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The Land Is Ours

a landrights campaign for Britain

Whilst much of the present situation can be attributed to housing expenditure cutbacks (from £13 billion or 2.75% of GDP in 1979 to £6 billion or 1% GDP in 1991/2), a significant underlying cause of the problem is the high cost of land.

With most land in Britain owned by the privileged few and large organisations ­ even though some is owned by homeowners and businesses ­ land made available for development creates huge profits for landowners via the unearned gain bestowed upon them by the planning process. The community, through its elected representatives, grants the planning consents that produce highly valuable building land, yet the market benefits accrue as private profit to the developer. This is because the market system enables a shortage of land to exert a long term upward pressure on land prices and results in sharp regional variations in land values. This means that land can account for 25% or more of the cost of each new home built.

Henry George (1839­1897) saw the effects of this kind of largesse in 19th century America where increasing population, infrastructure provision and extensive development created spiralling land values and widespread speculation. He proposed a 'single tax' which would tax away all the unearned profit from land. George recognised that social factors created profit so it is logical and just that society as a whole should benefit from it (3).

In 1986 Tony Benn MP introduced the Common Ownership of Land Bill which would have caused freeholds to revert to leaseholds and revenues from most land to accrue to a Community Land Trust. Freehold ownership would have continued only for owner occupied property of up to £250,000 in value.

The proposals of both Henry George and Tony Benn would have dealt with the problem of land speculation if implemented but would not, in themselves, help directly with housing provision. Labour's 1976 Community Land Act (repealed by the first Thatcher government) attempted to tackle part of the problem. The Act was restricted to land coming forward for development and sought to appropriate (for the benefit of the community and the state) the whole of the financial uplift resulting from the granting of planning consent for land development.

The 1976 Act often floundered because delays and impediments created by many Conservative councils. At the same time insufficient attention was paid to preventing landowners from keeping their land sheltered from planning consent until a favourable political regime could be restored. It is difficult to imagine today how even a limited direct assault on land speculation could be politically successful. Nor is it likely that proper resources will be allocated to social housing provision ­ the best that can be expected is Labour's plan to allow local authorities to spend 'in phased and planned manner' the £6 billion that has accrued to them from council house sales. This is enough to fund a total of around 100,000 additional homes whereas more like an extra 100,000 new homes per annum are needed (taking into account the 50,000 or so homes lost to the housing stock each year through demolitions).

An opportunity to address these problems on an incremental basis could be afforded be revising the Department of the Environment's guidelines on planning obligations. Planning obligations are requirements that may be imposed by local planning authorities under section 106 of the Town and Country Planning Act of 1990 in order to make 'proposals acceptable in land use terms' (4). Normally section 106 agreements cover specific accommodation works or provisions directly connected with the development proposed, but in recent times there has been a tendency for developers to offer, or councils to seek, wider benefits by way of so called planning gain as the 'price' for obtaining/awarding planning consent.

George Monbiot recently drew attention (5) to Oxford City Council's decision to grant planning consent for a leisure centre in exchange for £145,000 worth of road and bridge improvements and a £135,000 upgrade of a distant swimming pool. He also exposed a variety of inducements being offered in other areas by prospective superstore developers. In a similar vein, RJB Mining (the private successor to British Coal) is offering to invest £300,000 in community projects in return for planning consent to strip mine a 400 acre site near Blythe in Northumberland (6).

Whilst Department of the Environment guidelines, limit planning gain to matters specifically and directly relating to the proposed development, this does not prevent abuses nor make planning gain deals illegal.

However, whilst the bribing of local authorities or the selling of planning consents must be prevented, it is already possible to require those seeking residential planning consents to agree to set aside land within their developments for public open space. Section 106 agreements are used to ensure that such provision is actually made and also provide for the land to be dedicated, free of charge, to local councils to ensure future maintenance.

New planning obligations could also be created that would require all residential schemes to set asi de a proportion of the site for the provision of low cost homes for rent. This land would then be dedicated free of charge to local councils along with any required public open space. On smaller residential schemes or for commercial, industrial and retail proposals, developers would discharge their planning gain obligations by making a cash payment to the local council ­ to equate to the portion of the land that would be deducted for low cost homes for rent if the proposal was for a significant residential scheme.

This money would be used by local councils to develop those sites acquired in their area through planning gain dedications. A direct link would therefore be created between land development and social housing provision to ensure that local communities would obtain a clear and established benefit from the financial gain that are created in their name via planning consent. At the same time developer inducements would be forbidden and restrictions placed on the scope of a councils demands for accommodation works and specific matters directly related to the development.

It might be thought that requiring developers to hand over land or the equivalent in cash would increase the cost of homes for sale or the cost of commercial development. This is unlikely to be the case. Developers calculate what they are prepared to pay for sites based upon the market return of the completed development. Building work, off site accommodation works, open space, professional fees, the developer's profit etc. are all allowed for in arriving at the value of individual sites. Additional costs by way of an extra planning obligation would thus also be built into the developer's calculations. It would be the land owners who would make a reduced unearned profit because the value of land for the development would be reduced.

Local authorities would also need (and indeed should be under a duty to the local community) to avoid landowners being discouraged from bringing land forward for development in the hope of a return to a more favourable regime in the future. This could be achieved by levying an under­used/undeveloped annual land tax on sites identified for development.

Clearly, there would be a risk that local authorities would seek to speed up improvements in their housing provision by increasing the number of planning consents granted, particularly on green field sites. New guidelines must not only make the green belt fully sacrosanct but extend recent policy which limits out of town retail development to all development on green field sites except where sites are clearly allocated for development in local plans.

At the same time the opportunity must be seized to ensure that efficient and effective use is m ade of all land that comes forward for development to reduce pressure for the development of additional green field sites and encourage a decrease in the overall size of financial windfalls created by the granting of planning consents. Local authorities need increased abilities to require high standards of architecture with a specific emphasis on the use design which optimised land use. This should include the use of local authority architects to illustrate obligatory planning briefs rather than relying upon mandatory land to building ratios.

There is no more justification for the role of the market in the provision of housing than there is in the provision of health, education and welfare because, as Galbraith again points out: 'it must be recognised that in no industrial country does the market system provide good or even habitable housing for lower income tenantry' (7). However, since there is such a strong tradition of a market in housing and land , attention should be given to making the market responsive to the needs of people.

The amount of land/cash that should be required to meet planning gain obligations, the number of social homes that could be provided and whether there would be scope for the provision of wider communal facilities along with housing all need to be considered as part of this approach. However, there can be little doubt that a sy stem of social planning gain would be an important first step in establishing social balance in the development process.

Notes:

1. J K Galbraith ­ History of Economics, Hamish Hamilton 1987
2. Housing Demand & Need in England 1991 ­ 2011, Alan Holmans for the Joseph Rowntree Foundation
3. J K Galbraith ­ History of Economics, Hamish Hamilton 1987
4. Draft revision to Department of the Environment circular 16/91
5. The Guardian 28.6.96
6. Peter Hetherington ­ the Guardian 22.7.97
7. J K Galbraith ­ The World Economy Since the Wars, Mandarin 1995

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