Heathrow’s compensation pledges may be too low to match its claims

Date added: 13 September, 2016

The difference between Heathrow Airport’s pledges to residents and its commitment to funding those pledges could be hundreds of millions of £s. Campaign group Stop Heathrow Expansion has checked up on the figures and found a funding shortfall in the airport’s compensation proposals for local residents. With what little information Heathrow has provided, and using best estimates to fill in the blanks, it seems likely there would be a HUGE shortfall. Heathrow has said there would be “over 160,000” homes eligible. But the Airports Commission found that over 220,000 households could be in the Lden 55 db zone. Heathrow’s property compensation has already been criticised as inadequate, offering little potential for those displaced homeowners to find similar alternative accommodation further away from the airport where property prices have relentlessly increased. Heathrow’s “Our Manifesto for Britain” dated 23.5.2016 has the figure of £1 billion, but that is – Heathrow has confirmed – to cover both property sales, as well as noise compensation. The £1 billion consists of the £700 million Heathrow has often said it will spend on noise insulation – and just £300 million for home loss compensation. And if (Heathrow’s own figure) this was up to 3,750 homes, as well as the 780 being demolished, that does not work out as much for each. Heathrow presumes it will make a lot of money by re-selling the homes it buys up.
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What Heathrow’s compensation pledges actually mean:

In “Heathrow. Our Manifesto for Britain” dated 23.5.2016

https://your.heathrow.com/takingbritainfurther/wp-content/uploads/2016/05/Our-Manifesto-for-Britain-.pdf

Heathrow says: …

“we will provide compensation at full market value plus an additional 25%” for houses compulsorily purchased and (an unspecified commitment to:) … “A £1 billion fund on community noise and property compensation to reduce the impacts of the airport on local communities.”

AirportWatch comments on the compensation:

Heathrow confirms that this £1 billion is for BOTH noise compensation AND ALSO the money to compensate people whose homes will be compulsorily purchased.

£700 million was the figure that Heathrow told the Airports Commission, was the sum for noise insulation http://your.heathrow.com/wp-content/uploads/2014/09/040215-COMPLETE-FINAL-1.pdf

If the Heathrow figure is indeed only £700 million for noise compensation, (over how many years?) that works out – over 160,000 homes (Heathrow’s figure) – as just £4,375 per home. And of course, less if there are more homes.

If it is indeed just £300 million to compensate all those to be compulsorily purchased, that works out as £400,000 for each home, if considering just 750 homes to be demolished.

But Heathrow said up to 3,750 homes would be eligible for the purchase scheme, in addition to the 750 – 780 homes to be demolished. (Or does that figure of 3,750 homes include those to be demolished – Heathrow’s wording is unclear. See link ). Making a total of about 4,500 homes that they say they will offer their compensation deal to.

Supposing Heathrow paid out on average £340,000 – £350,000 for each of the 780 (approx) homes to be demolished. That works out to around £270 million. Those homes obviously cannot be re-sold. It is a straight loss.

Perhaps something like £250,000 + 25% = £312,000 + £13,000 Stamp Duty and £5,000 moving costs of – which comes to £330,000 per home?)

So for 783 homes, that comes to a loss for Heathrow of something like £260 million. That would mean (and the prices are all just guesswork at the moment) there would just be about £40 million that Heathrow has budgeted for the cost of all the other homes.

Heathrow expects between half and three quarters of the 3,750 homes would seek to be in the buy-up scheme.

So three quarters of 3,750 is about 2,800.

Heathrow has offered a 25% extra on the house price to each person bought out, and stamp duty and removal costs. That might come to, for a house valued at £250,000 as about £62,000 for the 25% mark up, and about £13,000 for the Stamp Duty, and about £5,000 for removals and legal costs. That is about £80,000 for each house.

Heathrow then has to do up the houses (or knock them down and build profitable blocks of flats?) and sell each for almost £80,000 or so more than they assessed the price to be, when the previous owner had to sell it to them.

So if each of 2,800 homes (could be 3,750) costs Heathrow £80,000 they could be stuck with a bill for £224 million. But not if they can get the equivalent of about £80,000 more on each house they re-sell (or get rent from).

Otherwise Heathrow has under-budgeted, and will have to deal with a further expense.

The £1 billion funding shortfall in Heathrow’s compensation offer

The difference between Heathrow Airport’s pledges to residents and its commitment to funding those pledges could be in excess of £1 billion. And the airport is so far staying tight lipped.

Campaign group Stop Heathrow Expansion has in the past week shone the spotlight on a funding shortfall in the airport’s compensation proposals for local residents, and Colnbrook Views has scrutinised the figures to see if they are right.

Taking what little information Heathrow has made public, and throwing in some conservative guesstimates to fill in the blanks, we’ve concluded … <drumroll please> … that the airport is hiding a HUGE funding shortfall in its compensation plans.

With bold pledges that lack the merest hint of detail and enough dubious claims to fill both sides of a Brexit battle bus, the funding black hole appears to be in the region of £1 billion, give or take a few million.

Heathrow’s property compensation has already been criticised as inadequate, offering little potential for those displaced homeowners to find similar alternative accommodation further away from the airport where property prices have relentlessly increased.

But the plight of tenants, airport workers, small business owners, and landlords – all omitted from the airport’s plans following its consultation in 2014 – is such that many in Colnbrook and the Heathrow Villages will receive nothing if expansion gets the go ahead.

Despite this our calculations show there is no way that Heathrow can afford its current pledges without further exclusions.

With inadequate compensation being offered to those being exposed to increased levels of noise pollution – or brought within the noisiest contours for the first time – and up to 60,000 left out of the airport’s calculations of those entitled, the limited pot will be stretched even further.

Naturally, we’ve asked Heathrow’s press office to comment on the “double-counting” of its £700 million package for both property and noise insulation but our enquiries have so far been met with no response. [Heathrow made the £700 million offer in February 2015 – copied below].

[The compulsory purchase figure, for 750 homes, in the calculation below, amounting to £290 million, works out at around £387,000 per home. AW note]

If there were 160,000 homes affected by noise, in the 55 Lden contour, that would mean – with a total of £700 million for insulation – just £4,375 per home for the insulation. If there were 220,000 homes, it would be £3,182 per home for insulation. AW note]

Scheme	Current offer	Likely take-up	Estimated Total
Compensation for properties subject to compulsory purchase(May 2014)	25% above un-blighted market value of home at time of sale plus stamp duty costs and all legal fees in relation to purchasing a new home. See details.	750 properties	£290.1 million (based on average sold price for a house in Harmondsworth last year)
Home loss compensation for those who voluntarily sell to Heathrow(December 2014)		Available to approximately 3,750 homes. Heathrow has assumed 50-75% of those eligible will choose to sell.	£725.2 million – £1.09 billion
Refurbishment of purchased homes(December 2014).	Where Heathrow purchases a property from a homeowner it will refurbish and sound insulate the property before reselling it on the open market. See details.		£9.4 – 14.1 million (Assuming just £5k each)
Free full noise insulation for the noisiest zone(February 2015)	Homes experiencing greater than 60 dB Leq noise levels, as averaged during a typical 16 hour day (7 am -11pm) closest to the airport will have the full costs of their noise insulation covered by the airport.	Unspecified. But the Airports Commission puts the figure of those in this zone at 128,000 – or 49,700 households.	£248.5 million (Assuming just £5k per household)
Contribution to cost of noise insulation to those further away from the airport (February 2015)	Up to £3,000 in noise insulation would be offered to homes further away from the airport (55 decibels Lden noise contour zone)	Heathrow says, in total, over 160,000 homes could be eligible for insulation. But the Airports Commission found that over 220,000 households could be in the Lden 55 db zone. Heathrow assumes 60% – 95% take up.	£198.5 – 485.4 million
Noise insulation to new schools affected (February 2015)	Heathrow says it has allocated additional funding to include any new schools that would be affected by an expanded Heathrow.	Unspecified. Sound insulation to 44 schools has previously been provided but there were 186 within the 57 dB Leq zone in 2014.	£2.8 million (Assuming just £20k per school)
Total estimated cost of pledges made			£1.5 – 2.1 billion
Budgeted cost of all property and noise compensation			£700 million
Shortfall in funding			£0.9 – £1.4 billion

Read more on Colnbrook Views’ analysis of the funding claimshere.

http://www.colnbrook.info/revealed-the-1-billion-funding-shortfall-in-heathrows-compensation-offer/

The Heathrow press release about their scheme (which has now been removed from the Heathrow website) said:

Heathrow responds to calls for world – class noise insulation scheme

2 February, 2015 |(Heathrow press release)

– Meets public challenge to develop noise insulation scheme comparable to other European hub airports including Schiphol, Madrid, Charles de Gaulle and Frankfurt

– New offering shaped by feedback from local public consultation

– Enhanced offer to cover all insulation costs for residents most affected by noise

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Heathrow has today unveiled new plans to provide insulation to homes, if the Government gives planning approval for a third runway. The newly proposed scheme would cover a zone based on the 55 decibel noise contour[1], the preferred measure of noise used by the European Union and the Mayor of London.

This noise insulation offer goes above and beyond UK policy requirements, expands on Heathrow’s previous proposals and is comparable to those offered by other European hub airports. In total, Heathrow estimates that over £700 million [AW emphasis] could be spent through this insulation package, an increase of over £450 million from that previously offered by Heathrow in its May 2014 submission to the Airports Commission, and an increase of over £610 million from its previous proposals for a third runway.[2]

The scheme is based on two newly designated insulation zones, and residents would be eligible regardless of whether they experience noise under existing flight paths or will be newly affected by noise from a new runway. Under the proposed scheme, homes in the designated zone closest to the airport with higher levels of noise[3] stand to have the full costs of their noise insulation covered by the airport. In addition, up to £3,000 in noise insulation would be offered to homes further away from the airport.

A third party assessment, free of cost to homeowners, would be made to determine the extent of each home’s needs within the eligible insulation zones. Heathrow’s insulation package could include:

· Acoustic double glazing in windows

· Ceiling overboarding in bedrooms

· Loft insulation and ventilation

In total, over 160,000 homes could be eligible for insulation in areas from Windsor in the west to Richmond in the east. Over 35,000 homes in Hounslow alone would be eligible for full costs of the noise insulation package, with all homes in Heston and Cranford eligible. Similarly, all homes within the towns and villages of Wraysbury, Datchet, Sipson, Harmondsworth, Harlington, Colnbrook, Brands Hill and Stanwell Moor would be covered by the scheme.[4]

The improved noise insulation package follows public consultations held between 21st July and 12th October in 2014, in which people said that:

· The noise contours the airport uses should better reflect the actual noise levels experienced by local people

· A new insulation approach should treat people equally, whether they are already exposed to noise or newly exposed to noise

· The £250 million previously earmarked for noise and property compensation through expansion would not be sufficient

John Holland – Kaye, Chief Executive of Heathrow said:

“We designed the new approach to expanding Heathrow to minimise noise to local residents, but we also need to mitigate the impact on those who are still affected. Today’s announcement does that, and is based on the feedback we have received from local residents over the last few months; it will reduce the impact of noise, and treat local people fairly. Now we want to work with local communities to ensure that the opportunities from expansion – up to 40,000 new skilled jobs at Heathrow, 10,000 apprenticeships, tackling youth unemployment – benefit those who are most affected by expansion.”

This offer is subject to government policy support and regulatory approval by the CAA. [ie .weasel words, in case CAA does not allow an increase in aeronautical charges? AW note]

Notes to editors

[1]This zone is for people experiencing average levels of 55 decibels Lden over a 24 hour period. Lden is the preferred European measure of noise, and stands for the level of noise during the day, evening, and night. This measurement includes an additional weighting for noise during the evening and at night when it can be more disturbing. This zone also takes into account those homes who experience noise greater than 57 dB Leq noise levels, as averaged during a typical 16 hour day (7 am -11pm) of easterly or westerly operations.

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[2] Heathrow already operates a range of compensation schemes with more than 40,000 properties eligible for some form of noise insulation.

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[3] Households experiencing greater 60 dB Leq noise levels, as averaged during a typical 16 hour day (7 am -11pm) of easterly or westerly operations.

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[4] The final number and location of these homes would be dependent on the design of routes around an expanded Heathrow and actual level of noise measured.

http://mediacentre.heathrowairport.com/Press-releases/Heathrow-responds-to-calls-for-world-class-noise-insulation-scheme-ad3.aspx

HACAN estimate true cost of noise insulation for 3rd Heathrow runway at around £1.8 bn – not £700 m

March 15, 2016

Heathrow has set aside £700 million to insulate homes affected by noise from a 3rd runway. That would be for 160,000 homes, which is the number regarded as being within the 55 decibel Lden noise contour, with the worst affected getting the full cost paid and others getting up to £3,000 to pay for the work. But the community anti-expansion group HACAN calculates that insulating all these homes would cost at least double the £700 million figure. HACAN estimates the real cost at nearer £1.8 billion, based on data they obtained from two companies that provide sound insulation. UK Soundproofing Ltd of West Sussex and Tudor Windows of London considered the average semi-detached house would cost around £11,800 to fully insulate against noise. It does not appear that Heathrow’s offer would be enough to do a proper job, even though they could probably get insulation cheaper by placing a huge contract. Heathrow is not intending to spend any more money on noise insulation, if it is not allowed a 3rd runway – and its insulation scheme is very poor in comparison with other large European airports. It is understood that Heathrow currently pays for soundproofing, including double glazing and loft insulation, at approximately 40,000 homes. The insulation is, of course, of no use if windows are open – or outdoor, in street, park or garden.

https://www.airportwatch.org.uk/2016/03/hacan-estimate-true-cost-of-noise-insulation-for-3rd-heathrow-runway-at-around-1-8-bn-not-700-m/

Heathrow’s improved offer of £700 million for noise compensation, if there was a 3rd runway, wouldn’t help residents in many areas

February 12, 2015

On the last day of the Airports Commission consultation about its 3 short-listed runway schemes, Heathrow Airport came up with a new, more widespread and more generous offer of compensation against aircraft noise, IF it got a new runway. However, this offer is not to be offered to residents in many affected areas, including Bracknell, Ascot or Wokingham. The £700 million that Heathrow says it would spend on noise insulation etc would only be for homes judged the worst affected by noise – with no homes south of Wraysbury included. The number of homes eligible for offered compensation will depend on the final design of flight paths from an expanded Heathrow, and those are not yet known. Residents in Bracknell and Ascot, who have been incensed by the aircraft noise to which they have been subjected this year, say that even if they were offered compensation it still would not be enough, and it would not solve the problem. Heathrow claims that flight paths and use of airspace in the area has reverted to its pre-trail state, but residents believe it has not. People are now much more aware of aircraft noise, and their tolerance for it has declined – and they know that no amount of money would be enough to keep the level of noise outside the house down, in gardens, parks, playgrounds and streets. Many believe the increased Heathrow offer, and its timing, is merely a PR stunt.

https://www.airportwatch.org.uk/2015/02/heathrows-improved-offer-of-700-million-for-noise-compensation-if-there-was-a-3rd-runway-wouldnt-help-residents-in-many-areas/

On final day of Commission consultation, Heathrow raises extent of its noise insulation offer, if it gets a 3rd runway

February 3, 2015

As part of its attempt to get acceptance for a 3rd runway, Heathrow has had to raise its offer on noise insulation. On the last day of the Airports Commission consultation, it has made a significantly better offer, saying it “could” (sic) pay around £700 million – which is £450 million more than its previous offer in May 2014. This would cover parts of the 55 Lden noise contour area. The number of people within that contour was725,500 in 2006 and over 314,000 dwellings. Heathrow says their offer now covers about 160,000 homes, and they have included two new areas, not previously covered by their scheme (no map is published).Heathrow has now raised the quality of its noise insulation offer to match those already used in Europe – its current noise insulation offers are far below these. In its new scheme, Heathrow says homes in designated zones “stand to have” (not “will”) the ” full costs of their noise insulation covered by the airport. In addition, up to £3,000 in noise insulation would be offered to homes further away from the airport.” This would be acoustic double glazing; ceiling over-boarding in bedrooms; loft insulation and ventilation. Many noise affected homes already have double glazing and loft insulation … and still suffer noise. Gardens and parks cannot be insulated. Campaigners said the improved offer was welcome, and should be carried out even if no runway is built, as it illustrates how poor and miserly the insulation schemes have been in the past.

https://www.airportwatch.org.uk/2015/02/25000/.