AC-2024-LON-001877 - [2025] EWHC 2132 (Admin)

In his closing submissions to the public inquiry on behalf of the Claimant, Mr Gregory Jones KC submitted that the CPO Guidance placed the burden on the Second Defendant as acquiring authority to demonstrate that necessary resources were available to deliver the Scheme with a reasonable timescale. The Scheme was not said to be independently financially viable. It was therefore necessary for the inspector to test whether the sources of funding upon which the Second Defendant relied would be both available and sufficient to enable the Scheme to be delivered. Moreover, as recorded in the March report, there had been a huge increase of £24M in the projected costs of the Scheme. Critically, the information provided by the Second Defendant did not enable either the objectors or the inspector to test whether the projected costs were reliable.

Leading counsel submitted to the inspector that there was an obvious risk in relying on the Scheme being funded through the Second Defendant’s housing revenue account, should projected costs increase further. He placed particular reliance on the absence of any evidence to show that funding would actually be forthcoming from the PWLB. The Second Defendant had not called evidence to explain how the Second Defendant would be able to build up the revenue needed to repay any loan which they might seek from the PWLB. In any event, the Second Defendant’s position was “quite hopeless” because they had only resolved to underwrite the Scheme by a loan to the value of £78.1M. That projected cost was based upon figures which the Second Defendant had not been willing to expose to independent expert assessment or scrutiny at the public inquiry. In the absence of such assessment or scrutiny, the risk of a further significant increase in project costs could not reasonably be discounted. Mr Jones KC submitted that the Second Defendant’s Overview and Scrutiny Committee had held similar concerns, but their recommendation for an external review of projected costs by a suitably qualified firm of accountants had been rejected by Cabinet on 30 March 2023. The role of Populo did not increase confidence in the Second Defendant’s ability to deliver the Scheme. Populo had no track record of managing a scheme of this size. As a wholly owned company of the Second Defendant, Populo was not in a position to exercise any independent control or scrutiny of the Scheme.

Mr Jones KC argued for a clear similarity with the Dagenham decision in respect of the uncertainty and lack of transparency over the viability, funding and delivery of the Scheme. In both cases, there was a fundamental lack of tangible and substantive evidence to demonstrate the financial viability of the scheme for which compulsory purchase powers were sought; and of the acquiring authority’s ability to deliver that scheme.

In his closing submissions for the Second Defendant, Mr Douglas Edwards KC said that the Second Defendant had made it clear in its evidence to the public inquiry that the Scheme was not commercially viable in the sense of generating a return on the investment. The Second Defendant did not intend that the Scheme should produce a profit. That would be unrealistic, given that the purpose of the Scheme was to deliver affordable, largely social rented housing and community floorspace. Nevertheless, on the evidence of Mr Mackin and Mr Clough, the Scheme was both fully funded and capable of being delivered within a reasonable timescale.

It was submitted that the Second Defendant as acquiring authority had committed to funding the Scheme as a standalone project. The Second Defendant had decided to fund the projected costs of the Scheme through their housing revenue account and via borrowing from the PWLB. The Claimant had confused the Second Defendant’s revenue funding arrangements to fulfil their housing management responsibilities with the prioritisation of a standalone capital project. The PWLB routinely provided loans to fund capital projects of this kind undertaken by local authorities. PWLB funding is non-discretionary, in the sense that the board does not revisit or evaluate the merits of such schemes.

Mr Edwards KC submitted that there was no reasonable basis for questioning the costs budget approved by Cabinet in response to the March report. The costs had been derived from the procurement process carried out by Populo and had been reviewed by the Second Defendant’s appointed quantity surveyors, Mott MacDonald. A substantial contingency of £8.66M had been included in the budget. The Second Defendant’s legal, finance and monitoring officers had assisted in preparation of the March report. The objectors had not produced any evidence to challenge the projected costs of the Scheme which had been approved by Cabinet. They had access to the March report and had been provided prior to the public inquiry with the Updated Financial Appraisal and Target Cost Plan referred to in the March report.

There was no requirement in the CPO Guidance for the Second Defendant to submit the cost plan and financial appraisal for the Scheme to independent assessment or scrutiny. The recommendations made by the Second Defendant’s Overview and Scrutiny Committee did not affect the position. They had been considered by the Cabinet on 30 March 2023. The analogy which the Claimant sought to draw with the Dagenham decision was false: the scheme in that case was intended to be financially viable. In terms of the advice given in the CPO Guidance, the Second Defendant had given a clear indication of its funding intentions for the Scheme; and had provided substantive information about the sources of funding available to them to meet both the costs of land acquisition and delivering the Scheme. The programme for implementation was in evidence before the public inquiry.