The Future of CPOs

Engagement and Acquisition in a Changing Landscape

Our previous article (March 2024) highlighted the significance of the Guidance on Compulsory Purchase Process and Crichel Down Rules (“the Guidance”) for public bodies pursuing a Compulsory Purchase Order (“CPO”). Published by MHCLG (then DLUHC), the Guidance serves as a crucial resource, outlining the steps and best practice for promoting a CPO.

The updated “Compulsory Purchase Process: Guidance”, effective from 3 October 2024, introduces significant changes aimed to improve the fairness, transparency, and efficiency in how CPOs are applied. Changes to the Guidance, with CPOs taking a more pivotal role, have been highly anticipated, following changes to the planning regime, specifically the implementation of part 9 of the Levelling Up and Regeneration Act 2023 (“LURA”), and a new Government pledging to deliver 1.5 million homes and essential social infrastructure.

This summary highlights key updates and practical considerations for local authorities.

Updated Procedural Timelines & Improved Communication

The Guidance introduces specific timelines for each stage of the CPO process, providing greater clarity for both authorities and landowners. While adhering to these timelines is important, it should not compromise genuine engagement and transparent communication – and local authorities will need to ensure that their communication timescale are aligned with procedural timelines.

Key considerations for local authorities include:

Proactive and Continuous Stakeholder Engagement: Ensuring early and regular communication with affected parties and the wider community;
Establishing Clear Communication Channels: Providing accessible platforms for sharing information, asking questions, and raising concerns;
Actively Exploring Alternatives: Demonstrating a willingness to negotiate, consider alternative solutions, and minimize the impact on affected parties;
Transparency and Accessibility Beyond the Basics: Going beyond simply publishing statutory notices;
Interactive Online Platforms: Creating dedicated project websites or portals to provide regular updates, FAQs, key documents, and interactive maps in an accessible format.
Community Forums: Hosting regular public meetings and workshops to present plans, address concerns, and facilitate open dialogue with the community;
Dedicated CPO Liaison Officer: Appointing a dedicated point of contact to provide support, answer inquiries, and guide affected parties through the process.

By embracing a proactive, transparent, and engagement-focused approach, local authorities can build trust, minimize conflict, and ensure a smoother and fairer CPO process.

Improved Consultation and Engagement

One of the recurring themes above is the overlap between the procedural timescales, the need for proactive communication, and stakeholder consultation and engagement. The revised Guidance reinforces robust stakeholder engagement throughout the CPO process. Compulsory acquisition is considered a last resort, therefore it is essential to demonstrate genuine efforts to acquire land by agreement before resorting to a CPO. Failure to do so can lead to CPOs being refused, as seen in recent cases.

For further information and advice on stakeholder engagement please refer to resources available on the Local Growth Knowledge Hub.

Strengthened Justification Criteria

The bar for justifying CPOs is significantly high, especially for large-scale land acquisitions. Authorities must present a compelling case demonstrating a clear public need that outweighs any infringement on private land rights. This requires robust evidence and a comprehensive assessment of the project's benefits.

Key considerations for local authorities wishing to undertake a CPO process include:

Strategic Alignment: How have you aligned the project with local strategic priorities outlined in housing strategies, regeneration plans, and economic development goals?
Economic Benefits: Have you provided a robust economic case, outlining job creation, investment, business growth, and tax revenue generation?
Commercial Case: Have you detailed a viable delivery model, outlined funding sources, and demonstrated a robust approach to risk mitigation?
Viable Delivery model: Has a realistic delivery model, including funding sources and a comprehensive approach to risk mitigation been completed?
Robust Financial Case: Have you included a detailed cost-benefit analysis demonstrating value for money and ensuring long-term affordability and sustainability?
Wider Public Interest: Has the broader benefits, including social value, environmental sustainability, and addressing inequality been articulated?

The project’s business case will summarise the results of all the necessary research and analysis needed to support decision making in a transparent way, drawing together the considerations outlined above. It needs to demonstrate accountability and value for money for the taxpayer, and it helps inform business and financial planning, particularly where funding may be scarce. The Local Growth Knowledge Hub has a many resource around building a robust business case, available here.

Amendments to the Compensation Framework

The LURA directions specify that any hope value should be disregarded for land acquired for affordable housing, education, or NHS purposes. The new Guidance goes further, emphasising fair and timely compensation for those affected by a CPO, aligning compensation more closely with market value and the full extent of losses incurred. Landowners are no longer entitled to compensation for future development value (“hope value”) unless there is evidence that the land’s redevelopment potential was a factor in its current market value. This helps to ensure that compensation reflects the current market value of land at the time of acquisition, without accounting for any speculative increase from future development or planning changes.

From an acquiring authority’s perspective, the new Guidance may encourage more schemes, particularly for housing, coming forward by potentially reducing land acquisition costs. To mitigate potential issues, parties should proactively address landowner concerns regarding the exclusion of hope value. This can be achieved through transparent communication explaining the rationale behind the valuation methodology. It's also crucial to be prepared for potential legal challenges from landowners who believe land is being acquired below its true value by ensuring all valuations are backed by robust data and comply with relevant legal frameworks.

Environmental and Sustainability Considerations

Greater emphasis is now placed on incorporating environmental sustainability, particularly biodiversity net gain (“BNG”) into the CPO process. Acquiring land for BNG purposes is now possible, but a compelling public case is crucial. For example, land for BNG purposes may be an integral part of a scheme underlying the CPO, but the authority needs to demonstrate how the acquisition will directly contribute to measurable biodiversity improvements.

Our comprehensive resources provide guidance on potentially unlocking Sustainability and BNG, with valuable insights into the key policies shaping this evolving landscape and the opportunities and challenges for Local Planning Authorities and developers.

What the Future Holds

As the Government sets ambitious housebuilding targets, local authorities will face a crucial challenge in navigating the complexities of the revised CPO guidance. Balancing robust stakeholder engagement with updated procedural timelines is key. However, authorities will need to carefully navigate potential legal challenges from the revised compensation framework, particularly regarding the exclusion of hope value. Transparency and proactive communication are paramount in ensuring a fair and efficient process for all parties.

If you have any questions on the topic of CPOs, or would like support please contact your Delivery Associate or email DeliveryAssociatesNetwork@Arup.com.

Luke is a chartered surveyor with over ten years’ experience specialising in compulsory purchase, land assembly and development matters. Luke primarily acts for acquiring authorities on major infrastructure, transport, and regeneration schemes.

If you have any questions on this topic, or would like support, please contact your Delivery Associate, or email DeliveryAssociatesNetwork@Arup.com

Disclaimer: the guidance is relevant as at the date of this article, but there may be further changes following publishing, therefore, it is advised to always check the relevant current legislation.