Land Compensation Manual Section 10: Special cases with the compensation code

Part 4: Statutory undertakers

The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.


10.71 Definition

Section 8(1) of the Acquisition of Land Act 1981 defines statutory undertakers as

  • (a) ‘any person authorised by any enactment to construct, work or carry on
  • (i) any railway, light railway, tramway, road transport, water transport, canal or inland navigation undertaking, or
  • (ii) any dock, harbour pier or lighthouse undertaking, or
  • (iii) any undertaking for the supply of hydraulic power
  • (b) the Civil Aviation Authority or a person who holds a licence under Chapter I of Part I of the Transport Act 2000 (to the extent that the person is carrying out activities authorised by the licence), or
  • (c) a universal service provider in connection with the provision of a universal postal service’

The term ‘statutory undertaker’ also includes the holder of a licence under Section 6 of the Electricity Act 1989 to generate, transmit or supply electricity and who is authorised to acquire land compulsorily under that Act.

10.72 Statutory undertakers’ land excluded from compulsory purchase

Section 16 of the Acquisition of Land Act 1981 provides that where a CPO includes land acquired by statutory undertakers for the purposes of their undertaking and on a representation made to the appropriate Minister responsible for that undertaking within the period for objections, the Minister is satisfied that

  • (i) any of the land is used for the purposes of the undertaking or
  • (ii) an interest in any of the said land is held for those purposes

the CPO shall not be confirmed or made so as to authorise the compulsory acquisition of any land except land that he is satisfied

  • (iii) can be purchased and not replaced, or
  • (iv) if purchased it can be replaced by other land belonging to, or available for acquisition by, the undertakers without serious detriment to the carrying on of the undertaking.

Thus unless the Minister gives a certificate stating that the acquisition could take place without serious detriment to the carrying on of the undertaking, no CPO could take place.

10.73 CPO subject to special parliamentary procedure

Section 17 of the Acquisition of Land Act 1981 provides that where a CPO includes land of a local authority or land acquired by a statutory undertaker for the purpose of its undertaking, and the acquiring authority is other than a local authority, a National Park authority, an urban development corporation, a Welsh planning board, any statutory undertakers including a Housing Action Trust or a Minister, and an objection is made by the local authority or statutory undertaker, the CPO will be subject to special parliamentary procedure.

Basis of compensation

10.74 General

Except in the circumstances set out in the Paragraphs below, the normal statutory compensation code will apply to the assessment of compensation for the compulsory acquisition of statutory undertakers’ land. However, where the statutory undertaker is required to make a ‘business adjustment’ (see Paragraph 10.75 below) section 11 Land Compensation Act 1961 applies subsection (5) of section 280 of the T&CP Act 1990 which provides that in assessing the compensation the Upper Tribunal (Lands Chamber) shall have regard to any increase in the capital value of immoveable property belonging to the statutory undertaker resulting from the ‘business adjustment’.

10.75 Exception to the general rule

Where a compulsory purchase is effected by means of a CPO under

  • the Town and Country Planning Act 1990
  • section 142 or 143 of the Local Government, Planning and land Act 1980 (acquisition by urban development corporation) or
  • section 21A of, and Schedule 4 to, the Welsh Development Agency Act 1975 corporations)

in respect of the land of statutory undertakers and the CPO is made or confirmed without the appropriate Minister’s certificate, the compensation shall be assessed in accordance with sections 280 to 282 of the Town and Country Planning Act 1990.

The precise meaning of the above provisions is not entirely without doubt.

10.76 Basis of compensation

Section 280 of the Act provides for compensation to be assessed for:

  • (a) the costs of acquiring (alternative) land, providing apparatus, erecting buildings or doing work for the purpose of the carrying on of the undertaking (called a ‘business adjustment’)
  • (b) the appropriate amount for loss of profits
  • (c) any expenditure reasonably incurred in complying with a requirement to move apparatus

Sections 280(4) and (5) also provide that the compensation shall be reduced by

  • (a) the value of any property which inconsequence of the business adjustment ceases to be used for the purposes of the undertaking
  • (b) any increase in net receipts of the undertaking in the period after the business adjustment has been completed; and
  • (c) any increase in the capital value of immoveable belonging to the statutory undertaker directly attributable to the business adjustment that has not already been reflected in any increase in net receipts

10.77 Procedure

Valuers should not proceed to assess compensation under this special basis without the prior approval of the PS Professional Guidance Team. The valuer should make a full submission including any information to hand regarding whether the statutory undertaker made any representations against the CPO.

Under Section 281 of the Act, a statutory undertaker entitled to the assessment of compensation under the provisions of Section 280 may, by giving notice in writing within two months from the date of service of notice to treat, elect to have the compensation assessed in accordance with the normal compensation code (other than Rule (5) of Section 5 of the Land Compensation Act 1961).

If an election were received by the valuer direct from the statutory undertaker, the valuer should forward it immediately to the acquiring authority and inform the statutory undertaker accordingly. The valuer should obtain the approval of the acquiring authority before proceeding in accordance with the election.