New Clause 31 - Compensation: application

High Speed Rail(London - West Midlands) Bill – in a Public Bill Committee at 2:30 pm on 8 March 2016.

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“(1) Compensation will be payable to those whose land is to be acquired, and to those who will be severely affected by the works.

(2) The Secretary of State shall define “severely” for the purposes of subsection 1.”—(Andy McDonald.)

This new clause will ensure that compensation is available to those who will be severely affected by the HS2 construction works, as well as to those whose land is to be acquired.

Brought up, and read the First time.

Photo of Andy McDonald Andy McDonald Shadow Minister (Transport)

I beg to move, That the clause be read a Second time.

The point here is that the scheme comprehensively addresses loss of land, compulsory acquisitions, and loss of, and adverse impacts upon, businesses. It has a sophisticated methodology of compensation and rights of appeal to deal with those values. However, there is a glaring omission concerning those who are affected and severely affected by the works but neither own land nor have an affected business.

Not only businesses and property owners are potentially adversely affected. Many tenants, be they in social housing or private rented accommodation, have the potential to be severely affected by the works. It is beyond doubt that individuals, especially those who live  close to the works, will suffer great disturbance, be that from the additional noise and heavy traffic, the vibration caused by piling or other construction activity and, importantly, the air pollution and the creation of dust in the atmosphere. That list is not meant to be exhaustive, and I am sure that hon. Members can think of innumerable ways in which individuals could be affected by the HS2 works.

There is provision for the payment of compensation under the Compulsory Purchase Act 1965, and the Bill makes additional, specific provision for compensation, principally in one of three ways. First, there is the express purchase scheme, under which owner-occupiers living closest to the line may be able to sell their home to the Government at its full, unblighted market value, plus 10%—up to £47,000—and reasonable moving expenses, including stamp duty. Then there is the voluntary purchase scheme, which enables owner-occupiers in rural areas who live outside the safeguarding area and up to 120 metres from the line to sell their home to the Government for its full unblighted value. They will be able to do that at any time up until a year after the line opens.

Finally, there is the need-to-sell scheme, under which owner-occupiers who have a compelling reason to sell their house but are unable to do so because of HS2 can sell to the Government for the full unblighted value. Applicants will not need to demonstrate that they would suffer hardship if they could not sell, but they will need to show that they have a compelling need such as job relocation or ill health. Once available, that scheme will replace the exceptional hardship scheme. In addition, the Government will immediately introduce a “rent back” option, whereby owner-occupiers who have sold their property to the Government but wish to continue living in it may be able to rent it back, subject to suitability checks.

I would be grateful if the Minister could confirm that the Government intend to promote two further proposals for cash payments for affected owner-occupiers, the first of these being a cash payment of between £30,000 and £100,000 for owner-occupiers living outside the safeguarding area and up to 120 metres from the line in rural areas who do not want to sell their home and move. That payment would be an alternative to the voluntary purchase offer.

There will be a homeowner payment for owner-occupiers who live within 120 metres and 300 metres from the route in rural areas. The Government’s initial view is that payments could be between £7,500 and £22,500, depending on a property’s proximity to the route. There is nothing for a tenant in Euston, for example, who cannot move for one reason or another and is simply wedded to their community and cannot tolerate the thought of leaving. If they did, they would not have anywhere else to go. Nevertheless, they may be subjected to all manner of disturbance for many years.

We all recognise the great potential for that amount of disturbance and upset to cause significant physical and mental ill health. The “need to sell” scheme addresses the issue of ill health as an important issue when establishing a compelling need to sell. It is simply unfair that those individuals who suffer health consequences as a result of the works have no ability under the Bill to seek compensation.

Some property owners will not live in the communities affected but, because the value of their asset within the affected area is reduced, they will quite understandably receive compensation, yet an individual, perhaps born in the community and having lived there for decades, who is personally, directly and severely affected by the disturbance of the works, has no ability to receive compensation under the scheme. The new clause does not seek to prescribe what constitutes being severely affected, but leaves that to the Secretary of State to define. One would hope that, in his consultations on achieving such a definition, he would avail himself of expert medical opinion and come to a definition that would fairly address the obvious omission.

There is a very important principle at stake. It is clearly absolutely right that we value, respect and recognise individuals’ and companies’ property rights, and the adverse impact on the value of their property assets. Equally, it is important to value people and the damage caused to them by the loss of peaceable enjoyment of their homes, their peace of mind and physical health when such major works are undertaken, and accordingly any deficit, be it visited on a property owner or tenant, ought to be properly recognised. I therefore commend the new clause to the Committee.

Photo of Robert Goodwill Robert Goodwill Parliamentary Under-Secretary (Department for Transport)

Landowners affected by the exercise of compulsory acquisition or by the construction or operation of the works will be compensated according to the compensation code. The code is a collective term for the principles deriving from Acts of Parliament. It is supplemented by case law relating to compensation for compulsory acquisition. The code is already applied by the Bill to the compulsory purchase of land required for HS2.

Depending on the particular circumstances in each case, compensation can be claimed for the unblighted market value of a property; severance and injurious affection, which is the depreciation in the value of land retained where only part of the claimant’s land holding is acquired; disturbance, representing the costs and losses incurred as a result of being disturbed from the occupation of the property; loss payments, which are an additional set payment depending on the nature of the interest being acquired, for example the home loss payment for a residential owner-occupier is 10% of the unblighted property value up to the maximum value of £47,000; fees, which include reasonable surveyors’ fees incurred in preparing and negotiating a compensation settlement together with solicitors’ fees for any conveyancing; loss in value due to physical factors such as noise, after trains start running; and diminution of value of the claimant’s interest in land caused by the works interfering with his or her private rights.

The compensation code forms part of the general law relating to compulsory purchase and it is entirely appropriate that it should apply to HS2. In addition to those statutory rights, the promoter has introduced a number of discretionary compensation schemes, in recognition of the specific impacts on property along the line of route. Those go significantly beyond what is set out in statute and address the points in the new clause relating to compensation for those who may be severely affected by the works.

The hon. Gentleman has outlined the compensation and purchase schemes, including the express purchase scheme and the voluntary purchase—he drew attention  to the fact that there is an alternative cash offer of 10% of the unblighted market value of their property with a cap of £100,000 and a minimum payment of £30,000. He also outlined the “need to sell” scheme, which has been operating successfully in our view, particularly in the light of the some of the suggestions being made by the Select Committee; and the homeowner payment scheme, which would provide cash payments to eligible owner occupiers between 120 metres and 300 metres from the centre of the line. This would be made following Royal Assent of phase 1 of the hybrid Bill, enabling residents to share early in the future economic benefits of the railway and contributing to community cohesion.

With regard to tenants, it is important to remember that we would seek to mitigate effects where appropriate through such things as noise insulation. Where a tenant is significantly affected, they can complain to their landlord, with whom they have a contract, and it would be for the landlord to seek resolution. Tenants do not have the same restrictions on free movement that can afflict homeowners blighted by this type of project.

I hope that demonstrates that the Bill and our discretionary schemes have gone above and beyond what is required to ensure those negatively impacted by the construction and operation of the line have fair compensation. I hope the hon. Gentleman can withdraw his new clause .

Photo of Andy McDonald Andy McDonald Shadow Minister (Transport)

The Minister has covered a great deal of the ground concerning property. Will he reflect on the assertion that tenants do not have restrictions on free movement? I am not entirely sure that I can agree with him on that point. Some people will be very wedded to their community and will feel unable to move for lots of reasons, including family or community ties. It is an obvious omission in my view that the potential damage to the peaceable enjoyment of tenants has not been addressed in any meaningful way whatever. It is not my intention to press the new clause to a vote. I simply ask that my comments and our discussion of it are further considered by the Minister as the Bill progresses. I beg leave to ask leave to withdraw the clause.

Clause, by leave, withdrawn.