sector Equality Duty, under section 149 of the Equality Act 2010.

26. The negative impacts on protected groups would include the effect of the impact on elderly leaseholders currently resident on the Estate, as identified at IR 372 to 373 and IR 401 and 402, namely the fact that many of the leaseholders (who will have no right to be accommodated in the scheme) are of an age where they would probably be unable to obtain a mortgage to make up any shortfall and their future earning potential is likely to be limited. Using their savings and other investments would severely limit their ability to choose how they spend their retirement and the use to which they put their savings and investments. The leaseholders are not obliged to accept either of the options open to them (shared ownership or shared equity) to stay on the Estate, and could potentially purchase a property on the open market. However, many of the leaseholders will probably be unable to afford these options and have to move away from the area. This is likely to impact particularly on those with the protected characteristic of age, including in relation to the care of older relatives and children’s education (as people have to move out of the area, this will mean that the elderly are deprived of having a local family to care for them, and the children of those parents affected are likely to have to move schools when their family moves to a different area).

27. This impact on the care of older relatives may adversely affect their ability to see and be cared for by their family and potentially to integrate with the rest of society (for instance, without a family member to accompany them in a car or on public transport it may be harder for them to access the shops and public facilities like the GP surgery or local library as they will lack the freely offered assistance to do so) and therefore breaches the PSED requirement to have due regard to the need to foster good relations between persons who share a relevant protected characteristic (the elderly) and persons who do not share it (the rest of the population).

28. The impact on children’s schooling may result in adverse impact on the child’s exam performance and their school reports. This is in turn likely to result in a lower level of achievement than otherwise might have been the case, which is likely to result in a lower level of opportunity for the affected child in terms of their ability to apply successfully for jobs (thus adversely affecting equality of opportunity) and – in terms of uprooting them at a vulnerable stage in their development – a negative impact on the affected child’s good relations with their family and extended social contacts (they are likely to go through a period of isolation as a result of being uprooted from the social networks they had established at their previous home).

29. Given the lack of clear evidence regarding the ethnic and/or age make-up of those who now remain resident at the Estate and who are therefore actually affected by any decision to reject or confirm the Order, it is not possible to clearly identify BME groups (either of the elderly or children) as disproportionately impacted by the proposal. However, given that 67% of the population living on the Estate were of BME origin (see IR 394), it is highly likely that there is a potential disproportionate impact on the elderly and children from these groups, who are likely to dominate the profile of those remaining on the Estate and who are therefore likely to have to move out of the area if the Order is confirmed.

32..there is a shortage of evidence concerning the precise ethnic make-up of those remaining resident at the Estate, who would be affected by a decision to confirm the Order (see above). If, in practice, the cultural and/or ethnic make-up of those resident at the Estate, who are unlikely to be able to remain there, is pre-dominantly those of one or more particular ethnic/ cultural origins, then their cultural life is likely to be disproportionately affected by a decision to confirm the Order. There is also likely to be a negative impact on their ability to retain their cultural ties, undermining their equality of opportunity with other ethnic groups (such as white British) who may not be so disproportionately affected. This is particularly so, in that white British culture is more widely-established across the UK, including at housing sites to which residents may be moved, whereas minority cultural centres are often less widespread, which is likely to make cultural integration harder for those of BME origin who are forced to move than those of a white British origin.” 
For more detailed background London Borough of Southwark’s statement of case  and the leaseholders group’s statement of case  may be of interest. 

In my view, the decision by the Secretary of State, whether justified on the evidence or not (Southwark are reportedly challenging it) is not unexpected following Horada (on behalf of the Shepherds Bush Market Tenants Association) and others v Secretary of State  (Court of Appeal, 18 March 2016) where the Secretary of State’s approach to the Shepherds Bush market CPO was struck down on similar issues. 

The Inspector hearing the Shepherds Bush market CPO inquiry concluded: “the current Orion proposal [which was the basis for the CPO] lacks the mechanisms to be assured of retaining the number, mix and diversity of traders in the way explained above. They are vital to the distinctiveness of the market and the Goldhawk Road shops. Therefore, insofar as it would facilitate delivery of the redevelopment scheme promoted, the CPO would not fully achieve the social, economical and environmental well-being sought”.
The Secretary of State disagreed and confirmed the CPO. The Court of Appeal held that the Secretary of State had acted unlawfully as his reasoning for reaching a different conclusion had been inadequate (shades of the Dover reasoning flaws covered in my last blog post  ):
“In short, although it is clear that the Secretary of State disagreed with the inspector’s view that the guarantees and safeguards were inadequate he does not explain why he came to that conclusion. I do not consider that requiring a fuller explanation of his reasoning either amounts to requiring reasons for reasons, or that it requires a paragraph by paragraph rebuttal of the inspector’s views. But it does require the Secretary of State to explain why he disagreed with the inspector, beyond merely stating his conclusion that he did. The two critical sentences in the decision letter are, in my judgment, little more than “bald assertions”. The Secretary of State may have had perfectly good reasons for concluding that the guarantees and safeguards were adequate. The problem is that we do not know what they were. In those circumstances I consider that the traders have been substantially prejudiced by a failure to comply with a relevant requirement.”

As regards Southwark’s failure to comply with the Public Sector Equality Duty, there are certainly echoes of the ruling by the Court of Appeal in one of the rounds of the Wards Corner saga in R (Harris) v London Borough of Haringey  (Court of Appeal, 5 May 2010) where the court held that the council, when granting permission, failed to discharge its duties under section 71(1) of the Race Relations Act 1976 (now replaced by the Equality Act 2020 Public Sector Equality Duty) in terms of the potential effects of the scheme on Latin American traders or loss of housing by ethnic minorities.

To add a further Court of Appeal ruling into the blog, Grafton Group (UK) plc v Secretary of State  (Court of Appeal, 21 June 2016) is another recent example of a CPO (in this case to seek to protect Orchard Wharf in London’s docklands for operational purposes) being struck down. In this instance, the Secretary of State’s reasoning for confirmation the CPO was held to be inadequate given that the basis for the CPO was a development proposal, planning permission for which had been refused. 
For any of these schemes to fall over at the last hurdle may be seen as a victory to some but is often a tragedy to others who have spent years seeking to secure outcomes that have previously been accepted as being in the public interest. The main lesson for all of us is surely that we need to go the extra mile (or more) to seek to ensure that the likely effects of the scheme and/or dispossession on all of those likely to be affected are properly analysed, that the analysis takes full account of the Public Sector Equality Duty and that any material effects are explained and justified. 
Simon Ricketts 22.9.16
Personal views, et cetera