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Roadworks can have demonstrable effects on a convenience store business by blocking shop frontage, restricting access or deterring footfall. This can negatively impact the business trading environment and affect business finances. This guidance for retailers outlines who is responsible for different works, the legislation covering roadworks, and how to seek to obtain compensation for business disruption.

Case Study: Duffy’s Budgens, Ash Vale

Mike Duffy received a letter through the post from his Borough Council informing him that the bridge which led into his village needed repair work. The bridge was on the main road through the village where the large majority of his footfall came from.

He contacted his council to confirm the details and was assured that the roadworks would only last four months. He instantly began to circulate vouchers to the surrounding houses to ensure the customers knew they were open for business during this time. Nevertheless, customer numbers and profits dropped as a direct result of the works by around 10%.

Mike identified the threat to his business and started gathering evidence of the disruption by taking photos of the restricted access, keeping financial records and footfall counts for before, during and after the work on the bridge. He also got in contact with his local councillors and surrounding businesses and gained their support.

The roadworks over ran by a further 5 months and Mike decided to seek compensation. By contacting his local council’s planning and environment department and his local Valuation Office he got application papers for a rates reduction. Using the evidence he had collected, he explained his case to his local Valuation Office and received a 10% rebate on his business rates.

Key Actions:

  • Increased marketing activity to local residents during the disruption
  • Collected evidence throughout to support a case for compensation
  • Gained the support of other local businesses and local councillors
  • Kept in continual communication with the local council

Who is responsible for different works?

Your Borough Council is typically responsible for allowing any work to be carried out on local roads. Your first point of contact for enquiries about roadworks should be your Borough Council’s Planning and Environment Department. They will be able to provide information on current and upcoming disruptions to the road network, or signpost you to the highways department at your County Council. Undertakers of roadworks are required to give three months’ advance notice of their intention to start planned works.

If roadworks have a direct impact on your store, then you will be contacted via post by the local authority. If there is minimal disruption for a short period of time, they will only display advanced warning signs on the surrounding roads. If the works will be for a sustained period or directly block access to your premise they will send a letter to those affected a least a month before they take place.

All information on roadworks in your area will be listed on your local authority website. Statutory notices are usually published in local newspapers informing people of proposed closures and a circular letter is sent to various organisations such as Parish/District Councils, the Police, and other emergency services and bus companies. Your local council may also place road signs to alert road users of any impending disruption. These include information of diversion routes and the predicted length of any roadworks.

Trunk Roads and Motorways

Highways England, Traffic Scotland and Traffic Wales manage the core national road network of motorways and trunk roads. They communicate details on maintenance work through their websites as listed below:

Highways England
Traffic Scotland
Traffic Wales

If your business is reliant on through traffic from motorways or trunk roads it is best to regularly check the relevant website above for disruption in your area.

What powers do local authorities possess over roadworks?

Local authorities have powers to prevent roads from being subject to repeated works; impose fines for non-compliance and decide when works can be carried out. They also have powers to implement a ‘permit scheme’ or charge ‘lane rental’.

Local authorities have responsibility for maintaining a register of roadworks carried out by water, gas and electricity companies to ensure that work is coordinated to reduce disruption. Under the New Roads and Street Works Act 1991, as amended by the Traffic Management Act 2004, undertakers can be fined for late completion and money raised used for improvements to the road network.

Permit schemes

County Councils now have the ability to set up a permit scheme in their area, whereby any company wishing to work on public roads has to apply for a permit. Undertaking works without a permit can induce a fine of up to £5,000.

Permit schemes allow authorities to be proactive in the management and control of activities taking place on roads. They allow authorities to attach conditions to permits to impose constraints on the way that work is carried out, when it is carried out and how local notice is provided. Permit schemes also allow authorities to charge a fee to the statutory undertakers and coordinate works to reduce disruption. You should find out from your local authority if a permit scheme is in place and how it is affecting roadworks around your business.

Lane Rental

Lane rental involves allows councils to charge utility companies up to £2,500 to dig up the busiest roads during peak times, encouraging works to be done at less disruptive times.

Local authorities also have the power to fine utility companies for ‘unreasonably prolonged occupation of the highway’ under the Street Works (Charges for Unreasonably Prolonged Occupation of the Highway) (England) Regulations 2009 (SI 2009/303). These overstay fees apply when companies exceed an agreed completion date and can amount to £5,000 a day for the first three days of overrun and £10,000 a day thereafter.

The use of these powers is intended to incentivise utility firms to carry out their works efficiently with minimal local disruption.

Can I claim compensation?

Compensation will depend on which utility is carrying out the roadworks and the extent to which it impacts on your business. Water companies are required by law to compensate for loss of business while gas companies have a statutory obligation to provide compensation to some small businesses for long-term roadworks.

Retailers should check their business insurance. Business Interruption Insurance may cover you from disruption caused by roadworks. In some instances, councils may consider giving a temporary reduction in rateable value to a business affected by works. Your local Valuation Office would be responsible for assessing this, but you should be able to provide evidence to substantiate any claims on the impact the works have had on your business.

Gas companies

You may be able to claim compensation for roadworks carried out by gas companies via the Gas (Street Works) (Compensation of Small Businesses) Regulations 1996. These Regulations require a gas company that undertakes works which are not completed within 28 days to pay compensation for subsequent loss of turnover sustained by a small business, except where the compensation would be less than £500 or would not exceed 2.5% of the annual turnover of the business.

Claims can only be made in respect of planned gas mains replacement work. The amount of the compensation is the difference between the profit (or loss) which would have accrued to the business but for the works and the reduced profit (or increased loss) which is a consequence of the works. A person must reserve the right to claim compensation within 3 months of the completion of the street works and submit supporting evidence within 6 months of their completion. You should contact the gas company for further information about how to claim.

Water companies

The Water Industry Act 1991 allows businesses to claim compensation for “for any loss caused or damage done” in the exercise of powers to close roads to undertake maintenance work. Compensation is payable for any depreciation to the value of the land caused as well as actual losses and disturbance. Any losses must be fully evidenced and substantiated.

To claim, you should initially contact your local authority and the water company in respect of any financial losses your business incurs due to the roadworks.  If your complaint is not satisfactorily resolved, you should contact the Consumer Council for Water to investigate your complaint further and assist you with claiming compensation from the relevant water company.

Electricity companies

The Electricity Act 1989 states that compensation may be payable for damage caused by roadworks. You should initially complain to your local authority and the relevant electricity company undertaking the works. You may be able to negotiate with the local authority for a reduction in your business rates and so you should liaise with them regarding any compensation relating to this.