Olympics land compensation – the saga rumbles on …

I have just been on BBC Essex having been invited by the Ray Clark Breakfast Show team – or Planet Ray as they prefer to be known – to discuss the government’s compulsory purchase of the 850 acres or so that make up the Olympic Park and Stratford City.

What sparked the discussion was the tough times that one Essex business, D&C Glass, appears to be having following its enforced relocation in 2007 from the Stratford area to a site in Thurrock.

The company claims it has received some compensation but the LDA has yet to pay up in full four years later and that this has led to a cashflow problem that means it may go out of business.

Clearly I was unable to comment on this individual case but it has certainly set me thinking about the entire Olympics land assembly process again and I will be seeking an update from the LDA today on progress on a number of elements.

In October of last year the LDA estimated that outstanding land purchase compensation claims would lead to payments of up to £41m, but as the individual case of D&C Glass proves yet again compulsory purchases are notoriously difficult to make estimates about.

In May 2009 the LDA told me that of the 193 businesses that were moved 72 were still in negotiation about final compensation. The LDA said it had secured more than 95% of the 4,750 jobs that comprised by spending two years working with each individual businesses.

Clearly the final few businesses are proving difficult to reach agreement with and that is probably not too surprising.

CPO experts have told me that it is quite common to underestimate by as much as 10% the original budget forecast on a complex CPO process and when you are spending well over £1bn on assembling land as the LDA that means the potential for significant errors.

It also means that there are unfortunately going to be winners and losers. While there has been a deal of focus on local businesses being forced to leave long-standing homes in ‘Mugabe-style land grabs’ there have also been plenty of stories about ne’er do wells pocketing fortunes from their moves (the Daily Mail has taken particular pleasure in writing these about gypsies).

The major issues are that firstly landowners are not only compensated for their land but also for the loss to their business caused by relocation and that is of course hard to measure.

Secondly, many negotiations are not settled amicably and have to go to the Lands Tribunal to take a view on the value of the site. The Lands Tribunal will often take the view that it is best to split the difference between the two and meet somewhere in the middle, something that pleases neither party.

What I said this morning is there are clear cases where businesses have done exceptionally well from the relocation and other cases where this has not been the case. It is clearly a great shame that businesses are still awaiting final compensation this far down the line, particularly if the cash injection is vital.

On the other hand of equal concern I suggested is the lack of clarity that remains over whether the land acquisition programme will turn out to be a good deal for the tax payers that ultimately funded it.

Boris Johnson’s administration fairly lethargically sought to distance itself from what turned out to be a significant overspend on the original budget after enlisting KPMG to audit matters.

A £160m black hole was found in the budget and the previous administration’s lack of rigour over accounting protocols was blamed. Two members of the Olympic Legacy Directorate were suspended and the LDA slashed back spending on a series of worthy other projects to balance the books.

That was all back in 2009. Since then it has all gone somewhat quiet.

There has been the odd story suggesting that back in 2005 in the middle of a property boom Tessa Jowell and Ken Livingstone were wildly bullish about the revenues government would achieve selling the land post-Games.

In truth we will not know if the government has balanced the books for the taxpayer for a long time, particularly as the ownership of the debt and ultimate responsibility for assets has shifted to a number of other parties than the LDA.

It would be helpful though to get an update again on how well the mayor and government are now managing the process and whether Boris’s promised improvements in efficiencies and protocol have been having much of an impact.

I will give the LDA a call this morning!

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About Paul Norman's Olympics blog

News Editor of CoStar News, a commercial property news service. Regular blogger on the London 2012 Olympics and what it means for property and the the regeneration of East London
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