Legal Briefing

Compulsory purchase crusade: mission possible?

The In-House Lawyer Logo

Scotland | 01 November 2010

The Scottish Government is on a mission. That mission is to encourage the (appropriate) use of compulsory purchase powers in Scotland. Its aim is to aid the delivery of economic recovery, social change, efficient and effective regeneration, and, of course, sustainable economic growth. No mean feat then.

The implication is that compulsory purchase powers are currently underused, by local authorities in particular, and that regeneration and other development opportunities are being held up as a consequence.

is that a fair diagnosis?

Statistics

Statistics on the use of compulsory purchase powers are surprisingly sparse. Given the serious implications of compulsory purchase, it would be reasonable to assume that a carefully kept, transparent record of compulsory purchase orders (CPOs), their purpose and outcome would be there for the reading. Not so!

Compulsory purchase has been the subject of repeated questions from Members of the Scottish Parliament since the Parliament’s devolution. On almost every occasion, a request for statistics has been rejected due to ‘lack of central records’ and cost. However, data has been made available for the years shown below in relation to CPOs promoted by local authorities (see table on p51).

Given 32 local authorities in Scotland (ignoring the national park authorities for present purposes), the numbers certainly seem to be on the low side. Even with a peak in 2002, an average of 18 CPOs have been sent to the Scottish Ministers for confirmation each year over the period highlighted. Several CPOs will have been promoted each year and subsequently withdrawn before referral to the Ministers due to agreement with the landowner(s), but even if the average figure is doubled to 36, the total would equate to just over one CPO per year per authority.

Over the past ten years, a total of 33 ‘contentious’ local authority CPOs have required examination at a public inquiry or have been scheduled for an inquiry. This is, of course, necessary where statutory objections are received and not withdrawn. This equates to approximately one contentious CPO for each local authority in Scotland over the whole ten-year period, and means that less than a quarter of confirmed CPOs have gone to public inquiry. (These figures were obtained from the website for the Directorate of Planning and Environmental Appeals.)

The statistics also show that CPO activity is not spread evenly across the country. In spite of (or possibly informed by) its infamous Buchanan Street battle (Standard Commerical Property Securities Ltd & ors v Glasgow City Council & ors [2006]), Glasgow City Council has led the way in recent times with the greatest number of CPOs promoted over the past ten years. Both North and South Lanarkshire Councils have also been active, as have Falkirk, Renfrewshire, and Fife Councils, together with the other Scottish cities.

Of course, none of these statistics show the full story. Several major transport projects, which have been promoted by local authorities in Scotland over the past five years, have obtained the necessary compulsory purchase powers by a different route. For example, the major-scale land acquisition for the Borders and Stirling-Alloa-Kincardine railway projects and the Edinburgh trams was authorised through private legislation enacted in the Scottish Parliament rather than by a CPO. But setting these major transport projects aside, and assuming the statistics are representative, the low figures for CPO activity seem to justify some of the Scottish Government’s concerns.

Solution

With the holy grail of legislative reform on the back burner for the time being, the Scottish Government’s action plan is fourfold. The Government will:

  • facilitate training events and opportunities for sharing good practice;
  • produce plain English guides for landowners and other affected parties; and
  • seek to improve efficiency in the confirmation process.

However, the main plank of the programme is to revise the 1976 Scottish Development Department Circular on Compulsory Purchase Procedures.

To this end, a Compulsory Purchase Advisory Group has been set up to guide the work on the circular, as well as contributing to the good practice debate. The group has already decided to extend the work to revisal of the Scottish Circular on the ‘Crichel Down’ Rules and consultation on both draft documents is now expected to commence in late November.

No-one would deny that the principal circular is long past its sell by date, and in this respect the work of the Scottish Government and the advisory group is to be welcomed. However, will a set of new circulars really result in a marked increase in CPO activity in Scotland or is something more drastic required?

To answer this question, the factors that might contribute to the current low levels of activity need to be considered.

Key Issues

When compulsory purchase is discussed at local authority forums in Scotland, several concerns are commonly raised.

Experience

As the CPO statistics tend to suggest, compulsory purchase experience is unevenly spread across the country. This inevitably means that some local authorities have little or no relevant experience within their ranks and, with ongoing staff cuts, the situation is likely to worsen. Where authorities have been involved in large-scale projects, such as the transport schemes mentioned, external advisers tend to be engaged, meaning that much of the experience gained is lost at the end of the project.

Compensation liability

The likely exposure to compensation must be carefully assessed at the start of any project. Whether acquiring land for its own use or to pass to a third party for development (an ‘agency CPO’), the local authority needs to know that compensation can be funded (in the case of the former), or will be covered or indemnified (in the case of the latter). It is, of course, good practice for valuations to be carried out by a suitably qualified surveyor at the planning stage of the project to test financial viability. General funding information must also be included within the statement of reasons when it is drafted. However, mistakes can happen and serious underestimates can have disastrous consequences.

Inquiries

CPOs and inquiries are often thought to go hand in hand. This may be the case for larger and more contentious projects, but for the majority of cases the statistics show that inquiries are, in fact, the exception rather than the rule. For those cases that do require oral examination, the trend towards faster decision making in the planning system generally would appear to be being replicated across recent CPO cases. With a good wind, councils are managing to achieve confirmation of a CPO, following an inquiry process, within around 12-15 months of the date of the making of the order. For example, Glasgow City Council had its Commonwealth Games CPO confirmed just one year and five days after the order was made, but then a strong political case and a looming deadline will always help, and fast-tracking is possible. In cases where there is a prolonged process, the delay is often due to other factors, such as protracted attempts at negotiation with objectors before an inquiry is scheduled. While discussions with objectors are generally a good thing, it is important to realise when to draw a line and move a project on to the next stage. Reluctance to do so when discussions are not bearing fruit may be due to a lack of confidence or experience.

Court challenge

There is little doubt that the series of court challenges faced by Glasgow City Council from 2000 through to 2006 had a discouraging effect on other local authorities and added to the general perception of compulsory purchase as difficult. This is unfortunate given that Glasgow’s agency CPO approach was ultimately endorsed by the House of Lords and, arguably, provides a template for other local authorities facing similar issues. While agency CPOs involving competing developers remain complex (as shown by the recent R (on the application of) Sainsbury’s Supermarkets Ltd v Wolverhampton City Council & anor [2010]), the vast majority of compulsory purchase opportunities facing local authorities avoid these issues altogether.

Powers

Anecdotal evidence would suggest that nervousness over choice of CPO powers persists. Historically, imprecise drafting or inappropriate choice of statutory authority has caused some problems, but these difficulties do not appear to lead to refusal to confirm orders on a regular basis. This may be partly due to the open-door policy of the CPO legal team within the Scottish Government, which is more than willing to review and comment on draft paperwork at the early stages of a project. A more fundamental question is whether or not the range of compulsory purchase powers available to local authorities is adequate for all the types of activity that they might wish to pursue (within the bounds of their statutory functions). This leads to the familiar debate over well-being powers and whether the promotion of well-being is, in fact, a local government function, delivery of which might be supported by use of compulsory purchase under the powers of the Local Government (Scotland) Act 1973.

External issues are also likely to influence CPO activity.

Developer awareness

Would CPO activity increase if developers had a greater awareness of the compulsory purchase powers to facilitate development or proper planning under the Town and Country Planning (Scotland) Act 1997? Despite the high-profile agency CPO cases, which have been the subject of litigation and media comment over recent years (including the CPO that completed the site for the proposed six-star hotel development on Argyle Street in Glasgow), knowledge of this mechanism appears to be sketchy within the development industry. If developers do not ask, will local authority planners volunteer this type of solution for consideration? Perhaps a developer education programme might be added to the Scottish Government’s agenda.

Funding

No discussion would be complete in the current economic climate without mentioning funding issues. CPO activity is unlikely to increase significantly in relation to local authority-led projects (roads, housing and schools) until the financial crisis has passed. For projects of this nature, the land acquisition costs are just a fraction of the overall bill. Reasonable certainty as to compensation liability is essential, but will not help where the overall project costs simply cannot be met. Similarly, agency CPOs are unlikely to see any significant growth until the development industry substantially recovers. While site assembly is often a problem, it is finance that is the current showstopper.

Conclusions

The Scottish Government’s aims in relation to compulsory purchase are laudable. The proposed programme of work, including the publication of revised circulars, will be extremely useful in helping local authorities and others to tackle issues that might otherwise discourage a more proactive approach to CPOs. In addition to the new guidance and the formal training sessions that are being organised, the very existence of the working group will stimulate debate around possible improvements to the system and encourage the sharing of good news CPO stories, which often go unheard.

However, the use of compulsory purchase powers to help kick start the economy is another question entirely. Site assembly is just one part of a complicated and expensive puzzle. Looking to the future, the good work now being undertaken on compulsory purchase by the Scottish Government will provide a solid base for future projects, once the money has returned to the system.