Mitigate the risks and minimise the impacts of infrastructure schemes

On 18 November 2020, members of our Planning & Environmental team were joined by panellists Sara Smith from KPMG’s forensic accountancy team and Mike King, Principal at Avison Young. Here we share some practical tips when making objections to infrastructure schemes which have an element of compulsory acquisition.

At what point should involvement from a professional team be sought?

• The sooner a professional team is involved, the better. Advisors may drop in and out
• It is critical for claimants to keep a paper trail in order to demonstrate continued attempts to meaningfully engage throughout the process. In turn this will help when evidencing a compensation claim.
• When considering the impact of a CPO on a business, the most useful evidence is a contemporaneous record of the financial results (and projected forecast) of the business throughout the process. If this is not gathered until further down the line, it is much harder and sometimes impossible to pull together an accurate record of the situation at each stage of the process. Just think of how different the Covid world looks (and potentially how different the post-Covid world will be).
• The key takeaway is that claimants should avoid ‘head-burying’ as far as possible, as this won’t help towards making a strong case for compensation further down the line.

To what extent will Scheme Promoters and Acquiring Authorities engage with claimants?

• Level of engagement differs between scheme promoters and the level of engagement will somewhat depend on where in the lifecycle of a CPO a claimant communicates with the Authority or Scheme Promoter.
• It is important to be realistic about the level of engagement that can be expected. For example, before a CPO is made, an Authority may be more reluctant to engage as its agenda may differ and the Order may not go ahead. Once the order has been made, there is more pressure on the Authority to justify the scheme and enter into compromise agreements with interested parties.
• If a robust professional team can be pulled together at an early stage, more pressure can be placed on an Acquiring Authority to co-operate. This includes seeking commitments from the Authority, such as an assurance or undertaking.

Can Claimants really influence the design of a scheme?

• If a claimant landowner objects to an Order, they can bring their concerns to the table with the Authority. If the impacts are genuine and the suggestions are realistic, these can be instigated through private treaty agreements.
• When raising suggestions, it is important to remember that schemes will have a finite budget and therefore expectations should be realistic.
• If tweaks or amendments are made to the scheme to accommodate an objector then the Scheme Promoter will no doubt require the objector to enter into an Agreement or Assurance to withdraw the objection.
• It is important to make these suggestions as soon as possible so they can be considered as part of the design process. Once the Authority has the powers needed through the Order, they are less likely to be open to accommodating any design suggestions.

What is the impact of ‘betterment’?

• This refers to any increase in the value of a claimant’s retained land resulting from the implementation of a scheme.
• Acquiring Authorities will seek to argue that compensation should be reduced by the increase in value, for example where a road scheme has the effect of opening up adjoining land plots for commercial or residential development. Practically speaking, the recovery of public money spent on such schemes can be done via a number of mechanisms, one of which is a ‘roof tax’ on residential units in the event that development comes forward in the future as a result of the infrastructure works enabling that development.
• There may also be betterment as a result of relocation of a business as part of the scheme – for example the new premises may be more efficient and so generate a higher profit margin for the business.

What is the impact of COVID-19?

• The impacts of COVID-19 have been wide ranging and we anticipate that within the context of CPOs, both the property value and the value of claimant’s business will be impacted.
• Although it is not possible for claimants to determine the valuation date of their property, it is now more important than ever to ensure a claimant is able to draw up a contemporaneous record of the business from the start of the scheme.