Compulsory Purchase in Focus: The Law Commission Review Next Steps

By Jane Bradshaw

In February 2023, the Law Commission was asked by the Government to review the law on compulsory purchase with the aim of producing a draft Bill to consolidate, codify, and make technical changes to the law. It is stated that the intention is to modernise and simplify the law, make it more readily understandable, and to be technically sound and consistent.

It does not, however, propose to consolidate the law relating to the existing powers available to bodies seeking powers, but to identify omissions, anomalies or inconsistencies that a new Bill could address.

This review has resulted in a 320-page Consultation Paper being issued in December, to which responses can be provided by the end of March 2025.

It is divided into three parts: procedure, compensation, and supplementary matters. The last is for matters such as particular interests in land or circumstances where an authority decides not to proceed with a confirmed order.

The Law Commission has set out specific areas of the law to be considered:

1. Powers – general statutory powers to enable the acquisition of land

The Commission confirms in its consultation that it is not the intention of the Bill to consolidate the array of existing powers available to various bodies to secure compulsory purchase powers but to identify any omissions, anomalies or inconsistencies that the new Bill could address. In addition to outright acquisition, the Commission will also consider other ancillary rights sought by Acquiring Authorities, such as rights to enter and survey, temporary rights, and the acquisition of rights over land.

2. Authorisation how the power is authorised through Government

The authorisation of powers is typically a two-stage process with a non-ministerial body (such as a local authority) issuing a Compulsory Purchase Order and the confirmation of that Order by the confirming authority, usually a government minister. This can be differentiated to an Order issued by a government minister who can confirm the Order. The Commission proposes that these two different approaches be amalgamated.

The Commission will also consider the basis on which landowners can challenge the validity of a CPO through Statutory Review and Judicial Review and will consider the options of ‘do nothing’, ‘clarify the law’, or ‘change the focus’.

3. Implementation – the legal mechanisms for implementing the powers

The Commission will consider the two currently available methods of implementation, the Notice to Treat plus Notice of Entry and General Vesting Declaration (GVD), and whether a single unified procedure would be appropriate. The two methods currently provide different periods over which powers can be exercised (the Notice to Treat plus Notice of Entry providing a longer window).

The Commission will consider whether some elements of the Notice to Treat procedure could be incorporated into the more often used GVD procedure, such as reconsidering time limits, the ability to bring forward or delay acquisitions, enabling GVDs to be used on short-term interests and the ability to withdraw from vesting.

The Commission will consider technical issues and procedural issues on, for example, the service of notices, the form and content of notices, the form of transfer, and costs. It will also consider cases where landowners are uncooperative, lack capacity or are missing, or where an acquiring authority erroneously omits interests from an Order.

The Commission will consider provisions relating to where only part of an owner’s interest is subject to acquisition and the circumstances where the owner has the ability to require the authority to acquire the whole.

4. Compensation – the assessment and payment of compensation.

Currently, the main statute dealing with compensation is the Land Compensation Act 1961, which sets out various rules to be applied in the assessment of compensation. The Commission will consider the basic concepts and case law principles, such as that of ‘equivalence’. It may also seek to repeal some legislation relating to the recovery of costs where these are now dealt with in Tribunal rules and practice directions.

It does not intend to make any substantive changes to the reasonably well-understood rules for assessing Market Value and compensation for Equivalent Reinstatement (where there is no general market or demand for the ‘use’ and a bona fide intention to reinstate). It will consider compensation for severance and injurious affection (damage to the value of retained land) and proposes to clarify that this element of compensation is payable only in respect of damage assessed by way of market value and not loss of profit, and secondly that it considers the valuation approach of undertaking a ‘before and after’ assessment is given express recognition. The method is generally considered valid as a sense check only.

It will consider disturbance compensation (other matters not directly based on the value of the land) and address the fact that legislation should positively state the entitlement to this head of claim and to codify the principles around it, such as causation, remoteness and the duty on a claimant to mitigate.

It will consider the Valuation Date to be applied for the various claim scenarios, whereas for land acquired, it is accepted as being the date of acquisition; for matters such as injurious affection, there is a question as to the degree to which post-acquisition date matters should be taken into account.

conclusion

Overall, the paper includes over 100 questions to which consultees may respond. Post-March, the responses will be analysed, and further papers may be issued as part of consultation for a draft Bill.

This will be quite an undertaking. The current legislation principally dates from the 1960s to 2024 and is underpinned by a library of case law, much of which provides for conflicting opinions. Codifying and simplifying the law would be daunting both to the authors and practitioners in this field.

But given the history of the legislation and case law, the real challenge will be having a Bill that achieves some consolidation and clarity without it opening a door to inevitable future litigation on both the interpretation of the law and how it applies to the myriad of circumstances and interests that are subject to compulsory acquisition.

This is part four of a five-part series named “Compulsory Purchase in Focus”. Read part one (introduction) here, part two (home delivery) here, part three here (full overview), and keep an eye out for our final part of the series on our LinkedIn page and website tomorrow.