Farmers are challenging the government over the rate of interest it pays on late compensation to businesses affected by HS2.
CLA President Henry Robinson wrote to Secretary of State Patrick McLoughlin after Transport Secretary Robert Goodwill confirmed hat HS2 charges 4.5 percent on late payment of rent from tenants who live in the 170 properties that HS2 owns.
But it will pay no interest at all to landowners when it is late in paying them compensation.
Mr Robinson said: “It is staggering that the same government department can maintain the double standard of charging interest on late rent while at the same time paying no interest to businesses who are suffering decades of disruption and loss at the hands of HS2.
“HS2 Ltd has consistently refused to pay a reasonable rate of interest on late compensation to landowners for compulsorily purchased land. Compensation is always late and often only settled many years after the land is taken. Being offered no interest adds to the financial misery of every business and individual long the route.”
The CLA President writes in his letter to the Secretary of State that under the outdated compensation code, landowners who receive compensation late will only be eligible for interest at half a percent below base rate, which is likely to be zero for some time and well below 4.5 percent for several years.
Mr Robinson explains to Mr McLoughlin that if a landowner does not receive compensation on time they may be forced to take out a bank loan to finance the restructuring of their business, which would be at a commercial rate of interest of at least 4.5 percent. Due to inflation, the value of late compensation will decrease over time and is not reflected in RPI or CPI figures but in the real costs faced by landowners purchasing replacement land and property.
Mr Robinson said: “It is unfair that this disparity exists, especially when HS2 Ltd has the ability to be more generous. 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. If compensation is late, HS2 Ltd should commit to paying an interest rate of four percent, which is reasonable and more in line with commercial lending rates.”
Transport Minister Baroness Kramer visited three rural businesses in Cheshire and Staffordshire affected by the HS2 route to see the impact on farmers and landowners facing compulsory purchase as part of the rail project.
The visit took in two farms as well as a modern estate and looked at issues including the need for HS2 Ltd to enter into early discussions with landowners, continued access to land, machinery and livestock during construction and once HS2 is operational, the importance of prompt and proper compensation and capital gains tax implications.
CLA President Henry Robinson said: “Families and businesses affected by compulsory purchase face major worry and uncertainty, often over a number of years. It is important that the Government recognises the effects that HS2 is having on the rural economy.”
Baroness Kramer said: “HS2 is vital to building a stronger economy and a fairer society, but I completely understand the concerns and anxieties of landowners near the line and it is only right that those people are properly looked after.
“I would like to thank the CLA for the opportunity to talk to landowners and famers about HS2 and see first-hand how the railway may affect them. The Government and HS2 Ltd have had extensive engagement with the CLA over a number of years and successfully resolved several issues. We will continue negotiations to try resolve any outstanding concerns.”
