Comment

A slow train to the future?

Malcolm Dowden, consultant at Charles Russell LLP, updates RTM on the HS2 legislation.

Parliamentary scrutiny of the first stage of HS2 has just begun. The Bill to authorise the project received its second reading in April, meaning that the project has been approved in principle. The Parliamentary committee cannot block the Bill, but may recommend amendments such as new tunnels to reduce visual impact and to protect land use. However, with 1,925 petitions to consider, it is likely that the committee will be fully occupied for some time to come.

By way of comparison, London’s Crossrail prompted just over 360 petitions in total, but took more than four years to complete its Parliamentary stages.

That comparison indicates the significant obstacles that remain in the way of the second element of HS2 – the routes to the north of Birmingham presented by Chancellor George Osborne as the key to creating an ‘economic powerhouse’ in the north of England.

However, the project has a long way to go. Even if there are no legislative delays, trains will not run along the initial London to Birmingham section until 2026. While that legislation is pending, and as construction proceeds, there is significant scope for disputes over compulsory purchase, compensation and land access rights, and perhaps even more for concerns over the extensive northern route proposals.

Protesters have already turned to the law. A Staffordshire protest group obtained an order requiring HS2 to disclose its criteria for determining the distance either side of the proposed line within which property will be acquired and payments considered under the ‘exceptional hardship’ provisions of HS2’s proposed compensation scheme. HS2 claimed exemption under the Freedom of Information Act 2000 (FOIA), arguing that disclosure would prejudice the effective conduct of public affairs. Initially upheld by the Information Commissioner, the Tribunal overturned that argument.

The FOIA dispute demonstrates both the strength of feeling provoked by HS2, and the difficulties faced by the scheme’s promoters. Disclosure of HS2’s internal criteria would not, and could not, provide homeowners with a single, clear figure for the maximum distance within which the acquisition of ‘blighted’ properties might be accelerated on the basis of exceptional hardship. Exceptional hardship requires proof not just of an adverse effect on the value of property, but also of unusual or urgent impact. Property must be in ‘close proximity’ to the proposed route, and the claimant must have had no prior knowledge of the route when acquiring the property. The claimant must be unable to sell because of HS2, and must demonstrate hardship by reference to factors such as medical need or divorce. The provisions are, and must be, discretionary. Consequently, disclosure of the maximum or average distance at which HS2 has accepted a claim of exceptional hardship would have little relevance to other claims.

In addition to the exceptional hardship provisions, HS2 compensation proposals for the initial stages included a more generous approach than under general compulsory purchase legislation. Although potentially good news for homeowners, commercial property was to benefit only where it is owner-occupied and within strict limits on rateable value.

Landlords holding property as an investment and many commercial tenants would remain within the general compulsory acquisition provisions and compensation code. Even if compulsory purchase is agreed, the timing of compensation payments and the need to find alternative premises may (if experience under the Olympic scheme and Crossrail is repeated) see the end of many businesses along the route.

However, it cannot be assumed that business failures along the route would necessarily reflect any fault on the part of HS2. Many businesses affected by the Olympics and Crossrail simply failed to engage with the issues soon enough or seriously enough to protect their own interests.

The northern route will require separate statutory authorisation, meaning that Parliamentary time must be found whether before or after the 2015 election. Following second reading of that Bill individuals or groups with interests affected by the project will have an opportunity to petition.

Although petitioning appears extremely formal, and assumes that all petitions will be considered by the Parliamentary Bill committee, the reality is that many are withdrawn on the basis of assurances, undertakings or express agreement with the scheme promoter. The process is designed to secure withdrawal of as many petitions as possible, leaving the Committee to deal only with the most intractable issues. Once the petitioning process is complete, landowners or businesses who did not take part can find only limited protection in the general statutory provisions.

There is little scope for effective complaint once the petitioning window has closed.

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