Compulsory purchase – lessons from recent refusals

Two recent compulsory purchase decisions have highlighted certain areas of risk to acquiring authorities, writes Matthew Tucker. These decisions particularly emphasise the importance of the process of negotiation and also indicate a heightened level of scrutiny of acquiring authorities’ conduct in this respect.

Case 1: Vicarage Field Decision

The London Borough of Barking and Dagenham Council (Vicarage Field and surrounding land) Compulsory Purchase Order 2021 was not confirmed by a decision of an Inspector appointed by the Secretary of State for Levelling Up, Housing and Communities dated 4 October 2022.

Outline of the case

In this case, the authority sought to acquire 31,878sqm of land in Barking to deliver a comprehensive scheme of regeneration, including some 855 new homes, business, retail, leisure and cultural uses.

The Inspector recognised the “obvious need” for the scheme as part of an “extremely compelling case” for compulsory acquisition, though ultimately was not persuaded that the scheme was financially viable, or that there was a reasonable prospect that the scheme would proceed.

A 2016 viability appraisal concluded that the scheme was unviable and no updated viability appraisal was put before the inquiry. As a result, the Inspector concluded that it was “difficult to show conclusively” that the compulsory acquisition was justified in the public interest. Sitting alongside this conclusion, the Inspector also had “concerns that inadequate negotiation [had] taken place”.

On negotiation, the Inspector viewed this through the lens of paragraph 19 of the Government’s Compulsory Purchase Guidance, which details steps which acquiring authorities should consider taking to help those affected by a CPO.

The Inspector highlighted the lag from Cabinet approval to making the CPO, that there had been a significant delay in the submission of reserved matters applications and overall that “it could not be said that delays have been kept to a minimum”.

Keeping delays to a minimum is a key theme of paragraph 19 and the Guidance expressly recommends that acquiring authorities consider “keeping any delay to a minimum by completing the statutory process as quickly as possible”.

The Inspector also commented that there was no “not before date”, resulting in persons affected by the CPO “living in limbo for a long period of time”, and that there had been “limited” efforts to relocate affected persons. The Inspector also highlighted that there was no clear case manager and full information was not provided to affected persons at the outset. Each of these are points which the Guidance states that acquiring authorities should consider pursuant to paragraph 19.

More generally, the Inspector was critical of the “largely ineffective” attempts to acquire the CPO land by agreement, on the basis that objectors had claimed that offers were not market value. For these reasons, the Inspector was not able to confirm that the compulsory acquisition of land was proportionate or justified in the public interest.

In reaching this decision, the Inspector considered the CPO Guidance and raised a number of concerns in the context of paragraph 19 which were material to her decision. The acquiring authority had arguably failed to comply with five of the seven points at paragraph 19, which played an important role in the conclusion reached. The takeaway from this decision, aside from re-emphasising the importance of proper negotiations and presenting a viable CPO scheme, is that acquiring authorities should ensure that they are engaging with affected persons in accordance with the recommended steps included in paragraph 19 of the Guidance, in order to minimise any concerns that may arise.

Case 2: Nicholsons Shopping Centre Decision

The Royal Borough of Windsor & Maidenhead (Nicholsons Shopping Centre and Surrounding Area at High Street, Queen Street and King Street, Maidenhead) Compulsory Purchase Order 2022 was not confirmed by a decision of an Inspector appointed by the Secretary of State for Levelling Up, Housing and Communities dated 3 January 2023.

Outline of the case

The acquiring authority sought to acquire a local shopping centre to deliver a mixed-use scheme of redevelopment. The Inspector accepted that the benefits of the scheme could only be achieved on the target land and acknowledged the public benefits of the proposal.

However, the CPO would result in the compulsory acquisition of a lease for a local nightclub. The nightclub had “no apparent prospect of finding satisfactory alternative premises within a reasonable timescale”, meaning that the business would cease trading, leading to a “particularly severe” impact on the owners and the loss of a facility considered valued in the locality.

The Inspector concluded that there had not been “a proper degree of constructive engagement” or a willingness to explore options for relocation, leading to a failure to pursue meaningful negotiations. The Inspector concluded that the interference with the owners’ human rights would be disproportionate, and that it did not appear that compulsory purchase was being proposed only as a measure of last resort.

Paragraph 19 of the Guidance recommends that authorities consider offering advice and assistance to affected occupiers in respect of their relocation and providing details of available relocation properties where appropriate. However, it is clear from this decision that this is not the limit of an acquiring authority’s role in respect of relocation. Compulsory acquisition must be treated as a measure of last resort, and in the context of severe harm to the interests of affected persons, failure to negotiate or engage constructively to agree a mutually satisfactory relocation package can lead to a refusal to confirm a CPO.

At the time of writing, the acquiring authority has indicated that it intends to challenge the Inspector’s decision by judicial review and an update on the outcome of that is currently awaited.

Key takeaways

These decisions represent an increased trend towards in-depth scrutiny of how an acquiring authority approaches negotiations, and how that approach sits in the context of the Guidance. These approaches are likely to be applied in a wider context, and increased scrutiny will be applied to future compulsory purchase orders through the inquiry process.

In terms of negotiations, the key takeaways from these cases for acquiring authorities are:

• To pay particular attention to the recommendations of paragraph 19 of the Guidance during the process of negotiation. While this is not a prescriptive list of required actions, Inspectors will consider compliance with paragraph 19 when assessing an authority’s approach to negotiation.
• A failure to negotiate a mutually acceptable relocation package can also represent a failure to pursue meaningful negotiations, particularly where an Inspector considers this should have been achievable and where there are severe human rights implications.

Going forward, acquiring authorities will need to be cognisant of these pitfalls when negotiating with affected parties.

Engagement is a fundamental tenet of the CPO process, and a failure to engage constructively leads to a heightened level of risk at the inquiry stage. Either issue can potentially prevent an Inspector from confirming a CPO.

Matthew Tucker is a Senior Associate in the Planning and Compulsory Purchase team at Burges Salmon.