Utility wayleaves: a compensation lottery?

Publication Date01 Apr 2002
DOIhttps://doi.org/10.1108/14635780210420043
Pages159-180
AuthorNorman E. Hutchison,Jeremy Rowan‐Robinson
SubjectProperty management & built environment
Academic papers:
Utility
wayleaves
159
Journal of Property Investment &
Finance, Vol. 20 No. 2, 2002,
pp. 159-180. #MCB UP Limited,
1463-578X
DOI 10.1108/14635780210420043
Received August 2001
Revised and accepted
December 2001
ACADEMIC PAPERS
Utility wayleaves:
a compensation lottery?
Norman E. Hutchison
Department of Land Economy, University of Aberdeen,
Old Aberdeen, UK, and
Jeremy Rowan-Robinson
Paull & Williamsons Solicitors, Aberdeen, UK
Keywords Compensation, Utilities, Compulsory acquisition, Legislation
Abstract In the UK over the last 20 years there has been a proliferation in the statutory
provisions for wayleaves. The utilities requiring wayleaves such as the water, gas and electricity
companies have now been joined by cable TV and a host of telecommunications providers. All
have access to compulsory powers. However, there are variations between these powers and
between the compensation arrangements. The main objective of this article is to examine whether
the compensation arrangements are now appropriate, following the privatisation of the gas,
electricity, water and telecommunication companies. The article considers the results of a six-
month study of wayleaves funded by the RICS, which was completed in 2000, and recommends
that, in order to strike a fair balance between the interests of the utilities and the landowners,
legislative change is required. Claimants should not merely be entitled to the financial equivalent
of their loss, but instead a consideration should be paid reflecting, in effect, a rental for the
wayleave.
1. Introduction
For the good of all. That is the argument used when privately-held land is
occasionally required for public purposes. In these instances it has long been
accepted that the loss to the individual is offset by the gain to the wider
community of which the individual is a part. In order to expedite public
projects and to ensure that private rights give way when required, Parliament
has been ready to confer powers of compulsion. The public sector and a host of
others have all been able to rely on powers of compulsory purchase, including
the creation of new rights falling short of ownership, to ensure that public
purposes are achieved.
This paper focuses on an important but relatively neglected area where
privately held land is commonly required for public purposes[1]. This is for the
provision of physical infrastructure. In order to bring services such as water,
sewerage, electricity, gas and telecommunications to the consumer, a network
of pipes and cables together with supporting facilities has to be provided.
The research register for this journal is available at
http://www.emeraldinsight.com/researchregisters
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/1463-578X.htm
The authors are grateful to Ms Fiona Leverick and Mr Thomas Munjoma for their assistance in
undertaking this research and to the RICS Education Trust for its financial support. They are
also grateful to Mr Andrew Pym and Dr Barry Denyer-Green for their comments on the full
research report and to all those who provided information on current practice.
JPIF
20,2
160
Ready access to such services is generally considered to be in the public
interest and Parliament has conferred statutory powers on the suppliers,
including where necessary the use of compulsion, to secure provision. These
powers typically provide for the creation of a wayleave (in effect a licence) or,
where a more formal arrangement is required, something akin to an easement
or, in Scotland, a servitude. In recent years, the supply of these services has
increasingly been passed to the private sector and the providers are commonly
referred to as ``the utilities''. This area is important, partly because of the very
extensive network of pipes and cables in existence at the present time, partly
because of the very large number of wayleaves that are negotiated each year,
and partly because of the anticipated growth in the level of services to be
supplied by cable and telephone during the next decade.
The history of the development of compulsory powers by public authorities
has been one of striving to achieve a fair balance between, on the one hand,
retaining adequate safeguards for the individual whose land is required and, on
the other, the importance of not delaying schemes which are to serve a much
needed public purpose. The former is reflected in the requirement to give notice of
an intention to exercise compulsory powers, the right to object and to be heard in
support of an objection and an entitlement to compensation reflecting a financial
equivalent of the loss. The latter is reflected in the use of codified procedures, the
delegation by Parliament of decisions on the exercise of compulsory powers in
each case to a minister and provision for fast track vesting of title.
What is different about the use of compulsion by the utilities is that the
supply of many of the services is now undertaken, as already indicated, not by
public authorities, but by the private sector. The privatisation programme of
the 1980s transferred the supply of many of the utilities from state control to
companies carrying on their business in pursuit of profit. There is nothing very
new about this. In the nineteenth century many of the utilities were in the
private sector and operated with the benefit of compulsory powers. However,
when they were brought into the public sector, procedures were streamlined
and compensation was pegged to the fair market value. This owed much to
the two reports of the Scott Committee which criticised the ``indefensible
complexities'' of the procedures and the extravagant compensation settlements
where access to private land was required for public purposes[2]. When the
utilities were eventually returned to the private sector during the 1980s, they
took with them the compulsory powers accompanied, for the most part, by the
streamlined procedures and fair market value compensation. There was no
significant adjustment in procedure or compensation to reflect their new status.
McAuslan and McEldowney question whether this was appropriate[3]:
... the whole law of compulsory acquisition and compensation is based on the assumption
that a public agency is acquiring land in the public interest and it is permissible in the
circumstances that a legal framework is created which ensures that an even hand is held
between the interests of the tax-payer and the private land-owner. It must be open to question
whether the same basic framework is wholly appropriate where a commercial organisation
wishes to purchase land for its commercial purposes.

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