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Major road works currently disrupting the Post Office at Upton Snodsbury have prompted Peter Luff MP to re-launch his campaign to get proper compensation for small businesses that lose trade while the works are under way.

The road outside Upton Snodsbury Post Office is currently closed for five weeks because of flood alleviation drainage work scheduled by Worcestershire County Council. The closure of the road has understandably had an effect on the trade of the local post office, which is owned by Celia and Geoff Young.

Peter, the MP for Mid Worcestershire said,

“It’s not long ago that over-running work on gas mains by National Grid devastated trade in Fernhill Heath. We all know roads must be repaired, flood alleviation work must be conducted and that gas mains must be replaced, but the trick is to do the work as quickly as possible.

“A proper and reasonably generous system of compensation for small businesses, who suffer dreadfully during such works, especially if they overrun an agreed period, would ensure they were done speedily - the longer they take the more the organisation responsible would have to pay. At present they get away scot free so there’s no real incentive to be speedy. ”

“Earlier this year, disruption to businesses on Worcester Road, Droitwich prompted me to take this up with the Department of Energy and Climate Change, who are responsible for policy relating to gas mains. The work taking place in Upton Snodsbury has highlighted this problem once again, but this time it is the county council who are responsible and arguably three government departments have policy responsibility -DEFRA, DCLG and Transport.”

Legislation does already exist to provide compensation to businesses suffering from utility works, but it is “disturbingly ineffective for small businesses” according to Peter Luff. Businesses can only seek compensation when the loss is over £500 and over 2.5% of the annual turnover of the business. For small retail businesses operating on very low margins this means compensation is almost never paid. Peter added that he was unaware of any provisions to compensate businesses for the kind of work now being done around Upton Snodsbury.

Commenting Peter said:

“I remain very concerned about the adequacy of the compensation arrangements for small businesses, especially shops, affected by road works. Disruption to their trade even over a few days, never mind a few weeks, can have a huge impact on their takings and profits as people get used to doing things differently.

“The Department for Energy and Climate Change have assured me that they are taking steps to reduce the disruption caused by street works, including the wider application of permit schemes, the piloting of lane rental and the introduction of the permanence scorecard.

“However, the current arrangements just aren’t up to the job and I will be writing to the minister for small businesses, Mark Prisk, asking him to review the burden being placed on small businesses by road works in general. Speeding up such works would probably reduce their cost and help the wider local economy, so it’s worth trying to get something done.”


Note to editors

The government’s policy on compensation for road works is set out by the Department for Transport at http://www.dft.gov.uk/publications/street-works-faqs

The relevant section reads:

When a highway authority or undertaker carries out works in a road under its statutory powers or duties, there is no general liability in law for loss of trade resulting from a falling away in the number of passers-by and so no liability to pay compensation. It is a long established principle that traders have no right to any particular level of passing trade: business may fluctuate for a number of reasons.
However, there may be entitlement to compensation if something is done improperly, for instance if access to business premises is blocked and customers cannot gain access.
Gas and Water – It may be possible for small businesses to claim compensation for losses resulting from works executed by gas companies. Water industry legislation also provides for compensation in certain circumstances. In such cases, it is for the individual trader to raise the matter with the company concerned. However, each claim will be treated on its merits, and it may be difficult to prove that a particular level of trading loss is attributable either wholly or mainly to works in the highway.
For works by a highway authority, there are no plans to introduce a statutory duty to pay compensation for loss of trade. Such works benefit the whole community, including businesses and others, who, while they may be adversely affected in the short term, will benefit in the long term. The highway authority has a statutory obligation to maintain the highway to a reasonable standard. The provision of a compensation scheme would have to be met by either increased local taxation or by reductions in expenditure (perhaps by cutting back on the amount of maintenance undertaken).

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