Ian Lindsay, Senior Partner, aspireCP: February 2020

Background

One in seven of all big city homes in England and Wales in 1955 had been demolished by 1985[1], with compulsory purchase one of the principal tools used to make slum-clearance a reality. But, from the 1980’s to the late noughties, with the exception of the Channel Tunnel Rail Link and a few tram and London Underground schemes, we saw only limited use of compulsory purchase orders (CPO). As a result, much of the experience required to deliver strategic land acquisition have been lost. In Ernst & Young’s review of the market Jonathan Stott, former Chair of industry body the Compulsory Purchase Association (CPA) says …”there remains a chronic shortage of professionals – and most particularly surveyors – practicing in the field of compulsory purchase and compensation”[2].

The Need for Compulsory Purchase

Despite this, over the last decade the use of CPO has grown exponentially, with major projects like the Olympics, Crossrail and HS2, renewable energy schemes, highway projects and utility programmes such as Thames Tideway. With government austerity measures in the wake of the global financial crisis, cash-strapped local authorities are increasingly turning to estate and town centre regeneration to leverage private investment into the renewal of public assets and central government is encouraging CPO to speed up delivery of new housing, with guidance stating … “Compulsory Purchase powers are an important tool to use as a means of assembling the land needed to help deliver social, environmental and economic change”[3].

Indeed, through the government’s £5.5 billion flag-ship new homes programme, the Housing Infrastructure Fund (HIF), a high proportion of bids feature CPO-led land assembly. Having appraised several HIF bids, few proposals I saw demonstrated a mature understanding of how to promote and deliver CPO programmes and nor were the skills and systems in evidence to control stakeholder and financial risks. The National Assembly for Wales in their June 2019 CPO report made the point that … “the most significant barrier to the regular use of CPOs is a lack of knowledge, resources and recent experience of the process”[4]. Without the skills for delivery, authorities seem scared to use the powers. Moreover, where CPOs have been used, media headlines have been far from complimentary about delivery.

What can be done?

So, how do we ensure we do not lose government and public trust in CPO? Having learned about CPO delivery from my experience at Crossrail (https://learninglegacy.crossrail.co.uk), the key principles I would recommend that acquiring authorities focus on are as follows:

1. Do everything you can to be an informed and intelligent client of land assembly. Draw a distinction between transactional advice (Property Cost Estimates/ assessment of compensation/ CPO legal process) and the insight a client needs to understand and manage risks. Commission a thorough risk analysis and understand the levers you can pull to mitigate risks e.g. designing out problems, extending notice periods etc. Transactional advisers sometimes just wait for the claims to arrive before negotiations really begin, by which time the risks have crystallised.
2. Put in place a good quality, experienced professional team to undertake transactional activities, with the right lawyers, surveyors, land referencing and stakeholder management specialists. Be wary of those who offer you a “one stop shop” as jacks of all trades will not necessarily have the skills to manage your risks. Look for advisers with actual programme implementation experience who will work with you on designing briefs, putting systems in place and can help up-skill the client as part of the process
3. Focus on designing the project and programme management systems, processes, reporting and governance that you will need to deliver your project effectively. Give yourself visibility on the statistics and trends so that you can make evidence-based decisions. Success in managing CPO programmes generally comes down to proactive risk, opportunity and stakeholder management. In particular, check what IT systems will be employed to manage finances, risk and cash-flow planning so claimants receive payments promptly and acquiring bodies can meet payment timescales without incurring potential penal interest.
4. Consider independent expert project review and assurance to give yourself confidence that your systems and teams are up to the task; and put this in place before things start going wrong. An ‘ounce of prevention is worth a pound of cure’ and that’s the very reason that the three lines of defence assurance model was created, to help public and private bodies assure themselves and their stakeholders that their projects are managed in line with market best practice.
5. Finally, look at other projects to understand what has gone well and what has gone badly. Make the effort to speak to others and see whether you can share systems and resources. You might also want to reach out to government. The Ministry of Housing, Communities & Local Government, Department for Transport and Cabinet Office, along with agencies like Homes England and the Infrastructure & Projects Authority have a vested interest in ensuring CPO is delivered well. Perhaps it’s about time government took up the calls of the Welsh Assembly and others to establish a central unit that could give expert advice, mentoring and support to acquiring bodies, a bit like the former ATLAS team for large planning applications.

In summary then, CPO programmes are set against a complex legal, physical, political and stakeholder background. The skills to manage such programmes are in short supply and, if they go wrong, they can leave public authorities struggling to deal with significant financial exposure and major reputational damage. However, done well they can be the key to regeneration and faster delivery of housing and a means to unlock the latent value of public land assets. The choice is there to be made!

[1] Breaking up communities? The social impact of housing demolition in the late twentieth century Record of a study and information sharing day November 2nd 2012, York
[2] https://www.ey.com/Publication/vwLUAssets/EY-The-long-and-winding-road-Compulsory-Purchase-Survey-2017/$FILE/EY-The-long-and-winding-road-Compulsory-Purchase-Survey-2017.pdf
[3] Guidance on CP process and The Crichel Down Rules, July 2019 p.6
[4] National Assembly for Wales CP June 2019 p.22

Whilst this summary is believed to be correct at the date of issue neither the author nor aspireCP accept any liability for the accuracy or completeness of the information contained in this article. No part of this document may be copied or re-produced without the written consent of aspireCP LLP