COMMUNITY LAND ACT

HL Deb 05 May 1978 vol 391 cc639-70

3.7 p.m.

The Earl of KINNOULL rose to ask Her Majesty's Government whether they are aware of the negative and damaging effect the Community Land Act and Community Land Schemes are having on both housing and commercial development throughout the country; what policies they intend to adopt to encourage and stimulate the construction industry; and whether they propose either to amend or repeal the Community Land Act in the near future. The noble Earl said: My Lords, I am very mindful that at this unusual hour on a Friday afternoon I am unlikely to win many friends, particularly the noble and learned Lord on the Woolsack, if I should speak other than briefly on a subject which deserves a far better time and day to be discussed. I would only add that it was thought on good authority, before the date was fixed, that the debate would come on a good deal earlier than this time. I would say that I am conscious, as other Members are conscious, of the desirability of not keeping the staff of the House longer than is necessary, particularly after the last two gruelling days of what one might term fairly indigestible Scottish porridge.

I am equally grateful to the noble Lords and the noble Baroness, Lady White, for wishing to take part and, indeed, for being here still—and, of course, I include the noble Baroness, Lady Birk.

The Question on the Order Paper falls into two parts but both are related. The first question is: Is the Community Land Act proving a practical framework to encourage the good, positive land policies and land planning and, indeed, the release of land for development which is so vital; is it living up to the high objectives we were assured it would achieve when it went through Parliament two years ago? The second purpose of the Question is to ask: What positive steps have the Government taken to assist in the now far too long depressed construction industry—an industry upon which our housing, urban renewal schemes, our commercial developments and, indeed, the very survival of our environments in urban areas depend for existence? Not least, of course, are the countless jobs required in the industry.

In talking briefly on the Community Land Act I wish to avoid, if possible, trotting out any arguments which the noble Baroness can pounce on and dismiss as Party dogma or Party principles. I equally hope that she will be able to do the same. I have but one single objective today and that is to produce what I believe is evidence of those who are actually working within the framework of the Act —the builders, the professionals, the developers, the local councils—and to refer to certain practical pitfalls and what I would submit are negative inferences for the noble Baroness to consider in order to determine what might be done.

The Community Land Act came into operation, as the House will well remember, just over two years ago and its twin Act, the Development Land Tax Act, followed six months later. The House will recall that the Community Land Act had two objectives: first, to put the local councils into the driving seat to initiate positive planning and control of development in their areas, and, secondly, of course, to collect for the community the tax that arose from development under the Development Land Tax Act.

The framework was designed with the accustomed ingenuity of Whitehall, both in care and in complexity, and I think it would win an Oscar for its complexity. I often think that those of us who try to participate in this subject, possibly including the noble Baroness, are all loth to speak too technically on this Act in case we get it wrong.

Some may say that two years is a very short time to judge the framework of how an Act of this nature is working. I do not think that it is, particularly when one talks to those who are operating within the Act. The evidence from all quarters that I have sought—and I do not include Wales as I know that the noble Baroness will refer to it, and it is indeed a special case in a way—is that the Community Land Act framework, its ideals, its workings and its operations are considered all but dead; what is worse, it is having a very anti-social freezing effect on the developments that are coming forward.

The reason why the Act is considered moribund—not by the Government but by those who operate it—is not only because of severely rationed funds, funds which the Government have not been able to supply in recent years to local authorities, but, more, there is the growing universal hostility from so many of those who have to operate it. Many local councils believe, quite genuinely, that the Act is cumbersome and largely unnecessary; they already have existing powers which they operate under the Housing Acts. Developers see their energies and entrepreneurial skills sapped by what is now an 80 per cent. development fund tax; and builders find it increasingly difficult to get a reasonable supply of land. The professionals—and here I quote from a report of the Royal Institute of Chartered Surveyors who are meticulous in being apolitical—see that the experience in the working of the Community Land Act is unhappy, unsupported, and needs either reform or repeal". I am sure that the noble Baroness has the report produced by the Chartered Surveyors.

Few would disagree that one of our most urgent political compromises, for which Britain is so famous, is to reach a solution between the major Parties on a consensus of land policy; a consensus that allows a balance and partnership between the private and public sector; and a policy which offers co-operation and action, not hostility and frustration. I think that that consensus is not far away, in a funny way, with the development land tax. It is only different in the fact that at the moment it is 80 per cent. I think that the Conservative Party—and I hope that my noble friend will comment on this—accepts the need for a tax, but at a lower rate, to give an incentive but not a rip-off.

That consensus is important because once the private sector sees that both the major Parties are not far apart on the need for a tax, it can move forward with confidence; and it can move forward by building up its land banks ready for development. One has to recall that, like so many industries, builders have to work three, four, five or six years ahead. The development land tax is a vital ingredient in any land framework. The evidence that I have seen—and I know that the noble Baroness understands these arguments—is that the tax at 80 per cent. is throttling any hope of co-operation and incentive from builders and developers, and indeed from landowners in bringing forward their land.

I should like to raise a few points on development land tax of which I gave the noble Baroness notice. The Development Land Tax Office, which is a single office which operates at Middlesbrough, is not at present prepared to give any guidance to those who may incur the tax under a deemed disposal. It is not prepared to give any guidance before a deemed disposal takes place. I think that is very unhelpful because the tax is not easy to understand, and those who incur such a tax should at least be guided as to possible liability.

Secondly, it is extremely slow in producing the formula and the tax that is finally reached. I am told that it takes over six months from the date that the deemed disposal occurs, which is a very long time when one remembers that three months after that date it starts running interest on the tax due, even though the tax office has not yet been able to give the owner or developer the information that is required. I should like to ask the noble Baroness whether it could be looked into as to whether interest should be charged from the date of three months if the tax office, which is not dealing with many cases, has not notified the respondent beforehand.

Another problem of which I am sure the noble Baroness is aware comes with house builders. When a house builder develops a site of perhaps 20 houses, on each occasion that he sells a house he incurs a tax at that point. This is a complicated formula because the tax office has to recalculate on each house. There have been occasions when the house builders have become more and more confused about where they stand. I hope that the noble Baroness will urge the Inland Revenue to try to straighten out that tax situation.

I hope that the Government will, even at this stage, reconsider the matter of exempting charities from development land tax. I know that there was a long argument when the Bill went through, but we still feel this to be sensible. I hope also that they will allow the cost of the infrastructure payments which developers have to meet. At present it is not clear whether that can be charged against the tax. I hope that the noble Baroness will be able to look into these points, and that, even if she cannot answer them today, she will write to me later.

My noble friend Lord Ridley raised on 15th February an enlightening and helpful debate on industrial development under the Community Land Act. I do not intend to go over the same ground again, except to ask the noble Baroness this question. She said on that occasion — and, I suspect, has on many other occasions— that the Government were committed as a policy to a 99-year lease on industrial and commercial land; that they did not like to dispose of freeholds, they were prepared to lease only on a 99-year lease. They had chosen the 99-year period because, in her words, 99 years was a reasonable period of time when local councils could then reassess the use of the site.

Can the noble Baroness say whether what she means by that is that the Govern- ment consider that that commercial building 99 years old by that time, will then be redundant? Does the noble Baroness agree that 99 years represents three generations of councils, possibly four development plans and in my view, at the present time, at least four different buildings? Does she agree that the site will have been redeveloped four times during that period, and on each occasion the site can then be considered?

I am not suggesting that the lease should come down to 25 years, because obviously there would not be the security for the institutions to invest. But if that is really the argument and when the institutions are pressing all the time for 125 years, which in their financial eyes they regard as important, I feel that the Government should give way on this fairly minor argument about whether the period should be 99 years or 125 years. The noble Baroness also said on 15th February that it was of course true that in special circumstances the Government would extend from 99 years to 125. But she did not give the reasons or the circumstances in which it would be considered, and for anyone who reads these debates it would be helpful if the Government could make clear what sort of reasons will allow them to extend the period of 99 years to 125 years.

Finally, I should like to ask the noble Baroness about builders' licences. As the noble Baroness knows, in certain cases the local authorities issue builders with a licence to build on the land. Often they do not own the freehold, and when the house has been built it is then sold by the local authority which offers the freehold direct. This licence security creates, quite unnecessarily, many problems with banks and those who are financing the builders, and I hope that the noble Baroness will say something on that matter.

The Question I have raised refers to the negative influence of the Community Land Act on planning and development policies. I am sure that the noble Baroness would agree, even if she does not agree with other points, that our two most important problems are our over-complex planning procedures and the urgent need to release land in the right places. The planning procedures were, of course, examined with great care by the Dobry Committee and certain clear and fundamental recommendations were given. It would be helpful, as this is very pertinent to this short debate, if the noble Baroness could say what is happening the Dobry Committee.

As regards the planning procedures under the Community Land Act, I am told that, despite the hopes that were floated at the time that the Bill was enacted, many local councils view the procedures as only causing more paperwork more delays and more frustration. When one considers that the Government have had to issue 13 directives and 27 circulars, it is not surprising that local councils take this view. I know that my noble friend intends to amplify this point. As the noble Baroness will know, local councils tend to use the Housing Acts when acquiring land because they provide a simpler formula. I hope that she will refer to that.

As to the land release problem, there is clear evidence that, in certain key areas in the South-East—I am not referring to Lincolnshire or Devon or the many small single planning permissions that county planning officers like to count up to prove that there is sufficient release of land, because they are not operative: one is talking about builders who are looking for sites of 20, 30 or 50 houses—prices have risen to those of the 1973 boom days. We see prices in Essex, Kent, Hampshire and Surrey going to over £100,000 per acre. No one can be pleased with that because it is ultimately reflected in the house price. Ultimately, the only beneficiary is the Inland Revenue. Certainly, it smacks right against Mr. Silkin's hopes at the time when the Act went through that it would be an influence in reducing the cost of land.

What is the answer to all these problems? If the Community Land Act really does produce a unified hostility from those who operate it and is proving a negative influence on what should be a positive system, I suspect that the Government have two courses open to them: either they can repeal or reform, or they can introduce the second stage, laying a compulsory duty on all local councils to operate the Act. I hope that that will not be the answer that the noble Baroness will give. It would be a most unwise course. I hope that she will be receptive to the idea of seeking to improve what we all want, which is a better system of planning and simpler procedures to allow good and vigorous development. To achieve this, the Government must accept the need to repeal the Community Land Act, to modify the development land tax, and to set up simpler planning procedures.

3.25 p.m.

Lord SANDYS

My Lords, despite the hour and the day, I am sure the House is grateful to my noble friend for bringing forward this Unstarred Question on a basis which has clearly encouraged all parties to participate. I am very glad that the noble Baroness, Lady Robson of Kiddington, will follow me in this debate.

When I last took part in a debate, on 15th February on a Question of my noble friend Lord Ridley, the noble Baroness, Lady Birk, rightly said: I do not think it possible to discuss properly these issues and those raised by the noble Lord, Lord Middleton … without first recording their wider context: that is, the Government's policies generally for development land ".—[Official Report, 15/2/78; col. 1443.] We take note of her remark. I refer back to that basic document, Command Paper 5730, entitled Land and dated September 1974. The very first paragraph makes this statement, which we know so well: We live in a small densely populated country, so the supply of land is not only fixed, it is also scarce". The Government go on in the next sentence to draw the conclusion: This makes it doubly important that we should plan to use our land well". They quote the counsel of perfection by the late Lord Silkin.

However, there is a central paradox here. Despite this early acknowledgement of the importance of land use, the second land utilisation survey, undertaken by Dr. Alice Coleman of King's College, London, which began in 1960, has not enjoyed financial support from a Government Department. I find it extremely surprising that a Party so much concerned with planning as the Labour Party should quote one of its elder statesmen so early on, and yet should rely on charitable support to promote this very important basic document. It is interesting that in 1977 the Sainsbury Charitable Trust made a grant for this very important survey, in which more than 3,000 voluntary surveyors are giving their time to the work and marking up no less than 6,500 maps of England and Wales. I understand that it does not extend to Scotland at present.

I leave that paradox and turn to the particular matters with which I know your Lordships will be concerned. Those are the complications which will arise from the Act and which lead to a point of almost total obscurity. When your Lordships discussed the Community Land Regulations on 17th February 1976, my noble friend Lady Young was pleased to say this: It is here that I should like to put in a plea for some much more readily understandable interpretation of ' excepted development '. It differs from exempt development ' in Schedule 1 which, as I understand it, is completely outside the Act, whereas excepted development ' is not".[Official Report, 17/2/76; col. 379.] The plea must have gone unheard, or at least unacknowledged, for, when, almost a month later a very important circular—Circular 26/76—was issued on 15th March 1976, the important Annex C was more misleading than enlightening. That particularly important circular dealt with exempt development in classes of land Nos. 1 to 13. I do not blame those who attempted to write the circular, but I do think that it is part and parcel of the whole policy which the Government have adopted in promoting the Community Land Act with all its complications that they have discovered, since that first initial paragraph, that the counsel of perfection is almost impossible to achieve.

My Lords, I am indebted to Mr. Michael Latham, the Member of Parliament for Melton in another place, who has followed a very assiduous series of Questions to the Government over a period of several years on the working of the Community Land Act. I believe that your Lordships, even at this hour, would not find it unnecessary to quote the narrative, which I believe is important. My noble friend Lord Kinnoull has told your Lordships that the first appointed day was 6th April 1976, but the events that follow are surprising.

Mr. John Silkin, the noble Baroness's right honourable friend, once said that the Act would make life easier for house builders. He did not repeat it at a later stage, and I am not surprised. The original intention was that local authorities should present their land acquisition management schemes, better known as LAMS, by February 1976. In fact, on the 23rd of that month only 17 county councils had been able to do so, and by 1st April of the same year the Minister admitted that he had already imposed the scheme on four counties and was threatening to do so in 13 other cases.

My Lords, the question of loan sanctions is of special importance in that initial year, 1976–77. We have studied it with great interest. Loan sanctions should have been ready by 31st May, with a final date of 30th September. What was intended was to seek local authorities to promote rolling programmes covering five years. What happened? The Government reached a decision on 16th December, some two and a half months after the final date. They issued a very interesting guidance note—Guidance Note No. 12, called GNLA/12. This announced that borrowing limits for local authorities to buy land had been reduced from £76.5 million to £33 million for the year 1977–78 and from £102 million to £64 million in 1978–79; but if local authorities did not take up the loan sanctions and borrow the money, the opportunity would lapse.

The rolling programmes were abandoned, just like that, on 16th December, and a number of local authorities were left stranded, because of course, at that time, 36 county councils, two special planning boards, all the London boroughs and no less than 225 district councils had submitted a tentative five-year rolling programme proposal to the Minister. The Minister said, "These shall no longer apply", and no compensation was to be available for the time, money and effort incurred in so doing.

The first year ended, and the books were closed on a year's operation of the land scheme. It is interesting to note what happened. Out of £24,400,750 allocated, only one half, or £12,251,750, was actually spent. The Government claimed in a Statement by the noble Baroness's right honourable friend Mr. Reginald Freeson, that 1,571 acres had been acquired. It was not immediately apparent that this applied to the whole of Great Britain, because we understood it to be for England and Wales only. I believe— and the figures are perhaps interesting here—that only 21½ acres were disposed of for housing purposes, and resold to developers in Northumberland. Nine point four acres were disposed of to developers in South Yorkshire, and 1.3 in Surrey. That was the lot.

Baroness WHITE

My Lords, may I interrupt the noble Lord for a moment? This figure does not apply to Wales. I shall he giving the Welsh figures later.

Lord SANDYS

My Lords, I am very much obliged to the noble Baroness for adding to the discussion. I think it is very important that she did so at this point. I believe that this year, far from being a successful year for the operation of the Community Land Act, was little short of a calamity. The local authorities found out the extreme complication of operating the Act was very little development land brought forward for housing purposes.

We have already had a debate, alluded to already by my noble friend Lord Kinnoull, on industrial development land, so I will not therefore burden your Lordships with that matter. But I believe that there may be lessons to be learnt. I hope that the noble Baroness, in her reply, will acknowledge what I have said and, as she has not thought fit to interrupt or challenge me at this stage, I hope that my figures, if not wholly accurate, are what one might expect an Opposition to achieve.

Oppositions are under great difficulties in this matter. They have to rely upon Government circulars and information acquired by patient questioning in both Houses. Therefore the pattern evolved is not always the total pattern. I think a remarkable amount of information has been discovered, and I hope your Lordships will not have been bored to hear how the narrative has developed.

I am greatly indebted to the Royal Institute of Chartered Surveyors for their report, to the Royal Town Planning Institute for a very interesting study undertaken by their working party, and for the six-point plan which the Royal Town Planning Institute has put forward. I feel sure that the noble Baroness will already have received copies of all these documents, so perhaps it would be burdening your Lordships unnecessarily to refer to them in any detail. But I believe the six-point plan to which the Royal Town Planning Institute referred is worthy of merit. They recommend in the first item: That district policy statements setting out the criteria which planning authorities intend to apply to planning applications should be thought of very carefully"; secondly, That an easing of control in areas where local policies are well defined and concentration of control in special areas such as town areas and conservation areas should be considered". Here I would pause in my argument, because one of the most interesting studies undertaken recently by the Civic Trust concerns the availability of derelict land, despoiled land and otherwise waste land in city centres throughout England and Wales. The noble Baroness will be aware of the Civic Trust report, which alludes to no less than 250,000 acres of such land. If one considers this in association with my earlier argument—that is, the second land utilisation survey being undertaken by Dr. Ellis Colman—it appears that an enormous amount of land available, perhaps in certain special cases and possibly not in others, is sitting there, available for use, held perhaps by local authorities, by agencies of the Government, by statutory bodies and others, and is doing nothing.

We on this side of the House do not believe that the Community Land Bill has achieved more than a very minute amount in its first and second years of operation. We believe that the Government were misguided in adopting this policy so wholeheartedly. Further, we shall seek the repeal of the Act in toto at the first opportunity.

3.40 p.m.

Baroness ROBSON of KIDDINGTON

My Lords, may I add my thanks to the noble Earl, Lord Kinnoull, for introducing this subject. While being fully conscious of the time, both of the day and of the week at which we are debating this subject, may I add my expressions of sadness that it is at this time in the week that we are discussing this very serious problem. It seems to me that it is a problem that is quite unique in many ways because it is one which is recognised equally by all political Parties, and there are certain matters upon which we all agree.

We all realise that we are a small island and that we have a finite resource of land. We also all agree that there is a general political agreement that the community should share in the land values of this nation and particularly in the development values granted through planning permissions. We all agree, because we are a small island, that development must be controlled. So there is a mass of agreement among us all. It is when it comes to the methods of how we achieve what we want to achieve that we occasionally disagree. The Community Land Act and the Community Land Tax Act constitute the fourth major attempt since the war that this nation has made to try to solve the problem.

I think we all agree that the first three were disasters and did not work. But our debate this afternoon is to talk about the effect of the Community Land Act coupled with the development land tax and the effect it has had on positive planning and development in this country.

Before going further, I should like to express my views on what we want to achieve by introducing legislation to control the development of land. First of all, like all Members in the House I want to achieve the release of land suitable for development at the lowest possible price and I want therefore to prevent the escalation of land prices which add to building costs. It puts housing prices out of the possibility of purchase for young people in this country, and commercial city centre development costs rise to such an extent that the users of the property cannot afford to rent it for business purposes. In the present context of our economic climate, we also want the legislation to give encouragement to the construction industry and to contribute to the reduction of unemployment in that industry. I believe, with previous speakers, that the Act has failed to achieve any of these aims.

I am fully aware that the Act and the legislation has been operative during a period of national economic difficulties in this country so that in many ways it is hard to judge to what extent it could have been effective. But I think we can draw certain conclusions. First of all, has it released for development any more land of the kind that we would welcome? I am assured by various statistics and by statements from the Department of the Environment that land is available for house-building for the next six years. I doubt whether that is a true statement. Much of the land that is available is in large lumps. For instance, there is a tract of land of something like 14,000 acres in Essex which is for a proposed new town development. Only 10 acres of that has so far been sold to a developer. If one takes away from the land bank we presumably have, which the DOE claimed could last for six years, no doubt it will last for six years; it will last for a lot longer, but it is not helping the problem of development at the moment.

In many other cases planning permission can be given for house building for large quantities, such as 1,000 houses. A developer, when he takes up—if he does take up—that kind of an offer must be a very substantial developer because he knows that probably he cannot market more than a maximum of 100 houses a year in that area, so he must be able to carry that expense for a long, long time. He has an additional problem facing him. In the development of his first 100 houses he is probably paid something like £5,000 a plot for the land. He then does his planning for his first 100 houses and six months later he arrives on site, having worked out the possible cost of sale of the houses when completed in a year's time. Then the district valuer arrives on site and decides that the land has increased in value and is now worth £10,000 per plot. He is then asked at that moment to pay the development land tax before he has done his development, at the rate of 66⅔ per cent. on the difference between his purchase price and the new estimated value up to the value of £150,000 in a year.

It may be that some large developers can afford to carry this expense, but what we surely want to do if we are to help the construction industry is particularly to help the small builder, because he is the one who will take up the greatest amount of the employment in the industry. I would therefore like to ask the noble Baroness whether the Government would consider levying the development land tax on a developer only at the time of sale of the development and not before he has started it.

The same applies to commercial property in inner cities. Here again, most of the land is owned by local authorities or national corporations. If one wants to develop the inner cities, which is something all of us are deperately concerned with at the moment, again the development land tax is payable at the start of the development, and this stops many of the leading institutions of this country who would be interested in developing the inner cities from taking an active part in doing so.

The noble Lord, Lord Sandys, has already referred to the Civic Trust Report of 250,000 acres of dormant land existing in Britain, and I believe that to be a very conservative estimate. If one compares that with the amount of acregae used to build Hatfield New Town—2,340 acres as against 250,000 acres of derelict urban land that is in our possession—we have not devised the right method to get the land used. The tragedy surely is that the legislation does not help us in any way. On the contrary, I believe that, because of the duty laid on local authorities to purchase land for development, because of the make-up and the kind of limited expertise that exists in local authorities on this issue, they are more likely in many cases to purchase what is good agricultural land because it is an easier development problem than to concentrate on solving the problems of the derelict land we already have.

Reference has already been made to the limited amount of land that has so far been purchased by the local authorities. I am told that in the first year 332 hectares were purchased and only 13 were sold, and that over the two-year period the Community Land Act transactions recorded a loss of £20 million for the taxpayer to cover. The small amount of land purchased is no doubt a reflection of the landowner's reluctance to sell because of what he believes to be—and I emphasise this—the swingeing impact of both capital gains tax on his first £10,000 from the profit on top of his base value, and the land development tax on the rest. I believe that many landowners are not fully aware of the impact of the tax, and many of them have exaggerated it, but it does exist.

On the taxing of private landowers who are prepared to put their land into the community pool, I would also ask the noble Baroness whether the Government would look at the possibility of giving roll-over relief to compulsory purchase from private owners. In consequence, as a whole, I believe that the development land tax is probably the greatest bar of all to making any sense of either of the two pieces of legislation. I would ask the Government, therefore, whether they woud consider reducing the top rate of development land tax to 60 per cent.

This has been referred to, and I understand that the noble Baroness who is replying is going to mention it. I should like here to refer to the Land Authority for Wales, because I believe that it is generally agreed that the Welsh authority has had a much better record over the past two years. I am told that it has acquired 186 hectares and passed on for development 82 hectares. But, above all, it has done that and its assets exceed its liabilities by the sum of £2 million—and this is without any recourse to public funds and with minimal staffing requirements.

I should like to ask the noble Baroness whether there is not a lesson to be learned here. One of the main objections in the minds of many people about the Community Land Act is that the local authorities are required to be purchasers, planners and vendors. That is not so in Wales. I would be the first to agree that the local authorities must retain their planning role, although I agree too that the planning procedures must he enormously streamlined.

However, I believe that the other duties under the Community Land Act could be handed over to local government boards operating at regional level, to create a similar sort of structure to the one which we have in Wales. The members of such boards should include delegates from local authorities and from the private sector—that is most important. They should be under a chairman appointed by the Secretary of State for the Environment. Their job would be to seek out and assemble land, plan the development together with the local authorities, and then sell to developers. I believe that that would be a better system than the one we have. Of course, as Liberals, undoubtedly we would wish one day to see such regional boards directly responsible to elected regional assemblies.

3.53 p.m.

Baroness WHITE

My Lords, I am, of course, delighted to follow the noble Baroness, Lady Robson of Kiddington, because of her extremely complimentary remarks about the Land Authority for Wales. I have to declare a very direct personal interest as I am Chairman of the Land Authority for Wales. Having made a brief obeisance in the direction of Lord Addison, I still think that it is important that I should say something about the way in which the Community Land Act is operated in the Principality because it is so different. It is entirely the same in principle as the Community Land Act affecting the entire United Kingdom, but the pattern of organisation in Wales is totally different, and I think, as the noble Lady, Lady Robson, has so kindly indicated, that it is proving very much more successful. It would be improper for me to comment unduly on what is happening in the rest of the United Kingdom, but I think I can fairly try to explain to the noble Lords who have been good enough to stay late on a Friday afternoon some of the reasons why we think we are being more effective in Wales.

I thought that it might be appropriate if I quoted some opinions from other people rather than just singing my own song. I have brought with me just a few of the many references to the Land Authority for Wales which have been contained in the Press in the last year or so, particularly in the professional and trade press. Their tributes are peculiarly valuable because they come from those who operate in this field and who therefore may be regarded as being relatively objective and not taking a purely political, ideological view.

If I might perhaps quote from the Estates Gazette, which claims that it is the oldest journal devoted to land and land property investment. On 11th February of this year, various criticisms were made in the leading article on the administration of the Community Land Act in general. It proceeded: These strictures are not applicable to Wales, where the Land Authority operating rather differently is demonstrating that the concept of the Community Land Act is by no means unworkable, given a regional basis and the freedom to work outside the two-tier local government system". I will comment on that in a moment because it is not entirely true that we work outside the system. We work with it but alongside it.

In a slightly earlier comment the Economist, having referred to Conservative suggestions that the Community Land Act should be scrapped root and branch, said: The English local authorities will thank Mrs. Thatcher for this, but she should have an eye to spare for the good bits of the scheme such as the Land Authority for Wales. In contrast to England, where the jam for the scheme has been spread too thinly over a large number of local authorities, the Government gave one dollop to the Land Authority for Wales and left it alone". It then goes on to point out that, because of this and because we concentrate solely on the function of buying and selling development land, we have been able to do so to social benefit and also profitably. I will come back to that in a moment.

I have many other quotations with which I will not weary your Lordships. The magazine Planning (again, a professional magazine) says "Land availability, LAW" —that is Land Authority for Wales— "sets the pace". Building of February of this year—" Wales gets in on the Act. The Community Land Act is alive and well and working in Wales." Last week the Estates Times reported Mr. Patrick Troy, who probably knows more than anyone about the Australian Community Land Act, which is in some ways comparable with the one we have in this country. He considers that the system in England is expensive and bureaucratic, but that the Land Authority for Wales is on the right tracks.

Mr. Michael Latham, a Member of Parliament referred to by the noble Lord, Lord Sandys, and someone who has very great experience in this field, is quoted as saying, with reference to the Land Authority for Wales, that it is working quite well. He says: So fat the staff are pretty private-enterprise-minded. I do not think that is entirely true, but I see what he means. He means that we have an entrepreneurial sense. Then, to complete his quotation: It has preserved the confidence of the builders and raised that of the landowners. That is a comment which I think is well founded.

Finally, may I quote from the magazine Building of 3rd February this year. Having discussed various aspects of our work, it goes on to say: The Land Authority for Wales reports to the Welsh Office, and the Department of the Environment may not be as fully aware as it might be of its activities and success. It could do worse"— that is, the DOE— than to take a deeper interest. The Land Authority for Wales' performance appeals to be an improvement on the English authorities' record and could also be a viable alternative to the Conservatives' Back to Square One' approach.". I hope you will forgive me for having blown the trumpet of the Land Authority for Wales, but I have done so exclusively from quotations from papers who have looked at us and have found that we were at least a very interesting administrative and social experiment.

I should like to take this opportunity of paying the warmest tribute I can to my own colleagues on the authority and to my staff, because I think we have done a quite remarkable job in a short time. I will try to explain very briefly in a moment why I think we have been relatively successful. We shall be publishing in about three weeks' time, I hope, a full account of our first two years of operation and we shall be holding a Press conference in London not too far from the Palace of Westminster. If any noble Lords would care to come and join us, or, for that matter, if they care to come to Cardiff—it is less than two hours by the fast trains—we should be delighted to welcome them and to discuss this matter at much greater length than is possible on an occasion of this kind. I think we are really quite worth studying as an example of public administration.

Just to get on the record the outline figures for the financial year ending on 31st March 1978: in that year we acquired or had by 31st March legally contracted to acquire, 498 acres of development land and had disposed of 208 acres in that time. Since then, I may say, we have disposed of some more but we had not been able to complete the full process by 31st March.

We reckon that at the end of the year ending 31st March 1978, as the noble Baroness, Lady Robson, indicated, we had what we would call a net worth —that is, assets as against liabilities —of about £2.8 million. We have not had a penny piece from any rates or taxes: all we had was permission to borrow at commercial rates of interest with a Treasury guarantee, but that is a double-edged concession. The Treasury make you borrow long when you want to borrow short. It would be improper, I think, to go into too many details on this point. We have shown that you can work this Act profitably—that profit, of course, will accrue to the community —but we also believe that we are performing a social function which is of some importance.

We are not a planning authority. We have excellent planners on our staff, but that is to enable us to discuss matters with the planning authorities who have the last word as to that they think is right in the way of development within their own areas We try to work very closely indeed with them and we are much in their debt in the matter of producing our land policy statement and the financial rolling programme for five years which accompanies it. I may say I have more faith in the land policy statement than I have in the financial rolling programme, but this is demanded of us by the Treasury.

Within about three weeks we shall be presenting the second edition of the land policy statement and the rolling programme and I would be happy to send copies to any noble Lord who might be interested in studying it to see how we tackle this in the context of the Principality. But, in parallel with our statutory duty to produce a land policy statement, we are undertaking a much closer analysis of the land availability position in the Principality not only with the planning authorities which are, of course, of paramount importance, but also with the other interests concerned. These include the other statutory bodies, especially the Welsh Water Authority, which is responsible for sewerage and other services; with the roads authorities, and also with the building and development interests, we are taking district by district—it will take us some little time to complete the exercise—collaboration with the local authorities, in a process of very careful analysis of the true availability of land for development within a five to 10 year time scale.

It is quite true that there is a great area of land in Wales, as elsewhere, which is designated for various development purposes. But when you come to look at it you find, for example, that if you wish to build a new housing estate the local sewerage system is already overloaded and that particular area does not come within the timetable of the Welsh Water Authority for (shall we say?) another 15 years. Therefore, that land is not realistically available for development at the present time. Similarly, it may not have adequate access for the type of development being sought.

Thirdly, and I think this is extremely important, it may be in an area which the commercial interests would regard as not marketable. I think that one of the great advantages we have in the Land Authority for Wales over the operation by a local authority is that we can bring in the commercial dimension much more effectively. We have a staff which is experienced in the market place. If one is in a mixed economy, one must know how the market place works. I believe that this is one of the basic reasons for our being so far at any rate, more effective than the other parts of the country. We have a team dedicated to one sole function in which they are experts. They have a sense of social responsibility on the one hand but they also have an understanding of the economics of the market place on the other. It seems to me that this combination is extremely important when dealing with the land situation.

We are very conscious indeed of the need to assist the construction industry, particularly after the difficult time through which it has passed. I was much interested that the noble Baroness, Lady Robson, should draw particular attention to the problem of the site which is too large for the smaller or middle-sized builder. We have tried—and I could give one or two examples—to meet this situation. For instance, we bought a site which has outline planning permission for housing just outside one of our larger South Wales towns. This was a site which was highly desirable for development, in a place where housing for owner-occupation was needed, but it needed to be planned comprehensively as one site.

We have done this in close consultation with the builders in the area. They formed a consortium and we are dividing that site into manageable areas for the individual builders, on licence if they wish it that way or if that helps their cash flow. We have a comprehensive outline for the entire site, so that the services, the internal roads and so on, can all be properly planned and then the individual builders can build within the framework of the site as a whole.

In other instances, for example in a site in Cardiff, we divided up the site. One site was sold to a housing association for single-parent families and the other was sold to a well-known commercial developer. We did, I think, a very successful balancing act between the totally commercial and the semi-social development of a housing association. I could give a number of other examples of that kind.

On the industrial side, I think we can do a very useful job in site assembly where both our expertise and the powers that we have in the background, even though we hardly ever use them, mean that we can bring together sites for commercial and industrial development which may have been sitting there—as the noble Baroness, Lady Robson, mentioned—either empty or badly run-down. Everybody has known for years that something should be done about them, but it is an awkward job to tackle and it has not been done. Again, I can point to two medium sized towns—Neath in South Wales and Rhyl in North Wales—where we have gone into a run-down commercial area and have pulled it together and made it available for fresh development

I must not go on. Noble Lords can see that I am an enthusiast for the matter and I am tempted to run on longer than I should on an occasion of this kind. I think we have had very great advantages in Wales because we have been blessed by a pattern of organisation which, quite truthfully, I wish very much could have been adopted for the rest of the country. I think we have the right sized unit and this is so important. The Land Commission failed partly because it tried to work country-wide and it simply was bogged down; it could not cope with something on that scale. The individual local authorities, even some of the larger ones, are not the right unit for this particular operation. We do not have regions in England, but I think it would not have been beyond the wit of man to have used economic planning areas for this particular function, if it had been realised in time that it is this kind of area which is effective for the particular purposes of the Community Land Act.

Although I was very sceptical when I was first appointed, I believed there is much to be said for separating the planning function, on the one hand, and the acquisition and disposal of development land, on the other. In practice, it really works very much better. I must not develop that, but I think it is true. I think, also, we benefit enormously, as the comment in the Economist which I quoted earlier on suggests, from having the resources concentrated for the whole of Wales instead of being spread thinly as in England over all the local authorities. It is much more effective to have concentration rather than dispersion of resources.

The other comment in the Economist quotation was that we were given one dollop and then we were left alone. There has been considerable relaxation very recently on the English side of the Border and I think the English local authorities in future will not only have greater resources but will also have considerably greater freedom of action. We did not have to, and have never had to, take individual transactions to the Welsh Office for sanction. We keep them informed of what we are doing, but we take the decisions: in other words, we negotiate as principals and I think that is absolutely essential. If you are working in the area of development land, you have to be able to take your own decisions and stand or fall by the consequences. That seems to me essential if you are working in a mixed economy in the market place.

I hope I have said enough to convince your Lordships that it is not the Community Land Act as such which is at fault, but that possibly a more favourable pattern of administration might be considered. I believe myself most firmly in the principles of the Community Land Act. I think we have groped and faltered so long, generation after generation, in dealing with land in this country. If we are going to maintain a mixed economy, then we must find methods of administration suitable for it, and I am very proud indeed to be the chairman of an organisation which combines making profits for the community with a social conscience.

4.13 p.m.

The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)

My Lords, I have listened very carefully to the speech by the noble Earl, Lord Kinnoull, and to the other noble Lords who have taken part in this debate. I must say that the amount of information that has been packed into really quite short speeches on this very complicated subject has been not only admirable but a wonderful example which perhaps we could follow in some other debates. They raised a very large number of important points. I will try to deal with as many as I can in the brief time available because I do not really feel that, as everybody has said, this is the afternoon or the time to elongate it too much, but otherwise I will be very happy to write to noble Lords.

The noble Earl's Unstarred Question tries to relate two quite separate issues. He gave a swashbuckling condemnation of the Community Land Scheme and he also linked with that the current difficulties of the construction industry. First, I would say that we do not accept that the Community Land Scheme is having a damaging, or even negative, effect on development; nor, in the noble Earl's own words, that it is moribund. When the noble Baroness, Lady Robson of Kiddington, said that we all agreed with the principles, I think that there may be three of us taking part in the debate who agree with the principles. But, quite frankly, I do not think that this applies to the noble Earl and the noble Lord, Lord Sandys. During the progress of the Bill through this House they certainly made it quite clear all the way through that they did not agree with the principle, unlike the noble Viscount, Lord Ridley, who said that he thought that there was a great deal of good in it. He made it quite clear, when I mistook him for someone else speaking in the last debate, that he certainly had not suggested it should be repealed. Both noble Lords have stated on this and on previous occasions, that it should be repealed, so they start from a different base from that of the other three speakers. I do not think there is anything in the point that there are two men and three women speaking in this debate. I do not think that this debate has any feminist or sex ingredient in it; the speakers are just broken down in that way.

The Community Land Scheme is already bringing land forward for development, so to take this completely negative view is a great pity. The noble Lord, Lord Sandys, produced a number of figures. I admired them and the way he produced them very much. I did not challenge them because, with the exception of one or two, they were quite correct. The only thing I felt was that they did not really relate all that closely to the Question. Nevertheless, he put them over extremely well.

I am also familiar with the Civic Trust report, to which my right honourable friend Peter Shore contributed a preface congratulating the Trust on making the surveys on which it was based. The recent Royal Town Planning Institute report, as I am sure he knows, is currently being studied.

I must first of all reject wholly the noble Earl's suggestion, and I think that of the noble Lord, Lord Sandys, that local authorities are failing to dispose of community land quickly. There is no evidence of that, nor could there be, because the scheme has existed for only two years. Most developers buy land much longer in advance than that. What I think the noble Lords probably have in mind is other land owned by the authorities which prospective purchasers would like to get hold of, but the future of which remains to be settled. There are a variety of reasons for this, and I am not by any means condoning the long delays that sometimes occur in various authorities. It has not anything to do with the Community Land Scheme. This is an entirely different thing, for which there are a variety of reasons, including, I think, as the noble Baroness mentioned, some planning delays.

Let us be quite clear that the Land Scheme was designed to eliminate the speculative scrambles for land that have created so much damage in the past, and to bring a degree of order and stability to the market and also to tie up, as my noble friend Lady White pointed out, the whole underlying principle of positive planning and the accruement of the increase in value to the community rather than to the individual developers. This must be beneficial to the construction industry where responsible opinion agrees that what is needed, what has always been needed, is greater stability in the land market. By this I mean greater stability of price, of demand and of supply.

The noble Earl and other noble Lords referred to the high prices recently paid for housing land. There has been quite a lot of sensational but selective publicity about this, but when one examines them in detail, these prices reflect a revival of the market for new luxury houses which has been dormant for some time. They do not represent the general market. Land prices have been stagnant for some time, despite the general rate of inflation, and even despite the fact that they have been rising recently; but the average is nowhere near back at the 1973 money level. The Land Scheme is still in its infancy, and therefore its effects on the market can only be very marginal at this time.

Commercial development, to which the noble Earl referred in his Question, has been at a particularly low ebb for some time. As I think the noble Earl must know, with his experience and qualifications, this has been due to the surfeit of floor space provided during the crazy boom which was regardless of true need. Construction fell because there was little demand. Again, this had nothing to do with the Community Land Scheme. There are now clear signs that demand is picking up even for commercial development.

What also intrigued me was that the noble Earl did not refer in his Question to industrial development, which we regard as having the first priority. Perhaps it was wise of him not to refer to it in the Question, because he probably agrees with me that industry has been leading the revival of demand for development. Last week's Investors' Chronicle, under the heading" Development climate has been transformed ", pointed out that there has been a substantial change on the industrial front, assisted by the fall in interest rate and the rate of inflation, coupled with an increase in demand from companies for further space. I claim no credit for the Community Land Scheme for this, but it certainly does not seem to be stopping it.

The noble Lord also raised the familiar complaint about our policy that local authorities should retain the freehold of land for industry and commerce. As lie pointed out quite rightly, we had a fairly lengthy debate about this when the noble Viscount, Lord Ridley, raised it on 15th February. I do not want to go over all that ground again today, apart from saying that we firmly believe that the community, through local authorities, should have a share in future increases in land values, and be able, from time to time—this is very important—to reassess the purpose for which land is being used. This is why, unless there are special circumstances, we prefer leases of no more than 99 years.

We have no real evidence that this is deterring development, and certainly the facts do not bear this out. I do not believe that land tenure is the crucial factor in investment decisions, except in certain cases—and the noble Earl was right when he referred to certain cases of institutions. He asked me on what basis the extension from 99 to 125 years was given. It is on a purely commercial balance of considerations which governs these circumstances. Each case is looked at on its own, and it depends, as he must be well aware, on the investment prospects and the particular demand. But I would say that certainly by no means is it true that everyone offered a 99-year lease then asks for a 125-year lease. That is not the case.

Turning for a moment to the private house-building industry, here again demand is picking up. Over the past six months the number of private houses started has been increasing steadily, and is now about 20 per cent. higher than it was at this time last year. It is true that house-builders are complaining that there is a shortage of land—and this was referred to by the noble Earl, the noble Baroness and the noble Lord, Lord Sandys—and blame the Community Land Scheme, especially the development land tax. But even they do not claim that the alleged land shortage is seriously holding up current production, because it is land for use in a few years' time that they are mainly worred about. Nevertheless, about 150,000 private houses are expected to be started this year, which is certainly an improvement on the 135,000 started last year.

We do not accept, therefore, that there is a general shortage of land for house building. Nationally, there is enough land with planning permission for about six years' building, and the builders themselves tell us, through the regular Private Enterprise Housing Enquiry that, overall, they are maintaining their own stocks.

Of course, I accept that national figures can be misleading. I also accept that there are difficulties in some areas and among some builders. But there always are, and there always have been. It is for this reason that my right honourable friend the Minister for Housing and Construction has recently agreed to conduct joint local studies with the builders' national organisations in order to try to identify the difficulties, to discover where they are and why they have come about, and to see what can he done about this.

The noble Earl and the noble Baroness, Lady Robson, both referred to the deterrent effect of the development land tax. If it is at the moment a deterrent to the private landowner bringing his land forward to development, this is largely psychological. The noble Baroness put her finger on it when she said that, even if it was not so, people felt that it was so. So far, the transitional tax provisions have, in fact, often greatly reduced the amount charged, and it is very much a fear of the unknown and the uncertain that is the motivating force, rather than the financial facts.

Nevertheless, I am convinced that a tax of this sort is here to stay, and that is in spite of what members of the Opposition may say while out of office. If one looks not too far back, the last Tory Administration taxed development gains up to a rate of 83 per cent. Naturally, tax alters the market for development land and affects supplies. The difference between the Tory approach and ours is that we have taken steps to try to offset that effect.

Lord SANDYS

Will the noble Baroness allow me to say, in regard to the development land tax, that the present Government scheme allows for 100 per cent. development land tax at a later stage?

Baroness BIRK

First, we have not got there yet. I was making the point that we are discussing at the moment the question of what is happening at present. People are acting as though everything had gone into the future, when there will in any case be an entirely different set of circumstances. One cannot take it, with great respect, out of the present context. I probably should have finished the sentence before I let the noble Lord interrupt me, but what I was saying was that we have provided through the Community Land Scheme for local authorities gradually to replace the private supplier and bring land forward. The noble Earl also mentioned difficulties for developers because of the delay in getting tax assessments and the uncertainty in what is undoubtedly a very complex matter. To some extent this may be, as I have said, because the tax is so new and unfamiliar. I take his point about guidance, and I shall certainly look into it, because, as he probably knows, there is one thing that we do agree on: that wherever possible, on anything and particularly on legislation as difficult as this, one should give as much information and explanation as possible.

I also agree that there are real problems here and we have a duty to see if there is anything we can do about it. I have also noted what the noble Earl said about charities, which, as he pointed out, was gone into thoroughly during the passage of the Bill, and also his point about infrastructure. But, as he probably knows, my Department is in touch with the Royal Institute of Chartered Surveyors about this.

I was extremely interested in the glowing account that my noble friend Lady White gave of the progress made by the land authority for Wales. As I am sure she would be the first to admit, the circumstances in which one can compare Wales by size and so many other factors with England are so entirely different that one could not take the analogy and just fit it into England. I am sure that a great deal of the success in Wales is attributable to the leadership she herself has given. We are all impressed by her enthusiasm and by the powerful "commercial she provided, not, I might say, for herself, but for the Land Commission, and by the various invitations she issued to us all, both for London and Cardiff.

I do not think she was intending to say that Wales is the only place where the Land Scheme is working, but I think I must make it clear that it is more difficult in a much larger country with a greater variety of local authorities, a greater variety of approaches and probably a greater variety of talent, management and all the other things that help to make for success.

I also noted what the noble Baroness, Lady Robson, said about regional boards. This was partly answered by my noble friend Lady White. It is in many ways an attractive proposition, but nevertheless I believe that the elected local authorities are the better bet for England. This was gone into thoroughly both a long time before and during the passage of the Bill. Even to start talking about changing a machinery at this early stage I think would be a great mistake. I agree with her view of the importance of vacant urban land, and agree with her concern when I see great areas of land which is not being used or which is turning into derelect land. Special emphasis is being given to this in the inner cities, certainly in the first instance. This is one of the things about which I and my colleagues in the Department feel very strongly.

In the course of this short but productive debate noble Lords have raised a number of other points on the administration of the Land Scheme, also some other points which I have not dealt with on development land tax. But these were matters of relatively minor detail in the whole context of the scheme; and if they would like me to write on these points I will try to deal with them. I will certainly go through Hansard to see which points I have not picked up. There were also references to the planning system and to delays. We are well aware of that and we are not happy about it. This is where a confusion often arises between what happens as a result of the planning delays and where the Community Land Act is given the blame for something for which it is not responsible. The Government's recent White Paper on planning procedures specifically set out to deal with this. I do not think that I should go into it further now because it is under consideration. But we are aware of it and do not like the delays any more than anybody else here does.

I hope that nobody, even on the Opposition benches, seriously believes that they can blame the problems of the construction Industry on the Community Land Act. The problems there are due to the severe downturn in economic activity that we have experienced. But the Government's economic plans—and this was reflected in the Budget—are intended to provide a climate within which the industry can now grow sensibly. Last year, additional allocations of over £800 million were made for public sector construction work over the next two years. Taken together with nationalised industry and housing association investment, annual expenditure on public sector construction should total about £6¼ billion.

In his recent Budget statement, my right honourable friend the Chancellor of the Exchequer announced measures which could add a further £97 million to expenditure on construction over the coming year. He also announced tax changes which will benefit the small firms to which the noble Baroness referred, and consultants engaged in work overseas. These measures should provide a stable pattern of public sector demand on which the industry can plan its activities more reliably than in the past; but the public sector provides only about a half of the contruction industry's total demand. The Government's plans deliberately allow for a faster rate of growth in the private sector, and the signs are encouraging. Industrial and commercial investment in construction rose by about 10 per cent. last year and the trend is expected to continue in 1978; and, as I have already pointed out, private house building is also on the increase. So, overall, the prospects are more encouraging than for some time.

Finally, the solution to the economic and social difficulties of the construction industry lies in a steady and sensible rate of growth. It really is sheer nonsense to blame the Community Land Act for the general economic malaise. We propose to sustain the Scheme because we believe that it has a vital contribution to make to the positive development of our built environment; and we are determined to develop it as rapidly as economic circumstances allow. I do not know whether it will have come as a great surprise to the noble Earl that I did not get up and say that we were prepared to repeal the Act in the short or the long term; and certainly there is no question of amending it in the near future. I hope that he will maybe not love it, but learn to live with it and help to make it work.

House adjourned at twenty-five minutes before five o'clock.