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Highways Agency: Getting Best Value from the Disposal of Property

Sir John Bourn, head of the National Audit Office, reported to Parliament today on the extent to which the Highways Agency has obtained best value for the taxpayer on the disposal of property acquired in connection with road construction. Since the Agency was created in 1994, it has raised £238 million (at 1999 prices) from the sale of 3,300 properties in England. Disposals peaked at £65 million in 1997-98. In March 1999, the Highways Agency held around 2,650 properties and pieces of land.

On average, properties owned by the Agency lose 32 per cent of their value before disposal

  • The law requires the Agency to acquire property at its unblighted, open market value. On disposal, the Highways Agency obtained on average 68 per cent of the price it had paid for the properties, after taking inflation into account; a loss in value of 32 per cent.
  • For properties disposed of because they were affected by a road scheme but not needed for construction, the average loss in value was 42 per cent, partly reflecting the actual impairment caused by the presence of the new road.
  • Around three quarters of recent disposals have been the result of road scheme cancellations, where the threat of roadbuilding and the consequent blight will have been lifted in many, but not necessarily all cases. For these properties the average fall in value was still 27 per cent.
  • The loss in value tended to increase with the length of time that properties had been held by the Agency. Properties sold within one year of acquisition sold for around 19 per cent less than the acquisition price, with this loss rising to around 37 per cent after ten years.

"more could be done to safeguard the value of properties. Better maintenance, higher occupancy and faster sales would help secure better prices when properties become surplus and are sold". The National Audit Office makes a number of recommendations including a need for the Agency to:

Sir John

Notes for Editors

 

The Department of the Environment, Transport and the Regions has overall policy responsibility for roads. From its creation in 1994, the Highways Agency has been responsible for the construction and maintenance of England's 6,500 miles of trunk road and motorways. The Agency has a range of compulsory and discretionary acquisition powers under which it may buy properties along the route of or in close proximity to the proposed road scheme. Disposals arise from scheme cancellations; and when the acquisition was for reasons of blight rather than for actual construction, and all or part of the property can then be sold.

 

As part of its work, the National Audit Office examined the disposal of property acquired for 17 road schemes:

 

  • Birmingham Northern Relief Road
  • M62 Relief Road Junctions 12 - 18
  • A27 Worthing – Lancing
  • A10/M25 Hoddesdon Bypass
  • M20 Junctions 3 – 5
  • A40 Gypsy Corner and Western Circus
  • M25 Junctions 16-19
  • A406 Bounds Green
  • A406 East London River Crossing
  • A1(M) Junctions 6 – 8
  • A5225 Hindley Bypass
  • M25 Junctions 10 – 12
  • M42 Widening
  • A4/46 Batheaston Bypass
  • M66 Contract 3
  • M4/M5 Second Severn Bridge Crossing
  • A45 Improvements

 

Press notices and reports are available from the date of publication on the NAO website at https://www.nao.org.uk/ Hard copies can be obtained from The Stationery Office on 0845 702 3474.

 

The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office employing some 750 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

 

PN: 73/99