Government ‘double standards’ in HS2 compensation

The CLA has accused the government of double standards in how it pays compensation to landowners in the path of HS2.

Transport secretary Robert Goodwin has confirmed the controversial scheme will effectively not pay interest on late compensation to landowners, but will charge interest for late payments from tenants living in homes now owned by HS2 Ltd.

Tenants will be charged 4.5% interest on late rent, but affected farm businesses will only be eligible for interest at 0.5% below base rate on compensation payments – which means they are likely to receive no interest for some time, said the CLA.

“HS2 Ltd should be required by law to pay compensation before entry, as a failure to do so puts the viability of affected businesses at risk.”
Henry Robinson, CLA president

Landowners with HS2 going through their land would initially be able to claim for the loss of the land, but claiming for the full cost of disruption would not be practical until construction had ended, said CLA chief surveyor Andrew Shirley.

The sheer scale of HS2 meant many landowners would not be fully compensated until 10 years after construction begun, he said, by which time the price of land would probably have risen further, as would other costs.  

See also: HS2 route: land compensation questions and answers

Some farm businesses would have to take out loans – often at a commercial rate of 4.5% – to finance coping with the disruption of HS2, yet would not get any of this back from the government, said Mr Shirley.

“It puts an additional hardship on farmers and farm businesses that have already been suffering,” said Mr Shirley. “[HS2] has produced no justification for paying no interest.”

Making HS2 Ltd pay interest would encourage the company tp pay as much compensation as possible quickly, rather than waiting until later to settle the final bill, argued Mr Shirley. 

CLA president Henry Robinson said it was “staggering” that the government could have such “double standards” on paying interest.

“HS2 Ltd should be required by law to pay compensation before entry, as a failure to do so puts the viability of affected businesses at risk,” he said.  

“If compensation is late, HS2 Ltd should commit to paying an interest rate of 4%, which is reasonable and more in line with commercial lending rates.”

Construction on HS2 is due to start in early 2017.