Backs to the Land
By DESMOND DONNELLY, MP
SIR BASIL SPENCE'S speech to the British Architects' Conference in Manchester last month has started a major controversy on the future of British town development. It has been followed by an urgent warning from the National Federation of Building Trades Employers, speeches by Mr. Gaitskell, and now a statement by Mr. Henry Brooke.
Mr. Brooke's refusal to abandon the green belt policy is right—for if he were to give way on this, all hope of restricting the size and con- gestion of cities would go by the board. But the Minister's other ideas for solving the practical problem of soaring land prices show lamentable complacency and they will fail unless he addresses himself to the central problem.
The background to the crisis is the chronic failure to solve the challenge of compensation and betterment—the problem which arises when a town plan increases the value of certain land or: which building is to be permitted, and restricts the value of other land on which build- ing permission will be refused.
Let me provide an illustration. Mr. Jones and Mr. Smith both own five acres on the edge of prosperous, expanding Hogsnorton. Mr. Jones's land is to the east; poor and stony. Mr. Smith on the other hand, owns rich, good land to the west. The planners decide in the public interest that the new area for urban expansion must be on the poor land near Mr. Jones, in order to preserve the good land around Mr. Smith. The consequence of this decision is suddenly to in- crease the value of Mr. Jones's land. In fact the town plan may be so drawn up that it becomes the only place where people can build, and prices rocket. They may reach £10,000 to £15,000 an acre. Mr. Jones, who only paid about £250-£300 for his land some eight years ago, now finds himself the possessor of a poten- tial fortune of at least £50,000. Mr. Smith is far less fortunate, although his property is the better land. He may have paid a little more for it in the first place, perhaps £500, but the price of his property stays at the agricultural level. Whilst Mr. Jones has gained tens of thousands, Mr. Smith is lucky if he has gained £100.
Under the 1932 Town and Country Planning Act—the first major attempt to deal with the problem in this country—certain powers were granted to local authorities. They were per- mitted, in theory, to levy a betterment charge on men like Mr. Jones who gained from the town plans. At the same time the local authorities were, obliged to pay compensation to those whose property was adversely affected, or whose potential development value was limited --like Mr. Smith.
The 1932 Act was a complete failure. It began with great good will, at a comparable time after World War I to the current period after World War II. But it was discovered that it was in practice impossible to levy betterment charges. The Joneses were always able to plead that their land had increased in value because of their own foresight or industry, not because of the bene- ficence of the town council. Simultaneously, the local authorities were compelled to pay out compensation to the Smiths. As this happened to be a charge on the local rates, town planning became an expensive luxury, and quickly stopped. My information is that, under the 1932 Act, in only one case was a betterment charge collected successfully, though several hundred thousand pounds were paid out in compensa- tion.
The Barlow Commission, set up in 1938 by the Chamberlain Goverhment, was the next step. In its report, published in 1940, it stated that a successful answer to the specific problem of compensation and betterment was the essential prerequisite to effective planning. As a result the Uthwatt Committee of experts was called into being; and their report remains the standard analysis of the problem.
In brief, Lord Justice Uthwatt and his col- leagues said that there was no way of solving the problem except by drastic action. They stated that in practice land had two values : its existing use value, possibly as agricultural land; and a possible development value, if the land were developed at a later stage. The Uthwatt Committee was debarred by its terms of refer- ence from considering outright land nationalisa- tion as a solution, although it said that this would be the simplest answer. Therefore, the Uthwatt Committee came forward with a colt' plicated solution aimed at nationalising the development values in land whilst leaving land' owners with their existing use value intact. Lord Justice Uthwatt proposed a central land fund to compensate landowners for the loss of develop' ment value. At the same time, he recommended a central land-purchasing agency for all develop' ment, which would acquire land at existing use ' value and make it available to prospective developers, probably on very long leases at its development value.
The 1947 Silkin Town and Country Planning Act accepted the Uthwatt analysis of the prob- lem, but offered a different solution. It set t10 the central compensation fund and aimed at nationalising development values in land. From that point it branched out on its own and, instead of the central land-purchasing agercY, it introduced a system of development charges —or betterment tax, based on the value of 3 particular planning permission. The hopeful theory was that development land would con. tinue to change hands at existing use value As it turned out this theory was quite ‘.■ i ag. Without monetary incentive and in the absence of Uthwatt's central land-purchasing agency. development land did not change hands unless the prospective developer was prepared to pay more than the existing use value. As the 100 per cent. development charge was still rigidlY retained, the Silkin solution had the effect of imposing a tax on development and, contrary to the intention, the unfortunate developer had to pay.
Thu.s the 1947 Act became unpopular and the development charge provision was repealed by Harold Macmillan in 1953 when he was Minister of Housing and Local Government. The plan- ning provisions, however, were retained and, with some modifications, so was the theory of central compensation.
The Macmillan solution was obviously a shi term one. Mr. Macmillan strenuously der this at the time, but to others it appeared evitable that in a few years, as the full dewl ment plans under the 1947 Act were publish new values in land would be created, cell landowners would receive virtual manor rights, and a serious problem would arise. 1 problem is now with us—hence the recent cry.
The question now arises as to what should be done. One suggestion is that a capital gains tai should be imposed, but although there may be arguments for this in a general sense, there is no evidence that as far as the land problem is 0111' cerned it will succeed where the Silkin proposals failed. A capital gains tax will not deal with the problem of the monopoly values created for cer- tain landowners by town planners—and there is no way of dealing with this problem short of the physical action proposed in the Uthwatt Report.
The answer therefore to Sir Basil Spence and the National Federation of Building Trades Ern- ployers is for Mr. Henry Brooke now to do what Mr. Macmillan failed to do .7 to take the Uthwatt Report out of its dusty pigeon-hole and to implement it. Short of outright land national- isation, if there is to be town planning, there no other way. )rt- ied in-
ed, olY hat La.
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