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High Speed 2 (Compensation)

Volume 586: debated on Tuesday 21 October 2014

Motion made, and Question proposed, That this House do now adjourn.—(Mel Stride.)

I am grateful for the opportunity to raise the issue of compensation for those adversely affected by High Speed 2. I thank colleagues for being here alongside me, as well as those who were unable to attend but have contacted my office. Since its announcement, and in common with others such as my right hon. Friends the Members for Aylesbury (Mr Lidington) and for Buckingham (John Bercow), I have received numerous representations from people affected by HS2. The theme, I am afraid, is a common one: despair at the current compensation arrangements and a feeling of powerlessness from people who think they cannot influence the process.

Since HS2’s announcement, I have consistently pushed for a fair and generous compensation package. Sadly, despite six public consultations and four years of anxiety for my constituents in Chesham and Amersham and for other colleagues’ constituents, the current proposals for compensation remain as inadequate as ever. However, before the Government’s announcement of their response to the latest consultation, I wanted to give the Minister one more chance finally to listen to people and to put things right.

There have been promises from Ministers. The overriding principle of this project ought to be that no one should have to suffer a financial penalty or be trapped in their home because of HS2. That view is shared by many of us, including my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who is currently on paternity leave but who would otherwise have been present. Unfortunately, the reality shows that that is not the case. Some properties have been on the market for years, and people are trapped and unable to move on with their lives.

Notwithstanding those ministerial promises, the compensation schemes to date have been woefully derisory, and people are facing substantial financial loss. The Transport Secretary promised that compensation would be “full and fair” for “those most directly affected”, and the Prime Minister told me personally that compensation schemes would be “generous and fair”. Given that other major infrastructure projects are in the pipeline, it is time for a rethink on compensation. I hope that the Minister will respond positively, with the aim of introducing fairer arrangements.

I appreciated the fact that when members of the HS2 Committee visited Coventry and Kenilworth, they allowed me to accompany them and explain the situation to some of my constituents. As for the question of negative equity—I know that the right hon. Lady will agree with me about this—some people in the Coventry area who have invested their life savings will not qualify for any form of compensation.

The hon. Gentleman has made a very valid point, and I shall say more about it shortly.

There are problems with the current compensation proposals. They will compensate only about 2% of those who live within 1 km of HS2, or within 250 metres from a tunnel. As the hon. Gentleman has just pointed out, despite widespread evidence of blight, the vast majority of people affected by HS2 will not be compensated fairly, because the Government have consistently linked the scheme to distance from the line and have ignored the wider effects. HS2 Action Alliance has calculated that only about 172,000 people will receive any kind of compensation, although more than a million live within 1 km of HS2 and many are being adversely affected.

In my area, around Euston, people will be living next to the biggest construction site in Europe for 10 or 15 years. They will be living within a yard of the works. However, they will be entitled to no compensation at all. As the right hon. Lady will know, uncertainty is a major source of blight. The revised proposals for Euston were supposed to be presented next month, but that has now been postponed until after the general election.

The right hon. Gentleman and I have stood shoulder to shoulder across the House on this issue. There is no party divide on it. I know that my right hon. Friend the Member for Uxbridge and South Ruislip (Sir John Randall) is similarly concerned, as are many other colleagues. The point is well made.

According to estimates in data commissioned by the Government from PricewaterhouseCoopers, the average loss to a homeowner is 20% up to 500 metres from the line, 30% up to 300 metres away, and 40% up to 120 metres away. Moreover, that blight is not temporary. PwC says that it will be at its worst until at least 2023. The Government have failed to recognise that, or the fact that the scale of suffering extends well beyond the line itself.

As things stand, there is not even sufficient compensation for those living above tunnels. HS2 Ltd believes that home owners are not unduly affected by tunnels, but my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright), for example, informs me that the property market in his constituency tells a very different story. There is no compensation for those affected by construction, although it will inevitably be very extensive in impact and duration. Constituents of my right hon. Friend the Member for Aylesbury (Mr Lidington) in Wendover and Stoke Mandeville live very close to the safeguarded area and the proposed construction sites, but they do not qualify for compensation under the boundary rules. It is grossly unfair that they should be expected to endure the disturbance of construction and operation as well as putting up with a loss of value to their properties unless they can prove an exceptional need to sell. Some of my right hon. Friend’s constituents say that estate agents simply refuse to place their properties on the market and that potential purchasers have been refused any mortgage on properties because of HS2. This is emblematic of the broad injustice of the current compensation measures.

The compensation schemes announced and operating to date are also problematic. The exceptional hardship scheme and the need to sell schemes have been arduous and complicated for many of our constituents, and in my view they are often wholly unjust. The lack of consistency in the decision-making process has been incredibly frustrating for those involved, and the accuracy of valuations has been the subject of contention in many areas. There has been little transparency in this process. The latest proposals—the alternative cash offer and the home owner payment—offer poor value to the taxpayer and involve arbitrary sums that bear little relation to the actual loss suffered by the individual.

I support the principle of the alternative cash offer for those living within 120 metres, but the scheme simply does not work for those living beyond that line. Does my right hon. Friend understand the concerns of my constituent, Mr Watson from Church Fenton, who e-mailed me earlier today to say that he was not at all happy to lose £95,000 from the value of his property? He described it as writing a cheque to the Government for £95,000 only to receive a Government refund of £7,500. That is neither full nor fair.

My hon. Friend is absolutely right. Phase 2 will affect his constituency, and the problems that we are having with phase 1 will come back to haunt us all on phase 2, so it is good that he is raising these matters early on behalf of his constituents. He is absolutely right to suggest that the alternative cash offer applies only to a limited number of home owners. As the payment is based on a 10% loss and is capped at a maximum of £100,000, it is completely unreflective of the true loss in property value. It is not a strong enough incentive for people to stay in their homes.

May I return for a moment to the exceptional hardship scheme? A constituent of mine, having arrived at a value that was supposed to be fair, was then asked by HS2 to reduce the figure by £20,000 so that it could get the property into a rentable state. That is neither fair nor reasonable.

I wholly endorse what my right hon. Friend is saying. The fact is that many people in my constituency have homes of very high value, but the compensation bears absolutely no relationship to the investment that they have made in purchasing the home, or to the fact that in many cases the properties are heavily mortgaged and that their losses will be colossal—running into millions of pounds in many cases.

My right hon. and learned Friend makes an important point. Those people have worked hard, saved and invested in those properties.

My right hon. Friend is making an excellent speech. Those of us who are between Birmingham and Manchester are extremely glad that we are going to have the opportunity to petition and to have our case heard by the High Speed Rail (London - West Midlands) Bill Select Committee, and we are grateful to her for everything she has done.

I thank my hon. Friend. I glad to see that the Chairman of the Committee, my hon. Friend the Member for Poole (Mr Syms), is in his place. I note that there are many hon. Members here tonight, and I welcome those who have just come into the Chamber. It is important to put these points to the Minister in as forceful a way as possible.

The home owner payment scheme proposes to give home owner payments to those living between 120 metres and 300 metres from the line. This once again limits compensation by distance from the line. It also does little to assist the functionality of the property market in affected areas. The payments on offer are too low and, as the effect of inflation is not considered, they might be inaccurate as well.

Like other colleagues, I have many farmers and landowners in my constituency, and none of the schemes properly addresses the impact of HS2 on them. I deal with a number of organisations, including the Country Land and Business Association and the National Farmers Union, that are campaigning hard to ensure that affected landowners receive fair and timely compensation, and I hope the Minister understands the special problems facing farmers and growers. He is a farmer himself, so I am hoping for that special understanding.

I am sure my right hon. Friend is aware that for many farmers the difficulty is that they are compensated at agricultural prices, but where land is taken beyond the actual requirements for the track, there is of course speculative value in that land, and does she agree that it is important that land-take is kept to a minimum?

My right hon. Friend makes a valid point and I entirely agree.

Concern has also been expressed to me by colleagues, and, indeed, Mr Speaker, about the fact that compensation has only currently been offered to owner-occupiers. Owners of second homes or those living in social housing receive no recompense, in spite of having to endure years of disruption and intrusion in an identical fashion to homeowners. If HS2 goes ahead, I would like to see four main changes on compensation and a greater safeguard for those affected.

First, I and many others have always supported the introduction of a property bond scheme, as proposed by HS2 Action Alliance, where the Government act as a purchaser of last resort, and whereby buyers have the confidence to buy properties on the open market at unblighted prices. I believe this scheme would provide greater functionality of blighted property markets, and a better deal for all constituents.

PricewaterhouseCoopers’ March 2014 report on a potential property bond scheme concluded that it was a fair option, assuming it has a generous boundary. Regrettably, there has been a continual reluctance to adopt this option by Ministers, in spite of widespread backing. The Department for Transport has rejected this scheme in the past because of “money risks”. However, figures from PwC demonstrate that the figures are not prohibitive, and given the clear benefits of this scheme in terms of supporting normal market activity, I would ask the Minister to reconsider this scheme carefully once again and recognise its obvious advantages for both the market and those affected.

Secondly, the “need to sell” scheme needs revising to remove the financial hardship criteria to allow those who are unable to sell their properties because of HS2 to be free to move. Thirdly, the boundaries of the voluntary purchase scheme should be widened to a distance greater than the 120 metres, reflecting the true levels of blight and to match the payments actually made under HS1.

Fourthly, the whole compensation package should take into proper account blight in urban areas, over tunnels, and those who will suffer extensive construction disruption. In particular, the Treasury should reconsider once again the possibility of introducing stamp duty exemptions for affected properties to re-stimulate the property market.

Finally, if this project ever reaches its construction phase it will cause blight and disruption still to be identified. I believe that to protect my constituents, and all our constituents who are affected by HS2, we need an additional safeguard. I propose that the construction code should be added to the Bill in order to implement a binding and comprehensive duty of care that sets standards and time scales for the conduct of HS2, its contractors and sub-contractors during construction. An independent ombudsman should be appointed to adjudicate swiftly on abuses and with powers to compensate those adversely affected.

The current £50 billion budget for HS2 is currently being paid by the taxpayer, but it is also being paid at the expense of those who will suffer as a result of this project. Government have a duty of care to ensure that those blighted by this highly disruptive infrastructure project are fully and appropriately compensated. A failure to do so is not only insulting, but also sets a worrying precedent for inadequate mitigation for future schemes.

The Minister will have noticed tonight that I speak not just for my own constituency, but for many others, and I urge him to listen to our electors and do the decent thing by people whose lives have been turned upside down by this risky, poorly managed and ill-conceived project.

To borrow, and slightly change, the words from “Macbeth”, “If it were done when ‘tis done, then ‘twere well it were done properly.”

May I congratulate my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) on securing this debate on the compensation package for phase 1 of HS2. She has been a tireless campaigner on the impact of HS2, and I recognise her continuing determination to ensure that the Government do not lose sight of those concerns. Indeed, the presence of so many right hon. and hon. Members in the Chamber underlines that point. I am aware that because of ministerial responsibilities, some colleagues are not able to speak on this, but I can assure the House that my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright) and my right hon. Friend the Member for Aylesbury (Mr Lidington) never let me forget about the concerns of their constituents too.

I am aware that my right hon. Friend the Member for Chesham and Amersham has recently asked a number of parliamentary questions in relation to HS2 and has been in regular correspondence with my Department. I must also explain why she has not had a response to her recent letter on behalf of the HS2 Action Alliance. The issue at the heart of this correspondence is the way in which we have estimated the number of properties within particular distances of HS2, including the data used in replying to a parliamentary question in November 2013. Estimating property counts in a given area is an extremely complex and technical matter, and the Department for Transport is currently preparing a detailed response.

I am pleased to be responding to this debate on a subject that is of such great importance to my right hon. Friend and her constituents. Before I respond to the points she has raised, it is perhaps worth taking the opportunity to set out the current position on the compensation package for HS2. Measures to assist property owners and occupiers affected by new infrastructure have developed over the years through a mixture of statute, case law and established practice and are referred to as the compensation code. Although the Government remain confident that reliance on the existing compensation code is appropriate for the majority of infrastructure schemes, we believe that the exceptional nature of the HS2 project justifies a different approach and the Government have long been committed to introducing measures for those directly affected by HS2 that go beyond what is required by law.

At present, we have the exceptional hardship scheme in place for phase 1 of HS2. That has always been intended as an interim measure to assist those property owners who have an urgent need to sell their home but have not been able to do so, except at a substantially reduced price, as a direct result of the announcement of the route for the railway. We have also introduced express purchase for owner-occupied properties within the safeguarded area. There are detailed maps available on the HS2 website to allow people to determine where their properties are in relation to the safeguarded area. Express purchase was introduced from 9 April 2014.

I am pleased to be able to update Members on the properties that we have purchased under the schemes that are currently open. To the end of September 2014, we have spent £110.3 million purchasing 162 properties affected by phase 1.

The problem in my constituency is that, under this scheme, HS2 has not given the market value for these properties, and it is driving down the price of those properties. That matter was raised with HS2 back in August, and I still have not received a response.

The instruction to our valuers was that they should value properties at the previous unblighted price.

The properties have been purchased under the exceptional hardship scheme, the statutory blight arrangements, and through express purchase. Compensation for disturbance costs and reasonable moving costs are not included in the expenditure figures.

My hon. Friend will know that my constituency is affected not only by phase 1, but by phase 2. Does he agree that, as a matter of principle, whatever compensation schemes are put in place for phase 1, and hopefully, as my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) has said, they will be generous ones, they should apply equally to those in phase 2?

My hon. Friend makes a valid point. If we can reach a fair compensation package for phase 1, we will certainly need to bear that in mind as we look at phase 2. I suspect that those affected by phase 2 would expect no less.

There are people in Coventry who are not covered by any compensation scheme, and yet they have invested their life savings in their properties. They cannot sell their properties now. What will the Government do about that?

That is precisely why we are putting these compensation schemes in place. We also have an exceptional hardship scheme in place for phase 2. To the end of September 2014, we have purchased 32 properties at a cost of £15.1 million.

Following the property compensation consultation in 2013 for the London to west midlands HS2 route, the Government decided to use five criteria to select the most appropriate long-term discretionary property compensation packages for phase 1 of HS2. Those criteria are: fairness; value for money; community cohesion; feasibility, efficiency and comprehensibility; and the functioning of the housing market. Accordingly, the Government announced on 9 April the long-term compensation schemes that would be introduced for phase 1. They included express purchase, which I have already mentioned.

Precisely. Fairness is at the heart of our approach—fairness to those who have to move because their properties are being demolished or are so close to the line; and fairness to those who want to stay in their communities and maintain community cohesion.

We announced a voluntary purchase offer that would be available to people up to 120 metres from the railway in rural areas. Eligible owner-occupiers between the safeguarded area and 120 metres will be able to ask the Government to buy their homes at the unblighted market value. The scheme will be opened to applicants by the end of 2014 following further consultation on supplementary cash payment schemes.

As I said, we have people in Coventry outside the 120-metre area who have invested their life savings in a property, but cannot sell it. How will they be compensated?

I will move on to the measures for those further away, but we understand that many people’s biggest asset is their home. In fact, many people see their home as part of their retirement package.

We announced a “need to sell” scheme to help property owners who have a compelling need to sell their home, but are unable to do so because of our plans to build HS2. There will be no outer boundary to that scheme, which will also be opened to applicants by the end of 2014. It will succeed the current exceptional hardship scheme for phase 1, which will then be closed. When we implement the voluntary purchase and “need to sell” schemes later this year, we will publish detailed guidance about how they will work.

We have also announced rent back, a rule that means that if a property that the Government have purchased under any of our schemes is suitable for letting, the previous owner may, if they wish, be considered for a Crown tenancy. That scheme was introduced on 9 April.

We have consulted separately over the summer on two supplementary cash payment schemes. The first would provide that, for owner-occupiers in the voluntary purchase area, an alternative cash offer of 10% of the unblighted market value of their property, with a cap of £100,000 and a minimum payment of £30,000, would apply.

Does the Minister accept that this is a wholly inadequate package? We sincerely trust that the Committee considering the Bill will listen carefully to the analysis that we will put forward in our petitions, because it is petitions to this House that ought to make the difference.

I pay tribute to the petitions Committee, which has set about carrying out its role in a workmanlike way. My hon. Friend the Member for Poole (Mr Syms), the Chair of that Committee, is in the Chamber to hear this debate.

That cash payment scheme might help some people to decide that they do not need to move to protect the value of their investment in their home. We have also consulted on a home owner payment scheme to provide cash payments to eligible owner-occupiers between 120 metres and 300 metres from the centre line, following Royal Assent of the phase 1 hybrid Bill, to enable affected residents to share early in the future economic benefits of the railway. We have sought views on consequential changes to the voluntary purchase offer and the “need to sell” scheme.

What about stamp duty? It is now a very substantial tax, and anyone who sells their house, even under the voluntary purchase scheme, will have to pay stamp duty on a fresh purchase. Those people moving to a property of substantial value, which is the sort that they are likely to move into, will face a serious penalty, and one that they would not have wished on themselves, because they had no intention of moving.

I understand my right hon. and learned Friend’s point. Stamp duty and moving costs will be payable for those in the closest band to the railway. We will announce the outcome of the consultation to which I referred later this year.

On the long-standing campaign of my right hon. Friend the Member for Chesham and Amersham for a longer tunnel through the Chilterns, we have considered a range of options for tunnels.

I do not wish to delay the Minister in turning his attention to the tunnel, but can he explain why the terms for urban areas are different from those for rural areas?

We take the view that the level of disruption in rural areas, particularly the effect on property prices, is absolutely different from that in urban areas, where properties can be close to the railway but there might be many houses in between, and in many cases there is already a railway established, for example near Euston station, which no doubt people were aware of when they moved there.

My constituents might not fancy the idea of a new station, but what they really do not want is having to live next to a construction site for a decade or more. That is what they are bothered about.

Yes, and I spent time with the right hon. Gentleman in his constituency, along with the leader of his council, looking at some of the mitigation that can be put in place.

I will talk a little about the property bond. My right hon. Friend referred to the Government’s decision against a property bond as a means of providing compensation for generalised blight caused by HS2. The main aim of the property bond concept is to ensure that eligible property owners do not suffer unreasonable losses because of any reduction in the market value of their properties caused by a proposed development. The defining feature of a property bond is the idea that eligible property owners, at an early stage in a project’s development, would be given a specific and binding promise of a well-defined, individual settlement, which the property owner would be entitled to redeem in specific circumstances. Should the property transfer ownership, so too would the bond. The outcome of a property bond scheme would reflect the way the scheme influenced property buyers, vendors and professionals throughout the lifetime of the relevant infrastructure project. Without evidence of those behaviours and decisions from actual schemes, it is very hard to assess the performance of a property bond for HS2.

The Government continue to believe that the property bond concept has merit, and that it was right to put it forward as an option in the property compensation consultation in 2013. However, taking all consultation responses and further practical and analytical findings into account, we continue to be concerned that the effects of a property bond on the behaviour and decisions of property owners, professionals and especially property buyers remain unknown and hard to assess.

In conclusion—

I have only 50 seconds remaining, so I will not give way.

In conclusion, I again congratulate my right hon. Friend on her unflagging energy in seeking the best outcome for those affected by HS2, and I very much recognise the importance of the compensation package to her and her constituents. I note the concerns she has raised and hope that I have shown hon. Members that we have a package in place that meets the Government’s policy objectives for compensation: fairness, value for money, community cohesion, feasibility, efficiency, comprehensibility, and the functioning of the housing market. I am confident that the compensation package, once fully in place alongside the protections already available through the compensation code, will perform well against those criteria.

Question put and agreed to.

House adjourned.