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Contingent Liability

Volume 642: debated on Wednesday 6 June 2018

I have today laid before Parliament a departmental minute describing a contingent liability relating to a blight agreement between me, as Secretary of State for Transport, and Heathrow Airport Limited (HAL).

If the proposed airports national policy statement is designated, land in the location identified as potentially suitable for the development of the north-west runway scheme becomes blighted. Owners of qualifying land (predominately owner-occupiers of private housing) within that location would be able to serve a blight notice on the Secretary of State, which if valid would, in effect, both authorise and oblige the Secretary of State to purchase the land.

In order to avoid my department having to cover the cost of blight claims I, as Secretary of State, have entered into an agreement with HAL under which HAL assume the financial liability for successful claims. In the event the proposed NPS is designated, the cost of meeting blight claims will need to be met by my Department if the agreement were for some reason ineffective to transfer liability.

The maximum estimated contingent liability for the blight claims is £160 million, though actual gross liability is likely to be much lower, c. £5 million to £20 million, as most owners of qualifying property are thought likely to wait for the more generous offer of 125% from HAL, available following the granting of any development consent.

The Treasury approved this liability and the chairs of the Public Accounts Committee and the Transport Committee were notified of this contingent liability by letter of 16 May due to the confidential nature of the contingent liability at that time. A period of fourteen sitting days beginning on 21 May has been provided for issues or objections to be raised, and final approval to proceed with incurring the liability will be withheld pending an examination of the objection.