Red Light, Green Light, and Mixed Signals!

Yesterday’s announcement from Rishi Sunak confirms a stop on HS2 north of Birmingham (Phase 2), but with the green light still on for the one remaining section between London and Birmingham, arguably the section least needed.

Abort Mission

HS2’s mission was to “better connect people across Britain”. Its vision was to “be a catalyst for growth across Britain”. Today’s announcement confirms that sadly, it will do neither.

Fervent anti-HS2ers have long maintained that this project was just a means of getting more activity and wealth to London, and from London to Europe, with the added bonus that a quicker link to Birmingham and Birmingham Airport from London might relieve the pressure on Heathrow. Otherwise, they say, why would construction not have started in the north!

My own view (for what it’s worth) is that if the sections north of Birmingham are being scrapped, then Phase 1 (the section between London and Birmingham) should be scrapped too. That is because:

  1. HS2’s mission and the vision, and its business case too, must now be in tatters;
  2. Yes, spades may be in the ground on Phase 1 and an eye-watering amount of money has already been spent, but they are just a fraction of the way through the required works; and
  3. Because the cost of phase 1 will almost certainly exceed even the increased budget.

Brick wall in negotiations

One reason for the very real concern over spiraling costs is because on Phase 1, HS2 Ltd is currently failing to give proper value to a head of claim of compensation, called “Severance and Injurious Affection”. This is essentially the loss in value of someone’s retained property and land, after compulsory purchase from that person or business of the part of its land and property required for the scheme. HS2 are taking a legal argument about the point at which the reduction in value of the retained land can be calculated. In the meantime, it is in many cases valuing this head of claim at zero, in cases where that head of claim has been valued on behalf of those impacted at sometimes millions of pounds.

Not only does this set alarm bells ringing that there may have been a further serious under valuing of claims for compensation (which is a cost of the project, and so a cost to the taxpayer), it also means that those people impacted have hit a brick wall with HS2 Ltd, and cannot get a settlement on their claim for compensation, unless they make a reference to the Upper Tribunal.

Taking such a step is hugely daunting for individual homeowners, farmers and other business owners. Individuals are having to gear up for litigation simply because they cannot get fair, reasonable valuations from HS2 on this hugely important part of their claim.

This means lots of things, but the three main ones are:

  1. Increased mental and financial stress for Claimants;
  2. Increased cost of Phase 1 once this aspect of claims has been properly taken account of; and
  3. Before we get to that point, the additional cost of a) obstructive negotiations between agents, and then b) agents and legal fees for both parties for the dispute resolution process for each of those claims.

Unless HS2 Ltd changes its approach to this head of claim, and claims generally, there will likely be a huge wave of references that will be made to the Upper Tribunal for determinations, and particularly so where a large number of claimants on Phase 1 are nearing the end of their six-year period within which to refer their claim (their limitation period).

Phase 1 has not been a success story in terms of communications with Claimants and claims handling.

Stilted negotiations

Claims are taking too long with HS2’s side stepping of Severance and Injurious Affection being a major obstacle.

Mental Health

I have seen too many Claimants on the brink of, if not already in, mental collapse because of the stress that this scheme has caused them. That is completely unacceptable.

That stress is caused by the threat, and then the reality, of having their homes, farms, businesses taken away from them, moved or closed down by HS2. However, compounding that stress is the difficulty they have faced with HS2 and negotiations on their claim.

HS2’s failure to consider ADR as an alternative to the Upper Tribunal

Worsening the situation still further is HS2’s reluctance to agree to try to settle by a mode of dispute resolution outside of the Tribunal – Alternative Dispute Resolution (ADR), particularly where the claim includes compensation for diminution in value of retained land.

Despite the Land Compensation Protocol requiring all parties to consider, and to be able to show that they have considered, the possibility of ADR as a means of determining their claim, HS2 seems to be dodging this important route to settlement, presumably because it is wanting to kick down the road the claims for diminution in value of retained land.

If Phase 1 goes ahead, then things need to change and now. We need HS2 ltd to take a fair and reasonable approach to negotiations with the focus on settlement in a time and cost-efficient manner.

I hope also that the push to get these claims finalised fairly and reasonably will be supported, and enforced, by the Department for Transport, or if necessary by the Parliamentary and Health Service Ombudsman or other bodies.

Written by Sarah Beer, Compulsory Purchase and Compensation Lawyer at Excello Law