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EXHIBIT LISTReference No: HOC/00107Petitioner: National Farmers UnionPublished to Collaboration Area: Thursday 26-Apr-2018

Page 1 of 118

No Exhibit Name Page

1 A45 General.pdf (A45) 2 - 15

2 A46 Farmers and Growers Guide.pdf (A46) 16 - 24

3 A47 Interest.pdf (A47) 25 - 29

4 A48 Drainage.pdf (A48) 30 - 31

5 A49 Soil.pdf (A49) 32 - 34

6 A50 Temporary possession.pdf (A50) 35 - 49

7 A51 Land Take for Mitigation.pdf (A51) 50 - 58

8 A52 Rights of entry.pdf (A52) 59 - 64

9 A53 Replacement buildings.pdf (A53) 65 - 72

10 A54 Borrow Pits.pdf (A54) 73 - 91

11 A55 Earthworks.pdf (A55) 92 - 93

12 A56 Conduits.pdf (A56) 94 - 96

13 A57 Interruption of Private Water Supplies.pdf (A57) 97 - 99

14 A58 Accommodation Crossings.pdf (A58) 100 - 102

15 A59 IHT.pdf (A59) 103 - 111

16 A60 CGT.pdf (A60) 112 - 118

HOC/00107/0001

The National Farmers’ Union of England and Wales: Petition No.107

General Slides

HIGH SPEED RAIL (WEST MIDLANDS - CREWE) BILL The National Farmers' Union of England & Wales: Petition No. 107A45 (1) HOC/00107/0002

1. Background: Agricultural Impact

• Along the line of HS2 Phase 2a 129 agricultural holdings will be directly affected, with 81 affected permanently

• Of the 188 petitions submitted, 69 concerned specific agricultural business (37%)

• 44 petitions concerning agricultural businesses came from NFU members

• Land take during construction: 2,090 ha, 1,370 of which is high quality agricultural land

• Permanent land take: 1,010 ha, 700 ha of which is high quality agricultural land


1. Availability of farmland- GB

-60

-40

-20

0

20

40

60

80

100

H2-2

006

H2-2

007

H2-2

008

H2-2

009

H2-2

010

H2-2

011

H2-2

012

H2-2

013

H2-2

014

H2-2

015

H2-2

016

H2-2

017

% n

et b

alan

ce

Demand v Availability of farmland - since 2006 (RICS data based on surveyor opinions)

GB - demand GB - Availability


1. Farm Tenure Types: England and WalesNumber of

farmsaverage area

per farmTotal area - hectares % of total area

All tenure types 56744 150.4 8,534,297 100%

Owner occupied 20948 105.8 2,216,298 25.97%

Tenanted 7795 158.2 1,233,169 14.45%

Mixed tenure 28001 181.6 5,084,981 59.58%

Mixed - mainly owner occupied 19240 165.7 3,188,068

62.70%

Mixed - mainly tenanted 8762 216.4 1,896,096

37.29%

Source Defra 2016-17


1. England and Wales Land Price

0

500

1000

1500

2000

2500

3000

3500

4000

England and Wales land price - £ per hectare (surveyor opinion bases based)

England and Wales land price - £ per hectare (surveyor opinion bases based)


1. Market Information• Sales reported to RICS (E & W)2016 – 4502017 – 518

• Area traded (E & W)2016 – 9, 591ha/23,700ac2017 – 12,707ha/31,400ac

• Average reported GB land price2016 - £26,516/ha or £10,731/ac2017 - £25,150/ha or £10,178/ac


1. Availability of Farmland –West Midlands

-60

-40

-20

0

20

40

60

80

100

H2-2

006

H2-2

007

H2-2

008

H2-2

009

H2-2

010

H2-2

011

H2-2

012

H2-2

013

H2-2

014

H2-2

015

H2-2

016

H2-2

017

% n

et b

alan

ce

Demand v Availability of farmland - since 2006 (RICS data based on surveyor opinions

West Midlands - demand West Midlands - Availability


1. West Midlands Land Price

0

500

1000

1500

2000

2500

3000

3500

4000

West Midlands land price - £ per hectare (surveyor opinion based)

West Midlands land price - £ per hectare (surveyor opinion based)


1. Availability of Farmland – North West

-100

-80

-60

-40

-20

0

20

40

60

80

100

H2-2

006

H2-2

007

H2-2

008

H2-2

009

H2-2

010

H2-2

011

H2-2

012

H2-2

013

H2-2

014

H2-2

015

H2-2

016

H2-2

017

% n

et b

alan

ce

Demand v Availability of farmland - since 2006 (RICS data based on surveyor opioions)

North West - demand North West - Availability


1. North West Land Price

0

500

1000

1500

2000

2500

3000

3500

4000

North West land price - £ per hectare (surveyor opinion based)

North West land price - £ per hectare (surveyor opinion based)


1. Compulsory Purchase

• “Hand in hand with the power to acquire land without the owner’s consent is an obligation to pay full and fair compensation. That is axiomatic.”

• “… the law in this country on this important subject is fraught with complexity and obscurity”

• “Difficulties and uncertainties abound”

• Delay, worry and expense


1. Qualifications• Louise Staples is a Member of the Royal Institution of Chartered Surveyors and a Fellow

of the Association of Agricultural Valuers and has 22 years experience in the ruraldivision.

• She worked in private practice from 1995 to 2010 in Northumberland for 8 years andthen Worcestershire, Herefordshire and Gloucestershire up to 2010.

• She then joined the NFU as their senior rural surveyor based at their head office atStoneleigh Park.

• She has acted for members which have been affected by national significantinfrastructure schemes through Development Consent Orders . Representing membersat oral hearings on socio economic issues and compulsory acquisition

– Improvement to the A14 from Huntingdon to Cambridge by Highways England– Triton Knoll Scheme relating to the installation of underground cables through Lincolnshire from an

offshore wind farm.– Richborough Scheme – Overhead 400KV electric cables by National Grid

• Represent members at a TWA hearings Network Rail Crossings Closures• Now acting for members affected by the following schemes

– A303 Stonehenge by Highways England– Vattenfall – Vanguard and Boreas wind farm connections in Norfolk– Orsted – Hornsea 3 wind farm connections


1. Agricultural Land Classification• Taken from Agricultural Land Classification of England and Wales, Ministry of

Agriculture, Fisheries and Food, October 1988Grade 1 - excellent quality agricultural landLand with no or very minor limitations to agricultural use. A very wide range of agricultural and horticultural crops can be grown and commonly includes top fruit, soft fruit, salad crops and winter harvested vegetables. Yields are high and less variable than on land of lower quality.Grade 2 - very good quality agricultural landLand with minor limitations which affect crop yield, cultivations or harvesting. A wide range of agricultural and horticultural crops can usually be grown but on some land in the grade there may be reduced flexibility due to difficulties with the production of the more demanding crops such as winter harvested vegetables and arable root crops. The level of yield is generally high but may be lower or more variable than Grade 1.Grade 3 - good to moderate quality agricultural landLand with moderate limitations which affect the choice of crops, timing and type of cultivation, harvesting or the level of yield. Where more demanding crops are grown yields are generally lower or more variable than on land in Grades 1 and 2.


1. Agricultural Land ClassificationSubgrade 3a - good quality agricultural landLand capable of consistently producing moderate to high yields of a narrow range of arable crops, especially cereals, or moderate yields of a wide range of crops including cereals, grass, oilseed rape, potatoes, sugar beet and the less demanding horticultural crops.

Subgrade 3b - moderate quality agricultural landLand capable of producing moderate yields of a narrow range of crops, principally cereals and grass or lower yields of a wider range of crops or high yields of grass which can be grazed or harvested over most of the year.

Grade 4 - poor quality agricultural landLand with severe limitations which significantly restrict the range of crops and/or level of yields. It is mainly suited to grass with occasional arable crops (e.g. cereals and forage crops) the yields of which are variable. In moist climates, yields of grass may be moderate to high but there may be difficulties in utilisation. The grade also includes very droughty arable land.

Grade 5 - very poor quality agricultural landLand with very severe limitations which restrict use to permanent pasture or rough grazing, except for occasional pioneer forage crops.


2. Compliance with Farmers and Growers Guide: Issue

• During the promotion of the Phase One Bill, the Promoter published a document called the Farmers and Growers Guide, in discussion with the NFU and others. A similar Guide has been produced for Phase 2A.

• The Guide contains useful information about the implementation of the Bill, and also includes a number of statements which are in the form of a commitment or assurance, but which have not appeared in the register of undertakings and assurance and/or which have not been complied with on Phase One.


A46 (2) HOC/00107/0017

2. Farmers and Growers Guide: Promoter’s Opening Statement 19.3.18

40.. [….]The promoter has published a guide for farmers and growers which sets out the principles that the promoter will follow in seeking to achieve that balance as the detailed design of the railway progresses. On the screen I’ve shown you that but I’ve also copied paragraph 2.1.5 of that guide. I won’t read it into the transcript because it’s there and can be read. But it is one of the key commitments that the project has given in order to seek to ensure that farmers and growers are able to be involved in the detailed design of the railway as it passes through their land. Thus our ambition is that the impact on them should be kept to the reasonably practicable minimum.


2. Compliance with Farmers and Growers Guide: Issue1

• Paragraph 1.1.8 of Guide for Farmers and Growers:– The principles set out in this guide will be adhered to throughout the design

and construction of HS2. The guidance may be subject to revision from time to time, recognising that throughout the life of the project, practices may be improved or modified.


2. Compliance with Farmers and Growers Guide: Solution1

• The Promoter should be required to give an assurance that the Promoter or Nominated Undertaker will comply with all the commitments in the Farmers and Growers and that the NFU will be consulted on any changes to the Guide.


2. Compliance with Farmers and Growers Guide: Issue 2

• The procedures relating to how breaches of assurances are to be reported and dealt with is unclear for farmers, based on reported experiences on Phase One. Information Paper B5 (compliance with undertakings and assurances) gives very basic information about this subject. It says that the Promoter will give an undertaking to Parliament that he will take such steps as he considers reasonable and necessary to secure compliance with the EMRs. It gives no detail about how breaches of assurances should be reported, to whom, how they will be considered and what avenues are open should a farmer disagree with the outcome.


2. Compliance with Farmers and Growers Guide: Solution 2

• The Promoter should be required to provide a guide to farmers setting out details of how allegations of breaches of assurances will be dealt with, including information on the format of complaints, contact details of an individual to whom they should be made, details about how allegations will be handled (including timescales and opportunities for farmers to provide further input) in a day to day online guide of what to do.


2. Compliance with Farmers and Growers Guide: Issue 3

• The NFU have secured an assurance on Phase 2a requiring an agricultural liaison officer to be appointed to deal with day to day issues raised by farmers.

• One issue that NFU members have encountered on Phase One is that as responsibility passes from the Nominated Undertaker to its contractors and sub-contractors, so does the identity of the agricultural liaison officer.

• Farmers have so far found that they have built up good relations with liaison officers only to find that they are likely to change when the main works contracts start.


2. Compliance with Farmers and Growers Guide: Solution 3

• That the agricultural liaison service be under the direct control of the Nominated Undertaker and the individual agricultural liaison officers be appointed directly by the Nominated Undertaker, so as to seek to provide more consistency throughout the construction works.


3. Interest on late payments– the issue

• Advance payments are made late and final payments of compensation for compulsory purchase claims are sometimes not made until years after the scheme has finished.

• The problem is that the statutory rate of interest as set down ( Acquisition of Land Regulations 1995) is 0.5% below the standard rate.

• This has meant that since March 2009 zero interest is payable when compensation is agreed but not paid.

• There is no incentive for acquiring authorities to make payments to claimants promptly.

HIGH SPEED RAIL (WEST MIDLANDS -CREWE) BILL The National Farmers' Union of England & Wales: Petition No. 107A47 (1) HOC/00107/0025

3. Interest on late payments: example

• Commercial lets of land: for example a block of land let on a farm business tenancy will include a clause stating that late payment of rent will incur interest thereon at the interest rate.

• On these types of lets interest is normally 4% above the base rate of a specified bank.

• Interest can be due from 7 days of the due date for payment.


3. Interest on late payments: example

• The rate of interest for the purposes of the Late Payment of Commercial Debts (Interest) Act 1998 is 8 per cent per annum over the official dealing rate.

• In the National Grid national agreement negotiated by NFU and CLA, which is used for National Grid Gas infrastructure, there is provision for payment of interest on late (ie more than 10 working days overdue) payment of compensation at 4% above the Bank of England base rate, with a maximum of 10%.


3. Interest on late payments: Recent Developments

• The issue in relation to advanced payments was recently addressed in the government’s consultation on further reform of the compulsory purchase system (March 2016).

• Paragraphs 43 and 44 set out their proposal:– Paragraph 44 stated “We therefore propose to introduce a penal interest rate

of 8% above base rate. This reflects the need to establish a sufficiently punitive rate which reflects the impact of late payment to businesses and individuals.”

• The consultation was followed up by the enactment of s196 of the Housing and Planning Act 2016.

• This enables the Treasury, by regulations, to set a rate of interest for outstanding advanced payments.

• So far, no rate has been set but now understood further limited consultation to be carried out by HCLG.


3. Interest on Payments: Solution1. The NFU proposes that the Bill should be amended so that the 1995

Regulations are disapplied in relation to compensation claims made in relation to the acquisition of land and interests in land under the Bill.

– the NFU proposes that the Bill should specify that compensation payments will attract interest from the date of entry at a figure which is above the standard rate

– that it should require that all payments of compensation due to claimants are made within 30 days of the amount being agreed or determined and

– that compound interest should apply to all overdue payments.

2. The NFU suggests that this proposal of a rate of 8% should be taken up in respect of the Bill.

3. The Bill should be amended so as to provide that interest should accrue on outstanding final payments of compensation, not just on advanced payments.


4. Land drainage: Issue

• The construction of the works will inevitably lead to alterations to field drainage along the line of the railway.

• The Promoter’s Information Paper E16 (Land Drainage) sets out a number of commitments and other information about how the Promoter intends to deal with that issue, and some of the commitments are listed in the register of undertakings and assurances (entries A129 and 130).

• The NFU is concerned about two aspects of the assurances: – First: the onus is on the farmer to maintain any new drainage systems and – Second: there is no requirement on the Nominated Undertaker to ensure that

new drainage system is as effective as those which they replace.

• In other similar infrastructure schemes, the NFU has secured commitments on behalf of farmers which meet both those concerns – drainage issues often take some time to materialise.


4. Land drainage: Solution• That the Promoter be required to alter the assurances recorded in the

register of undertakings and assurances in line with other infrastructure schemes, so as to: 1. remove the onus on farmers to maintain drainage systems that have

been imposed on them (unless the farmer agrees otherwise); 2. ensure that any new land drainage systems are put back in a

condition that is at least as effective as the condition of those which they replace;

3. provide for a dispute resolution mechanism, based upon adjudication by a jointly appointed expert (or in default appointed by the President of the Institute of Civil Engineers);

4. provide that where it is appropriate and reasonable to do so, and the consent of the relevant landowner has been obtained, the Nominated Undertaker will carry out works involving the reinstatement of drainage outside of the Bill limits.


5. Soil aftercare: Progress

• Further to petitioning an assurance, number 16, has beengiven on agricultural soils and how soils will be dealt withduring construction and reinstated back into agricultural use.

• This now includes a schedule of aftercare maintenance whichincludes soil testing appropriate to the target specification fora period of 5 years and a further 5 years if there is provenneed for further works to restore to the pre-agreed standard.


5. Soil Aftercare: Outstanding issue

• There will be a cost to a farmer to carry out the aftercare maintenance whether this is for 5 years or 10 years.

• All reasonable costs to carry out the aftercare maintenance which is essential should be met by the undertaker but that is not made clear within the assurance as currently drafted.

• Such costs may be recovered as part of any compensation payment but compensation may be agreed prior to expiry of any soil aftercare works and/or before the need for a further extension is known.


5. Soil Aftercare: Solution

• HS2 should include the following wording in theassurance:

All reasonable costs incurred by the farmer in orrelated to meeting the target specification for thepurpose of aftercare maintenance will be met by theNominated Undertaker.


6. Temporary Possession Powers: Background

• HS2 can take possession of land temporarily for construction (Schedules 15 and 16) and then follow up by acquiring the same land permanently for permanent infrastructure and mitigation when detailed design is complete (clause 4)

• This could mean a large area of land is taken temporarily at the outset and then followed up, possibly years later, with permanent acquisition (possibly of a smaller area)

• That is what is happening in practice on Phase One and is likely to happen for Phase 2A

• There are 3 distinct disadvantages for farmers: uncertainty, inability to capture capital value early and inadequate notice of entry.


6. Temporary possession on Phase One: Brook Farm

A50 (2) HOC/00107/0036

6. Temporary Possession Powers(a) Notice Periods: Scenario and Issues

• Scenario:– HS2 wants to take an area of land from a farmer for the purposes of the railway: some of

the land is needed temporarily (which could be years) and some permanently– different areas of land in the farmer’s ownership could be taken at different times under

different notices– HS2 gives notice to take all the fields temporarily at the outset: in accordance with the

Bill, only 28 days’ notice is given

• Issue– 28 days’ notice is inadequate, particularly if the area of land taken is significant and

given the need for farmers to be able to make plans for the use of their land a long time in advance.

– For example, a farmer who grows potatoes may suffer the loss of his crop, for which he would be compensated in due course, but the long term impact on trust and confidence in the farmer is likely to be undermined.


6. Temporary Possession Powers(a) Notice Periods: Promoter’s response

“1. A twenty-eight day notice and approval period for commencement of proposed works is consistent with the timescale applied to the exercise of equivalent powers conferred under the High Speed Rail (London-West Midlands) Act 2017. However, as the Petitioner will be aware, where possible, discussions are normally opened with the landowner or occupier prior to this point.”

• This response provides no justification as to the appropriateness of the 28 days’ notice, and it is out of step with recent national legislation.

• Experience on Phase One demonstrates the need for greater periods of notice and more certainty.


6. Temporary Possession Powers(a) Notice Periods: requests

• Paragraph 4(1) of Schedule 15 should be amended to provide for a notice period of no less than 3 months before the powers of temporary possession are exercised.

• This would bring the provisions into line with national legislation [s. 20(3) Neighbourhood Planning Act 2017: “The notice period must not end earlier than the end of the period of three months beginning with the day on which the notice is given.”].


6. Temporary Possession Powers(b) Uncertainty: scenario and issues

• Scenario: – Field A is required for ecological mitigation, eg newt ponds – But Field A is only taken temporarily by HS2 at the outset– Eventually (maybe years later) the farmer will be asked whether he/she wants to keep

Field A and manage it in accordance with a management agreement. The alternative is HS2 would acquire Field A permanently and make similar arrangements with others (e.g. Woodland Trust).

• Issues:– Farmers need certainty. The farmer should be given the opportunity to choose what

he/she wants to do with Field A as soon as HS2 gives notice of its intention to take it temporarily (related to issue (b): capital value)

– Farmers on Phase One are not being provided with drafts of management agreements to consider – that makes it difficult for the farmer to decide what to do.

– Farmers need to be told in advance about the proposed period of planned temporary occupation, and be kept updated.


6. Temporary Possession Powers(b) Uncertainty: solutions

• 1: Bill amendment enabling farmers to serve a counter-notice on HS2 where HS2 has served a temporary possession notice if the land is required permanently for purposes of ecological mitigation. The counter-notice would require HS2 to acquire the land permanently at an early stage, providing certainty and enabling compensation for capital value to be obtained, and an advance payment requested.

Note: Solution 1 based on national legislation



• 2: Require HS2 to provide a management agreement template before the end of the select committee proceedings. [HS2 have now provided a draft but NFU asks to reserve the right to address the committee on the template’s contents later]



• 3: Require HS2 to provide an assurance that in the case of farmers whose land is to be occupied temporarily:– (a) the detailed programme and likely date of occupation will be

discussed with landowners and occupiers before the service of the notice

– (b) an indication of the period of planned occupation will be provided before the service of the notice and updates will be given to the landowner and occupier from time to time

Note: Request 3 is based on the Farmers and Growers Guide (para 9 of Explanatory Note) and is less demanding than equivalent national legislation [s.20(4) Neighbourhood Planning Act: “The notice must specify the period for which the acquiring authority is to take temporary possession of the land.”]


6. Temporary Possession Powers(c) Capital Value: scenario and issues

• Scenario:– Part of Field B is required for the railway tracks– HS2 takes temporary possession of Field B– HS2 must pay compensation only for losses suffered during

temporary occupation: the figure is based on the loss of income during that period (not loss of potential rent)

– HS2 then takes part of Field B permanently for railway infrastructure, possibly years later

• Issues:– Even though only part of Field B is very likely to be taken

permanently, capital value cannot be realised on the whole field for years


6. Temporary Possession Powers(c) Capital Value: Promoter’s response with NFU

suggestions

1. HS2 Phase 2A Information Paper C3: Land Acquisition Policy outlines how landowners will be compensated for the acquisition of their land required for the construction and operation of the Proposed Scheme. Paragraph 4.2 says:

“where the nature of the site will materially change (e.g. through demolition of existing buildings or construction of railway works on the site) or where land or property is planned to be developed, the freehold interest will, if the freehold owner so requests, be acquired at the outset rather than by the exercise of temporary possession powers followed later by acquisition.” [NFU suggested changes in red]


6. Temporary Possession Powers(c) Capital Value: request

• Where it is clear that farmland will be required on a permanent basis for the railway tracks and associated earthworks and cuttings then HS2 must exercise permanent compulsory purchase powers at the outset rather than temporary powers, if the farmer has indicated that as a preference.


6. Temporary Possession Powers(d) Cashflow: issue

• Issues:– There is no procedure available for advanced

payments under temporary possession– This could present farmers with serious cash flow

issues, compounded by the lack of certainty about when the land will be returned or permanently acquired.


6. Temporary Possession Powers(d) Cashflow: Promoter’s position

• Farmers and Growers Guide, Explanatory Note:

“11. Compensation can be paid either in the form of an annual payment (where the occupation is for a number of years) or one-off payments to cover both a land element and payment of ancillary losses.”


6. Temporary Possession Powers(d) Cashflow: request

• A formal assurance that HS2 must provide interim payments in respect of losses suffered as a result of the exercise of the temporary possession powers. Payments should be made on a monthly, six monthly or (at a maximum) annual basis, depending on the circumstances of the case.


7. Land take for Mitigation: the issue

• A significant area of agricultural land is to be taken out of agricultural production for the creation of woodland, wetland and grassland habitat, including some of the best and most versatile land.

• The extent is considered unacceptable, given the amount of agricultural land already being lost to the scheme and given HS2’s aim “to limit the adverse impacts on agricultural land and farm holdings as far as is reasonably practicable” (NTS, page 46.)

• It is not apparent how, if at all, the impact of farms and/or the need to avoid BMV land has been taken into account in identification of mitigation land.

• HS2 state that these areas are to be created to meet the objective of ‘no net loss’ as a route wide sense check. The areas identified appear to extend well beyond that.

• The NFU disagrees with the promoter's aim of promoting mitigation that adheres to the Lawton report principles of "bigger, better, and more joined up“ if that is at the expense of taking more agricultural land.


7. Land take for Mitigation: the evidence

• In the ES Non-technical summary it states at paragraph 9.5:– “Approximately 107.8ha (266.37acres) of habitats of principal importance will be lost overall,

including up to 42.7ha of lowland mixed deciduous woodland. Where reasonably practicable, ecological compensation areas will be created to provide habitats of principal importance.

– A total of approximately 394ha (973acres)of habitats of principal importance will be created.” (this is over 3 1/2 times the area lost).

• Freedom of Information - letter to Roger Bedson Agent – FOI 17-1917:– A total of 238ha (588 acres) of woodland will be planted for landscape and mitigation and

ecological habitat creation and this will offset 46ha (114 acres). (this is 5.2 times the area lost).

• The area of land to be taken for habitats of principal importance is a high percentage (39%) of the area to be taken permanently for the scheme. Permanent land take is 1008 ha.

• The planting has been located to increase the size of the existing higher quality woodland habitat and to increase connectivity without adequate consideration of impact on farming.


Netherset Hey Farm – Habitat Creation

- Netherset Hey Farm Boundary

- Manor Farm Boundary- Land take for mitigation

Creates new wetland habitat which did not previously exist on farm

c. 27 ac


Grange Farm – Habitat Creation

- Grange Farm Boundary- Land take for mitigation- Farm Steading


Grange Farm – Habitat Creation

- Grange Farm Boundary- Land take for mitigation

Wetland habitat creation –encourages wild birds – increases risk of Avian Influenza on poultry farm


Manor Farm – Ecological Mitigation

- Manor Farm Boundary- Land take for mitigation- Farm Steading


7. Land take for Mitigation: the evidence• The ES is not transparent as to how habitat replacement has been calculated:

– The Technical Note –’Methodology for Demonstrating No Net Loss in Biodiversity’ explains how a metric has been used to calculate pre and post development units.

– But none of these calculations are being explained to landowners and farmers.

• The promoter is continuing to say that decisions about the location, size and type of environmental mitigation have been made on the basis of their professional judgment.

• Simply no explanation on a farm by farm basis why extent of land identified is required, and such identification will provide the starting point for any detailed design discussions.

• No long term management plan has been set out for created habitat areas or how it is to be funded to achieve a target value:

Management and maintenance in Technical note – Ecology and biodiversity - Ecologicalprinciples of mitigation

“14.3.1 The nominated undertaker will commit to appropriate on-going management, maintenance and monitoring of compensatory habitats.”

• Early indications are that assurance as to involvement of farmers in detailed design, assurance 14, has been of limited if any effect in securing any substantive re-design on Phase One.


7. Land take for Mitigation: Solution

The NFU considers that the Promoter should be required:

(a) to publish a metric or equivalent which sets out in detail how the Nominated Undertaker will assess the amount and type of mitigation that will be required to meet its aims, rather than merely relying upon general “professional judgment”; (b) to comply with a stated aim of “no net loss” in terms of ecological mitigation by the following:


7. Land take for Mitigation: Solution

• The basis of mitigation should be on the following principles:– The impact on farm businesses must be expressly considered along side

other factors; – Intelligently located mitigation on land already out of production or

of low inherent fertility should have priority to minimise the take of the best and most versatile land;

– Locating mitigation on severed fields where appropriate.• The nominated undertaker will take into account and implement any

reasonable request as to the location and extent of any mitigation land of the owner/tenant for the protection of the farming business (including where appropriate with the owner/tenant’s agreement relocation of proposed mitigation inside or outside the Bill limits).

• An undertaking that the nominated undertaker will enter into detailed management agreements for areas of mitigation and will provide appropriate funding for implementation of the plans.


8. Rights of entry for further high speed railway works and exercise of rights of entry: Issue

• Section 54 of the High Speed Rail (London – West Midlands) Act 2017 enables an authorised person to enter land, in connection with a Bill or proposed Bill authorising a high speed rail line, for the purpose of conducting surveys or facilitating compliance with EU protection legislation.

• The form of notice does not specify what type of survey is to take place. A long list of possible types of survey is attached to a schedule and the landowner is told any of them might happen. Some are simply inspections of the land but others are borehole drilling with heavy machinery.

• The power under section 54 does not apply provisions of the Housing and Planning Act 2016 which make requirements about the form of notice that should be used.

• Due to lack of liaison, the powers can be exercised at inappropriate times.


A52 (2) HOC/00107/0060

8. Rights of Entry – Powers

• Under the Housing and Planning Act 2016 section 172 (1)

• A person authorised in writing by an acquiring authority may enter and survey or value land in connection with a proposal to acquire an interest in or right over land.

• It states that a person will only enter and survey at a reasonable time and provide evidence of authorisation.


8. Rights of Entry – Powers

• Sec 174 of the 2016 Act– every owner or occupier must have at least 14 days notice before the first day on which the authority intends to enter.

• The notice must include details of what is proposed-– Searching, boring and excavating– Leaving apparatus on the land– Taking samples– An aerial survey– Carrying out any other activities that may be required


A52 (5) HOC/00107/0063

8. Rights of entry for further high speed railway works to survey: Solution

• An assurance that any notice served under HS2 for access to survey will include the following:– Who will be taking entry– The date of entry and for how long– The types of survey to be carried out – The type of equipment if any will be used.

• An assurance is given that discussions take place in advance with farmers to ensure that surveys are not carried out at inappropriate times.


9. Planning consent for replacement buildings and associated dwellings: Issue

• The construction of the Authorised Works will necessitate the demolition of agricultural buildings, including farm buildings, together with associated dwellings.

• Where the core farm business will survive, the farmer is likely to want to replace those buildings and the dwellings associated with them.

• In most cases this will require a full planning application. • The uncertainty over whether an application will be approved

and the time delays that can arise if a case goes to appeal can all be very difficult for a business to manage.


9. Replacement Buildings: Upper Hanyards Farm

HIGH SPEED RAIL (WEST MIDLANDS - CREWE) BILL The National Farmers' Union of England & Wales: Petition No. 107

- Farm Steading

A53 (2) HOC/00107/0066

9. Replacement buildings – planning: the issue

• The replacement of farm buildings in most cases will be needed before the demolition of the residential farmhouse or the farm building including as examples, livestock housing, silage pits, grain and potato storage.

• First agreement will need to be reached with HS2 of equivalent reinstatement – difficulty in reaching agreement to replace

• Second the planning and approval for such replacement will be needed years in advance of the demolition to enable the building to be built it time so that the farm business and enterprise is not affected by the demolition.


9. Planning consent for replacement buildings and associated dwellings: Issue

• As a result of concerns raised by the Select Committee of the House of Commons on the Bill for Phase One, the then minister for planning wrote to local planning authorities about this issue and the promoter has provided assurances to the NFU which go some way to meeting its concerns. But there are matters of detail in respect of those assurances which remain outstanding.


A53 (5) HOC/00107/0069

A53 (6) HOC/00107/0070

9. Planning consent for replacement buildings and associated dwellings: Solution

• 1: The NFU asks that the assurance given on this subject by the Promoter be altered so that it also provides that the Nominated Undertaker would give reasonable consideration to providing a statement in support of a planning applicationin cases where this issue applies.

• 2: The Nominated Undertaker be required to respond promptly to any reasonable request by a farmer about the scope and likely amount of compensation that would be payable in the event that the farmer is required to construct a new farmstead or replacement building.


9. Planning consent for replacement buildings and associated dwellings: Solution

• 3: The NFU seeks a recommendation from the Select Committee that the Ministry for Housing, Communities and Local Government should remind local authorities of the sensible position it took on Phase One AND

• provide further guidance to local planning authorities on the subject of planning conditions: (a) ensuring replacement of existing dwellings will be

permitted;(b) discouraging an agricultural tie on replacement premises

where none exists on the current premises; (c) ensuring that conditions should only relate to design,

materials used and access.


10. Borrow Pits: Issue• The Promoter has identified a shortage of high quality aggregates needed

for the construction of the railway.• To be addressed by creating six borrow pits along the line of the railway,

from which material will be excavated and which will affect 9 farms– 4 borrow pits – CA1 – Fradley to Colton– 1 borrow pit - CA4 – Whitmore Heath to Madeley– 1 borrow pit – C5 – South Cheshire

• Each of these areas represents a significant proportion of each farmer’s land, and the total amount is up to 154ha (or 380 acres).

• The NFU is very concerned about the use of valuable farmland being taken for borrow pits and the impacts on the farm businesses, as are the farmers concerned who have all objected, all bar Barn Farm.

• The borrow pits will be worked for at least 4 years before being reinstated and so taking valuable farmland out of production for at least 6 years.


10. Borrow Pits: IssueCA1

CA4

CA5

Total area of all borrow pits is 380.5acres The pits would be filled in again (including with material not required for the scheme) and would be restored in accordance with a scheme, after it is no longer required. All of them are to be located on farmland. But there will be temporary impacts while the pit is in operation, and permanent impacts after restoration.


Farm Total Farm AreaTotal Area Required (% of Farm Area)

Borrow Pit (% of Total Area Required)

Woodend Farm 240ac 81.79ac (34.1%) 25.45ac (31.1%)Common Farm 250ac 75.61ac (30.2%) 29.65ac (39.2%)Common Lane Farm 951ac 103.28ac (10.9%) 32.12ac (31.1%)Barn Farm 106ac 47.94ac (45.2%) 16.56ac (34.5%)Echills Farm 395ac 122.06ac (30.9%) 47.9ac (39.2%)Pipe Hall Farm 1001ac 141.59ac (14.2%) 49.42ac (34.9%)



Netherset Hey Farm 801ac 183.1ac (22.9%) 69.18ac (37.8%)



Grange Farm 919ac 115.6ac (12.6%) 10.13ac (8.8%)Lower Den Farm 638ac 224.37ac (35.2%) 88.71ac (39.5%)

A54 (2) HOC/00107/0074

Woodend Farm/Common Farm:Kings Bromley South Borrow Pit

- Common Farm Boundary- Woodend Farm Boundary


Common Farm: A515 Borrow Pit

- Common Farm Boundary


Echills Farm: Shaw Lane Borrow Pit

- Echills Farm Boundary- Echills Farm Steading


A54 (5) HOC/00107/0077

Pipe Hall Farm: Blithbury Borrow Pit

- Pipe Hall Farm Boundary- Pipe Hall Farm Steading


Netherset Hey Farm Borrow Pit

- Netherset Hey Farm Boundary- Netherset Hey Farm Steading


10. Borrow Pits: HS2 Information• HS2 say that it requires high grade excavated materials for the

construction of the railway embankments and that it is not possible to obtain this from the works.

• The promoter contends that creating borrow pits next to the line is the best solution as it can be processed locally and transported largely on haul routes.

• According to Information Paper D12, commercial quarries have been ruled out by HS2 for two reasons:

– it would reduce the effect of HGV movements on the local road network and communities.

– clay materials generated by construction of the railway will be used to backfill the borrow pits.


10. Borrow Pits: HS2 InformationIn HS2’s ARUP report “Mitigation for shortfall of suitable excavated material report”, fuller reasons were given for not using commercial quarries:1. Increase in HGVs on public road network.2. Cost of material likely to be higher than borrow pit/widen cutting

options, and would be affected by haulage distance from commercial quarry.

3. Potential for shortfall or limited material availability at local quarries during works due to the scale/permitted extraction volumes and demands of the works.

4. No guarantee of future availability at particular quarry – difficult to predict future availability and therefore cost.

5. Volumes of material required would impact the local authority mineral plan proposals, which currently make no specific allowance for HS2.


10. Borrow Pits: Expert Report• The NFU believes there is a better source for the sand and gravel

materials to be obtained from commercial quarries that are already active.

• The NFU commissioned a report from Mineral Surveying Associates, specialist minerals surveyors; it concludes that it is possible to obtain the amount of sand and gravel required from three working commercial quarries near Kings Bromley.

– Newbold Quarry (Aggregate Industries)– Barton Quarry (Hanson Aggregates)– Alrewas Quarry (Tarmac)

• The quarries have 16.7 m/t of consented reserves with further planning applications submitted for 6.3m/t and 2.2m/t. So Reserves increasing to 25.2 m/t in 2018.

• Due to there being three commercial aggregate companies with capacity to supply HS2 there will be competition and so enable HS2 to reach a market rate. Not possible for one operator to ransom.


Commercial Quarries and Borrow Pit Resources


10. Borrow Pits: NFU response to HS2

(1) Increase in HGVs on public road network

• All of the sites identified have direct access onto the A38, a dual carriageway and can supply HS2 without the need for significant disruption to local communities.

• Due to substitution of demand HGV movement increases between the three commercial quarries identified and HS2 Phase 2a may not be significant.

• Constructing a haul road off the A38 onto the line of HS2 Phase 1 could reduce impact on roads between dual carriageway and HS2 Phase 2a.



(2) Cost of material likely to be higher than borrow pit/widen cutting options, and would be affected by haulage distance from commercial quarry.

• The quarries are within reasonable haulage distance (6-9 miles) of the proposed Phase 2a route.

• The cost of hauling aggregate up to 10 miles from the commercial quarries identified is £2.50 to £2.75 per tonne.

• The cost of purchasing aggregate from commercial quarries would be off set by the operational cost of borrow pits, and the compensation payable to land owners. The net saving to HS2 is considered to be in the order of £1.00 to £2.50 per tonne, depending on the above factors.



(3) Potential for shortfall or limited material availability at local quarries during works due to the scale/permitted extraction volumes and demands of the works• The quarries have 16.7 m/t of consented reserves with further planning

applications submitted for 6.3m/t and 2.2m/t. So reserves likely to increase to 25.2 m/t in 2018.

• Drawing 1 provides a graphic illustration of available material. Quarry reserves are shown in proportion to material that may be available for borrow pits.

• Total capacity to supply from the three quarries identified is 2.2 m/t pa, or 8.8 m/t pa over the 4 year operational life of the proposed borrow pits.

• All three quarrying companies understood to have the ability to meet existing demand from other sites if the terms offer by HS2 are commercially viable.



(4) No guarantee of future availability at particular quarry – difficult to predict future availability and therefore cost• The Promoter can agree terms for a supply contract with one or more of

the quarries identified.• Once terms are agreed, both availability and cost will be fixed. A supply

contact will be more certain than borrow pits as the contactor will be required to provide the material, regardless of geological conditions.

• The presence of three major commercial operators will ensure that the Promoter is able to obtain a market rate through a competitive tender process.

• Availability of supply is dependent on the Promoter agreeing terms with commercial suppliers rather than the availability of suitable material.



(5) Volumes of material required would impact the local authority mineral plan proposals, which currently make no specific allowance for HS2• Staffordshire County Council has made provision for 75 m/t of aggregate

over the plan period.• The total requirement for HS2 Phase 2a is the equivalent of 18 months of

planned supply.• The location of 2 borrow pits (Kings Bromley South and Kings Bromley

North (Lichfield Road) within that local authority’s area of search for future sites may impact on the ability to deliver future consented reserves within this area as a result of cumulative impact.

• The Scheme will sterilise a large quantity of aggregate identified by the local authorities as Mineral Safeguarding Areas, reducing the ability to identify future areas of search.


10. Borrow Pits: Additional NFU Points

• According to the information provided by HS2, the six borrow pits identified may contain significantly more than the aggregate required.

• Possible that one or more of the borrow pits may not be required or that the size of the borrow pits could be reduced further to evidence from ground investigations.

• The sites and reserves within Staffordshire’s MLP have undergone environmental assessment and the environmental assessment to date by ARUP highlighted changes that have not been taken up which would reduce the size of the borrow pits.


10. Borrow Pits: Additional NFU Points

• Staffordshire has a deficit restoration material for existing mineral extraction sites. Inert waste material from HS2 could be used for restoration and so provide a community benefit.

• Local road network will have to be used to move waste to borrow pits for backfill.

• The borrow pit proposal conflicts with the adopted Local Plan of restricting new mineral extraction to extensions to existing sites.

• Excavating borrow pits in addition to allocated mineral sites may be considered to have an unreasonably high cumulative impact on the CA 1 Community Area Fradley to Colton.


10. Borrow Pits: Solution

The NFU would like the Select Committee to require an assurance from the Promoter that • First, material required will be taken from the available resources in the

commercial quarries within a reasonable distance.• If it is proven that borrow pits are still required then the size of the area of

any borrow pit must be kept to a minimum, including but not limited to excavating to the maximum depth possible, and be based upon the ground investigation data (proving the mineral volume and suitability).

• The final 3D borrow pit shapes should be modelled/located to have minimal impact on the efficient operation of all affected farms.


11. Earthworks: Issue

• There will be significant lengths of bund, made-up ground, depositing of spoil and ground reprofiling alongside the proposed railway.

• Due to the significant landscape earthworks and sustainable placement there is concern over the amount of slippage and slumping that may happen.

• The NFU is concerned about clarity for the long term responsibility for safety of earthworks on farmland.


11. Earthworks: Solution

The NFU requests that the promoter be required to give an assurance that the Nominated Undertaker will:

(a) remain responsible for the structural safety and maintenance of all bunds and landscape earthworks including embankments and spoil placement areas, except where they are materially altered by the landowner;

(b) be responsible for any losses associated with the failure of any such earthworks.


12. Utilities and conduits: Issue

• The NFU is concerned to ensure that farmers are able to install utilities such as cables and pipes under the railway if land in their ownership is severed by the railway.

• This can be achieved by the construction of culverts underneath the railway by providing them at regular intervals along the route as part of the construction, in order to provide future proofing and to help ensure that connectivity (particularly high speed broadband for rural communities) is not stifled by the scheme.


12. Utilities and conduits: Issue

• Any HS2 infrastructure, such as bridges or culverts, that provides a connection between areas of severed farmland should be made available for the use of farmers, subject to safety and operational requirements, without any premium or ransom payment having to be made by the farmer.


12. Utilities and Conduits: Solution• The NFU request that the promoter be required to give the following

assurances:

(1) In the absence of an existing suitable crossing point, to provide conduits as part of the build at regular intervals under the railway line as it passes through agricultural land (say every 500m or as otherwise agreed with the farmers concerned) to take cabling or other utilities across the railway both now and in the future;

(2) after construction, if a farmer makes a reasonable request for the use of an existing culvert, conduit or bridge, (or construct a new conduit) then such use or construction should be permitted (payment by the farmer being limited to the actual cost of the works and additional maintenance).


13. Interruption of private water supplies: Issue

• It is important that private water supplies are considered and mitigated not only from tunnelling and piling but the general construction of the railway line as well.

• There are many farmers with boreholes and reservoirs which are providing water to irrigation systems to irrigate arable crops and supplying water to livestock farms.

• The NFU submits that it is essential that the potential impact on the water supply for livestock farms and irrigation systems is properly assessed and suitable mitigation is provided.

• The promoter has provided an assurance to the NFU on this subject, and again, the NFU is concerned that they need to be strengthened.


13. Interruption of private water supplies: Issue

• The assurance given needs to be modified so as to provide that if a farmer makes a reasonable request to the Nominated Undertaker for an alternative water supply then it should be provided within 24 hours of notification by the farmer and until the issue that gave rise to the request has been remedied.


13. Interruption of private water supplies: solution

Our suggested assurance is as follows:

• 6.1. Where an existing private water supply to a farm is adversely, and directly, affected by the construction of the Proposed Works, the nominated undertaker will, where appropriate if requested by the farmer or landowner to do so, consider the provision of provide or procure the provision of an alternative temporary supply of water where reasonably practicable to do so. This will be considered having regard to an assessment of compensation and the commercial justification by the farmer.

• 6.2. Where the supply is so affected temporarily by the construction of the Proposed Works, then the alternative supply need only be supplied for the period during which it is so affected.

• 6.3. Where a request is made by the farmer or landowner under 6.1 and a permanent alternative supply of water cannot be provided immediately, the Nominated Undertaker will provide, procure the provision of or reimburse the farmer’s costs of providing an interim temporary supply of water until the permanent supply is provided or (as the case may be) until any decision is taken by the Nominated Undertaker not to provide a permanent alternative supply.


14. Accommodation crossings: Issue

• A large number of farms will be severed by the construction of the proposed railway line.

• Crossing points to provide access to severed land is essential and the loss of even small areas of land to some farm businesses could lead to the business not being viable.

• Accommodation crossings should be future proofed at the design stage so that they will be able to cater for the width, length and weight of existing and likely future agricultural machinery.

• Farmers need to have some certainty about the dimensions of proposed underpasses and overbridges.


14. Accommodation crossings: SolutionOverbridges, underpasses and access tracks must be provided to farmers to reach severed land, so the following requests are made:• A requirement that before detailed design is complete, farm owners and

tenants will be consulted about the location, standard and type of overbridge, underpasses and access tracks that will be provided to farmers to reach severed land

• In that consultation exercise and in finalising the detailed design, the nominated undertaker will take into account and implement any reasonable requirements of the owner/tenant for the protection of the farming business (including where appropriate relocation of proposed accommodation works and the provision of tracks that give access to crossings).

• The accommodation over-bridges and underpasses highlighted on the ES maps and which provide access to severed farm land should be designed to provide agricultural access where needed.


14. Accommodation crossings: Solution

• An assurance that in designing and constructing the authorised works, the Nominated Undertaker will ensure that, if requested—(a) all accommodation overbridges provided for farmers shall be no less

than 5 metres wide and capable of taking a loading of 60 tonnes; (b) all underbridges provided for farmers will be no less than 5 metres

wide and 5 metres high; (c) any new or modified vehicular farm access to the highway is at least

20 metres long and capable of use by all road legal agricultural vehicles.

• A specification for all access accommodation works should be negotiated with each farmer (to include reasonable future proofing) and the specification once agreed must be binding on the nominated undertaker


15. Inheritance Tax: background

• Where an estate is worth more than £325K an IHT charge of 40% applies to the excess.

• The structure of IHT ensures that businesses and business assets are relieved from the charge to IHT.

• This protects viable trading businesses from disruption and break up on the death of each successive owner.

• For farm businesses this is achieved through agricultural property relief (APR) and business property relief (BPR) – usually of 100%.


A59 (1) HOC/00107/0103

15. Inheritance Tax: backgroundIntroduction to agricultural relief

Essentially, agricultural relief is available on the:

• agricultural value, IHTA84/S115(3) of

• agricultural property, IHTA84/S115(2)

• owned and occupied for the purposes of agriculture. IHTA84/S117, for the required period.*

* throughout the two years immediately before the transfer the deceased or transferor must have occupied the property for the purposes of agriculture.


A59 (2) HOC/00107/0104

15. Inheritance Tax: Issue 1

• Where farmland is required by the promotor on a temporary basis this may nevertheless involve a number of years where the land is not in agricultural use.

• Agricultural use of farmland is a requirement for the application of relief from Inheritance tax (see next slide).

• An owner who dies whilst land is occupied by the promoter on a temporary basis may lose relief from Inheritance Tax.

• In addition the reduction in the amount of farmland in agricultural use could in some instances have further implications, for example in relation to whether or not relief would still be available on the farmhouse, being the centre of business operations.


A59 (3) HOC/00107/0105

15. Inheritance Tax: Issue 1Agricultural property

You can pass on some agricultural property free of Inheritance Tax, either during your lifetime or as part of your will.

Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals intensively. It also includes:

• growing crops• stud farms for breeding and rearing horses and grazing• trees that are planted and harvested at least every 10 years (short-rotation coppice)• land not currently being farmed under the Habitat Scheme• land not currently being farmed under a crop rotation scheme• the value of milk quota associated with the land• some agricultural shares and securities• farm buildings, farm cottages and farmhouses

Gov.uk guidance based on HMRC Inheritance Tax manual


A59 (4) HOC/00107/0106

15. Inheritance Tax: the solution 1

The NFU wishes to ensure that farmers who have land occupied by the promotor on a temporary basis do not suffer additional tax as a result, as follows:

• We ask that the committee recommend to the Treasury that the “agricultural use” relief be extended to include “where land is temporarily in the occupation of the Nominated Undertaker by virtue of the High Speed Rail (West Midlands –Crewe) [Bill]”

• The legislation already deems some land to be in agricultural use because of a perceived public good, for example land not currently being farmed under a Habitat scheme.

• The NFU would like to see this principle extended to land in the temporary possession of the promotor, which some might perceive as another form of public good.


A59 (5) HOC/00107/0107

15. Inheritance Tax: Issue 2

• When an asset that did qualify for APR or BPR is replaced with another qualifying asset the replacement will qualify for relief.

• There is however a risk, given the difficulty in finding replacement land, that a farmer may die before he has been able to replace farmland taken compulsorily by HS2 and as a result his estate may suffer a 40% tax charge on the compensation for the value of the land taken which remains un-reinvested, which would be unfair.

• Where assets qualifying for APR or BPR are acquired by compulsory purchase the compensation received will not qualify for the relief unless HMRC are satisfied that the deceased had a clear intention to reinvest it in their business.


A59 (6) HOC/00107/0108

15. Inheritance Tax: Issue 2• In principle, if a claimant for compensation on compulsory acquisition becomes

liable for tax which he would otherwise have not paid, he should (if the principle of equivalence is followed) be able to claim the tax from the acquiring authority. However, the claim may have been settled and moreover case history suggests that some acquiring authorities will contest claims for taxation incurred.

• The NFU are seeking to remove the potential need for a small minority of inheriting farmers to pay tax or face uncertainty over claiming it back under the equivalence rule in the form of compensation from HS2.

• 32% of farmers are over 65 compared with 16% of the general public. The NFU believe that the risk of incurring an IHT charge is small but nonetheless a real risk.


A59 (7) HOC/00107/0109

15. Inheritance Tax: Issue 2 progress• The NFU originally suggested an exemption from any Inheritance Tax liability

incurred in relation to farmland acquired under the Bill, providing there is a continuing intention to acquire suitable replacement land. We appreciate this was a difficult suggestion but it was made with the underlying principle of equivalence in mind.

• H M Treasury have suggested HMRC need to consider the facts in each individual case, including continuing activities and evidence of an intention to replace business assets, in deciding if the compensation proceeds will qualify for Business Property Relief. They have pointed to the case of Brown’s Executors v IRC [1996] STC (SCD) 277, a Special Commissioners case where BPR was given. However in that case the business asset had not been replaced within 21 months and HMRC argued BPR was not available.

• We believe that during our evidence to the House of Commons HS2 Select Committee, HS2 accepted that provided the owner had sought reasonably to mitigate any Inheritance Tax arising as a result of the scheme this cost would in principle be recoverable by way of compensation.


A59 (8) HOC/00107/0110

15. Inheritance Tax: Issue 2 - solutionThe NFU wishes to ensure that farmers who have actively sought to replace business assets do not suffer additional tax as a result of their difficulty in finding suitable replacement assets. This can be achieved through guidance from both HMRC and HS2 and we would suggest:

• The committee make a recommendation that HMRC expands the guidance in their Inheritance Tax manual to include a case study of a farmer affected by HS2. This should acknowledge the specific difficulty in replacing farmland taken for a major national infrastructure project such as HS2 and that there should be a positive presumption that the money will be reinvested in the farm business in the event of an untimely death, unless there is evidence to the contrary.

• Section 16 of HS2’s “Guide for Farmers and Growers” deals with compensation. However it makes no mention that Inheritance Tax will be compensated for where the deceased had taken reasonable steps to mitigate the liability. Neither does it give any indication of what the promoter suggests would be reasonable mitigation or how such a claim should be made if the original compensation claim has been closed. This should be rectified by an undertaking by the Promoter to include appropriate guidance in the “Guide for Farmers and Growers” and a recommendation that it is included in the guidance letter the Financial Secretary to the Treasury has already suggested HS2 will issue to those affected by compulsory purchase.


A59 (9) HOC/00107/0111

16. Capital Gains Tax: background• A compulsory purchase triggers a disposal for capital gains tax purposes.

• A capital gains tax charge may be deferred if the proceeds are reinvested in replacement land within statutory time limits of one year before to three years after the disposal.

• HS2 Phase 2a will take 1,010 hectares out of 17,271 hectares of land held by the owners (6%). In 2017 just 25,391 hectares of farmland were sold on the open market out of a total of 8.5million hectares in England and Wales (0.3%) (RICS). Due to the shortage of farmland and given the linear nature and scale of the scheme such timescales for reinvestment are likely to be unrealistic.

• HMRC have discretionary powers to extend the reinvestment period if they are satisfied the farmer has acted reasonably and replaced farmland at the earliest opportunity. This is not however considered until the reinvestment has taken place and is considered on a case by case basis.

• Whilst a charge to capital gains tax may form part of compensation this still requires the farmer to demonstrate that they have taken all reasonable steps to mitigate the liability and not to have settled his claim.


16. Capital Gains Tax: House of Commons Special Report

Tax

361. Farmers whose land is compulsorily acquired by the Promoter may find themselves landed with a large and unwelcome capital gains tax liability if unable to reinvest the purchase proceeds in replacement land, premises or fixed plant within the normal ‘rollover relief’ periods. The size and scale of the HS2 project means that competition for replacement land will be intense, and real estate prices will probably increase. The estate of any farmer unfortunate enough to die while the purchase proceeds remain uninvested may also incur inheritance tax liability.

362. The Department said that HS2 may result in some increased land availability of parcels along the line which HS2 itself resells, but we doubt that that will be sufficient. We were told that HS2 should not be treated differently from other infrastructure projects but we believe the likely intensity of competition for land along the HS2 route merits its treatment as a special case.

363. We wrote to HM Treasury seeking a generalised extension of the discretion to extend rollover relief periods in the case of HS2, or at least a statement that there would be a starting assumption of such extension. We did not want farmers spending money on detailed individual tax advice when a general position or set of starting assumptions could be usefully set out.

364. HM Treasury said that it would write to farmers to advise them of existing rollover relief discretions. We wished for greater certainty and clarity. There is precedent for extended discretion in cases from other business sectors. The Treasury should make it clear that the enhanced rollover relief periods will apply to all those whose land is acquired for the project. As it will take HS2 some ten years to bring its Phase One rail project to fruition, there is a case for allowing farmers a comparable period for reinvestment.


16. Capital Gains Tax: HOC Committee Phase 1

• 250. SIR PETER BOTTOMLEY: That we understand. The merited criticism is of Treasury Ministers and, in particular, HMRC for not having had direct discussions with the representatives of farmers, whether NFU or CLA, and having left this issue as long as they have. As was pointed out – don’t bring it up – in P15808(1), a quarter of a year may go, on average, between a letter being sent by the NFU and a reply being received. And for us to be told that HMRC can use their discretion when HMRC have not been involved in direct discussions is frankly letting down those involved who are adversely affected and who face the risk either of a landowner dying unexpectedly and getting inheritance tax unprotected or capitals gains tax because they haven’t been able to roll it over in time. So that’s not something for the Promoter to respond to, but if anyone from the HMRC or the Treasury is listening, they should not do it again – and they ought to go further now.

• 251. MR STRACHAN QC (DfT): I’m sure your comments, if they’re not being heard directly, will be passed on. I think I’ll just point out – I’m not commenting either way –that P15802 does indicate that there was a meeting with the Treasury and the County Land and Business Association in March 2015; it doesn’t detract from the point that there hasn’t been one with the NFU.

• 252. SIR PETER BOTTOMLEY: Indeed. 11 months ago, the problem wasn’t resolved and since then there hasn’t been discussions with the NFU. I won’t emphasise the point.


16. Capital Gains Tax: HOC Committee • 260. SIR HENRY BELLINGHAM: I just want to

reinforce what my colleague has said on this. I think that I actually agree with everything he’s said. We have been talking about this for a long time and I am concerned that HS2, at the highest level, including the Chairman and Chief Executive, have not been making sufficient representations to their Secretary of State to make, in turn, representations to the Chancellor. I have been getting letters through from Junior Ministers at the Treasury, but we have not had a letter from the Chancellor. I’m not clear that your Secretary of State actually really is focused on this. I would urge you to make sure the mood and feelings of this Committee are passed on to the hierarchy of HS2.

• 261. MR STRACHAN QC (DfT): I will certainly do that. All I can say is that the position that is being indicated by the Committee is very clear, but I will ensure that clarity of the message is passed on.

• 262. SIR PETER BOTTOMLEY: If I’m allowed one extra pair of sentences, ‘where discretion will be used’ not ‘might’, but ‘will’. Make it plain. In unpredictable circumstances, where the farmers or other people are affected by this line, if there are unintended penalties on people because of their circumstances, that is when extra discretion should be allowed. There should not be penalties on people who suffer because this project has interfered with their liability to taxation, when it wasn’t actually intended. I just want to make that clear.

• 263. MR STRACHAN QC (DfT): In a sense, I am acting as a conduit today, but I will ensure that the points being made, if they haven’t already been heard directly, are made clear.

• 264. MR CLIFTON-BROWN: I want to make it clear that Mr Gauke’s recent letter to us in no way deals with the issue. He hasn’t really moved at all – and in my view that is unacceptable.


16. Capital Gains Tax: House of Lords special report (15 Dec 2016)

Tax issues

379. The NFU raised a number of tax issues. The most important of these is capital gains tax (“CGT”). CGT is payable on chargeable gains from the sale or other disposal of chargeable assets, gains being computed without any allowance for inflation. If the land acquired from a farmer is less than 15 per cent (by value) of his holding, the sum received may be accounted for by deduction from the base value of the land on any future disposal. But if the 15 per cent limit is exceeded, CGT will be payable on the gain unless the farmer can obtain rollover relief by reinvesting the proceeds in agricultural assets, or other business assets, within three years, or such longer period as HMRC may, as a matter of administrative concession, allow.

380. The House of Commons Select Committee expressed the view (Second Special Report for the session 2015–16, paragraph 364) that in view of the likely intense competition for replacement land, there should be greater certainty and clarity about the extension of the rollover period. We were told at the NFU hearing on 5 July 2016 that there had recently been a meeting with officials of HM Treasury and HMRC, but that the outcome was not yet known. However, Mr Mould QC, for the promoter, told us that any CGT payable in these circumstances would be allowed as an element of the compensation payable.


16. Capital Gains Tax: progress


16. Capital Gains Tax: solutionIn order to provide farmers with the certainty they require, the NFU asks that :

1. The committee makes a further recommendation to H M Treasury that either:- the statutory time limits for reinvestment be extended to 10 years where the disposal is

as a result of HS2 using compulsory purchase powers and after that 10 year period, HMRC should continue to use its discretion as now; or

- that HMRC should confirm that it will exercise discretion in the same circumstances in favour of the farmer reinvesting outside the statutory reinvestment time limits within 10 years.

2. HS2 provides an assurance in the terms as set out in the House of Lords Special Report “that any CGT payable in these circumstances [i.e. where a charge to CGT arise because the farmer can’t roll over] would be allowed as an element of the compensation payable”.


Documents

The National Farmers Union of England and Wales: … Farmers...England and Wales land ... of Agricultural Valuersand has 22 years experience in the rural ... private practice from