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Lords amendments to HS2 Bill

13 Jan 17 Enabling legislation for the £56bn High Speed 2 rail project is working its way through the House of Lords. Richard Flenley, senior associate of Charles Russell Speechlys LLP, reports.

No major infrastructure project can practically commence without there first having been intense scrutiny of the proposals.

In the case of HS2, which proceeds by way of a hybrid Bill before Parliament, that has meant a long and arduous path that started as long ago as 25th November 2013.  The Bill currently sits in the House of Lords, having been passed in principle – with amendments – by the House of Commons on 23rd March 2016.

Since then, for much of the time that followed, the House of Lords’ select committee for the HS2 project has been considering petitions against the Bill and produced its report on that stage of proceedings shortly before Christmas.

Next on the agenda is the Grand Committee in the House of Lords, which started on 10th January 2017 and will ultimately lead on to a report to the House of Lords before that House makes its amendments prior to return to the House of Commons.  There will then follow a process designed to reach agreement between the two Houses before the Bill receives Royal Assent.

In short, therefore, we are still some way from construction work commencing.  However, it is still possible that work will commence this year.

Bill amendments

As part of this process, the House of Lords select committee has made amendments to the Bill; the key ones I have set out below:

  • Clause 48 is materially altered to restrict the ability of HS2 to compulsorily acquire land for regeneration or development;
  • On compensation, the committee considered that the discretionary compensation schemes should be amended so that those households in urban areas within 120 metres of the line of the route are included in the scheme.

As made clear above, it is not yet guaranteed that the amendments will be incorporated into the Bill by both Houses – that is still up for negotiation.  However, it will be highly contentious should these two amendments be ignored.

Clause 48 Amendments

By way of reminder, the material provisions in Clause 48 originally stated:

“(1)        If the Secretary of State considers, having regard to the relevant development plan, that the construction or operation of Phase One of High Speed 2 gives rise to the opportunity for regeneration or development of any land, the Secretary of State may acquire the land compulsorily.

(2)          Before exercising the power under subsection (1) to acquire land compulsorily, the Secretary of State must consult each relevant local authority as to whether the acquisition would be in the interests of the proper planning of an area in which the land is situated.

(3)          In subsection (2), “relevant local authority” means the council of a county, district or London borough in whose area the land is situated.”

Before the House of Lords select committee, leading counsel for HS2 Tim Mould QC sought to argue that the provisions should remain as drafted (and slightly amended by the House of Commons select committee to add the consultation provisions in Clause 48 (2)) on the basis that the power of compulsory acquisition in this regard is nothing more than a “backstop power designed to prevent ‘ransom strips’ obstructing regeneration”.

However, in opposition to that argument, the petitioners (the lead petitioner on this issue being Camden Council) argued that (i) compulsory purchase powers should only be granted when they are clearly needed and (ii) there is no reason why the Secretary of State for Transport should have such wide powers indefinitely simply because of some degree of proximity between the land in question and the proposed railway.

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The House of Lords select committee concurred with the petitioners.

It is clear that they were very concerned that the language of Clause 48 before them gave very wide powers for potentially any form of development with some sort of geographical link to the route but without any more clarity and without any time limit for the exercise of the power.

Accordingly, they concluded that: “With respect, we do not understand how the House of Commons select committee reached [its] very restrictive view about the scope of the power … the powers are in our view unnecessary and undesirable”.

Impact on construction

The consequence of the amendments made to Clause 48 is that, save where land is required for “Phase One Purposes” (which generally means for the purposes of or in connection with the high speed railway – although is sufficiently vaguely worded to be open to interpretation), the only circumstances in which land can be compulsorily acquired is where it is necessary to relocate an undertaking displaced as a consequence of the operation of any powers authorised by the Act.

If it remains, this amendment will come as good news to those property owners who feared the opportunistic taking of land to facilitate regeneration and/or development by the back door, but is potentially bad news for the construction sector as it makes wide scale acquisition of lands by the Department for Transport for regeneration or development projects less likely (if not prevented entirely).

From a construction perspective, assuming the Clause 48 amendments are made, this will have a significant impact on the associated regeneration schemes being discussed locally and on a national scale.

It has long been the case that the government has used the concept of HS2 as being a springboard for regeneration and development projects along the length of the route.  Having the Clause 48 powers within the Bill must (notwithstanding the comments made by Mr Mould QC to the House of Lords select committee) be a fundamental part of that.

For example, in the Department for Transport’s document, The Strategic Case for HS2, it was made clear that: “HS2 will also generate economic opportunities and development … which can have serious local impacts.  HS2 Ltd predicts that additional commercial development brought forward as a result of HS2 in areas immediately surrounding HS2 stations could support up to 100,000 jobs.  The Core Cities Group – representing eight of the largest city economies outside London – puts that figure at 400,000.”

Indeed, following the announcement of HS2, significant work continues to be undertaken by the Mayor of London’s office and the Old Oak & Park Royal Development Corporation to deliver substantive regeneration to, according to Transport for London figures, a 950 hectare site potentially resulting in, according to figures from the Mayor of London’s office, gross value added for the London economy of between £3.5bn and £6.2bn.  There are also additional proposed schemes in Euston and in Birmingham, and it will no doubt be anticipated that further projects will follow, particularly as the proposals move towards Manchester and Leeds. 

Deprived of an automatic ability to compulsorily acquire the lands necessary to facilitate such regeneration and development because of the removal of the Clause 48 provisions, it will be incumbent on interested parties either to seek private acquisitions with individual planning applications or the relevant planning authorities (or other qualifying agencies) will need to consider using their powers of compulsory acquisition to co-ordinate large scale developments on the usual planning grounds.

This may see some schemes not being delivered at all and, for those that are, may also cause delay and additional project costs.

For this reason, amongst others, we could therefore see the amendments by the House of Lords Select Committee being opposed by the Government in the hope that proximate regeneration and development can be triggered under the Clause 48 powers.

It remains to be seen whether they will object (although the proceedings before the Grand Committee will be a useful barometer of feeling in the House of Lords at least) and, if they do, whether those objections are successful.  All we can say at this stage, however, is that, if the Clause 48 amendments are upheld, the future for regeneration and development along the HS2 route – particularly in the numbers envisaged by government – is very much in the balance.

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