The recent decision of an Inspector not to confirm a compulsory purchase order (CPO) sought by the London Borough of Barking and Dagenham is a key reminder of the need to fully justify the use of CPO powers and provide appropriate supporting evidence.

The decision

On 4 October 2022 an Inspector decided not to confirm a compulsory purchase order (CPO) sought by the London Borough of Barking and Dagenham (Borough). The purpose of the CPO was to facilitate the regeneration of Barking town centre to provide a comprehensive mixed-use development (Scheme).

The Inspector found that there was “national policy support, regional policy drive and strong local policy” that promoted the regeneration of Barking town centre and the Scheme benefitted from outline planning permission. The evidence provided by the Borough also demonstrated “an obvious and desperate need” for the regeneration of the town centre and substantial benefits in the public interest, which resulted in the Inspector concluding that “there is an extremely compelling case” for the CPO to be confirmed.

Despite such positive comments, the Inspector ultimately decided against confirming the CPO for the following reasons:

Inadequate evidence of financial viability

The Inspector had the following concerns in relation to the viability of the Scheme:

• No budget had been built in for business extinguishment costs, despite the likelihood of several businesses being extinguished if the CPO was confirmed. Whilst the Borough’s development partner had provided evidence of available funds for the acquisition of land interests, the Inspector noted that increases from business extinguishment costs could impact on funding.
• Inadequate evidence had been provided to support the developer’s assertion that the Scheme was viable. Whilst a general indication of funding intentions will usually suffice to support a reasonable prospect that a scheme will proceed, the most recent viability review had been carried out in 2016 for the outline planning application and had found the Scheme to be “substantially unviable”. Based on that evidence, the Inspector considered that it would be highly unlikely that the Scheme would proceed.

In response to the Inspector’s concerns regarding viability, the Borough and its development partner asserted that the 2016 viability review was no longer relied upon, and that up-to-date viability information was available. However, that information could not be provided as it was commercially sensitive. The Borough also claimed that objections on the grounds of viability were not raised until at the inquiry, and thus it had no fair notice and time to respond.

This did not wash with the Inspector who noted it is the Borough’s “responsibility to provide substantive information as to the financial viability of the Scheme in light of the CPO Guidance, and to be able to defend this.” The Inspector could also “not understand why an up-to-date appraisal was not presented, even if this was redacted or subject to an independent review.” They concluded that there was insufficient substantive information to assure them that the Scheme was viable and would be delivered in a reasonable time frame.

Inadequate negotiations

Despite engaging with landowners, tenants, occupiers and leaseholders early on the process, the way in which the Borough managed negotiations with those parties was heavily criticised by the Inspector.

The Inspector noted that the Borough had failed to:

• provide full details of the CPO process to affected parties;
• confirm that CPO powers would be used in a timely manner;
• appoint a single point of contact for parties affected by the CPO process;
• keep delays to a minimum;
• offer advice and assistance to affected occupiers about relocations and instead tried to ‘pass the buck’ to local estate agents; and
• provide a ‘not before’ date to affected parties, confirming that acquisition would not take place before a certain time.

As a result of the above, the Inspector was not persuaded that the Borough had genuinely attempted to negotiate with the affected parties in line with the CPO Guidance.

Takeaways

There are some clear lessons to be learned in terms of the evidential burden and project management requirements that the Planning Inspectorate expects from acquiring authorities. It is recognised that, even with the best will in the world, issues will arise that impact the smooth running, best practice approach for effective use of CPO powers.

However, the key take home messages from the decision are as follows:

1. An acquiring authority must be able to demonstrate that adequate resources are available to implement the CPO and CPO scheme within a reasonable time frame and that there is a reasonable prospect of the CPO scheme going ahead. In terms of supporting evidence:

• Even if the case for confirming a CPO is otherwise strong, lacking an up-to-date viability appraisal or substantive information on viability can prevent a CPO being confirmed.
• It does not matter if no objections have been raised in respect of viability. It is the acquiring authority’s responsibility to provide adequate supporting evidence at the outset.
• If there are confidentiality concerns regarding the submitting of viability evidence, consider either (a) submitting a redacted version of an appraisal/evidence to the inquiry; or (b) submitting an independent expert report on the viability appraisal.

Note always that a well advised objector may raise issues relating to compensation considerations that are strictly the preserve of the Lands Tribunal. Whilst any debate on compensation at Inquiry will not bind the Tribunal, as the Borough found for this Scheme, a failure to provide adequate evidence that sufficient funding is available to discharge an acquiring authority’s obligations in respect of statutory compensation can result in a scheme ultimately failing and the scheme promoters facing abortive costs and wasted time.

2. A CPO is a measure of last resort, and an acquiring authority must demonstrate that reasonable steps have been taken to negotiate the acquisition of land interest by agreement. In terms of managing the negotiation process, acquiring authorities should:

• Engage as early as possible in the CPO process with third party landowners, providing full details about the CPO process and the rights and duties of those affected, and aim to come to an agreement prior to inquiry.
• Provide a single point of contact to parties affected by the CPO process so they have direct and easy access to the acquiring authority.
• Keep any delays to a minimum so as to reduce the period of uncertainty and anxiety for owners and occupiers of the affected land.
• Offer advice and assistance to affected occupiers about relocations and, where possible, seek to provide for re-locating into the scheme that the CPO is being made to deliver.
• Provide affected occupiers with a ‘not before’ date, so that owners and occupiers of the affected land have certainty and can make plans in the intervening period.