HL Deb 18 March 1971 vol 316 cc586-607

4.22 p.m.

Debate resumed.

LORD GREENWOOD OF ROSSENDALE

My Lords, the noble Lord, Lord Sandford, has given us a very full account of the Government's views on this measure, and I hope that we shall not take up too much time over what is a miserable little Bill. The gravest problems in the field of housing are undoubtedly twofold; first, the lack of building land; and, secondly, the escalating cost of land. But this is a Bill which is not designed or even intended to deal effectively with either of these two problems. It is simply an act of wanton destruction made necessary by the Conservatives' Election Manifesto, though it is clear, from oral Answers in the House to-day, that they are going to be extremely selective in the choice of what obligations they are going to honour and what they are going to ignore.

They have acted in this matter in pursuance of a vendetta that they have carried on for the past three years against the Land Commission and its staff. So I hope that the House will forgive me if I do not join with the Government in thanking the staff of the Land Commission or the Commission itself, because I believe that the Government's thanks will seem to the men and women concerned to have a very hollow ring. Certainly, such heat as Mr. Page injected into the Second Reading debate in another place was more the heat of hatred than the warmth of appreciation. Therefore, my Lords, on behalf of the Opposition I tender quite separate thanks for all that the Commission and its staff have done in the face of what virtually amounted to sabotage by the then Opposition in the last Parliament. Having known and worked with the Land Commission since its creation, I hope that my own thanks at least will be recognised by them as being genuine thanks.

I think that this is a seedy, vindictive little Bill. It will not have escaped the notice of many noble Lords, and it will certainly not have escaped the notice of the more politically educated members of the public, that in this century radical Governments have tried on four occasions to deal with the land problem. Lloyd-George's great Liberal Government set out to ensure that the public would benefit, in part at least, from increases in land values which were due to the energy and enterprise of the community. Those are the words that he used; and the House will know what subsequently happened. In 1931 the Labour Government, in its Finance Act, set up machinery to tax land values. A Conservative Government repealed those provisions. In 1947 my noble friend Lord Silkin, who I am glad to know is going to speak later in this debate, created a development charge, and this, too, was repealed by the Conservative Party a few years later. In 1967 the Land Commission Act established the Land Commission and provided for a betterment levy. The purpose had been defined in a White Paper as being, to secure that a substantial part of the development value created by the community returns to the community. In order to stop that from being done, we now have this vindictive measure, which is probably the most complicated Bill of its size that I have seen in a fairly long Parliamentary life. There are only seven clauses, but there are three Schedules, one with three Parts, another with two appendices, and a third with two Parts. The Bill itself takes less than three pages; the Schedules take 15 pages and are almost incomprehensible.

Moreover, in some respects the Bill is retrospective. In other respects we shall have to wait for the Finance Bill, when we shall have more retrospective legislation. The Secretary of State is taking to himself great powers which are to be exercised by Statutory Instrument, including, indeed, the abolition of the Commission itself. He will be, in a manner of speaking, the Land Commission and he, as planning Minister, will have to decide appeals against decisions which he, as the Land Commission, has taken.

But I think there is little point in considering in detail the effect that this mass of muddled verbiage is going to have, and I prefer to devote the time to putting on record the achievements of the Land Commission as I see them. The Commission has had only three short years of life. Staff had to be recruited and trained. It had to survey land throughout the country and, in consultation with local authorities, decide where land was needed. It had to undergo all the delays which are, I think rightly, inevitable in any compulsory purchase order machinery. In the early days, moreover, a number of anomalies had to be put right and, thanks largely to the perseverance and the kindliness of Mr. Jenkins and Mr. Kenneth Robinson, that was done in the Finance Act 1969.

On many occasions the Conservative Party has argued that the betterment levy put up land prices. There is no evidence to support that point of view. The price of land is determined by its availability and by how much the market will stand. If this results in a high price, it seems to me to be proportionately more reasonable to provide that 40 per cent. of the development profit should go to the State, thus symbolising by a reasonable compromise that both the community and the individual have contributed towards that profit. The new proposal of a capital gains tax of 30 per cent. will be a wholly inadequate substitute and, if my arithmetic is correct, the Secretary of Slate will be depriving the Exchequer in the next two years of over £40 million. Moreover, if betterment levy did put up the price of land it would be reasonable to assume that the abolition of the levy would cause a reduction in the price of land. But I am prepared to place a small wager that we are not going to see that during the period of a Conservative Government.

There is one further point. The success of the Land Commission must not be judged merely by the acreage it bought. The very fact of its existence, as I know from my own experience, tended to make land more readily available than would otherwise have been the case. It is not without significance that the judgment of the National Federation of Building Trades Employers was that the Commission was perhaps in existence for too short a time to help in securing that the right land was available at the right time, and they conceded that the Commission had done good work.

I should like to give just three quick examples of some of the achievements of the Land Commission. The first is in respect of a tract of badly-developed land between the Medway towns and the M.2 which the Kent County Council wanted to use for the urban expansion which will be necessary in that county. Much of the land had been sold fifty years ago in small plots, and many of the owners had disappeared. The County Council invited the Land Commission to help by buying the whole site and putting in the spine roads which were needed before development could take place. The second example is a 1,000 acre site near Teesside where the planning authority asked the Land Commission to buy and prepare the land for development. Lastly, there was a case in which the Surrey County Council asked the Land Commission's help in developing land near Woking which had been used as a horticultural nursery and where the water table was only 18 inches below the surface.

Mr. Derek Senior, who writes with some authority on these matters, has described what happened in this way—and I think it is a good example of how the Land Commission worked: Asked to help, the Land Commission agreed to buy it up (from willing sellers)"— that is, the land— drain it by creating a 15-acre lake (by arrangement with the Thames Conservancy), put in spine roads to an agreed comprehensive plan, and sell to private developers willing to conform with that plan. I believe that those three examples show that the Land Commission has been a great deal more successful than most of the organs of public opinion or the Party opposite have been prepared to concede.

My Lords, members of the present Government have given proof that in some respects they have seen wisdom, but I am afraid that this is not one of those instances. I wish they could be persuaded to think again, but I do not think there is very much hope of that. If the Government want to throw away what could be one of the most valuable instruments at their disposal, nothing that we can say is likely to stop them from doing so. So, my Lords, the Bill will go on its way, but it will certainly not go with the blessing of noble Lords on this side of your Lordships' House.

4.34 p.m.

LORD BROOKE OF CUMNOR

My Lords, at the funeral of the Land Commission there are very few mourners either in your Lordships' House or in the country at large. The noble Lord, Lord Greenwood of Rossendale, has said that the Bill now before us is not designed or even intended to further the objectives of housing policy. Let us examine the objectives of the Land Commission Act, which it is designed eventually to repeal. In the White Paper published in 1965 in advance of the Land Commission Bill, the Labour Government said: The two main objectives of the Government's land policy are … (1) to secure that the right land is available at the right time for the implementation of national, regional and local plans; (2) 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. My Lords, I would defy anybody to claim that in these three or four years either of those objectives has been secured.

The noble Lord, Lord Greenwood, sought to escape from the charge by saying that the Land Commission must not be judged by the acreage it bought. But certainly his Government's stated objective was to secure that the right land should become available at the right time; and it is at least significant that in three years, according to the information given recently in another place, the Land Commission acquired only 2,800 acres, and made only 320 acres of that land available to builders. That seems a derisorily small direct contribution to solving the problems of the house builders; and the indirect influence which the noble Lord said that the existence of the Land Commission exercised must have been very great indeed if it was to offset the failure of the hopes of those who founded the Commission that it would directly make land available.

The noble Lord said there was no evidence that the price of land was raised by the betterment levy. Nevertheless, the fact remains that in the three years of the Land Commission's existence the price of land did rise faster than, so far as I am aware, in any previous period of three years in the country's history, and that since the present Government announced that the Land Commission was to be abolished the rise in the price of land has steadied. I am not seeking to establish any of these as absolute proofs, but nevertheless there is significance in all of them. The previous Government claimed, indeed, that the existence of a Land Commission was going to reduce the cost of land. It was extraordinarily hard for any of us, at the time when the 1967 Bill was before us, to conceive how that was to be done. The only possible clue seemed to reside in the idea of con- cessionary crownhold, which that Bill included. My information is that concessionary crownhold proved so extraordinarily complex in practice that it never operated, and therefore the one positive instrument in the 1967 Act to reduce the cost of land never came into action.

The betterment levy in practice proved unfair and a cause of hardship to people who were in no sense speculators. In my life I have thought a great deal about betterment levy. Before there was any capital gains tax I could always see a strong theoretical case for a tax on betterment or development value. But I had come to the conclusion—indeed I said this in another place, I remember, in 1959—that for various reasons, which I then adduced, it was literally impossible to translate this theory into practice in a way that would be reasonably fair; and I believe the experience of the last three or four years has proved that again.

The betterment levy is founded on the theory that development value is created by the community, and those who uphold that theory would impose a tax at a flat rate on development value or betterment value. There was a 100 per cent. tax under the Act of the noble Lord, Lord Silkin, in 1947; there was a 40 per cent. tax, threatening to rise further, under the 1967 Act. But, my Lords, what those who uphold this idea of taxing betterment value or development value seem to slur over is that the amount of the increase in the value of land which is actually created by the community may range from something like 95 per cent. down to virtually a nil part of the increase, and therefore any flat rate tax will always be unfair.

Also, the taxation of development value in the 1967 Act was in truth retrospective taxation, because it taxed development value which in very many cases had been accruing over many years past, unlike capital gains tax, which does not go further back than 1965. A capital gains tax will not bring in so much revenue, but it will be much fairer in operation. It will bring in less money because, as I have said, it will not tax that part of increased value which accrued before 1965, and it will not fall on owner-occupiers. Some of the greatest hardship under the 1967 Act and the betterment levy therein has fallen on owner-occupiers. When your Lordships' House, four and a half years ago, voted to exempt owner-occupiers from liability, we were overruled by another place. Experience has proved how right we were.

The application of the single capital gains tax, instead of the combination of capital gams tax and betterment levy, will also vastly simplify the law, which was unnecessarily complicated by the interaction of the two. I was struck by Lord Greenwood's remark that this short Bill was a complicated one, and that it was "a mass of muddled verbiage". He tempts me to recall to your Lordships one sentence out of the 1967 Act which I ventured to read during the Second Reading debate on the Bill which became that Act. It is only one sentence, but I must draw a long breath before starting on it. It is to be found in paragraph 23(2) of Schedule 8 to the Land Commission Act 1967: If the operative provision in question is paragraph 8, then for the purpose of calculating the appropriate deduction paragraph 19 or, as the case may be, paragraph 21 of this Schedule shall apply as if the taxable disposal which occurred had been the first separate disposal and not the relevant taxable disposal, and accordingly as if—

  1. (a) in paragraph 19 of this Schedule (where that paragraph is applicable) any reference to the chargeable gain which accrued on the taxable disposal in question were a reference to so much of the chargeable gain which accrued on the relevant taxable disposal as is properly attributable to the first separate disposal, and
  2. (b) in paragraph 21 of this Schedule (where that paragraph is applicable) any reference to the chargeable gain which would have been taken to accrue on the taxable disposal in question if the assumed tax condition had been fulfilled in relation to it were a reference to so much of the chargeable gain which in those circumstances would have been taken to accrue on the relevant taxable disposal as is properly attributable to the first separate disposal."
And the noble Lord said that this short Bill, introduced by my noble friend, is a mass of muddled verbiage! One of the virtues of my noble friend's Bill is that the provisions in Clause 5 will eventually lead to the removal from the Statute Book of that single sentence which I have just read out.

My Lords, one of the saddest effects of the 1967 Act was the ill-will that it created between the Land Commission and local authorities. The Government which put the Act on the Statute Book said that it was designed to help local authorities; but in fact the local authorities soon thought otherwise. The noble Lord, Lord Greenwood, has just quoted three cases where, he said, the Land Commission was able to help the local authorities. They were, I think, almost precisely the same three cases as were quoted on behalf of the Opposition on Second Reading in another case. I do not know whether that is an indication that there were not many to choose from.

When the Land Commission Bill was first introduced in 1966, I hoped that the Commission might be of some use in helping inexperienced local authorities to acquire blocks of urban land for redevelopment. I had realised that inexperienced authorities were liable to come up against difficulties in that field and that the Land Commission would be expert. Instead of that, however, the Land Commission seems to me to have gone in too largely for a policy of trying to force councils to approve undeveloped land for building which the councils, as the planning authorities, thought ought not to be approved for development. The noble Lord, Lord Greenwood, quoted two cases arising in Kent and Surrey; but, certainly on such information as I have, the Kent and Surrey County Councils were by no means enthusiastic supporters of the Land Commission. On the contrary, they felt that the Land Commission took views on planning and development which were contrary to their own. So, instead of smoothing the path of the local authorities, it created extra friction for them.

My Lords, I believe that democratically elected local authorities are responsible bodies that know their own localities best. The Minister should seek to guide them by advice, as the present Secretary of State for the Environment has done by his recent circular, but he should not set up a Government agency to force them against their better judgment. When we had the Second Reading debate on the Bill that became the 1967 Act the Government spokesman said: Is it too colourful a claim to say that the Land Commission … is to protect the weak against the strong? I think not."—[OFFICIAL REPORT, 14/11/66; col. 1168.] I am unaware of any case during the four and a half years since then in which weak people have actually felt that they were effectively protected by the Land Commission against the strong. It simply has not worked out in that way.

I know that in politics it is always unwise to make forecasts; but just occasionally one has the satisfaction of having a forecast fulfilled. In that debate I said: … I forecast that much of this measure, well-intended as part of it is, will suffer the same fate as the 1947 100 per cent. development charge did. It will get hated for itself, and public opinion will turn so strongly against it that hardly anyone, even in the Party opposite, will regret its demise when it is repealed by a Government with greater common sense and understanding."—[OFFICIAL REPORT, 14/11/66, col. 1101.] My Lords, that is exactly what has happened.

4.47 p.m.

LORD SILKIN

My Lords, it is rather remarkable that the noble Lord, Lord Sandford, who introduced this Bill said not one word about its merits. He laboriously explained each clause and each subsection and talked about the various appendices to the Bill; but not a single word did he say in justification, except a reference to a mandate. May I say just a word about mandates in general? I wonder whether any single person voted for the Conservative Party because of an alleged mandate to abolish the Land Commission. I doubt it very much. Indeed, the Act itself, as the noble Lord, Lord Brooke of Cumnor, has been at pains to explain, was so difficult and so complicated that he himself did not understand it. I cannot imagine, therefore, that anybody would have given his vote on the strength of what is called a mandate. I wonder, also, how many Members of Parliament who have been elected said specifically in their election address that they were going to repeal this 1967 Act. I do not know whether the noble Lord who is to reply can tell me, but I doubt very much whether there were half a dozen Members of Parliament who actually referred to this subject in their election addresses.

Moreover, the noble Lord and his friends have challenged fate by stating a very large number of things that they intend to do, for which presumably they will say they have a mandate. I doubt whether they will do half of them. From time to time we shall have occasion to remind them of some of the mandates which they say they have been given. Apart from that, my Lords, not a word was said by the noble Lord in justification of this measure.

The noble Lord, Lord Brooke of Cumnor, made a gallant attempt to show that the 1967 Act had failed and that he had forecast that it would fail. Did he forecast that he would give it only a three-year trial? Does he really justify repealing an Act which has only just got into its stride, only just set up the necessary machinery and is just getting on collecting development charges and acquiring land? He referred to 2,800 acres of land that the Commission had acquired. He did not tell us of the 9,000 acres which they had agreed to acquire and which would have been acquired in the fairly near future. Nor did he tell us of the 16,000 acres of land in the pipeline. If you count all that, then that is not bad going for three years.

The justification for the Land Commission's acquiring land in this way was that it was primarily to help the small builder; it was not to help the local authorities unless they definitely sought help—and in a number of cases they did. But when we realise that 40 per cent. of the houses of this country are erected by small builders employing fewer than twenty people and that these small builders are finding it extremely difficult to get the necessary land, we realised that the Land Commission had a real public function to perform in acquiring land in order to help them. The building industry recognised that; my noble friend Lord Greenwood quoted from one of their statements. It is a fact within my own knowledge that the building industry very much regretted that the Land Commission were no longer in existence in order to help them to acquire the necessary land and to secure continuity in their operations. The larger builders are well supplied: many of them have seven years' supply of land available—and that is not a liability because that land has been constantly appreciating in value. But the small builder is not in that position; and 40 per cent. of the houses are built by the small builder. So that there was not only ample justification but a real need for some authority to have the necessary power to acquire land in this way.

It is now said that the local authorities can do it. Of course, they always could do it; but they never did and they never will, because it means the outlay of money from their ratepayers. At times it may mean acquiring land outside their own area. There is no reason why they should put themselves out to help the small builder. And if I may make a prophecy, as did the noble Lord, to be read in three years' time, then I will say that not one acre of land will be provided by the local authorities to help the small builder to carry out his excellent work in providing 40 per cent. of the houses that are built in this country.

Now, my Lords, I want to say a word about the development charge. It is said that here you have two instruments, the Land Commission and the capital gains tax, for the carrying out of this function and that they are doing much the same job. They are not doing much the same job; they are doing quite different jobs. The purpose of the capital gains tax is to acquire a proportion of the net profits made not only by the land developers but by everybody. In the case of capital gains one is enabled to set off losses against profits; it has nothing to do with the services of the community.

The noble Lord, Lord Brooke of Cumnor, made very light of the part played by the community in creating value; but if you take a piece of land and leave it as it is, it will not appreciate in value unless you provide the necessary services like roads, sewers and drains and all the facilities such as schools and so on required for a population. Unless those facilities are provided, that land will not appreciate in value. The land appreciates in value only because of the efforts of the community and because of the expense to which the community is put. It seems to me reasonable that the person who gains from the efforts of the community should make a contribution.

The noble Lord, Lord Brooke, said that the contribution of the community varies from very little to a great deal. He might have had a case for recognising that in relation to the development charge. But what case has he got where, as he admits, 90 per cent. of the increased value is due to the efforts of the community? He is taking a case where perhaps 3 per cent, or less was due to the efforts of the community; but in the case where 90 per cent. of the value is contributed by the community—and I would say that in a vast majority of cases a very substantial amount of the value, though not all of it, is due to the community—is it not just that the person who benefits should make a contribution?

The noble Lord also talked about hardship. Hardship to whom? Surely this levy is imposed only on people who gained as a result of development which has been permitted. It is a proportion of the gain that they have made. I cannot see the hardship in that—even in the case of widows, who are always trotted out as great examples of hardship. Not all widows are hard up, anyway. But in those cases the widow has made a gain as a result of being given permission to develop and there is no reason why she should not make her contribution. In fact, the Commission have been very reasonable—I could almost say "compassionate"—in casing matters for people who found it difficult to make a payment at once. In many cases they have reduced the demand, with authority or not: they have been very gentle with people who have made the profit but found it difficult to meet the development charge. And I would point out that the development charge is not imposed except where there is planning permission to develop. In cases where development can take place without planning permission, no development charge is levied; but they are subject to capital gains tax.

My Lords, I must confess—and I hope that I am looking at the thing fairly; although I might be thought to be prejudiced in favour of some kind of levy—that I cannot see that there is any hardship to anybody in making this contribution towards the expenditure of the community in making their land viable and capable of being put to the best use. Like my noble friend, I am afraid that what I am saying is largely wasted, because I imagine that this Bill will go through, and that we are not even going to vote against the Second Reading, for reasons perfectly well understood in this House. But we very much deplore this. If I may make another prophecy, in the not too distant future there will be a fifth attempt to impose some kind of levy on those who obtain planning permission and benefit from it at the expense of the community.

5.0 p.m.

LORD FISKE

My Lords, I cannot helping feeling that this is really not so much a Bill as a chopper. That is the instrument that the Party opposite usually bring into play when any question of land reform is under discussion. Nevertheless, I must say that I felt sorry for the noble Lord, Lord Sandford, in having to bring such a (as my noble friend Lord Greenwood called it) miserable little Bill before this House, framed in the way that it is. There is one assurance—that is not quite the right word, but it is the only one I can think of—that I should like from the Minister, and it is this. I gather from his remarks that no legislation is contemplated to replace what is now being chopped into small pieces, and that the Government have no legislation on the stocks to bring in any kind of land reform, even if it could be made acceptable to their Party.

This particular Bill is retrospective, which itself is enough to condemn it. One must say that in the three short years of their life, the Land Commission obviously never had an opportunity to show their mettle. Anybody who has had to deal with land will understand that three years is an extremely short period indeed. I feel—and since nobody has referred to this, I propose to do so—that the Land Commission, under the distinguished leadership of Sir Henry Wells, were capable of doing a great job for the British people. That the Commission and Sir Henry have been deprived of that opportunity is something which I can only think is to be deplored.

The noble Lord, Lord Brooke, read an extremely difficult sentence from the Land Commission Act; and I confess that I found the Land Commission Act very difficult to follow and understand. But was there a reason? I think there was. The Land Commission Act was only necessary because Mr. Harold Macmillan, when he was the Minister of Housing and Local Government, chopped all the financial provisions of the 1947 Act, which was introduced by my noble friend Lord Silkin and has been the cornerstone of all post-war planning, without any real regard for the effect that that would have on the other sections. But that was the difficult position in which planning had been until we came to the Land Commission. Now they also are going.

I wholeheartedly endorse the remarks of my noble friends, Lord Greenwood and Lord Silkin, when they say that there will have to be another round. Another Government at another time will have to come back to this problem, when it will be even more complicated, unless some simple—but probably too drastic—solution can be found. This problem gets more and more difficult the longer it lives. But that another Government must come back to it, there can now be no question. We have tried in 1909, 1931, 1954 and now 1971. Efforts to bring land into use for the benefit of the people of this country have been thwarted by the Party opposite. That is something that I am sure will on a suitable occasion be brought to an end. That is why I particularly want to hear if the Minister can tell us whether the Government are proposing to do anything in this field of activity, or whether we may consider that, this Act having been duly buried, any question of land reform during the rest of the life of this Government is something that just will not happen.

It is interesting at this time to look at the unfolding of the policy of the Government in this way. I have always considered that two of the main supporting pillars of the modern State are, on the one hand, a contented, well-rewarded labour force with money in their pockets to spend, and, on the other hand, the provision of land for public needs rather than for private greed, to provide the necessities of the modern State for housing, education, recreation, industry, travel or whatever it may be. These things are essential. We see the Government opposite bringing a quite different approach to these important twin parts of modern life.

The question of purchasing power, of the economic strength of the workers, especially the lower paid workers, was something that had to be tackled with all the force, and vigour of the Tory Party. We know what is going on in the fields of wage rates and labour relations, and we can see a Party fully extended in its efforts to bring about its own policy. But on the other great field of public activity that I have mentioned, that of bringing land forward for public use, there is, as I assume, no question of Government interference or activity. That is something which this afternoon, although we may be powerless to do much about it, we must deplore. I could tell the Minister what I think he should do with this Bill; but instead I will content myself by asking him to take away this miserable little Bill and bring back something that is worthy of one of the great Parties in the State, worthy of Government and worthy of the people they govern.

5.8 p.m.

VISCOUNT GAGE

My Lords, I remember that when the Land Commission was set up I said that I thought there was room for a Commission of a different kind, with ample funds, and with the sole job of redeveloping city centres. I said that because, with such knowledge as I had (I do not pretend that it was extensive), it did not seem to me that the smaller local authorities had sufficient expertise to do this by themselves. I was told—and it was quite true—that the Bill provided that one of the numerous jobs the Commission would be asked to take on was the redevelopment of city centres. But I have never heard of any such scheme being undertaken. I was interested to hear of three schemes cited by the noble Lord, Lord Greenwood of Rossendale, which are an instance of the Land Commission acting as an agency for a local authority—not entirely without some remarks, as my noble friend Lord Brooke has mentioned. The real truth is that the Land Commission does not have sufficient money to do this, or sufficient money to supply land on concessionary terms to such bodies as housing associations. The reason it does not have enough money has been to some extent touched on by the noble Lord, Lord Greenwood: he put it down to the campaign against the Land Commission and the question of time—that the Commission has not had sufficient time.

I suggest that when this Bill was introduced there was a third source of income which appealed to some branches of the Labour Party—though we have had no reference to it to-day; we have a very sophisticated Back-Bench Labour representation to-day. The theory was that speculators were earning enormous profits out of buying and selling land. The argument was that if the Land Commission was to take on that job, if it could muscle in on the profits and take the profits, then there would be a lot of money available for the Commission to carry out all these various functions. It has surprised me that not one word about speculators has been heard to-day. People who know about this know that there was not much in that argument. I was for twenty years chairman of a town planning committee, and I never met such a person as was talked about in that debate.

LORD SILKIN

My Lords, may I interrupt? Has not the noble Lord, in his experience, come across land which has an agricultural value, which was given planning permission to develop, and became worth 20, 30 or 40 times as much as it was before?

VISCOUNT GAGE

I agree that that has happened. I am challenging the existence of these sinister people who, by deliberate intention, set about making money in that way. I agree that a number of people have profited, more by luck than anything, by reason of this increase in value. We all agree that that increase should be taxed; I do not think there is any difficulty about that.

On the question of the finances of the Land Commission, I hope that somebody can explain this point. If, as in all other acquisitions of land by statutory body, the price to be paid is the district valuer's price, and if the Commission has also to sell at the district valuer's price, how can it make large profits? I know that it has the benefit of the levy. I remember the Land Commission at one time rather wistfully suggesting to local authorities that, if they did more work through the Commission's agency, the Land Commission would become richer. The scheme did not work, and I do not think it could have worked. It would have taken years, and the acquisition of enormous tracts of land, to produce through that agency enough money for the Land Commission to fulfil all these rather grandiose projects that it was asked to take on. I feel that the financial structure (and I know this is not quite what the noble Lord, Lord Greenwood, said) of the Land Commission is unsound; and for that reason I view with equanimity its abolition and the taking over of its fiscal duties by the Board of Inland Revenue.

But, my Lords, having said that, I agree with some noble Lords opposite that the positive contributions supposed to be made by the Land Commission were good objects. I believe that city centres ought to be redeveloped on some priority basis, and that housing associations ought to be helped. I agree with my noble friend Lord Sandford that these things can be done by local authorities. I also think that the task will be exceedingly difficult, particularly in areas where the market price of land is very high. People talk about the price of land as if everybody knew what it was. I once carried out some research into this subject, and I remember consulting the late Lord Cohen of Brighton (who was an authority on it), and it became quite obvious that nobody knew what the price of land was, except in particular areas which were always given great publicity.

It is impossible to say whether, by doing this, we shall put the price of land up or down. A great deal, it seems to me, depends on other measures, such as Strategy for the South-East, or these other economic plans. Clearly the high market cost of land in certain areas is going to be a very serious problem. I wish that the high cost of land were due to speculators, because speculators are comparatively easy to deal with. But when it comes to trying to reduce the market price of land, that really is a man's job, and everybody in all parts of the House will have to help to reduce it. I can only hope that in this great turmoil of local government reform, and in the financial rearrangements that are going with it, particular care will be taken to see that local authorities are at least enabled to carry out these difficult and necessary tasks.

5.18 p.m.

LORD JACQUES

My Lords, I had no intention of speaking in this debate, but having heard the contribution by the noble Viscount, I should like to point out that there is land speculation in the area where I live at the present time. I live in the Solent area. A short while ago, the South-East Planning Council recommended that there should be a city region developed in the Solent area. Immediately following that, we had the Buchanan Report, and now there is a local joint planning team, sponsored by the county and the two county boroughs of Southampton and Portsmouth.

There is already speculation taking place; farms are being bought, and they are being bought in accordance with recommendations made by Buchanan. The speculators are hoping that they will make a profit out of their present-day purchases. In effect, this means that the community will pay twice, because the value of that land is created by the expenditure on roads and sewers, and the community will have to pay for both the roads and the sewers, and for the added value which those create to the land. This speculation will continue until one Government or the other find a way of dealing with it, and that is accepted by the Party in opposition at the time. Until we find a way of dealing with it, development will be very difficult. It is extremely doubtful whether the development contemplated in the Solent area can take place on economic grounds because of the speculation which is being allowed at the present time; it will prevent the future development.

5.20 p.m.

LORD SANDFORD

My Lords, I am not a bit surprised, and I do not think any of your Lordships will be surprised, that noble Lords opposite have not found themselves able to receive this short Bill with acclaim. I am a little surprised that the noble Lord, Lord Greenwood of Rossendale, and others, find the Bill difficult to understand and the Schedules incomprehensible, because the longest and most substantial part of the Schedules only consolidate provisions enacted by the previous Government. It is rather sad and surprising that the previous Minister of Housing who was the author of the words in the Act, does not understand them. I would have hoped that he, at any rate, would be the person who might be expected to.

The noble Lord, Lord Fiske, who has held such an eminent position in the Greater London Council, would, I should have thought, have been among the first to take this opportunity to describe how the Land Commission have helped, if it were possible for the Land Commission to help bring forward and deal with the problems of housing where housing stress is greatest.

LORD FISKE

My Lords, may I interrupt to explain that during the currency of this Bill I have not been a member of the G.L.C.

LORD SANDFORD

But, my Lords, the noble Lord, Lord Fiske, knows a great deal about the affairs of Greater London and, I am sure, has as much concern as anybody for the tremendous problems of housing stress in Greater London. This, I should have thought, was a moment par excellence, if it were possible, to describe how the Land Commission have in practice helped to deal with the problems of housing stress; and I should have thought we would have heard about it from the noble Lord. But we did not. What I should like to say to him, however, is that although no legislation is contemplated to take the place of the Commission which this Bill abolishes, this does not by any means mean that the present Government are inactive or have no further plans for dealing with the problems.

May I invite the noble Lord to look particularly at Circular No. 10/70, published on December 14 of last year, where he will find set out, at a length too full for me to repeat it now, some of the measures that we are proposing and inviting local authorities to take. All I will say now is that the Press comment on this Circular has been almost overwhelmingly favourable. The builders have welcomed it and we know that a great many of the local authorities are now taking steps to discuss it in detail with all concerned.

In the course of this short debate a good deal was said, and certainly implied in the original debates on the setting up of the Land Commission, about how the Land Commission would be able to deal with the problem of those people who bought up a lot of land, hoarded it, waited for its value to increase, and stymied and hindered proper development. But, in fact, one of the first tasks which the Commission themselves carried out was a land availability survey. This established that land shortages for housing were the result not of speculators hoarding it in order to make huge profits, but of the insufficiency of land with planning permission for development, particularly in the pressure areas. This was a most important finding and one of the first things the Commission themselves discovered. However, I will not say any more about land.

What I should like to turn to now is the operation of the levy—and I refer to an extract from the last Report of the Land Commission. A good deal of the debate in the earlier days was about the way in which the levy would operate so as to get at the people who were making huge profits at the expense of the rest of the community. But all questions as to whom the levy is biting upon and whom it is affecting are made quite clear if one studies the Report. One finds in the last Report that, of the 18,000 transactions on which the levy was charged, 12,500—that is just over two-thirds—concerned transactions on £5,000 or less, and the vast majority of people on whom the burden of the levy fell were therefore those of modest means, including many people who suffered real hardship as a result of it. It was for that reason that the previous Government had to ease the impact of the betterment levy in their 1969 legislation, which has already been mentioned.

At the same time as that kind of burden was falling on people of that kind, only 2½ per cent. of transactions on which levy was charged involved sums of £50,000 and above—a tiny percentage. The changes from the betterment levy to the other forms of taxation—capital gains tax and corporation tax—has the effect, in some cases, of putting up the rate at which profits are taxed in the case of large corporations, and at the same time of reducing the impact of the levy on smaller people of more modest means to whom the great bulk of these cases refer. I cannot believe that that is not a tremendous gain in fairness all round.

I should like to end this debate by paying a tribute to the staff of the Land Commission for the work they have done in administering the 1967 Act. The differences that divide us Party politically on this issue need not divide us at all in paying this tribute to the staff; because, by any account, they have had an extremely difficult task to perform. It has involved most complex legislation—not incomprehensible but complex—and their dealings with the public in administering it have shown humanity and understanding in circumstances which, as my noble friend Lord Brooke of Cumnor has o well illustrated, have been highly controversial and complex.

My Lords, in closing my remarks I would reiterate what in fact it is we believe we are doing with this Bill. We are restoring the situation where decisions about bringing land forward for development rest where they ought always to be: with the democratically elected local authorities and central Government working in co-operation with one another. We cut out the need for some 1,000 unnecessary Civil Service posts, and bring the collection of tax back into a unified system which is simpler and fairer.

On Question, Bill read 2a, and committed to a Committee of the Whole House.