fabian tract 422 
Labour and land 


contents 


1 introduction : the price of land 1 
2 the aims of land policy 5 
3 public ownership and land 7 
4 requirements of land policy 11 
5 regional land and 

development corporations 14 
6 summary and 
recommendations 19 


this pamphlet, like all publications of the Fabian Socfety . 
represents not the collective view of the Society but only the 
view of the individual who prepared it. The r~sponsibHity of 
the Society is limited to approving .publications it issues 
as worthy of consideration within the Labour movement. 
Fabian Society, 11 Dartmouth Street, London SW1 H 98N. 
April 1973 ISBN 7163 0422 8 


1. introduction: . the price of 
land 
! 
Land prices have soared, are soaring and 
will continue to saar. If ever there were a 
political issue which was ready made for 
Labour, this is it. A totally unacceptable 
dynamic of the capitalist system is leading 
to an iniquitous mal-distribution of enormous 
wealth largely unrelated to anytalent of, or effort by the recipients. In 
1942 the Uthwatt Report (Expert Committee 
on Compensation and Betterment) 

referred to " attempts largely to preserve 
in a highly developed economy, the purely 
individualistic approach to land ownership." 
These have proved totally unacceptable 
and this pamphlet points to a 
new system which is designed to break the 
stranglehold of the present land holders, 
and to ensure that the community is the 
beneficiary of this vast, rising and largely 
untapped source of wealth. 

It might be as well to begin by reviewing 
what has actually happened to land prices 
in recent years. Before 1963 statistics are 
scarce and inadequate. From the 1890s to 
the beginning of the War the price of sites 
appears to have fluctuated without showing 
any consistent upward movement (E. 

A. Kallis, "Urban land and buildingprices 1892-1969," Estates gazette, 21 
May 1972). However, D. R. Denman has 
estimated that from 1939-59 the price per 
acre of building sites increased eightfold 
Peak prices 
and planning," Journal of 
and property law, 1960). From 

P. A. Stone estimated that prices 
were rising by about 10 per cent a year 
(see Peter Hall (ed), Land values, 1965). 
From 1963 to the first half of 1972 we· 
have a rather more reliable series of statistics 
from Housing and construction 
statistics showing an increase of no 
~ess than 262 per cent in private sector 
.housing land prices per plot in England 
and Wales, a figure which may conceal a 
still higher price rise per acre. The broad 
seems to be for the rate of 
increase to accelerate. 

land prices are by no means a 
specifically British phenomenon. At a 
United Nations seminar on "the development 
and allocation of land for housingand related purposes" in 1965 almost all 
the Western countries reported enormous 
increases. In Spain the increase in specific 

areas was only rarely as low as 50 per cent 
in the years 1950-63, and ranged up to 
1,300 per cent in some places (the cost of 
living in the same period rose about 94 percent). In Denmark the increase from 1957 
to 1963 was between 100 and 178'per cent 
(the cost of living went up 15 per cent). In 
the us from 1948 to 1962 the increase 
was 159 per cent compared with a cost 
of living increase of 25 per cent, and so on. 
The universality of the land price boom 
makes one suspicious of treating it as a 
merely temporary phenomenon. It is 
worth therefore pausing to have a brief 
look at the economics of land values to 
see how we can explain the increase. 

The classical economists made great play 
of the fact that land is roughly fixed in 
total quantity. There is only limited scope 
for increasing supply, such as by reclamation 
of derelict land or from the sea, and 
such gains will in most countries be very 
small in relation to the total stock of land. 
Nevertheless, this fixity of overall supplyis not now generally the most important 
factor making for high land prices. Poor 
agricultural land is cheap, and even good 
agricultural land is relatively inexpensive 
by comparison with the enormous prices 
being realised for, for example, prime 
office sites. 

However, in place of fixity of total supply, 
a crucial factor at work today is fixity of 
supply in certain areas and for certain 
purposes. Taking area first, there is 
obviously an absolute natural limit to the 
amount of land within 5 miles of CharingCross. Thus increases in demand for land 
within that area due to its special value to 
certain kinds of business cannot lead to 
an unlimited response from supply. This 
geographical limitation is compounded by 
the fact that we add further strict limitations 
through planning regulations. An 
unrestrained price mechanism would no 
doubt partly satisfy the demand for office 
space in Central London by causing la~d 
currently in use for housmg to be b1d 
away for offices. We prevent it working 
in this way. We attempt to plan so as to 
take into account the social costs of such 
a change-for example, the increased ' 
burden on transport services, or the horror 
of a city deserted at night. But in doing 


2 
so we inevitably restrict potential supply, 
and thus increase the effect which higher 
demand will have on land prices. "Green 
belt" policies, again enforced for the best 
of motives have a similar effect. 
The other important restriction on the 
supply side is the restriction on how 
intensely you can use a given piece of 
land. Partly this is a matter of cost. Build-
ing costs rapidly increase for buildingover a certain height, and this reduces the 
amount of development it is profitable to 
carry out on a given site. But it is also a 
result of planning restrictions-on dens-
ities, site-ratios, building heights and so 
on which we impose to keep our urban 
areas anywhere near tolerable to look at 
or live in. 
So the supply of land, in central urban 
areas at least, is limited. When one essen-
tial factor of production is limited in this 
way it is not surpr~sing that it will tend to 
grow more expensive. 
This limited supply is confronted with a 
rising demand. The natural growth of the 
economy makes sure of that. In certain 
areas too we can expect the growth in 
demand for buildings and hence for land 
will go up faster than does the grossnational product. For example, financial 
services has been one of the few British 
growth industries. It tends to demand 
concentrated location near the centre of 
cities. Demand faces a relatively static 
supply, and land prices in such places will 
go up to ration such supply as there is 
between competing uses. 
At this point, it is worth considering very 
briefly what the effects of an artificial 
lowering of land prices would be. Econ-
omists have on the whole argued that land 
prices are simply a function of the demand 
for what can be built on it-" land is 
dear ... because accommodation is dear " 
(Ralph Turvey, " Rationale of risingproperty values," Lloyds Bank Review,
January 1962). It would seem to follow 
from this that lowering land prices arti-
ficially would simply increase the builders' 
profit at the expense of the landowners'. 
This is too simple a view. First, the price 
of many dwellings is not a market price. 
For example council house rents were, 
until the passing of the Housing Finance , 
Act, traditionally set on a cost basis ir-
respective of supply and demand. Now 
assuming that a Labour Government 
returns to this method of rent setting, a 
lower land price paid by councils would 
certainly reduce the rents of new dwel-
lings, and thus keep the average rent 
down over the whole housing stock. 
Secondly, the increase in builders' profits 
from a restriction of land prices will add 
to the incentive to build. Thus, if land 
prices are kept down, and assuming sites 
to build on remain freely available, re-
sources will be shifted into building in the 
hope of cashing in on the high profits : 
available. As a result, we can expect more · 
building, a nearer approach of supply to 
demand and thus lower prices. Tpese , 
lower prices for new houses will tend also 
to moderate the prices asked for existinghouses. 
Of course these effects can be cancelled 
out if there is widespread hoarding of land 
or. uns?ld property in the hope of furthe 
pnce nses. 
Therefore, although it is true tha 
generally land prices are the result of the 
price obtainable for real property and not 
vice versa, it is also true that loweringland prices artificially may. reduce the 
price of property. 
should economics determine 
land use? 
One thorny problem recurs through this 
discussion of the economics of land. Eco-
nomists tend to argue that it would be 
wrong to allocate land between uses ex-
cept by means of the price mechanism. 
Land should always be sold to whoever 
is prepared to pay most for it. 
The case for this is twofold. First, the 
man who pays the top price is the man 
who can extract the most value from the 
land. If all land was offered for sale at 
the same price, sites round Charing Cross 
might be used to graze sheep ; but they 
yield far more value to the community 
2 
so we inevitably restrict potential supply, 
and thus increase the effect which higher 
demand will have on land prices. "Green 
belt" policies, again enforced for the best 
of motives have a similar effect. 
The other important restriction on the 
supply side is the restriction on how 
intensely you can use a given piece of 
land. Partly this is a matter of cost. Build-
ing costs rapidly increase for buildingover a certain height, and this reduces the 
amount of development it is profitable to 
carry out on a given site. But it is also a 
result of planning restrictions-on dens-
ities, site-ratios, building heights and so 
on which we impose to keep our urban 
areas anywhere near tolerable to look at 
or live in. 
So the supply of land, in central urban 
areas at least, is limited. When one essen-
tial factor of production is limited in this 
way it is not surpr~sing that it will tend to 
grow more expensive. 
This limited supply is confronted with a 
rising demand. The natural growth of the 
economy makes sure of that. In certain 
areas too we can expect the growth in 
demand for buildings and hence for land 
will go up faster than does the grossnational product. For example, financial 
services has been one of the few British 
growth industries. It tends to demand 
concentrated location near the centre of 
cities. Demand faces a relatively static 
supply, and land prices in such places will 
go up to ration such supply as there is 
between competing uses. 
At this point, it is worth considering very 
briefly what the effects of an artificial 
lowering of land prices would be. Econ-
omists have on the whole argued that land 
prices are simply a function of the demand 
for what can be built on it-" land is 
dear ... because accommodation is dear " 
(Ralph Turvey, " Rationale of risingproperty values," Lloyds Bank Review,
January 1962). It would seem to follow 
from this that lowering land prices arti-
ficially would simply increase the builders' 
profit at the expense of the landowners'. 
This is too simple a view. First, the price 
of many dwellings is not a market price. 
For example council house rents were, 
until the passing of the Housing Finance , 
Act, traditionally set on a cost basis ir-
respective of supply and demand. Now 
assuming that a Labour Government 
returns to this method of rent setting, a 
lower land price paid by councils would 
certainly reduce the rents of new dwel-
lings, and thus keep the average rent 
down over the whole housing stock. 
Secondly, the increase in builders' profits 
from a restriction of land prices will add 
to the incentive to build. Thus, if land 
prices are kept down, and assuming sites 
to build on remain freely available, re-
sources will be shifted into building in the 
hope of cashing in on the high profits : 
available. As a result, we can expect more · 
building, a nearer approach of supply to 
demand and thus lower prices. Tpese , 
lower prices for new houses will tend also 
to moderate the prices asked for existinghouses. 
Of course these effects can be cancelled 
out if there is widespread hoarding of land 
or. uns?ld property in the hope of furthe 
pnce nses. 
Therefore, although it is true tha 
generally land prices are the result of the 
price obtainable for real property and not 
vice versa, it is also true that loweringland prices artificially may. reduce the 
price of property. 
should economics determine 
land use? 
One thorny problem recurs through this 
discussion of the economics of land. Eco-
nomists tend to argue that it would be 
wrong to allocate land between uses ex-
cept by means of the price mechanism. 
Land should always be sold to whoever 
is prepared to pay most for it. 
The case for this is twofold. First, the 
man who pays the top price is the man 
who can extract the most value from the 
land. If all land was offered for sale at 
the same price, sites round Charing Cross 
might be used to graze sheep ; but they 
yield far more value to the community 

as central locati0ns for activities which 
need to be concentrated. So we must 
ration land between uses by letting it go 
to the highest bidder. 

Secondly, ·if site costs are kept artificially 
low, the land will tend to be less intensively 
used, than if they reflect its scarcity 
for certain purposes ; and this will be eco. 
nomically wasteful. We want to extract 
as much use as we can from scarce sites 
in va1u<!!ble locations in city centres or the 
main transport lines to them. 

So land policy, says the pure economist, 
~ust discourage unnecessary central locatwn, 
encourage max,imum exploitation of 
scarce land, and encourage technological 
developments (such as video-phones and 
document transmitters) which can reduce 
the pressure 'in certain locations. This 
means high prices. 

Planners and politicians on the other 
hand, tend to argue against this. They will 
emphasize the social costs which the market 
ignores, such as those mentioned 
above. They believe that encouragingmaximum economic exploitation wiH 
create a city of offices, and the loss of the 
mixture and variety of uses which make 
a city attractive. The economists' dream 
may be a social nightmare, a·s some 
American experience suggests. 

If they are socialists they will make one 
other point. The market .is biased against 
those with low incomes. The rich corpora:
tion wanting an office can alwaysoutbid the poor man looking for a home, 
but its need in human terms may be far 
less. 

There can be no final answer in this debate. 
The planners need to strike an optimum 
balance between social costs and 
benefits, but economic costs and benefits 
are a major part of these. We should be~
are of those who wish us totally to 
Ignore the economics of the matter, for 
t~e economic costs of the socially ideal 
City may drive it into unviability. But 
equally, we should not tum our cities over 
unconditionally to Mr. Harry Hyams, 
a~d Stock Conversion Ltd. Usually plannmg 
requirements and devices such as 

office development permits, will be our 
defence against them. But for some uses, 
especially low cost council housing, selling 
land at below its market price can 
help us achieve a desirable social balance. 

land prices and equity 

Whatever view we take on how far land 
prices should be at market levels for the 
purpose of allocating land between various 
uses, we cannot excuse ·the distribution 
of the gains which result from the 
present system. 

Firstly, the benefit is largely unearned. 
Generally the owner of the land simply 
sits there while the land market-and his 
wealth-grows round him. This is not always 
so. The land specula:tor who puts 
together a package of land for development 
has, ·in fact, created something of 
value. Even so, the social value of what 
he has created may be less than its 
economic value (for example, he takes no 
account of additional social expenditure 
on transport needed when a new office 
block is built on the site he has 
assembled). Again, depending on the 
price he pays, some of his profit is shared 
with those whom he has bought out who 
have done nothing. Finally, his profit may 
exceed that necessary to the performance 
of his function because he has a near 
monopoly of the somewhat sordid skills 
of his trade. 

Secondly, this fault 'is compounded by 
the fact that ·the initial distribution of the 
land is haphazard, unequal and inequitable. 
In this particular lottery most participants 
had their tickets purchased for 
them by their father or their grandfather, 
or their great-grandfather. The stake is 
not even their own, but they get the 
prizes. 

Thirdly, the value of the land very often 
depends on community decisions. There 
is the community's choice of where to 
allow developments of different profitability, 
and where to ban development 
altogether-as expressed through the 
planning machine. Those who get the 
right permission garner much of the value 


created by the fact that others have been 
refused that permission. They capitalise on 
society's deliberate restriction of supply. 

Finally, the land can often only be developed 
after certain serv,ices have been 
put in. Until water, electricity, roads and 
sewerage have been supplied the land cannot 
be used. Now, the money to pay for 
these services comes from the community. 
But much of the value they add 
to the land goes to its owner, thoughsome goes to the community in ·the form 
of higher rates. The landowner is reapinga dividend from the community's investment. 



2. the aims of land policy 
The land pol.icy of the next Labour Government 
should have two main aims : 

1. It should maximise the availa~ble supply 
of land, subject to the constraints of 
good planning, and ensure that it is allocated 
between uses in a manner which 
maximises the benefit to the community 
as a whole. 
2. It should ensure .that at least the bulk 
of the proceeds of all increases in land 
prices go to the benefit of the whole community, 
and not <into the pockets of those 
who happen to own the land at present. 
Of course these two aims can conflict. A 
simple example will illustrate this. Let us 
suppose that, rather as the 1947 Town and 
Country Planning Act did, we decide to 
take away as a tax 100 per cent of the 
increase in the value of a piece of land 
which results from its development. Immediately 
current owners will stop selling. 
Why bother 'to sell up house and 
move when all the gain goes to the Exchequer? 
Why not hold on in the hope 
that the friendly Tories will come back 
into office in a few years' time and allow 
you to cash in on the development value? 
So a strict 100 per cent development levy 
will tend ~to dry up the supply of land, 
and as a result desperately needed houses 
will not be built. Of course, the 1947 Act 
was far more sophisticated than this. It 
did, for example, provide that compensation 
for disturbance would be paid on top 
of the current use value of ~the land taken. 
over, in an attempt to make landowners 
s~ll. But observers seem to agree that it 
d1d have precisely .the effect of dry·ing up 
the supply of land which our oversimplified 
example suggests it might (see B. 
· Cullingworth, Town and country planning, 
ch 5, 1972). As soon as the building 
industry was ready to increase output 

1 
again at the beginning of the 1950s the 
lack of land created very rea'l problems, 
and these, as well as dogma, allowed the 
!ories to wind up .the scheme by stages 
m the 1954 and 1959 Town and CountryPlanning Acts. 

A much more subtle attempt to deal with 
the land values problem was made by the 
last Labour Government in its highly 

complex Land Commi•ssion Act, 1967. Its 
objectives as set out in the white paper 
were similar to those put forward above 
(The land commission, cmnd 2771, 
HMSO, 1965): 

1. To secure that .the night land is available 
at the right 1lime for the implementation 
of nation3il, regional and local plans ; 
2. To secure that a substantial part of 
the development value created .by the 
community returns to the communityand that the burden of the cost of land 
for essential purposes is reduced. 
The seoond object tis, of course, somewhat 
confused. lt is not clear whether 
what is meant is a reduction tin general 
land costs through an increase lin supply 
or in par1licular plot prices through disposals 
by the Land Commission at below 
market price. Not surprisingly, it is not a 
theme which echoes through the Commiss1on's 
annua'l reports. 

The recoupment of development value 
was to be achieved through a development 
levy. The ievy was to apply to s·ales 
and transactions in land, though later on 
many small transactions were exempted. 
In such ca·ses, the Commission was to 
collect a percentage of the excess the 
seller received over the base value of his 
land. The base V·alue was .the current use 
value, plus a 10 per cent allowance to 
guard against unjust valuation and an 
allowance for disturbance. The percentage 
was to start at 40 per cent, increasing 
fairly rapidly to 50 per cent. The rising 
rate of levy was designed to give owners 
a motive to sell quickly, ra1lher .than hold 
on to the land in the hope of a change of 
government and of pol,icy ; in fact, it 
never was increased. The choice of 40 
per cent was surprisingly low. The lesson 
of 1947 had 'been well learnt-perhapsovedearnt. Nevertheless, the levy was expected 
to yield £80 million in a full year. 

Despite the low level of the levy, however, 
the Government clearly expected 
widespread land withholding. The Commission 
was initially to have powers to 
purchase compulsorily any land on which 
a planning deoision which would lead to 


6 
material development had been made. 
Later even this wide power would be ex-
tended (it never was). The Commission 
abo had power to short circuit the tortu-
ous legal process of conveyancing by 
means of a vesting declaration which 
gave it ilnmediate good title to the land. 
With these powers the Commission hoped 
in the words of its Chairman, Sir HenryWells, " to loosen up the land market." 
For example, it clearly had a potentialrole to play in collecting smaU individual 
unused plots together to make a viable 
site for dev·elopment. 
A further important power of the Com-
mission was its right to sell land to hous· 
ing associa~tions and local authorities for 
housing on concessionary terms. Such 
disposals had to be on new Cflownhold 
tenures subject to restriotions allowingthe Commission to reserve any future de-
velopment value in the land .to itself. 
The Land Commission was fully opera-
tive for only three years before the in-
c o m i n g Conservative Government 
butchered it. Given the complexity of its 
job, it would be unfa:ir to expect that it 
would have revolutionised the land situa-
tion in such a short time. Nevertheless, 
looking back, it is difficult to see the 
Commission as an unqualified success. 
The levy collected was we11 below ex-
pectations, and the administrative costs 
associated with the collection were very 
high-never below about 11 per cent of 
the proceeds. In the process too, ano-
malies and the extreme complexity of the 
legislation created no little heat, and a 
rash of hard-done-by Little old ladies 
filled the columns of the Daily Mail and 
the Daily Express. 
As for loosening up the land market, the 
Commission fell shmt of its objectives. It 
bought comparatively little [and, around 
2,800 acres in 3 years, and sold less sti11 
(320 acres) (Hansard, 16 December 1970).
Worse, most of what it did buy was in 
low pressure areas like the North. In 
London and the South East where land 
was really short, it scarcely succeeded in 
buying at all. It is not entirely clear 
whether this was because land hoarding 
was not as prevalent as Labour support-
ers thought, or because the Commission 
was bad at spotting it. OnJ.y once did the 
Commission try to compulsorily purchase • 
land which it considered was beinghoarded ; the compulsory purchaseorder was turned down by the Minister 
on appeal. Instead the Commission was 
forced to turn to a task for which it was 
less well suited-that of persuading Local 
Authorities to grant more planning per· 
missions. 
Certain defences oan be made of the 
Commission's results. Undoubtedly some 
of its initial difficuLty in finding land re· 
suited from the fact that many trans· 
actions had been hurried thflough to beat 
possible legislation and levy. Undoubtedly · 
too, its actual purchases and sales under·. 
estimate its full effects, as it unearthed 
many potentiai sites where the transaction . 
subsequently took place privately. Finally .. 
it was clearly hindered by the threats to 
abolish it which the Conserva.Jtives con·· 
stantly issued. 
Nevertheless, it is difficult to •believe tha1 
the Commission would ever have solveo 
the land problem on its own. Partly this 
was because one aspect of the problem-
local authority unwillingness to designate 
sufficient land for the right kind of de· 
velopment in their plans-had been 
underestimated by the Government. As 
a result the Land Commission was facec 
with a problem for which it had not bee 
designed. It had to try to inject an ele· 
ment of positive support for develop·
ment into the negative control system o1 
English planning. But partly too, it~ 
f.ailure was because it was not a.u:J·L~...J·• 
enough. It was trying to oil. the wheels o1 
an existing market system despite the un· 
willingness :to co-operate with it of man)•
in that system. What is needed in th( 
future is a Land Commission which i~ 
seen much more as a permanent anc · 
active participant in ·the system, witt 
some of the powers and :rights of land· 
owner, developer ·and pl·anner. 
6 
material development had been made. 
Later even this wide power would be ex-
tended (it never was). The Commission 
abo had power to short circuit the tortu-
ous legal process of conveyancing by 
means of a vesting declaration which 
gave it ilnmediate good title to the land. 
With these powers the Commission hoped 
in the words of its Chairman, Sir HenryWells, " to loosen up the land market." 
For example, it clearly had a potentialrole to play in collecting smaU individual 
unused plots together to make a viable 
site for dev·elopment. 
A further important power of the Com-
mission was its right to sell land to hous· 
ing associa~tions and local authorities for 
housing on concessionary terms. Such 
disposals had to be on new Cflownhold 
tenures subject to restriotions allowingthe Commission to reserve any future de-
velopment value in the land .to itself. 
The Land Commission was fully opera-
tive for only three years before the in-
c o m i n g Conservative Government 
butchered it. Given the complexity of its 
job, it would be unfa:ir to expect that it 
would have revolutionised the land situa-
tion in such a short time. Nevertheless, 
looking back, it is difficult to see the 
Commission as an unqualified success. 
The levy collected was we11 below ex-
pectations, and the administrative costs 
associated with the collection were very 
high-never below about 11 per cent of 
the proceeds. In the process too, ano-
malies and the extreme complexity of the 
legislation created no little heat, and a 
rash of hard-done-by Little old ladies 
filled the columns of the Daily Mail and 
the Daily Express. 
As for loosening up the land market, the 
Commission fell shmt of its objectives. It 
bought comparatively little [and, around 
2,800 acres in 3 years, and sold less sti11 
(320 acres) (Hansard, 16 December 1970).
Worse, most of what it did buy was in 
low pressure areas like the North. In 
London and the South East where land 
was really short, it scarcely succeeded in 
buying at all. It is not entirely clear 
whether this was because land hoarding 
was not as prevalent as Labour support-
ers thought, or because the Commission 
was bad at spotting it. OnJ.y once did the 
Commission try to compulsorily purchase • 
land which it considered was beinghoarded ; the compulsory purchaseorder was turned down by the Minister 
on appeal. Instead the Commission was 
forced to turn to a task for which it was 
less well suited-that of persuading Local 
Authorities to grant more planning per· 
missions. 
Certain defences oan be made of the 
Commission's results. Undoubtedly some 
of its initial difficuLty in finding land re· 
suited from the fact that many trans· 
actions had been hurried thflough to beat 
possible legislation and levy. Undoubtedly · 
too, its actual purchases and sales under·. 
estimate its full effects, as it unearthed 
many potentiai sites where the transaction . 
subsequently took place privately. Finally .. 
it was clearly hindered by the threats to 
abolish it which the Conserva.Jtives con·· 
stantly issued. 
Nevertheless, it is difficult to •believe tha1 
the Commission would ever have solveo 
the land problem on its own. Partly this 
was because one aspect of the problem-
local authority unwillingness to designate 
sufficient land for the right kind of de· 
velopment in their plans-had been 
underestimated by the Government. As 
a result the Land Commission was facec 
with a problem for which it had not bee 
designed. It had to try to inject an ele· 
ment of positive support for develop·
ment into the negative control system o1 
English planning. But partly too, it~ 
f.ailure was because it was not a.u:J·L~...J·• 
enough. It was trying to oil. the wheels o1 
an existing market system despite the un· 
willingness :to co-operate with it of man)•
in that system. What is needed in th( 
future is a Land Commission which i~ 
seen much more as a permanent anc · 
active participant in ·the system, witt 
some of the powers and :rights of land· 
owner, developer ·and pl·anner. 

3. public ownership and land 
Meanwh1le in the Labour Party the stubborn 
persistence of the land problem has 
given rise to a widespread feeling that the 
land ought to be publicly owned. On last 
year's Labour Party conference agenda 
no less than 36 resolut·ions called fur this. 

It is fair to say, however, that quite a lot 
of confusion and disagreement still remains 
on precisely what public ownership 
of the land means. Resolutions called for 
the public ownership of variously " all 
land " (Hitchin) ; " all building land " 
(Mid-Bedfordshire); and "urban building 
land other than owner-occupied land " 
(St. Marylebone). One resolution demanded 
no compensation (Rossendale) ; 
another for compensation " at its existing 
(agricultuml) use value" (CardiffBorough), whioh is actuailly asking for 
two completely different bases for compensation. 
It is therefore worth examining 
briefly the implications of some of the 
proposals which have been made for 
public ownership in land. The classification 
of these schemes largely follows 
those set out by Nathaniel Lichfield in 
"Land nationalisation" (P. Hall (ed), 
Land Values, 1965). 

nationalisation of 
development rights 

Here the State does not actua;lly own 
land. Instead it takes over the right to 
develop land. The 1947 Act is ·an example.
In i·t the State took the right to the increase 
in v•alue of a site from its re,
development (beyond very limited redevelopment). 
Compensation was limited 
to. cases where some development value 
existed before the Act. The actua1 ownership 
of •the land is unaffected by such 
schemes. 

The scheme clearly deals with one kind of 
betterment, the betterment which ar.ises 
from the granting of planning permission 
a nd subsequent redevelopment. Even 
here, however, experience suggests that a 
100 per cent charge clogs up the market 
and therefore some development value 
has to be left to the current owners. Two 
further k·inds of increase in land va!lues 
a re left untouched. First, -increases in the 
land value of existing properties due to 

public works, such as the building of new 
roads or schools or parks, are left entirely 
to the owner who will reap them if 
he sells his property for existing uses. 
Secondly, the natural increase in land 
values due to growth is left permanently 
untapped (except in so far as for non-
owner occupied property, it is subject on 
reaiisation to capital gains tax). 

The schemes' major disadvantage, however, 
is that they reduce the incentive to 
sell land for development without putting 
any countervailing force in its p!.ace. In 
other words, the first objective of land 
policy is left untouched. This has been 
widely recognised by the authors of such 
plans ; for example, the Central Land 
Board under the 1947 Act was givenCompulsory Purchase powers to facilitate 
supply. It simply failed to use them. 
Being a non-radical change in the land 
system, nationalisation of developmentrights is easily reversed, as the 1954 and 
1959 Acts show. '"f.he result -is ·that land 
holders are given a strong motive to hold 
on to their land until the political climate 
changes. The only counter to this is to 
put development charges on a rapidlyascending scale increasing with time. 

developed and redeveloped 
land ownership 

A much more promising approach is that 
of taking over land which is to be developed 
or redeveloped. This was the 
Labour Party's plan in the eady 1960s 
(see Town and country planning, speakers 
notes 3, Labour Party). The plan was 
that a Crown Lands Commission should 
acquire all land on which local planning 
author.ities had granted planning permission. 
It would compensate the existing 
owners at current use value, however defined, 
to which would be added compensation 
for disturbance and a " sweetener " 
to facilitate wming sarles. The land would 
then be leased to the developer (except 
where the developer was a local authority 
which might buy the freehold) witih a 
rent subject to revision being reserved to 
the Commission. The system would in 
many ways be similar to the Land C?mmission 
Act, except that all transactwns 
would go through the Commission. 


8 
The scheme clearly deals effectively with 
betterment. The price charged for the 
lease and the rising rent can take each 
element of increasing iand value for the 
State. 
In some ways too it could help in effici-
ent land 'aHocation and use. By the priceit charged, the landholding agency could 
strongly influence the type of develop-
ment which took plaoe (for ,example, it 
might discriminate in its lease charges in 
favour of housing development). The re-
turn to the developer could be adjustedthrough the rent to the optimum ~evel for 
ensuring that development went ahead. 
Development would also 1be enc·ouragedby the developer !being able to obtain the 
land he needed from a single seller who 
is 1armed with c-ompulsory powers, rather 
than having to negotiate with a number 
of small interests, any one of :whom mayhave the power Ito hold up developmentby withholding a single piece of land. 
The question is whether the scheme goes 
far enough. It has t·wo main drawbacks. 
First, it does not collect increases in land 
values except where devel·opment or re-
development takes place. With the move 
away from comprehensive redevelopment 
and towards rehabilitai'ion often falUngshort of any reasonable definition of "" re-
development," this would mean the loss 
of a valuable source of revenue from un-
earned increment. Secondly, it does abso-
lutely nothing about the problem of the 
lack of positive planning. The Commis-
sion simply has to await other peoples'decisions to develop, and it oannot take 
over land until an authority has givenplanning ~permission. So if developers are 
coming forward with too few schemes or 
schemes of the wrong kind, or if authori-
ties are being too sparing with their per-
missions, the Commission is helpless. We 
need to ·go further if we are to make a 
real impression on the problem. 
unification of reversion 
An ingenious scheme by which the state 
would get gradual control over all built-
on land was put forward by a Socialist 
Commentary group in 1961 ("The face of 
Britain," Socialist Commentary, Septem-
ber 1961). It is worth 'looking at this 
again in some detail, as it has much to 
offer us for present land policy. 
The scheme would have meant the end 
of privately owned freeholds. From a 
given day the freeholds would be vested 
in regional authorities. Leases would then 
be granted to the current owner for the 
expected life of each building up to a 
maximum of 80 years. The lease would 
be rent free at first, but the rent would 
increase every seven years by a percent-
age, perhaps 50 per cent of the increased 
value of the land jn the interim. At the 
end of the lease generaJJJ.y the site would 
revert to the State, on payment of the 
original site value plus 50 per cent, though 
it could be renewed on suitable terms. If 
during the currency of the lease there was · 
any change of use, the ~lessee would have 
to obtain a new lease, and the rent would 
be put up to recoup the betterment. If un-
developed land were developed, agaiDJthe rent would be fixed to recoup at 
least the major part of any betterment. 
Special terms would apply to certain 
groups. Though owner occupiers were to 
be covered by the scheme they were to be 
compensated at the freehold value of theii1 
land and house if it was decided to re-
develop their property at the end of their 
lease. For non-profit making public ser-
vices and charities, generally no rent 
would be payable for the lease which 
would normally be renewed automatically. 
The scheme has been criticised on tech· 
nical grounds. It would be impossiblethe critics said, accurately to "life" indi· 
vidual buildings, and inevitably some· 
people would find themselves surrenderin~ 
good property for site value alone. Thi~ 
argument is all the stronger now th(
fashion has shifted away from comprehensive redevelopment towards planneimprovement, for such " lifing " schemel 
clearly reduce the incentive to maintair 
existing buildings. Still, it might be pos 
sible to avoid such problems by a gener 
ous policy of extending or renewing thl 
leases of well maintained properties, an< 
a hardship fund for people who woul< 
still be adversely affected. 
Others argued that the scheme was unfair 
8 
The scheme clearly deals effectively with 
betterment. The price charged for the 
lease and the rising rent can take each 
element of increasing iand value for the 
State. 
In some ways too it could help in effici-
ent land 'aHocation and use. By the priceit charged, the landholding agency could 
strongly influence the type of develop-
ment which took plaoe (for ,example, it 
might discriminate in its lease charges in 
favour of housing development). The re-
turn to the developer could be adjustedthrough the rent to the optimum ~evel for 
ensuring that development went ahead. 
Development would also 1be enc·ouragedby the developer !being able to obtain the 
land he needed from a single seller who 
is 1armed with c-ompulsory powers, rather 
than having to negotiate with a number 
of small interests, any one of :whom mayhave the power Ito hold up developmentby withholding a single piece of land. 
The question is whether the scheme goes 
far enough. It has t·wo main drawbacks. 
First, it does not collect increases in land 
values except where devel·opment or re-
development takes place. With the move 
away from comprehensive redevelopment 
and towards rehabilitai'ion often falUngshort of any reasonable definition of "" re-
development," this would mean the loss 
of a valuable source of revenue from un-
earned increment. Secondly, it does abso-
lutely nothing about the problem of the 
lack of positive planning. The Commis-
sion simply has to await other peoples'decisions to develop, and it oannot take 
over land until an authority has givenplanning ~permission. So if developers are 
coming forward with too few schemes or 
schemes of the wrong kind, or if authori-
ties are being too sparing with their per-
missions, the Commission is helpless. We 
need to ·go further if we are to make a 
real impression on the problem. 
unification of reversion 
An ingenious scheme by which the state 
would get gradual control over all built-
on land was put forward by a Socialist 
Commentary group in 1961 ("The face of 
Britain," Socialist Commentary, Septem-
ber 1961). It is worth 'looking at this 
again in some detail, as it has much to 
offer us for present land policy. 
The scheme would have meant the end 
of privately owned freeholds. From a 
given day the freeholds would be vested 
in regional authorities. Leases would then 
be granted to the current owner for the 
expected life of each building up to a 
maximum of 80 years. The lease would 
be rent free at first, but the rent would 
increase every seven years by a percent-
age, perhaps 50 per cent of the increased 
value of the land jn the interim. At the 
end of the lease generaJJJ.y the site would 
revert to the State, on payment of the 
original site value plus 50 per cent, though 
it could be renewed on suitable terms. If 
during the currency of the lease there was · 
any change of use, the ~lessee would have 
to obtain a new lease, and the rent would 
be put up to recoup the betterment. If un-
developed land were developed, agaiDJthe rent would be fixed to recoup at 
least the major part of any betterment. 
Special terms would apply to certain 
groups. Though owner occupiers were to 
be covered by the scheme they were to be 
compensated at the freehold value of theii1 
land and house if it was decided to re-
develop their property at the end of their 
lease. For non-profit making public ser-
vices and charities, generally no rent 
would be payable for the lease which 
would normally be renewed automatically. 
The scheme has been criticised on tech· 
nical grounds. It would be impossiblethe critics said, accurately to "life" indi· 
vidual buildings, and inevitably some· 
people would find themselves surrenderin~ 
good property for site value alone. Thi~ 
argument is all the stronger now th(
fashion has shifted away from comprehensive redevelopment towards planneimprovement, for such " lifing " schemel 
clearly reduce the incentive to maintair 
existing buildings. Still, it might be pos 
sible to avoid such problems by a gener 
ous policy of extending or renewing thl 
leases of well maintained properties, an< 
a hardship fund for people who woul< 
still be adversely affected. 
Others argued that the scheme was unfair 

Present freeholders would find themselves 
as leaseholders, soon to pay rent and 
losing " hope " development value which 
they might have paid for when theyacquired their property. As far as owner 
occupiers are concerned these are strong 
arguments, even given the better terms of 
final compensation which would be payable. 
Labour showed it accepted them 
when it introdut.:ed the Leasehold Reform 
Act, and we should not reverse that stand 
now. 

On the other hand, for commercial users 
the case is much weaker. The rents payable 
would not seem to differ greatly from anyother new form of tax. They would, of 
course, reduce the value of currently held 
property assets, but no real economic disadvantage 
would result (the irrelevance of 
property assets to companies' actual behaviour 
is shown by the irregularity with 
which most of them actually write up the 
value of their property in their accounts). 
Indeed, stable property prices might be 
economically advantageous, as it would 
no longer pay the Hyams of this world 
to invest in empty offices, and they might 
turn instead to productive investments. 
We should not confuse a social democratic 
belief in the individual right to 
own and use property with a Conservative 
belief in a right to extract every penny 
out of that property. When you recover 
stolen property from a thief, you do not 
pay him compensation on it. A philosophical 
claim that every change in any-
one's legal rights should be met with full 
compensation is a recipe for permanentconservatism. 

The advantages of public ownership on 
these lines are great. The problem of 
betterment is dealt with both by new leases 
on redevelopment and by the rising rent. 
The scheme would also mean a once and 
for all drop in land values as propertyowners were faced with the future prospect 
of paying rent. For redevelopment, 
eventually all would be easy as the sites 
of buildings which needed replacementwould automatically revert to the State at 
low cost. 

However, it cannot be a full solution. The 
problem is that it does nothing for present 

redevelopment. Indeed, by reducing land 
values it would if anything reduce the 
incentive to sell land for redevelopment. 
At the very least it would need to be 
accompanied by some use by the regional 
body of compulsory purchase -of leases 
before they had run their term. Secondly, 
it does nothing about the possible reluctance 
of local authorities to designateland for development in plans. It is no 
use owning the land if you cannot use it 
as you would wish. Eventual reversion 
would mean a bonanza for our grandchildren, 
but it does not solve our problems 
here and now. 

public ownership of all land 

Immediate state takeover of all land is a 
policy with great attractions for socialists. 
It looks to offer the chance for the state 
to plan land use comprehensively, in keeping 
with public priorities. It would mean 
the end of betterment going to privateindividuals. It would leave no problemof deciding what to take over and what 
not. 

A scheme would be simple enough in 
essence. On a given vesting date, the state 
would proceed to buy all land. Compensation 
would be paid at current use value. 
The current owners would then get leases 
at revisable ground rents. 

There are two real objections to such a 
solution. First, it would be fiendishlyexpensive, and more important, wastefully 
so. The estimate in Lichfield's paper 
(op cit) of £20,500 million for 1961 was 
probably too low at the time. It would 
cost far more now-perhaps it would 
double the national debt. Meanwhile, the 
state would be taking over a whole lot of 
land quite irrelevant to the real problems 
with which it would be faced. Suddenly, 
it would be managing all agricultural land 
in the country (for the pros and cons of 
this see John Mackie and Harry Walston, 

Land nationalisation-for and against,

Fabian tract 312, 1958). It would be 
landholder for every office, every house, 
every factory whether it was likely to be 
redeveloped or built last year. Valueing 
and rent collecting alone might well be 


enough to give the landholding body a 
bureaucratic seizure; valuers in particular 
are in short supply. 

Secondly, and following from this, public 
ownership of the land would not help with 
the planning problems of land use at all. 
The transfer to leases alone would not 
make a single acre available, would not 
build a single dwelling, would not cater 
for a single plan. We would still need to 
work out what compulsory powers for 
land acquisition from leaseholders and 
what powers to encourage the right use 
of that land to give the land holding body. 
One suspects that these questions, and 
they are the really important ones, would 
be buried while the political battle was 
fought out over the whole operation. It 
would be tragic to have the kind of 
revolutionary change that total publicownership would imply only to find that 
at the end of the day the same problems 
remained, left unconsidered in a conflict 
generating much heat but very little light. 

summary 

This survey shows that public ownership 
of the land in any of the forms in which 
it has been recommended is not going to 
achieve both the aims of land policywhich we originally identified. They are 
all more or less effective ways of securingbetterment for the community. But they 
are all weak as ways of ensuring the best 
use of our land resources. They fail really 
to get to grips with what the real problems 
here are. They content themselves 
with a somewhat superficial analysis of 
the problem in terms of speculators, or 
high prices, and once the problem is thus 
misidentified, the solution is doomed. 


4. requirements of land 
policy 
What are the requfrements of land policy? 
We should define those aims and see what 
they imply. 

BETTERMENT 

Land policy must be designed to tap the 
bulk of the proceeds from three kinds of 
betterment : 

1. The increase in the value of sites re· 
suiting from community expenditure like 
the building of roads to improve access. 
2. The increase in the value of land resulting 
from community planning decisions 
like the granting of planning permission 
for change of use. 
3. The increase in the value of land resulting 
from general growth in demand 
and limited supply in chosen locations 
and for certain purposes. 
The third kind of increase is often ignored. 
But beside providing a buoyant and 
generally progressive new source of tax 
revenue, it is also as much unearned as 
either of the other forms of betterment. 
It would be quite illogical to deal with 
them while leaving it untouched. 

OPTIMAL USE OF LAND 

This is far more complicated, and covers 
many different problems. _ 

land hoarding 

Evidence of speculative land hoarding 
· cont!nues to mount. For example, two 
studies by the Standing Conference on 
L~ndon and South East Regional Plan~
ng show a considerable excess of plan-
rung permissions granted over dwellingscompleted (The housing land situation, 
July 1972 and Land availability for residential 
development, December 1972).
Furthermore, certain types of hoardingwould not be brought out by such figures. 
For ~xample, a developer may deliberately 
re~r~m from applying for planning perrrussiOn 
on land on which it would be 

granted, so as to allow him to keep his 
options open. Or he may hoard in the 
sense of hoarding after building, deliberately 
leaving buildings unoccupied in the 
hope that the market will rise still further. 
As well as these deliberate hoarders, there 
are also the slothful hoarders. Unfortunately, 
public bodies are the worst offenders 
here. In the case of the Ministry of 
Defence, the Nugent Committee is at 
present considering the possibilities for 
land release, but there are other offenders. 
British Rail is notorious ; so are some 
Hospital Boards. In some cities a substantial 
proportion of the land needed to 
cope with the housing problem could 
come from such sources if we could find 
a way of ensuring its release. 

So dealing with hoarding will be a major 
requirement of our new land policy. So 
far as speculative hoarding goes, it may 
not be the most difficult problem. Reversing 
hoarding is a cumulative process. 
If you once cause some hoarded land to 
be released, you immediately create a fear 
of price falls in other hoarders' minds, 
and the speculative bubble will burst. 

inadequate planning 
permissions 
The Labour Party has been reluctant to 
admit this as a major source of trouble ; 
it has preferred to contrast supposedlyvirtuous local authorities with the wicked 
developer. The truth, as always, is rather 
more complicated. We may decide not to 
believe the developers (see for example,
Neil Wates, "Planners who push up the 
price of houses," The Times, 17 July1972), or the studies related bodies have 
commissioned (Shankland Cox Partnership, 
Land availability for resiqential development), 
but we should not 1gnore our 
own Land Commission's verdict (see 1968 
report). 

In some cases a restrictive attitude maybe justifiable on planning grounds. For 
example, in the interests of inter-or 
intra-regional dispersal, it may be necessary 
to prevent people living in a given 
area. In other cases, getting rid of permission 
hoarding will deal with the prob



12 


lem. Some local authorities seeing a large 
stock of unused planning permissions are 
unwilling to add to them, especially when 
doing so may result in them taking on the 
cost burden of providing the necessary 
servtcmg. 

But another reason for the shortage of 
land is the attitude of many, particularly 
Conservative, local authorities. In the 
South East it is not only the outer London 
boroughs, but many county authorities 
beyond the Green Belt who shrink from 
accepting their share of the needs to be 
met. The failure of the expanded towns 
concept to be widely adopted similarly 
reflects a local conservatism, a determination 
to resist change and expansion. Our 
land policy should help us to tackle these 
problems. 

reg iona I element 

This problem of planning permissions is 
in part a reflection of the lack of anyregional element in our local government 
structure. It is true that plans are prepared 
for regions ; often excellent plans like the 
South-East strategic study. But the bodies 
which prepare them are entirely without 
executive power. They cannot give permission 
for any development to go ahead. 
Still less can they erect a single building. 
They can indicate what the needs of a 
region are, but that is all. If local authorities 
decide that regional needs are not in 
keeping with the future they would choose 
for themselves, they can ignore the plans 
entirely. 

The answer is clear. Whether in the context 
of further local government reform 
or not, whatever body is set up by the 
next Government must be based on the 
region. It must have the powers to enable 
it to tackle the land problem in the 
interest of the region as a whole. 

positive executive planning 


One of the main problems with the present 
planning system is that it is purely negative. 
It works on the basis of approvingor rejecting proposals put up, rather than 

positively acting to carry out a planned 

strategy. 

Now no doubt this system is often satisfactory. 
Developers are skilled at their . 
craft, and it seems unlikely that manyoffices for which there is a profitabledemand and which would receive planning 
permission would go unbuilt once the 
problem of speculative hoarding has been 
overcome. 

The same is not true, however, for housing, 
especially low cost housing. The 
effective demand which would encourage 
development is simply not there because 
of the low incomes of those who need . 
the accommodation. It may be, therefore, : 
that the body in charge of land should 
have the role of itself initiating develop-· 
ment or developing in such cases. 

land assembly and servicing 


The importance of land assembly and 
servicing should not be underestimated. 
The private developer does have certain 
skills in getting together land packages, as 
the assembly of the big Piccadilly. sites 
has shown. However, such assembly byprivate buyers is always in danger of beinghindered by blackmail. An example will 
make this clear. Suppose a potential site 
worth £100,000 to a developer consists 
of 5 pieces of land. Suppose the developer 
holds four of these pieces, but that road 
access to the site depends on the fifth 
piece. Without that piece, the site is 
worthless. It will pay the developer to . 
give anything up to £100,000 to secure 
that last bit of land. Its owner is in a 
position to demand an enormous monopoly 
price. At best, this means that developers 
have to operate secretly in 
land assembly, which is itself undesirabl 
in planning terms. At worst, it means 
windfall gains for some land owners quite 
unrelated to deserts. A public land body 
on the lookout for such cases and ready 
to purchase compulsorily could help the 
developer avert this problem. 

A second problem often confronting the 
developer is a lack of vital servicing of the 
land. Sewage; roads; water-all have to 



be put in before the land is worth developing. 
A public land body could supplement 
local authorities' efforts here, and could 
also by the ground rents it charges recoup 
the cost from the developer. 


allocation of land 

To some extent the allocation of land by 
any new body will depend on the use 
limitations imposed by whatever plans 
are in existence. But it will be necessary to 
decide the principles on which potentially 
" free " land is allocated between uses. 

For commercial uses there is a strong case 
for making the developer pay the full 
market price. Anything less than that 
merely increases his profit margin. Those 
who can extract the highest commercial 
value from the land will be prepared to 
pay most for it, and subject to the constraints 
of good planning, they should be 
allowed to do so. 

However, if all land were sold at market 
price, even within a plan, it seems likely 
that the mix of uses would not be optimal 
from a social point of view. Take the case 
of the city centre. Currently there may be 
very little alternative to allowing office 
development. Local Authorities may wish 
to avoid the deadness and social imbalance 
of a purely commercial centre, but theycannot afford the land prices asked, and 
thus cannot afford to put up much needed 
low cost housing. A land allocation body 
might well sell land to them at a pricewhich allowed socially desirable inter· 
vention. 


5. regional land and 
development corporations 
The daunting needs which have been described 
here clearly go beyond land alone. 
If there is one thing which emerges clearly 
from a consideration of the land problem 
it is this. It makes no sense to formulate 
a scheme for land which is not also a 
scheme for executive planning of the use 
of that land. The problems of land prices, 
development and planning are inextricably 
linked, and a plan which purports to deal 
with one set of problems without tackling 
the others is doomed to failure. 

When Labour returns to power, it should 
set up in each planning region a regional 
land and development corporation. This 
would be easiest if a democratic structure 
of regional government had already been 
set up-clearly the Labour Party is 
attracted by such a possibility. Failing 
this, the corporations would have to be 
composed of local authority representatives 
from within the region, with the 
addition of people with special knowledge 
of the region as a whole. Each corporation 
would need a substantial bureaucracy. 
Failing further local government reorganisation 
the relationship between the 
corporations and the bureaucracy could 
be modelled on the Passenger Transport 
Executive system under the 1968 Transport 
Act. However, such ad-hocery is not 
at all satisfactory. A body whose success 
depends on combining intelligent development 
with the desires of existing inhabitants 
needs to be more firmly rooted in 
democratic local government. 

The corporations would be given a dual 
role in keeping with the dual nature of 
land policy. First, they would be responsible 
for the collection of the community's 
share of any increase in land values. 
Secondly, they would be responsible for 
the purchase and allocation of land 
needed for the fulfilment of the broad 
aims of regional policy, and for its 
optimal use in partnership with local 
authorities. 

Each corporation would have to decide 
what land was likely to be relevant to 
present and future development. When it 
had done so, it could then proceed to 
designate an area in a way similar to that 
under the New Towns Act. If the boun


daries were too tightly drawn an element • 
of rigidity would be introduced into the 
planning process at an early stage in a 
way the 1968 Town and Country Planning 
Act was designed to avoid. Instead, designation 
should be on a very substantial 
scale so that designated areas would eventually 
cover all significant conurbations 
and land likely to be developed around 
them. But for administrative reasons some 
" phasing " would be needed. 

To commercial and industrial propertywithin a designated area a scheme similar 
to the Socialist Commentary lifing scheme 
would apply. All freeholders would be 
converted into state leaseholders, leaseholders 
into sub-leaseholders and so on. 
The leases would initially be rent free,
but later on, rent would be payable at a , 
certain percentage (perhaps 50 per cent)
of any increase on their current use value. 
This might be done on the basis of seven 
year rent reviews, but it would take some 
time to become effective as at first 
property especially property with a 
shortish life would show a once and for 
all decrease in value as leaseholds with 
rent reviews would be less highly regarded 
than freeholds. Use changes or 
material development within a given use 
would mean immediate rent reviews under 
new leases so that rents reflected a substantial 
proportion of the ne:w value of 
the land. At the end of the " life " the 
land would revert to the state, with compensation 
being paid on the basis of the 
real value of the site initially (that is the 
initial site value plus an allowance for 
general price inflation). 

In general, the fall in land values which 
would arise would only harm people who 
deserve what they get. People who were 
intending to sell land which they had · 
bought at a price above existing use value · 
would get their fingers burnt, but most 
people in the Labour movement have 
more deserving cases to worry about than 
that of the poor speculator. 


However, such a scheme would certainly 
throw up some cases of hardship. Some 
people who have recently bought with the' 
intention of using the land or the property · 
on it could suffer. They will have bought . 


at the full inflated current price. The 
prospect of having to pay a rent in the 
future could conceivably tip their venture 
into unprofitability. In some cases, therefore, 
the corporation might be prepared to 
grant more favourable terms for the lease 
on a non-transferable basis. The dangerhere is that once you open such loopholes, 
every accountant and every propertybaron in England will be looking for ways 
to exploit them, To avoid this, the provision 
might be confined to : 

1. Owners who had bought within, say, 
5 years of the date of publication of the 
Government's proposals ; 
2. Landowners who at the time of the 
proposals were individuals, or companieswith book assets of under a certain 
amount, and for which property dealing, 
on carefully defined criteria, was not a 
major activity. 
The other problem which could arise is 
that of uneconomic uses which are, nevertheless, 
thought to be desirable on social 
grounds. For example, in areas such as 
Covent Garden, some of the activities 
which give the area its character, such as 
ballet shoe repairing, depend on the rent 
of premises being set at histori rather 
than current levels. Of course, if one 
adopted a very strict definition of " current 
use " when assessing how much a 
value had risen for the purposes of a rent 
review, then the rents would not go up in 
such cases. But it would be wrong to 
de~~e it so narrowly; as the unprofitabilJty 
of any given individual activity or 
company in itself should not be enough to 
preserve it from rent rises. If this was so, 
there would be no incentive for activities 
which make poor use of a given piece of 
land to move elsewhere. Land use patterns 
of our cities must not be fossilised in 
ways which are economically wasteful. 

The answer might lie in some kind of 
procedure whereby areas such as Covent 
Gard~n would be singled out by local 
planrung authorities, and socially desirable 
specific uses within them, of the 
ballet shoe variety, spared the full burden 
of rent increases. Such a policy might 
actually reinforce a preservation policy 

for these areas, for present occupantswould no longer suffer from pressure from 
the ultimate freeholder to get out, or to 
pay more. 

However, owner occupier property would 
not be included. It would be wrong to 
take away from individuals a securitythey presently possess, often at the cost 
of great personal sacrifice. Further, full 
ownership is an excellent way of ensuringthe good maintenance of houses. In the 
same way when new house building development 
for sale took place, the householder 
would be given the right to acquire 
his freehold after several years' occupation 
under the procedure of the Leasehold 
Reform Act. However, some limit on the 
acreage of land surrounding an owner 
occupied property indemnified by these 
provisions would be needed to avoid exploitation 
of this exception. 

The greatest advantages of this terminal 
reversion system will be well in the future. 
It will mean that today's appalling situation 
never arises again, but it is also necessary 
to do something about the effects of 
that system now. 

securing betterment 

The first need is to secure all betterment. 
This would be done by the RegionalCorporations becoming the purchasingagents for all land for development inside 
or outside the designated areas. 

This would operate simply enough. A 
private developer want~ng to ~e':elop a 
given plot (either outside or ms1de the 
designated area) would app~oach th.e Corporation 
which would buy 1t for him. At 
first it would pay well above current use 
value (and disturbance allowance) for 
such purchases. Perhaps as much as 60 
per cent of the excess of market value over 
current use value would go to the current 
owner. However, this " sweetener" wo~d 
be on a rapidly declining scale, reducmg 
at, say 10 per cent a year to around 20 
per cent. The landholder who held on ~o 
his land in the hope of a change m 
Government would thus be taking a grave 
risk of losing much of the market value 


16 
he would receive initially. Under such 
conditions voluntary sale of land mightwell increase. 
In certain cases, the owner might be re-
luctant to sell despite the "sweetener." 
The Corporation would therefore have to 
be given wide powers of compulsory pur-
chase. It could exercise this where it was 
satisfied that the development would be 
helpful to the fulfilment of the regional 
plans. It would be subject, of course, to 
appeal to the Ministry. It would be wrong 
to allow a compulsory purchase order to 
go through only for planning permission 
to be later refused, so we should confine 
compulsory purchase orders to cases 
where planning permission had alreadybeen granted, or where the land was 
designated for the proposed kind of de-
velopment in the relevant plan. The 
" vesting declaration " procedure of the 
Land Commission should be available to 
each Corporation. 
Compulsory purchase of owner occupied 
property would be permitted where this 
was necessary to redevelopment; in this 
case, compensation should always be at 
full market value plus a generous allow-
ance for disturbance. Having purchased 
the land, the Corporation would generally 
sell on a long lease to the developer. He 
would be allowed a small discount on the 
market value of the land to encouragehim to seek from the local authority the 
maximum permitted exploitation of the 
plot. In areas where private housebuilding 
is to be encouraged the discount could be 
slightly increased. In the case of land 
zoned for private house building for sale, 
the lease would be subject to the over-
riding right on the part of the final pur-
chaser of the house to buy his freehold. 
In the case of commercial and industrial 
property, the Corporation's leases would 
be subject to rent revision clauses which 
would both ensure a future income for the 
Community and serve to depress land 
values below current levels. 
The leases would contain certain conditions 
to safeguard against hoarding. The devel-
oper would have a fixed length of time to 
apply for planning permission ; if he failed 
to do so, the Corporation would repur-
chase from him at the original use value. 
If he failed to start development, if he ' 
failed to complete it, or if he failed to sell 
or let the completed property within set 
periods, he would be liable to immediate 
rent reviews, aimed at clawing back the 
full amount of any rises in values after the 
time limits had expired. Such proposals 
would go far beyond those in the 1973 
budget, and would ensure that no incentive 
to hoard was left. 
As well as selling to developers, the Reg-
ional Corporation could buy land for, and 
sell it to local authorities. The problemhere is-what should they charge for 
land? If they charged the full market 
value, then many local authorities, especi-
ally in the conurbations, would find pur-
chase for housing-let alone for open 
space and the like-prohibitively expen-
sive. If on the other hand, the price was 
set too low, one could run into the 
opposite problem. Local authorities migh 
build parks when on economic grounds 
the land should be used for commercial 
development. Or council housing might 
become too financially attractive vis-a-vis 
private provision of owner occupiedhousing. This part of the question will 
need to be reconsidered in the light o 
whatever detailed policies the Labour 
Party adopts on council house rents and 
subsidies ; but clearly the price asked will 
usually be somewhat below ·full market 
value. 
The advantage of the land subsidy tc 
councils advocated here is that it woul 
favour authorities needing large buildin~ 
programmes in areas of high land cost 
The disadvantage is that it would favow 
new building against acquisition and im~ 
provement of old property ; and anoth~J 
subsidy would be needed to redress thu 
imbalance. 
One important technical question raisec 
by all this is the assessment of curren 
use value, and market value. 
In the case of current use value, the diffi 
culty is largely one of defining what we 
mean by " current use." There are tW' · 
main problems here. The first is the om . 
of excluding all " hope " value. The rate 
16 
he would receive initially. Under such 
conditions voluntary sale of land mightwell increase. 
In certain cases, the owner might be re-
luctant to sell despite the "sweetener." 
The Corporation would therefore have to 
be given wide powers of compulsory pur-
chase. It could exercise this where it was 
satisfied that the development would be 
helpful to the fulfilment of the regional 
plans. It would be subject, of course, to 
appeal to the Ministry. It would be wrong 
to allow a compulsory purchase order to 
go through only for planning permission 
to be later refused, so we should confine 
compulsory purchase orders to cases 
where planning permission had alreadybeen granted, or where the land was 
designated for the proposed kind of de-
velopment in the relevant plan. The 
" vesting declaration " procedure of the 
Land Commission should be available to 
each Corporation. 
Compulsory purchase of owner occupied 
property would be permitted where this 
was necessary to redevelopment; in this 
case, compensation should always be at 
full market value plus a generous allow-
ance for disturbance. Having purchased 
the land, the Corporation would generally 
sell on a long lease to the developer. He 
would be allowed a small discount on the 
market value of the land to encouragehim to seek from the local authority the 
maximum permitted exploitation of the 
plot. In areas where private housebuilding 
is to be encouraged the discount could be 
slightly increased. In the case of land 
zoned for private house building for sale, 
the lease would be subject to the over-
riding right on the part of the final pur-
chaser of the house to buy his freehold. 
In the case of commercial and industrial 
property, the Corporation's leases would 
be subject to rent revision clauses which 
would both ensure a future income for the 
Community and serve to depress land 
values below current levels. 
The leases would contain certain conditions 
to safeguard against hoarding. The devel-
oper would have a fixed length of time to 
apply for planning permission ; if he failed 
to do so, the Corporation would repur-
chase from him at the original use value. 
If he failed to start development, if he ' 
failed to complete it, or if he failed to sell 
or let the completed property within set 
periods, he would be liable to immediate 
rent reviews, aimed at clawing back the 
full amount of any rises in values after the 
time limits had expired. Such proposals 
would go far beyond those in the 1973 
budget, and would ensure that no incentive 
to hoard was left. 
As well as selling to developers, the Reg-
ional Corporation could buy land for, and 
sell it to local authorities. The problemhere is-what should they charge for 
land? If they charged the full market 
value, then many local authorities, especi-
ally in the conurbations, would find pur-
chase for housing-let alone for open 
space and the like-prohibitively expen-
sive. If on the other hand, the price was 
set too low, one could run into the 
opposite problem. Local authorities migh 
build parks when on economic grounds 
the land should be used for commercial 
development. Or council housing might 
become too financially attractive vis-a-vis 
private provision of owner occupiedhousing. This part of the question will 
need to be reconsidered in the light o 
whatever detailed policies the Labour 
Party adopts on council house rents and 
subsidies ; but clearly the price asked will 
usually be somewhat below ·full market 
value. 
The advantage of the land subsidy tc 
councils advocated here is that it woul 
favour authorities needing large buildin~ 
programmes in areas of high land cost 
The disadvantage is that it would favow 
new building against acquisition and im~ 
provement of old property ; and anoth~J 
subsidy would be needed to redress thu 
imbalance. 
One important technical question raisec 
by all this is the assessment of curren 
use value, and market value. 
In the case of current use value, the diffi 
culty is largely one of defining what we 
mean by " current use." There are tW' · 
main problems here. The first is the om . 
of excluding all " hope " value. The rate 

of return which apply at present to much 
agricultural land are so low that its auction 
price must include a large element for 
expected future returns from development. 
" Hope " value also creeps in bit 
by bit as plans for areas develop from the 
strategy stage through to implementation, 
and it is not easy to find at what time a 
given piece of land was entirely free of 
such value. 

The second is that some pieces of land 
seem in one sense to have no current use 
value, and in another sense to have very 
substantial current use value. Take the 
case of the disused railway siding in an 
area zoned for industrial use. Is its current 
use value as a railway siding (zero), 
or as the factory which within its zoning 
could be built there (a lot)? 

In the case of " market value " the problem 
is one of how to assess this in a 
situation in which there is no market in 
land. At present, the valuer assessingmarket value for public compensation 
purposes can refer to auction evidence as 
a basis for his judgment of value. But if 
we take away the market what is left for 
him to work on? 

The problems of assessing current use 
value are more difficult ones. Inevitably 
some " hope " value will come into the 
assessment, and some pieces of land will 
be overvalued. This should not be regarded 
as an intolerable problem. Better 
that the Corporation bases its payment 
on slightly more than a minimum valuation, 
and thus recoups something less than 
the full " betterment " of the land, than 
that, as now, the full amount goes to the 
~andowner. Present legislation for work-
Ing out market values does prescribe what 
assumptions to make as to the potential 
u~~ of a site ; and though similar pro-
VlSlons for assessing current use value will 
be complex, they should not be beyond 
the draftsman's wit. 

On_ market value the problems are more 
easily solved. First, some plots which the 
Corporation assembles other than in respons.
e to a developer's request could be 
au~tioned ; this would give it a basis from 
which to work in valuing land sold direct. 

Secondly, if the Corporation does pitch 
market values too low, it will normally 
have a chance to rectify its mistake at the 
first rent review. The ease of assessingmarket value is shown by the skill with 
which local authorities have managed to 
calculate lease values in the case of town 
centre redevelopment plans with a sophistication 
which has grown over the years 

(Report of the working party on local 
authorityI private enterprise partnershipschemes, annex B, Department of the 
environment). 

carrying out plans 

So far these proposals have not touched 
on an important problem which has recurred 
throughout this pamphlet ; how 
do you add a positive executive wing to 
our planning system? The Regional Corporations 
seem to me to be ideally suited 
for this purpose, and they should be given 
a major role in development. 

The aim of this development role would 
be to ensure that the agreed requirements 
of the region, especially in housing, were 
met, despite any inadequacies of local 
authorities or private developers. 

The Corporation should be empowered 
to get over the danger of unnecessarylocal constriction of planning rights. It 
would be given the right itself to put forward 
planning proposals for development. 
These would be subject to normal local 
planning controls. Otherwise there would 
be an intolerable errosion of the autonomy 
of the local authority, and a circumvention 
of the growing demand for local 
participation in planning control following 
the Skeffington Report (People and 
planning). Wherever possible the development 
should be in partnership with the 
local authority concerned. Some of the 
proposals for partnership arrangementsbetween local authorities and private developers 
contained in a recent Department 
of the Environment working party report 
could be usefully applied to such developments 
(op cit). In some cases, however, 
the local authority may be deliberately 
obstructive. Some Conservative authorities 
are only too likely to be prejudiced against 


18 


the kind of body proposed, and to greetits planning applications with cavalier rejections. 
In these cases, the Corporations 
must go to the Minister on appeal. 

The Corporation would then have the 
power to bring its plans to fruition. Theycould either let the work needed to do 
this out on a contract basis, or run building 
divisions themselves on commercial 
lines to carry them through. In some 
ways they would be acting as a regional 
variant of the Housing Building Agency 
proposed in Labour's Programme for 
Britain (p 38). However, though no doubt 
private developers would carry out most 
needed commercial development, in some 
schemes the Corporations might have a 
role to play, especially where economic 
sense could only be made of an inner city 
development by bringing together office, 
shop and low cost housing provision. 

It is fair to say that much of the housing 
the Corporations build will not be profitable. 
Certainly, where land is charged at 
anywhere near its full market value it will 
not be. The most profitable uses will have 
been met by private developers already. 
The Corporation may well find itself 
undertaking many expensive and loss 
making inner city projects. This does not 
necessarily matter. If the projects are 
firmly based on the needs of the broad 
plan for regions and areas within them, 
and those plans are themselves the result 
of a correct analysis of the various social 
costs and benefits of alternative developments, 
then losses should be accepted on 
them. A number of difficulties will inevitably 
arise, however. For example, how 
are rents to be fixed on new estates? This 
will be particularly tricky where it proves 
impossible to persuade local authorities 
who have refused to develop themselves 
to take Corporation developments into 
their housing stock. Where the Corporations 
build for sale, what price should 
they charge for their houses? Again, 
losses may have to be accepted in cases 
where the reasons for building are social 
rather than commercial though restrictive 
covenants on resale would then be needed. 

All these questions will need to be further 
examined in the light of the Labour 

Party's decisions on housing finance 
policy. 

As well as this full development role, the 
Corporations will also act positively in 
getting together land for development and 
offering it to developers. Their role here 
will include land assembly ; assisting and 
supplementing local authority efforts in 
providing services like sewerage and 
roads ; and encouraging and where necessary 
forcing by compulsory purchase the 
release of surplus land held by public and 
private bodies. This could be an importantrole ; the Corporation's success will depend 
on how skilfully and flexibly they 
tackle it. 



6. summaryand recommendations 
Previous attempts( at tackling the land 
question have failed. They failed because 
they have been better designed for collecting 
betterment {though not the proceeds 
of natural price increases) than for 
assisting in the allocation and developmentof land. We must recognise that there are 
inadequacies in our planning system as 

' 
well as in the market system. No purported 
solution which fails to tackle both 
aspects of the problem can succeed. The 
details of how we do this can be debated, 
but certain aspects are fundamental. These 
include a strong regional basis for our 
chosen agencies, and a power for them to 
initiate and carry through desirable developments. 
The changes required are 
radical-even revolutionary-but lesser 
reforms have failed us already. 

The recommended scheme therefore is: 

1. That Regional Land and DevelopmentCorporations should be set up. Ideallythese should operate in the context of a 
further local government reform, which 
sets up the missing formal regional element 
in our local government system. 
2. They should convert from freehold to 
leasehold all commercial property in 
designated areas with rent rises dealing 
with future value increases. 
3. Leases for developed commercial property 
would be based on their expected" life," and the site would revert to state 
ownership at original real site value when 
they reached the end of that life. 
4. The Corporations should purchase all 
land for developers which they think is 
desirable. Willing sales by current owners 
would be encouraged by setting the 
l'"""'"u'IL of development value they would 
retain after sale on a rapidly diminishing 
scale. Owner-occupiers would have the 
right to receive full market value for their 
property and a limited acreage of land. 
On other property, an increasing amount 
of betterment would be retained by the 
state. 

5. Land should then be leased at rents 
reflecting full market values, except for 
certain sales for public purposes, certain 
uses deemed to be in the public interest, 
and certain cases of hardship. Where the 
land is used for building for owner occupation, 
the owner occupier would have the 
right to buy his freehold as under the 
Leasehold Reform Act. 

6. The Corporations should themselves be 
able to initiate development, and should 
be prepared to enter into partnership with 
local authorities to this end. They could 
themselves apply for planning permission, 
and on occasion would have to push an 
application through even against local 
authority opposition. They could then 
either carry out the development themselves 
or contract it out to a privatedeveloper. 
7. The Corporations would have an important 
role in land assembly, land servicing 
and in securing land release from 
slothful institutional holders. 
This is a fundamental reform and one 
certain to be heavily opposed by vested 
property interests. But the disastrous 
results both for social planning and for 
equity of the present system are there for 
all to see. More half measures will only 
mean more failures. If we reject the 
effects of an unfettered profit system, if 
we take planning seriously as an alternative, 
we must be prepared to tackle the 
problem at its roots. 


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The Fabian Society exists to further 
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Since 1884 the Fabian Society has enrolled 
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the author 

David Lipsey is a Rowntree politicalfellow working as personal assistant to 
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Cover design by Dick Leadbetter. Printed 
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ISBN 7163 0422 8 


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