LAND COMMISSION BILL (Hansard, 14 November 1966)

§ THE LORD CHANCELLOR

My Lords, I beg to move that this Bill be now read a second time. In case I should forget it later, may I say that later to-day I have to fulfil a public engagement, which Lord Chancellors cannot avoid, and I hope that your Lordships will excuse me if, unfortunately, I have to leave before the end of the debate.

The proposition upon which this Bill is founded is a simple one. It is that the value attached to land by the right to develop it is value which has been substantially created by the community, and the community is therefore entitled to recover some part of it. This is a proposition that has been debated many times over many years; indeed, it has been discussed over centuries and in many kinds of circumstances. Very few, I think, would now disagree with it, and therefore I will not waste time debating it. I will turn instead to the methods by which we propose to achieve that end.

There have been many attempts throughout history to recover for the community a proper share of development value. For 1072 a variety of reasons these have all been frustrated. But we can learn from the lessons of the past and it is therefore with confidence in its future that we commend this Bill to Parliament.

The White Paper on the Land Commission, which was published in September, 1965, set out two main objectives. The first was to secure that the right land is available at the right time for the implementation of national, regional and local plans; and the second to secure that a substantial part of the development value created by the community returns to the community, and that the burden of the cost of land for essential purposes is reduced. The Bill sets out to achieve these two main objectives by establishing a Land Commission with two main functions. The first is to acquire, manage and dispose of land; the second is to collect a levy on development value.

This brings me immediately to one of the main points on which the Bill has been attacked. It has been argued that although the objectives are beyond reproach there is no need for a Land Commission to achieve them. The first function, it is said, is unnecessary: other bodies, including national, regional or local planning authorities, already have adequate powers to ensure the availability of land. The second function, it is said, does not require a Land Commission; it can more effectively be handled by Inland Revenue: and, indeed, some would argue that the point is already covered adequately by the capital gains tax.

To take the latter point first, it is, I think, widely accepted that there is something special about development value; that it differs from other gains, and ought to be treated separately. The levy on development value is not just a tax to raise revenue. It is a means of ensuring that the community takes its proper share of the values which it has itself created by community expenditure and public decision. Given this special treatment of development value, collection of the levy will require additional staff, whether it is done by the Inland Revenue or by some other body. It is the view of the Government, however, that it is essential that the body responsible for the levy should also have effective powers of compulsory purchase, and this would not be appropriate for the Board of Inland Revenue.

1073 It cannot be denied that the imposition of a levy on development value may incite some landowners to withhold land which otherwise would be offered for development. There can be many reasons for their doing so. They may, for example, believe that if they hold on for a few years all this will be swept away and they will be able to realise the full amount of the development value for themselves. This is a decision that can be taken quite lightly, because land does not deteriorate. The landowner can continue to enjoy the current use of the land while the development value lies there waiting to be plucked, at whatever time may suit him best. If landowners acted in this way on a widespread scale, the immediate impact would be on the essential programme of private enterprise housing. I stress the private enterprise programme, because, of course, local authorities already have compulsory purchase powers and can, if necessary, ensure that land is available for their needs. The private builder, however, could not do so.

If this possibility is to be avoided there must be a body with effective powers of compulsory purchase ready and able to use them in order to ensure that builders can indeed get enough land to maintain their programmes; and the body must be able to use the powers quickly enough to prevent prices being forced up by a fear of scarcity. This can be assured only by the existence of a body such as the Land Commission, and since the need for such powers derives from the levy, both functions must be vested in the same body. The Land Commission will thus assess and collect betterment levy and, from information gained from these operations and in other ways, will watch the operations of the market in land and be able to use their powers of acquisition and disposal where this is necessary in order to prevent the market from being distorted by artificial scarcities. In this context the existing powers of compulsory purchase held by local authorities can be no substitute for the powers of the Land Commission.

Thus the two objectives in the White Paper are closely related, and the two functions of the Land Commission are interdependent. It is indeed the combination within a single Land Commission of the power to collect levy, 1074 together with wide powers to acquire land, that will make the Land Commission an effective instrument for the purpose of achieving the objectives, which are themselves beyond dispute.

However, the Commission are provided with powers of acquisition which will enable them to play a wider and more positive role than that of ensuring that the supply of land does not dry up because of the introduction of the levy. I shall be dealing with these powers in a moment. Suffice it to say now that the Commission will be able to facilitate development in both the public and the private sector by the judicious use of their powers to buy land. The Commission can, for example, play their part by assisting with the assembly of land in privately undertaken schemes of redevelopment, and also will be equipped to undertake the large-scale purchases, sometimes well in advance, that will undoubtedly be necessary if our expanding population is to be properly housed in the right places and according to modern planning ideas. Here the Commission may be operating in the public sector. But it is not the intention of the Government that the Commission should supplant the various authorities who would have powers to acquire land for development. For example, local authorities will still have their compulsory purchase powers in support of their various statutory functions.

Neither is it intended that the Commission should become a super-planning authority. There are two safeguards against this in the Bill itself. First, although the Commission may buy land compulsorily for the purposes of a public authority, they can do so only with the agreement of that authority or otherwise with the consent of a Minister. Secondly, although the Commission will be a Crown body, it has been made specifically subject to planning control and the Commission's powers of compulsory purchase will depend upon planning decisions.

Having touched on the possible scope of the Land Commission's activities, may I now turn to the Bill itself? I will not deal with it in any great detail—there will be an opportunity for this on other occasions—but will try to bring out some of the main features and to touch on some of the points of principle which 1075 may arise from it. It seems to me that the Bill is rather complicated. But length and complexity are inherent in any legislation affecting land. I am afraid this is the result of our somewhat tortuous land laws. They result from the need to achieve fairness to individuals and between individuals, and consistency of treatment in a wide variety of situations. Some of the situations may seldom occur, but nevertheless they need to be dealt with if there is to be certainty. As the Minister has already explained in another place, he has preferred, at the cost of some length and complexity, to spell matters out in the Bill itself in order to give certainty, rather than to leave them vague or to leave them to be dealt with by regulations. Some regulations are provided for, but even here so far as possible the scope of the regulations is narrowly prescribed.

I agree, of course, that this is a Bill of 102 clauses with 16 Schedules but, as I have said, I am afraid that this is the consequence of the state into which we have allowed our land law to get. This really goes back quite a long way, because if one goes back to the Land Clauses (Consolidation) Act 1845, one finds that that was in 152 sections with 2 Schedules, or, if one takes the latest work in this field of the previous Conservative Government, the Town and Country Planning Act 1962, this was in 226 sections with 15 Schedules.

The Bill is in four Parts. The first Part deals with the constitution of the Land Commission and the financial arrangements; the second Part with the acquisition, management and disposal of land; the third Part with the betterment levy; and the fourth Part deals with general and supplementary provisions. Part I—that is, Clause 1 and Schedule 1—deals with the constitution of the Land Commission. They are to be servants of the Crown, and the Ministers—the Ministers for the purposes of the Act are the Minister of Land and Natural Resources and the Secretary of State for Scotland—will be entitled to give them directions. Schedule 1 sets out the details of their procedure and constitution. They are to consist of not more than nine members to be appointed by the Ministers. They appoint their own staff, except that the secretary must have 1076 the approval of the Ministers. There are the usual provisions for their remuneration, for a quorum, and for matters of that kind.

It occurred to me at once to ask whether the Land Commission would be included in the Schedule of the Parliamentary Commissioner Bill as being a body which would be subject to the Ombudsman. I am told that that is so—they will be. The Commission's activities on the acquisition, management and disposal of land will be financed out of a fund to which advances not exceeding £45 million may be made out of the Consolidated Fund. The ceiling on the advances can, however, be increased to £75 million with the approval of the House of Commons. This£45 million is not the limit upon the amount that the Commission can spend upon acquiring land; it is the limit upon the amount of money that can be put into the Commission's acquisition and management fund from the Consolidated Fund. However, the Land Commission will buy land at market value less the amount of levy payable and will, with certain exceptions, dispose of land at market value. The amount of levy deducted from the price when land is acquired by the Commission will thus show as a profit to the fund and there may well be other profits to the fund from the trading activities of the Commission. The land acquisition and management fund will therefore grow from the trading activities of the Commission and should in time be self-supporting. The £45 million or the £75 million therefore represents the limit upon the assistance that can be given to the Commission from the Consolidated Fund to their working capital.

To the extent that the Commission sell the freehold of land shortly after they have acquired it—and where land is made available for private building it is to be expected that the Commission will normally sell the freehold—a working capital of up to £45 million, even without being supplemented by profits from the activities of the Commission, could support a substantial turnover of land. Clearly, however, substantial acquisitions of land well in advance of requirements which will tie up capital may have to wait until the Commission have built up their resources, and the need to build up resources will also limit the extent to 1077 which the Commission can assist in redevelopment where costs of acquisition can be high and land and property may have to be held for perhaps two or three years.

The administrative expenses of the Commission are to be met from Votes in the same way as those of any other Government Department. It is envisaged that the Commission will have a staff of about 2,000, with a small headquarters in Newcastle and the remainder of the staff spread over eleven regional offices. The total administrative expenses of the Commission are estimated to amount to about £4 million. Valuation work for the Land Commission will be undertaken by the Valuation Office of the Board of Inland Revenue and it is estimated that their costs for work on behalf of the Commission may amount to £3 million a year. All sums received by the Commission, except those obtained from disposals or the management of land in their possession and thus appropriate to the land acquisition and management fund, will be paid directly into the Exchequer. This is primarily the proceeds from the levy. It is estimated that with the rate of levy at 40 per cent. in a full year, if there were no acquisitions by the Commission, the proceeds of the levy would be of the order of £80 million. This will of course be reduced to the extent that the Commission buy land net of levy and the notional amount of levy deducted from the purchase price appears as a profit in the fund. In the early years also t[...] will be reduced by various transitional provisions. Perhaps before leaving Part II should say that provision is made for an annual report to Parliament, and also for annual accounts which will be considered and reported upon by the Comptroller and Auditor-General in the usual way.

Part II of the Bill, together with Schedules 2 and 3, contains the Commission's powers of acquisition, management and disposal of land. The Commission will be able to buy, by agreement, any land which in their opinion is suitable for development. Their powers to buy land compulsorily are however subject to limitations. As I have already said, before a compulsory purchase order can be made there must be a planning decision indicating that development of the land is appropriate. The Bill thus ensures that 1078 compulsory acquisition powers can operate only within a framework of decisions by the planning authorities and that the Commission does not supersede the existing planning system.

The Bill confers on the Commission comprehensive powers of compulsory purchase which will enable them to acquire any land on which there has been a planning decision, but until a date appointed by an order approved by both Houses of Parliament the compulsory powers of the Commission will be limited to the purposes set out in subsection (4) of Clause 6. In the first stage, therefore, the Commission's powers of compulsory acquisition will be limited to four purposes—namely, the acquisition of, first, land which in the opinion of the Commission ought to be acquired by the Commission in order to secure its early development or redevelopment; secondly, land which in the opinion of the Commission ought to be acquired by the Commission, in order to secure its development or redevelopment as a whole; thirdly, land required by a public authority possessing compulsory purchase powers for the purpose of its functions; and, fourthly, land which is to be disposed of to housing associations or through local authorities or directly on concessionary terms for private housing.

These provisions, which are all in Clause 6, define the limits on the Commission's activities. The power to buy [...]d compulsorily in order to secure its [...]ly development is the essential support to the levy. Here the two functions of the Commission are most closely related. It is very difficult to forecast with certainty what effect the levy will have on the market in land. It is to be hoped that, at the moderate level at which the levy will start, it will be sufficiently accepted by landowners as reasonable for it to have little effect on the market. But, as I have already explained, the Commission must clearly be able to cope with any difficulties that may arise in the supply of sufficient land to maintain the essential building programme.

The other purposes for which the Commission can use compulsory purchase powers will enable them to buy land for large-scale comprehensive development, whether it is urban land requiring redevelopment or urban land required for some major development, like a new town 1079 or town expansion, or a substantial area of land which needs to be brought into development on the boundary of an existing town. They can also act on behalf of local authorities or perhaps groups of local authorities or other public authorities—but, as I have already said, normally only with their consent or at their invitation—or can buy in order to provide land for concessionary disposals for private housing, on which I shall have more to say later.

I should like to deal specially with certain procedural questions which have attracted some attention in another place. First, under Clause 7 the Commission will follow a procedure which is half-way between that appropriate to a Minister and that used by a local authority, but the procedure follows closely and applies the provisions of the First Schedule to the Acquisition of Land Act 1946, which governs virtually all compulsory purchase powers by other bodies. In form the Commission's compulsory purchase orders will be like those made by Ministers who have compulsory purchase powers for their own functions. The Commission will make a draft order. If there are no objections to it, the order will then be made and become operative. In this the procedure follows the adaptations in Part II of the First Schedule to the 1946 Act which applies to Ministers. If, however, there are objections, the Commission are treated in much the same way as any other subordinate body like a local authority and an order requires ministerial approval. When a local authority makes a compulsory purchase order it requires confirmation by a Minister before it becomes operative, whether or not there are objections. In the Commission's case, the reference to a Minister is necessary, as I said, only if there are objections, but in that event the Minister must give his authorisation before the Commission may make the order. The procedure under which the Minister may make an authorisation is virtually identical with the procedure under which a Minister confirms a compulsory purchase order made by a local authority. The Minister must give the objector an opportunity to be heard generally at an inquiry, and must then consider the objection and the report of the person who held the inquiry before 1080 deciding whether or not to give the authorisation. The rights of the individual are therefore as fully protected under this procedure for the Land Commission as they are in any other compulsory purchase.

Clause 8 and Schedule 2 provide, however, that in certain circumstances this procedure can be modified. It is intended only to enable the Commission, in exceptional circumstances, to act quickly—if, for example, the supply of land for development failed on such a scale as seriously to threaten private development. It is not envisaged that this is a procedure which would be applied to an individual case. In the circumstances in which it would be applied there would be a need for the Commission to make a number of compulsory purchase orders, and this could impose such a burden on the normal machinery for holding inquiries that the delays could be intolerable. This clause and Schedule, therefore, provide for a shortened procedure in which the requirements relating to advertisement and the services of notices are curtailed—but by no means removed—and objections can be considered without the obligation upon the Minister to grant a hearing. A similar power was provided in the Acquisition of Land (Authorisation Procedure) Act 1946, and during the five years in which that power was available it was used fairly widely without causing any significant criticism. It necessarily involves some curtailment of the landowner's opportunities to elaborate on his objection but it does not absolve the Minister in any way from the obligation to consider the objection. There has been much misrepresentation about this matter in another place, and I therefore repeat that the Minister, under this procedure, is obliged to consider the objection and there is no question of any land being taken from anyone compulsorily without his having full opportunity to object. He can state his objections at length in writing.

I repeat that this is very much a reserve power. It comes into effect only with a ministerial order which would be limited in time; it would be confined to those parts of the country where Ministers were satisfied that it was needed, and would also be confined by Ministers to the classes of compulsory purchase order for 1081 which it was essential. The power would not be invoked unless Ministers were satisfied that the Commission was confronted with a very serious situation. The Government hope, and indeed expect, that landowners will act reasonably and will not withhold from the market land which is clearly needed for development. But the Government would be failing in their duty if they did not take powers to ensure that in the event of an organised withholding of land the essential development of the country would be able to continue. The Government think that if this situation arose it would be likely to do so in the early years of the Commission. The powers under Clause 8 and Schedule 2 will therefore be available only within the first five years after the first appointed day, unless that period is extended by both Houses of Parliament.

I would also draw specific attention to the vesting procedure in Clauses 9 and 10 and Schedule 3. This matter also has been the subject of some misrepresentation. The procedure is based upon the expedited completion procedure which has been available for certain compulsory purchases by local authorities since 1944; that is, for 22 years. Under the normal compulsory purchase order procedure, a local authority can enter on, and take possession of, land within two or three weeks after the confirmation of a compulsory purchase order, without waiting for compensation to he settled or for title to be investigated. The local authority has de facto possession: the owner is dispossessed and the local authority can build its houses or schools and use them. However, until compensation is settled and the land is formally conveyed, the local authority does not have a good title and would not therefore be able to dispose of it to a private purchaser. The expedited completion procedure first made available in 1944 was designed to enable a local authority that was buying land for redevelopment, and therefore primarily for re-disposal, to get a good title to the land more quickly. The Commission will always be in this situation. Their function is to buy land for the purpose of re-disposing of it, and, except where they are deliberately buying land well in advance, they will want to dispose of land as soon as possible after buying it.

But there is another, more important, advantage in the vesting procedure. The vesting declaration gives the Commission 1082 an unchallengable title, and any subsequent purchaser from the Commission does not therefore have to investigate the Commission's title. This saves the time of scarce lawyers acting both for the purchaser and for the Commission on disposals by the Commission. It also removes the need for the Commission to employ lawyers to investigate the title of the vendor in order to ensure that the Commission have acquired a good title. The vendor's title is of significance only in determining his entitlement to compensation. Investigation of title can lead to considerable delays, not least the receipt by the vendor of his compensation. The Ministry of Transport, who have considerable experience of paying compensation before investigation of title, have found however, that, in practice, vendors of land very seldom claim title to more than they own or fail to disclose encumbrances. It is therefore proposed, in the interests of efficiency and saving of scarce staff, that the Commission shall not normally investigate title before paying compensation. The vendor will be invited to arrange for his solicitor to set out a declaration of his title—and the vendor's solicitor's fees for this will be paid by the Commission—and compensation will be paid on the strength of this. The Commission will, however, have a reserve power of recovery in the unlikely event of too much compensation being paid—because, for example, of a failure by the vendor to disclose an encumbrance or because the vendor claimed title to land which was not in fact his.

This procedure does not in any way deprive the owner of his rights. He cannot be dispossessed any more quickly than under the normal procedure whereby an acquiring authority can enter on land quickly. It does not in any way affect the right of the owner initially to object to compulsory purchase. It is concerned only with the procedure after a compulsory purchase order has been made, but it has the great advantage that, because the lengthy operation of investigation of title by the solicitor to the Commission is dispensed with, it will in most cases be possible for compensation to be paid much more quickly, and will very substantially reduce the administrative burden on the Commission and the demands which the Commission would have to make upon the scarce supply 1083 of solicitors. As your Lordships may know, the Law Society estimate that they are 5,000 solicitors short, which is 25 per cent., and there are 30 jobs waiting to choose from for every newly qualified solicitor.

I come now to the Commission's management and disposal functions, in Clauses 12 to 21. The Commission will have all the powers necessary to enable them to manage land efficiently while it is in their possession, including power to carry out works, such as the lay-out of estate roads or the provision of services. They will have a reserve power, but only with Ministerial consent, for the provision of houses, but I will deal with this when I come later to crown holds. Subject to this, it is not envisaged that the Commission will normally undertake substantial development. They will normally dispose of land for development by others. But, in so far as the Commission do undertake any development, although they are a Crown body, they will be subject to building by-laws or regulations and to planning control. In disposing of land the Commission have the widest discretion. They can, for instance, dispose either of leasehold or freehold interests. In disposing of land to public authorities, the Commission will normally dispose of the freehold; they will probably do so also if they are disposing of land to a builder for private enterprise housing. They will be expected, when disposing of land, to obtain the best price they can, unless they are disposing of a concessionary crownhold interest, or otherwise are authorised by a direction of the Ministers to do so.

I turn now to the provisions in Clauses 17 to 21 which deal with crownhold. A principal objective of the Government's land policy, as set out in the White Paper, is the return to the community of a substantial part of the development value which the community itself has largely created. The main instrument for this will of course be the levy. But when the Commission are disposing of land it would be inconsistent with this objective if the Commission were not able to reserve the right to any future development value which may accrue to that land. The Commission will therefore, when disposing of land, whether on a freehold or a leasehold basis, have the 1084 power to impose such restrictions upon the future use of the land as will enable them to retain the element of value attaching to the prospect of development other than that for which they are disposing of the land. Thus, for example, the Commission might sell freehold a plot of land for the erection of houses, but subject to a restriction against development for anything other than houses. If, at some time in the future, the question arose of the houses being demolished and replaced by shops which would be a more valuable use and would therefore release development value, the Commission, by enforcing their covenants, could ensure that the whole of the additional value atributable to the shopping use returned to the community. The special points about crownhold covenant are that they will be enforceable by the Commission even though the Commission may hold no land which can show benefit from that covenant but that, unlike covenants in a lease which are enforceable by a right of forfeiture, they ensure that whenever they are enforced the crownholder retains the full value of the land for the purpose for which he originally bought it from the Commission. In other words, a person buying a house subject to a crownhold covenant cannot be deprived of the value of that house so long as it exists.

The second purpose of crownhold is to help prospective owner-occupiers of houses. Clause 18 enables the Commission to dispose of land for housing at a concessionary price—a price below the market value. This is one of the ways in which the Government propose to help a person who wishes to provide his own house or to help agencies which set out to provide houses for owner-occupation. The difficulty about a concession of this kind is to ensure that the benefit goes to the person for whom it is intended. If land is just sold at a price below market value without control, the concession can be realised—and indeed would be realised very quickly—either by going merely to swell the builder's profit or by being taken on the first resale. Clause 18 therefore provides that when land is disposed of for housing at a concessionary price it will be done so subject to crownhold covenants which will include a right of pre-emption to the Commission, thus ensuring that the Commission can 1085 recover the concession, but only the concession, that they have made. The Commission will be able to dispose of land on concessionary crownhold terms direct to the person who is to occupy the house, and they can either do so by disposing of the plot or they can, with the consent of the Minister, build the house and dispose of that, or the Commission can dispose of land to a body which can undertake to police the further disposal to individual owners. In practice it is expected that the Commission will normally dispose of land on concessionary terms to housing associations or societies or co-ownership groups whose rules will ensure that the benefit of the concession in the price of land, is indeed passed on to the occupants of the houses. It is not envisaged, however, that the concession would be made to bodies who are otherwise in receipt of a subsidy.

I have dealt at some length with Parts I and II of the Bill. I do not propose to deal in any detail with Part III. The 59 clauses in Part III, together with 10 of the Bill's 17 Schedules, are concerned with the levy on development value. The clauses and the Schedules are unavoidably complex, but the basic ideas are really quite simple. There are three basic principles attaching to the levy: first, it will be charged only on development value and not on any increases in the value of the land for its current use; secondly, development value on which levy has been paid will not be chargeable again, and, thirdly, levy will be payable by the person who realises the development value. Your Lordships may remember that in the Act for which my noble friend Lord Silkin was largely responsible the development charge always fell on the person who developed the land. Development value will normally be realised by the person who sells the interest in the land, and the levy will he assessed on the actual price paid. A disposition of land by inheritance or gift will not be charged to levy; but, of course, if it were followed by the development of the land, the value then realised would be charged.

Once the levy comes into operation it is intended to provide by next year's Finance Bill that capital gains for the purposes of the long-term capital gains tax, or for the purposes of corporation tax, will be limited to gains in the current 1086 use value of land and will cease to bite on development value. The levy will thus become the Government's main instrument for dealing with development value, which will not be subjected to both levy and capital gains tax. There are certain transitional circumstances in which levy might apply to a value which was otherwise subject to capital gains tax, and this matter is unravelled by Schedule 8 to the Bill which provides for any capital gains tax paid in these circumstances to be deducted from the liability to levy.

The levy is a flexible instrument which can be varied according to the supply of land and the Commission's ability to ensure sufficient land for development. It has been announced in the White Paper, and the Minister has given a number of assurances, that the levy will be set initially at 40 per cent., but it will be increased progressively to 45 per cent. and then to 50 per cent. at reasonably short intervals. Such rates of levy still leave very substantial incentives for development, and considerable care has been taken in working out the provisions to minimise the possibility of unfairness on any individuals, and also to minimise the possibility of interference with the operations of the market and the progress of development. Thus, for example, levy applies after the sale of land and is taken out of the proceeds. The conveyance of land does not have to be held up until levy is assessed—indeed, levy cannot be assessed until after the conveyance has taken place.

So far as development is concerned, the only obligation before the start of development is to notify the Commission, and development can then proceed while the liability for levy, if any, is determined. As I have already said, in many cases no levy will arise at development because it will already have been taken on a previous disposition. Indeed, there is a specific provision that where land has changed hands at arm's length in the full knowledge of planning permission for the project of development that is to be carried out, if the Commission are satisfied with the terms of the disposition, there will be no need for any notification or assessment at the start of development, provided that it takes place within two years of the disposition.

I have spent some time on the principles of Part III of this Bill to which your Lordships are now being asked to 1087 give a Second Reading. If I have not spent more time on the details of Part III it is partly because on Second Reading the House is concerned more with principles than with matters of detail, and partly because if Part III had been, as it might have been, put into a Supply Bill, it would not be the practice of your Lordships' House to amend it.

Part IV of the Bill, as I have said, contains general and supplementary provisions. In particular, it contains in Clause 99 the definitions and interpretations. The most important of these, of course, is the definition of "material development". This is significant for two purposes; first, the powers of compulsory purchase of the Land Commission relate only to land which is suitable for material development; secondly, development value to which levy applies is the value arising from the prospect of material development, and no levy will apply to increases in current use value which is the value which land has if any planning permissions for any material development are disregarded.

"Material development" is defined negatively; in other words, it is defined by development which is not material. Very briefly, development which is not material is any development covered by Schedule 3 to the Town and Country Planning Act 1962 (subject to one minor qualification); secondly, any development which is permitted under the General Development Order, and, thirdly, any development specified in regulations made under this clause. The effect of these definitions is that it is only substantial development that is caught; in other words, the erection of new houses, shops, offices or factories or substantial changes of use: for example, from a house to an office. The owner of a house can extend it very considerably—indeed by as much as 1,000 square feet, which is roughly the equivalent of a typical council house—without this constituting material development. The definition of "material development" has deliberately been made wide in order to prevent the Commission from being cluttered up with the need to assess levy in many minor cases.

The Bill also provides that it is only when the development value realised is greater than 10 per cent. of the current 1088 use value that any liability for levy can arise. This is also a provision to prevent unnecessary assessments of levy and to ease the impact of levy on redevelopment. Here I quote two sentences. The first is: Land which is essential to the free and healthy development of towns is being kept out of the market in order to enhance its value. Then: The growth of the value of urban sites is due to no expenditure of capital or thought on the part of the ground owner, but entirely owing to the energy and enterprise of the community. That quotation is from cols. 532 and 536 of the House of Commons OFFICIAL REPORT of April 29, 1909, from Mr. Lloyd George.

As your Lordships know, my noble friend Lord Silkin's Town and Country Planning Act 1947 was dismantled by the Conservative Government in 1953. Since then building plots in London have risen in price from about £400 to £2,000. Even in the two years from 1963 to 1965 the price of building plots in the Swindon-Oxford-Newbury area has often more than doubled. In the Cambridge area since the dismantling of the 1947 Act, and particularly between 1958 and 1964, the cost of building land has risen from between £500 and £1,000 an acre to between £5,000 and £20,000 an acre. A former Conservative Member of another place has frankly recountered how he bought 173 acres for £36,000 and then sold three of those 173 acres for £18,000. As your Lordships may remember, in the Lavender Hill case land bought for £7,500 was resold two years later to the Enfield Council, who simply had to have it to house their people, for £240,000. It is now being claimed that, as the Enfield Council ultimately entered on a rather bigger scheme of development with flats, the sellers are entitled to at least another £150,000.

My Lords, for too long the property speculators have bled white those of our people who have wanted a home to live in, at a price or at a rent they could afford. I commend this Bill to the House as a means by which this racket will be ended—and about time, too! I beg to move.