UK: Compulsory Purchase - A Review

Last Updated: 30 March 2011
Article by Murray Shaw

Compulsory purchase in Scotland is nothing new as is demonstrated by the fact that the primary legislation regulating the power and the processes relevant to that power date back to 1845. Despite the length of time compulsory purchase has been with us, it is an area of law which is controversial and difficult both in relation to the principles and the process. Given that any consequence of the use of compulsory purchase powers can be significantly detrimental to those affected. it is appropriate that the use of the power must be properly regulated. However proper use of the power of compulsory purchase may bring about significant benefits and whatever the affect there is no justification for the process to cause unecessary issues,

The present Scottish Government guidance on compulsory purchase dates from 1976. The Scottish Government, correctly, have decided to update that guidance and have produced a draft Circular, consultation in respect of which is to take place until the summer of 2011, with the revised guidance being produced thereafter.

While compulsory purchase has been with us a long time, that is not to say there have not been changes in the area. For example in 2007 the Scottish Parliament brought in the Transport & Works (Scotland) Act 2007 which covers inter alia compulsory purchase in relation to projects which fall within the ambit of that legislation.

In the covering letter to the consultation paper, John Swinney observes:-

"Compulsory purchase is a valuable tool to facilitate projects in the public interest where it is impossible or impractical to acquire the land by agreement. These are often vital schemes that can promote economic recovery and sustainable growth and bring real benefits to our communities. But without compulsory purchase they could not go ahead".

The reference there to "sustainable economic growth" echoes the key policy objective of the Scottish Government and it is probably no coincidence that this review is underway now. Facilitating compulsory purchase is likely to be seen by the Scottish Government as a useful tool where appropriate to stimulate economic activity.

The consultation paper is a lengthy document but a very useful one. Not only does it deal with the process but in a number of appendices gives specific guidance including check lists and forms of orders. Appendix A also lists the legislation under which compulsory purchase powers exist. Some 26 different pieces of legislation are identified and that list is not exhaustive. Helpfully the Appendix not only identifies the legislation but the relevant acquiring authority (the body with the right to exercise powers), the relevant statutory provisions and summarises the purpose for which the compulsory purchase powers may be used. The Appendix in itself (based upon an appendix in "Compulsory Purchase and Compensation: The Law in Scotland" the leading textbook in this area) is an extremely useful list.

While the Circular is out for consultation the underlying message appears to be that Councils should be more willing to make use of the powers when that use can be properly justified. In his introductory comments John Swinney notes:-

"Compulsory purchase has been neglected in the past but to address this the Scottish Government is working to promote good practice to ensure that compulsory purchase is an effective tool for local authorities, Government agencies, other acquiring authorities and the development industry".

There has been case law in relation to compulsory purchase in the past few years. One issue of particular concern have been the arrangements where local authorities undertake the use of compulsory purchase powers but subject to indemnity arrangements with a third party developer by way of a "back to back" agreement (e.g. Standard Commercial Property Securities v Glagow City Council, House of Lords 16 November 2006). It is of course not always necessary that the local authority as acquiring authority is the end user. For example Section 189 of the Town & Country Planning (Scotland) Act 1997 provides specifically that when powers are being used under that Act to compulsorily acquire land "it is immaterial by whom the local authority propose any activity or purpose... is to be undertaken or achieved and in particular the local authority need not propose to undertake that activity or achieve that purpose themselves".

The Circular appears to give tacit approval to these arrangements though equally it is made clear that Scottish Ministers have no role in approving any back to back agreement and in deciding whether or not the scheme should proceed the Scottish Ministers require to weigh up the public interest in the same way as in relation to any other scheme made (in effect ignoring the fact there may be a back to back arrangement).

The Circular recognises that compulsory purchase can have significant adverse effects on those affected by the order. It makes the point, quite properly, that local authorities should seek to acquire land by agreement. However paragraph 26 notes "an acquiring authority should take a realistic view, depending upon the particular circumstances, on whether or not to seek to acquire by agreement before using compulsory purchase". In other words it is recognised that there may be circumstances in which acquiring by agreement is simply not feasible – for example there may be some time constraint. The Circular goes on to note "there is little to be gained in prolonging unproductive negotiations if an acquiring authority is going to use its compulsory purchase powers if necessary. Given the amount of time that the compulsory purchase process can take it may often be sensible for the acquiring authority to begin the CPO process at an early stage. In some cases there may be benefits in beginning compulsory purchase procedures in parallel with negotiations to purchase by agreement".

The clear message appears to be that where it can properly be justified negotiation and in particular unproductive negotiations should not be carried out just for "form" sake.

The Circular does however make clear that early engagement which is meaningful has to take place with those who are affected. Such engagement is not precluded by virtue of the fact here is a process running. Acquiring authorities are encouraged to have particular regard to the impact upon businesses (farm businesses are emphasised). Mediation is specifically identified as a means by which difficult issues may be resolved including issues in respect of compensation.

The Circular goes into some detail in relation to the process identifying the steps which acquiring authorities ought to take, making clear that while Scottish Ministers encourage authorities to submit orders in draft, any examination carried out at that stage does not pre-empt the role of Scottish Ministers at a later stage in deciding whether or not to confirm the order. In other words any early review is no more than a technical review.

Paragraphs 71 and 72 deal with objections making clear that there is no special form required and there are no specific statutory grounds upon which objections might be made. Disputes in relation to compensation are of course not a valid ground of objection.

There is a right to be heard in favour of "statutory objectors". In effect owners, occupiers, tenants or certain benefited proprietors are statutory objectors. Anyone else who objects is perfectly entitled to do so but has no statutory right to be heard at an inquiry or a hearing. If there is to be some form of inquiry or hearing this will be run by the Directorate for Planning & Environmental Appeals. Given the way in which matters have moved generally in the planning sphere it is likely that the DPEA will encourage these hearings rather than formal inquiries.

The consultation paper is a very helpful summary of the compulsory purchase process and one that is up to date. As well as providing such a summary however the underlying message appears to be that those who have the power should more actively consider the use of these powers in the current economic climate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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