Adversary Politics and Land: The Conflict Over Land and Property Policy in Post-War Britain

Adversary politics and land

ADVERSARY POLITICS AND LAND The conflict over land and property policy in post-war Britain ANDREW COX Senior Lecturer in Politics, University of Hull

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ISBN 0 52125517 1 hardback ISBN 0 521 52641 8 paperback

Contents

Preface PART A INTRODUCTION

i

vii I

Power, adversary politics, government policy-making and the implementation problem

3

PART B THE PROBLEM OF LAND AND PROPERTY IN BRITAIN AND THE EFFECTIVE LIMITS ON GOVERNMENT POLICY INITIATION

23

2 3

The history of land and property policy in Britain and the development of social democratic solutions (1845-1945)

25

The structure of the British land and property market as constraint on policy initiation

51

PART C THE HISTORY OF ADVERSARIAL POLICY FAILURE IN LAND AND PROPERTY IN POST-WAR BRITAIN

4 5 6 7 8

Labour, the 1947 system and the collapse of the development market (1945-1951)

75

77

The Conservative free market approach and the 1950s property boom (1951-1964)

103

Labour, the Land Commission and the problems of implementation (1964-1970)

125

The second failure of the Conservative free market approach and the 1970s property boom (1970-1974)

155

Labour and the failure of the Community Land Act (1974-1979)

176

vi

Contents

PART D CONCLUSION

9

193

The failure of adversarial policies and the enigma of the Thatcher government

195

Notes

204

Index

238

Preface

In preparing and researching any book an enormous number of debts are incurred and this book's compilation has been no different than others. I would, therefore, like to thank all of those people who assisted me even though I do not name them individually. I would like to express my especial thanks to Anthony King for his advice as my Ph.D. supervisor when the groundwork for this book was laid. At the same time Anthony Barker, David McKay and Graham Wilson at Essex University provided me with valuable encouragement and insights. A particular debt is, however, owed to Bob Jessop for broadening my horizons to the way in which problems could be conceptualised in the social sciences. I thank him for that. For their assistance on the substantive sides of the questions discussed here special thanks are also due to Wyndham Thomas, J. R. James, Peter Hall and the myriad of nameless but not faceless civil servants and pressure group leaders and officials who gave so much of their valuable time to me. David Coates, Peter Nailor, Jack Hayward and Alan Child deserve a particular vote of thanks for reading through the drafts of the manuscript and offering useful advice on style and argument. If the book reads well then part of any thanks should go to them, as well as the sub-editing staff at Cambridge University Press. It is also necessary for me to thank Janet, Sally, Enid and Catherine for their assistance in the typing and preparation of the manuscript over numerous redrafts and revisions. They were always prepared to go over the ground once more whenever asked and I cannot thank them enough for their efforts. Finally, I owe an immense and unpayable debt to Angie, who happily and without complaint gave birth to two children and built a home around me as I laboured on this book. I could not have done it without her support and I dedicate the book to her. Neither she nor anyone else named here bears any responsibility for any errors or inadequate arguments presented. Such weaknesses that exist in this work are my responsibility alone.

October ig8j

ANDREW COX

vii

PART A

Introduction

Power, adversary politics, government policy-making and the implementation problem

Structure and process in the analysis of power in policy-making. Two levels of analysis: the short-term power of initiation versus the long-term power of constraint. British adversary politics, social democracy and the analysis of power and public policy-making. There is a central debate in the social sciences about the concept of power which is linked directly to notions about how best to study and analyse public policy-making. Within this debate about the scope for the use of political power in advanced capitalist societies, some theorists argue that the government is capable of doing anything it chooses as long as it retains the support of the electorate and is responsive to the demands made upon it by competing interests in society. Other writers have argued that only a few actors in government and society actually wield the influence to shape key decisions and this limits the ability of the holders of political power to initiate policies which they desire. At another level some writers have contended that, while there may be some mobilisation of bias against radically reforming governments, in practice the government does possess an ability to shape its own policies, but that this ability is constrained by other centres of power in economy and society outside the narrowly circumscribed political decision-making process.1 The realisation of these differences opens up an interesting area for study. While it is unlikely that we can overcome the lack of commensurability between theories which concentrate on different areas and levels of analysis, it does appear from the previous introductory summary that the analysis of power and public policy-making can be approached from two distinct directions. First, it should be possible to discuss the power of initiation, by which we mean the ability of government to create and draft policy independently and authoritatively. This level of analysis

4

Introduction

emphasises the need to concentrate on the decision-making process of the state and to analyse the extent to which it is open, democratic and subject to bargaining and compromise. The ultimate question here is whether or not the constitutional holders of political power are capable of making the final decisions about the shape of public policy or whether some elite or special interests dominate these decisions. At another level some theorists are concerned with the problems of policy implementation, or the ability of governments to ensure that their policies are successfully carried out. It has been argued that duly elected governments will not always be able to ensure that their policies will be implemented successfully because they face the potential limitations of the unwillingness of the bureaucracy to carry out its duties, opposition from social and economic interests (trade unions, private companies, financial institutions and individuals) and real socio-economic constraints. Approaching the concept of power and public policy-making analysis from this perspective implies concentration not on the power of initiation, but on the ability of other centres of power, outside the purely political, to veto the actions of duly elected political office-holders. This is, then, the study of the power of constraint. It is difficult, however, to construct a general theory of power or policy-making with approaches which are concerned with very different questions (who decides versus who vetos). Nevertheless by drawing a distinction between these two levels of analysis it is possible for the social scientist to broaden and extend the meaning and understanding of the concept of power. Having first outlined the problem of power in more detail (and shown how this debate is often sterile because writers are drawing conclusions from very different levels of analysis which cannot be used to prove or disprove one another's theories), it will be possible to outline the two levels of analysis to be adopted in this study. The substantive material of the study is the struggle over the state's role in land and property development in Britain since the Second World War. The basic structure of the study is to indicate first what the major issues have been in land and property development policy, and then to outline the constraints outside the political decision-making structure which limit the scope for successful policy implementation. Having examined these generalised constraints in society and economy, the study then tries to illuminate the power of initiation and the power of constraint in this issue-area in post-war Britain. By describing and analysing the process of decision-making for land policy it is possible to understand that Britain's political decision-making structure is relatively pluralistic and that elected governments which command a

Power, policy-making and implementation

5

majority in Parliament have relative freedom of manoeuvre in policy initiation. This is so even though there are attempts at mobilising bias by the civil service against radical party policy in office. The implication one might draw from this is that the government could therefore do whatever it wished to do. Unfortunately, this is not a correct assumption nor is it a valid interpretation of the structure of power in this issue-area or in Britain generally. The analysis of power cannot end with the process of policy initiation; we must go further because all post-war attempts to restructure the role of the state by the right-wing or left-wing policies have ended in failure and reversal. Right-wing (or laissez-faire) policies have generated property speculation and have been questioned ultimately by the very Conservative governments which first implemented them. Left-wing policies aimed at partial or, ultimately, full land nationalisation have generated bottlenecks in land and development and crises of housing construction and public expenditure. To understand why these problems have occurred (and also why governments have eventually returned to consensually based policies of a middle way between the Right and Left) it is necessary to comprehend the power of constraint and the ability of important social, economic and bureaucratic actors to impede the successful implementation of policy. This study will argue that governments fail to understand the power of constraint and that they generally legislate in ignorance of it. Successful policy initiation is only possible, therefore, if government seeks to co-operate with and co-opt those actors outside the political system who have the power to veto the successful implementation of policy. This conclusion is not only to be seen in relation to land and property policy in Britain but can be drawn generally for all government policy-making. This further implies that extreme right- and left-wing policies, even when they can be initiated, are unlikely to be implemented successfully because such policies ignore the veto powers of actors outside the political system. The author argues that, this being the case, the effort of initiation against interests that the government is unable to control is hardly worthwhile, and that a more 'middle-way' approach is the best that governments can achieve in advanced capitalist societies, which have relatively autonomous centres of social and economic power outside the purely political decision-making process. Structure and process in the analysis of power in public policy-making

One of the major problems with the debate about power, and the best method to use to analyse public policy-making, is that social scientists

6

Introduction

do not agree on the questions which are to be analysed. Consequently, because of the dichotomy which exists between those who are concerned with the question of who decides and those concerned with the question who vetos, there is a tendency for social scientists to concentrate on different 'realities' and different levels of analysis. The 'real' world they seek to explain varies according to the epistemological assumptions entailed within each explanatory construct. In very simple language, the concepts utilised are incapable of linkage due to their lack of commensurability. This problem is clarified if we consider the assumptions and focus of analysis utilised by elite and pluralist theories of power and political decision-making.2 In constructing its explanatory framework of power and decisionmaking, the pluralist school concentrates almost exclusively on the process by which decisions are made. On the other hand, the elitist school draws its concepts and causal hypotheses from an analysis of the structure of society, as well as from an understanding of the mechanisms by which observable conflicts are resolved in that society. As a result, the two schools are analysing very different 'realities', utilising dissimilar concepts, and operating under vastly different assumptions about the nature of power and influence in society. Pluralist writers concentrate on the mechanisms by which decisions are reached - who participates and who decides. 3 They allow empirical data (the diversity of groups and actors in the policy process) to stand for itself. Having studied a number of decisions in society, and finding that no one group or body appears to be shaping all or most of these decisions, pluralists have concluded that decision-making (and therefore power) structures are flexible, open and relatively democratic. Despite the fact that the pluralist approach lacks any theoretical analysis to guide research, or any real concern with the effects of policy decisions on society, it has been readily accepted because it appears to conform so obviously with the reality of the political system. Most analyses of the decision-making process do reveal a wide diversity of participation and influence, and this diversity has led many writers to conclude that society's power structure must be pluralistic. Of course, it has also been heavily criticised, 4 because it lacks an awareness of the development of legislation over time. 5 It fails to account for the inequality of representation and participation in decision-making. 6 It ignores the possibility of agenda setting and non-decision-making. It fails to differentiate adequately between types of issues and their importance for different groups or interests in society. 7 Furthermore, it has no way of accounting for the continuity of deprivation in society,

Power, policy-making and implementation

7

and it fails to appreciate the stratification of society into elites drawn from varied social and economic backgrounds.8 It is not surprising, therefore, that elite theorists should disagree so vehemently with the pluralists. Although there are many different elite analyses,9 they all share one common denominator: they are concerned to show that society is stratified. The initial premise revolves around the assumption that society is structured in a certain way, and that, irrespective of who appears to be making political decisions, the reality of who decides is rooted in this initial structural order. Thus, for writers who believe that a social or economic elite exists, evidence that political decisions are taken by, and within, a relatively pluralistic policy process, cannot be taken as a justification of pluralism. 10 Any evidence that pluralism exists in the policy process can be, and is, refuted by assertions that: only some decisions are important to the dominant elites; threatening issues may be kept off the policy agenda; and, in the final analysis, the mobilisation of bias in favour of the elites contains within manageable bounds any potential threat to their position. There are, of course, obvious problems with the elitist approach: the theory is often constructed prior to research (with evidence being gathered to support the initial argument rather than to disprove it) and most empirical research has tended to discount elite theories, which base their arguments on the correlation between social background factors and the attitudes and behaviour of decision-makers. 11 The main problem with this debate is not the analytic weakness of each approach but, arguably, the fact that the two approaches are not commensurable, because one concentrates on the visible power relations in the process of decision-making while the other looks for causal explanations by emphasising those structural forces in society which predetermine choices in the long term. Thus, formal institutional approaches to the study of government decision-making (which emphasise the role of elections, Parliaments and Cabinets) are centrally rooted within the process paradigm. Such approaches make few assumptions about the structure of power in society, other than to support the view that formal institutional relationships, embedded in the process of decision-making, best approximate the power structure of society. 12 Linked with these 'electoral chain of command'13 theories are pluralist and organisational theories.14 Organisational, or bureaucratic, explanations of decision-making emphasise the role of ' standard operating procedures' and ' routines' in constraining the choices open to decision-makers15 and must be seen within the process paradigm of most political science literature.

8

Introduction

These process analyses can therefore be clearly differentiated from elite analysis with its structural bias. Likewise, systems analysis, derived from the work of David Easton, is concerned with illuminating the broader forces which operate on and shape political action. 16 But, as Easton has argued: ' my approach to the analysis of the political system will not help to understand why any specific policies are adopted by the politically relevant members of a system'. 17 He is clearly uninterested in process and is more concerned with the totality of social relations which may shape decisions in the political system. His approach is centred, therefore, on an elaboration of the ' supports' and ' demands' within the total social system, which the political system must convert into 'outputs' (policies). In this formulation the governmental process is regarded as relatively neutral. As such, Easton's emphasis on socialisation, culture and attitudes, rather than with political ideologies, compromises and institutions, places him squarely in the structural approach to political analysis. Unfortunately, his structural method is primarily descriptive, and is mainly concerned with explaining how complex social systems survive and regulate themselves rather than with illuminating the structural properties of power and policy-making. This criticism cannot reasonably be directed at Marxist approaches. Starting from an analysis of the dominant mode of production, Marxist approaches seek to prove that the ownership and control of the means of production ensure the dominance of social, political and economic decision-making. Although, in recent years, Marxist writers have moved some way from this over-determinist approach,18 their emphasis on the relationship between the ownership and the control of the means of production places them centrally in the structural approach. The goal of Marxist theorists is not to illuminate the intricacies of the policy process as such but to reveal the constraints placed on autonomous action of political decision-makers by the needs of the dominant mode of production. At its most extreme, politics and process in this formulation must be merely superstructure and largely irrelevant to the shape of the decisions which must eventually be taken.19 The dilemma over structure and process has, however, also been clear in recent Marxist writings. The traditional assumption of Marxist writers has been that structure and process were indivisible. The Ruling Class dominated the social and economic systems by their control of the means of production, and were also able to control political decisions, either by direct representation (as Cabinet Ministers, MPs or top civil servants), or indirectly through economic or moral pressures (crises of business confidence). The proponents of this view have been labelled

Power, policy-making and implementation 20

9

'State Monopoly Capitalist' theorists. More recently, theorists of an Hegemonic Ruling Class have accepted the dominance of Monopoly Capital, but argue that the orthodox interpretation of the role of the state is partial. The state should be seen not only in terms of formal institutions but also in terms of the family, school, trade unions, parties, the church, the media, the arts and the health service. As such, contrary to orthodox Marxist analysis, the state is not monolithic because each group, institution and organisation has its own autonomy, and value systems are poiycentric in a relatively pluralistic system. Thus 'Ruling Class' domination is perpetuated through the unequal competition between different ideologies. Both the masses and groups in society accept the ideology of the dominant political and economic class, so that thought and action is confined within limits acceptable to the 'Ruling Class'. 21 Clearly, though major disagreements are apparent over the mechanisms of domination, the overall determinism of economic ownership, in the last instance, in controlling policy and process is not questioned in either of these approaches. The location of the owners of the means of production and their beliefs, attitudes and goals is the key to the analysis of public policy, since the political process is subordinate to their interests. Some recent Marxist writings have, however, seriously questioned the centrality of economic determination: Jessop, for one, seeks to update this argument. His view is that in the long term ' Monopoly Capitalism' dominates, but in the short term its goals may be overturned and constrained.22 His basic argument is that at any moment in time action will be constrained by the ' conjecture' of socio-economic needs and political possibilities. Thus, even though the needs of'Monopoly Capital' may be crucial, the state is not tied irrevocably to the goals of the owners of the means of production, nor will the working class always lose in struggles with the interests of Capital. In this framework, then, the struggle between class interests over control of the state may result in modifications in state organisations and class relations and practices: change is possible within the constraint of the search for solutions to the problems of capitalist production. Under this new formulation the Ruling Class does not control or dominate the state, rather the state is itself a field of struggle23 in which the interests of Capital may well be overturned by reformist and social democratic forces. But problems arise with this attempt to link structural constraints and the plurality of relationships evident in the policy process. Once it is accepted that economic determinism and the Ruling Class no longer dominate the state, and the state becomes merely the

io

Introduction

focus for a political struggle in which working-class and reformist interests may dominate, then structural analysis may be superceded by the explanation of short-term compromises in the policy process. This new formulation, therefore, raises the question of whether or not the initial structural property of the approach (economic determinism) has any real meaning any more. To coin a phrase: one may be throwing the baby (Marxist structural analysis) out with the bath-water (economic determinism in every case). Contemporary Marxist writers thus have difficulty in coming to terms with the problem of analysing and linking the study of structure and process: they face the dilemma of meshing economic determinism in every instance with the eclectic and indeterminate plurality of action in the policy process in individual policy cases. Despite the fact that no general, over-arching theoretical solution is possible to resolve this dilemma, it is suggested here that Steven Lukes' three-dimensional approach to power offers a potential compromise answer. Two levels of analysis: the short-term power of initiation versus the long-term power of constraint Lukes has identified three ways of analysing power, which incorporate the distinctions of approach embedded in the structure versus process debate.24 These distinctions are as follows: (i) one-dimensional view: A has power over B to the extent that he can prevail over B in formal political decision-making on one or more key issues, where there is direct and observable conflict between A and B over outcomes. (ii) two-dimensional view: A has power over B to the extent that he can prevail over B in determining the final outcome and also what is to count as a formal issue, where there is a conflict of interest over policy preference or sub-political grievances (observable), (iii) three-dimensional view: A has power over B to the extent that he can prevent B from realising his' real' interests, or from articulating these effectively, due to the mobilisation of bias resulting from the institutional structure of society. In the first two views power is seen in visible conflicts of interest between individuals. In this sense it relates to the normal political science paradigm of power in policy-making. Given that process analysis concentrates mainly on clearly visible and observable phenomena and behaviour, and denies that structural constraints can shape policymakers' actions, these two views are the normal tools of analysis for

Power, policy-making and implementation

11

political scientists. The third view is distinct because it moves away from clearly visible inter-personal relationships and conflicts, and concentrates on how power is manifest in the way in which social structures (class relationships) or institutional arrangements (the shape and bias of the political or educational systems) conspire to leave certain actors unaware of their 'real' interests. This third view is located centrally within the structural approach to policy, or political, analysis; power is conceived as manifested, not in individual relationships but in the interaction of groups and institutions. Lukes has appreciated that there are serious epistemological difficulties between power defined in terms of individual actions and power conceived in terms of constraints imposed through the structure of society. The former definition obviously implies contingency (scope for 'free will'), while the latter denies contingency by emphasising determinism (constraints on freedom for individual actions).25 Although Jessop has argued that Lukes' answer to this problem is simply to oscillate between contingency and determinism,26 it would seem that he does offer at least a way forward for the policy or power analyst who wishes to understand the relative influence of structural and process variables on policy formulation. Lukes argues that the 'real' world is structured within certain limits by social and institutional arrangements, but that the constraints imposed by these structural properties leave gaps within which individuals can choose to act in conditions of relative freedom.27 By this means he is able to maintain a belief in 'free will' and also in 'social determinism'. This appears to be useful because a partial solution to the structure versus process dilemma may be arrived at by using Lukes' differentiation to draw a temporal distinction between methods of analysis. This is evident if we compare our dichotomous approaches: structural theories emphasise the constraints imposed on social and political interactions in the long term; process theories concentrate, almost exclusively, on short-term consequences and relationships. The benefit of making a distinction between long- and short-term influences in policy analysis, however, is that it allows one to appreciate the insights of both structural and process explanations and to develop two levels of analysis of power. It is clear that society is structured: 'life-chances' are not equally distributed; 'winners' and 'losers' for material, physical, social and political rewards are plainly visible; 28 certain groups, actors and institutions have a predominant influence in social and political decisionmaking; and the search for profit (though not unfettered by governmental restraints) is still an important force underlying social and political

12

Introduction

decision-making. This latter point should not be ignored because, even if a determinist or structuralist Marxist view is not adopted, the search for profit in Western societies, and the consequences of changes in the mode of production and circulation of capital, may impose important constraints on the possibilities available for government action.29 If we accept Lukes' differentiation of power and the long-term view of structural constraints presented here, it is also likely that all issue-areas in a society will have structural constraints which limit policy op ions. In order to understand, therefore, why certain policies are decided upon rather than others, and also the limitations of effective government intervention into areas of society, the structure of the policy or issue-area must be clearly defined. This implies describing the dominant modes of production and exchange, the major institutional and political actors, the unorganised and politically inarticulate (whose realisation of their own best interests is perhaps underdeveloped), the ideological predispositions, and the existing policy programmes and practices within each issue-area. Only by this means is it possible to appreciate the structural limits within which governments (of whatever persuasion) must operate. The delineation of these constraints is analytically and temporally distinct from the discussion of the compromises and power struggles within the policy-making processes itself. This is true, if the temporal distinction is held too for analytic purposes, even though the two are not totally separate in 'reality'. It is obvious that constraints may change in the long term, and even though this may be due to changes in methods of production or losses of profitability, it may also be due to the effects of group or government actions in the policy process. This is a crucial caveat and one that is central to the recent critique of structural Marxism. E. P. Thompson has argued that this new Marxism (associated with works of Althusser, Balibar and Poulantzas) is essentially reductionist because, like the earlier 'Stalinist economism', it assumes that there is no meaningful autonomy for political structures.30 He also suggests that structural Marxism is misguided, mainly because Marx and Engels only developed their analysis to include an abstract theoretical system, which they defined as 'Capitalism'. This did not extend to the analysis of 'Capitalist Society', with its social, political, ideological and cultural relationships; their analysis only illuminated an idealised mode of production which had not (and arguably has never) been fully formed in any society.31 For Marx and Engels, therefore, the needs of' Capitalism' were not, as Althusser and Poulantzas argue, always determinant in the 'last instance' at all. Rather 'Capitalism' was an abstract theoretical system, with its own laws and needs as a mode

Power, policy-making and implementation

13

of production (viz. search for profit and the need to accumulate capital to reproduce the conditions of division of labour to ensure the creation of further profit, etc.), which, while having a major role in shaping political and social structures, could also be shaped by political action and class struggle. Thus, whereas ' Capitalism' has definite needs, it is not inevitable that these needs will be met at all; and only by the analysis of the historical development of the capitalist mode of production in specific societies is it possible to determine whether or not capitalist development has been unfettered, or whether it has been constrained by other modes of production (viz. feudalism and land ownership) or by working-class (Labour Party and trade union) activities. It is not axiomatic that the goals of the capitalist mode of production will always be determinant, nor that' Capitalism' as a system of production or as a society of social and political relations has not changed substantially since the nineteenth century. This in no way invalidates the use of the Marxist framework (with suitable modifications to take account of modern changes and developments in production and social and political reality) as a starting point for analysis.32 It does, however, counsel caution in assuming any inevitable relationship between the needs of capital reproduction and governmental policies or even power structures in society. Constraints are not immutable: they are likely to change due to the effects of economic, social and political interaction. Structural limits on political action do not, therefore, arise simply out of the needs of' Capitalism', although they may in part. On the contrary, the way in which the capitalist mode of production has been introduced into different societies has varied. In some societies (like the USA) it is possible to argue that the capitalist mode was more unfettered than in others (like Britain) where the monopoly mode of production was relatively slow to develop even though the initial move to capitalist development came very early. Furthermore, it is also true that workingclass and traditional landed interests have acted as significant obstacles to the creation of a fully integrated and dominant capitalist system in some societies. This is certainly the case in British society, where the autonomy of the financial sector, historically involved in trading rather than productive relations, has acted as an additional restraint on the full dominance of the domestic productive sector.33 As result the needs of the primary productive-capitalist sector in Britain have always been constrained economically, politically and socially. As E. P. Thompson has argued, however, it is the elaboration of these historical relationships and compromises which form the base for the elaboration of the

14

Introduction

long-term structural limits on policy-making. It is not a reductionist emphasis on the needs of an idealised ' capitalist' system of production that should concern us, but more the historical experience of capitalism's elaboration within British society. In this sense, then, the structure of society, or an issue-area within it, and not simply the needs of capitalism, will set limits on the scope for innovation by governments in the long term. This is another way of saying that governments are not able to achieve everything that they may ideally desire. For instance the Conservative government (between 1970 and 1972) and the Labour government (between February 1974 and July 1975) found that the economic policies they desired and those possible in practice were not the same. The main reason for the failure of their respective, if distinct, policies was that market participants (trade unions, manufacturers and financial institutions) did not behave as they were supposed to. In other words, the market in Britain has a structural relationship or logic which constrains and limits the scope for successful policy implementation even though, in the short term, governments may have the opportunity to initiate policy relatively freely. An inclusive approach to the study of public policy-making and power must therefore not only concentrate on the short-term bargains and compromises within the political decision-making process, in which the power of policy initiation is the paramount concern, but should also study the implementation stage, to understand the effectiveness of alternative centres of social, bureaucratic and economic influence which may have the power of constraint in the long term. Both levels of analysis are necessary if we are to understand fully the freedom of manoeuvre of democratically elected governments and, ultimately, the locus of power in capitalist societies. Before analysing British land and property policy from both of these perspectives a short digression on the analysis of policy-making and power in Britain is in order. This is necessary for two reasons. Firstly, a study of the literature on this subject clearly shows the way in which authors have failed to take account of these two perspectives. Secondly, it is the intention of this work to draw a number of conclusions about the need for more realism in British policy formulation by political parties and governments. This need must also be seen, furthermore, in the context of the adversarial nature of post-war British politics and the rise of the SDP-Liberal Alliance.

Power, policy-making and implementation

15

British adversary politics, social democracy and the analysis of power and public policy-making The debate about whether governments have power to influence all the policy decisions which they might desire, or whether they are constrained, is evident in British social and political science writing. Recent studies of the role of government in Britain, by both elite and pluralist writers, have concentrated heavily on the pluralistic nature of the decision-making system and the relative independence of governments to decide on policy for themselves. This model is normally associated with the adversary politics thesis, made famous by S. E. Finer; 34 the basic argument here being that, in Britain, political parties do take power and are able to initiate policy freely as they would wish, but that they base their policies on ideological prejudices and ignorance of the real socio-economic circumstances of the world. This in turn leads to poorly formulated policy and a failure of impetus and direction in government, as the state continually confronts crises of its own making. The conclusion is that only a change in the adversarial system of government, in which the two major parties confront one another, would result in less policy failure and more policy continuity. The chosen solution is normally the creation of a third political force through electoral reform which would (in the guise of the SDP-Liberal Alliance today) result in continuous coalition government and relative policy stability on non-ideological grounds and on the basis of consensus rather than class conflict.35 Set against this extreme view of the adversarial nature of British politics is a whole generation of social (mainly political) science writing which has doubted the pre-eminence of the elected government in decision-making. This school of thought, while still concentrating heavily on the government's ability to initiate policy, can however be further differentiated in two distinct factions. On the one hand are, mainly political, science writers who argue that the government governs but that, because the political system is pluralistic, then pressure groups are able either to shape or, in some cases, dictate to the government of the day. The list of writers in this school is immense and a sample of the more seminal is all that is possible here. Samuel Beer, C. J. Hewitt, Wyn Grant and David Marsh, Anthony King and Samuel Brittan are typical of this particular view even if they do not always totally agree.36 Beer and Hewitt argue basically that the government must listen to pressure from external groups which therefore have political influence, but that it is the government which has ultimate power in policy initiation because it decides what policy compromises

16

Introduction

must be taken. This is also the general conclusion which Grant and Marsh draw of the relationship between business, labour and the government in Britain.37 Brittan and King who, while contending that the system is pluralistic, also argue that the government is now 'overloaded' by the demands placed upon it. It cannot, in other words, freely decide what it wants to do and this leads these writers to doubt that the system is one which the government is as independent as adversarial theorists imply. In fact they argue that the government is buffeted by forces it cannot control. This group of writers can be subsumed under what Richard Rose has termed the consensus or technocratic models of policy-making in British government. 38 This view holds that there is little policy difference in practice between the political parties when they take office, whatever their manifestos may imply. In this sense, then, the pluralist and overload theorists are arguing that the government decides but, because it faces the same pressures whatever its political or ideological persuasion, then it must pursue similar policies. A variant on this approach is the jfekyll and Hyde thesis which maintains that, while the parties hold very different manifesto commitments and though they normally strive manfully to implement them, within two years the radical and ideological Mr Hyde of the manifesto gives way to the more consensual and reasonable policy associated with Dr Jekyll - the reason being the failure of ideologically based policies. 39 There are in this approach strong similarities with the more recent study by Richard Rose on whether a change of party government makes any difference to government policy. Rose concludes that, on important party political issues, the party will normally try to implement and initiate the policy which it believes in, but that most policy-making is not adversarial nor ideologically fundamental to the party. In this sense one has, according to Rose, both limited adversarial politics in Britain and also a continuing consensus on very many issues and a tendency to policy failure and U-turns by governments which place too much reliance on ideology to formulate policy. 40 This broad group of writers, then, is concerned with analysing whether party makes a difference to government policy, and the studies by Rose and Stewart conclude that while there is something in the adversarial thesis it is not a total explanation of what happens in policy-making and that it overplays the freedom of manoeuvre of the elected government. The implication is, however, that this is because of the defensive strength of various interests and groups in a basically pluralistic system. There is, however, a more sociological group of writings on power and policy-making in Britain which, while also concerned with who makes

Power, policy-making and implementation

17

policy, is more concerned with explaining why it is that there is a continuity in government policy. The main criticism of this view is that it assumes that policy continuity is apparent, and it is on this ground that many of the pluralist writers discussed above have been disparaging about this elitist school. C. J. Hewitt in particular has been scathing of assumptions that the British system is dominated by any social, economic or political elite.41 A further problem with this approach has been the variety of types of elites that these writers have discovered: W. L. Guttsman identified a political elite dominating policy; R. E. Pahl and J. T. Winkler, Joe Haines, Brian Sedgmore and Tony Benn have espied a bureaucratic elite; while Hugh Thomas found an 'Establishment', C. Arnold Baker a 'Power triangle' and Max Nicholson a 'system'. 42 The great problem with this school of writing, which is mirrored in the Marxist/elitist arguments presented by Ralph Miliband (in which he discovered a social and economic elite which taken together he argued constituted a ruling class in the Marxist sense), is, however, that it is contradictory.43 It may be argued that for an elite to exist it must possess what has been termed Meisel's three C s - cohesion, conspiracy and consciousness.44 Without there being one unified and co-ordinated elite capable of dominating all important issues then an elite by definition cannot exist. Pluralist writers have always argued that there are elites who can dominate policy in some discrete areas - indeed their thesis is a thesis of checks, balances and competition between elites45 - but that they do not as one elite dominate all issues, nor is one elite able to dominate all issues. The plethora of theses of elites presented above seems therefore to confirm rather than to undermine the pluralist case. Despite this major weakness of the elitist approach, it is still the case that this viewpoint takes the analysis of power further, because it tries to explain, rather than to describe the fact that there is a high degree of continuity in British public policy and that this might be generated through a mobilisation of bias by strategically placed political social or economic actors - like the civil service, trade unions or business and financial interests. To agree that it has not been proven convincingly that Britain is controlled by an elite is not to denigrate in any way the basic insight of this writing. In this sense it is a useful attempt to explain the apparent consensus which develops in British public policy-making, whatever the original ideological premise from which the governing party might have started. It would appear, then, from our brief discussion of the British literature on where power to initiate public policy lies, that pluralist writers seem to be nearer the mark than elite theorists. Pluralist writers

18

Introduction

show the government to be the main locus of policy initiation but also argue that it is limited in its ability to do whatsoever it might desire by the need to be responsive to a plethora of other pressures and interests in society. It may well be that some of these interests may have more influence than others, but it is doubtful if any one of them (business or labour for example) constitutes an elite. Having said this, however, a number of problems do appear to exist with the pluralist school of writing. If the government of the day is not dominated by an elite, why does it not implement successfully its manifesto and ideologically based policies? Pluralist writings have no answer to this conundrum because their analysis is concerned only with understanding who decides policy not where power lies in society and the economy. It is this weakness that elite theorists have picked up, but their own analysis has been weak and has not really refuted the pluralist argument about political power in Britain. The main reason for this failure is not the underlying inadequacy of the basic elite assumptions (about the inequality of life chances and the structural differentiation of society) but rests with the focus of their inquiry. To understand where power lies in reality we need to know whether policy can be successfully implemented once it has been formulated. If it cannot, then we must doubt whether all there is to be said about power can be said by analysing who decides. But the elite approach, which tried to understand the failure of elected governments to implement their chosen policies (or even to initiate them), is a cul-de-sac. This is not because the basic premise is invalid but because the level of analysis is wrong. To understand the reason for policy failure and ultimately to understand more fully the distribution of power in society, we need to look at the third dimension of power, or the power of constraint. Analysis of the power of constraint is concerned less with the political decision-making process and more with the implementation process and it is a poorly studied area in British social science. The research which has been undertaken has normally been confined to policy studies associated with the role of the bureaucracy and its efficiency,46 or determinist Marxist writings which argue that the ruling class, through its ownership of the means of production, can dominate all policy implementation and veto radical policies both within the state and outside it by investment strikes and the like. 47 The problem with this latter approach is that it ignores the possibility that the working class or other interests may have the power of constraint which is not related to the requirements of capital. This writer, for example, has argued that the trades unions are a constraint on the power of the state and can veto

Power, policy-making and implementation

19

important policies - as can business and financial sectors which Marxists are perennially concerned with. 48 Furthermore, as studies of policy implementation which have been undertaken reveal, there is also the possibility of bureaucrats - for a whole variety of reasons ranging from personal prejudice to organisational survival - vetoing the implementation of policy. 49 For this reason, then, it is contended here that, before it is possible to understand fully the nature of power in any society, the constraints on policy implementation outside the political system must be clearly understood. This implies an appreciation of the economic and social environment in which policy must be implemented as well as of who actually decides policy in government. Neither focus alone can tell us where power in society lies; only by meshing the two can we fully illuminate the analysis of power, because both, at different levels, indicate the political, social and economic forces at work in any society. There is finally, however, a more practical reason why we need to adopt this two-headed approach to public policy and power analysis. The continuing debate in political science literature has revolved around whether party makes a difference to public policy in Britain. In general there has developed a division between those who see the British system as adversarial (and who then argue that ending this will solve Britain's economic and social problems) and those who argue that the system is not as adversarial as it appears to be (and therefore do not believe that changing the political system will make much difference to public policy problems). It seems apparent to this writer that both of these arguments are correct and yet both are wrong. The adversarial thesis, as will be shown here, is correct for some important policy issues in Britain but not for all policy decisions. The Rose view, that party does not make much difference, is, however, also correct when we look at the implementation of policy in the long term. Radical adversarial policy usually fails in implementation, and this explains why there is also some truth in the Jekyll and Hyde thesis of constant government U-turns. The problem with Rose's position, though, is that it does not really explain why policy fails, because he limits his analysis to the power of policy initiation and tells us nothing about the power of constraint. Thus, while Rose has told us something about the inability of governments to innovate as freely as they may wish - he has not really told us why they are not able to do so. To understand why, we need to shift to another level of analysis. In doing this we are moving into new and fertile ground for social science in that, if it is possible to explain the resistances to change and policy implementation more adequately, then it should be

20

Introduction

possible to help governments to construct policies which are more practical and relevant. This point is worth underlining because it appears to this writer that by concentrating only on the power of policy initiation - which has been the abiding weakness of political science as a separate discipline - political scientists tend to have a limited utility in advising governments. The assumption of much political science literature, whether it agrees with the Finer view or not, seems to be that a change in the political system, to overcome the problem of adversary politics or of overloaded demands on government, will somehow resolve the broader crises in society and economy in Britain in the 1980s. This viewpoint when looked at from a more inclusive analysis of power in our society may, however, be naive. While the need for an end to adversarial politics may well be important, and a breaking of the two-party mould wholly desirable on policy continuity grounds, this alone cannot resolve the problem of the defensive strength of crucially placed interests (for example business, finance and labour) in society and the economy who have the ability to veto public policy outside the political system. Thus Finer's advice, while laudable in one direction, is naive in another: it indicates that policy based on ideological prejudice rather than reasoned awareness of the issues is likely to fail; but it then assumes that the failure is caused wholly by the ideological nature of the policy rather than the true cause of failure - the ability of strategically placed interests in society to refuse to implement that policy. Changing the political system will not change the cause of policy failure one iota if this argument is correct. It follows that, if social scientists wish to advise governments, then they should first understand the true locus of power in society rather than concentrate their analyses only on those areas in which they happen to have specialised. It therefore appears to this writer as axiomatic that it is necessary to bargain with interests outside the political system who have power resources which the government cannot overturn, rather than confront them by force and coercion.50 This is the ultimate conclusion of this book, because this study seeks to show that while governments do have a capacity to dominate the policy initiation process in Britain (and they choose to define an issue as of key importance to them as a government), this power is not absolute. Thus, because power is also located in the social and economic structure of society, the government's political power is itself circumscribed and limited. Governments, then, which try to ignore these structural constraints and force the holders of these important veto powers to act in ways they do not wish, are bound to

Power, policy-making and implementation

21

see their policies fail. Politics is the art of the possible whether a government has a right- or a left-wing philosophy. This means that governments have to persuade, cajole and pray; they can only dictate to those politically, socially and economically weak interests in society which are totally dependent on the government's largesse for their survival.51 As a consequence this writer concludes that an incorporationist approach to policy formulation, rather than either a rigid demarcation of political, social and economic power in line with neo-liberal philosophy, or an attempt to extend the powers of the state over all economic and social power centres in line with socialist philosophy, is the only way to resolve the social, economic and political problems which Britain suffers in the 1980s. That this requires a consensual and continuous coalition government in Britain seems hardly in doubt and it also implies partial support for the electoral reform and mould-breaking role of the SDP-Liberal Alliance. But, this conclusion is arrived at from a very different route than the one which led S. E. Finer to call for a break in the political mould. It is a recognition of the weakness of governments in the face of socio-economic veto powers that has led this writer to argue for centrist, consensus and bargained politics, not Finer's apparently naive faith in institutional and political reform, as a vehicle for transforming social and economic problems. As this study seeks to illuminate, breaking the political mould may well be the easiest task that faces individuals who wish to transform Britain in a social democratic fashion. It seems apparent that the more difficult problems of overcoming the veto ability of centres of power outside the political system has yet to be overcome, or even fully realised, by the leaders of the SDP-Liberal Alliance or those academics who seek to advise them. 52 This however is to run ahead of the analysis of policy and the problems this reveals. Before we can draw these general conclusions out in more detail we need to fulfil three tasks: indicate why land and property has been a contentious political issue; outline the social, economic and political structures which limit the ability of government to implement any public policy they wish in this area; and, then describe and analyse why governments have pursued ideologically based policy prescriptions (the power of initiation) and why these have failed (the power of constraint). Only having achieved all of these tasks will we be in a position to explain which policy will work and, from this point, draw general conclusions about the need for social, political and economic change in Britain.

PART B

The problem of land and property in Britain and the effective limits on government policy initiation

The history of land and property policy in Britain and the development of social democratic solutions (1845-1Q45)

The compensation and betterment problem. Modern land values policies and the social democratic solution of Uthwatt (1845-1942). The failure of Uthwatt and the social democratic solution between 1939 and 1945. This chapter outlines the background to one major area of adversarial politics in British policy-making - the question of the role for the state in land and property development. This issue-area - generally referred to as land values policy - is particularly useful as a case study because it provides an example of the failure of adversarial policies to work in practice and provides us with an opportunity to try to explain both the power of policy initiation and the power of policy constraint. From this perspective it is possible to indicate why 'middle-ground' policies between a totally public or totally private role in land and development provide the best chance of successful implementation. Later chapters of this book have to chronicle, not the realisation of this solution but the failure to recognise the need to find a workable compromise between the public and private sectors in this issue-area. The final result of this lack of awareness of the need for mixed, public and private involvement has been a policy impasse and repeated failure of policy implementation. These failures of implementation have occurred whether land values policy was politically on the right or the left of the ideological spectrum. Before we can look at these failures in more detail we need, however, to understand the historic role of the state in land values policy in Britain. The problem hinges on the divergent views that are held about the role of the state in relation to two different but interconnected issues. The first relates to the level at which the state should compensate landowners who lose their right to develop land or whose land is acquired, either by agreement or by compulsion, for essential public or 25

26

The problem and limits on policy initiation

community purposes. The second is whether or not, and at what level, the state should seek to collect increases {betterment) in land values whether they are created by the state, the landowner or the natural progression of society.1 The compensation and betterment problem Differing policy prescriptions for the compensation and betterment problem have been formulated by the political parties mainly because there is no necessarily correct or equitable solution. The choice tends to be the result of the general view that is taken of whether the state should interfere with individual property rights and the free operation of the land and property market. As is normal when individuals and parties disagree on the role of the state in areas of social and economic life, the complexity and intractability of the compensation and betterment problem has grown as a consequence of the increasing state role in the land use planning and development systems. Traditionally it has been argued that the owner should be treated fairly whomsoever purchases his land, and that the state should pay market values (the price that would be obtained in the open market in a transaction between willing sellers and buyers) for any land which it is decided is necessary for public use. This view can be defended on the grounds of natural justice and also because, without the use of market valuations, the only recourse is an administrative and potentially arbitrary valuation based upon the social value of the land. Consequently, it is argued that, since corruption or unfairness between different owners might otherwise result, the only acceptable solution is to allow the owner to be compensated for the loss of his land at market value for its most potentially profitable use. 2 Indeed some have taken this even further, arguing that the state should pay an additional amount, above market value, to cover any disturbance or loss of option felt by the owner as a result of state purchase.3 This might well be regarded as theyr^ market solution to the problem of compensation, since it implies that the sanctity of property rights should be maintained in the face of all state actions in the land and property markets. It is contended that any increase in land values is rightly the property of the owner of the land and when any development takes place the actual development (e.g. the provision of houses) should be regarded as a sufficient gain to the community; any subsequent tax or state recoupment of betterment is therefore an unwarranted and punitive impost on development and individual rights.4

History of land and property policy (1845-1945)

27

It is a view that is questioned by those who believe that the state, and society, play a major role in increasing land values over and above the activities of the property owner or developer. One of the earliest formulations of this position was that of Henry George.5 George argued that the rent from land was an unjust impost by landowners because land values, and therefore rents, were created by the natural development of industrial society. A similar view had already been posited by John Stuart Mill: that increases in land values were an 'unearned increment' which could be taxed away without any detrimental effect on the state of the productive economy.6 This can be seen as the 'classic' statement of the position: owners do not enhance their land values by their own actions and therefore they should not be able to keep any realised or unrealised gains in the land they own. On the contrary, since the community at large creates all betterment, then the community should recoup most, if not all, of it. Obviously this view of betterment rights has important implications for the question of compensation rights under state purchase. If the state is to recoup all betterment, then the case for compensating owners at market values is no longer valid. This argument has important connections with, and has served as one central rationale for, the case that has been put forward to support land nationalisation.7 If land values are created by the actions of society working as a community and not by the actions of owners, then it would appear not only unjust to allow them to earn profits but also unnecessary to have private ownership. Thus land nationalisers have argued that if the owner should not be allowed to retain betterment then it only makes sense to allow land to revert to the Crown, or the state, in modern conditions.8 This is not, however, the only possible interventionist position. Historically there has been a limited acceptance of the fact that the state can create betterment by its own actions and that when this is so then the state should recoup the increases in the value. In 1427 an Act of Parliament sought to recover increases in the values of property which were attributable to public expenditures on projects of sea defence. Similarly, a levy was imposed in a 1662 Act upon owners of property who benefited from street widening in London, and in 1670 the tradition was maintained in the Acts passed to assist the rebuilding of London after the Great Fire. 9 These provisions were not, however, continued or extended throughout the eighteenth and nineteenth centuries when the central governments of the day imposed obligations on local authorities to provide public utilities and to assist in the development of the railway system. 10 Obviously, the provision of services like gas,

28

The problem and limits on policy initiation

water, sewerage and roadworks may enhance the value of contiguous land. If a local authority provides what would now be termed infrastructure services to land in the interest of the community, then one effect may be that it enhances the land's development potential. As a result it can be argued that the state may indeed create values and that it should recoup those incidences of betterment directly attributable to its own activities. This view of the problem of betterment resulted in a re-appraisal of compensation rights, over and above the arguments posited for total land nationalisation. The state may well purchase land, and in practice often does so, for services which are in themselves non-profit-making but necessary. The majority of local authority statutory undertakings - the provision of land for schools, open spaces, roads, waterworks and sewerage - are examples. The provision of these services may, however, raise the value of land, and this adds a further dimension to the problem of whether the state should collect more betterment than it traditionally did under specified legislation or state schemes. It also raises the further question of whether or not the state should compensate the landowner at the full market rate for the land at its highest potential use, when in fact that use is not to be accorded to that particular site. To argue that it should not presents an additional problem. If the state compensates the owner only at the existing use value then a dual market in land is created, with owners being treated differently depending on whether the state purchases their land or they are left to dispose of it freely to obtain the market price then ruling. The issue is further complicated by those who seek to defend the sanctity of property rights and ensure equity of treatment between owners. They argue that while the state may create values it may also diminish them (worsenment) by placing restrictions on land use or by placing undesirable projects on adjacent areas. Thus, refusal of planning permission or the siting of a sewage works next to a piece of property may have a marked effect in lowering values. It follows, therefore, that if the state collects the betterment it creates, it should also provide for compensation for worsenment of land and property.11 This argument appears sensible and not particularly problematic at first sight, yet it becomes so when the state begins to play a major role in controlling and planning competitive land uses in the interests of the community at large. Once the state controls development, owners who are refused planning permission to develop can claim that but for this refusal they might have developed their land to its most profitable use, and that the state has heavily penalised them in the interest of sound

History of land and property policy (i 845-1945)

29

planning. The owner can argue that as a result of this worsenment he should be compensated at the most profitable use value for either refusal of planning permission or state purchase of his land for non-profit-making uses. The problem is, however, that all landowners can make the same case and demand full compensation. As the 1942 Uthwatt Report observed, this ignores the problem for the state that though it may shift values around in the country by planning it does not create values; rather these values are a consequence of the total demand for profitable development in society as a whole. If the state restricts the development in one area it vfi\\ float around potential sites until a suitable one is found. Unfortunately, if every owner who is refused planning permission, or whose land suffers worsenment, had his claims met in full, then the total sum that the state would have to pay would be far in excess of the real value of development that would take place, or had taken place. 12 The issue therefore becomes one of allowing for state purchase and planning, while being fair to owners and at the same time avoiding unnecessary expense. The problems are exacerbated when the state comes to control all land use planning, as has been the case in Britain since 1947. Though the Uthwatt Report had explained that the state only shifts values between competing areas, it is clear, as Balchin and Kieve have argued, that the granting of planning permissions in a market where demand is high is bound to create values which tend to be privately realised.13 As a result, the modern history of party policies reveals fairly wide disagreement as to the requisite solutions to these problems. In very general terms this disagreement has tended to be the result of the different views that the major parties have taken over the role of the state in the land market, as well as in the planning and development systems. Modern land values policies and the social democratic solution of Uthwatt (1845-1942) Up to 1909 the emphasis of legislation and party policy had been mainly confined to the compensation side of this problem. Issues involved were the level at which compensation should be set and whether or not the individual's property rights were adequately safeguarded.14 The fact that the property owner's interests were more than merely safeguarded is testimony to their power in eighteenth- and nineteenth-century British politics.15 The protection of the rights of owners as against the needs of the state was emphasised by the 1845 Land Clauses Consolidation Act. By this Act, land purchased by the state was to be compensated for at the value to the owner, plus any potential use forgone, with the addition

30

The problem and limits on policy initiation

of a ten per cent solatium to offset the loss of option due to compulsion by the state. It would be hard to think of more beneficial provisions for property owners, particularly as they were free to collect any betterment arising on their land irrespective of who or what created the extra value. 16 This situation was maintained more or less intact until after the First World War, when the 1919 Acquisition of Land (Assessment of Compensation) Act abolished the ten per cent solatium and left compensation at the open market value as between willing seller and buyer. This reform in itself might have appeared as an attack on individual property rights but it cannot be taken as such. It is fairly clear that the reform was predicated more by a desire to limit state expenditure than by any desire to attack property rights fundamentally.17 A more open attack on property rights had undoubtedly been seen in the Liberal budgets of 1909 and 1910. However, the land taxes imposed under those measures yielded very little, and were repealed by 1920. l8 The most successful increase in state activities came in Liberal moves to extend betterment collection when it was attributable to state actions, and also to give local authorities powers to commence regulatory planning of changes in land use. During the nineteenth century local authorities had been given statutory obligations, and compulsory purchase powers, to provide for the well-being of their indigenous populations,19 but had been forced to pay market value compensation for any land purchased and were unable to recoup any betterment that might arise from their improvement schemes. These restrictions had been attacked strenuously by London County Council at the turn of the century. Moreover, from 1895 to 1902, nine LCC Improvement Acts were successfully steered through Parliament, allowing for recoupment when action by the LCC increased land values.20 That betterment, resulting from specific state activities, should be recouped by the state came to be generally accepted by 1902. Following from this the Liberal government, in the 1902 Housing and Town Planning Act, was able to give those local authorities desiring them, powers to plan developments on the fringe of their towns and to raise a levy of 50 per cent on any site value rises due to their planning schemes. Under a further Act in 1932 the levy level was raised to 75 per cent and in 1935 powers to control urban sprawl were added, by Conservative dominated governments.21 Obviously Liberal measures did not envisage anything more than a limited state intervention of a regulatory and partially fiscal nature. Neither Liberal nor Conservative governments after 1906 sought to attack property rights directly or to give the state a dominant role in

History of land and property policy (i 845-1945)

31

development. This is borne out by the fact that, even though the state was to be given regulatory powers of planning control and betterment collection in urban areas, when any scheme was initiated those whose land values fell as a result of worsenment were to be entitled to compensation which, under the 1919 Act, was at full market rates. It is not surprising, therefore, that commentators on this period have argued that the over-protection of owners' rights was enough to make sound planning by local authorities unworkable, due to the exorbitant compensation bill likely as a result of any local authority scheme. 22 The period up to the outbreak of the Second World War is, therefore, one in which successive Conservative governments sought to ' hold the line' against attacks on private property rights, in the face of a gradual acceptance by all parties of the need for some betterment collection and planning controls on changes in land use. The Liberal Party laid the groundwork for the larger planning powers and extensions of betterment collection that were to come, but they did not seek to attack the sanctity of property rights as such, or the existing relationships between individual owners, local authorities and central government. The conception was essentially one of some betterment collection by the state, but only when the state could be seen to be directly increasing values, within a framework of limited local planning intervention in urban areas. For all other increases of value the owners' rights were sacrosanct. The only party with a radical vision was the Labour Party which, under its 1918 constitution, was committed to land nationalisation. Such a policy would have meant a solution to the compensation and betterment problem once and for all. Not surprisingly, the two minority Labour administrations of 1924 and 1929-31 failed to fulfil this commitment: presumably because they lacked not only the parliamentary resources but the political will to achieve this radical departure.23 It is instructive at this stage to try to put this somewhat esoteric discussion into some kind of general perspective about the role of the state in British politics in the inter-war years. In the land values policy area the Liberal Party was being forced to accept a more social-democratic, middle ground, rather than laissez-faire, approach to economic and social affairs. This shift in emphasis (which was to have its high point in the Second World War rise to prominence of John Maynard Keynes and William Beveridge) had been evident in the nineteenth century. Men like J. S. Mill and W. S. Jevons argued that the state might have to intervene occasionally when the public interest required it. This was to be the harbinger of a more general commitment to state intervention, to eradicate social and economic ills while at the same time ensuring as

32

The problem and limits on policy initiation

great a degree of individual liberty as was possible. 24 Commitment to a 'middle way' between the extremes of socialist planning and control and capitalist private enterprise was not, however, sufficient to win electoral approval for the Liberal Party in this period. While the Liberal Party clearly espoused the social democratic policies which were to form the consensus of the period immediately following the Second World War, these policies not only served to divide the Party internally but also ensured its demise electorally.25 The Liberals had policies and could not govern. The Labour Party, however, found itself in a similar position even though its policies were more socialist than social democratic in this period. The dilemma for the Labour Party was that it had faced the constraint of governing in 1924 and 1929-31 without an overall majority in Parliament and also at a time of catastrophic international economic circumstances. Ultimately the sterling crisis of 1931 had brought dissension in the Labour government, as men like Ramsay MacDonald and Philip Snowden had preferred public expenditure cuts to the possible international and domestic financial repercussions of high public expenditure. This decision - consonant with orthodox economic theories at the time and against the stimulatory economic arguments of men like Keynes - split the Labour government and laid the groundwork for the creation of a National government.26 Under the circumstances of minority government, and due to the economic crisis at the beginning of the decade, it was hardly surprising that the Labour administrations did little to extend state betterment collection or planning and development control. There was however a further reason for this lack of radical policy initiation, which was to become clearer as the Labour Party went into the political wilderness in the 1930s. While the Party was clearly committed to state intervention to resolve social and economic problems, there was at no stage any agreement amongst factions within the Party about the extent and scope of such intervention.27 A totally planned and controlled socialist economy along the Soviet model was not unequivocally supported by all sections of the Labour movement in the 1930s. Labour intellectuals, like Durbin and Wootton, espoused a more limited commitment - to state indicative planning, with nationalisation confined to industries which had failed the nation. It was always clear to these intellectuals that the state's role would need to be limited to protect individual rights - a view wholly consistent with the social democratic approach to which Liberal politicians and writers were also gradually moving.28 The lack of agreement was to cause great difficulty for the Labour Party in office because, in opposition, the reaffirmation

History of land and property policy (i845-1945)

33

of socialism always tended to mask the lack of consensus in the Party over what it was to mean in practice. This was seen strikingly over the land and property issue: the 1918 Constitution and subsequent manifesto commitments implied a policy of land nationalisation, but there were those in the Party who wanted merely to extend state betterment collection by taxation and to give local authorities more powers to control and regulate unsightly and speculative property development. This latter approach was not very far from the position that the Liberal Party had come to adopt after 1918. It was also the leitmotif of the inter-war and wartime civil service and governmental inquiries which were set up to try to find solutions to the mass unemployment and regional decline that Britain had experienced in the 1930s.29 Finally, it is instructive to place the Conservative Party in this broader perspective. Like the Labour and Liberal Parties the Conservative Party in the 1930s can be seen as a divided party. There were factions who rejected state intervention and maintained a commitment to free market approaches to economic problems, whatever the political and social problems this might engender. This group was clearly opposed by those individuals, often aristocratic, who felt that the social and economic elites of a society had a paternalistic responsibility to ameliorate the conditions of those who were less well placed. Amelioration would generally stop short of state intervention which changed ownership rights, but was in some way related to the idea of a 'mixed economy'. As Harris has chronicled, this faction tended to be taken over in the 1930s by the representatives of declining industrial sectors - iron and steel, coal, railways and textiles - who wanted the state to protect their interests against foreign competition. Such interests in the Party had little real concern for the working class and were merely trying to use the state in their own interest to protect their economic inefficiency. Set against these actions were the young politicians like Macmillan, Amery, Stanley and Boothby who were the true modernisers within the Conservative Party at this time. 30 This faction recognised that private enterprise, left to its own devices, was incapable of resolving the problems of high unemployment and that a mixed economy with indicative style planning (Macmillan's 'Middle Way' as he called it)31 and stimulatory budget techniques, similar to those espoused by Keynes, would be necessary to solve the regional unemployment problem. Given these tendencies in the Conservative Party it is hardly surprising that the National government should gradually accept the need to study the problems of regional decline and high unemployment. Individuals in all three major parties, who would fall short of recommending full

34

The problem and limits on policy initiation

state control of economy and society, nevertheless recognised the need for a mixed economic approach. While none of the suporters of this approach would be happy to be labelled social democrats, their views over ends (a mixed economy with a positive ameliorative state role which did not undermine all individual liberties and freedoms) were remarkably similar. But this social democratic solution could not be implemented because the support for it was divided amongst the three major parties. The National government tended in practice to take the line of least resistance. Rather than following the logic of Keynes and the social democrats within his own Party, Baldwin, and later Neville Chamberlain, set up committees of inquiry and indulged in protective trade restrictions to defend inefficient industries and did not adopt the interventionist, positive role that was demanded. This was wholly explicable given the ideological and personal prejudices of the Conservative leadership in the inter-war years. The Conservatives therefore had power but little idea of what to do with it. 32 This conclusion can be shown most emphatically in the context of the land use planning, development and land values policy areas. The impact of the Depression on regional unemployment was stark, as areas dependent on staple industries like coal, shipbuilding, iron and steel and textiles experienced more than 30 per cent unemployment in the early 1930s. At the same time it was apparent that the physical environment (housing, amenity, infrastructure) of these areas of regional decline, in the North East, central Scotland and South Wales, in particular, was also a major problem. High unemployment seemed to coexist (as it does today) with poor housing stock, high crime rates, social problems and a lack of social, educational and industrial services and infrastructure. Set against this unmistakably bleak environment was the relatively prosperous condition of the South East and the West Midlands in the inter-war period. The 1930s were remarkable for the fact that there were two very different sides to the economic coin in Britain. If the old staple industrial centres experienced decline, the new industrial areas (electrical engineering, motor-cars, chemicals and household consumer durables) of the West Midlands and the South East experienced growth. Inflation rates were low and the conditions of world trade moved in favour of manufacturing countries. An individual with a steady income and employment found himself relatively better-off economically than he had ever been. 33 The National government responded to these problems by imposing protective import controls in 1932 and allowed cartels to form to protect inefficient firms in the depressed areas against new and often more efficient competition. 34 This failed to do anything other than

History of land and property policy (1845-1945)

35

bolster inefficiency and did not resolve the underlying problems of a lack of demand, lack of competitiveness and high unemployment. The government's reaction was to try to encourage retraining and labour mobility amongst the unemployed in the depressed regions. This was followed by the provision of special public works schemes and financial inducements for firms locating in areas designated for development, reconstruction and improvement. These policies, which were enacted between 1935 and 1937, were underfunded and devoid of any coordinated governmental commitment - they were ad hoc responses to a problem that the government only partially comprehended.35 But the government, while unable to grant the Keynesian stimulatory policies which many individuals desired at this time, was persuaded to set up a Royal Commission to look into the problems of regional decline. Thus the Barlow Commission on the Distribution of the Industrial Population was set up in 1937. It was, in part, the result of demands from town planning pressure groups - the TCP A and the TPI 3 6 - and from civil servants and politicians who had been responsible for administering the initial Special Areas schemes 37 for an inclusive approach to the problem of decline and unemployment. The commitment to a Royal Commission was testament to the influence and growing consensus amongst enlightened politicians and administrators that a social democratic solution was inevitable if the problems of the 1930s were to be resolved without recourse to a totally planned society. This was seen most emphatically in the conclusions of the Barlow Report, presented in 1940. The Commission argued that the problems of economic and regional decline were fundamentally related to the problems of physical and social decay and poverty; furthermore, that the growth and expansion of regions and towns were also fundamentally related to structural economic changes. From this it followed that any attempt to tackle regional unemployment required a national co-ordinated approach which not only tried to encourage the location of industry in declining areas but also attempted to disperse industry and control its location within prosperous areas. Here in stark outline was a plan for an indicative planning approach to national economic problems. But the Barlow Report further concluded that urban sprawl and concentration of population in cities and towns (particularly in the South East and the West Midlands) required state regulation and control too. This implied, then, wholesale state regulation of land development and the creation of a physical planning system to complement the indicative economic planning system which was being mooted.38 Following from this came a realisation that if the state was to plan

36

The problem and limits on policy initiation

for regional balance then it would have to have some idea of where people should live. This view was supported by the nascent town planning professions and confirmed the arguments of the doyen of British town planning - Ebenezer Howard - that social and political quiescence was only possible within planned communities having the right balance between employment and urban and rural life. 39 After the war this was to lead to the creation of New Towns to decant people from congested cities (like London) and to provide for regional balance.40 During the war the government was in no position to implement such policies and contented itself with the creation of committees of inquiry to assist in the formulation of a policy for post-war reconstruction. In particular this led to the creation in 1941-42 of the Uthwatt and Scott committees to look at the related questions of compensation and betterment and the use of rural land respectively. Both of these committees of inquiry came to similar conclusions to those of the Barlow Report. Britain needed to solve its social and economic problems by the adoption of a ' mixed economic' or social democratic approach, which extended the state's role but did not fundamentally change ownership rights in the economy.41 The Uthwatt Report can be seen as the apotheosis of the social democratic approach to land values policy-making to resolve the compensation and betterment problem. If the state was to be given an extended role in controlling all physical land and property development and encourage regional balance, as the Barlow Commission recommended, then it made the problem of compensation and betterment more problematic than it had been before. In the inter-war period, the National government was not interested in providing for state recoupment of betterment. Indeed, while it did not repeal the permissive legislation which the Liberals had passed to allow regulatory planning of physical developments by local authorities, it indirectly ensured its failure by allowing for punitive compensation payments. But if the state was to be given the power to control and regulate all physical development then the issue of how much betterment was created by the state and how much compensation should be paid for worsenment or loss of development rights became even more complicated. The 1942 Uthwatt Report was and still is the most extensive public study of the compensation and betterment problem ever undertaken in Britain and, despite the disagreements amongst some of the members of the Committee, it is an unmistakably social democratic document. The Report analysed in some detail all of the potential schemes that might be used to resolve the compensation and betterment problem, now the state would be taking a far more extensive role in physical planning and

History of land and property policy (i 845-1 gtf)

37

development. Most important of all it also indicated a real understanding of the main dilemma which had bedevilled effective town and country planning by the state in the inter-war years. This was the problem of shifting and floating values. If the state was held to be responsible for compensating landowners at full market rates when they lost their right to develop their land freely, then the total cost of compensation to the state would be out of all proportion to the actual development which would in fact take place. This excessive compensation bill would arise because only part of the total land in Britain is ripe for development at any one time. But if the state controlled development through planning permission it would be shifting values between different potential development sites. The state would be deciding which land could be developed and in so doing was increasing the value of that land from its existing (probably agricultural) use to a more valuable one, while denying an increase in the value of land it had zoned for agricultural-only uses. As a result it could be argued that the state created values and should recoup some of the betterment. But there was another side to the coin. The state could also be creating worsenment. Landowners who were refused planning permission could demand compensation at full potential market rates for the loss of their right to develop their land. Set against this argument, which had always been accepted by Conservative and, to a lesser extent, Liberal governments, was the problem of floating values. Denied the opportunity to develop in one area, the finite amount of development which could be undertaken profitably would float around the country until it found a suitable site. But the state, because it was now taking responsibility for planning, was in fact being asked to compensate all landowners for the loss of their right to potentially higher land values, even though much of the land zoned outside commercial, industrial and housing uses would not (in a free market) ever be developed at a higher use value. In other words landowners could take advantage of the state's actions to demand compensation at full market prices for their land even though there was not in reality, and never would have been in practice, any chance that this land would have been so developed in the free market. In this way the state faced a compensation bill far in excess of the true development potential of the economy and this effectively limited positive local authority planning in the inter-war years.42 The dilemma for the state was therefore evident: it needed to encourage comprehensive town and country planning for regional balance; yet to grant individuals full compensation made the possibility

38

The problem and limits on policy initiation

of this type of planning in the national or public interest so costly as to be prohibitive. Compounding this problem, of course, was the related issue of how much the state was entitled to in betterment recoupment vis-a-vis the individual landowner, now that it was decided that the state should plan and thereby, indirectly, create or assign higher values to developable land. The importance of the Uthwatt Committee's work was that its nain report revealed all the potential solutions which might be adopted by the state to resolve this dilemma. The solutions ranged from full land nationalisation and limited compensation (which came down in favour of the state against the owner), through the middle way of the majority view (which tried to protect the state and give some rights to owners), to the more laissez-faire solution of full compensation at market prices for all landowners whatever the state of their land (which effectively limited the state's role). 43 The Uthwatt Report, in line with the general tenor of opinion in governmental and bureaucratic circles during the Second World War, clearly came down in favour of a social democratic, or mixed public and private, solution. Full compensation at market prices was rejected as injurious to effective planning. Outright land nationalisation was seen as politically (electorally) and administratively unworkable - even though the Committee did accept that this might well be an ideal long-term solution. 44 The Uthwatt Committee's compromise solution was to try to steer a middle course between the need for an effective state planning role and the need to protect individual ownership rights. The Committee started from the same premise as the Barlow Commission and concluded that a nationally co-ordinated economic and physical planning system was necessary. To this end, given the weakness of the local authority planning system during the 1930s, it recommended that an independent national Commission should be created to oversee all planning administration. To ensure Parliamentary accountability this Commission should be responsible to a Minister for National Development, who would co-ordinate an inter-departmental committee of ministers in Whitehall. Here we see the war-time desire for co-ordinated economic and physical planning first mooted in Barlow outlined in detail.45 It was clear that within this system local authorities would play a key role in detailed management and local planning. In particular, the Uthwatt Committee, recognising the acute problems facing local authorities which had experienced war damage and blight, recommended that local planning controls should be tightened up to stop speculation in bomb damaged sites and to allow these authorities to plan for comprehensive reconstruc-

History of land and property policy (1845-^45)

39

tion. To assist this it was felt that a speedier system of compulsory land purchase by such local authorities should be adopted. 46 The extension of planning powers in areas of war damage was also to be completed by a system of local authority land use control over development for the country as a whole. The Committee recognised however that earlier, permissive, local planning measures had not only always been jeopardised by a lack of adequate public finance to pay compensation but also by the political recalcitrance of rural and small urban local authorities (especially those under Conservative control). Thus it was felt that the recommended independent commission, staffed by professional town planners, would be less politically biased in its planning approach.47 Relatedly, given the inter-war compensation problem, it was proposed that, now that all development rights were to be vested in the state, there should be some compensation for the loss of rights by landowners but this should be confined to land ' dead ripe' for development. To overcome the shifting and floating values problem, all compensation should be paid out of a global fund which was to represent fair value to the landowner. To this end it was felt that a fair settlement should be compensation at full market value where land was 'dead ripe' for development with planning permission. This fund was, however, not to be open-ended but to have a finite limit of around five years to meet all claims: five years was seen as a reasonable time span in which development of'dead ripe' land might take place. 48 Two further problems remained for the Committee, namely compensation for land which the state compulsorily purchased for its own purposes and state betterment recoupment. To solve these problems, which were clearly interrelated, the Committee made a distinction between developed and undeveloped land. On developed land in which land values increased, sometimes due to owners' actions and sometimes due to inflation and state actions, it was suggested that a system of site value rating might be adopted (five-year assessments of value increases with the state taking a percentage of around 75 per cent of the increase due to its own actions). For undeveloped land which was needed for public or private development the Committee wanted compulsory purchase at existing use value by local authorities, who would then lease (not sell) this land back to private developers. This would mean gradual land nationalisation and betterment collection. Landowners would not be compensated for any loss of development value, they were to receive only the existing use value of the land, set at rates applicable on 31st March 1939.49 A limited amount of compensation from the global fund might be paid to such landowners when there was some potential

40

The problem and limits on policy initiation

development value of the land at the enacting date, but this was to be limited to 333- or 50 per cent of the difference between existing use and potential development values. 50 With hindsight, despite the somewhat open-ended recommendations made by the Uthwatt Committee, it would appear that this was an equitable approach to the compensation and betterment problem. True, it could be argued that the scheme did not go far enough to assist the state, or conversely that it was an infringement of individual property rights by the state, but in most respects this Report represented a workable compromise between the interests of an ameliorative and positive state role and the need to protect the individual. It bore all the hallmarks of the developing social democratic consensus that had been seen within the three major political parties in the 1930s. Unfortunately, while the Uthwatt Committee's main recommendations offered a viable solution to this inherently intractable problem between the rights of the state and the individual, they were not fully implemented. 51 To understand why we need to understand the power of policy initiation and the power of constraint that existed in British society during the war. The failure of Uthwatt and the social democratic solution between igjg and At the outset it is perhaps worth indicating what the Coalition government led by Winston Churchill did agree to do in response to the Uthwatt Report. Cullingworth, the official historian of this period, had remarked that despite the failure to implement all of the Uthwatt recommendations what is remarkable is the degree of consensus which was recorded on land use planning and land value policy in this period. 52 It is important to appreciate, however, what was not agreed upon, because this serves to illustrate the effective limits to social democratic policy solutions in Britain. The Coalition government, despite numerous policy disagreements, did agree to extend land use planning to the country as a whole and this was achieved in the 1943 Town and Country Planning Act. A further Act in 1944 also tightened up the planning powers of local authorities, ensured effective controls over land speculation in war damaged areas and provided for special expedited and comprehensive purchase powers for local authorities in war damaged and blighted areas.53 The 1944 Act also allowed local authorities in war damaged areas to purchase their land at the existing use value of 31st March 1939. This was one of the main recommendations of the Uthwatt Committee but it was only granted initially to these specific local authorities. 54 In

History of land and property policy (1845-1945)

41

1943 a new Ministry of Town and Country Planning was also created to have responsibility for all land use planning. Despite these substantial successes and the real measure of agreement that had been reached in the Coalition government on the need for a more positive state role after the war, there was still a fundamental measure of disagreement in the government. The main unresolved issues related to: the creation of an independent planning agency; the total level of financial compensation which was to be paid to landowners for the loss of their development rights; the amount that the state was to take in betterment recoupment; and the role of local authorities and central government in post-war planning, land ownership and development. The intractable nature of these issues was indicated by the fact that, despite the early start that the Barlow Report and the Uthwatt Committee (it reported initially in 1941 and finally in 1942) had given the government, there was no final agreement by the end of the war. Testament to this fact was the introduction in 1944 of a Government White Paper entitled The Control of Land-Use.ss The White Paper set out, for further discussion, a policy solution which tried to deal with the outstanding issues left by the 1943 and 1944 Acts. In particular the White Paper suggested that there should be an independent Land Commission, responsible to the Ministry of Town and Country Planning, which would collect betterment by imposing a 75 per cent charge on the difference between 31st March 1939 existing use value and the enhanced value resulting from planning permission. The Land Commission would use the fund so created to pay (after five years) compensation to landowners who were to lose their development rights once land use planning was imposed on the country as a whole. This compensation was to be based on 31st March 1939 development values, as the Uthwatt Committee had recommended, and would terminate after 15 years of operation. Finally, local authorities, working under the Ministry of Town and Country Planning and the Land Commission (for overall national land use planning co-ordination), would be able to purchase land compulsorily for comprehensive redevelopment schemes even if they were not in war damaged areas. 56 Thus the White Paper went a considerable way to meet the recommendations of the Uthwatt Report. It created national land use planning and a central institutional structure to co-ordinate the activities of local authorities; it offered a solution to the compensation problem along lines similar to the Uthwatt proposals; and it allowed for a measure of betterment recoupment to facilitate the more positive land use planning role by the state. Nevertheless, while on the surface it would

42

The problem and limits on policy initiation

appear that there was substantial all-party agreement on this policy approach, there were still major areas of disagreement. The Labour members of the government, in particular Ernest Bevin (at the Ministry of Labour), were unhappy that outright land nationalisation was not being agreed upon. 57 Anderson, a Conservative (at the Treasury), felt that landowners who had improved their land since 31st March 1939 should be compensated for this. 58 The Labour Party, generally, felt that full compensation at 1939 values was too high. The local authority associations agreed and wanted the 1939 values to be a ceiling rather than a standard so that they could try to compensate landowners at lower levels than the 1939 price. 59 This view was also supported in Whitehall by the Treasury, who wanted to reduce the cost of compulsory purchase to the Exchequer and who also argued for a five-year rather than a fifteen-year limit on the period for compensation claims. In line with this general antipathy to open-ended financial commitments, the Treasury was concerned about the implied role given to local authorities to purchase any land they desired and which the Exchequer would have to finance.60 Furthermore, the local authorities were concerned about the Land Commission and its role of national co-ordination and land purchase, which they felt might usurp their own role. They were supported in this course by their Whitehall sponsor Department - the Ministry of Health. 61 Finally, Morrison (at the Ministry of Town and Country Planning) also wanted to limit the compensation to 75 per cent of the 1939 development value, but was opposed in this by landowning interests inside and outside the Conservative Party.62 As a consequence, while it may be correct to argue that the more limited proposals of the Coalition White Paper would still have represented a substantial victory for the Uthwatt approach, what was clear in 1944 and 1945 was that even these faced innumerable constraints in the initiation process. This is why the White Paper took so long to arrive in Parliament. Before we look at these constraints, it is perhaps worth remarking in a little more detail on why there was a measure of agreement on the Uthwatt approach. While there was a growing realisation amongst some politicians, intellectuals and civil servants that the state would have to take a more positive role if it was to solve the problems of unemployment, regional imbalance and urban congestion in the 1920s and 1930s, this vision had been limited by the political myopia at the heart of the British state. This myopia can be seen in the attachment to orthodox economic theories, the resistance to institutional change in Whitehall and the recalcitrance of many local authorities to take on the positive interventionist role in

History of land and property policy {1845—1945)

43

economic and land use planning that was desired. Perhaps the major difficulty, however, was the lack of a Parliamentary or party political consensus on the need for this state action. There were a number of inroads being made into the anti-interventionist attitude of the National government throughout the 1930s. Indicative of this was the position taken by Sir Malcolm Stewart, who was appointed the first Special Commissioner to deal with the problems of the depressed areas of England and Wales. Stewart's experience led him to conclude that the National government's half-hearted approach to the regions would only work if there were effective controls on industrial location in the prosperous regions and massive assistance for the declining areas. 63 Stewart, then, was coming to accept the need for an indicative, positive planning approach to Britain's social, urban and economic problems and his view was mirrored in the Report of the Barlow Commission, which had been appointed in 1937 and which completed its work in 1940. The Barlow Report in fact touched many strands within intellectual, political and bureaucratic life with its attachment to an ameliorative and positive state role. Yet it is doubtful that it would have had quite the impact it was to have, in spawning a series of related wartime reports, or of laying the groundwork for the post-war Labour government's reconstruction programme, without the peculiar circumstances which were created by the war.64 It would undoubtedly have faced tremendous resistance from anti-interventionist Liberal and Conservative politicians without the war. It would also have faced opposition from the local authorities and central government Departments - not least the Treasury and Ministry of Health - as they defended their traditional roles, practices and assumptions. It would also, no doubt, have failed because of the lack of a political majority in power which was wholly supportive of its position. The war however changed all of this, because it created a vacuum at the heart of British government. The immediate exigencies of fighting the war left first Chamberlain and then Churchill and their senior political colleagues and civil servants preoccupied with fighting the enemy. This created an environment in which a more interventionist state role could germinate. First of all the creation of a war economy ensured that planning was no longer the shibboleth that it had been. Secondly, the government immediately recognised that, in order to maintain national unity behind the war effort, there was a need to spell out why the country was fighting and to promise a major reconstruction of post-war society in return for the war effort. Finally, the introduction of a coalition government brought into the administration Labour politicians and trades unionists. It was into this administrative vacuum that interventionist inclined

44

The problem and limits on policy initiation

civil servants, intellectuals and politicians were able to slip and to lay the groundwork for a more positive post-war state role. This fact is revealed if one dwells for a moment on the personnel who were given responsibility for post-war reconstruction in the early 1940s. On the Reconstruction Cabinet Committee chaired by Greenwood, under the War Cabinet, sat social democratically inclined men like Clement Attlee, Lord Reith (formerly head of the BBC), R. A. Butler (ultimately responsible for the 1944 Education Act) and Sir Kingsley Wood (who as Chancellor of the Exchequer passed the first Keynesian budget in 1941).65 Given the lack of time available for the normal Whitehall machine to deal with reconstruction, the Reconstruction Cabinet Committee was allowed to create its own Reconstruction Secretariat and to draw on outside experts to advise it. Among the outside advisers were the Liberals (William Beveridge, for social insurance, and John Maynard Keynes, for economic policy) and a team from Nuffield College, Oxford, which brought G. D. H. Cole and Professor R. H. Tawney (notable Labour Fabian social democrats) into government. 66 Given this personnel and the seminal influence of the Barlow, Uthwatt and Scott Reports it was hardly surprising that there was an assumption that positive, indicative style national planning and a more ameliorative, social welfare role for the post-war state would be necessary. Despite this seminal influence, which Cullingworth has chronicled, 67 these men were not able to achieve everything they desired. Only the 1943 and 1944 Town and Country Planning Acts were effectively initiated. Furthermore, the Coalition White Paper of 1944, while going some way to meet the demands of these individuals and the recommendations of the Uthwatt Committee, was not assured of successful policy initiation. Indeed the 1944 White Paper can be seen as a defeat for the more positive goals of many of these actors. A number of key recommendations from the Uthwatt Committee did not appear in the 1943 or 1944 Acts nor in the Coalition White Paper. In particular that to limit the amount of compensation to owners of undeveloped land to 33T o r 5° P e r c e n t w a s rejected in favour of 100 per cent compensation at 1939 prices. The argument that compensation should be limited to 75 per cent or only be 100 per cent for 'dead ripe' development land was also ignored.68 Uthwatt's recommendation for site value rating was resisted by the Treasury and by valuation experts as problematic. Finally, the desire to allow local authorities to buy all future development land compulsorily, for subsequent leaseback for development, did not appear in any legislative proposals. Instead the government sought only to tax away betterment on land

History of land and property policy (1845-1945)

45

that was undeveloped where the granting of planning permission could clearly be seen to have increased the value. This left all developed land to benefit from what J. S. Mill had called the 'unearned increment' and effectively limited the state's role in betterment collection. 69 Furthermore there was no effective solution to the demarcation dispute that was inherent in the recommendation (Uthwatt and Barlow) that there should be a national and independent agency to control and co-ordinate land use planning and the compensation and betterment proposals. True, there was a partial commitment to this approach in the 1944 White Paper but this was hardly binding and was contested by the local authorities and the main Whitehall Ministries (Treasury, Health, Agriculture and Transport). The main policy initiatives which were resisted in Whitehall during the war were the failure to create an independent agency to co-ordinate land use (physical) and economic planning; the failure to limit compensation payments to landowners; the failure to introduce schemes to recoup betterment on developed land for the state; and the rejection of gradual state land purchase and leaseback. Lord Reith, who was Minister of Works and Planning in the early 1940s, was clearly committed to achieving these more interventionist goals, but in 1942 he was sacked by Churchill.70 He was not associated with any particular political party (which may explain why he was without support in Whitehall),71 and he saw the Barlow and Uthwatt recommendations as the basis for the creation of one agency to co-ordinate not only physical but economic planning. Perhaps it was the independence granted to him at the BBC, that led to his desire to create an independent, non-political agency to co-ordinate these functions. Whatever his own intentions it was clear, as Cullingworth has recorded, that the idea of such an independent agency, under Reith's control, was too much for the senior departments in Whitehall (including the Treasury and the Ministries of Health, Transport and Agriculture) and in this they were assisted by their ministerial heads. 72 Only Bevin was wholly supportive of Reith's position and he was heavily involved in other matters at the Ministry of Labour at that time.73 The result of this conflict was that Reith lost his job and his vision of an independent planning agency was downgraded to a separate Ministry of Town and Country Planning, limited to physical planning and co-ordination, through an inter-ministerial committee, of the other senior ministries.74 Furthermore, Reith's goal of a national and regional physical planning structure which would oversee local authority planning was also downgraded by civil servants in the Treasury, Ministry of Health and Reconstruction Secretariat who

46

The problem and limits on policy initiation

were responding to defensive pressure from the local authorities and their Associations. Even the idea of the Land Commission, in the Coalition White Paper, was hardly what Reith or Uthwatt and Barlow had intended, because the Ministry of Town and Country Planning, not the mooted Land Commission, was to have the co-ordination role. 75 The financial elements of the Uthwatt scheme were also pushed aggressively by Reith but these measures, too, faced significant resistance. It was not just that builders and landowners, attached to the Conservative Party and having close connections with the Whitehall ministries, were strongly placed to oppose these measures. (Ambrose indeed has argued that this was the main reason - although it would appear to be an over-estimation of their power, given that fairly punitive financial measures were eventually agreed upon). 76 It was also that the issue of compensation and betterment was, and is, an extremely complex issue as between individual and state rights. The financial provisions took so long to resolve because there were so many different arguments that had to be reconciled - all of which led to compromises which substantially diluted the original Uthwatt proposals. Take first the arguments related to ownership rights. Given that the Coalition government was headed by a Conservative leader it was likely that defence of individual ownership rights should receive prominence. This explains in part why there was no recoupment of betterment on developed land, why state ownership and leaseback was rejected, and why the compensation proposals in the 1944 White Paper were more beneficial to owners.77 This also partially explains why there was agreement to give local authorities expedited compulsory purchase powers initially only to develop war damaged areas; in other areas where there was less immediate need for massive state action, landowners and Conservative rural authorities were prepared to oppose the Uthwatt proposals. But the issue was further compounded by the defence of local authority and traditional Whitehall roles and functions. The problem of what level of compensation for compulsory purchase should be paid by local authorities caused immense difficulties for local authorities and the Treasury alike. The Treasury naturally wanted to limit the commitment given to local authorities to purchase land, because it might be a drain on the Exchequer. On the other hand, the local authorities wanted an open-ended commitment by the Treasury, as well as reduced compensation rights for landowners, to reduce their cost of land purchase. The local authorities were supported in this by Labour members of the government, who felt the compensation figures should be closer to the originally more stringent proposals.78 Finally, the Treasury opposed site

History of land and property policy (1845—1Q45)

47

value rating as incredibly complex administratively, and the same fate awaited the proposals for state leaseholds. 79 Given these internal Whitehall conflicts and the defensive positions of landowners, builders and local authorities it is surprising that the 1944 White Paper was agreed upon. However, it might never have been fully implemented even if the Coalition government had continued beyond 1945. This tells us something about the power of policy initiated during the war. The interventionist inclined Reconstruction Secretariat was not in a strong enough political position to force through its policy goals and the fate of Lord Reith is ample testament to this fact. The Coalition government may have included socialists and social democrats, but it would appear that the Conservative members were unwilling - given their close relationships with private building, development and landowning interests - to accept many of the proposals from the Uthwatt Committee and the Reconstruction Secretariat. If the Uthwatt Committee's full recommendations for state control of development rights, limited compensation and leasehold control of future development had been implemented, the role of private developers, builders and landowners would have been undermined, as they had traditionally been allowed total freedom of manoeuvre in development. Private developers and builders would have faired somewhat better than landowners because they would still have been allowed to develop land - although the state would have greater control of the land supply and development process. But set against this, developers would also lose some of the speculative element in land purchase and development to the state. Clearly this was more than they would be prepared to accept and it required a fully committed government to force this through the policy process. This the Coalition government - particularly on the Conservative side - was not. Moreover, the Uthwatt proposals were far too much for landowners to countenance because these effectively limited their ability to retain betterment and threatened gradual land nationalisation by local authority purchase. Only a partial compensation for the loss of their land and their development rights was being proposed and, given their attachment to the Conservative Party, it was hardly surprising that Conservative ministers at the Treasury and Ministry of Health would try to support their interests. Ultimately, however, the Uthwatt proposals also alienated the local authorities and senior Whitehall Ministries because they threatened to usurp their role through a national and independent planning agency or a new Planning Ministry. The conclusion one must draw, then, about the policy initiation process during the war was that social democrats were able to obtain that

48

The problem and limits on policy initiation

which was least problematic - special local authority powers for comprehensive redevelopment of war damaged areas, a commitment to full land use planning and some betterment collection from land that was undeveloped - everything else was still to be resolved. This is indicative of where power really lay in the Coalition government between 1939 and 1945. The social democrats in the Reconstruction Secretariat could achieve some gains but they were never able to overcome the dominant position that senior Conservative politicians and traditionalist civil servants commanded in the decision-making process. These latter actors clearly wanted to resist the Uthwatt proposals in so far as they undermined the rights of landowners and private developers. It was not, however, possible to defend these interests without compromise - which explains the 1943 and 1944 Town and Country Planning Acts - because the Conservatives had to maintain their coalition with Labour to run the war effort and some Conservatives did accept the need for a more interventionist approach. Nevertheless, it was possible - as the protracted and inconclusive discussions over the structure of the 1944 Coalition White Paper reveal - to engage in delaying tactics. Thus, while the Coalition White Paper is seen as a basically consensual document, presaging all-party agreement to a new state role in land and development, it was in fact nothing of the sort: it revealed the lack of agreement in the government and would probably never have been passed in the form it was presented. We have discussed, then, the power of policy initiation in British land values policy-making between 1939 and 1945. It is worth stating at this stage however that, while this revealed the strength of a number of interests in resisting the Uthwatt proposals, there was also another reason why the proposals would have faced difficulties if they had ever been implemented. During the early discussion of these proposals in government it was argued that punitive taxation of betterment would lead inevitably to a lack of landowners willing to bring forward their land for development and that this would delay post-war reconstruction, as development and house-building was disrupted through land shortage.80 While this might be overcome by state land purchase and development, it was clear that the state lacked the financial resources to purchase all land for development and then to undertake development - it would have meant in fact full land and building nationalisation. This was one of the main reasons why the more interventionist intentions of Uthwatt to create state leaseholds and to impose more stringent betterment recoupment provisions - were rejected. This indicates a further dimension to power than the ability to press

History of land and property policy (i 845-1945)

49

one's case in the policy-making process. In addition to the power of policy initiation in capitalist societies there is also a power of constraint. Given the inability of the state to finance all development or to win electoral support for land nationalisation, the owners of land and the developers must be accommodated by governments, even if they wish to limit their role and the profits they make from development. In other words, owners of land and developers have a crucial veto power over socialist and social democratic governments: without their willingness to accept legislation they can 'vote with their feet' and decide not to develop or buy and sell land because there is no profit to be made in it. Thus outside of a state-planned economy these actors have the power of constraint over democratically elected governments. Furthermore, because local authorities have traditionally been responsible for land use planning and the implementation of compensation and betterment policy, it is clear that their recalcitrance is also a major constraint facing any state interventionist approach - especially when local authorities are controlled politically by Conservative interests. The logical solution to this problem - a national/regional planning agency - is difficult to create, however, because of the important role and access that local authorities have in the policy initiation process. Bureaucratic agencies at local levels - and the Whitehall departments responsible for implementation and finance - can therefore constrain policy implementation by elected governments. The Uthwatt Committee tried to arrive at a social democratic solution but it went further than these interests were prepared to countenance. Similarly, as we shall see, post-war Labour governments have tried to implement these types of social democratic and neo-socialist policies, but have completely failed to understand this dimension of power and their policies have failed miserably. Ironically, Conservative governments have also failed to appreciate the strength of the landowners and property owners when left to their own devices by the state. The willingness to allow them total freedom explains why Conservative post-war policies have also failed and resulted in property speculation and high social and political costs. There is, then, a message in the history of the wartime government's record on land values: there are limits to what democratically elected governments can achieve in a mixed economy in which economic and social power is not totally controlled by the state. Governments which try to force the holders of social and economic power too far will face policy failure. On the other hand governments which allow a free hand to private centres of power will face the social and economic consequences of laissez-fairism. It was for this latter reason that

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The problem and limits on policy initiation

the social democrats of the 1930s recognised that the state should take a more positive interventionist role in controlling these centres of economic and social power: the social and economic costs in terms of unemployment, urban sprawl and congestion and regional decline were seen to be too high. But the lesson of this period is clearly that an interventionist approach can only work by incorporating and educating the private centres of power in society and economy to the national consequences of the pursuit of their own self-interest. The state simply lacks the political power in capitalist societies to force them to act as it would wish without their consent. This means that democratically elected governments of either a Social Democratic or Conservative stamp are fundamentally constrained and only certain policy solutions are likely to pass successfully through the policy initiation process and then into effective implementation. To illuminate this point it is worth indicating in more detail the nature of the power of constraint as it impinges on land values policy-making in Britain and thereby indicate the effective limits on policy initiation in this issue-area.

The structure of the British land and property market as constraint on policy initiation

The structure of the British land and property market. Potential land values policies. The policy constraints imposed by the structure, nature and development of the British land and property market. Realistic long-term policy possibilities in the British land and property market. It was observed in Chapter i that there is a conceptual distinction to be drawn between the power to initiate policy in the political decisionmaking process and the power to constrain and resist the successful implementation of policy. The discussion in the last chapter was almost wholly confined to the analysis of the first of these dimensions of power. During the wartime conflict over the Barlow and Uthwatt proposals interventionist inclined policy-makers could not overcome opposition from local authority, landowning, development and building interests because these were able to influence Conservative politicians and senior civil servants, in the Treasury and Ministry of Health. But it can be argued that these interests also have a further 'power' outside the political system. This power relates to the ability to deny the successful implementation of policy which has been initiated in government. It was impossible to reveal this in the discussion of the fate of the Barlow and Uthwatt proposals because the radical elements of these Reports did not shape policy. The remainder of this study, however, does provide the opportunity to indicate the power of constraint over policy implementation because, since the Second World War, there has been a history of adversarial land values policy-making in Britain. Both types of policy, aimed either at land nationalisation or a return to free market (laissezfaire) conditions, have failed in implementation. To understand this it is necessary to explain which interests possess the power of constraint rather than the power of policy initiation.

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The problem and limits on policy initiation

In this chapter the structure of the British land and property market will be described. Having identified those interests which possess the power of constraint in the market, the range of potential policy proposals which might be adopted to resolve the compensation and betterment problem are outlined. These policies are then discussed in terms of whether they can be implemented successfully in relation to the power of constraint which has been identified. The broad conclusion is that a policy approach similar to the Uthwatt Committee's proposals, but which involves more limited state landownership, is the best that can be achieved by governments which must accommodate powerful social and economic interests. It is suggested, then, that a social democratic, or mixed public and private ownership, policy is viable but that all other types of policy will lead to failure. The structure of the British land and property market No discussion of the development process in Britain would be valid unless it started with the primary element of that process - land. A key interest involved, then, will be landowners, or the landed interest, including amongst others the Crown, financial institutions, farm owners, individual landowners, public corporations and private companies. Landowners have a crucial role in providing land for development and therefore are heavily concerned with the level of profit (and taxation) to fall on land and also ownership and compensation rights under state purchase. Closely related to the landowner in the development process is the property developer or property company, referred to here as the rental sector. Property developers and property companies make their profits from the speculative purchase of land and its subsequent development to a more valuable use; but they are also concerned with the renting of commercial property to obtain rising rental values from development of long-term assets. This sector has been joined in recent years in Britain by the financial sector. This sector includes the range of financial institutions, banks, and companies associated with the City of London and the Stock Exchange, which have seen the benefit of high profits to be made through investment in property. All these interests will be concerned with the level of taxation on land profits in development and also the need to keep the state out of a fairly lucrative area for investment. Finally in this socio-economic side of the market are the commercial and productive sectors of the economy. The commercial sector encompasses two interests: firstly, it refers to the distributive and retail

The market as constraint on policy

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companies (stores, shops, etc.), which provide a commercial service to producers and consumers alike by providing outlets for sales, and which are concerned both about the rental value of their sites and the cost of land purchase for their own developments. Secondly, it contains the architectural, surveying, valuation, engineering and planning professions which provide services in the developing process. These actors are normally concerned to accept a limited state role in development, with a fair degree of profitable private development. There remains the productive sector of the market, which refers to industrial undertakings which produce commodities for sale. This sector can be further differentiated in terms of the degree of concentration of market control (monopoly/oligopoly versus small business) or in terms of the centrality of land to the productive process. Thus while farmers and building and construction companies are centrally concerned with the price and supply of and profit from land, companies producing motor-cars, which do not continually require land to make a profit, are less concerned with the state's role in land. In general, however, this sector dislikes too much state involvement in land ownership, although resenting the ' unearned increment' that landowners and speculators receive and which may contribute to higher costs of production for industrial firms. There are also administrative and political agencies involved in the development process who are concerned to influence and constrain policy for land. Most important of all in this context is the role of the local authorities and public and quasi-public corporations (nationalised industries and regional and national agencies). These state agencies seek to influence land policy and are crucially involved in its implementation. Finally come socialist / social democratic political groups, who are interested

in policy to redistribute wealth and state action to achieve a more prosperous, spatially planned and egalitarian future. In Britain these groups include bodies like Shelter, Child Poverty Action, the Town and Country Planning Association, the Fabian Society, the Civic Trust, the National Trust, the Council for the Protection of Rural England and the TUC. These then are the basic categories of actors in the market. All of them have some potential political resources with which to influence government policy-making, but not all of them have the socio-economic resources to constrain the implementation of policy. The power of constraint is basically located in the landed, productive and financial sectors, although state agencies which implement government policies also have powers of administrative constraint. Before looking at these powers in more detail it is necessary, first, to specify the range of

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The problem and limits on policy initiation

potential land values policies which might be implemented by governments. Potential land values policies In earlier chapters it was argued that the need for land values policies only occurs when the state takes an active role in the control and development of land. Under 'free market' conditions, with the state merely taxing landowners for wars and general revenue requirements, there is little such need.1 It is clear, however, that as the state increases its role it comes to threaten the various stakes held by social and economic actors in the land market. Initially, state intervention into land questions was limited to compensating owners for land compulsorily purchased to provide welfare goods and services - public health, defence and road construction schemes.2 In the twentieth century the state's role was extended from the provision of infrastructure and services to include land use planning and regulation. This was necessary for three reasons: the altruism of middle-class reformers; the potential for political unrest in British urban slums;3 and the restraint on development imposed by private landownership.4 Unfortunately, these interventions become increasingly difficult to finance, and in regulating all or most land development the state exacerbates the problems of compensation, betterment and worsenment. A number of policies to solve these problems have been formulated.5 The nature of these can be differentiated in terms of the scope they afford for a state role, and in relation to their likely effects on the interests of actors in the market. The task facing policy-makers, who wish to solve the compensationbetterment problem, is that any solution must attempt to overcome contradictions and it must work while attempting to control the actual market behaviour of the various sectors of the economy. For instance, the need by the productive, commercial and financial sectors for land development must immediately question the continuity of traditional landownership rights. Any solution which benefits the productive sector by limiting property rights must therefore mean a relative loss for the traditional landowners. Similarly, any attempt to enable the state to finance its role through the collection of betterment must curtail the capital gains in land of all interests in the economy. There is, as a result, no one clear solution to the compensation-betterment dilemma that will not involve political and economic costs and/or benefits for all of the interests in the economy and society.

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The first potential solution is the maintenance of a free market. The free market approach implies the preservation of the stakes of traditional landowners in land, because there is no taxation of betterment and compensation is paid at full market value for land purchased by the state. The state does not plan land uses, and, when the state does intervene, it is normally obliged to compensate for any worsenment inflicted. Unfortunately, the absence of betterment tax revenue means that necessary state social welfare or economic stimulatory measures must be paid for out of taxes on industry's profits rather than on landowners. The free market solution is therefore likely to be taken as unjust by the financial, productive and commercial sectors, because part of the increase in land value is generated by the natural progression of industrial society and landowners can be seen as having an 'unearned increment' and avoiding taxation on values which industrial and commercial development are creating. 6 At the same time the multiplicity of private ownership rights is seen by the productive and commercial sectors of the economy as a hindrance to land and industrial developments. Thus, the free market approach alienates not only social democratic reformers who want to finance the state's role but the productive, commercial and financial sectors as well. A second solution is the regulatory approach. Under this arrangement the state co-ordinates and regulates land use, and also undertakes the provision of unprofitable infrastructure (roads, sewerage and social welfare services such as health, education, etc.), but does not tax betterment. This meets the productive and commercial sector's desire to use the state to end ownership problems through comprehensive planning, but provides no solution to the 'unearned increment' problem. In this case industrial and commercial development is facilitated by planning control over landowners, and the ameliorative, social democratic professionals (like town planners) in the state are given a role. There is however a difficulty of financing the state's role to fulfil its statutory functions, because 'unearned' profits are retained by the landed and rental sectors of the economy. The main problem with this approach is that it does not solve the betterment problem. Moreover, it alienates the landed and rental sectors because, even though they are able to obtain full betterment, their ownership and development rights are questioned by the burgeoning of the state planning role.7 To solve the problem of' unearned increment' and an increasingly expensive state role, two solutions are possible: the state's role can be reduced or its planning and welfare role can be maintained and 'unearned increment' can be taxed to finance it. The first option is

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The problem and limits on policy initiation

normally termed site value rating* or a fiscal-only approach. No direct land use regulation powers are given to the state but fiscal betterment collection, as an indirect control on land use, is adopted. This is the classic approach, outlined by liberal economists, to tax away 'unearned increment'. 9 An annual tax is assessed on the yearly increase in value of the optimal use of land. Landowners are therefore encouraged to develop their land to its most profitable use. By this means the state's role in land use planning is diminished, but one major goal of intervention (speedier development) is still achieved indirectly, and an effective mechanism for taxing landowners' 'unearned increment' is created. The landed and rental sectors of the economy are bound to resist any such proposals as, to a lesser extent, are state agencies involved in land use regulation and planning. Site value rating also has inherent problems for the valuation, planning and surveying professions, because the job of assessing annual optimal and existing use values is difficult if not impossible. 10 This approach may be seen as in the best interests of the productive and commercial sectors of the economy. 11 An alternative scheme is possible for taxing' unearned increment' but, without either reducing the state's role or attacking landed interests directly. There are a number of methods by which a fiscal-regulatory approach might be implemented, but the general thesis is similar in all cases. The intention is to allow the state to pay for its basic social welfare and facilitative roles by taxing betterment directly; thereby syphoning off part of the 'unearned increment' according to landed and rental interests. The benefit for the productive sector is that it allows betterment collection to be assessed differentially in relation to the processes by which values are created - through owners' actions, state activities or due to the general development of society. In theory this should be beneficial for all concerned because the state's role is financed and landowners are able to keep any betterment directly attributable to their own actions. Unfortunately, the benefits do not obtain in practice for a number of reasons. First of all, it is an extremely complex valuation task to assess precisely what has caused betterment. Secondly, the method of betterment recoupment may lead to the state taking a dominant role. Betterment taxes may be collected either by fiscal means (capital gains tax and by an assessed betterment levy) 12 or by state land purchase and 'leaseback' to developers - the Uthwatt Committee's proposal. This latter measure is problematic for the financial, commercial, productive and rental sectors because it allows the state to maintain a continuing interest in values generated by the actual development

The market as constraint on policy

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process. Finally, whichever method is adopted, the level at which any tax is to be set by the state will be important: a punitive tax level may deter owners from selling land and thus disrupt the operation of the development process.13 Thisfiscal-regulatorymethod has been the main policy approach adopted in Britain since 1947.14 A number of other solutions to land values problems have been formulated, which look to extension of the state's role at the expense of key social and economic actors. One such variant is zfiscal-interventionary approach.This involves an extended state land supply role with limited state betterment collection and land use regulation. The desire to introduce this solution arises because the state cannot force owners to develop if it taxes betterment punitively, but it lacks the necessary finance to undertake all development or land purchase itself. Furthermore, the limited finance, but extensive planning powers, of the state may create 'planning blight' or an artificially reduced land supply.15 These restraints on development are detrimental to the productive, financial and commercial sectors of the economy because they cause delay in profitable development. Thzfiscal-interventionary approach seeks, therefore, to extend the land supply role of the state against the inertia of landowners and existing state agency practices, which may be restraining development. This can be achieved by raising extra revenue to finance a land purchasing role by the state, and by creating an autonomous agency to work outside existing governmental planning structures. The additional revenue is raised by collecting betterment through state land purchase at existing use value, with resale at market value. This approach will be supported by those interests in the commercial and productive sectors that have a direct interest in land development and a more integrated state role (the construction industries and the planning and architectural professions in particular). On the other hand, such a policy will alienate those interests (local authorities and landowners and property developers) who fear this as the 'thin edge' of a dominant state role in all landownership and development. This social democratic approach, aimed at speeding up development through a mixed public and private development process, has only been attempted once in Britain, between 1967 and 1970, although something similar was mooted by the Uthwatt Committee and in the 1944 Coalition White Paper. A more radical policy position, which seeks to overcome some of the resistance of existing state agencies to any extended state land supply role, is municipalisation, or the co-ordination of local state ownership of all development and redevelopment land with land use planning. Once again the state collects betterment by buying land at existing use value

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The problem and limits on policy initiation

and reselling, or leasing, it at market value. The state's extended role in infrastructure provision and in planning is financed by this means. Unfortunately, such an extension of state activity is likely to alienate the property development and the financial and productive sectors of the economy because there is always the possibility of leasehold control of all future development and the eventual creation of a dominant state role in development itself, through 'direct labour' schemes. This is added to the inevitable opposition to these types of policy from landowners. Unfortunately the cost of this potentially extended state role may also bring local authorities into conflict with central state agencies — who, often, provide finance.16 A variant of this approach was adopted in Britain between 1975 and 1979 under the Community Land Act of 1975. There were also elements of it in the Uthwatt scheme, but they were summarily rejected by Conservative politicians in 1942 and 1943. The final solution to these problems, and potentially the most radical, is full nationalisation of all land, rather than land for development and redevelopment only. This would involve the state in the purchase of all land at one or several dates in the future,17 after which all betterment would accrue to the state from all potential sources. It would only be possible, however, if the state controlled all subsequent development and rights in land. Clearly, this in itself would be difficult, because, even with nationalisation, there would still be rights in land under tenant arrangements and these rights would be available for differential treatment and demand. l8 However, in addition to this technical difficulty, apart from support from some academics (planners in particular) and some working-class organisations, full nationalisation would face serious obstacles in operation. For one thing the cost of purchasing all land (variously estimated at £500,000 million 19 and £17,000 million20) would be astronomical, and could only be financed by punitive taxes on productive industry. Loss would be felt also by the financial sector, which would find a lucrative short-term (property bonds) and long-term (land) investment avenue closed. On the other hand, some radical planners and architects might support such a solution, because their design and planning skills would still be in demand, although others would not be so enamoured.21 Interestingly, even the working class would tend to resist it, due to the effect of property ownership in dividing their loyalties.22 Landowners and property developers would obviously resist it vehemently. It is not surprising, therefore, that this option stands little chance of success of implementation and has never been attempted in Britain.

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The policy constraints imposed by the structure, nature and development of the British land and property market Since 1909 the land and development process in Britain has involved state land use planning by local authorities in the context of a largely private property development and ownership process. 23 In attempting to discover the effective constraints which limit policy solutions to the compensation and betterment problem it is necessary to elaborate the roles of, and relationships between, the major actors in the British land and property market, using the broad categorisation outlined earlier. This will require an appreciation both of the political and socio-economic resources available to these interests as they attempt to resist policy implementation which threatens their stakes in land and property development. The landed interests in Britain have been involved in an extremely successful social, economic and political holding operation since the industrial revolution, which has allowed them to retain a veto power over radical land values policy-making. The success of landed interests in preserving their role in British society is also highlighted by their emasculation of Liberal land taxation measures from 1909 to 1920; by their ability to restrain ribbon development in the 1930s; and by their post-war success in containing urban growth through green belts policy.24 The landed aristocracy, the gentry, the Churches, the Universities and the Crown still own about 40 per cent of the total land area of Britain.25 Massey has argued that this ownership is mainly rural and, though concerned with commercial returns, the landed interests hold land as an integral part of a wider social role. 26 This implies that although economic return is important it will not, in the final analysis, always determine the relations of landowners to land use. Thus traditional landowners will often refuse to turn their land to its most profitable use because this clashes with their conception of a rural way of life. This attitude is one potential constraint on industrial development, as is the multiplicity of ownership right in Britain. The enduring goal of these actors is likely to be, therefore, the preservation of individual property rights. In Britain, landowners normally support policies which give the state limited betterment collection and provide for full compensation for compulsory purchase and restraints on state land use planning powers. In support of these goals the landed interests rely mainly on their political and economic resources. Perhaps one further important additional resource is the general social attitude towards property rights in

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The problem and limits on policy initiation

Britain. The landed interests are, without this, well represented anyway in the policy-making process. The Crown Estate Commissioners have their interests defended in government through contacts with the Treasury.27 Charities, the Universities and the Church establishment have also developed extensive relationships with government departments.28 These twin assets allow landowners to maintain the responsible and respectable role which is required before civil servants will take political actors seriously in the policy process. 29 Individual landowners have had more difficulty in ensuring the protection of their interests due to the decline of their influence in direct political representation in Parliament. It is probably due to the decline of the landed aristocracy and gentry within the major political parties that the Country Landowners Association - their major organisational representative - has adopted a more politically aware role since 1945.30 This new role has involved the development of fairly close ties with the Ministry of Agriculture and the Department of the Environment, but has also meant an acceptance of some state role in land use planning and betterment recoupment, in order to appear responsible to government departments.31 The ultimate power of landowners (whether as individuals or institutions) lies however in their economic rather than their political power. In a mixed economy, in which the state cannot finance all land purchase and development (where land nationalisation is electorally unpopular), landowners can veto the successful implementation of policy by refusing to sell land for development. In the absence of high (and also electorally unpopular) taxation to pay for compulsory land purchase, the state must adopt policies short of full land nationalisation and full betterment taxation, if it does not wish to see development come to a halt. If the traditional landed interests have been able to maintain and develop important points of political access and economic control, this has been less true of the rental or property sector in Britain, which although sharing many of the same interests has not found such general acceptance. Landlords (like Rachman) and property developers (like Levy, Hyams, Cotton and Clore) have normally been regarded as entrepreneurs lacking in social and political responsibility. This has ensured the failure of the landed and rental sectors to fuse together politically to defend themselves against other actors. It has also resulted in the rental sector finding it difficult to obtain ready access to government departments to shape policy initiation - even under Conservative governments. This lack of respectability has traditionally meant that the protectionist propaganda organisations, formed to defend this

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sector and individual property owners, have been largely ignored by government. Thus agencies like the Property Council, the Association of Landed Property Owners, the National Federation of Property Owners and the Property Owners Protection Association which have been formed over the years, have generally failed to have any marked impact on policy. 32 This has been largely due to their rejection of any extension of the state's role and their desire to return to a free market in land.33 In this sense the rental sector has been the least successful interest in developing political access and organisational resources. However, without this sector's entrepreneurial skills, much development would not take place and the governments which deny this sector a role may also undermine effective development. It is, then, their economic role which is important in constraining radical interventionist policy, not their political resources. The rental sector in Britain has also suffered from its failure to develop close ties with organisations representing productive interests. The major reason for this lack of co-operation is rooted in the different relations of these actors to economic activity. The productive sector often finds itself in competition with rental interests for prime land and development sites. In so far as this is so, the economic alienation of these two sectors is apparent; although the rental and productive sectors do share some interests in that they both require land to turn to profitable uses. Thus, neither sector will desire land nationalisation or the full recoupment of all betterment. The productive sector is not, however, monolithic because it is internally divided between monopoly and non-monopoly enterprises, and also in relation to the specific productive activities undertaken. These differential relations to production have meant, as a consequence, slightly varied economic goals and political and organisational resources with government. Owning farmers are related to both the landed interest and the productive sector because they straddle landownership and the creation of profit through the use and development of land. It is no surprise, therefore, that the Country Landowners Association and the National Farmers Union have close ties with one another. 34 The N F U and CLA obviously share a common concern to maintain individual property rights, but this is tempered on the NFU's part by its close connections with the state since 1945.35 This has led to an acceptance of the NFU as a responsible and respectable political organisation in relation to land issues. Since the state sees the need to protect a viable agricultural industry, this has also meant the acceptance by farmers of some limited betterment collection and land use planning. 36

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The problem and limits on policy initiation

The Confederation of British Industry - the major political representative of the productive sector in government since the 1960s - has also been seen as a politically responsible actor. There has, however, always been a tension in the productive sector between monopoly and non-monopoly firms.37 The leadership of the CBI has come to accept a limited state land use role (to overcome the multiplicity of land ownership) and limited betterment recoupment (as long as it is confined to land speculation by owners who push up the cost of land as a factor of production).38 Despite this general policy position, the willingness to allow for a limited state regulatory and betterment role is more likely to be accepted by the monopoly, than by the small-business sector.39 Although most industrial undertakings would wish to see land speculation and hoarding reduced because it pushes up land prices, the acceptance of state intervention to overcome these problems is a contentious issue. The representatives of industry disagree on how far the state's role should be extended in this field. Nevertheless, these actors as a whole agree that punitive taxation and partial or full land nationalisation is undesirable. Their use of political access, and the economic threat of lack of investment in development, is normally sufficient to constrain radical policy. The internal divisions within the productive sector in general in Britain are also evident in the construction industries and have led to some support for a limited state role in the development process. They use land as a factor of production, and are more concerned with its permanence of supply and price than other productive industries because continual land development is a prerequisite of economic survival. Moreover, they often obtain wealth from dealing in land, as well as in developing it. For some (in particular speculative private housebuilders) the recoupment of betterment by the state is not welcome as it is elsewhere. Most firms would welcome the state's role in providing a check on land hoarding and multiple landownership through land use planning. But the state can become a land hoarder itself. Nationalised industries and central and local government departments often hoard land, and land use planning by local authorities may artificially restrict the supply of land for development. The state may also force land off the market by betterment collection and may extend public sector housing developments to the detriment of the private sector's role. Clearly, the construction industries find their relations with government over land complex and contradictory. Their willingness to support government policies to collect betterment and regulate land use will,

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however, depend on how they obtain their income. Most of the large firms, like Laings, Wimpey, Fairclough and McAlpine, are domestically almost totally dependent on government contracts.41 This is also true for many smaller contractors, scaffolders and plasterers who tender for local authority contracts. This dependence ensures that in return for contracts and state assistance in land supply, general contractors are normally more willing to support limited betterment collection and land use planning, than private speculative house builders. Since house builders do not obtain the major part of their income from government contracts, but from buying land and building for sale in the market, they are less happy with government controls. They are most likely to confront the state when it artificially restricts land supply on prime sites around urban areas. Furthermore, the state's beneficial role in overcoming multiple ownerships is mainly experienced by the monopoly sector involved in large-scale redevelopment. 42 As a result, 'spec' builders have a tendency to resist extensions of state land use planning, unless it is in the form of additional aid in speeding up land supply through adjusting local authority planning decisions. These two sides of the construction industry have, over the years, developed separate organisational forms to represent their views in government. The large and small general contractors have been represented traditionally by the National Federation of Building Trade Employers. The private house builders have been defended by the Federation of Registered House Builders 43 and the Federation of Master Builders. The FRHB has clearly been more concerned with limiting the state's role than the NFBTE, and as a result it has often been viewed as a biased protagonist by government departments.44 The division between the two bodies did not appear fully until the 1960s, because private house building was all but moribund during and shortly after the war and because of the Conservative government's attachment, throughout the 1950s, to a largely private sector market in construction. By the 1960s, however, with the development of industrial building systems,45 the growth of monopoly contractors and then the determination of a Labour government to push for more public sector housing, a clear divergence of interest occurred. As a result, the FRHB came to take on a much more political role and began attacking the government's land use planning role as a restraint on effective land supply. 46 The consequence of these divisions for the productive sector as a whole is that there is an obvious contradiction between the needs of monopoly/oligopoly and non-monopoly enterprises. Monopoly/oligopoly enterprises, because of their relative ability to ignore taxation and

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The problem and limits on policy initiation

land costs and their desire for large-scale development, are happy to accept state land use planning and betterment taxes on landowners. Non-monopoly firms (and especially private house builders) are less happy with these arrangements. Their role in the provision of housing is continually threatened by the state in its role as builder and as regulator of land supply. Small businesses and builders often look to 'windfall' land profits as a means of overcoming cash flow problems, and are less able to ignore the extra costs imposed by state land use regulation and taxation. As a result, these interests tend to support policies aimed at 'rolling back' the state's role. Despite this important difference of approach in detail, all sectors of industry fear any form of land nationalisation or central state interventionist agencies in land supply and betterment recoupment. It follows that if such policies are initiated then firms are likely to refuse to invest in new developments and look to the return of a more laissez-faire orientated government. This can cause severe disruption in the development process (particularly in housebuilding) which no government can afford to ignore as it frames its interventionist policy or watches the effects of the implementation of it. If the productive sector finds radical land policy problematic, this conclusion is less true of the commercial (or service) sector in Britain. The major services concerned with the development and use of land are the surveying and estate management, design and architectural, and planning professions. These professions in Britain, because of the historic client relationships which they have developed with other social and economic interests in society, have generally rejected laissez-faire solutions.47 The Royal Institution of Chartered Surveyors, formed in 1868, is the major body representing the valuation, land agents and surveying professions, and has maintained ties with government as the mature representative of these interests. The RICS has tried to maintain a non-political alignment because it has members in both public and private practice, which often necessitates middleman relationships between the state and the private individual. Though this was important in developing a non-aligned attitude on the part of the RICS, it has never precluded a tendency to favour ' free market' solutions, with the state's role confined to the recoupment of betterment by the normal taxation system. Positive intervention in the planning and property market has never been supported, not even by the more radical junior organisations in the Institution.48 The attachment of the RICS to this type of solution owed a great deal to its early formation and its role in assisting private landowners in their management and use of property. Thus its view has

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always tended to be one that seeks to maximise the role of the private sector in development and land use, both because there are lucrative jobs in private practice and also because planning and state controls make the job of valuation and survey extremely difficult. This is not surprising given that they are a profession concerned with the economics, rather than the social costs, of property. The RICS has little power to constrain governments from pursuing radical policies. While surveyors can withdraw their labour this can be ignored and it may be counterproductive. As a result, the RICS has confined itself to exhorting changes in government policy initiation. The RICS commitment to a limited state role and qualified acceptance of the 'free market' in land is important as a political resource. The key factor which has allowed this body, along with others like the NFU, CBI and CLA, to maintain a close working relationship with government over the years has been the recognition of the need for some state role in development. To argue for a ' free market' is normally sufficient to lose pressure groups any influence with government. This is highlighted by the experience of those bodies, like the Valuers Institute and the Incorporated Society of Auctioneers and Landed Property Agents, which represent valuers, surveyors and land agents, but with a more abrasive commitment to the private sector than the RICS. 49 These anti-interventionist bodies have had some limited policy influence, but only due to the continuing attachment of sectors of the Conservative Party to anti-state views.50 Like the RICS, however, these bodies lack the power of economic veto to question policy implementation and this is also true of the architectural and planning professions. Architects work in both the public and private sectors and have had to adopt a similar compromise approach to policy as the RICS. They accept a limited state planning role and the recoupment of betterment. 51 But, because the architectural profession also relies heavily on private development for work and contracts, the Royal Institute of British Architects has had to take a cautious line in relation to the extension of the state's role.52 A further problem for the architectural professions has been that they have, since the 1950s, been in conflict with the newly emerging planning professions.53 This has had two effects: the RIBA has been forced to rely increasingly on its private development role; and its continual battle for control of town planning with the Royal Town Planning Institute has led to a failure to grasp its social and political responsibilities.54 Unhappily, this has also been the case for RTPI which, by the 1960s, dominated town planning. Harrison has argued that the RTPI has

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The problem and limits on policy initiation

tended to emphasise technical and professional demarcation, rather than social and political criteria, in the policy positions. 55 This is an interesting conclusion because it supports the views of MacEwan and Hall, that the urban deprived - the homeless, poor, old, immigrant and uneducated - have no one to defend their interests in the British land and property market.56 The problem for the planning profession in this respect has been that, although it is prepared to defend the state's role, it is itself a firmly middle-class profession which was formed initially in an attempt to overcome problems of physical, rather than social, decay.57 Having achieved land use planning and dispersal - in the legislation of 1909, 1919, 1935 and 1947 - the state interventionist ideals of the movement were spent.58 Since 1947 the RTPI's major goals have been to defend the state's regulatory planning role, to ensure some betterment recoupment without affecting the economy, and, most of all, to consolidate the profession's control of town planning in local government.59 While the professions lack effective resources to constrain policy and must rely instead on influencing policy initiation, this is not true of the financial sector. The financial sector in Britain - the insurance companies, banks, pension funds and building societies - does not normally own, nor has it developed, political organisations to defend its interests in land.60 Only the Building Societies Association, with its special interests in financing home ownership, has developed as an umbrella organisation to protect the individual societies. This primarily political role has only become necessary in the 1960s and 1970s as governments have tried to regulate demand in the economy and reduce property prices by adjusting mortgage interest rates.61 The major resource that the financial sector posseses is not political influence but economic power. As the 1970-1973 property boom, and the increasing search for equity shares in property companies reveals, 62 the financial sector is interested in land, because it can obtain high returns from rising rental values. Property and land prices rise as a consequence of institutional investment in property bonds and the funding of property companies through equity arrangements. This creates two major economic resources for the financial sector: its control of investment or risk capital may limit the amount of finance available to the productive sector; and any state policy which undermines confidence in property may lead to the withholding of investment in property.63 The role of the financial sector is so crucial to the state (limited by its ability to tax the population) and to the productive sector (limited in reinvestment by declining profit margins) that it does not require political access to influence policy; all that is

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67 64

required is that it 'votes with its feet' economically. As Massey and Catalano have argued, in recent years this relatively independent role for the financial sector has forced the productive sector to encourage the state to control unearned profits in land and property.65 The financial, landed and productive sectors have economic resources to contain government policies, but there are in the market a number of interests who must rely mainly on political resources to shape policy. These actors have goals ranging from the defence of the landed interests to middle-class political reformism. The development of purely workingclass organisations concerned with the creation of socialist solutions to urban problems has been particularly weak in Britain. Such change that has been possible in land policies has been due either to social democratic middle-class reformism, or to the impact of industrial working-class organisations (the trade unions) and the Labour Party representing the working class.66 Within the development process in Britain a number of promotional organisations, or pressure groups, concerned with preserving the' national heritage' and the rural way of life have developed. These include the National Trust, the Civic Trust, the Council for the Protection of Rural England, Friends of the Earth, the Ramblers' Association, and an array of other bodies loosely defined as the 'environment lobby'. 67 Bodies like the National and Civic Trusts are concerned with ensuring that they are exempt from any tax on their land development.68 At a more committed level, organisations like the CPRE are interested in preserving individual property rights and limiting the scope of state and industrial and commercial incursions into rural areas. The CPRE does, however, recognise the need for land use planning by the state and some betterment recoupment; anything beyond this would be resisted politically because it is seen as an attack on individual property rights. 69 It is important to realise that in fact the development of land use planning in Britain owes at least as much, if not more, to the work of these bodies in forcing the state to contain urban growth, as it does to the productive and rental sectors' desire for state action to overcome the multiplicity of ownership problem.70 Their ability to shape policy is normally confined to the initiation process because they have no resources to block legislation they dislike. A similar conclusion can also be made about the Town and Country Planning Association, which is in many ways the promotional adjunct to the RTPI. 71 It was formed in 1899 out of the desire by middle-class reformers, like Ebenezer Howard, to defend society from the evils of urban squalor and congestion. 72 The object of the TCPA was the

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dispersal of population from high density urban cities to low density, green field and self-contained towns. Dispersal, aimed at resolving the urban physical contradictions of capitalist development, may become a threat to the productive and rental sectors due to the costs of relocation. The TCPA has, nevertheless, maintained a firm attachment to planning and the extension of state activities to resolve social problems. Its promotion of quasi-central government intervention through New Towns, and its attachment to increase central state intervention in land values policies, is evidence of this position. 73 Although the TCPA has argued for the extension of planning and state intervention this has never been a particularly revolutionary intention. On the contrary, its goal is to ameliorate the conditions of the underprivileged without threatening the workings of the economy. 74 Some individual members have been willing to support 'fiscalinterventionary' and limited ' municipalisation' solutions to the compensation-betterment issue, but outright land nationalisation has not normally been part of the TCPA's policy demands. Like other promotional groups, it must rely on influencing policy in the initiation process; it has few resources to stop the implementation of policy it dislikes. Although individuals and socialist groups would prefer to extend the state's role further than the reformism of the TCPA, land nationalisation is extremely difficult to achieve in Britain, due to the lack of radicalism amongst the working class. David Harvey has shown that the working class, by its ownership of property, is internally divided between tenants and owner-occupiers.75 The working class is also divided in relation to its communal and industrial experiences. Although well organised on the factory floor to fight the owners and managers of industry over wages, it is not so well organised to fight owners of land and property over housing and land issues. 76 This is revealed by the paucity of working-class organisations which have formed to demand an increased state role in land and housing issues. Massey and Catalano have argued that the 1975 Community Land Act was precipitated by a grounds well of community action groups and trade union activities.77 Such a conclusion is however dubious. Although more active in the 1970s, urban working-class groups are poorly organised, locally concentrated and lacking in channels of political access. Only Shelter, the Claimants' Union, the defunct Community Development Projects, the Child Poverty Action Group and the national bodies representing the poor, have recorded any marked success in obtaining access to policy-makers. Much of this access has been unproductive and

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only Shelter and the CDPs have been particularly interested in land issues. 78 The protest movements are fragmented and often flounder against local government resistance, without ever influencing national levels of policy-making.79 What these groups lack most of all is organisation, resources and political respectability in the eyes of national and local decision-makers.80 This view is reinforced when one considers the state agencies involved in the British Planning System. State agencies generally do not support any dominant central state role in land development due to the weakly developed interventionist attitudes of the civil service, 81 compared with the civil servants in France, for example. 82 British civil servants have traditionally adopted a social welfare, rather than a 'dirigiste', ethic and this, coupled with their training and workplace socialisation, has tended to undermine any belief in concerted interventionist administrative effort.83 Their major goals tend to revolve around limited changes to an on-going situation, the defence of existing practices and procedures and the preservation of traditional organisational boundaries and responsibilities.84 Local authorities were initially given an extended role in the provision of social amelioration in the mid-nineteenth century under the Chad wick Public Health legislation. 85 By the twentieth century they were given a further role in land use planning and betterment collection. What is significant here is that it was through local government, rather than regional or any other tiers of government, that land use planning was instituted. Even in 1974, when local government was reformed, the desire by some academics and planners for regionally based authorities was overcome.86 Furthermore the established local authorities have continually been an obstacle to central government attempts to change their powers and responsibilities in the planning field. The defence of the local government role is assisted in a number of ways. First of all, individual authorities have direct access to the relevant central government departments. Secondly, the Department of the Environment (and its predecessors) 87 has normally defended the local authorities' role assiduously in central government. 88 Finally, the local authorities are also firmly defended by their respective umbrella organisations. Today these are the County Councils Association, the Association of District Councils, the Association of Metropolitan Authorities and the GLC, and the London Boroughs Association.89 As a consequence, whenever governments have attempted to alter land policies, local authorities have been well placed politically to ensure that these changes do not seriously affect their statutory functions, usurp their

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The problem and limits on policy initiation

role in planning, or give to other government agencies betterment which they have created.90 This constraining role is compounded by other factors. Although local authorities have basic interests, they do not necessarily share common political or ideological goals. They are both state agencies implementing central government policies and political institutions in their own right in which conflicts occur between political protagonists and local officials over policy.91 Urban authorities tend to be Labour dominated while rural authorities tend to be under Conservative control. 92 This complex situation is exacerbated by the Associations, whose representations to government are a composite of the views of officials and political councillors, and there is always a tension and conflict of political purpose in their demands. Overall, local authorities are unlikely to offer clear signals to policymakers. The policy preferences of committed political councillors will be seen as such by central government civil servants and therefore largely discounted. What are likely to be taken more seriously by central government departments are the obvious implications for on-going programmes and procedures of any changes in policy. Thus civil servants in central government are more likely to listen to what the officials in local government are saying, mainly through the local authorities Associations. This bias towards the bureaucratic view will normally encourage the continuity of a limited regulatory planning role, with some betterment collection to enable local authorities to fulfil their statutory functions. This problem of inertia is compounded also by the role of regional and other quasi-public agencies in Britain. Government departments and regional bodies (the Scottish and Welsh Development Agencies and the Water Authorities) hold land and are concerned with the policies impinging on land use. These agencies are normally intent on ensuring that any tax on land does not fall on their operations. Similarly, quasi-government agencies involved in land use and management or who require land for operational uses 93 (the nationalised industries, the New Towns, the Forestry Commission, the Highlands and Islands Development Board and the Scottish Special Housing Associations) 94 do not want to pay extortionate compensation for land compulsorily purchased. Nor do they wish to pay betterment tax on land development, and this also acts as a constraint on policy changes. There are, however, tensions between local, central and quasigovernment agencies, which under certain conditions may influence land policies. Each of the agencies mentioned above has interests in land, but

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71

they also have 'stakes' in the competition for limited financial resources and bureaucratic responsibilities in government. 95 Thus central government departments with an interest in land policies - the DOE, the Treasury, the Ministry of Agriculture, the Department of Industry and the Ministry of Transport - will all be involved in protecting their existing resource base and responsibilities. 96 In this sense there are administrative goals which will influence the search for viable policies. Thus, some civil servants may desire a more interventionist role, existing quasi-government agencies (the New Towns) may desire an extension of their role in land use developments, and problems which arise may militate against solution within the existing machinery of government. 97 Despite the potential effects of these conflicts it is more usual that bureaucratic agencies will act as constraints on innovation than as agencies for change. This is a crucial insight because, while public bodies clearly play a major role in policy initiation through their access to decision-makers, these agencies are also responsible for the implementation of land values and land use policies. They have the opportunity, therefore, to resist policy innovation. As we shall see, on a number of occasions Labour governments found their policies blocked by the obstinacy of Conservative controlled local authorities after 1945. Some of the constraints on policy implementation in this issue-area have been indicated, but change does come about due to the fact that in Britain the state is a field of political struggle. Thus, political parties are the major vehicles for policy change because, with a Parliamentary majority, they command the apex of the policy-making hierarchy of the state. Political parties also reflect the competitive struggles between interests in society and economy and this may give a distinctive bias to policy. But, although political parties can, in government, change policy they may be constrained by the fact that some interests outside government have countervailing resources to limit its successful implementation. In the land values issue-area those interests which do not rely merely on political resources but also have the economic and administrative resources to ignore and limit government policy implementation possess this power of constraint. Realistic long-term policy possibilities in the British land and property market Whatever the goals of the politicians, civil servants and pressure groups who dominate the policy-making process, the most realistic land values policies will be those which recognise the need for a compromise between

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The problem and limits on policy initiation

the interests of the state and those of the productive and financial sectors, the local authorities and the landed interests. Such policies are those that fall within the fiscal-regulatory approach outlined above. This kind of approach offers a useful compromise because it allows the state (through local authorities) to recoup betterment, fulfil its statutory functions and regulate land use planning. This also assists the productive sector by providing unprofitable infrastructure services without excessive taxation on industries profits. Taxation falls mainly on 'unearned increment', but landed and financial interests are not overburdened because imposts only fall on urban development land, rather than on rural and agricultural land or on land already developed. In this way the landed interests may lose some of its income, but this is a price worth paying for the containment, by the state, of urban growth. The real losers under this approach will be property developers (whose speculative development is taxed)98 and radical urban working-class and middle-class groups (concerned with extending the state's role). Since these groups may be seen as having few powers of constraint, their ability to resist this policy is to be doubted. Such a policy then - assuming the tax rate is not too punitive - is likely to work in practice and allow the state to recoup some betterment to finance its land use planning role. Policies which question the relationships between these dominant interests will have unrealistic implementation possibilities. Free market and regulatory solutions, which seek either to emasculate the state's role, or to give the state a role to assist the landed interest without the benefit of betterment collection, are likely to be resisted. Existing state agencies (facing difficulty with funding statutory functions), ameliorative reformers (aware of the state's role and the need to fund it) and the productive sector (rejecting the 'unearned increment' accruing to landowners) would all resist these solutions. Site value rating is also unrealistic, given the state's existing planning role and the demands for land use regulation from social democratic reformers and from the landed interest. On the interventionist side, municipalisation and nationalisation must be seen as unrealistic. The cost to the state of funding land nationalisation, or the purchase of all land for development and redevelopment by local authorities would be exorbitant. Since the finance could only be provided out of punitive taxes on the productive sector it would be resisted. Similarly, in threatening the development industry and property rights, all sectors in the economy (plus anti-interventionist civil servants and individual property owners) would resist this approach. This conclusion is perhaps less true of the final solution of a fiscal-interventionary approach. This involves a further extension of the

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state's supply and ownership rights in land for development, and would be resisted by the landed interest because the state is now involved directly in buying development land. It would, however, win support from ameliorative reformers and, ironically, the productive sector (i.e. the construction industries in particular). If it is felt that the landed sector is withholding land and undermining land development then positive state intervention to facilitate land supply would be supported by builders. This approach would, then, have a chance of successful implementation; but if the land supply role was given to a central state agency rather than to local authorities such a policy would suffer serious administrative opposition. This fiscal-interventionary approach was the basis of the Uthwatt Committee's recommendations and it is probably the most that radical state interventionist solutions can hope to achieve. The least problematic solution would appear to be a fiscal-regulatory approach, but this only allows the state a negative role in development: it can deny unsightly development but it cannot undertake positive development, it must wait until someone decides to undertake development privately. Perhaps the optimal solution in Britain's mixed economy is therefore a fiscal-interventionary approach, which taxes landowners' and developers' speculative profits, but which also allows for the positive facilitation of the development process by the central government through land assembly and some redevelopment out of betterment taxation. The major obstacles are the recalcitrance of local authorities and the inability of governments to educate landowners and developers to the advantages for the development process. Despite the problems with these solutions, both of them would appear to have a chance of successful initiation and implementation in Britain. The post-war history of land values policies is unfortunately the history of the refusal by government to adopt either, due to the adversarial nature of British politics. Governments have continually initiated ideologically pure land values policies only to see them fail in implementation. They have ignored the power of constraint in British society.

PART C

The history of adversarial policy failure in land and property in post-war Britain

Labour, the 1Q47 system and the collapse of the development market

Land values policies, Uthwatt and the powers of initiation and constraint. The power of initiation: the Labour government and the 1947 Town and Country Planning Act. The power of constraint: the collapse of the development market and the failure of the 1947 Town and Country Planning Act.

Land values policies, Uthwatt and the powers of initiation and constraint It was argued that the wartime Coalition government was pressurised from three broad directions over land policy. Firstly, there was the demand that the state's role should be limited to the collection of betterment and the regulation of land use planning, with full compensation at market rates for landowners whose land was purchased by the state. Secondly, came proposals that betterment should be collected on a wider basis, and that this should be used to finance a positive, facilitative state land supply and development role. Finally, there were those who proposed land nationalisation and limited compensation to landowners. The Uthwatt Committee's proposals were within the second of these broad approaches but they were not accepted fully by the government. Furthermore, even if this policy had been initiated it is likely that it would have failed in implementation, due to the power of constraint held by bureaucratic and social and economic interests outside the policy initiation process. The main obstacles against either land nationalisation or the Uthwatt Committee's approach are the possibility of a development strike and the financial constraint of the state having to purchase all land for development and expend public resources in the process of development and redevelopment. The Uthwatt Committee's approach went too far because of failure to recognise these powers of constraint. One of the 77

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key obstacles was the desire to have a dominant Land Commission, independent of direct local authority control, to co-ordinate the proposed public purchase and leaseback of all development land. This suggestion ran into opposition in the policy-making process from the Treasury and Ministries of Health, Agriculture and Transport, as well as the local authorities and their Associations. Government could have ignored these pressures in the policy process and it could have initiated the Uthwatt Committee's scheme, but to do so would have been to ignore the crucial delaying constraint at the disposal of local authorities. Since local authorities were to be given a substantial role in land use planning and in redevelopment of war damaged areas under these proposals, they would have the capacity to delay successful implementation by disputing Land Commission initiatives and acting in a recalcitrant manner out of political prejudice. The consequence of this would have been the disruption of the housing drive and of the continuity of development and redevelopment. The recognition of this constraint explains why there was no consensus on the Land Commission's role during the discussions leading to the 1944 Coalition White Paper. Nevertheless, because local authorities are mainly financed by central government, the Land Commission might well have been able to overcome the bureaucratic constraints of local authority antipathy. But the Coalition government lacked the political will to make an early decision to act on this issue. Labour politicians wanted more interventionist solutions while the Conservative members wanted less, and this was a classic example of the debilitating effects on policy of adversarial policies. There was a further difficulty for the Uthwatt Committee's proposals. This solution can only work if it is possible for the government to educate the holders of social and economic power to the need for a positive, facilitative and interventionist state role. But, in this area, governments have very few cards to play in either the short or long terms. While the financial, productive and commercial sectors of the economy should benefit from a facilitative state role, in practice this is rarely perceived as beneficial by these actors. Subjectively it is seen as the 'thin edge of the wedge' of state interventionism - especially when it is supported by Labour politicians who are regarded as socialists. This ideological antipathy to an extended state role is not, however, the major constraint. The dilemma for the Uthwatt Committee's approach lies in the fact that it must also question the economic interests of landowners and private property developers. This then is the ultimate constraint facing interventionist land value

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policies: if the Uthwatt Committee's proposed central planning agency was to take a dominant role, then it would have to buy, through compulsory purchase, all land for development and take responsibility for the co-ordination and supply of that land, as well as its subsequent development. In theory this is possible, but this ignores the inevitable, practical response by landowners and developers. They will withhold land from development and refuse to use their expertise in the development process because there is no profit in it. It may be argued that this problem can be overcome by state finance of the whole land purchase, supply and development process. Unfortunately, the state has difficulty in taking on this role because it lacks the expertise and staff, which leads to bottlenecks in the housing and property development markets. But the main problem is that any attack on profits in the development process leads also to a subjective perception by the financial, productive and commercial sectors of the economy that the state is socialist. The result is a crisis of business confidence, media opposition, and ultimately a collapse of confidence in sterling and possible economic dislocation. In answer to this it might be argued that the state could finance the whole land purchase, supply and development role by raising taxation, or increasing international indebtedness. This solution would only compound the original dilemma. Britain is already an international debtor nation and raising taxation will only further undermine business confidence. The alternative, of increasing the level of overseas borrowing from the IMF, is also precluded because this is not possible without stringent conditions - as Labour governments in the 1940s, 1960s and 1970s have discovered. The result is the failure of what at first appears a wholly logical approach. Thus, while the Uthwatt Committee's solution may well be theoretically logical, in the British context it cannot work. It may extend the facilitative role of the state. It may penalise only those who recoup 'unearned profit' while allowing for a fair return to those who actually undertake development. Yet it is virtually impossible for radical interventionist governments to generate the economic and political support from the productive, financial and commercial sectors of the economy for this modernising role. The Uthwatt Committee's scheme would have gone much further than is possible politically or economically in Britain - which ironically was the conclusion which the Committee also made, quite correctly, about the land nationalisation option. It is through the recognition of these constraints by civil servants, and due to the pressure exerted by the representatives of these interests in the policy process, that we can more fully explain the limited nature of

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the Coalition government's land values proposals. It is apparent that a 'fiscal-interventionist' approach is too radical in the British context. A compromise between a 'fiscal-regulatory' and a 'fiscal-interventionist' approach, with state planning of development and with a more limited Land Commission assisting the private sector and local authority roles of development, planning, betterment taxation and land purchase is the most that can be achieved. In this sense the Uthwatt Committee was on the right lines but it went slightly too far in proposing to give a Land Commission the pivotal role in development, with little scope for private sector development and extremely limited compensation rights for landowners. Since 1945 this fact has not been generally accepted by the politicians of the two major parties or by senior civil servants because of the ideological attachment of the Conservative Party to neo-liberal, free market solutions, and of the Labour Party to nationalisation and 'fiscal-interventionist' solutions. The values of senior civil servants, whose attitude to policy is preconditioned by their need to defend their organisational routines and the traditional demarcation lines between Departments of State, has also been of importance. The post-war history of land values policy is, then, the story of adversarial political parties and myopic civil servants using their powers of policy initiation to force through policy which has generally failed to have the desired effects in implementation. This is a study of policy failure on a continuing basis. The power of initiation: the Labour government and the igtf Country Planning Act

Town and

While this study will show the deleterious consequences of adversarial politics it is also the case that failure of policy initiation can be explained from a different perspective. This interpretation is that one of the major constraints on policy initiation resides in the inertia displayed by senior officials in Whitehall to a positive, facilitative state role. The reasons are legion (ranging from the civil servants' similar socio-economic and educational background as that of property owners, to the myopia generated by their defence of traditional bureaucratic procedures and practices).1 There may be some truth in this. Although the ideological basis of party politics has been a continuing problem for consensual policy initiation, in the peculiar conditions of the immediate post-war period civil servants were responsible for the failure of the Labour government to arrive at a viable solution to the land values conundrum. But, having said this, it is important not to take this argument too far,

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81

because the ability of the civil service to overcome ideologically based policies has been limited since 1947. The true failure of policy initiation can be laid more fairly at the door of adversarial politics. The experiences of the Coalition government and of the first post-war Labour government are, then, the exceptions rather than the rule. Between 1945 and 1947, however, it was civil servants, rather than the ideologues of the Labour Party and the government, who were to blame for the weaknesses in the 1947 Act. To understand this it is necessary to show, first, what the left wing of the Labour party wanted to achieve in 1945 and, second, to indicate how they failed to initiate any of the policy goals which they espoused. The Labour Party Research Department and the movement as a whole, as indicated in the 1945 manifesto, wanted to adopt either the Uthwatt Committee's approach or land nationalisation.2 The commitment to land nationalisation had been a continuing theme in the Party since the creation of the 1918 constitution. There was a realisation of the immediate difficulty of implementing wholesale nationalisation and the Party became committed to a draconian 'fiscal-interventionist' solution. In the Research Department document - Labour and Land Owners (1944) - it was argued that the 1943 and 1944 Town and Country Planning Acts and the 1944 Coalition White Paper failed to create a positive and dominant public role;3 in particular, it was necessary for a Labour government to take land into public ownership for all development, not simply for rebuilding in blitzed areas, and compensation should not be as generous to landowners as the Coalition White Paper indicated. Despite this, what the Labour government created in the 1947 Town and Country Planning Act was neither land nationalisation nor a draconian 'fiscal-interventionist' solution. True, there was a more punitive compensation proposal (with landowners being entitled only to payments from a limited £300 million global fund over five years for their loss of development rights), but in general terms the 1947 Act fell somewhat short of the intentions of the more radical members of the Labour movement. This is true even though a 100 per cent charge was imposed on betterment created by the granting of planning permission. This was more punitive than the Uthwatt Committee had recommended. The 1947 Act was, in general, a compromise which fell somewhere between a 'fiscal-regulatory' and a 'fiscal-interventionist' solution - but which was ultimately illogical. The explanation for this lies in the role played by the civil service and in the goals and attitudes of the Labour Ministers responsible for the legislation. It has very little to do with the influence of ideologically inspired left-wingers or of pressure groups

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History of adversarial policy failure

representing socio-economic interests. Pressure groups certainly tried to exert influence on Labour policy in this period, but they were unable to shape the details of the Act directly.4 The 1947 Act was to be a failure, and this might appear surprising given that it was not a socialist inspired solution. The reason was that it fell between two stools: it allowed the private market to operate and yet, through the imposition of a 100 per cent betterment tax (development charge), it took away all incentive for the market to operate. In this sense it was neither socialist enough nor sufficiently stimulative of the private sector. To understand the failure it is necessary to summarise the system of land use planning and development control which was created between 1945 and 1947. The Labour government passed four major pieces of legislation to provide for a more positive state role than had been the case before. In line with the goals of the Barlow Report, the 1945 Distribution of Industries Act was passed, to provide positive encouragement for firms locating in Depressed Areas and to control industrial location in the prosperous regions. This was part of the general post-war commitment to full employment and regional balance. The 1946 New Towns Act was intended to assist this by creating autonomous Development Corporations, outside traditional local authority-central government relationships. The Corporations were expected to develop New Towns which would accommodate people decanted from overcrowded and congested cities (particularly in the South East and London). To facilitate a more positive local authority role in post-war reconstruction, the 1946 Compulsory Purchase of Land (Procedure) Act was passed. This gave local authorities expedited compulsory purchase powers to overcome the problems of land in multiple ownership, which had severely limited local government redevelopment in the past. Finally came the 1947 Act.5 The 1947 Act required that development could only take place with a planning permission from county and county borough authorities. These authorities were to prepare development plans (to be reviewed every five years) which were to be the ultimate responsibility of the Minister of Town and Country Planning. Now, because the right to develop had been taken from landowners and vested in the state, landowners were to be compensated from a global fund of £300 million. This compensation was to be paid over a five-year period and only if landowners were clearly suffering hardship. This solved the compensation problem, but the Act also dealt with the problem of betterment. All land was to be treated in the same way. A 100 per cent development

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charge was imposed on the difference between the land at its existing use value and its development value with planning permission. This was to be paid by the prospective developer. The only general (as opposed to special) allowances were a potential 10 per cent tolerance in the valuation process (this was a notoriously inexact science) and some provision for reimbursement of the capital costs of improvement undertaken by landowners before the Act came into operation. Only land dead-ripe for development and land held by single plot owner-occupiers for their own use was to be totally exempt from this charge.6 These provisions dealt with the financial side of the compensation and betterment problem, and allowed for substantial state recoupment of betterment within a system of state controlled and regulated land use (a 'fiscal-regulatory' approach), but the Act also went some way to adopting elements of a 'fiscal-interventionist' approach. To administer the collection of betterment and the payment of compensation a Central Land Board was created. This central body was seen as necessary to overcome the difficulty which arose when local authorities recouped betterment from development schemes which occurred in their areas as a result of contiguous local authorities refusing planning permission for the scheme. It was felt that it was unfair that some local authorities should have to pay compensation to landowners for the loss of their right to develop while other local authorities benefited from the development that actually took place in their areas as a result. Thus the Central Land Board was to centralise all compensation and betterment transactions and end this anomaly. What was less clear, and what became a major issue in the discussions over the Act, was the effective role of public sector development. The 1946 Act had given expedited powers to local authorities to undertake compulsory purchase of necessary redevelopment land, and it was envisaged that Treasury grants would be available to local authorities (outside the blitzed areas which already had these powers under the 1944 Town and Country Planning Act) to redevelop their areas in a positive way. The 1947 Act was unclear on the central issue of whether the lead for national state planning and development should be left to individual local authorities or to the Ministry of Town and Country Planning and the Central Land Board. The confusion arose because the Act gave the Central Land Board reserve powers of compulsory purchase to make land available for development. Furthermore, the Minister of Town and Country Planning was constitutionally responsible for the oversight of all local authority planning and development plans. 7 It is due to this confusion at the heart of the legislation that one may

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conclude that the 1947 Act was a loose compromise between two solutions. On the one hand, there was a clear commitment to a 'fiscal-regulatory' approach. This was seen in the global compensation fund, 100 per cent development charge and local authority land use planning. There was also the commitment to create a more positive role for industrial location control, local development and in the reserve powers given to the new Central Land Board. These latter proposals were clearly a commitment to the ' fiscal-interventionist' approach which the Uthwatt Committee and the Barlow Report recommended. But, this legislation failed to go as far as the Uthwatt Committee's proposals and was therefore ultimately illogical because it allowed the private market in land and development to work, while taking away any incentive for the private sector to operate.8 This is evidence of the failure of the left wing of the Labour Party to achieve what it had wanted in 1944 and 1945It is worth outlining in more detail the divergence between the 1947 Act and the land nationalisation and Uthwatt Committee approaches, because their rejection by the Labour government illuminates the issues which were debated during the formulation of the 1947 legislation. The main differences were the failure to nationalise land and the refusal to take all land for future development into public ownership through a central planning body. The Uthwatt Committee had intended that the central agency would acquire land and lease it to local authorities and developers, but still retain an interest in any betterment created in the future. The central agency would also allow the state to maintain a role in actual development. The 1947 Act allowed a Central Land Board to compulsorily purchase land to facilitate development and allowed the Board to recoup betterment, but this fell short of the Uthwatt Committee's desire for the state to maintain a continuing ownership of all developed land through leasehold.9 Against this it might be argued that the state was given a positive role through the granting of expedited compulsory purchase powers and Exchequer grants to local authorities. This failed, however, to meet the criticisms of this approach by the Uthwatt Committee: that there would be no central control of planning and development and also that the state's role would be dependent upon the administrative capabilities and political intentions of local authorities and the willingness of landowners and private developers to co-operate. 10 Furthermore, the Central Land Board did not have the power to undertake actual development - only local authorities and the New Town Corporations retained this power. The Board's role was limited to bringing land on to the market for development when that land was

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being withheld. Nor could the Central Land Board enforce sales at existing use value as between willing sellers or buyers. 11 These were the central weaknesses of the 1947 Act in relation to the state role intended by the Uthwatt Committee. It had envisaged that the public sector would actually undertake more post-war development and that the state would maintain a continuing ownership interest in developed and undeveloped land. This logical 'fiscal-interventionist' approach was not created in the 1947 Act, and the Ministry of Town and Country Planning and the Central Land Board were never able to undertake this role. In the 1947 framework the private sector would continue to play a part in development and ownership, with local authorities, not the state centrally, having the main public stake in development. This was compounded by the failure to create a national ministry for physical and economic planning as the Committee had desired. The Ministry of Town and Country Planning was only to oversee land use (physical) planning, the detailed day-to-day responsibility for which would rest with local authorities and not the Ministry or Central Land Board.12 Consequently, it can be argued that the 1947 Act was not created by adversarial politics. The draconian demands of Labour's 'left-wing' were rejected and many of the radical recommendations from the Uthwatt Committee were left out of the legislation. The Act did contain some measures which went further than the Committee had desired. These included: the extension of planning control to all land rather than to undeveloped land; the imposition of a 100 per cent development charge on betterment; and the decision not to pay compensation to all owners for the loss of their right to develop. Only the last of these three would appear to owe anything to Labour ideological preferences, and resulted from the interventions of the Lord Chancellor (Jowitt) and the PM (Attlee) at a late stage in the initiation of the legislation. 13 The other two owe more to civil servants and Labour Ministers trying to work out a viable scheme in an incredibly complex technical area than to ideological preferences. How then can one explain the initiation of the 1947 Act if it owed little to the role of adversarial politics ? How can one also understand the creation of a piece of legislation which, while within the broad framework which is practical in this policy area, failed ? It would appear that in the 1945-1947 period the main culprits for the failure of the Act were senior civil servants in the Treasury, the Board of Trade and the Ministries of Health, Agriculture and Transport. These officials were able to use the social democratic inclinations of the Labour government

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and their ignorance of the issues to defend their traditional departmental structures and responsibilities at the expense of a viable policy approach.14 Before analysing the role played by senior civil servants, one must understand that not all of the civil servants in Whitehall were intent on limiting the scope of the 1947 Act. Nor were all of the civil servants and Ministers involved totally opposed to the logic of the Uthwatt Committee's approach. Cullingworth has argued that officials in the Reconstruction Secretariat, and later in the Ministry of Town and Country Planning, were basically supportive of an extended state role in development. The fact that there was any consensus politically over this extended role in the Coalition and Labour governments is testament to their influence.15 These relatively junior officials were, however, confronted by two insurmountable problems. Firstly, they had to overcome the traditional lines of organisational demarcation within Whitehall. Senior civil servants in the Departments assiduously defended their traditional responsibilities against the rationale of a central planning agency for economic and physical planning. They were basically opposed to such an agency, due to their personal views about the need to protect and support the private sector and ensure a continuing role for local authorities. Secondly, radical civil servants faced an even greater obstacle. While the Uthwatt Committee's approach was logical it would have failed to overcome the power of constraint in the market if it had ever been implemented. This fact was fully realised by the Reconstruction Secretariat during the war; and also by the officials in the Ministry of Town and Country Planning as they tried to arrive at a workable compromise, which would have met most of what the Uthwatt Committee wanted and would yet be acceptable in the market.16 These officials convinced their Minister - Lewis Silkin - of the need for an approach, which fell between the 'fiscal-regulatory' and 'fiscal-interventionist' solutions. In the end what would have been an ideal solution to the problem was defeated by senior officials and Ministers in other Departments. The result was the illogical compromise of the 1947 Act. Officials who had been involved in assessing the utility of the Uthwatt Committee's recommendations during the war had come to the conclusion that these had a number of weaknesses. In particular, they argued that the Committee had been mistaken to make a distinction between developed and undeveloped land, because this would be time consuming for a new central land agency and would lead to endless appeals and litigation by landowners and developers who would be treated differently. It was felt that the Committee's approach would result in a time-lag

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between the analysis of compensation for owners who lost their development rights in undeveloped land and the recoupment of betterment. A scheme that dealt with all land at once and in the same way was administratively easier and likely to be more acceptable politically. This, rather than ideological prejudice, was the reason why the Uthwatt Committee's differential approach to developed and undeveloped land was rejected and replaced by land use planning control and similar compensation treatment for all types of land in the 1947 Act. 17 The Uthwatt Committee's site value rating proposal was also rejected. It was argued that it might take away any incentive to develop, that the tax would take time to be collected, that it would hold up the payment of compensation and would cause market hostility and electoral unpopularity. It was also maintained that there was a contradiction in paying compensation at existing use value only on undeveloped land and allowing owners to retain 25 per cent of betterment in developed land. Finally, collecting all increases of betterment on undeveloped land also raised the thorny issue of worsenment. As a result Silkin's officials persuaded him that the Uthwatt Committee's approach was the basis for a solution, but that all land should be treated similarly and that compensation should only be paid to owners on the granting of planning permission. This approach might have worked in the market because it overcame the inherent inequity of the Uthwatt Committee's treatment of different types of land. It is clear from Cullingworth's account, however, that Silkin's officials wanted to extend this 'fiscal-regulatory' approach (land use planning and tax on betterment at the point of development, with some limited compensation rights). Cullingworth has maintained that Silkin and his officials wanted a new central land agency to have a more purposive role - to include a control over the development of land through compulsory purchase to facilitate the private market. Indeed Cullingworth has contended that Silkin may well have believed in full nationalisation, but because he was a realist he recognised that this might be elect orally unpopular and that a workable first step was needed. This first step was to be the creation of an effective land use planning system and a solution to the compensation and betterment problem. A central land agency could follow, but it would take some time for it to be given a dominant role in the market.l8 Unfortunately, in the political in-fighting over the legislation with other Ministers and civil servants, Silkin and his officials were not able to achieve fully either of these two goals. The conflict in Whitehall over the Silkin proposals revolved around the issues of how much compensation should be paid to landowners who

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lost their development rights; how much betterment should be collected; and what role the proposed central land agency and Ministry of Town and Country Planning should have in the control of development. Opposing the scheme proposed by the Ministry of Town and Country Planning were the clients and officials of the Treasury, the Board of Trade and the Ministries of Agriculture, Health and Transport. It was the Treasury and the Ministry of Health which were the major obstacles to what Silkin and his officials wanted to achieve. The story of the internecine struggles which took place in Whitehall over these issues has been told in detail elsewhere. 19 However it is instructive to draw out the major lines of conflict and to specify who were the winners and losers in the struggle over policy which took place. Broadly speaking, Silkin and his officials, while recognising that land nationalisation and public purchase and leaseback were politically impossible in the short term, had arrived at a number of conclusions: any solution must treat all landowners similarly; owners should be granted some compensation based on the value of their land at existing use value (with a sweetener of 50 per cent of the potential development value in their land as at 1939 values); and compensation should be paid from a global sum to deal with the problem once and for all. It was also generally accepted that a betterment tax of around 80 per cent should be imposed on the granting of planning permission. By this means Silkin and his officials hoped to solve the compensation and betterment problems in such a way that electoral and market antipathy were minimised. By giving landowners some compensation for the loss of their development rights, and then allowing owners and developers to haggle over the 20 per cent of betterment value not taken by the state on the granting of planning permission, it was argued that willing sales in the market would occur. 20 Having achieved this first step it might then be possible to take a second step. This would involve laying the groundwork for a dominant state role in land purchase and supply - initially to facilitate the local authorities and private sector roles - and, ultimately, in actual development itself. This second stage would have been something like the 'fiscalinterventionist' solution which the Uthwatt Committee had desired. The important point here is that Silkin and his officials recognised that they would have to proceed slowly. They could not alienate the market by nationalising all development land and they would have to carry the rest of Whitehall with them. 21 The issues of compensation, betterment taxation and land use planning control were given first priority in Whitehall as a result. The

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question of central state land development and supply were left as a second priority, to be discussed later. Silkin and his officials did not however achieve all that they desired. In the Act a global sum was created to compensate hardship cases for the loss of development rights, but this was an ex gratia payment to be left to the Treasury to decide on. Furthermore, it was not to be based either on compensation for loss of development rights or on existing use values. This was a heavy defeat for the Silkin approach because it created political resentment amongst property owners, who felt they were not being fairly treated. Silkin was able to resist Treasury demands that any compensation should be paid for only on the granting of planning permission, but the Treasury did ensure that there would be no payment of compensation for five years out of the global fund.22 The creation of the fund was not, however, a victory for Silkin; it owed more to the intervention of Jowitt - the Lord Chancellor - and the Treasury. Jowitt argued that landowners should not be compensated because this would raise the issue of worsenment. Instead he proposed the 'one-off' ex gratia payment which was not to be seen as compensation. This was supported by the Treasury who did not want to pay compensation to all landowners because of the potential cost to the Exchequer.23 The global fund was not based on the compensation rights which Silkin and his officials had desired, but was to be a hardship fund and limited only to acute sufferers, not to all landowners. The issue of the level of betterment tax created particular problems because it involved taxation questions (on which the Treasury would be bound to be concerned) and raised the question of what role the Ministry of Town and Country Planning and central land agency should ultimately fulfil in the development process. The Silkin team of officials had argued that, if the new agency was to begin the process of facilitating the market for development (and also creating a positive role for itself), then the setting of betterment should be flexible and left to the discretion of the agency. Sometimes it would be set at a high level (depending on the state of the market and the land in question), sometimes it would be low. This proposal had been rejected by the Coalition government on the grounds that it gave too much discretionary power to a quasiindependent agency. This meant in practice that the Treasury's case was being supported. The Treasury resisted any proposals that created a new agency which would be able to raise or lower taxation independently of Treasury control. Dalton (the Chancellor of the Exchequer) successfully opposed any attempts to give the new agency flexibility in varying the levy rate.24 Silkin was able to wrest one concession from the Treasury.25

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The new central land agency was to have reserve compulsory purchase powers to auction land to the highest bidder if landowners refused to sell their land. In this way Silkin and his officials hoped to provide something of a flexible role for the Commission in facilitating private development, despite their initial defeat. 26 The Treasury was able to overturn this compromise eventually by their success in forcing the new land agency to impose a ioo per cent betterment tax on the granting of planning permission. The Labour government had accepted that there were two approaches which might be taken to ease the new system into operation against the expected opposition from property owners. One was to allow the land agency flexibility in compensation and betterment transactions, but this was defeated by the Treasury. The alternative was to leave some betterment to be negotiated between landowners and developers to encourage willing sales, with the proviso that if this did not occur then the state would have reserve powers in the new agency to buy the land at existing use value. This solution was keenly debated in government, with Morrison - the Lord President - anxious to lower the level of betterment charge to encourage the private sector to operate. Silkin wanted flexibility, but he felt that if he could not achieve this, then the state should recoup a substantial amount of betterment and that a figure of around 80 per cent was in order.27 Discussion in the Lord President's Committee, and then in the Cabinet, had oscillated between the flexible and the 80 per cent levy approaches. Once the flexible approach was rejected it was decided to adopt an 80 per cent betterment levy. In drafting the legislation for Parliamentary enactment the Treasury was able to modify this suggestion. The Treasury, with support from the Valuation Office, argued that a 20 per cent retention for the private sector would always go to the developer, because landowners would not see it as sufficient reward for the trouble of bringing their land on to the market. As a result, compulsory purchase at existing use value would be used by the land agency (to be known as the Central Land Board) and the 20 per cent of betterment would pass to the developer. This had been one of the intentions of the 1947 legislation - to penalise the owner and facilitate, through Central Land Board, the development process. This was unacceptable to the Treasury and Valuation Office and, when the regulations governing the Central Land Board's operations were announced in the year after the Act was passed, it was revealed that the charge would be 100 per cent rather than 80 per cent. Treasury concern to protect their control over revenue and expenditure, against the

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potential incursions of a competitor in the form of the Central Land Board, explains this change. It clearly had nothing to do with socialist commitments on the part of the Labour government and is testament to the power of the Treasury in policy initiation. It is worth stressing here that the decision was supported by Sir Malcolm Trustram-Eve and his staff at the Central Land Board (created in November 1947) because they feared that, without any compulsion in the Act to enforce sales at existing use value, the 20 per cent left to the owner and developer might soon come to equal real development value.28 The final area of contention was the role of the Central Land Board in land purchase and development. Silkin's officials (led by Sir Geoffrey Whiskard) started from the assumption that traditional central-local relationship should be supported, but local authorities should be given extra powers to undertake positive development. These additional powers had been granted for blitzed areas in the 1944 Town and Country Planning Act, and Whiskard and his officials wanted to encourage positive state land purchase and development by local authorities outside these areas. Under the 1947 Act these authorities would benefit from being able to buy land at existing use values instead of full market prices, but they would have to face development charges on their remunerative development land (commercial development, housing, etc.). 29 Silkin argued that, since the Central Land Board would be collecting betterment from local authority planning activities, then the Board should also purchase all development land. This land could be sold or leased to local authorities or private developers. This was the original intention of the Uthwatt Committee and was Silkin's second step approach to the problem. By this means the state centrally, through prices or rental values determined by the Board, would be able to differentiate between private developers (who would be charged marked rates) and local authorities (who would be given a hidden subsidy depending on the use their land was to be put to). 30 Although this approach is logical it faced immense political and administrative obstacles. Any body which is able to vary the price it charges for land is bound to face opposition from the Treasury because it threatens the Exchequer with financial uncertainty and organisational competition. The Board of Trade was also concerned because of its responsibility for industrial location and development, which the Central Land Board might begin to affect. Similarly, the Ministries of Agriculture and Transport were also worried by the potential ability of a quasiindependent agency to shape and to influence land transactions for agriculture and road and highway development. The main obstacle

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came, however, from local authorities; the Board's new role questioned their independence to control the development of land and their traditional relationships with the Treasury and the Ministry of Health. The Ministry of Health was the main vehicle of support for the local authorities in government at this time. In particular it was concerned about any new initiative which might affect local authority house building. Thus, added to the opposition from the Treasury (Dalton) and the Board of Trade (Cripps) was the antipathy of Aneurin Bevan, the Minister of Health, who attacked this proposal after his officials convinced him that it would seriously disrupt the housing drive.31 In fact, there may have been other reasons why the civil servants were opposed to this scheme. The Ministry of Health was, at this time, working out its own proposals to provide extra grant aid to local authorities, to fund an increased housing drive by traditional means. The Central Land Board proposal threatened to end this work and this is why it was attacked. Opposition from the Treasury, the Ministries of Health, Agriculture and Transport and the Board of Trade successfully limited the second step proposed by Silkin. The fact that local authorities and their Associations were wholly hostile to this approach was also a contributory factor. The compromise solution, which was developed after this defeat for Silkin's, was an extension of grants from the Exchequer to local authorities, in consultation with the Ministry of Health. The Central Land Board would not play a role in this process. This grants scheme was however to be limited to local authority reconstruction areas only. Silkin was defeated, but he was able to win a number of concessions to his own viewpoint. The Central Land Board was given reserve compulsory purchase powers to test the development market and expedite sales; the Minister of Town and Country Planning was empowered to encourage local authority compulsory purchase in reconstruction areas; and county and county borough councils rather than district councils were given planning powers.32 This was the compromise approach arrived at in the 1947 Act. It was to fail in implementation because it allowed the private market to operate, confined the state's role to local authority action in reconstruction areas and imposed a 100 per cent development charge on betterment. This effectively reduced the incentive for development or land sales in the private market. Silkin came close to achieving the approach which it was argued was viable in the market, but in the end he was defeated by his colleagues' ignorance of the issues and their willingness to accept uncritically the case presented by their own Department officials, who

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were often more concerned with defending traditional organisational responsibilities than with formulating viable policy. While the constitutional blame clearly rests with Ministers for this failure, in reality the more powerful actors in the process were the civil servants, not the politicians. One cannot conclude from this, however, that the civil service in Britain is unified in its opposition to radical policy innovation. Some of the officials in Whitehall were responsible for formulating, and supporting, an interventionist state role in land and development after 1945. It was the officials in the Reconstruction Secretariat and Ministry of Town and Country Planning who gave the impetus to much that was achieved by the Labour government in 1947. This should counsel caution in theorists who see the civil service as a monolithic body with a unity of purpose. The civil service was in continual disagreement about means and ends and this led to conflict throughout the period. Eventually, however, senior officials in the strategically important Departments were able to defeat the goals of their more junior and radical colleagues. As Cullingworth has argued, more radically inclined officials recognised that in the future the central state role would have to be strengthened to make the 1947 Act work. They were not able to achieve this and the chance of resolving the compensation and betterment problem, once and for all, was lost. 33 The power of constraint: the collapse of the development market and the failure of the IQ47 Town and Country Planning Act The central problem facing the 1947 Act lay in two interrelated issues. The Act did not provide powers to allow the state to control land sales at existing use value even though it was intended that this should always be the case. The 100 per cent development charge was supposed to force potential purchasers and developers of land to resist demands by landowners for prices over existing use value. Their incentive was to be the assumption that if they did pay over existing use value they would also have to pay the development charge to the Central Land Board. They would thereby pay the charge on their land twice, while landowners pocketed inflated existing use values. It was assumed that rational purchasers would not act in this way. This was a basic misconception by the framers of the legislation. Secondly, the Act could still be made to work even if development values were demanded, because the Central Land Board had the power to enforce sales at existing use value by compulsory purchase. It was felt that, if it was seen that the Board was

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prepared to use this power, then private owners would accept that they had to sell at the intended existing use price. The need for this reserve power had been realised late in the formulation of the legislation, and had been written into the Act on the advice of officials from the Ministry of Town and Country Planning and with the support of economists (D. N. Chester and J. E. Meade) in the Cabinet Office.34 The reserve compulsory purchase power did not work well in practice. It was drafted on the assumption that the major difficulty facing the 1947 Act would be a racket in land prices, as owners tried to recoup some development value above existing use value. To this end the Treasury and the Ministry of Health had ensured that the power would be limited so that compulsory purchase could only be used to stop this practice. Compulsory purchase could not be used by the Board in furtherance of broad planning aims or to facilitate public and private development. The Treasury and Ministry of Health held that these were properly the functions of the private market or the more extensive planning and compulsory purchase powers granted to local government. This was also a misconception because it failed to take into account that land withholding by recalcitrant owners (who saw no profit in selling land at existing use value) would be the major difficulty rather than racketeering in land prices. Officials in the Ministry of Town and Country Planning had always envisaged that, in the interim period of the Act's life, the Central Land Board would have to use its planning powers extensively to overcome the owners' ability to act negatively to frustrate the Act's intentions. The wording of the 1947 Act, however, left the Board's compulsory purchase role ambiguous and this led to its failure.35 In describing the way in which this led to the discrediting of the 1947 Act it is worth stressing that one is dealing with the analysis of the power of constraint. Under the 1947 Act the main power of constraint lay with owners of land, because they were free to decide whether to sell land or to retain it in its existing use. This was a central weakness of the Act as the Uthwatt Committee, with its desire for state purchase of all land for development, had correctly perceived. It ensured that landowners would withhold land from the market and thereby undermine effective development. This is in fact what happened as the Central Land Board was only too unhappy to record.36 The result was a sustained campaign of political opposition in Parliament and the press by landowners, on the grounds that it penalised profit. But, owners of land also had another power, which the Uthwatt Committee's solution would have ended. Since there was no state purchase of all land for development, and

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because the Act only gave the Central Land Board reserve powers of compulsory purchase, landowners could ensure that prospective buyers paid over existing use value to obtain land for development. This was made easier because owners also had the power to withhold land from the market and artificially create a shortage of supply to drive up the effective price. Landowners were assisted in this by the fact that the economic circumstances facing Britain seriously undermined the development process. Immediately after the war there was an acute shortage of building materials, and wartime controls (in the form of building licences) were maintained by the Labour government to ration available building supplies. For builders the possession of a licence was often more important than the price of land, and anyone with a licence was prepared to pay more than existing-use value for land in order that development might take place. Thus developers were more concerned about development than with haggling with landowners over existing use values, because they could always pass on any inflated price to homebuyers and still make a reasonable profit. Landowners and developers therefore combined to frustrate the intentions of the legislation - land was both withheld and changed hands at prices above the existing use value. The Act also became electorally unpopular as it became apparent that the global fund for hardship cases contained inequities. The government had tried to ensure that bona fide developers were excluded from the development charge scheme in the passage of the Act by giving them preferential claims on the eventual global fund. This led prospective purchasers of land and existing owners to wonder what claim they would be able to make on the fund once their own claims were adjudicated by the Treasury in 1953. The Treasury could not be precise about how much each claimant would receive and this further dislocated the land market. As a result, landowners were encouraged in withholding land because they had no idea what they would receive, if anything, in compensation for the loss of their development rights (it was the intention that only hardship cases would be compensated and the £300 million figure was regarded as derisory). Prospective buyers of land (who were being asked to pay over the existing use value and were then given a claim on the fund by their land vendor) were also uncertain about how much compensation they could offset against the eventual development charge they would have to pay to the Central Land Board.37 Added to this was a further irony. The government had decided that building licences should be granted fairly freely to individuals who wanted to build their own houses. These individuals, who were least able to pay inflated existing use prices and wait for land to come on the market, were

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often the most glaring hardship cases. The government was continually pressured to make exemptions for these and similar classes of people, but could not do so without accepting so many preferential claims on the global fund as to make the eventual sum to be received by all other claimants appear even more derisory. Though some exemptions were made in 1949 and 1950 they were minimal and had little impact on the supply of land.38 In this way the treatment of individuals contributed to a perception that the development charge actually increased prices and kept land off the market; it also gave tremendous political capital to the Conservative opposition as they began to pledge themselves to the repeal of the Act. 39 A number of potential solutions to this dilemma were debated in government up to 1951, but none could be made to work without undermining the original intentions behind the legislation. The most notable was the desire - strongly pressed by the surveying and estate agency professions - to abolish the development charge altogether or to reduce its size substantially. This was rejected by both the Ministry of Town and Country Planning and the Treasury on the grounds that it would reduce the overall amount of revenue without contributing substantially to encouraging an increase in land supply. An alternative, championed by Trustram-Eve (the first head of the Central Land Board), was to extend the exemptions and increase the global compensation fund. This was rejected by the Treasury on the grounds that the global fund was not in fact a compensation fund at all, but a 'one off' payment in cases of hardship, not in lieu of lost development rights. Trustram-Eve's proposal would have granted all landowners the right to compensation, which was not the intention of the Act. As a result the government was left with the alternative of attempting to mitigate the effects of the 100 per cent charge on individuals by granting exemptions. 40 Unfortunately the number of these would have to be limited because of the uncertainty over how much might be pre-empted from eventual compensation for all landowners out of the global fund. The Central Land Board and the government resisted moves to make substantial exemptions, or cuts in taxation, because most developers (95 per cent in the Board's estimation) were willing to pay the development charge. It was only a small number of individual cases which were troublesome.41 Nevertheless these few cases received tremendous media and political coverage and contributed to the perception that the Act undermined development and was invidious to individuals. Antipathy to the Act was exacerbated by its impact on the estate agency, valuation and legal professions. Land agents could not easily

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make a living with sales taking place at existing use value and, though this might have been an intended consequence of the legislation, their political opposition (plus that of the Royal Institute of Chartered Surveyors, The Law Society, the Estate Agents' pressure groups and the FBI and Chambers of Commerce) contributed to popular disaffection with the legislation.42 This pressure was not an effective constraint on the government, as their ability to ignore demands for a substantial reduction in development charges between 1947 and 1951 revealed. More important as a constraint in this period was the impact of bureaucratic inertia and its confluence with the real economic problems which faced the government. The 1947 Act failed to control land sales or land supply effectively and created severe hardship for individuals. But, this could be resolved by other means than tampering with the 100 per cent development charge, which was not really the problem. The real difficulty was that the 100 per cent charge was imposed on a market which was free to act in its own way. The logical solution was to ensure that the market did not operate in such a way as to frustrate the intentions of the Act. This could only be achieved of course by two methods: outright state purchase of all development land for sale and leaseback (Uthwatt), or the use by the Central Land Board of its reserve compulsory purchase powers to stop land being withheld or changing hands above existing use value. This latter solution, which economists in the Cabinet Office and officials in the Ministry of Town and Country Planning had recognised might be necessary, ran up against two major constraints: the economic position the government found itself in; and opposition from senior civil servants in Whitehall, members of the Central Land Board and some Labour politicians. The power of bureaucratic actors in the policy initiation process was revealed earlier, but they also possess the power of constraint because they are centrally involved in the implementation of government policy. Indeed we were given a foretaste of this when the role of the Treasury and Valuation Office in drafting regulations to impose the 100 per cent development charge was discussed. As the Central Land Board tried to overcome the problems of lack of land supply and high existing use prices, the Treasury and other senior civil servants were once again to limit its role. First, it is necessary to deal with the constraint imposed by Britain's parlous economic position. The Labour government inherited an indebted nation and economy and was not in a position to provide for all the social welfare and state socialist schemes it desired. Public money

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was at a premium, as the 1947 financial crisis was to reveal.43 There were also demands from many quarters for public money to finance the nationalisation of key industries, to extend social welfare and to revitalise export industries and pay for imports. Against this background it is not surprising that ministerial attention should fail to accord the problems of compensation, betterment and physical planning the highest priority. This was a very important factor because it strengthened the resolve of the traditionally parsimonious Treasury to overturn the intentions of Silkin, his officials in the Ministry of Town and Country Planning and the Central Land Board to provide for a positive and controlling state role. The true power of economic constraint this gave the Treasury was revealed in the derisory sum of £100,000 given to the Board to undertake its activities of land purchase in the first year.44 Given that most property professionals thought that the £300 million global fund was clearly insufficient to meet the needs of hardship cases alone, it was unclear how the Board was supposed to undertake an effective compulsory purchase role - which might involve substantial land purchase against land withholders and racketeers - with such a small sum of money. This constraint was also supported by sustained opposition by officials in the Treasury, the Ministry of Health and the Ministry of Town and Country Planning (especially when Silkin was replaced by the more accommodating Dalton in 1950)45 to any extended compulsory purchase role for the Central Land Board. The basic position taken by senior officials was that the 1947 Act had not granted the Board the power to purchase land compulsorily, unless it was to ensure that sales took place at existing use value. The Treasury had initially insisted that any wider powers which might have involved the Board in questioning the planning powers of local authorities, or of indulging in any extensive purchase role should be written out of the Act. This limitation clearly contributed to the emasculation of the Board's compulsory purchase role for a number of reasons. First of all, the main problem was not the high price of land, but was rather that owners were able to withhold land in the hope of forcing up the price. But, the Treasury's interventions had created such an ambiguity over the meaning of the Board's purchase powers that legislation appeared to stipulate that the Board could only act to purchase land which was being sold at an inflated price. Any other powers to ensure development by facilitating land supply appeared to belong solely to local authorities; powers which they and the Ministry of Health assiduously defended.46 This had never been the intention of the officials at the Planning Ministry or of Silkin, who had always envisaged that the Board would

Labour (79^5-/95/)

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need to act boldly and quickly in the initial period of enactment to force land on to the market and to ensure thereby that prices were maintained at existing use value. But their approach questioned the traditional relationship between the Treasury, the Ministry of Health and local authorities, and was resisted as a result so that the Board was initially confined to compulsorily purchasing land only where there were clear cases of inflated prices being charged. Unfortunately as the Board discovered, despite an immediate flood of applicants for state purchase, very few of the cases were suitable to test the Board's general powers in the courts and, out of 1,100 applications, only 11 led to compulsory purchase.47 Ultimately, however, the powers of the Board were tested in the courts, and the House of Lords and the Court of Appeal found in favour both of the power to purchase at existing use value and of wider compulsory purchase powers to facilitate land supply and development. Ironically this decision, which clarified the ability of the Board to purchase land to facilitate development, only came on 25 February 1952, when a new Conservative administration was in office and had embarked upon abolishing the Board. 48 This case shows that the power of constraint at the disposal of senior civil servants is limited, because recourse to law is always open to Ministers to enable them to test the real meaning of legislation. If this fails they are also able to enact new legislation to clarify their intentions. But to say this is to deal only in theory, for it ignores a number of crucial factors which operate in the real world. First, the power of constraint available to officials may not be effective all of the time but, given that governments have to be re-elected, it is a potent delaying tactic against measures which are regarded as unpopular. Moreover the need to win electoral support also causes even the most radical Ministers to limit their short-term expectations. We have already seen how Silkin had talked about a two-stage approach in the policy initiation process. During the implementation stage, although Silkin wanted the Board to introduce a test case to begin this second stage, he was in no hurry to do so. 49 Furthermore, when Dalton replaced Silkin in 1950 the government was in a precarious electoral position. The result was that Dalton's natural caution towards radical schemes was reinforced by the perception that to be seen to be creating a draconian compulsory purchase scheme would be electorally damaging. This was particularly true because the opposition was already making political capital out of the development charge issue. 50 This explains as well why, in the winter of 1949/50, Silkin had refused to allow the Board to create a test case out of its attempt to purchase plots of land in a parcel to facilitate land supply. 51 Silkin clearly

i oo

History of adversarial policy failure

sensed the political and electoral necessity of not pushing the Board into a potentially damaging legal case, which it might lose, just before an election. This is ample testament to the pernicious effect of electoral considerations on viable policy implementation. There were two other constraints which the 1947 Act faced. Firstly, there was the attitude of local authorities to the Central Land Board. Local authorities had been given extensive land purchase powers to facilitate development under the Act, but it soon became apparent that the Board's desire to encourage the use of these powers on its own behalf to stimulate land supply would be frustrated by local authority antipathy. Local authorities were not prepared either to buy single plots of land for individual owners or to expedite their own five-year programmes in development plans as the Board desired. Additionally, many local authorities feared the potential threat to their own role implied by an interventionist central planning agency. 52 Finally on an informed reading of the official history of the time it can be argued that the Board's conception of its own role was also instrumental in limiting its potential. Sir Malcolm Trustram-Eve was the Board's first chairman. His work experience had been at the Bar and he was conversant with the problems of valuation, and his vision of the Board's future clearly circumscribed its role in the initial period. Trustram-Eve spent most of his time in trying to solve the problems of the development charge and in exhorting land purchasers to refuse to pay the inflated prices demanded by sellers. Compulsory purchase was seen by him as a power of the very last resort, and he was unwilling to accept that the Board had the power to facilitate development as well as to question inflated land prices. Indeed, Silkin had to force him to accept the necessity of bringing a test case in the courts to discover the extent of the Board's powers. Eventually, as it became clear that the courts did accept that the Act gave the Board the power to intervene to facilitate development and to stop land withholding, a more extensive compulsory purchase approach was devised. Ironically, this came as Trustram-Eve was replaced by Sir Thomas Phillips (formerly Permanent Secretary at the Ministry of Pensions and National Insurance), and just as Labour Ministers themselves were less inclined to adopt a more positive, facilitative state role for electoral reasons.53 In conclusion, then, the 1947 Act faced numerous constraints when it was implemented. Some of these were surmountable and some were not. One of the main obstacles that might have been overcome was the antipathy of senior officials, as the test cases over compulsory purchase in the courts indicated. But by then the damage to the more facilitative state role had been done. Similarly, the politicians could have replaced

Labour (7945-/957)

101

Trustram-Eve or forced him to take a more positive role; this they did not attempt, for which they are culpable. But there were a number of constraints they could not easily surmount. These related to the way in which the original scheme had been formulated and the position this gave to certain actors in the market. The real problem for the 1947 Act was located in the way it was drafted: it took profit and incentive out of the market without ending the operation of the market in land. In doing this the Act placed landowners in a crucial and pivotal role for the viability of the whole scheme. It ensured that if landowners did not sell their land willingly then the supply of land would dry up and, in the peculiar, rationing environment of the immediate post-war period, it followed that land would change hands at inflated prices and frustrate the development charge proposals in the Act. This was the central weakness of the scheme and it could not be overcome without a substantial modification of the Act. Neither of the two viable alternatives to resolve this dilemma - a 'fiscal-regulatory' or a 'fiscal-interventionist' approach - were possible in the political and economic environment of the period. More extensive land purchase by the state may be a logical solution to the problem, but in the short term it confronts bureaucratic opposition and it is dependent on a common strategy being adopted by the individuals who run the day-to-day operations of any interventionist agency. Many of these constraints can be overcome, but effectively only by recasting the whole administrative machinery in Whitehall and local government. Without a central planning agency, or Ministry, it is doubtful whether the defeat of traditional Departmental practices, roles and routines can be achieved. Even then, any radical interventionist government would face two crucial constraints which are less easy to counteract, as the 1945-1951 Labour government discovered. First, the economic resources to allow a dominant central state role in land purchase, let alone land development, were lacking, given Britain's international indebtedness. Secondly, any such approach must confront the problem of subjective political perceptions which impinge on electoral behaviour and directly influence Ministers' views on policy. By the end of the period many actors had recognised the need to take the state's role further, but to do so by extending a piece of legislation which had fundamentally changed property relationships, and alienated many interests in the market was hardly the basis on which to offer oneself for re-election. This electoral constraint was the crucial factor which limited the ability of the Labour government to act. Perhaps there are two lessons to draw from this. Britain's electoral system precludes long-term policy implementation and needs to be rethought; and,

102

History of adversarial policy failure

secondly, if governments intend to be radical they should ensure that they first formulate workable policy and then act radically at the beginning, rather than at the end of their tenure of power. The Labour government did neither and, while it must take some of the blame for this, perhaps the main culpability lies with the senior civil servants and local authorities, who effectively constrained the approach which had been formulated in the Ministry of Town and Country Planning.

The Conservative free market approach and the 1950s property boom (1951-1964)

The power of initiation: adversary politics and the dismantling of the 1947 system (1951-1959). The power of constraint: the implementation problem and the property boom (1959-1964). The dilemma for the Conservative government: adversary politics versus an interventionist solution. It was argued that the 1947 Act was an illogical compromise and that due to the power of constraint this legislation generally failed in implementation. In this chapter it is suggested that the period of Conservative government between 1951 and 1964 reveals all the inherent problems for policy-making in Britain of adversarial based politics. In this period Ministers did dominate their officials and they were able to force through legislation (in 1953, 1954 and 1959) which supported landowning and property interests. But this return to a relatively free market in land development caused as many problems as the interventionist Labour approach. The freeing of the market led to a massive boom in land and house prices and the undermining of an effective local authority and public sector role in urban renewal and development. The subsequent attempt by some Ministers and officials to force the government to return to a more interventionist solution after 1962 was, however, to be defeated. The result was prevarication and the loss of office in 1964. The power of initiation: adversary politics and the dismantling of the 1947 system (7957-/959) It is impossible to understand the reasons for the Conservative government's decision to return to a relatively free market in land development without an appreciation of the interests which sustain the Conservative Party and the factions which have developed within it as a result. 103

104

History of adversarial policy failure

Notwithstanding the apparent public appearance of unity, historically the Conservative Party has experienced sustained internal conflict over the relationship between the state and the private economy.1 During the 1930s there were disagreements as to how a Conservative government should respond to the social and economic problems of the Depression. In general terms these were between those who argued for an increased state role (which included some form of planning and Keynesian social welfarism)2 and those who preferred to defend laissezfaire solutions (which sought to maximise the role of the private sector).3 The war experience, which brought trade unionists and businessmen into a closer relationship with government, seemed, however, to have tilted the balance in favour of the more social democratically inclined elements within the Party. In land development this had led to the agreement to assist public sector urban renewal and to support the compromise on a Land Commission and betterment role enshrined in the 1944 White Paper. Despite this apparent agreement on state intervention, some members of the Conservative government were not happy either with this role or with attempts to give the state more control. Churchill had come under pressure from Party members - like Selborne - and had revealed all his political agility by recognising that a promise was not a commitment. After the war, he was to argue, a Conservative government might not implement the White Paper fully.4 This antipathy is wholly explicable in terms of the socio-economic base of the Party. The need to maintain the support of landowning, private business and property interests constrained the Party and forced it to reject extensive state control of the market. Thus Cullingworth's conclusion that much that was decided upon in the 1947 Act was not controversial and that a Conservative government in 1945 would have initiated similar policy is debatable.5 There was a renaissance of laissez-faire values in the Conservative Party as politics returned to normal in the post-war period. This is not to say that a Conservative government in 1945 would have returned to a free market in land. Rather it is to suggest that there would have been opposition to the 1944 White Paper compromise from socio-economic interests in land and development, as they sought to reassert their traditional role in the market now that the defence of the nation from external threat had been achieved. But these interests would have been up against the more interventionist inclined Party members, who recognised the need for a move towards social welfare and a more positive state role. Men like Butler and Maxwell-Fyfe had been responsible for creating a Tory Reform Committee in 1943, which had the goal of changing the balance

Conservative (1951-1964)

105

of power within the Party in favour of this more social democratic ideal.6 Indeed, it has been argued that it was this that led to the immediate post-war demise of the laissez-faire elements within the Party, influenced as well by its unexpected defeat in the 1945 election. This had the effect of reducing the standing of Churchill in the Party (a valiant supporter in his life of liberal laissez-faire policies) and therefore of antiinterventionist views. Given that the nation appeared to have opted for social welfarism and some form of planning, the success of the interventionist strand within the Party during 1946 and 1947 is understandable.7 This was however a pyrrhic victory. Most commentators recognise that by the early 1950s the underlying socio-economic base of the Party, as a constraint on wartime policy commitments, was to reassert itself,8 and the 1947 Act and its impact on the market clearly underlines this. While the Party had resisted the 1947 Act in Parliament, in general there was some agreement among members that state betterment collection was necessary. In operation, however, the Act highlighted the dilemma which this type of solution created for the Party. The Act faced opposition from landowners, developers and private individuals, who felt that it was iniquitous and a restraint on private development. Thus, while there were Conservative politicians who recognised the need for a state betterment role and the positive facilitation of private and public development, the illogicality of the 1947 approach merely served to bolster the position of those landowners and private developers who could point to the deleterious consequences of this legislation. This, plus the general discrediting of the Labour approach to economic management after the 1947 financial crisis,9 served to undermine the role of interventionist inclined Conservatives. By the early 1950s a reappraisal of Conservative policy had taken place, which was predicated on two basic requirements. The Party had to offer itself to the electorate as having an acceptable alternative to the social democratic approach of the Labour government. Secondly, it had to be seen to be offering something more to private interests than the Labour Party. This was a dilemma, because the interests which make up the Conservative coalition are often contradictory. For example, the interests of landowners (who wish to preserve their right to the use of their land) often conflict with the interests of the business community (who often wish to change existing land uses in search of profit from industrial and property development). Furthermore, these interests also have to compete with the aspirations of progressive Conservatives who wish to provide a state role to assist economic growth and to sustain social cohesion through social welfare.

106

History of adversarial policy failure

The Conservative solution was astute, even if it was somewhat illogical. To protect and sustain the socio-economic interests which underpin the Party, it was decided to develop a commitment to a property owning democracy. This implied a defence of property which was a clear alternative to the implied nationalisation objective offered by Labour. To offset the problem that this free market commitment might cause electorally, and to pander to more interventionist minded Conservatives, it was also decided to maintain social welfare and Keynesian economic management and full employment budgetary techniques. This compromise offered something to all of the socioeconomic and political interests within the Party, and it allowed the Conservatives to appear as a credible alternative to Labour. The basic contradiction in the approach was that it fudged the issue of the degree to which the state should or would intervene to ameliorate the worst excesses of the private market in land and property. This lack of precision was to cause immediate problems for the Party as soon as it returned to office. It is worth stressing that the property owning solution was clearly an electoral, as well as a socio-economic, necessity. This is important to appreciate because the manifestos on which the Party fought the 1950 and 1951 elections were in reality a return to adversarial politics. In order to sustain and defend its socio-economic base the Conservative Party had to win office, and to do so meant not only offering an alternative to Labour but also discrediting the opposition's approach in the eyes of the electorate. Thus, while it was perfectly apparent that the Labour government's 1947 Act was not a socialist measure, the fact that it was illogical in some respects and faced problems of successful implementation allowed the Conservatives to make political capital by denouncing as socialist what was basically a social democratic approach. The problem this creates is that it leads to the curtailing of the room for manoeuvre of governments when they come into office and have to face the objective constraints of the real world. Parties which seek electoral success by adversarial means discredit policies which they must accept eventually as logical and equitable and, in so doing, limit the possibility of consistent and viable policy-making. In the Conservative election manifestos of 1950 and 1951 the tension between the laissez-faire and social amelioration approaches was evident. The Party was committed to abolishing the Central Land Board and giving the private sector a larger role in housing development, but it was unclear whether or not it would end, or merely reduce, Labour's 100 per cent development charge.10 In office this conflict was to be played

Conservative (1951-1964)

107

out between two Ministers - Butler (Chancellor of the Exchequer) and Macmillan (the new Minister of Housing and Local Government). It was to result in a decision to favour the private sector rather than the public sector. This decision, which dismantled the financial provisions of the 1947 Act, was enacted in the 1953 and 1954 Town and Country Planning Acts. 11 In this period the Conservative government dominated the policy initiation process and Ministers were able to resist pressure from civil servants in a way that had not been possible for governments between 1939 and 1951. There were two main reasons for this. The Conservative government was not attempting to question the traditional role of local authorities and the private sector, nor was it planning to restructure the existing Whitehall machinery radically. The government did introduce some organisational change; the Ministry of Town and Country Planning and Ministry of Health were merged into the Ministry of Housing and Local Government - but this was not seriously opposed by officials. This is not surprising because in effect it was merely a re-affirmation of the dominance of the old Ministry of Health - under a new name - in the land use field, and it limited the possibility of the creation of a super planning ministry which the Ministry of Town and Country Planning had threatened to become in the earlier period. In this sense the change was probably supported whole-heartedly by the Treasury and Ministry of Health. This explains why the Conservative government was able to dominate the policy initiation process. Having said this, however, some officials, while accepting that the private developer would play a more extensive role in redevelopment and house building, recognised that there was still a need to provide housing for people who were unable to buy their own homes and also to support positive land use planning by local authorities. Thus the government had to accept that the state had a role to play; furthermore this role had to be funded. The government had to choose, therefore, between very difficult policy options: was it to return to a totally free market in land, which would question the state's ameliorative and facilitative role; or was it to collect betterment in part, in an attempt to be equitable to the public when state actions created land values ? On balance the manifesto appeared to offer the last of these two alternatives. It maintained a commitment to continuing local government land use planning and a local government house building, renewal and infrastructure role, while promising to expand the private development industries' role and allow landowners to recoup more of the betterment in their land than Labour had permitted. The one definite commitment

108

History of adversarial policy failure

was to abolish the Central Land Board. The issues of the exact amount of betterment to be retained by landowners and the specific role for the private development industry were not yet resolved. By the time the 1953 and 1954 Town and Country Planning Acts were passed it was clear that the government had decided to try to maintain a very limited public sector role within a largely free market approach. This was an illogical solution because it ultimately created a dual market in land: landowners selling land privately were paid more than those whose land was purchased for public uses. This inequity could not be sustained in the face of the pressure from landowners and developers and was resolved eventually in the 1959 Town and Country Planning Act. The 1959 Act saw a return to a free market in land, with limited concessions for land purchase for New Town developments and local government redevelopment and Town Expansion schemes. These decisions reveal the inherent conflict within the post-war Conservative Party and government, as laissez-faire elements clashed with more interventionist minded interests. The main argument over land values after 1951 revolved around the positions taken by Butler (at the Treasury) and Macmillan (at Housing and Local Government). Both of these men had been inclined towards a more interventionist state role in the 1930s and 1940s, but it is probably fair to argue that Butler was more willing to extend the state's role than Macmillan. This was revealed as the two men wrestled with the difficulty of repealing the 1947 Act and giving greater freedom to the private sector. It is important to stress, however, that a number of things were not at issue. Both men accepted that the Central Land Board's powers were too extensive and that central state land purchase was inconsistent with the Conservative commitment to the private sector. Secondly, they agreed that the 1947 Act's global hardship fund should be abolished and that the loss of development rights should be compensated when the state compulsorily purchased land. Thirdly, both men agreed that the public sector should have a role in the market. This would entail local government house building, planning of land use and facilitation of development - particularly for urban renewal. Fourthly, they decided that worsenment (occasioned by local government planning) should not result in compensation by the state. In other words, there was an agreement that a 'regulatory' land use planning and a limited development role for the state should be retained, but that the private sector should be given a more fulsome role. This placed them both clearly at odds with the ideologically purist laissez-faire faction in the Party - Salisbury and Thorneycroft - who wanted a return to a free market in land. 12

Conservative (ig^i-ig64)

I0

9

The problem was how this was to be achieved and what the exact balance between the private and public sectors should be. Butler favoured (with Maxwell-Fyfe and John Boyd-Carpenter)13 the retention of the 1947 development charge at a lower level (between 33^ per cent and 60 per cent), with more exemptions from levy than Labour had allowed and reserve powers in the Ministry of Housing for compulsory purchase when landowners withheld land. Butler clearly wanted to proceed within the framework created by Labour in 1947 and to make this approach work by removing its most glaring anomalies. There is also evidence that Butler was impressed by the arguments presented to the government by the Central Land Board that the Act was beginning to work after initial teething problems. 14 His position owed something to the fact that Treasury officials wanted to retain what was becoming a useful source of tax revenue. But Macmillan had the responsibility of generating a housing and slum clearance drive (which had been the basic electoral appeal of the Party in 1951). He was also advised by officials in his Ministry who felt that betterment collection and state compulsory purchase had hindered post-war development under Labour. Macmillan, then, was persuaded that a more drastic curtailment of development charge was necessary, and a return to as free a market in land as was possible was the only way to proceed. This is not however to argue that officials dominated Macmillan but that, given his responsibilities, and his own judgement, he found himself amongst kindred spirits at the Ministry of Housing and Local Government. 15 He was eventually successful in winning this particular battle. 16 Macmillan's success, unfortunately, created as illogical an approach as its Labour predecessor. The 1953 Town and Country Planning Act repealed the financial provisions of the 1947 Act by abolishing the £300 million global fund and the 100 per cent development charge. The compulsory purchase role of the Central Land Board was also ended. This, in effect, provided for regulatory local government land use planning and allowed landowners to recoup all betterment in private land and development transactions. This was a return to the 'regulatory approach' of the 1930s which the Uthwatt Committee had eloquently denounced as inimical to sound and positive local government planning. But Macmillan also understood this problem, and he sought to protect local government through limiting the price paid for the land required in pursuit of planning objectives. This was also an attempt to allow for some limited betterment collection for the state. Macmillan's solution was outlined in the 1954 Town and Country Planning Act. This Act allowed local authorities and other public agencies to purchase land

no

History of adversarial policy failure

compulsorily at existing use values, plus the potential development value in the land at 1947 values. This was also to be the basis of compensation for landowners who were refused planning permission for development.17 The system created a dual market in land because owners selling privately received full market value, while owners selling to the public sector received only the existing use value (plus any outstanding claim0 they had on the compensation that the Labour government had allowed for in the 1947 Act). Any value increase since 1947, or due to planning permission granted for development, would revert to the state. Clearly, any attempt to create a compromise solution between the public and private sectors must generate these problems. The only logical alternatives are to leave the free market to operate and penalise the state or to treat all landowners equally. The latter is difficult to achieve, however, without some continuing state presence in all land purchase and development, which is too much for the socio-economic base of the Conservative Party to countenance. Macmillan was, then, forced to cobble together an iniquitous solution. His compromise was not to last, as the Conservative government drifted towards a more laissez-faire bias in policy-making during the 1950s. The inequity of the dual market was revealed during the final stages of the drafting of the 1953 and 1954 Acts. This was known as the Pilgrim case. Having purchased land for £400 in 1950, Mr Pilgrim's land was purchased from him in 1953 for its existing use value of £65. Unfortunately, Mr Pilgrim had not made a claim for compensation under the provisions of the 1947 Act and therefore, under the legislation, was unable to claim any of the potential development value that had existed in the land in 1947. Mr Pilgrim committed suicide, even though the government indicated later that they would have made amendments to the legislation to allow for such hardship cases to be dealt with. 18 This was unfortunate, because Macmillan and his officials had recognised, at an early date, that limited inequities would occur but that they might be dealt with on a piecemeal basis. Despite this the Act appeared iniquitous and this was all that was required by the laissez-faire factions within the Party who wanted a totally free market in land. Landowners, developers and estate and land agents used backbench MPs to mount a campaign to discredit the legislation. They were assisted in this by the fact that the Labour Party also saw the 1954 Act as iniquitous, even though their own solution was very different from a return to the free market.19 The result was that a private members' Bill was given a majority on

Conservative second reading against government opposition. The Corfield Bill called for a return to a free market in land and provided that all future land purchase should be at market prices. This Bill was eventually withdrawn by Sir Frederick Corfield after promises by the government to introduce its own legislation to move in a similar direction. This legislation was enacted in the 1959 Town and Country Planning Act. It is important to see this legislation in the broader context because it clearly indicates the relative autonomy of the political system from external constraints. The Conservative government under Macmillan and Butler had recognised that if the public sector role in the economy was to be sustained some limitation on the operation of the free market was needed. But it was possible for backbenchers, in response to the ideological preferences of landowners and developers, to ignore the consequences of a free market for the public sector and for balanced economic growth. Thus the 1959 Act, while allowing for the continuation of local authority planning and facilitation of development and urban renewal, ensured that there would be no dual market in land. In future public land purchase would take place at full market values. This was the apotheosis of the free market/laissez-faire approach in the post-war period and indicates the freedom of politicians to legislate, whatever the problems their policies create in implementation. Despite the need by the government to pander to the ideological preferences of its own backbenchers and the economic interests of landowners and developers, there was still sufficient realisation of the need to sustain the public sector role for a number of concessions to be written into the Act. The new Minister of Housing - Brooke - toyed with the idea of imposing a limited betterment tax or levy and even looked at the idea of a capital gains tax to end the dual market. Both of these solutions were rejected because they were seen as inimical to the socio-economic interests which sustained the Party and because the taxation approach had been discredited under Labour's 1947 Act. This clearly indicates the limitation that the Party's own adversarial commitments had imposed on an equitable solution. Although there was a feeling in the government in 1958/59 that extensive betterment collection was justifiable and desirable, for ideological reasons this was difficult for the government to admit.20 In recognition of the fear amongst local authorities that their planning and development functions would now be impaired, Brooke had to accept, however, that some limited state betterment collection was necessary. The 1959 Act therefore allowed New Towns, and local authorities undertaking comprehensive redevelopment and Town Expansion schemes, to discount the increase

112

History of adversarial policy failure Table 5.1 Index of housing prices {existing dwellings) London South East 1952 1953 1954 1955 1956 1957 1958 1959 i960 1961 1962 1963 1964 1965 1966

Southern

North West

284

273 288

281 282

287

270 282

294 299

291

302 312 320

337 358

288 292 300

465 494

315 351 415 425

612

501

409

550

655 645

477 550

577

312

306 317 318 340

357 379

412

433 474 479

(i939 = ioo) Source: Nationwide Building Society: 'Index of existing dwellings sold with vacant possession in the regions of the U K ' (1952-1976). The figures are compiled from the 31 December figures for older property each year.

in values that their own land plans created for contiguous private land. Thus it was hoped that at least some local government and public sector land purchase would take place at prices below full market value. Despite these concessions the 1959 Act stimulated a property boom, generated Labour Party ideological antipathy and alienated local authorities. To understand why, it is necessary to appreciate the power of constraint which creates unintended consequences for government policy whether it be interventionist or laissez-faire orientated. The power of constraint: the implementation problem and the property boom The Labour government of 1945-1951 was faced with a combination of bureaucratic, economic and ownership constraints. The Conservative government was however to be faced with different problems. The main difficulties for the Conservative government were the broad socioeconomic developments related to post-war prosperity and the problems that the freeing of the land market generated for local authorities, who were unable to fulfil their statutory functions. The Conservative

Conservative r.

i> (

•—— • (• average for period Residential land prices per acre: Vallis historical series DOE series — indicated) Ai Auction series England — Retail prices all items — ii Cambridge indices: Industrial ordinary shares —

600

fl D E ° j ju1 series

500 -

1 Auction i series

400 -_

Vallis historical series

300 --

200 -

- 1 , Retail prices fj / j •

61/69 If

1 8 1

100 - —'

4

1890

°^

S

2

S S 8 £

..LLU—

1900

O

—

1910

—

rs|

1920

CN|

<~O

1930

$ ni

1940

A/

58/64/itfy 1947/57

i

1950

\ Industrial * ordinary shares

y^Hir0^

i

i1963

1960

i

1970

Figure 5A Selected prices indices (1963 = 100) Source'. D. Massey and A. Catalano, Capital and Land (1978), p. 2. government also faced electoral unpopularity, as speculation in land and property contributed to rising land and house prices and antipathy to government policy. The period after 1954 witnessed the first sustained post-war boom in prices. As Table 5.1 reveals, although there were regional variations, there was an exponential increase in house prices. Evidence relating to land prices is much more inferential due to their variability across the country, depending upon the method of sale and the use the land will be put to after sale.21 As Figure 5A reveals, however, there was a sustained increase in land prices from 1950 to 1965, and this was particularly marked after 1957.22 Although it would not be correct to argue that rising land and house prices were due solely to the effects of the 1953, 1954 and 1959 Acts, it is clear that the dismantling of the 1947 system did increase the 'effective' demand for land.23 One of the major results of the ending of building controls in 1954 was an increase in the number of speculative builders and developers in the market.24 This encouragement to enter a lucrative business was enhanced in 1959 with the ending of the dual market in land. Along with an increase in the number of speculative builders in the market, as Table 5.2 reveals, the number of property companies quoted on the Stock Exchange rose markedly between 1958 and 1964.

H4

History of adversarial policy failure Table 5.2 The number of quoted property companies {1939-1967) 21 February 1939 Years to 31 March 1958 1959 i960 1961 1962 1963 1964 1965 1966 1967 Source: O. Marriott, The Property Hamilton, 1967) Appendix 4.

35 in 120

146 149 169 179 183 175 166 164 Boom (London:

Hamish

Similarly, the economic success of property developers and 'spec' builders in the 1950s led to a 'spill-over' effect, as individual entrepreneurs, landowners, financial institutions, large firms, supermarket chains and department stores seized on the lucrative possibilities of urban redevelopment and development. 25 The growth in the number of these schemes is indicated by the increase in the number of deals in property shares, which rose from 16,000 in 1958 to 102,000 in 1959. By 1967 the percentage of insurance company assets invested in property had risen to 10.3 per cent from a mere 5.8 per cent in 1947.26 As a result of this increase in market competition the 'effective' demand for, and therefore the price of, land increased. This increase was probably only partially related to the rise in the level of demand for houses from consumers and may have been determined largely by each individual builder assuming that he would be able to maximise his share of the market. In other words, each builder, seeing a potential consumer demand, would assume he could sell every house he could build. Thus, the number of firms in the market seeking profits would eventually determine land prices much more than the ' real' demand from consumers. This is not a problem for builders if they are able to pass on increased land prices in the form of rising house prices, and so long as consumer demand is high. 27 It is clear, according to Carter, that the 'profit motive', rather than consumer demand, was the major cause of rising property prices in this period.28 It is a view that is also supported by Marriott in his study of

Conservative (1Q51-1Q64)

115

the role of commercial property developers. Marriott indicates that if the number of redevelopment schemes being planned between 1959 and 1964 had been completed, then the number of offices and shops available would have swamped the demand.29 The freeing of the market in 1959 contributed to this rise in prices, but it did not generate the rise on its own: Conservative policy merely exacerbated a crisis which had been developing due to the impact of largely unforeseen socio-economic trends. It had been assumed that the upturn in the birth-rate just after the war would diminish and the growth of population would then be relatively static. Estimates made in 1944 expected Britain to have 54 million inhabitants by the year 2000, but due to declining deaths, earlier marriages and higher birth-rates this total was surpassed in 1966.30 This meant that the local authority planning assumptions for housing and industrial development, made in 1947, were out of date by the mid-1950s. The land allocated for housing and industrial use in local authority development plans was clearly inadequate to meet the needs of this population explosion. 31 Added to these problems was the increasing prosperity of the population, which generated a demand for new housing. Increased prosperity was one of the reasons for earlier marriages, and these two factors, when taken together, explain the increase in the number of people seeking their own homes. The period 1961 to 1966 saw the number of people in private households rise by 32 per cent, but the number of households rose by 93 per cent. 32 This increase in the number of households led to a sustained demand for land for housing uses: even in areas where the actual population fell the demand for housing land increased.33 The increase in the price of land and property was also exacerbated by post-war changes in employment. Urban decentralisation and suburbanisation has been pari-passu with the decline of traditional manufacturing and the rise of the tertiary sector of the economy. This change, which has been seized upon recently as the explanation for the decline of the inner-city,34 necessitated the creation of new physical infrastructure by the state and demands for virgin land for new offices, shops and factories. These developments have been most evident in the South East and West Midlands, which helps explain, in part, the higher land and house prices in these areas.35 Irrespective of the differential locational impact of these developments these changes precipitated a national office, shop and redevelopment boom in the 1950s. 36 The boom in inner urban renewal was also encouraged by the boom in car ownership in the 1950s. The number of vehicles on the roads rose from 2.3 million in 1940 to 9.4 million in i960. The number of private

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passenger miles travelled rose from 38 million to 107 million in 1962. As the Buchan Report, Traffic in Towns, was to indicate in 1963, the major effect of this commuter boom was to bring into question the traditional physical structure of towns and cities. 37 As a result, added to the pressure on land from the changes in housing, employment and demographic demand came a further pressure to reconstruct and redesign urban areas. These broad socio-economic developments were to clash with Conservative policies in 1959 and boost rising property prices. The problem for builders and developers was that the Conservative government's policy made the fulfilment of their own role extremely difficult. Due to increased competition for land uses the market position of the landowner was strengthened. With land in high demand landowners could withhold and speculate in land until they were able to maximise their profits thereby contributing to rising prices. This was extremely unfortunate for builders and developers who required a regular supply of land for development and redevelopment. In particular it affected small builders, who were not able to buy in advance and had to pay increasingly high prices for land. This problem of finding an adequate land supply for development was exacerbated by the fact that under the 1947 Act local authorities had been asked to plan for land uses over the next twenty years. Due to the population explosion and consequent rising demand for land, most of the areas zoned for specific purposes had been used up by the mid-1950s. 38 If the problem of inadequate supply was serious for builders, the effect of Conservative policies on local authorities was also marked after 1959. There was an increasing demand for urban renewal in Britain after 1945.39 This boom was coming to an end by i960 and it was becoming increasingly difficult for developers to find suitable sites for redevelopment. The sites that were left were usually beset with difficulties: multiplicity of ownership problems; government requirements that displaced tenants should be rehoused; and costly clearance problems. The schemes that were left were not the highly profitable central city schemes, but the ' twilight' areas between the city centres and the newer suburban areas.40 If developers and builders were to continue in business they would require either the state, in the form of local authorities, to undertake the costly and unprofitable roles of slum clearance, rehousing and infrastructure provision, or they would require powers from government to undertake this role themselves. It is for this reason that the period after 1959 saw growing pressure by these interests for fuller co-operation between the public and private sectors in urban renewal schemes. 41

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This need became even more pressing after the 1959 Town and Country Planning Act. Up until 1959 local authorities had been able to assist in urban renewal under powers granted in the 1944 and 1947 Town and Country Planning Acts. Local authorities suffering war damage were entitled to obtain special grants to undertake renewal.42 By the 1950s it was clear that these powers were inadequate to meet modern needs because they were confined to small pockets and did not cover the whole of city centre areas. Similarly, although local authorities did have compulsory purchase powers to buy land to fulfil statutory functions, they often lacked the finance to develop or redevelop the land they had purchased. This became a major difficulty after 1954, when the Conservative government had imposed obligations on local authorities to clear slums and renew their housing stock.43 Having cleared the slums, many local authorities found themselves unable to finance redevelopment, and this led to what came to be known as 'planning blight'. 'Planning blight' was even more likely to occur after 1959, when land had to be purchased at full market value. The major cause of blight up to 1959 had been due to the Conservative government's policy of reducing local authority borrowing rights through the Public Works Loan Board and the ending of specific grants for redevelopment (other than those for war damage) in the 1958 Local Government Act. 44 The 1959 Act, however, made the situation even more difficult for local authorities, and contributed to the problems facing builders and developers in search of renewal and housing contracts from public authorities. The 1959 Act only gave limited exemption on land purchase for New Towns, Town Expansion and Comprehensive Development Area schemes.45 This means that the majority of local authorities would have to pay full market price for any land they purchased, for whatever reason. As a result the fulfilment of local government statutory functions became increasingly expensive, because land purchased for schools, parks or open spaces would be at full market price. Under the 'certificate of alternative use' system, introduced in the Act, this usually meant local authorities were paying residential use values for land to be used for non-remunerative purposes. In so far as local authorities had to contend with these increased costs it made urban renewal schemes even more difficult to finance. Indirectly, it also hit private sector builders and developers who were unable to find suitable sites cleared and provided with infrastructure by local authorities. The 1959 Conservative policy, therefore, in weakening the financial position of local authorities in the fulfilment of their statutory functions, in encouraging excessive competition and investment in the property

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market, and in exacerbating the effects of unforeseen post-war socioeconomic developments, generated a crisis of rising land and house prices. Unhappily for the Conservative government, the only people who benefited directly from the 1959 legislation were landowners and property developers. These interests either obtained 'unearned increment ', or profited from the rental returns on developed commercial sites, at the ultimate expense of the productive sectors of the economy and the public planning system. As a result, it became inevitable after 1959 that the crisis developing in the market — even if it was not wholly attributable to government policy - would force the Conservative government to rethink its approach. The policy had generated electoral and media notoriety; contributed to a reawakening of Labour's ideological commitment to land nationalisation; and stimulated demands from some responsible private development interests and from local government as a whole for powers and finance to provide for a more positive state role in development.46 The dilemma for the Conservative government: adversary politics versus an interventionist solution It is interesting to locate this growing realisation of the need for a reversal of policy and a return to a more social democratic approach in the broad context of the Conservative government led by Macmillan between 1959 and 1964. Britain's economy began to experience a gradual deterioration at the end of the 1950s, and low growth and declining international competitiveness were to force Macmillan and his government to question much of the policy which had been implemented along free market lines in the 1950s. In the broad economic sphere this led to the return to indicative style planning and a resurrection of the interventionist approach which Macmillan and others had espoused during the war and up to 1947. In other words there was a return to policies predicated on the politics of sustaining electoral support and the national interest rather than pandering solely to the narrow interests of the Party's socio-economic base. This created immense difficulties for Macmillan (causing him to restructure his Cabinet radically in 1962) and ultimately he was unsuccessful in the face of intra-party business and trade union opposition.47 In this light the Conservative government's policy on land values between 1959 and 1964 is understandable. Up to 1962, despite the pressure for change being generated in the market, the government clung to the defence of its laissez-faire approach.48 After 1962, however, there

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were moves to return to a 'fiscal-regulatory' or 'fiscal-interventionist' solution. But, because the Party had previously rejected betterment taxation and central state intervention in land supply and purchase for ideological reasons, and because these policies were inimical to many of the interests which support the Party, a Cabinet majority could not be found for them. Instead the government relied on encouraging local authorities to supply more land for development and on reforms aimed at speeding up the planning process, without attempting to tackle the financial problems experienced by local government in the fulfilment of its development and redevelopment role. Circular 37/60, published in August i960, and the i960 White Paper on Housing, both argued that rising land prices were due to the inadequacy of land supply and not land speculation or the freeing of the market.49 As a result, local authorities were asked to extend land allocations in the review of their development plans from 1951 to 1971; to submit reviews of land pressure areas ahead of the main reviews; to allocate more land in advance of review; to allow more infilling within the green belts; and to allow higher density developments whenever possible. 50 A Planning Advisory Group (PAG) was set up in 1962 to explore the reforms needed to end planning delays and to rationalise the planning system;51 and a series of Planning Bulletins was published to encourage fuller co-operation between the public and private sectors in urban renewal projects. 52 The government did, however, bow to some local authority pressure. An attempt was made to facilitate public and private sector partnership arrangements for urban renewal and redevelopment by deferring local authority loan charge repayments as one means of overcoming their financial difficulties.53 But the fact that no other financial aid for authorities was envisaged indicated that they were unable to convince the government that the public sector's role would be undermined unless extra financial aid, or a betterment solution, was found for the crisis in the market.54 The major reason for this failure to act arose out of the attitudes of senior civil servants in the Ministry of Housing and Local Government at this time. Firstly, the Ministry had traditionally conceived of its own role as supportive of local authorities in the fulfilment of their tasks rather than of central direction and control of local government. Furthermore, although the local authorities fulfilled an important role in society, this was seen as supportive of, rather than dictating to, or competing with, private interests. The central Ministry might exhort and advise local authorities in the fulfilment of their statutory functions, but those functions were normally seen as non-remunerative and welfare biased -

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profitable development was normally left to the private sector. As Evelyn Sharp - then Permanent Secretary - wrote: ' the basic conviction that housing is a private responsibility has remained, and this explains much in the Ministry's attitude to housing. ' 55 It is not surprising, therefore, that the Ministry of Housing and Local Government should seek to criticise and reject the growing clamour for a return to a major state role in land development. There was, however, another reason for this rejection. The senior land policy officials at the Ministry of Housing and Local Government Evelyn Sharp and J. D. James - had been in the wartime Reconstruction Secretariat, which had assisted in the drafting of the 1944 Coalition White Paper and 1947 Town and Country Planning legislation. They felt that the 1947 system had failed and had hindered development. As a consequence Sharp and James were unwilling to countenance seriously any return to an interventionist scheme premised on a dominant state role at local or central level. A fiscal approach, through taxation, was the most desirable for them because it was unlikely to affect private development drastically.56 Policy was not, however, dictated by officials in this period. Rather, Evelyn Sharp and her colleagues shared the convictions of Conservative Ministers on the problems of land prices and the public sector's role in development. In a speech to the RICS in 1962, the Permanent Secretary revealed that she did not believe there was any effective betterment solution to land price problems. In so far as anything could be done, this could be achieved through increasing the supply of land for development and by helping small local authorities with their cash problems.57 The method of assisting local authorities would not, however, be through extra financial aid, but through deferring the repayment of loan charges on redevelopment schemes. It was undoubtedly by this reinforcement of the bias of Conservative Ministers that betterment solutions to the crisis of land and house prices were rejected up to 1962, and the loan deferral solution in the 1963 Local Government (Financial Disposition) Act was arrived at.58 But since land prices were still higher than they had ever been, and local government still required some additional financial aid to undertake its statutory functions, the government was forced to rethink. This realisation was confirmed when increases in land supply did not reduce land or house prices. Financial problems were also threatening builders, especially the smaller operators, who had benefited from the initial freeing of the market in 1959. Institutional investment in property had pushed prices well beyond the level that small operators could afford. This placed developers in difficulties, because they required land to be

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able to plan their operations well in advance and ensure continuity of development. Now, with high land costs, individual firms were facing serious cash-flow problems due to exorbitant loan charge repayments. As a result, by 1962, many builders had started to reappraise their situation. Some builders, particularly the larger ones, began to argue that, since local authorities were assisting with increased land supply, then part of the problem of high prices must be due to land speculation and withholding by landowners. It was felt, therefore, that if a betterment or capital gains tax was imposed on landowners' 'unearned increment', this might encourage development and land supply, and reduce prices. On the other hand, even if it did not do this directly, the revenue raised could be passed on to local authorities, to help them overcome urban renewal problems, and thereby indirectly encourage development and extend land supply. This latter view was clearly expressed in an editorial in the Builder in 1964 when a tax on landowners' speculative profits was demanded. 59 It is not surprising, therefore, that the Conservative government had to rethink its policies after 1962. In part this was bound to happen due to extraneous circumstances. Macmillan had been pursuing innovative foreign and economic policies in the early 1960s, and his desire to breathe new life into his administration by making wholesale ministerial changes in 1962 was symptomatic of this new direction. This desire for change had also been responsible for Sir Keith Joseph being promoted from Junior to Senior Minister at the Ministry of Housing and Local Government in July 1962. This in itself was likely to have some impact on policy direction because Sir Keith had family connections with the building trade and was well aware of the renewed interest in land values policies. There is also evidence that Sir Keith had two other qualities which would lead him to want to change Conservative policy. Firstly, although he accepted that land supply was a key variable behind land prices, he was also prepared to accept that the local authorities were placed in a very difficult situation by the effects of the 1959 Act and that they should be assisted.60 More importantly, there is evidence that he would listen to his senior advisers before making up his mind on policy, 61 and although the senior civil servants in the Ministry of Housing and Local Government had shared Henry Brooke's view on land supply, they were also well aware of the difficulties facing the local authorities. This meant that, while they would resist the central state interventionist solution to local authority problems being espoused by the Labour Party at this time, they were willing to support a limited fiscal-regulatory approach if pressed.62 In advising the new Minister it is likely that the civil servants would

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want to find a scheme that assisted the local authorities without distorting the existing development process. It followed that any taxation approach would have to be well below the 1947 100 per cent level which, it was argued, had hindered development through a withholding of land supply. On the other hand, any central or quasi-central agency (buying and leasing land) would threaten the traditional local authority role in development and would therefore be undesirable. Given that any policy would have to fall somewhere between these two approaches then only two solutions were effectively possible. One would be to have a tax on planning permissions. This, if the tax was set at approximately 50 to 70 per cent, would allow some betterment to be recouped by the state and some retained by owners and developers. At the same time a central fund could be set up to aid local authorities with their land purchasing problem. Failing this, an alternative solution would involve extending the existing arrangements under the 1959 Act. Under this Act, for New Towns, Town Development and Comprehensive Development Area projects the increase in value on land purchased in advance of development could be discounted. By allowing all, or some, local authorities to discount the value increase in any land they bought in advance of requirements, the cost of land for all purposes would be reduced and, indirectly, the state would recoup some betterment. Clearly, both of these limited fiscal-regulatory approaches to the land values problem would be seen as workable by the senior civil servants, because they would solve the local authorities' problems without seriously distorting the market. As Sir Keith's speech on the White Paper, London: Housing and Land, on 18 November 1963 revealed, he became committed to the latter, local land corporation, solution.63 His choice was probably influenced by the realisation that this solution could be adopted without introducing new legislation. New Towns and local authorities within housing development expansion areas could be encouraged to buy land well in advance of need under existing legislation.64 The alternative of a taxation solution would be more difficult for the government because it would mean legislating in 1963 to reintroduce a tax the government had abolished between 1953 and 1959Sir Keith Joseph was not, as it transpired, to have much success with either approach. The major reason for his failure was that he was faced with three factions within the Party who were opposed to his policies.65 The first faction, headed by the new Prime Minister in 1963/64 - Sir Alec Douglas-Home - was concerned with preserving the property rights of the landed interest. A second faction defended the interests of

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the building and development industries whose main concern was to limit the state's role in housing and to ensure that any land values taxation did not hinder development. This group was represented in the Party and government by Graham Page and the Minister of Public Buildings and Works, Geoffrey Rippon. 66 The third faction was represented by R. A. Butler and Reginald Maudling. This group was concerned with electoral pragmatism and argued that it would be electoral suicide to reintroduce a betterment solution, because this would be admitting that the government had been wrong in 1959.67 Sir Keith was not able to marshal such formidable support behind his own view that the land values issue should be resolved. On the back-bench, Sir Keith had allies in Sir Colin Thornton-Kemsley and Sir Frederick Corfield,68 and he also had a few allies in the Cabinet. According to Summerscales, Iain Macleod and John Boyd-Carpenter were willing to support Sir Keith on the issue because they felt that the local authorities were being heavily penalised and that landowners' speculative profits were adding to rising prices.69 Finally, Sir Keith had the support of a number of younger men in the Party, like Nigel Lawson, who acted as the Prime Minister's political assistant. Lawson felt that if the Conservative Party had a policy on land it could defuse one of Labour's major electoral weapons, and, thereby, win the next election.70 Even though Sir Keith, and his allies, brought pressure to bear on the Prime Minister and Cabinet in November and December of 1963, it is clear that they were defeated. Geoffrey Rippon, in winding up the debate on the London Housing White Paper on 18 November 1963, went out of his way to deny that local authorities would be given extra finance or additional machinery for land purchase.71 The limits to which the Cabinet was prepared to go in 1963 were: to allow local authorities to defer their loan charges; the approval of additional land supply for development in rural areas; and the closure of the third schedule loophole in the 1947 Town and Country Planning Act which gave massive profits to developers.72 This defeat for Sir Keith was shown emphatically in the subsequent White Paper on the South East Study in March 1964, when no mention was made of the tentative proposals for local land corporations of November 1963.73 Although the local authority Associations had been quick to point out that Sir Keith's initial proposals would have created a dual market in land, and would have been unfair to local authorities outside the South East, the scheme was defeated mainly for political rather than technical reasons.74 The problems of alienated local authorities, rising property prices and market pressure for government action did not diminish through 1964.

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Indeed, given that an election was called for October 1964, they became more pressing now that the government had to create a manifesto with which to defeat the Labour Party. The Cabinet met to discuss the manifesto in June and July 1964, and Sir Keith made a second attempt to win the government and Party over to a land values policy. Having failed with his own preference for local land corporations, Sir Keith tried to win acceptance for a betterment tax.75 This was not, however, accepted because Butler and Maudling convinced the Cabinet that to do so would appear as naked electioneering. 76 The Cabinet was clearly divided on this issue but in the final analysis the three factions proved too strong for Sir Keith and his allies. Sir Keith's only successes were the creation of a special study group in the Ministry of Housing and Local Government to look at the taxation approach, and a manifesto commitment to do something along these lines after the election.77 The Ministry of Housing and Local Government study group eventually came to the conclusion that, should a betterment scheme be desired by a future Conservative government, either a purely fiscal (capital gains), or a tax on planning permissions, approach would be the least likely to disrupt the planning system and the property market.78 Keith Joseph fought to awaken the Conservative government and the Party to the need to return to either a 'fiscal-regulatory' or a 'fiscalinterventionist' solution but he failed to convince his colleagues of this. For many Conservatives this was an electoral blunder which led directly to the defeat at the polls in October 1964. 79 Although it is as difficult to prove or disprove such conclusions, it is clear that the Conservative government was extremely doctrinaire in its land values policies. But, what is perhaps of even more significance is the fact that although governments can base their policies on ideology, the consequences of doing so are likely to be disastrous. The result of the freeing of the market between 1951 and 1959 was an escalation in property prices, and the alienation of the local authorities and, eventually, of many interests in the market. This political and economic crisis not only enabled the Labour opposition, which was in disarray in 1959, to make political capital out of the government's inaction, but it also created a conflict over policy within the government. Ultimately, the Conservative government's refusal to act appeared as incompetence, and this led to a belief that it had lost touch with the 'real' world. Undoubtedly this contributed to, even if it was not the only factor causing, the government's electoral defeat in 1964.

Labour, the Land Commission and the problems of implementation {1964-1970)

Labour in opposition: adversary politics and the Land Commission. The power of initiation: the struggle for the Land Commission (1964-1967). The power of constraint and the problems of implementation (1967-1970). In this chapter the second attempt by the Labour Party to resolve the compensation and betterment problem is outlined. It is argued that in opposition there was insufficient attention paid to the constraints which any interventionist policy might experience in implementation. This is explained in terms of the adversarial reaction by the Party to the apparently doctrinaire approach taken by the Conservative government after 1959. In office civil servants forced the Party to recognise that their adversarial based approach was unworkable, and that an attempt to implement any commitment to public purchase of all development land would create disruption in the housing market. This was accepted by Labour - revealing its willingness to modify doctrinaire policies in office more quickly than its Conservative predecessor. A debate did develop, however, between those who felt that the original commitment to outright public ownership should be provided for in the 1967 Act and those who felt that a more limited approach, to assist the private and local authority development system, was all that was needed. Neither side was able to impose its wishes on the other and a compromise - the 1967 Land Commission Act - was created. This was something of a defeat for senior civil servants who had tried to convince Labour of the need for a more limited approach. Labour ministers were able, therefore, to dominate policy initiation, but officials (supported by Richard Crossman) were able to impose sufficient limitations on the scheme to ensure that it would not fulfil a dominant role in the market. This was to be the undoing of the Land Commission Act. During implementation it was discovered that the obstacle to the fulfilment of 125

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the Land Commission's role was not the landowner or the property speculator but recalcitrant local authorities, against which the Commission had few tools with which to act. Despite this, by 1970 the initial teething problems experienced by the Commission were beginning to be overcome and the 1967 Act might well have worked if it had been allowed to continue in operation. The Conservative government, which returned to office in June 1970, failed to appreciate that the 1967 Act could, given suitable powers to overcome local authority opposition, have provided a useful facilitative mechanism for the private development market. Even though some builders and developers were to recognise the benefits of this land agency for private and public development, it came too late to overcome the adversarial antipathy which the Heath government had adopted by 1970. Labour in opposition: adversary politics and the Land Commission1 In opposition the Labour Party developed its own response to the crisis facing local authorities and the property market as a result of the implementation of the 1959 Act. This was made without any serious input from market participants, and consisted mainly of ideological considerations which were often contradictory. One of the major problems was the lack of clarity over goals. Some Party members wanted to reduce property prices by ending the speculation in land, 2 others were more concerned with helping local authority redevelopment 3 and their financial problems.4 This lack of clarity meant that any policy formulated would have to be a compromise. There was also another reason why the Party wanted to develop a land policy. The deleterious consequences of the 1959 Act for local authorities, and the media's emphasis on the windfall and speculative profit in land, allowed the Labour Party to use the land issue to discredit the Conservative government electorally. 5 Initially research workers in Transport House had pressed for assistance mainly to local authorities penalised by the 1959 Act. 6 This was to be achieved by allowing local authorities to purchase all development land, at prices below the market value, for eventual leaseback to developers.7 This approach was rejected for two reasons. Firstly, there was no guarantee that all local authorities would have the political will or administrative resources to allow them to purchase all development land.8 This view had been expressed forcefully by Henry Wells (Chairman of the New Town Commission) in i960, when he had advocated the creation of a national land trading agency to supplement the existing local government role in urban renewal.9 Secondly, there

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was also no guarantee that land prices for housing would be reduced. If local authorities were given the initiative as to whether land should be sold cheaply for housing, then some authorities, due to their political complexion, might decide not to offer the cheap land concessions that a Labour government desired. In order to overcome these two difficulties the Labour Party (and there is evidence that this was due to the intervention of Hugh Gaitskell)10 committed itself, in Signposts for the Sixties (June 1961),11 not to local authority land purchase but to the creation of a central Land Commission. This had strong overtones of the Uthwatt Committee's and Henry Wells' National Land Trading Agency schemes. The Land Commission scheme was an ingenious compromise. To overcome recalcitrant local authorities the Land Commission would have powers to buy all land for future development. This agency would be funded initially from the Exchequer, and then, on the lines advocated by Wells, would become self-financing from its own land transactions. Only development land would be purchased: land remaining in agricultural use and land already developed or in small sites (owner-occupied houses) was exempt from state purchase. These caveats were introduced to defuse the fear of outright nationalisation amongst agricultural and landowning interests, and the public at large. To assist local authorities, and the state's role in planning and development generally, land purchase would be at existing use value, plus a 'sweetener' (30 per cent to encourage willing sale by owners, plus an amount to cover contingent losses). After state purchase, land would either be sold or leased to public authorities and private developers and builders. It was intended that the Commission would normally sell land at purchase price to local authorities, and lease land to the private sector at full market rates. By these means it was expected that local authorities would obtain cheaper land and that the Commission would obtain betterment from purchase and resale and also from maintaining a leasehold interest in continually rising property values. Similarly, the Commission would be in a position to encourage or discourage social or commercial developments through its powers to adjust the price it charged for land. The decision to allow landowners to retain 30 per cent of the difference between current market and existing use values was intended to overcome the withholding of land which had bedevilled the 1947 Act and its 100 per cent redevelopment charge. This goal was also to be assisted by giving the Commission extensive compulsory purchase powers to buy land withheld from the market. The potential loss of some

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of the 'unearned increment' in land was to be offset by the Commission's use of crownhold leases. Under these leasehold arrangements the Commission would offer land to private developers and individuals for house building purposes. In this way the Commission would be using the profits made in land transactions to subsidise, and thereby reduce, the cost of land for housing. In this fashion albeit artificially, it was intended that house prices would be reduced. In the long term it was also expected that, in reducing the competitive scramble for land, prices would gradually fall. This policy strove to meet all the goals of the major factions in the Party: local authorities would be assisted; land prices would be reduced; the 'left wing' had partial, if not full, land nationalisation; a policy to defeat the Conservatives had been formulated; and it bolstered Gaitskell's position as leader. As a result, it was readily, even enthusiastically, received by the Party. Unfortunately, ingenious as the policy was, it fitted only the needs of the Party and did not fully take into account the difficulties this nationalisation of urban development land would face in the initial period of implementation. This was the same problem that the Uthwatt Committee's proposals had faced. How can an effective central agency to buy all land for development be created when there is a lack of professional staff and the possibility of seriously dislocating housing development in the short term? The Labour Party refused to accept that these were serious obstacles, even though members of the study group (which was instituted to work out a policy for early enactment) began to express doubts about the scheme's viability. 12 On entering office, however, the new government faced similar opposition to their scheme from officials in Whitehall. Eventually, national responsibilities undermined the Party's ideological commitments and the original approach was modified substantially in the initiation process. This was not only due to civil service opposition, but was possible because a number of senior Ministers also came to question the viability of the original scheme. The power of initiation: the struggle for the Land Commission (1964-1967) The Labour government which formulated the 1947 Town and Country Planning Act had been dominated by officials; the same conclusion however is not applicable to the Labour government between 1964 and 1967. It is true that civil servants were able to persuade the Labour government to drop the more draconian elements of its scheme - at least

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temporarily - and agree to accept a more limited 'fiscal-interventionist' approach. This was the direction in which Sir Keith Joseph (although with regional land agencies and betterment taxation) had been moving after 1961 and was clearly within the social democratic mould. But officials did not force this on Labour. The Party had already begun to accept in opposition that there might be problems with their manifesto commitments and it was Ministers who eventually decided to limit the Land Commission's role. Thus, the power of initiation clearly lay with politicians in this period. While Crossman was convinced by the arguments of his officials at the Ministry of Housing and Local Government that the scheme was unworkable, Fred Willey, who was responsible for the creation of the Land Commission, was able to obtain a legislative commitment from his Cabinet colleagues for a two-stage approach. In the first stage a limited facilitative policy would operate to assist the private development industry and local authorities. In the second stage this would be replaced by the more draconian policy of nationalisation of all urban development land along lines outlined in the manifesto and Signposts for the Sixties. In one respect, however, civil servants were to create the conditions for the eventual discrediting of the first stage. They were instrumental in encouraging Crossman to circumscribe the powers of the Commission to act against Ministry of Housing and local authority planning policies. To understand why officials did this we have to understand the organisational dilemma which Harold Wilson posed for traditional Whitehall Departments when he and the Labour Party entered office in October 1964. After the war the Labour government had attempted to create a Planning Ministry to question Treasury and Ministry of Health policy prescriptions. In 1964 the Party was committed to doing the same with the creation of the Department of Economic Affairs for national economic planning. Relatedly, Wilson intended that the manifesto commitment to a Land Commission would also result in a new Physical Planning and Land Use Ministry, along lines similar to the old Ministry of Town and Country Planning. Initially the land use planning functions of the Ministry of Housing and Local Government were given to the new Ministry of Land and Natural Resources, which would also have responsibility for setting up the Land Commission.13 This produced an immediate dilemma for both the Treasury and the Housing Ministry. These two Departments had always resisted any attempts to create one comprehensive economic and physical planning Ministry or attempts to usurp Treasury and Ministry of Housing control over local government functions by the creation of an autonomous physical planning Ministry.

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Neither Crossman (the new Housing Minister) nor Fred Willey (at Land and Natural Resources) could be expected to comprehend these issues. Indeed, while Crossman was in ignorance, Evelyn Sharp, the Permanent Secretary at the Ministry of Housing, ensured that all land use planning functions would remain with her Ministry, and the new Land Ministry would only be responsible for the Commission and other minor matters.14 The importance of this is only to be fully appreciated later when one considers the problems the Commission experienced in implementation. In general, then, the Land Commission, as proposed in Labour's manifesto, was opposed in Whitehall, but more for practical rather than purely organisational or political reasons. The opposition was generated mainly by the threat the full Land Commission scheme posed for the efficient operation of the housing market and because it was perceived as a threat to the local government role in planning and development. Consequently, by September 1965, the original adversarially based Land Commission scheme was rejected, not simply because of the opposition it faced from civil servants or Richard Crossman in government but also because the policy faced immense short-term administrative problems which even Fred Willey and his junior minister - Arthur Skeffington - at the Ministry of Land had to accept. Instead, on the basis of a pre-election study undertaken by officials in the Ministry of Housing, the more limited two-stage approach was decided upon by Ministers. 15 It is worth pointing out that the major decisions to modify policy between October 1964 and September 1965, when the White Paper for the Land Commission appeared,16 were taken in an environment relatively isolated from external pressure group activity. This is not to deny that the market was basically hostile and preferred a taxation-only approach, nor that some interests like the CBI, RICS and local authority Associations were consulted informally, but because this legislation had financial implications such discussions were kept extremely secret. 17 The main reason for the decision to adopt the two-stage approach to the problem was not, then, outside pressure but the relatively unanswerable case that officials were able to present. Starting from an assumption (which the Labour government also shared)18 that the housing drive should be maintained, they showed that the Signposts proposals would lead to a serious short-term disruption of the housing market. The Commission would have to undertake approximately 100,000 land transactions per annum, which would cause delay. Furthermore this would have to be achieved without sufficient legal and valuation staffs in the public service and with little immediate chance of altering this

Labour {1Q64-1Q70) 19

131

circumstance. Thus although the approach might be logical it could only be implemented in the short term at the cost of hindering other cherished Labour commitments, such as housing completions and speedier urban renewal and development. Furthermore, it also questioned many officials' assumptions about the right balance between collective and individual action. As Fred Bishop, the Permanent Secretary at the Ministry of Land and Natural Resources argued: * It's the sort of thing that could be done, but only at certain costs - i.e. upsetting the market as it existed... also at the cost of losing a certain amount of individual initiative in the development of land, which is a very serious point. ' 20 One might conclude from this that the officials were trying to usurp the powers of the Labour government and to limit its radical intent. This would, however, be too extreme an interpretation. Despite the personal prejudices of officials, the policy option presented by them to the new government was a faithful attempt to set out a compromise based on the original Land Commission scheme. It was proposed that the Commission should operate gradually and then, once the original teething problems had been overcome, the full powers of compulsory purchase of all development land could be introduced. Of course it might be argued that officials recognised that this second stage might never be reached and that, by forcing the government to accept the logic of a two-stage approach, they were duping their political masters. Such an interpretation, while fitting nicely with conspiracy theories of power, does not really comprehend the reality of decision-making in government. Similar criticisms to those raised by officials had been levelled at the scheme by the Party's own specialist study group on the issue, and a scheme similar to that proposed by officials had also been formulated by one of the more astute members of this study group. Labour had ignored this scheme, presented by the Director of the TCPA (Wyndham Thomas), but in office the logic of it was forced upon them. 21 The basic proposal emanating from the Ministry of Housing was that, in order to avoid the disruption of development that was otherwise inevitable in the short term, the Land Commission should only be allowed to buy land for redevelopment and large new development schemes. During this first stage, when there would be two land markets - one through the Commission and one in the private sector - it was decided that a dual price system could be avoided if a betterment levy was introduced. Officials suggested that a 50 per cent levy on transactions in land (this was lower than the 70 per cent that Signposts had proposed but higher than that the Cabinet later agreed

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History of adversarial policy failure

upon) could be imposed on all private land sales. The Land Commission could then purchase land net of the levy paying market value less the 50 per cent levy. Thus landowners would receive existing use value plus 50 per cent of development value, whether their land was purchased publicly or privately. The levy would normally be paid by landowners rather than the developer. This was clearly intended to overcome the problems experienced under the 1947 Act when the developer often had to pay the development charge twice over. It was argued that landowners had refused to sell without adding on the value of the charge which the developer then had to pay to the Central Land Board. Under the new proposals betterment tax would only be levied on land transactions rather than, under the 1947 Act, on development or the granting of planning permission. The intention was clearly to tax 'unearned increments' accruing to owners, and not to penalise genuine private developers. 22 To assist the Commission's role further it was also suggested that an expedited compulsory purchase power should be introduced. Any landowners who did not wish to sell to the Commission were to be allowed 28 days to appeal to the Minister. But if they were successful they would lose their right to planning permission because the only ground for appeal was against the Commission's desire to develop the land. There would be no right to compensation for the loss of planning permission. The intention here was that landowners should not burden the planning system with appeals nor withhold land from development on the expectation that a more laissez-faire inclined government might return to office. This was an extremely radical proposal from officials and, interestingly, it was Ministers who were eventually to reject the loss of planning permission penalty clause. The need for this draconian power is understandable in terms of the desire by officials to protect the development market against recalcitrant landowners, rather than evidence of political radicalism on their part. This was, then, a 'fiscal-interventionist' approach which was based on a Land Commission to collect betterment, to facilitate the development process and, through the betterment it created, to provide grants (or financial assistance) to public agencies and local authorities in pursuit of their development plans. The Commission might also, subject to Ministerial approval, grant some concessionary leases to owner-occupiers to reduce house prices - although this particular action was seen as a very dubious and difficult practice by officials. Ultimately, as officials explained to the new government, a second stage might be possible, after the market and planning system had become used to the Commission's operation, when all future development land might be purchased by the Com-

Labour {ig64-igjo) 23

133

mission and a higher levy introduced. In the interim, however, the more limited approach seemed in order, given the short-term administrative and practical problems which existed. This was a basically correct view, but in a number of respects the recommendations were clouded by the desire of the officials at the Ministry of Housing to protect the role of local authorities and, therefore, their own control over the land use planning system. In particular, they argued that any compulsory purchase powers should be confined initially to local government development plans or land with planning permission. True, there was talk of a reserve power for the Commission to apply to local government for planning permission on land that owners were believed to be withholding from development, but this merely reinforced the role of local government and the Ministry in the process. There was no logical reason why, even under this initially limited approach, the Commission should not have had more discretion and freedom of manoeuvre. To have granted this from the outset would, however, have created a competitor to the role of local authorities and the Ministry of Housing in planning and development, and this was systematically resisted. It is worth pointing out however that officials can only suggest, they cannot dictate. That they were able to limit the powers of the Commission in relation to local government was, then, not so much evidence of civil service power but of the success of Richard Crossman in defeating the more interventionist intentions of his colleague, Fred Willey, at the Ministry of Land. 24 The major debate in Whitehall between October 1964 and the publication of the White Paper in September 1965 was not between civil servants and Ministers, but between Willey and Skeffingten on one side and Crossman on the other. The main issues revolved around whether the first stage proposed by officials should be the limit of Labour's goals (which Crossman desired), or should only be an interim measure on the road to a more extensive second stage (as Willey and Skeffington desired). In general it is fair to say that officials in all Ministries (including Willey's) preferred Crossman's approach; and they were probably right, given their knowledge of the constraints of the market, to argue for this. While Crossman was able eventually to win most of the things he desired, it is worth stressing that on a number of key points related to local government planning and financial relationships opposition from the Treasury and the Ministry of Housing seriously limited the effectiveness of the first-stage solution. Before spelling out these weaknesses it is necessary to indicate briefly the attitudes of officials and Ministers to the original scheme and then to show which of these actors eventually shaped policy. Evelyn Sharp,

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History of adversarial policy failure

the Permanent Secretary at Housing, has argued that: 'Neither Dick Crossman nor I had the slightest interest in the Land Commission... we never understood what the function was supposed to be. Now collection of betterment levy, yes. Or a capital gains tax... a fiscal thing, this was important. And this was a good way to deal with what was a major point in the party's manifesto: that a good part of the profit from land transactions should be taken by the state. That was right. That could be done. It didn't need a Land Commission.' 25 and, 'On this one I must confess that we came to the conclusion that it really couldn't be done the way it was said.'26 Further as Crossman argued in his Diaries: 'One can talk gaily about backing party policies, but in this case the whole of my housing programme could be scuppered if we were to launch the wrong Land Commission measure.'27 Thus, in the rejection of the manifesto commitment the civil servants were assisted by three factors. First of all, the Minister of Land and Natural Resources, Fred Willey, had little detailed knowledge of the subject matter.28 Secondly, the new Secretary of State for Housing and Local Government, Richard Crossman, was also unversed in planning, housing and local government matters. 29 As a result Evelyn Sharp was able to convince him that a 'fiscal-regulatory' approach was all that was necessary, and that the Commission would affect the short-term fulfilment of the Ministry's housing and planning functions.30 From this second factor came the final element assisting officials: because Crossman was opposed to the scheme the Cabinet was divided. 31 This failure to agree allowed the civil servants to dilute the manifesto approach. It is not accurate to argue, however, that the civil servants and Crossman had everything their own way. It was quickly apparent to the civil servants that, despite their desire to resist the Land Commission and to support a taxation approach, the Cabinet had decided to proceed with some form of Land Commission. As Richard Crossman was to bemoan later, this was a manifesto commitment which the new government was not prepared to rescind completely. 32 Nevertheless, the intellectual heart of the White Paper owed most to the special team of civil servants - J. D. Janes (the definitive Whitehall expert), 33 J. Catlow and G. H. Chipperfield (who were drafted into the new Ministry of Land and National Resources from the Ministry of Housing and Local Government) and the senior civil servants, Evelyn Sharp, J. R. James, H. W. Carthery and Robert Cox (at the Ministry of Housing and Local Government). All these officials felt the full Commission was a nonsense, and it is hardly surprising that Willey could not stand up to them in their own specialist field of policy responsibility.

Labour (1Q64—1QJ0)

135

But Willey, denied a major Department by Sharp's organisational coup in the first weeks of government, and finding himself without a seat in Cabinet, was left with very little with which to make a name for himself as a Minister. As a consequence, encouraged by Skeffington (who believed in the Commission), he avidly defended the Land Commission against its opponents; and there was a point beyond which officials and Crossman could not push him. This was the commitment to some form of Land Commission. But in order to achieve this pyrrhic victory, Willey had to make compromises with his officials and with other Departments; and in so doing, the initial aims of the Commission scheme were to be lost. As Stewart Greenstreet has argued: 'Once the Land Commission was side-tracked into an agency to collect betterment levy it was in fact finished - its main purpose was different from the original conception. This was true, even in spite of the fact that the Commission as it emerged in the final act did have enough power to acquire land to institute original policy. ' 34 Willey, therefore, suffered a number of defeats in Whitehall. The most important was, of course, that he had to accept the fact that the full Signposts scheme could not be made to work immediately. Once this had been agreed upon, and a permissive role of collecting levy had been accepted, the main issue was whether the initial scheme should be closer to Willey's proposals or to those of Crossman and the Treasury. Since Willey wanted to move swiftly to the full Signposts scheme he argued that any interim measures must provide for as effective a central state role for the Commission as possible. 35 This meant a high level of betterment levy of around 70 per cent; powers for the Commission to buy, manage, sell and develop land as ity rather than local government and the Ministry of Housing, wished; Commission controls over the allocation and collection of the levy raised; and Commission powers to give special aid to the public sector and private developers through concessionary crownholds. Set against him were Crossman, senior officials in Whitehall and James Callaghan at the Treasury. The Treasury was in the process of creating a capital gains tax in April 1965 and wanted to avoid double taxation. Callaghan was therefore interested in either recouping all betterment through capital gains taxation or limiting the size of the levy to a low level to avoid controversy. Callaghan also wanted to ensure that any levy raised should be retained by the Treasury and not left to the discretion of an independent Commission. 36 Relatedly, Crossman wanted to ensure that a taxation-only approach was introduced along lines supported by his Permanent Secretary. He argued that failing this, the first stage should also be the last stage and that the

136

History of adversarial policy failure

Commission should have powers only to buy land that was zoned in local development plans, was being withheld, or was necessary for comprehensive urban redevelopment. Crossman clearly sought to defend the role of local authorities and the private sector by limiting the Commission's ability both to define whether land was ready for development and actually to undertake development itself. In this respect the Ministry of Housing was at one with the Treasury, as seen in their shared desire to resist Willey's aim that the Commission should have discretionary powers in allocating levy to local authorities. Both argued that this should be left mainly to the existing Exchequer local grants system. 37 Ultimately, the 1967 Land Commission Act was a compromise between these two views, but on balance Crossman, the Treasury and the Ministry of Housing achieved most of what they wanted. While this says a great deal for the forcefulness of Crossman, in fact it says an awful lot more about the weakness of the original scheme and the central role played by officials in policy-making. This is true because, while the overall approach was viable and made sense, it was deficient in a number of respects which were to limit its successful implementation later. Before assessing these deficiencies it is useful to summarise the winners and losers in the initial battle for the White Paper. There was disagreement over whether the original scheme should go ahead as planned and this led to the creation of the two-stage approach. Crossman wanted to have one stage with only a tax or a limited Commission role, but this was defeated by a combination of Willey's aggressiveness and the belief, in the Cabinet as a whole, that the Commission was an important manifesto commitment which had to be fulfilled. Despite this it was quickly realised that the Commission could not reduce land prices in the first stage because, with a partial private market still operating, it was likely that owner-occupiers and developers would merely take advantage of the cheap prices passed on to them through concessionary crownholds. The government could only reduce land prices by nationalisation of all housing sales and land development, and this was more than could be countenanced. Thus, concessionary crownholds for cheap land and housing were dropped; although Willey did achieve a nominal commitment to provide some crownholds for local authorities, Housing Corporations and other co-operative groups. 38 Willey was also successful in winning Cabinet approval for a betterment levy. He had wanted the levy to be set at 70 per cent or more, but a compromise of 40 per cent (ultimately rising to 50 per cent in 5 per cent stages) was eventually agreed upon. 39 These were the limits of Willey's achievements.

Labour (ig64~ig/o)

137

While Willey won a commitment to a second appointed day, when all that had been promised in the manifesto would arrive, until then the Commission would have only a very limited role, which was to be severely circumscribed within the existing local planning and centrallocal government structure. After the first appointed day it was decided that the Commission would act circumspectly and it was allowed only to purchase land for specified purposes. These were confined to land for comprehensive development and redevelopment by public bodies and to facilitate the market by ending land withholding. True, the Commission could build some houses, but these must be within local authority planning approval. This fell far short of Willey's ultimate desire to replace the private sector with one national building agency in the form of the Commission, which would obviously have been too much for local government and which, in combination with the Treasury, the Ministry of Housing and the Board of Trade (responsible for industrial and commercial land), they successfully defeated. 40 Crossman and his colleagues were also able to limit the Commission's role in a number of other ways. It had originally been intended by officials that the Commission should be given a right of expedited compulsory purchase and that successful appeal against any purchase order would constitute loss of planning permission for the appealing owner. This expedited purchase power was granted, but there was to be no refusal of planning permission on successful appeal.41 Crossman was also instrumental in limiting the power of the Commission to act independently by ensuring that it would be subject to specific Ministerial instructions, rather than to the general instructions which Willey had proposed in an attempt to allow it flexibility of operation. 42 Most importantly of all, however, it was decided that while the Commission could collect the levy, it would not have any powers to disburse it. In future all levy would revert to the Treasury, which would decide how to disburse these sums to local authorities. Local authorities were particularly upset that they were not to have the same powers as the Commission to buy land net of levy (except for non-remunerative purposes). On commercial land the authorities would continue to pay full market value compensation and they only had the promise of additional grant assistance for land purchase from the Treasury. Given that the authorities ideally wanted to have cheap land, the fact that they would get neither the same powers as the Commission, nor specific assistance from the Commission or Treasury in relation to the betterment their actions created (which Willey certainly wanted to achieve), was bound to alienate them. 43 Wyndham Thomas who had, from an early

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History of adversarial policy failure

date, called for this type of scheme had always insisted that any aid should immediately go to the local authorities because they were a crucial constraint on its successful operation.44 Given that the Commission was bound by local planning decisions and was supposed to be facilitating their implementation, the ability of the Treasury, Crossman and the Ministry of Housing to circumscribe the Commission's role in assisting local government financially was a fundamental weakness of the scheme. While the structure that had been created for a permissive Land Commission role was basically sound, the Commission, in the end, was made dependent on local government goodwill without any resources to win that goodwill directly. This need not have been part of the policy, and Crossman and Callaghan's success in imposing it was ultimately a defeat for the Labour government, for the Commission and, therefore, for a viable 'fiscal-interventionist' approach. Obviously this says a great deal about the ability of officials to influence Ministers, but Ministers ultimately made the decision. In conclusion, then, we can argue that the main aim of the Signposts scheme had been to reach a compromise between three goals in the Party: to reduce the cost of land for public purposes by collecting betterment; to reduce land and house prices generally by ending speculation and the competitive struggle for land; and, finally, to make planning, development and renewal more efficient and effective.45 The Commission was to achieve these three goals by buying all land for development at its existing use value, and then selling it at market rates. This activity would result in betterment collection from landowners; any additional state generated betterment could then be recouped from developers by maintaining leasehold control over land sold to the private sector so that part of the rising rental value of developed land would accrue to the state. The Commission would be able to use the funds collected by both means to sell land to public authorities at concessionary rates. It was also intended that general house prices would be reduced by offering land at concessionary rates (crownhold land) to private builders. Indeed, the idea that land and house prices could be reduced in this way was continually presented in speeches by Harold Wilson during the election campaign; even though the speech writers at Transport House felt that this was the most dubious claim that could be made for the scheme.46 Notwithstanding these expectations, by September 1965 the Labour government's manifesto commitments had been subtly reversed. The major changes in the 1965 White Paper were that the Land Commission would have a permissive role only. The strident attack on land and house prices and on profits, plus the desire to aid public

Labour (1Q64-1Q70)

139

authorities, had given way to a quasi-state agency which would ease the private sector's land supply problems and overcome planning delays, while collecting some betterment.47 The Commission was only to have selective powers of purchase until a second appointed day, when it would be able to buy any land it desired which had local planning permission for development.48 From the first appointed day (when the Commission came into operation) until the second appointed day, the Commission would be limited to land management and trading functions where it could show that it was expediting private development, facilitating comprehensive development, making land available for public bodies fulfilling statutory functions and, finally, disposing of land for concessionary crownholds. The intention, in Signposts, for a dominant central state agency in planning and development was not to be implemented until the second appointed day, which most civil servants confidently expected would never arrive.49 Even when the full Commission scheme did become operational, however, it was to be limited to purchase and development of land which had local government planning consent: a free-wheeling central state agency was never to be created. Because of the initially limited powers given to the Commission, and due to the desire to avoid a dual market in land, Wyndham Thomas' suggestion of a betterment levy was instituted.50 The levy was set at 40 per cent and, to ensure fairness to owners selling land to the Commission, the Commission would pay the existing use value of the land plus 60 per cent of the difference between the existing use and full market values. In this way the Commission would retain the 40 per cent difference when it sold land at market value. The 40 per cent levy was much lower than the 70 per cent agreed upon by the Party when in opposition, and even this was to be passed immediately to the Exchequer. The Commission was only allowed to keep the profits from its land trading activities, which were also to be open to Exchequer seizure if they became excessive. 51 It was clear from this that any idea of a major central state role in subsidising public sector renewal and local authority statutory functions was not seriously considered; the main role would be easing private sector land supply problems. Further limitations on the initial scheme were also revealed in the rejection of leasehold controls: the Commission would sell all its land freehold to the public and private sectors. The Commission scheme in the White Paper was very different from the manifesto commitment: a full 'fiscal-interventionist' approach had given way to a mainly 'fiscal-regulatory' solution, with limited interventionist powers for a quasi-central state agency to overcome

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History of adversarial policy failure

bottlenecks and eradicate inefficiency in the market. Within this approach any assistance for the market would be premised, at least in the first instance, on aiding the private sector rather than, as initially intended, the public sector. This was highlighted by the limitations imposed on the Commission and by the fact that local authorities were not allowed to buy land cheaply. It was also confidently expected in Whitehall that concessionary crownholds for Housing Societies and Agencies, and perhaps for local authorities, would never be used. 52 Local authorities were> therefore, left with only one meaningful concession under the White Paper: they were exempt from paying levy on any of their own development schemes. The White Paper made vague promises of assistance to local authorities through additions to the rate support grant and through the Commission's assistance of urban renewal in the long term, but these were hardly concrete benefits which the public sector could expect and were to be a major stumbling block to successful implementation. Once again then, as in 1947, Labour had created a scheme which almost solved the main problems but was eventually to fail in implementation. Officials and market participants would argue that it was the commitment to the second appointed day which was the ultimate obstacle, because it caused a fear that this was the thin end of the wedge of socialism and created subjective antipathy to the scheme, but while there is clearly some truth in this, at the end of the day this antipathy was unfounded. The true cause of the failure of the Land Commission was not the fear of the second appointed day but that the first stage had an inherent inconsistency in it. This weakness arose from the defence of organisational interests by Crossman, Callaghan and their officials. The scheme promised to overcome short-term antipathy by giving some real benefit to all the existing actors in the market: landowners would retain some development values; it offered speedier land supply to developers (and also granted numerous levy concessions to builders' land in the White Paper and during legislative drafting);53 and it could have but did not promise that, in return for local authority support and acceptance of an intrusive Commission role in planning and development, existing local authorities would be given direct financial recompense. If all these things had been achieved then the compensation and betterment issue might have been resolved. Unfortunately, the Commission was not ultimately given the financial or institutional resources to overcome the constraint that local government imposed on the successful operation of the agency. The power of policy initiation was not used successfully by Labour and, even though they accepted

Labour (1964-1970)

141

substantial modifications in their original adversarially based policy, they went too far to accommodate bureaucratic interests and, in so doing, inhibited the successful implementation of policy. The power of constraint and the problems of implementation {1967-1976) Despite the failure to create the central agency which would have purchased all land for development, by 1970 the Land Commission had, after some initial teething problems, started to collect a substantial amount of levy and had begun to facilitate the supply of land for both the public and private sectors. The scheme appeared to work more successfully than the earlier 1947 Act, as there was little sign of either land withholding or inflated land prices due to the imposition of the levy. Unfortunately, this agency did not last because the Labour government was sufficiently committed ideologically to provide for a second appointed day, when the more draconian and extensive land purchase and development roles which had been intended originally would come into operation. This led to a subjective perception that the Commission was the thin edge of the wedge of socialism and alienated the Conservative Party. It also alienated local authorities (who saw this as central encroachment on local government) and builders and landowners (who saw it as the beginning of nationalisation). This was unfortunate because the intention of the Act was to use the Commission to facilitate land supply for private development and to create a central land supply bank and fund of money for development of problem sites, which neither local authorities nor private developers could affor& It was extremely difficult for the Commission to achieve even these limited goals because it had been made dependent on local authority planning decisions for all its land purchase functions, and it had to rely on financial support from the Treasury for the money to buy any land to fulfil its own desired roles. The Commission did have reserve compulsory purchase powers and a right to apply for planning permission to the Minister of Housing over the heads of recalcitrant local authorities, and the right to retain any levy which was generated in its land trading actions (by buying at existing use and selling at market values), but in reality these powers were never very effective in giving the Commission a positive role in the market. This dependence on the Treasury and local government was compounded by having to introduce a positive state role in a market still predicated on private ownership and a substantial private role in building and development.

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History of adversarial policy failure

The logic of the scheme (when it was discovered that the main development problem was not land speculation but the fact that local government was allocating insufficient land for private development) was that the Commission would have to question local authority planning decisions, and seek the active co-operation of private developers and builders in pursuit of its limited land supply functions. Any attempt to assist local authorities, which was a clear long-term desire of the Commission, could only come later after it had made profits from land transactions. The Commission failed to surmount this obstacle in its short life, and this was compounded by the fact that private developers were slow to realise the benefits that the Commission offered to them in practice. The Commission was also constrained in its supply role by the fact that any action taken to buy land in advance was bound to lead to landowners demanding higher land prices or attempting to pass the levy on. 54 Thus in the initial phase the Commission's role seemed to be contrary to its initial intentions of lowering land prices or facilitating land supply. It was this inability both to help private builders and ultimately to support local authorities which was the main constraint on the scheme. By first assisting builders the Commission encountered political opposition from local authorities in the housing pressure areas, in the South East, Midlands and North West. The need to help private builders had been recognised early. In October 1965, Fred Willey had argued that the scheme should aid the public and private sectors equally, but increasingly, he came to realise that the Commission could not help the local authorities effectively until after the second appointed day. As a result, he began to see the Commission first establishing itself in the market through assistance to private builders and developers in the eradication of their land supply difficulties.55 This was revealed in the exemptions from levy granted to house builders after September 1965. By January 1966 both Willey and Skeffington were arguing that there was no need for a catalyst in the market to solve planning and private development problems. In fact, by 1966 both had begun to attack local authorities for failing to allocate sufficient land for private house builders' needs. 56 Inevitably, therefore, the Commission's success would be viewed largely in terms of its impact on the housing drive, rather than in terms of whether it reduced prices, ended speculation or assisted the public sector. The Commission had become a catalyst in the existing market's efficiency, not an agency to change the nature of market relationships. This new emphasis for the Commission was generated by a number of factors other than simply the willingness of Willey to make concessions

Labour (1964-1970)

143

Table 6.1 Land price index and private sector housing land (1963-1970) North 1963 1964 1965 1966 1967 1968 1969 1970

67 77 88 100 102

113 176 137 1966 = 100 (Price per plot)

Midlands/ Wales 58 78

Gtr.

South

London 82

9i

77 89 96

92

100

100

100

97 no

106 125 152 157

95

125 153

84

106 123 128

England/ Wales 74 84 94

100 102

118

H7

150

Source: Cullingworth, J. B., Problems of an Urban Society, vol. 1 (London: Allen & Unwin, 1973), Pp. 166-7.

to private builders. It was also encouraged by the slump in housing starts and completions in 1965/66; the deterioration in the relationship between builders, the building societies and the government; 57 and the impact of a 1966 Ministry of Housing and Local Government Study Group on land supply (which blamed planning authorities for not allocating sufficient land for builders' needs in the housing pressure areas).58 It is not difficult to understand why Henry Wells (the Chairman) and his colleagues at the Commission should also opt for assistance of the private, rather than the public, sector in the market. The period between 1967 and 1970 was an extremely difficult time for the private sector. As Table 6.1 reveals, house and land prices continued to rise after 1967, despite the Commission's activities; and there is evidence that this may have been generated by a shortage of land for builders - especially in the pressure areas of the South East and West Midlands. 59 Compounding these problems was the decline in housing demand, caused by the economic squeeze introduced to deal with the effects of devaluation between 1967 and 1970.60 As Peter Hall has argued, the experience of one builder, who had to pay £5,000 in interest charges over four years on land which had initially cost him £10,000, was normal and this contributed to declining demand and rising prices. 61 The impact of Selective Employment Tax on the building trades, of deflation on raw material costs and rising labour costs all contributed to rising prices at a time of reduction in demand for housing. 62

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History of adversarial policy failure

These events coincided with a feeling that the Land Commission was itself seriously undermining the viability of private housing development. The effect of the Land Commission Act was to encourage developers to buy as much land as they could in advance of requirements. By this means builders hoped to avoid paying levy by commencing a ' specified operation'. But only the larger contractors were able to hoard land in this way, and this artificially reduced the supply of land for the smaller builders and pushed prices up. Similarly, the fact that some landowners withheld land from the market in the hope of a subsequent repeal of the legislation under a Conservative government, or expected the cost of the levy to be paid in the purchase price of land, contributed to rising land prices and a dwindling supply. 63 Ultimately, this also meant that the government's goal, outlined in the 1965 White Paper, The Housing Programme ig6s-i9jo, of 500,000 house completions per annum, could not be achieved.64 The government was faced, therefore, with two major problems in 1967. Firstly, its commitment to the housing drive was jeopardised. Secondly, its ability to build houses and overcome these difficulties through the public sector was limited due to cuts in public expenditure. 65 Together with the need to bolster a declining political position following the disastrous local election results of 1968, 66 the government was forced to listen to the advice of its civil servants once more. Since the public sector could not be expected to fulfil all requirements, it was logical for the officials to encourage the government to give every assistance possible to the private sector. It was not surprising, therefore, that the government should seek to use the Land Commission to aid the private sector. At the same time the MHLG Review of the South East Study (Circular 5/66), had argued that there would be 2.9 million more people in the South East and East Anglia, and that insufficient land had been allocated in local development plans to meet their needs. 67 An obvious role for the Commission assisting the private sector to find land from recalcitrant local authorities was evident and this was also encouraged by Fred Willey and Arthur Skeffington. Willey had gradually come to realise that there would be opposition even to the limited functions given to the Commission, and he wanted it to be quickly accepted as a useful instrument before a Conservative government returned and repealed the legislation. 68 It was for this reason that Willey was prepared to issue a directive to the Commission on 17 April 1967, instructing Henry Wells to bring land forward for development by private builders. The emphasis of the directive was on the catalyst role for the Commission in assisting the private sector - any other roles were to be of secondary consideration. 69

Labour (ig64~ig7o)

145

It would not be fair, however, to imply that the only reason for this complete reversal of the Signposts intentions was due to the Minister or the Labour government's change of heart. The acceptance of a policy bias in favour of the private sector only came after the rejection by Henry Wells and his colleagues on the Land Commission of an initially active public role. This was despite the argument of one Commissioner Wyndham Thomas - that since planning came before construction and land purchase in the development process, and because local authorities dominated land allocation, it was premature for the Land Commission to be involved in land transactions for the private sector. Thomas argued that fewer people would be alienated if the Commission confined itself to helping local authorities. Thomas' fear - which was prescient - was that if the Land Commission attempted to attack local authority planning functions, the local authorities would be able to hold up development for three or four years and the Commission would be discredited.70 Unfortunately the other Land Commissioners did not share Thomas' views and wanted to support the private sector. Thus, much earlier than the directive of 17 April 1967, Wells and the Commissioners had decided upon a mainly private role for the new agency. The view was logical because this was the only way that the Commission could eventually make sufficient profit to finance unprofitable development.71 There were, however, a number of reasons why the Commission would have serious difficulties in assisting local authorities. Since the Commission had to operate commercially, it could not hold land for local authorities and thereby subsidise interest charges until a large fund had been created. Assistance to local authorities was only possible if the Commission could expect to make a profit.72 The only help that was offered to the local authorities was to be limited, therefore, to the programming of problem land and purchase to overcome problems of multiple ownership. 73 There is evidence that Wells and the Commissioners further alienated local government by other decisions. In an attempt to ensure his freedom of manoeuvre, Wells refused to consult with the local authorities until the Commission had decided on the land it required for development. 74 Wells also refused to consider granting crownhold concessions to local authorities until adequate profits were made, and he informed the authorities that he saw the Commission acting in areas where local authorities could not, or would not, act to help the private sector. 75 Finally, Wells and his colleagues exhorted the local authorities and private builders to generate profits for the Commission by using it as a 'middleman'. Since all levy from land and development transactions went to the Exchequer, and the Commission only kept profits from its

146

History of adversarial policy failure

own land trading activities, one method of creating a large land fund was through the public and private sectors using the Commission to buy land to sell back to them. 76 It is clear, therefore, that despite the fact that Wells and his colleagues did want to help the local authorities in the long term, they had decided that this could only be achieved by aiding the private sector in the short term. They ignored Wyndham Thomas' advice and the criti 4sm that, with only between £45 and £75 million to draw on from the Treasury,77 they would be unable to buy enough land to develop a sufficiently large land fund quickly. As a result - as Thomas foresaw - the Commission would fall between two stools and have a very disruptive impact on the market. There were two other reasons for the alienation of local authorities from the Commission. Firstly, the Land Commission was only prepared to offer marginal assistance to local government when it could make a quick profit from land trading and this, according to the local authority Associations, failed to fulfil government promises given during the passage of the Land Commission Bill in Parliament. Secondly, and this was the major issue, the new agency was intent on questioning local planning. The Commission, being in search of quick profits, was bound to look for the lucrative development land situated on virgin sites around existing towns. The consequence of the search for such land would be an attack on the Green Belts and, ultimately, on local planning and development control.78 It soon became apparent that the 'middleman' method initially pushed by the Commission was bound to fail because neither the local authorities nor private developers would entrust their land to a bureacratic agency, with no definite guarantee that it would be returned to them. Furthermore, the Commission had prompted the 1966 MHLG studies of land availability for development in the housing pressure areas of the South East, North West and West Midlands, which concluded that the land allocated in these areas would run out in six to nine years, and in the extreme pressure areas within one to two-and-one-half years.79 The MHLG response at this time was to exhort greater effort from the local authorities; they asked local authorities to release more land and called for greater efficiency and the increased use of higher density and industrial system building. In particular the Ministry asked Worcestershire to allocate land for an additional 15,000 to 20,000 houses, between 1970 and 1975, to cope with Birmingham overspill. The local authorities in the South East were asked to release the land allocated for the next seven years within two years.80

Labour {1Q64-IQ70)

147

Here was the beginnings of the conflict between the Commission and the Outer Metropolitan Area local authorities which ensued after 1968. The rural local authorities in the Outer Metropolitan Area of London argued that these requests for extra land allocations were based on inadequate and biased statistical information and that their development plans were based on the government's own Review of the South East Study, published in 1966. This Review had indicated that a deceleration in population growth would occur in the OMA between 1964 and 1981. The OMA authorities had therefore planned for a growth of only one million extra people in their region, but after these new studies they were being asked to plan for an additional million. The OMA authorities, in the Standing Conference on London and South East Regional Planning, felt that the government and the Commission were both rejecting sound planning in the interests of the wishes of private builders. 81 The reasons for this stance by the Commission are not difficult to discern. The Commission had made only three compulsory purchase orders and published only three draft orders, covering 45 acres of land, in its first year of operation. Only £461,000, rather than the expected £85 million, had been collected in this time from levy. 82 Due to this, it was inevitable that Wells and his colleagues would seek to act more positively. Furthermore, the threat to act against recalcitrant local authorities had always been implied in Wells' speeches, when he argued that he would apply for planning permission over their heads if they obstructed the Commission. 83 As Table 6.2 reveals, by 1967/68 it was clear to the Land Commissioners and the government that only the local authorities in the 'non-housing-pressure areas' (Scotland, Wales and the North of England) were working with the Commission. By March 1969, 699.8 acres of land had been purchased by the Commission in the North, East Midlands and Yorkshire, out of a grand total of 946 acres. This showed that there was resistance to further land allocations from authorities in the pressure areas of the North West, South East and West Midlands, where only 206 acres had been purchased by 31 March 1969. The Commission correctly concluded that MHLG exhortation to action could not be expected to work in these areas. The Commission and the OMA authorities were bound to clash after this because it appeared to the latter that the Commission was simply taking the builders' side without considering the facts. As the Standing Conference on London and South East Regional Planning was to argue in 1967 and 1968, these findings ignored five points: no account was taken of the land already purchased and held in advance by builders; sufficient

148

History of adversarial policy failure

Table 6.2 Regional analysis of land purchased by the Land Commission {^68-1971) Land approved

Land purchased Region

3I-3-69

31-3-70

3I-3-7I

3I-3-69

31-3-70

Northern Yorks E. Midlands Eastern London/SE Southern South West Wales W. Midlands North West Scotland

250.6 1045 344-7

525.3 2.6 — —

192.2

304.0 74.6 91.8 16.6 16.1

2.9

i-9

761.4 252.5 1190.1 841.1 1016.5 518.9 1081.6 605.6 1168.5 708.4 1129.0

Total

9273.6

—

1.9

3-9 — 8.9

—

13-8 37-2

197.9 148.5 285.8

0.9 24.7 466.5

67.8 395-8 618.1 98.2 1076.6 316.5 277.0 547-9 323-0 421.7 1074.4

946.0

1261.0

1065.2

5217.0

O.I

324

121.9

No land was purchased by 31 March 1968. Figures in acres. Source: Annual Reports of the Land Commission.

account was not taken of the end date of development plans; some local authorities did not take potential sites into account in their plans of land availability; the MHLG also failed to include land already under development into its findings; and finally, future building rates could not be adequately predicted due to the uncertainty of the market and public expenditure levels.84 When Wells compounded this by accusing the local authorities of creating high land prices by failing to plan adequately for land needs, the damage done to the relationship between the local authorities and the Commission was irreparable.85 This antipathy, which was felt in varying degrees by all local authorities, was also exacerbated by the political composition of those authorities most affected by the Commission's new role. Rural, Conservative controlled county councils, like Essex, Hertfordshire, Berkshire, Kent, Cheshire and Worcestershire, were opposed to the Commission on political and ideological, as well as technical grounds. The opposition to the Commission's findings was not, however, simply ideological. The fact that the Labour controlled GLC was also unconvinced and called for further studies underscores this point.86 Despite opposition from the local authorities the Land Commission was able, after 1968, to convince the government that the builders had

Labour (ig64-igyo)

149

Table 6.3. Land sold by the Land Commission (ig6j-igyi)

Land sold (acres)

Receipts from sales

1968/69

1969/70

1970/71

6.4

312.0

£37,063

£597,120

595-0 (Committed to sell 213.0 acres for £690,000) £1,581,053

Table 6.4. Land purchased by the Land Commission (by type of purchase) 1967/68

1968/69

1969/70

By compulsory purchase order (acres)

For local authorities For private developers For mixed (public/ private) schemes Total (acreage) Total (cost) By approval (acres) For local authorities For private developers

0

20.7

0

3094

0 0 0

615.9 946.0 £3,559,330

0

228.2

0

For mixed schemes

0

1608.7 338o.i

Total (acreage)

0

5217.0

382.9 878.1 0 1261.0

£4,643,300 2015.5 7258.1 0

9273.6

a case. On 16 February 1968 Anthony Greenwood, senior Minister at the MHLG, asked the Home Counties to allocate an additional 31,000 acres of land for an extra 5,000 houses per annum over the following seven years. In finding this land the local authorities were to maintain the Green Belts, but the Land Commission would help them to determine which land should be made available, and the local authorities were to inform the Commission of any problem land in their areas which required purchasing.87 Conflict between the local authorities in the Home Counties and the Land Commission was inevitable after this. A letter from Wells to the Standing Conference, on 12 March 1968, further exacerbated the situation. Wells informed the Conference that the Commission's earlier land estimates had been on the conservative side; that there would be no room for manoeuvre over the land demanded by the Minister; and if the authorities resisted then he would appeal over their heads to the

150

History of adversarial policy failure

Minister for planning permission.88 There was an obvious explanation for Wells' belligerence. We saw in Table 6.2 how regional land sales had been slow to develop. As Tables 6.3 and 6.4 indicate, and as Wells was to intimate in a speech in November 1968, the total land sales and purchase record of the Commission was derisory.89 Up to November 1968, although the Commission could claim to be considering the purchase of between 20,000 and 30,000 acres of land, only 274 acres had been purchased for resale to public authorities; only 685 acres were offered for competitive sale to builders; and a paltry 14 acres had been purchased for resale to specific builders. Furthermore, between March 1967 and March 1969, only 6.4 acres had actually been sold, mainly in the non-pressure areas, recouping a mere £37,063 for the Commission. 90 It is hardly surprising, therefore, that the Commission should want to act against the local authorities in the pressure areas, in order to find a role for itself. Before any decisions could be taken, however, the Labour government was defeated at the general election in June 1970. The history of the Commission's role in the market, as catalyst of development and market efficiency, was one of developing conflict and eventual stalemate due to the alienation of the local authorities — especially those in the Outer Metropolitan Area of London. But that was not the only obstacle to the successful implementation of the 1967 Act. There were also a number of problems with the betterment levy, where a number of small transactions led to acute hardship for individual landowners and developers; and the Labour government, at the cost of giving much political capital to the Conservative opposition, had to exempt all levy assessments under £1,500 from payment - these accounted for 53 per cent of all assessments in 1968.91 The Conservative government, which came into office after the June 1970 general election, quickly moved to repeal the 1967 Land Commission Act on the grounds that it had failed to reduce prices, ease land supply problems or to assist the efficiency of the market. Were these fair criticisms and was the Commission the failure the new government insisted it was? First of all, it is unfair to judge the Land Commission on whether or not it increased or lowered land and house prices. By September 1965 the Labour government had, itself, tacitly accepted that this could not be achieved by the Commission. 92 The Commission can only be judged, therefore, on the two major tasks given to it in the White Paper of September 1965; these were to collect betterment by a levy system and to speed development by buying and selling land to overcome land

Labour (1964-1970)

151

Table 6.5 Land Commission: levy receipts and assessment notifications (1967-1971) 31.3.68

31-3-69

31-3-70

3i-3-7i

3,449

15,39°

18,178

11,935

Total levy assessed

£1,646,300

£14,940,700

£30,922,200

£32,000,000

Total levy received

£461,600

£8,103,100

£21,172,300

£24,500,000

Total number of levy assessments

Source: Land Commission Annual Reports.

supply problems. Judged on these criteria alone, at least in the first three years of its existence, the Land Commission was technically a failure. It was estimated that the Commission would recoup £85 million per annum from 150,000 levy assessments. As Table 6.5 reveals, these figures were never achieved during the brief lifespan of the Commission. It was true, however, that when the Commission was abolished the situation was improving. From levy receipts of a mere £461,600 in March 1969, the 1971 total was around £24.5 million, with the amount of levy assessed in that year as high as £32 million. If the betterment levy was beginning to work effectively by 1970/71, the same could not be said for the Commission's land supply role. As Table 6.4 shows, by 31 March 1970 the Commission had only compulsorily purchased 2,207 acres of land. It was true that a further 14,490.6 acres had been approved for purchase but most of this was for resale to the private, rather than the public, sector. Unhappily, for the Commission, as Table 6.3 reveals, by 31 March 1971 only 913.4 acres had been sold in total. Similarly, as we saw in Table 6.2, most of the land that was bought and sold was not in the housing 'pressure areas'. Scotland, the North and the North West areas were the most willing to sell land to the Commission. On the other hand, of the land approved for purchase the Commission would have bought increasingly in the pressure areas. If the land transaction role of the Commission was beginning in embryo by 1970, this very limited success must be set against the failure of the Commission to make a profit throughout its short lifespan. By 1970/71 the Commission had only collected £1,581,053 from sales of land and of this only £368,084 was actual profit from land transactions. As Tables 6.6, 6.7 and 6.8 indicate the Commission continually operated at a loss in its few years of existence; despite its limited profits the costs

History of adversarial policy failure

152

Table 6.6 Land Commission: profits from land transactions {ig68-igji)

31.3.68 31.3.69 31.3.70 31-3-71

0

3,136 176,645 368,084

Source: Land Commission Annual Reports.

Table 6.7 Land Commission: costs of administration

(ig68-igji)

(Calculated by subtracting total receipts from gross expenditure and the costs of other government department services) 31-3-68

3I.3.69

3I.3.7O

3I.3.7I

Gross expenditure Department services

2,210,582

974,800

2,066,354 786,750

1,937,662 1,462,200

1,000,000 1,750,000

Total costs Less: Total receipts Total cost

3,185,382

2,853,104

3,399,862

2,750,000

802,028

813,745 £2,039,359

754,692 £2,645,170

£2,750,000

£2,383,354

0

Source: Land Commission Annual Reports.

Table 6.8 Land Commission: profit and loss account {ig68-igji) Net Deficits (£) 31.3.68 31.3.69 31.3.70 31.3.71

1,103,630 1,380,072

1,684,848 1,638,399

Source: Land Commission Annual Reports.

of administration never fell below £2 million. Thus the role envisaged for the Commission, of making large profits from land transactions by helping the private sector, was never achieved. The Commission was never self-financing, even if levy was collected adequately, and at no time were any concessionary crownholds given to reduce land prices. 93 Judged on the three or four years of operation and the high ideals set for it, the Land Commission was a failure. There were, however, a

Labour {1964-1976)

153

Table 6.9 Land Commission: staff composition {1967—1970) 31.3.68 Professional/ directing grade Executive grade Clerical grade Total

3I-3-69

31-3-70

no 466

102

118

701 601

583

492

492

1,404

i,i93

1,068

Source: Land Commission Annual Reports.

number of reasons for the delay it experienced in fulfilling its promise. The Commission faced difficulties in estimating demand and in surveying the available land for development. It also took time to recruit the necessary staff and to create the organisational ethos required. There was also the problem, indicated in Table 6.9, that the Treasury was stringent in the control of the Commission's finance, with the consequence that the composition of the staff was heavily weighted towards clerical and executive, rather than administrative, grades. 94 Added to these organisational problems was the difficulty of making levy assessments quickly. Only ten per cent of the notifications of sale or development received by the Commission were liable to levy assessment, but it could take anything up to seven months to determine this - even when there were no objections and no inquiries were necessary.95 The Commission could also argue, with some justification, that on top of these restrictions was the fact that it would take between three and four years for the levy system to work properly, due to the number of temporary concessions and allowances given under the 1967 Act. It was also clear that builders and developers had stockpiled land to meet their future requirements and to avoid paying levy. The Commission could claim, therefore, that, since it collected £71 million in levy during its lifetime, the levy system was beginning to work and would have fulfilled its expectations if it had been allowed to continue in operation.96 Similarly, despite the resistance to its land supply role in the pressure areas, by 1970 there was mounting evidence that the Commission was playing a useful, if limited, catalyst role in the market. The purchase of a surplus Ministry of Defence airfield; the unification of land in multiple ownership for comprehensive development in County Durham and in Ross and Cromarty; the purchase of a 400-acre problem site in Kent; the compulsory purchase of land from an overstocked builder, for resale and speedy development by a builder without land; and the

154

History of adversarial policy failure

discovery of pockets of unowned and unclaimed land hindering development, were all examples of this role which the Commission might have continued with success. 97 It was no surprise, therefore, that in 1969 and 1970 a number of commentators could argue that, despite its slow start and initially high administrative costs, the Commission was beginning to fulfil the role that had been intended for it. 98 In this respect they were correct: the Land Commission would not have been a technicalfailure in the long term. But it was, and presumably would always have been, a political failure in the context of adversarial British politics. This implies that the approach was logical and that it could have overcome the opposition from local authorities to its land supply role if it had been able to use its compulsory purchase powers more extensively. Unfortunately, the actions of the Commission were seen as politically biased by market participants and this led to electoral support for an ideologically based laissez-faire style Conservative approach. This was a tragedy because the problems which the Commission faced might have been overcome gradually, after some political conflict with local authorities. The progressive disillusionment of the electorate with the Labour government led, however, to the demise of a basically sound solution to the compensation and betterment problem. A fact which, by 1970, even some builders and local authorities (especially in Scotland) were to recognise. 99 In the short term implementation was made difficult by the power of constraint granted to local authorities in the 1967 Act. In the end what finally defeated this solution was not this but the adversarial basis of British politics.

The second failure of the Conservative free market approach and the igjos property boom {1QJO—IQJ4)

The power of initiation: Heath and the Selsdon approach. The power of constraint: the speculative property boom of 1971-1973. Heath at the crossroads: social democracy versus market constraints. In the early 1970s the compensation and betterment problem was made more difficult to resolve because the government had to deal with financial speculation in the rental values of commercial properties. This speculation was encouraged by the Heath government's return to an adversarially based policy for land values. The Land Commission was abolished and a ' regulatory' solution was imposed on the market similar to that which had existed between 1959 and 1964, when an earlier boom in property had occurred with adverse electoral consequences for the Conservative government. The aim of the government in 1970 was the stimulation of industrial regeneration through the private market. But very limited state taxation on property speculation, no state role in facilitating land supply and a lax monetary policy was to lead, with declining industrial profitability, to a sustained property boom. This came about because the government's power of initiation was used in ignorance of the power of constraint which its free market approach gave to financial institutions. The government found, between 1972 and 1973, that it was unable to control these interests: they invested in property rather than industry. Consequently, massive capital gains were made by a few, and property millionaires became part of the 'unacceptable face of capitalism'. This led the Conservative government to set aside its free market ideals and to impose controls on business rents. This policy was difficult to sustain because it threatened to bankrupt property companies and secondary banks, and to undermine the international role of the whole of the City of London. In 1973 the Heath government therefore had to rescind its controls on 155

156

History of adversarial policy failure

business rents, but it still retained a tax on property profits. This realisation of the need to tax betterment came too late to halt the ruinous investment in property which, through inflation, undermined the whole economic strategy of the government. It also came too late to help the Conservative government win the general election which was called in February 1974. The power of initiation: Heath and the Selsdon approach After the electoral defeat of October 1964 the Conservative Party had accepted the need to adopt a 'fiscal-regulatory' approach. This meant a commitment to the special tax on betterment to stop property speculation which had been suggested by Keith Joseph and others in the government between 1962 and 1964. It followed the creation of a study group which included Reginald Maudling, Sir Colin ThorntonKemsley, Sir Keith Joseph and John Boyd-Carpenter, all of whom had long advocated such an approach.1 Only Nigel Lawson was not of this basic frame of mind, and even he saw the sanity of having a policy for property profits for electoral reasons.2 The success of Edward Heath in the leadership contest of 1965 did not change this basic approach and the Party fought the March 1966 election with this commitment. The loss of this election, however, occasioned a fundamental re-appraisal of Conservative policy in an attempt to offer the electorate a credible alternative to the Labour government. The result was to be a return to a neo-liberal, laissez-faire, policy framework.3 Labour's Land Commission legislation was functional for the Conservative Party's policy re-appraisal in this period. The Party had resisted the Land Commission scheme because it was seen as inimical to the role of local authorities and private developers. The Conservative Party merely wished to impose a taxation solution on the market. After 1966, as the Party moved increasingly towards free market solutions to resolve Britain's economic problems (an approach which was to reach its height in the 1969 pre-election conference at Selsdon Park Hotel), 4 the 1964 commitment to a betterment tax was also to be rescinded. Graham Page and Geoffrey Rippon, who handled the Conservative opposition to the 1967 Act in Parliament, began to attack the Land Commission, as an arbitrary socialist measure which threatened local authority planning (which it did) and the role of private builders and developers (which it did not). Rippon and Page were to argue in Parliament that the measure should be repealed, and that no special betterment tax was necessary now that Labour had introduced a capital gains tax in 1965.5

Conservative {1Q70-1Q74)

157

This became the Conservative approach in the run up to the June 1970 election. As the 1970 Campaign Guide stated: 'Conservatives believe that planning decisions and compulsory purchase should be under the control of the democratically elected local authorities rather than Ministerially appointed bodies. ' 6 Peter Walker, in debate, explained the reason for the Conservative commitment to repeal: they feared the effect of the Commission on the builders' role and on planning, and the levy was an 'unacceptable tax on land'. 7 Walker's statement indicated the ideological electioneering of the Party as it returned to adversarial politics to win the 1970 election. The Land Commission was basically a social democratic attempt to recoup some betterment and to facilitate land development, but the Conservative Party either could not see this or chose to ignore it. There were a number of reasons for this. Local authorities - particularly Conservative controlled rural authorities in the housing pressure areas of the South East and West Midlands - were threatened by the interventions of the Commission and they wanted the Party to end this role. Secondly, builders (who are also a bedrock of Conservative support) were opposed to the Commission on ideological grounds, even though it was supposed to be assisting them in finding land. Builders feared that the second appointed day powers would be enacted and that this might be the prelude to the nationalisation of building. Only a few well-informed and long-sighted builders were able to understand the logic of the Commission's true role, which was to overcome landowner and local authority recalcitrance in land supply. But these men - like J. G. Mclean of the House Builders' Federation, who also sat on the Conservative's pre-election land study group and argued unsuccessfully for the retention of the Commission 8 - were unable to overcome either the ideological antipathy of their colleagues or of Conservative MPs who had historically tarred the Labour Party with the brush of socialism. There was a final reason for this move to laissez-faire. For landowners and property developers the Land Commission was a real threat to their role in the market. The Commission taxed part of their 'unearned increment' and also threatened their property rights through compulsory purchase. It was hardly surprising, therefore, that they should attack the Commission vehemently. Furthermore, they could point to the fact that, with all other capital gains being taxed at 30 per cent (under the 1965 legislation), the special 40 per cent betterment tax on property was unjust and it also fell partially on unrealised, as opposed to realised, capital gains. By 1970, then, the Conservative Party had returned to adversarial

158

History of adversarial policy failure

politics in the land market and it was committed to a 'regulatory' approach. This was to lead to a sustained price inflation in land and property and the potential collapse of the integrity of the City of London. No more glaring example of the failure of adversarially based policies in the post-war period can be found than this. The freeing of property developers, builders and landowners to maximise their economic selfinterest was to impose a crucial constraint on the ability of the Heath government to implement its policies successfully. By freeing the private sector in the hope of national economic regeneration Heath effectively left the implementation of his policies in the hands of private actors who were more concerned with their own enrichment in the short term, than with that of the nation in the long term. However, this does not mean that these interests dominated the Heath government in a conspiratorial way. Rather it is to say that, while Heath's government was able to retain control over policy initiation, its policies were based on a complete lack of understanding of how the market operated. Because the market did not act as expected eventually the government was forced to renege on its original laissez-faire commitments; but too late, so that it actually threatened to undermine the integrity of the financial system. The Conservative government therefore found itself in 1972 and 1973 caught between the need to act to overcome property inflation (which the government's own laissez-faire policies had helped to generate) and constrained in what it could achieve by the very same financial crisis that had been generated. It is as well to look at what the Conservative government actually did with the power of initiation which it won in June 1970. The first point to make is that Conservative governments since the Second World War have generally been more ideologically committed in the land and property field than their Labour opponents. In the 1945-51 and 1964-70 periods Labour governments were willing both to limit their interventionist intentions in office and accept more social democratic approaches predicated on mixed public-private sector solutions. Conservative governments of the 1950s were much more doctrinaire and prepared to initiate adversarial based policies favouring their socio-economic base. In 1970 the Conservative government was similarly pre-disposed. They abolished the Land Commission in 1971, returning the market to a 'regulatory' approach of local government negative land use planning with no special betterment recoupment.9 All future capital gains in land would be charged under the general capital gains tax of approximately 30 per cent. Local authorities would have to plan land use, but they would be expected to pay for their socially needed land at full

Conservative {igjo-igjj)

159

market rate without any prospect of extra subsidies from betterment recoupment via the Exchequer, as had been promised in the 1967 Act. Only for New Towns and Town Development schemes - as in 1959 - would they be able to offset some of the increase in land values created by their own development plans and actions. Finally, there would be no state facilitative role to overcome obstinate landowners and local authorities who refused to release land for development. The Commission's compulsory purchase powers had gone and the government - as indicated in Circular 10/70 from the new Department of the Environment10 - was to rely on the exhortation of local authorities in the pressure areas to allocate more land for housing. These changes, it has been argued, resulted in a loss to the state of £31 million in betterment taxation - which went instead to landowners and property interests,11 and also created the conditions for a sustained and economically ruinous boom in property speculation. The power of constraint: the speculative property boom of

igji-igjs

The government had intended that its land policies would facilitate a more active private sector role in housing and commercial development. This, plus the easing of monetary restraint and the introduction of greater competition between the financial institutions in 1971, was also expected to lead to a massive injection of investment in the regeneration of British industry. Unfortunately, neither of these goals were to be fully achieved as monetary growth and competition led to a flood of investment in property. The private role in property development was enhanced but it seriously unbalanced the relationship between industrial and property development and caused a sustained increase in property prices which undermined the government's overall anti-inflationary policy. Even the attempt to stimulate private house building was to lead to conflict between builders and local authorities, as the latter refused to supply more land for development in response to what they saw as unwarranted private speculative demand. This dilemma was not fully appreciated by the new government, however, and they maintained their laissez-faire approach until 1972. The first problem which confronted the government after its freezing of the land market was the same as had beset the Land Commission. The Commission had felt that local authorities in the housing pressure areas were resisting the demands from builders for development land. The Conservative government also saw this as a major problem because housing and land prices rose rapidly after they returned to office (Table

160

History of adversarial policy failure

Table 7.1 Index numbers of land and house prices, United Kingdom, 1967-1976 (1970 = 100)

Second-hand houses" 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976

83

New houses

Price index of local authority housing 6

Building land for private owners c (price per plot)

84 89

94

83 86 94

92

65 73

100

100

100

100

116

no

"3

113

155 208 218

139 193

136 188

185 295

223

217

239 259

245 263

238 253

290 205 203

90

9i

a UK figures for houses purchased with building society loans; from 1969 the figures are weighted averages of prices for individual types of houses, which exclude much of the effect of changes in the 'mix' of dwellings sold. b Tender prices for traditionally built one- and two-storey houses in England and Wales outside Greater London. Refers to tenders accepted in the years shown. c England and Wales. Source: Housing Policy, Technical Volume, Part /, Cmnd. 6851 (1977), Table iv, 4, p. 171.

7.1). Under the 1968 Town and Country Planning Act the development planning system had been changed. The old style (1947 Act) development plans were to be replaced by a two-stage (structure plan and local plan) system. Local authorities' engagement in formulating these new plans naturally caused some delay, with many county authorities failing to complete this process before 1978. 12 Local authorities were also subject to a number of other changes, like those arising from the Bains Report on corporate planning and the upheaval of the 1972 reform of local government.13 All of these innovations held up the long-term review of future land requirements by local authorities and led to opposition from them to premature allocations for development. As a result builders began to argue that local government was hindering the fulfilment of the role which the government had intended for them. This conflict was complicated by the actions of individuals as they responded to the economic conditions created by the government. Housing demand increased in the period 1968 to 1973 as inflationary wage settlements gave more disposable income to house buyers at a time when there was a shortage of supply due to a decline in public and private

Conservative (igjo-igjj) 14

161

house building between 1969 and 1970. This boosted property prices and encouraged landowners to withhold land from the market in anticipation of greater profits in the future. This also contributed to a shortage of land supply. Furthermore, the gradual relaxation of monetary controls, as part of the government's policy of creating a consumer-led boom, gave house builders a copious supply of funds from secondary banks and the financial institutions. Builders therefore had finance for land purchase but land was in short supply or it was too highly priced in inner city areas for low and medium income housing. This forced them to look for land in the Green Belts and unzoned rural areas around major cities, where they came into conflict with the unwillingness of local authorities to allocate additional land to meet their needs. But the real constraint facing the government's broad land and economic strategy was not this conflict over land supply but the astronomical rise in land and property prices in inner city areas after 1971, which forced builders to look for land outside city areas. The financial sector had been given the freedom to compete and to invest wherever it wished after 1971 and the government had expanded the money supply. This led to a sustained boom in commercial property speculation for a number of reasons. There had been a substantial boom in property in the 1950s, but by 1962/63 this had gradually petered out just as the financial institutions began to realise the higher profits which could be made in this area. The cause of the slump in the early 1960s (according to Marriott)15 was that the supply of commercial property began to outstrip demand. The Labour government in 1965, however, had introduced an Office Development Permit system in a belated attempt to control an evil they had criticised in opposition. This curtailment of office development was functional for property speculators because it artificially reduced the supply and caused rents for offices in London to rise from £5 to £10 per sq.ft. between 1967 and 1971. 16 This artificial curtailment of office space, however, also came just at the time when the structure of the British economy was changing from a mainly manufacturing to a service basis, which in turn led to a higher demand for office space. Given that the Labour government was unaware of what was happening and failed to control commercial (as opposed to housing) rents in this period, the conditions for a continuing rise in commercial property rents and values was thereby created. The Labour government's 1967 Act also concentrated only on the recoupment of betterment from the actual process of development and ignored rising property rents and values. As a result financial institutions saw that the capital asset values in property were not taxed and that property rents

History of adversarial policy failure

162

368 £m 300

Total net cash investment: pension funds

i

i

i

I

% of total net cash investment

1964

1965

1966

1967

1968

1969

1970

1971$ l 109

£m 900

Total net cash investment: insurance companies

800 700 600

20

% of total net cash investment £182m

15

£83m

10 5 + 0 1964 Y0^/\

1965

1966

Mortgages & loans•

1967

1968

1969

1970

1971$

H ^ ^ Land, property & ground rents

* Revised basis t Figures for earlier years not available % 1st 9 months at annual rates • the chart above includes policy loans, excludes house purchase loans Figure 7A The demand for property by the financial institutions (1964-1971) Source: The Economist, 242 (18 March 1972), p. 12.

Conservative {igjo-igyj)

163

had outstripped inflation since the Second World War.17 An increase in institutional demand for property was generated as indicated in Figure 7A. By 1970 there were sufficient grounds for the financial institutions to have confidence in commercial property investment, but this enthusiasm rose to a fever pitch in the City between 1971 and 1973 when the Conservative government returned to office. Not only was the government about to repeal the 1967 Land Commission Act (which would abolish betterment tax and allow unearned profit in development to be retained) but it was also committed to easing Labour's control on office developments and to raising the lower limit for office permit to 10,000 from 3,000 sq.ft.18 Furthermore, the 1972 Finance Act was to change the taxation of unit and investment trusts, reducing the capital gains tax liability from 30 to 15 per cent, to stimulate - it was intended - industrial development. But the City quickly realised that if property trusts (shares and property bonds) were created, it would be possible to invest in property and also escape a substantial amount of capital gains tax - which was clearly not the government's intention.19 As an additional bonus the government, in the 1973 Land Compensation Act, also allowed for the compensation of property owners who suffered worsenment as a result of planning schemes.20 Whatever the government's intentions for industrial regeneration, these measures gave a green light to financial institutions to invest in property. Property, unlike industrial investment, was now hardly subject to any taxation at all on capital gains. But this was not the end of the government's short-sightedness as it tried to implement a laissez-faire solution to Britain's economic problems. The government decided in 1971 to introduce Competition and Credit ControlXwhich took the ceilings and controls off* bank lending and encouraged greater competition for funds between the institutions), and to expand the money supply. Both these measures gave a tremendous freedom to the financial sector and further boosted property speculation. It was not simply that there were socio-economic conditions for speculation in offices and shops by 1970, the government's policy of Competition and Credit Control created on its own a rising demand by financial institutions for property investment. The policy of greater financial competition encouraged the secondary banks and discount houses to compete for property with the established institutions (the clearing banks, the pension funds and insurance companies). Realising the substantial profits to be made in commercial property and the lack of return to be had from industrial investments, these institutions began to swamp the property market with funds.

164

History of adversarial policy failure

Funds, moreover, which they were able to obtain easily, given the pressure by the government on clearing banks to provide an expanded money supply for the money markets. The secondary banks then encouraged a boom in residential building, property rental and normal office development, as they searched for lucrative property assets which faced little capital gains on development and had rising untaxed capital values. The established financial institutions were forced down the same road. They had already realised the benefits of this type of investment in the 1960s but in the early 1970s they were obliged to increase their own bids for property and to give property developers higher profits. In this way the established City institutions and clearing banks were being led by newcomers with little financial judgement or experience of the property market. The City went property mad and financial sanity went out of the window as property fortunes were made overnight at the expense of industrial investment and inflation rates.21 The ultimate constraint on the Heath government was then revealed: in giving freedom to the City to determine the success of its economic strategy and also providing it with abundant funds, it was tying the fate of its own political future to private sector actors more concerned with the maximisation of their short-term financial gains than with the long-term viability of the national economy. This can be said of course with hindsight, and there were few commentators at the time who fully realised the enormous dilemma which this approach created either for the government's economic strategy or for the future of the City. Indeed, for most financial experts there was little realisation of the underlying weakness of this property boom. Rental values of commercial property had always kept in line with, or ahead of, inflation since the Second World War, while industrial shares were subject to cyclical fluctuations and (with Britain's declining industrial performance) had low profit and yields. 22 For fund managers it seemed to make abundant sense to invest in offices, shops and warehouses rather than industry; they were a hedge against inflation and very lightly taxed. The reason why property was so lucrative is tied up with the unique valuation process in Britain, which contributes to tax avoidance on a massive scale in capital gains on property. Unlike the USA, where the Securities and Exchange Commission only allows valuation of property at the price it is sold for, or bought at, in the UK property is valued as a multiple of its annual rent role. Now, because there has been a shortage of office accommodation (both real and artificial) in the post-war period, commercial rents have risen astronomically, making property

Conservative {1QJO—1Q74)

165

100 1967

1968

1969

1970

1971

1972

50

Figure 7B The property share boom Source: The Economist, 242 (18 March 1972), p. 19. historically one of the safest long-term bets to invest in. Property companies in the 1950s and 1960s were, therefore, able to borrow money without a satisfactory cash flow to repay the interest on their loans. This broke one of the cardinal rules of finance: that all loans should be repayable out of earnings. This was possible because, when a property is developed it is valued on the future potential rental values of that property. Thus developers did not sell their offices but kept them, and so earned for themselves unrealised and continuously rising real assets as rental values rose.23 These unrealised gains have never been subject to taxation, and unpaid interest payments and loans were always rolled over into the future by bankers on the basis of the rising value of the assets. Property developers could always counter the conservatism of bankers by arguing that if it became necessary a property could be sold to pay back loans, or that rents could be raised astronomically as leases fell due for reversion. In fact, however, this was only sound financial practice so long as the future rise in rental values always kept ahead of inflation. Figure 7B indicates the massive investment in property shares which occurred in this period, as small investors saw the profit that property could earn for them. It was not just the small speculators who invested heavily in this market. A range of estimated figures from various sources indicates the scope of investment by the secondary and primary financial institutions in property between 1971 and 1973. Pension funds doubled their investment in real estate from £138 million to £360 million between 1966 and 1969.24 Quoted property companies raised £108.7 million on

166

History of adversarial policy failure

the Stock Exchange through capital issues in 1972 (when the whole of manufacturing industry raised only £223 million), and property unit trusts gathered a further £150 million between 1966 and 1970.25 In 1971, 96 property companies borrowed a mere £382,000 from the money markets, but between February and November 1973 this rose to £769 million and left them owing a total of £2,330 million to their bankers.26 In 1973 insurance companies alone invested £572.7 million in property, which was three times the figure invested in 1972.27 Even the larger industrial companies, like the Rank Organisation and Reed International, became involved in property speculation and the financial institutions moved gradually to buy up property companies as they tried to ensure a larger share in profits for themselves.28 All of these interests - whether fringe banks or established institutions - were gambling that the supply of offices would never match demand. What none of them bargained for was a Conservative government which would undertake a policy 'U-turn' in 1972 and 1973, destroy demand for offices and cause afinancialcrisis. The property game was sound so long as monetary growth provided the conditions for rising inflation in rental values and property valuations. But there was a basic instability in the whole approach. If either supply caught up with demand, or demand fell away when supply was high, then many speculative property gambles would collapse. The reason for this - as shown by a prescient article in The Economist in March 197229 - was that many of the property companies did not have positive cash flows and they were geared to rolling over their interest repayments and loans on the basis of the gamble that property rent and valuations would always outstrip inflation as they had done in the past. If this did not occur and rents fell then they would be left with severe liquidity problems. This was a particular problem also for the secondary and fringe banks which had appeared in the market. Often these banks provided loans at the full 100 per cent valuation of properties, many of which were highly dubious investment. Furthermore, these banks were also heavily committed to private house builders (who also gambled that their land purchases would continue to rise in value with a continuously rising demand for private houses) and residential property companies (committed to rising residential rents). If any of these, or the property companies, collapsed, then many fringe banks and the weaker merchant banks would also face severe liquidity problems. The problem did not end here, however, because even the larger established institutions were heavily committed to property. While they did not face bankruptcy, they also stood to lose substantial sums of money in any property crash.

Conservative (1Q70-1Q74)

167

The whole edifice was, therefore, only stable as long as rents continued to rise and property values with them. If this did not occur then property companies would have no chance of paying off their interest payments or the balance of their loans, which would certainly be called in with alacrity by their creditors - the secondary banks and ultimately the major financial institutions - as the market collapsed. The problem was that with yields being so low property companies would be forced to sell property in a falling market, with little chance of recouping enough to pay off their loans. This would set in train a whole series of collapses of property companies and, with them, the secondary banks heavily committed to this market. Furthermore, the international confidence in which the City was held would also be undermined as the major institutions lost substantial sums of money in any sustained collapse. Thus the property boom sowed the seeds of its own eventual downfall. The original intention in freeing the market had been to stimulate industrial investment, but the government gradually realised that its laissez-faire policy left it dependent on the goodwill of a financial sector which was more concerned with short-term maximisation of speculative gains than with the long-term viability of the British economy. The symbol of this was what Heath was to call the 'unacceptable face of British capitalism' as his policies failed in implementation and created media and political furore.30 The government could not ignore the unintended consequences of its policies for very long, as industrial investment slumped and inflation rose. Almost daily in 1972 and 1973 the media drew attention to the deleterious consequence of this laissez-faire approach. First there was the 'cause celebre' of the office block, Centre Point, which was unlet but on which its owner Harry Hyams continued to recoup huge capital gains as rental values increased. Then came the Rachmanesque activities of the Stern Group of property rental companies, who raised rents without materially developing properties,31 and the asset-stripping and money-making activities of the Lonrho group and the City whizz-kids (like John Barclay and John Slater).32 But it was not just the property millionaires that caused concern, nor the lack of industrial investment by the City; there was also the situation that local government and the planning system found itself in. As land prices rose, manufacturing industry was forced to move from central areas and workers had to undertake long journeys to work. This contributed to public and private transport congestion and planning difficulties for local authorities. These authorities also faced the problem, especially in central city areas, of paying full market rates for any land

168

History of adversarial policy failure

they required for social purposes. This forced them into two unacceptable (and for the Conservative government politically damaging) choices.33 Either they could enter into public-private consortia arrangements with private developers, by which they hoped to obtain sufficient money for socially desirable projects (like housing) at the price of approving planning permission for commercial development which granted huge untaxed capital gains to developers;34 or they did not bid for land at all because they could not afford it and gave up any intentions of undertaking their socially desirable projects. This latter choice ensured that many authorities would then find themselves with rising homelessness, overcrowding and multiple-occupancy for low-income groups they could not afford to rehouse. It also, of course, contributed directly to inner city decay and twilight or blighted areas in which no development could occur for lack of local government finance.35 These were the direct results of freeing the market which could not be sustained, given the consequence for local government planning, ir^iustrial investment and general inflationary trends in the economy. True, the government was partially to blame for expanding the money supply, for introducing Competition and Credit Control, and for taking away any effective taxation or controls over the land development and property market. But the government had not intended that its policies should lead to a property boom. This is a stark reminder, then, of the power of constraint that free market inclined governments face when they seek to rely for the implementation of their policies on the private financial sector. The price of freeing this sector was too high and, as a consequence, after sustained political pressure, Heath was to undertake a 'volteface' and attempt to stop property speculation at source. Heath at the crossroads: social democracy versus market constraints Initially in 1970, following its laissez-faire proclivities, the Heath government concentrated on facilitating the private developers' role in the market. In the land market the government blamed local authorities for creating a shortage of land for development, which they felt also contributed to rising house prices. This was the argument which had been presented by builders' representatives throughout the 1960s.36 Local authorities were told in Circular 10/70 to increase land allocations in pressure areas. These mirrored the arguments presented in a number of reports - like the Shankland/Cox report of 1972.37 It was also made plain that a far higher number of appeals against local authority refusals of planning permission would be granted by Ministers.38 This meant

Conservative

(IQJO—IQJ4)

169

that the government, like the Land Commission before it, rejected the local authorities' case that there was sufficient land for development and that the problem was due either to speculation or land hoarding by builders for future development. 39 The only assistance for local government was to come through the encouragement of public-private consortia arrangements, which favoured the private sector but allowed some indirect subsidy of public sector social provisions. 40 By early 1972 there was, however, a subtle shift in the government's response to the problem. The Centre Point fiasco was perhaps the turning point for the Secretary of State for the Environment - Peter Walker - who, by 1972, was threatening to introduce legislation to enable the government to force developers to bring empty offices onto the market. This was eventually to occur in the 1974 Finance Act. 41 At the same time Walker also began to threaten to introduce curbs on building society funds. It was felt their policy of maintaining deposit account interest rates at high levels was counter to the intention of Competition and Credit Control and allowed building societies to raise finance for property loans which also contributed to property inflation.42 This shift in emphasis was taken a stage further after November 1972 when Peter Walker was replaced by Geoffrey Rippon at the DOE. By April 1973 Rippon had rejected the builders' case against local government on land supply. In the White Paper, Widening the Choice: The Next Steps in Housing,*3 Rippon promised to introduce both a land hoarding charge of 30 per cent on undeveloped land with planning permission and a levy on developers to contribute towards local authority infrastructure costs. It was speculative landowners and developers who were now public enemy number one, not the public planning system. There is little doubt that this policy reversal was necessitated by the difficulties which the government found itself in during 1972 and early 1973. Inflation was getting out of hand and obviously contributed to the loss of a number of key by-elections to the Liberals, in Sutton and Cheam (December 1972) and Ely and Ripon (July 1973).44 On top of this, a number of pressure groups in the public and private sectors were demanding government action to control the deleterious effects of the property boom: the TCP A wanted government aid for local government advanced land purchase; The Economist, the RICS and the RTPI argued for a betterment tax on realised and unrealised profit in property; and the CBI called for more industrial investment. Furthermore, Conservative back-benchers were restive at the electoral consequences of government policy; owner-occupiers found it difficult to buy houses; and the City's Committee for Invisible Exports argued that rising rental

170

History of adversarial policy failure

values in London might undermine its ability to take advantage of membership of the European Community. 45 It has to be said, however, that Rippon's approach was basically misguided. The Queen's speech in autumn 1973 contained no legislative commitment to undertake the promises he had made in April. There were a number of reasons for this. His solution did not locate the basic cause of inflation in property - lax money supply and the competition between financial institutions. He was attacking the symptoms not the cause of the problem. The land hoarding charge idea failed to take into account the fact that builders require fairly extensive land banks of up to 3 to 6 years to plan their operations effectively. While this made unearned profit for them as property prices rose, it was not directly due to their actions but to speculation in property generally. Penalising the need by builders to hold land in advance of operations by imposing a land holding charge might well have led to a curtailment of development, and a further rise in prices, as the supply of houses declined. 46 Furthermore, any infrastructure charge would be passed on to house buyers and would also have raised house prices. 47 As a result opposition from developers and builders, local government, and the TCPA (who feared the disruption of development) was sufficient to defeat these proposals in policy initiation.48 The government was, however, throughout 1973 to learn the true cause of property inflation. This was brought out most forcefully by the unforeseen consequences of the policy U-turn associated with the counter-inflation strategy which was first introduced in November 1972. By then the government had fully reneged on its general laissez-faire approach to the economy and returned to a statutory incomes policy. While it is debatable whether this had led to a realisation of the need to extend state intervention fully into the property market as well, the complete freeze on business rents in Phase 2 of this strategy, in January 1973, quickly exposed the cause of property inflation.49 The property boom had been based on the freedom of the money markets and the gamble by financial institutions and property companies that business rents would continue to rise. But under Phases 1 and 2 of the counter-inflation policy business rents were to be held at the levels attained as at 5 November 1972, only lettings of new development from that date were to be exempt from controls. The incomes policy caused the supply of finance for home buyers to decline, affecting their ability to pay inflated property prices. The government, throughout 1973, began to impose controls on building society lending, causing mortgage finance to dry up. Similarly, the Bank of England began to raise interest rates

Conservative {igjo-igjj)

500 -

171

government freezes business rents and proposes long term control 300

ex

2

450 -

250

400 -

Jan Feb Mar Apl

— property shares — ordinary shares

May

Jun

Jul

Aug

Sep

Oct

Figure 7c The movement of shares (January-October 1973) Source: Royal British Architects Journal, 80 (November 1973), p. 534. and instruct the clearing banks to limit their advances to non-industrial borrowers.50 As a result there was a rapid decline in house prices. In early 1973 the price of building land fell 40 per cent. 51 The freeze on business rents further exacerbated the problem, as the collapse which The Economist had predicted in 1972 began to occur. Confidence in property development generally deteriorated and property shares and bonds began to fall rapidly (see Figure 7c). Confidence in the ability of property companies to repay their interest payments and their loans also deteriorated. This means that property companies, developers, landlords and builders holding land and property experienced a rapid decline in the value of their previously inflated property assets. Given that yields were low on these assets and many of these interests had low or negative cash flows, there was an immediate liquidity crisis in the market. But the problem did not end there. Many of the fringe and secondary banks which had entered the market in 1971 were also unsecured because they too had gambled on rising property values - often lending up to 100 per

172

History of adversarial policy failure

cent on the value of highly speculative developments which now looked very dubious indeed. The secondary banks - indebted to the money markets - also faced severe liquidity problems given their heavy commitment to property. But, if neither the secondary banks nor property interests had any hope of repaying the money they had borrowed, this raised the spectre of huge losses as well for the major financial institutions which had lent the money in the first place. There followed a sustained lobbying of the government to unfreeze business rents because there was no way, in a declining market with no confidence in future rent rises, that property developments could be sold off to pay back loans and interest.52 There is little doubt that this potential collapse, which was only staved off temporarily by a Bank of England and clearing bank moratorium on property loans, educated the Heath government to the true cause of the boom and also the power of constraint which the City imposed on its economic strategy. The government was, however, beset with problems other than property. In 1973 it needed to win CBI and T U C support for Phase 3 of its counter-inflation strategy. Both these interests were outraged by the failure of the City to put its own house in order, and by the property boom, 53 and this made it difficult for Heath to exempt property from the freeze. But, it is crucially important here to understand the power of constraint which the City possessed over the government. Given Britain's weak economic position there was a pressing need to sustain the integrity of the City so that it could continue to create invisible earnings and attract short-term sterling currency holders to finance Britain's economic decline. The problem was compounded by the fact that by the summer of 1973, when the Bank of England and major financial institutions began to rescue the secondary banks and property companies which had not weathered the storm of the freeze, there was between £2,250 a n d £ 2 >5 0 0 million tied up in property, which had little chance of repayment so long as the freeze on business rents continued. Furthermore, the clearing banks were to impose a limit on the amount of money - 20 per cent of their shareholders' funds - that they would use to bail out the fringe banks. At the same time, the pension funds and insurance companies were unwilling to help stave off bankruptcies by purchasing property which might fall further in value. 54 Thus, unless the government repealed the freeze on rents, the ability of the City to finance industrial investment or to assist in the balancing of international payments through invisible earnings would be questioned, as international confidence in the City declined due to financial bankruptcies and losses. The

Conservative {1QJO-1Q74)

173

government was therefore in a cleft stick. It wanted to punish property speculators and it hoped this might win support from business and the unions, but it could only do so at the price of a fundamental collapse of the financial system. 55 In October 1973 the government, in the announcement of Phase 3, chose not to cause a financial collapse. In the subsequent Green Paper it was suggested that long-term control of rents was 'neither feasible nor desirable'. Commercial rents were allowed to rise immediately to market levels as at November 1972 and, then, in May 1975, they were to be allowed to rise to full market rates. 56 Confidence was immediately restored to the property market and the shares of the top eight property companies increased in value by £150 million (see Figure 7c). 57 But for the weaker secondary banks and property companies this policy reversal came too late. By November 1973 the City was still attempting to rescue a number of bankrupt companies, like the Piccadilly Estate Hotel Group, London and County Securities, Vavasseur and the Stern Group. 58 Despite the ending of the freeze it was estimated that £500 million would be needed to pay off property debts. This was additional to the £1,300 million that the clearing banks had already poured into property and secondary bank rescues in 1973. 59 This indicates that, while the City was able to constrain the government's policy for business rents and force an end to the freeze, it did not escape unscathed from its own earlier profligacy. A number of weak institutions which had overspeculated in property collapsed and many of the major financial institutions sustained heavy losses in 1974/75. One of the contributory reasons for this was the government still retained the power of policy initiation. Although the City had been given a breathing space and the ability to continue to make capital gains in property, the Heath government was not prepared to ignore totally its shift away from laissez-fairism. In his budget statement in December 1973 the Chancellor of the Exchequer indicated that, in future, property would be subject to extensive taxation on realised and some unrealised capital gains. A Development Gains Tax was outlined, which was intended to recoup £80 million per annum by bringing capital gains in land and building into line with income and Corporation Tax. Companies would be liable to 52 per cent Corporation Tax and individuals to 75 per cent income tax on sales of land and building as well as on transactions in property shares. Only limited exemptions for owner occupiers and the dwellings of dependent relatives would be allowed. 60 Furthermore, to take speculation out of property, companies would be liable to 52 per cent Corporation Tax (and pensions funds 37.5 per cent) on the first lettings of their developments. This was clearly aimed at the

174

History of adversarial policy failure

Centre Point case, since the longer properties were held without letting the higher the tax. Tax liability was to be calculated on the difference between the cost of construction (plus 20 per cent of the cost) and the value of first letting. The DOE would also be given powers to take over and let any property which had been empty for two years. These proposals were later enacted in the April 1974 Finance Act by the Labour government which replaced the Heath government in February 1974. Under the 1974 Local Government Act local authorities were also allowed to charge rates at over 100 per cent (rather than 50 per cent) on unlet properties.61 The policies formulated by the Heath government indicate what has been a continuing theme of this work: there are limits beyond which government of whatever ideological persuasion cannot go in their interventions in the market, without destroying the mixed economy. 62 The experience of the Heath government is especially relevant in this respect because it shows the limits of radical action on both the right and left of the political spectrum. Its original laissez-faire approach fuelled a property boom, due to its dependence on the goodwill of a financial sector which is mainly concerned with profit, not national regeneration. On the other hand its extremely radical policy of a freeze on rents was also constrained by the dependence of the British economy on the strength and viability of the City of London. The Conservative government was forced, therefore, to return to one of the only viable solutions to end property speculation and facilitate the public sector role in development. This was a commitment to a 'fiscal-regulatory' approach. That the government ignored the other solution of 'fiscalinterventionism' (like the Land Commission or the demands being made at the time by the TCPA) 63 is hardly surprising given the Party's proclivities. Nevertheless, the December 1973 statement was a clear indication of the ability of the Heath government to learn that lax monetary policy and financial competition, without financial penalties on capital gains in property, was a recipe for inflation. Unfortunately, this realisation came at the wrong time. While it may be argued that the December measures were viable, it can also be stated that this was not a workable policy in the winter of 1973/74. The problem was that, given the decline of confidence in property which had been under way throughout 1973, and notwithstanding the lifting of the freeze on business rents in October, these announcements had a further debilitating effect on the market. There was uncertainty about the impost that property would have to bear in 1974, and an additional worry that a

Conservative {igyo-igj4)

175

future Labour government, committed to squeezing property speculators 'until the pips squeak', 64 would be returned to office. In the Winter of 1973/74 confidence in property slumped once more and commercial rental values fell by 20 per cent. 65 The Heath government learnt the lesson of the power of constraint and the limitations of government policy initiation, but at tremendous cost to the economy and too late. The eventual 'fiscal-regulatory' approach adopted in December 1973 can be seen as a basically sound framework for the mixed economy but, in the context of the collapse already under way, it further destabilised the situation. A continuation of the property and secondary banking collapse ensued and this was exacerbated by the new Labour government's own commitment to adversarially based policies for land and property in 1974.

8

Labour and the failure of the Community Land Act (ig/4—ig/g)

The dilemma facing Labour in 1974 and the unfreezing of business rents. The Community Land Scheme: Labour policy radicalism versus the power of constraint. Since 1945 governments have been free to initiate policy as they wished, even though the unforeseen and unintended consequences of their policies often forced them later to adopt 'fiscal-regulating' or 'fiscalinterventionist' solutions to end property speculation and to protect local government planning. By the 1970s, however, this freedom to indulge in adversary politics when entering office eroded. The ability of Conservative or Labour governments to pursue laissez-fairism or state control was circumscribed by socio-economic constraints. There were a number of reasons for this. First, there was the serious overall deterioration of Britain's economy associated with declining international competitiveness, a falling share of world trade, rising unemployment, and inflation and a growing public sector borrowing requirement. But, added to this, government land policies faced the peculiar constraints operating in the property market in the 1970s. The Heath government's policy for the financial sector created a property boom, and a subsequent freeze on business rents undermined confidence in property companies, secondary banks and, ultimately, the established financial institutions in the City. The consequential need to bolster the international role of the City was to limit the room for manoeuvre of both the Heath government and the Labour government which replaced it in February 1974. This fact is illustrated by the policy gyrations of the Heath government throughout 1973. The freeze on rents introduced in January was partially repealed in October because it threatened to undermine the role of the City. Following this a Development Gains Tax was introduced in December. But even this policy was problematic because it also undermined confidence in companies and financial 176

Labour (igj4-igjg)

177

institutions which had begun to collapse in 1973. The partial unfreezing of rents in October had been a temporary respite for the strongest companies in the market, but the Development Gains Tax ensured that, weaker property companies and fringe banks would still suffer severe financial problems. It quickly became apparent in the winter of 1973/74 that this 'fiscal-regulatory' policy was only sustainable if the government was also prepared to allow the Bank of England to engineer a 'lifeboat' operation (or rescue) for the secondary banks and property companies. The Heath government's power of policy initiation was, then, only relative', it could not pursue a long-term policy of rent controls without a collapse of confidence in the City as a whole. This relative autonomy of British governments from financial constraints was to be shown even more starkly when Labour returned to power in February 1974. The dilemma for the Labour government in the 1970s was that it faced the same constraints in land and property as the previous Heath government, but its radical, interventionist policies were likely to undermine foreign and domestic financial confidence even further.1 The Party wanted to give the state a dominant role in the economy and also in the property and development market. This was not sustainable in the face of the power of constraint that financial and property owning interests were able to exert on the Labour government between 1974 and 1979, so that it found itself even more severely circumscribed than the Heath government before it. Nevertheless it did initiate a two-stage Community Land Act in 1975 which, if it had ever been fully enacted, would have given the state an eventual controlling ownership role in land and property. That the government could not do everything it desired was revealed in the limitations imposed on Labour's original policy proposals. Labour had to unfreeze all business rents in December 1974. A two-stage approach to the Community Land Act was introduced and local, rather than regional, authorities were given control over the scheme. Finally, even this modified approach was to fail in implementation. This chapter, then, illustrates the limited room for manoeuvre which British governments have possessed in policy initiation in the 1970s as they faced the twin problems of a generalised economic decline and the close intermeshing of this with the developing role of the financial institutions in property investment. The dilemma facing Labour in igj4 and the unfreezing of business rents The problem facing Labour's land and property policy in the 1970s was the collapse of property speculation in 1973. Compounding this was the decline of Britain's economic performance in the context of the

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stagflationary effects of the oil crisis in 1973. This meant that the Labour government faced the most severe economic dilemma of any post-war government: if it did not rescue the City from the property crash then its desire to rebuild manufacturing industry could not be achieved because so much capital was tied up in property. This was exacerbated by the fact that, during opposition, Labour had returned to a more radical interventionist policy commitment, expressed in Labour's Programme for Britain (1973). This document called for the nationalisation of 100 major manufacturing industries and parts of the City; a new public investment institution taking equity shares (the National Enterprise Board); and, in property, the continuation of the freeze on business rents and a commitment to a gradual nationalisation of development land. Ten-year rolling programmes for land acquisition would be based on local government structure plans, and purchase would be undertaken by unspecified 'public land management agencies', who would buy at existing use value and resell for development on a leasehold basis.2 Although this manifesto commitment cannot be seen as outright land nationalisation, and caused considerable dispute in the Labour study group which discussed the proposal in 1973, 3 there is little doubt that it was a return to adversarial politics by the Labour Party in opposition. It went further than the 'fiscal-regulatory' approach of the Heath government, promising 'fiscal-interventionism' in the short term, with nationalisation of development land in the long term. On top of this, Labour was promising to enact the previous government's Development Gains Tax proposals in the 1974 Finance Act and to maintain the partial freeze on business rents, as interim measures. In the context of this study the Labour policy commitment was interesting. While it was not an outright nationalisation proposal, as some socialists in the Party desired, it followed the logic and tried to learn the lessons of earlier policy failures in 1947 and 1967. A Land Commission was rejected because a central agency was seen to be unrelated to local needs, and a taxation approach alone was rejected because it was felt that state land ownership was the only effective way of controlling development and recouping betterment. But this new proposal indicated that the Party did not fully understand the way in which the property market had changed since 1945, nor the power of constraint which the financial institutions now possessed over government policy. The commitment merely served further to reduce confidence in the market causing both industrial and property shares to fall dramatically throughout 1974. (See Figure 8A.) The manifesto commitment to the eventual nationalisation of develop-

Labour (ig74-ig?g) 300 250

Financial Times share indices (10.4. 1962 = 100)

200 150

All shares A

100

/

179

V \ ^

f

^

|

V

\

/^NV A

Property share index

50

1

1966

1967

1968

1

1969

1

1970

\J 1

1971

1

1972

1

1973

1

1974

1

1975

Figure 8A Industrial and property shares (1966-1975) Adapted from Paul N. Balchin and Jeffrey L. Kieve, Urban Land Economics (London: Macmillan, 1977), p. 80. ment land was perceived by financial institutions (taken together with the Development Gains Tax and the continuation of a partial freeze on business rents) as an end to property investment. This generated sustained activity by the Governor of the Bank of England and the financial institutions to educate the Labour government to the problems this caused for the role of the City as a whole. 4 Despite this pressure, the Labour government clearly possessed, as had the Heath government before it, the constitutional power to initiate whatever adversarially based policy it wished. In the Queen's speech and the Finance Act of April 1974 the government made its intentions abundantly clear. The freeze on rents and the tax on development gains were to be maintained until its own proposals to give the state a controlling role in land development could be enacted. The details of this appeared in September 1974 in the White Paper: Land (Cmnd. 5730). This document stated that a Community Land Act would be passed to provide for the nationalisation of all relevant development land by local authorities. There would, however, be an interim stage in which local authorities would buy only some not all land and the private market would be allowed to operate. To this end Labour's White Paper also set out details of a new Development Land Tax, which would operate on private land transactions in this interim period, and which would be at a more punitive level than the Development Gains Tax. But, after September 1975, the Labour government was to be faced with a crisis in the property market and its own inability to fund radical interventionist policies due to the declining performance of the economy. Lacking the financial resources to take over the private sector role in property development outright, after the cuts in public expenditure necessitated by the sterling crises of 1975 and 1976, the government was forced to renege on its desire to control business rents and to give the state a

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dominant role through the Community Land Scheme (CLS). The constraint imposed by Britain's parlous economic position and the need to bolster the role of private financial institutions was, then, the basic cause of this third failure for Labour property policy since 1945. There were, of course, other factors which undermined this policy - like Treasury and civil service opposition and local government recalcitrance - but these were not the crucial factors between 1974 and 1979. The Labour government simply did not understand the problem which faced its policy proposals in 1974. Throughout 1973 the Bank of England and clearing banks had begun to assist the fringe banks.5 The partial unfreezing of business rents in October 1973 had allowed some recovery in the property market, but the announcement of a Development Gains Tax in December had forced the Bank and the clearing banks to organise a wholesale rescue of fringe banks and property companies, as their indebtedness became even more apparent. The spark for this had been the collapse of London and County Securities, but this was only the tip of the iceberg of a more generalised collapse which affected all of the financial institutions which had become over-extended in property. By February 1974 the clearing banks alone had between £2 and £3 billion in loans outstanding to property and construction interests, in a market where rental values had slumped and property companies were unable to pay back either their loans or the interest on them. 6 Labour's policy commitments merely served to heighten the sense of impending collapse in the City as industrial and property share prices slumped. The FT index fell by 65.4 per cent between October 1973 and January 1975, while property shares fell by 71.1 per cent on average.7 Furthermore, property could not be sold to pay off debts because the insurance companies and pension funds refused to buy the speculative developments which the weaker property companies had undertaken. Compounding this the clearing banks informed the Bank of England that they would only use up to 20 per cent of their investors' funds (approximately £1.2 billion) for the hastily constructed 'lifeboat' operation created by the Bank in 1974. 8 This meant that with an estimated £500 million required (on top of the £1.2 billion earmarked to cover the bad debts of failing property companies and fringe banks),9 there was a serious crisis in the City. Unless confidence returned to property investment or the financial institutions began to purchase property again, there would be substantial losses made by the clearing banks and a lack of funds to assist in the recovery of the manufacturing sector of the economy. It was, then, not just a property collapse which Labour faced in 1974 but a collapse of domestic and international

Labour {igj4~igjg)

181

confidence in the financial integrity of the City as a whole. 10 The Bank of England's 'lifeboat' operation had some success: financial institutions were pressed to purchase property; a moratorium of three years was imposed on the bad debts of some property groups; and few major property companies or fringe banks were allowed to collapse publicly. But the Bank of England on its own could not restore confidence to property, only the government could do this. 11 Initially the government clung to its manifesto commitments but, by the end of 1974, it became clear to Harold Wilson, Denis Healey and Tony Crosland (at the Department of the Environment) that, in Crosland's words: 'a healthy market in commercial property is necessary for the achievement of the government's social and economic objectives' [because] ' much savings and pension money, depends on income from commercial property, which also constitutes an important credit base for industry'.12 It was decided in December 1974 to lift the freeze on business rents on 1 February 1975, fourteen months prior to the date set by Heath. This meant that the Labour government's ability to create a radical shift in power in the property market had been undermined by the short-term consequences of that action for the economy as a whole. In this sense the financial institutions achieved all that they had desired. Clearly losses would be made by institutions, and some smaller and weaker property companies and fringe banks would collapse, but the City as a whole and the stronger property companies within it would survive intact.13 Compared to this success of private institutions to maintain the right to retain continually rising rental reversions and inflation-proof capital assets, the Labour government's ability to push ahead with its Community Land proposals was arguably of little significance.14 The CLS was primarily directed at taxing 'unearned increments' associated with the granting of planning permission and the start of development. This tax would fall on landowners and developers rather than the financial institutions. By December 1974, then, the Labour government's radicalism had been constrained fundamentally. Furthermore, even though Labour was able to initiate a Community Land Scheme after this, the original intentions were to be diluted, both in the process of initiation and in implementation. The Community Land Scheme: Labour policy radicalism versus the power of constraint The major constraint facing the Labour government, as it tried to keep faith with the manifesto proposals to nationalise development land, was

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History of adversarial policy failure

that it was simply not in a position to fund a major state role in land ownership and property development. It was also apparent that, in the absence of a fundamental reform of local government, local authorities rather than new regional authorities would be responsible for operating the scheme. Therefore, because local authorities lacked the skill, staff and experience to take on the full-scale land management and development role which had been desired, it was recognised at the outset (as set out in the White Paper of September 1974) that a more gradual move towards total land nationalisation would be necessary. Local authorities were to be given an ownership and development role, but the private sector would be allowed to operate (subject to fairly stiff betterment taxation) until the full scheme could be enacted. In this way the Labour government became dependent initially on the maintenance of a profitable private sector in property and the willing acceptance of the scheme by local authorities. From this it is clear why Labour was forced to renege on its original manifesto commitments and to accept civil service advice for the introduction of a two-stage approach. External pressure groups were then able to demand that the scheme should be amended further so as not to disrupt the private housing and development market. The original manifesto commitment had promised to create public land management agencies, which would purchase all relevant development land in structure plans at existing use value (with minor exemptions) and then either develop the land themselves or lease it for private or public development. This was to ensure state ownership of all development land in the future and, through this, positive planning. The state would collect betterment created, through development, the granting of planning permission or from future rises in rental values. It was not intended that private commercial or industrial land which was already developed should come into state ownership, unless a major public redevelopment scheme was to be created. It fell short, therefore, of total land nationalisation as proposed by some Labour Party supporters.15 Nevertheless it was by far the most radical land policy proposed by any post-war government. What Labour eventually enacted in the November 1975 Community Land Act, and its companion Development Land Tax Act of 1976, was different from this original proposal in that it was to have two stages rather than one. True to the original intentions of the manifesto, on a Second Appointed Day, English local authorities (county and district), Scottish regions and districts and a new Land Authority for Wales would have the duty to prepare five-year rolling programmes, for the purchase

Labour {igj4~igjg)

183

of all relevant development land at existing use value. These would be guided by local planning requirements as outlined in Land Policy Statements. The authorities would also have the right to develop the land or to lease it for development, over 99-year periods, to other public or private agencies. Freeholds would only be granted to owneroccupiers who wanted to develop their own homes, and other exemptions from state purchase would be extremely limited. 16 It was thus intended that local authorities, while still subject to some detailed central government controls,17 would have relative freedom to recoup betterment and undertake the positive planning and development of their areas. It was expected that these proposals would result in around 12,000 more staff in local government, and that over £350 million per annum would be generated from its land purchase and land trading activities. These funds would be kept by local authorities in separate Land Accounts. Any surplus would be shared out on a ratio of 30 per cent to the relevant local authority, 40 per cent to the Exchequer and 30 per cent to regional pools for unprofitable local authority schemes. The Act was fairly close to the manifesto commitment, even though - apart from Wales - local authorities rather than new public agencies in regions were to be given the new powers. The government was constrained in 1974 and 1975 by a chronic need to reduce public expenditure and so an open-ended commitment to subsidise all land development, land purchase and subsequent (and often unprofitable) local government planning and development policies was not possible. On top of this, because local authorities had little expertise in the new role they were being granted, it was argued that they would need time to learn how to operate the CLS and also time to make profits to ensure that the CLS was self-financing. Thus the government introduced a First Appointed Day for a first stage, in which the public and private sectors would co-exist. Ministers would direct local authorities about the type of land they could purchase and would control this through their approval of loan sanctions for local government borrowing from the private market. Local authorities would buy only that land which the government felt could be turned to profitable uses (mainly residential land for private house building). While this was being done the local authorities would have the time to develop their Land Policy Statements and rolling programmes for land purchase. They would also have the time to create Local Authority Management Schemes (LAMS), in which the responsibilities under the CLS would be shared out between the different tiers of local government. As local authorities learnt how to operate the legislation they would move to a

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History of adversarial policy failure

second stage when they would be given a duty to buy all relevant development land. It was expected that some authorities would reach this stage within two years, but that all authorities would be operating at this level in seven to ten years. This would be the date when the Second Appointed Day finally took effect.18 In the interim stage, because the private market would still be in operation and local authorities would not be paying existing use value for land purchase, a new Development Land Tax was necessary. This tax would ensure that the community received a similar amount of betterment whether transactions occurred in either the public or the private sectors. The tax rate was set at 66f per cent of the increase in land value when material development was started, and was to be paid by developers to the Inland Revenue. Local authorities would be able to purchase their own land net of the tax. The first £10,000 of gain was exempt from tax and after £150,000 the tax rate rose to 80 per cent.19 Finally a number of transitional exemptions from state purchase and taxation were granted. A new class of land was created known as excepted land, which could only be bought in exceptional circumstances after a special case to purchase it had been made to the Secretary of State. This included land with planning permission on 12 September 1974 (White Paper Day), land owned by builders on this date, single-dwelling housing land for owner-occupation and land held by charities and churches.20 These exclusions (like the similar proposals under the Land Commission Act) were needed because the government wanted to ensure that, in the interim period, there would be no immediate dislocation of private development and house building. The overall CLS was therefore an attempt to create a flexible and gradual transition mechanism to the Second Appointed Day without disruption to the development process. In this respect there were strong similarities between CLS and the 1967 Land Commission Act. It is also true that most commentators felt (as with the Land Commission) that the Second Appointed Day would never arrive. The CLS was, therefore, hardly the threat to the private sector that the Conservative opposition who dubbed it the Communist Land Act - attempted to represent it as. Like the case of the Land Commission before it, once the Labour government had been persuaded by civil servants and the local authorities that the original manifesto approach could not be introduced immediately, then the legislation, as it passed through the policy initiation process, was substantially diluted. First, civil servants - particularly the Treasury - and the local authorities protected their own interests prior to the publication of the White Paper. Then, pressure groups found anomalies in the proposals and won concessions from the government.

Labour (igj4-igjg)

185

While there is little doubt that John Silkin, the Minister responsible for drafting the CLS, was fully committed to the enactment of the manifesto, like Fred Willey before him he had to face Ministerial and civil service opposition. His superior at the DOE, Anthony Crosland, had been educated to the problems that property posed for the government's overall economic strategy in late 1974. There is evidence that as a result he resisted Silkin's desire to move towards an early enactment of the manifesto commitment.21 Furthermore, despite the fact that David Lipsey (one of the architects of the original manifesto proposals and a firm believer in regional public land agencies) was Crosland's special adviser at the DOE, it is clear that Crosland, Lipsey and Silkin were unable to counter the lack of support in the government for regional land agencies at this time.22 The desire to create new public land agencies was quickly defeated and this was assisted by civil servants in the DOE who defended the traditional role of local government. It is not surprising, therefore, that, apart from the Land Authority for Wales (where an independent land trading agency was created), local authorities rather than new agencies should be given the new land purchase role set out in the White Paper. Furthermore, given that local government reform had just become operative in 1974, it was hardly likely that a further drastic overhaul would be possible in 1975. But perhaps the most important change in the White Paper, compared with the manifesto proposals, was the decision that the CLS should at all stages be self-financing. One of the main reasons for Labour's original commitment to state ownership of land was the view in the Party that positive planning was impossible without land ownership control and betterment recoupment. This implied that central government (through the Exchequer) would have to subsidise local government land purchase and development — even when that development itself might not be profitable. But, the White Paper ensured that local authorities would not be able to subsidise their CLS activities through the rates and that the Exchequer would not in fact subsidise unprofitable planning schemes local authorities would have to finance these themselves out of their own profitable ones. Since Crosland had argued, prior to the publication of the White Paper, that there might even be a case for all profits from land purchase to revert to the Treasury, it is not surprising that the Treasury was able to convince Ministers that the CLS should be self-financing. Without any doubt, this was a serious erosion of the basic goals that had informed the manifesto commitment. In the initial stage - before the Second Appointed Day - it was highly unlikely that local authorities would be able to undertake the redevelopment of often unprofitable, blighted and twilight areas. They would be forced to concentrate only

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History of adversarial policy failure

on land trading activities to facilitate private sector house building, where they could make a quick profit from land assembly and sale. 23 This was clearly not the role which had been intended. If these were the major changes within the White Paper, Land (Cmnd. 5730), there were a substantial number of additional concessions granted after its publication. The government accepted in all 276 amendments to its Bill in Parliament. This can be explained as due to the need to ensure that there would be no disruption of private development after the First Appointed Day, so that the CLS would not be discredited. 24 Interestingly, the White Paper received substantial criticism from Labour's friends and foes alike. In the White Paper there was no commitment to tie land purchase to local planning and this generated opposition from the TCPA, RTPI and local authority Associations.25 The government eventually wrote this provision into the Act. But the most sustained attack on the proposals came from Labour's political opponents - the Conservative opposition, the legal profession, builders, developers and landowners. These actors were alarmed at the lack of precision in the legislation and the way it allowed great flexibility for Ministers to alter arrangements. They were also upset by the proposal to dispense with public inquiries into appeals against the compulsory purchase of land and the apparent disruptive effect ten-year rolling programmes might have, as local governments held off the market land which private developers might use. These criticisms were part of a general campaign to ensure that substantial exemptions were granted from the CLS in its interim period.26 The Labour government had to meet most of these criticisms with amendments because it was in a 'cleft stick'. Given that it could not introduce its original intentions immediately and had accepted an interim stage in which the private sector would be operating, in order to ensure that the CLS survived, it was forced to grant a number of further concessions which contributed to the failure of the scheme. The most important of these were: the agreement to give landowners prior consultation before land was offered by local authorities to prospective developers;27 the further detailing of the White Paper proposals for revelant and non-relevant land into three classes - relevant, exempt and excepted - with additional exclusions for charities, churches and owneroccupied land; 28 the lowering of Development Land Tax from 80 per cent to a variable rate starting at 66f per cent; the raising of allowances from £5,000 to £10,000; the dropping of ten-year rolling programmes in favour of five-year programmes; the obligation on councils to state the reasons for, if not the purpose of, their land purchases; the right to a public inquiry if one had not already been undertaken during local

Labour (ig/4-ig/g)

187

planning decisions;29 and the right for pension funds to refuse to sell their own land to local authorities for leaseback if they wished to redevelop. 30 While the government did not grant everything that its opponents wanted it was forced to allow a substantial number of exemptions from taxation and land purchase because to have done otherwise would have led to political controversy. It might also have contributed to land withholding by private landowners, a lack of confidence in property and dislocation of development. The problem was that in bending over backwards to assuage its political opponents the Labour government contributed to the failure of its own policy proposals in implementation. The CLS was a failure. By April 1979, just before it was wound up by the Conservative government which won the May 1979 election, the Community Land Account was in deficit to the tune of £33 million. True, some surplus - £203,649 - had been redistributed to poor local authorities, Development Land Tax was recouping £7 million per annum and the balance of land purchased was probably worth more than the deficit, but the CLS did not operate successfully.31 As one study of its implementation has argued: 'In general the scheme seems to have represented more bureaucracy, more uncertainty and less local control over land activities than was the case in the past, to achieve, by and large, less. ' 32 There was abundant evidence to support this view. While it had been expected that the CLS would lead to substantial land trading activities and ownership by local authorities - generating community profits - little of this was achieved. Only the independent Land Authority for Wales had an unblemished record: between September 1976 and March 1979 it bought 1,418 acres of land and sold 557 acres - generating a surplus of £800,000 in 1978/79, with substantial land holdings on top. 33 The Scottish and English authorities had a far less satisfactory record. While there was little evidence of the political recalcitrance by Conservative controlled authorities resisting implementation that had been feared,34 neither Labour nor Conservative controlled authorities were able to use the CLS powers to generate either a land trading role, like the Land Authority for Wales, or to undertake positive development projects. There was continual evidence of underspending of funds allocated by central government and the scheme saw a very slow start in land purchase. In the first year (1976/77) only 1,600 acres were bought, at a cost of £12 million, and only 33 acres were sold. In the second year (1977/78) only 800 acres were bought, at a cost of £10 million, and in the third year (1978/79) an increase to a mere 3,600 acres was recorded.35 This was a very poor record indeed and it would be tempting to argue

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History of adversarial policy failure

that the main culprits must have been the same local authorities whose opposition and recalcitrance had defeated the Land Commission. In fact, while local authority recalcitrance (especially Conservative authorities encouraged by a campaign by the Conservative opposition to refuse to implement the CLS) 36 was a factor in its slow start, it was, on the available evidence, only a minor one. The main reasons why the scheme was a failure rest in two areas: the technical problems inherent in the scheme and, most importantly of all, the financial constraints within which the Labour government had to operate throughout this period. Despite the government's attempt to create a flexible and viable approach, there were bound to be teething problems with any scheme which radically altered traditional local authority functions and its relationship with the market. First of all, there was an acute shortage of planning and valuation staffs to undertake the new local government functions. This was compounded by the fact that the government, for financial reasons, refused to allow any additional staff to be employed to operate the CLS. 37 Relatedly, there was bound to be conflict between planning, finance and surveying staff over the role of each within a local authority. This contributed to delay in submitting five-year rolling programmes; as did the lack of adequate forecasting techniques for assessing future land needs and in formulating structure and local plans for the new role in the market.38 Furthermore, since there were two tiers of local authority responsible under the CLS, there were problems in working out the exact division of responsibilities between counties and districts, which led to a delay in LAMS being formulated. The DOE, indeed, had to impose 17 LAMS on recalcitrant authorities. 39 Further delay was engendered because the Community Land Act came into operation on 6 April 1976, while its companion Act, for Development Land Tax, was not introduced until August 1976. This meant that local authorities waited until August before commencing their initial land purchases to ensure that they purchased net of tax. This left them only six months in the 1976/77 financial year to make their bids for land purchase. These delays led to an underspending of first-year financial allocations, and slippage in the purchase of sites with DOE loan approval.40 After this first year there was less excuse for local authorities, although the fact that they retained only 30 per cent of any Land Account surpluses may have contributed to a lack of incentive amongst even those positively inclined to use the legislation. There were a number of additional technical problems which militated against the successful implementation of the legislation. Local authorities felt that the leasehold provisions, which limited them to granting 99-year

Labour (ig/4-ig/g)

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leases, were a major difficulty. They had to raise loans from financial institutions on the open market and they preferred 125-year leases. It was argued, therefore, that local government was at a disadvantage compared with private sector competitors for finance.41 Relatedly, because the Conservative opposition had promised to repeal the legislation, there was some evidence of land withholding by landowners, who were concerned by heavy taxation and the possibility that any application for planning permission might trigger compulsory purchase.42 All of these factors were important obstacles to the early development of an extensive local government role in the market. They were, however, of less significance than the substantial number of exemptions granted to developers and builders. The DOE itself estimated that only a mere 2 per cent of land with planning permission would be relevant land for local government purchase in the initial stages of the scheme. This was because most development land was already held in land banks by statutory undertakers and builders and was, therefore, exempt. 43 The lack of potential purchasable land was compounded also by a slump in the housing and development market after 1975. In 1975/76 only between 125,000 and 150,000 houses were completed, due to the recession, government controls on building society lending and higher interest rates.44 Excepted land held by builders was therefore not used up as had been expected, and there was less scope for local government purchase. The inherent structural problem of the CLS was thus revealed. In an attempt to ensure flexibility and the gradual acceptance of the CLS, the First Appointed Day powers severely circumscribed the state's role in the market. In the absence of a very active and profitable private development market the interim powers of local authorities could not be used effectively. These were important reasons why the CLS had only a very slow start but, to be fair to the local authorities, none of these factors was the main cause. The available evidence suggests that, even though there were a number of politically and ideologically recalcitrant local authorities, what was surprising was the amount of effort put in by local government to try to make the CLS work. Obviously those authorities who saw the CLS as a useful addition to their existing practices were bound to be the most positive in their actions, but most authorities did re-allocate staff to new committees, organise training schemes and prepare rolling programmes and LAMS with other authorities.45 There were obviously differences in the roles which individual authorities considered appropriate. Conservative authorities had a bias towards land trading activities (assembling sites for the private sector). Labour authorities preferred a positive

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History of adversarial policy failure

planning role linked to industrial and employment regeneration. It would appear, however, that many Conservative and Labour authorities took the proposals very seriously and tried to fulfil the complex timetables which the legislation imposed. 46 The real cause of the failure of the CLS was the constraint of economic decline and financial impecunity which faced the Labour government. One major problem for the CLS was that the property boom had ended and a general economic recession had set in after 1974. This had two effects. First of all there was less development and less profit in the market, which reduced the scope for local government purchase and betterment recoupment. Secondly, and crucially, the international indebtedness of the government ensured that the implementation stage would be severely circumscribed by restraint on public expenditure. The Treasury and the DOE reduced the number of loan sanctions available to local authorities for land purchase and contributed to delay and obstruction in the decision-making process over the bids for land purchase presented by local authorities. This implies that local authorities wanted to do more than they were able to and that it was central government, for financial reasons, that was to blame for the emasculation of the scheme. The importance of these financial constraints was revealed at the outset by the government. When the first allocations of funds were outlined in the White Paper, Public Expenditure to igyg/80, in February 1976, it quickly became apparent to the active local authorities that the sums available were derisory and that they would only be able to purchase a handful of sites each. The White Paper envisaged that only 1,500 acres would be bought in 1976/77 at a cost of £33.3 million, rising to £76.7 million in 1977/78 and £102 million per annum between 1978 and 1980. The government also restricted purchases to land without buildings. The intention here was to restrict local authorities to a land trading role to facilitate the private sector, rather than to encourage positive planning. This was seen as a complete denial of an effective role by those urban local authorities who needed land for redevelopment. 47 It was hardly surprising that, as a result, many authorities should begin to doubt the seriousness of the government's intent. This view was supported by the fact that the DOE and its regional offices were extremely tardy in processing bids for land purchase throughout the scheme's life and particularly in the first years. The death knell for the CLS came not in February 1976, however, but in December, with the publication of DOE, Guidance Note to Local Authorities, No. 12 (GNLA/12). This followed the public expenditure

Labour (igj4-igyg)

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cuts imposed by the Cabinet during the crisis of December 1976. Finance available to the CLS was to be substantially reduced, with loan sanctions cut almost in half to £38 million in 1977/78 and £64 million in 1978/79. Five-year rolling programmes were replaced by bids for land purchase on an annual basis (with each bid being dealt with individually by the DOE, rather than through block loan sanctions as intended). Speculative and unprofitable purchases were forbidden. All land purchases had to result in early freehold rather than leasehold disposal. Local authorities were thus forced into a land trading role to facilitate the private market which was further encouraged by the proviso that local authorities should not intervene in the market when the private sector was willing to do so. 48 The ideal of positive planning was now secondary to considerations of profit. These measures placed local authorities in a difficult situation. The only land on which they could now operate was residential building land which they could buy and sell profitably. This was also land which the private sector was willing to purchase and which local authorities were not supposed to purchase in the first stage of the CLS. By December 1976, then, the CLS was in disarray and this led local authorities to believe that it had been ' trivialised' by the government. It is not surprising that enthusiasm waned and that a lack of interest in the scheme became apparent. Without finance there was little that the authorities could do. Even subsequent relaxations of financial stringency were unable to overcome local authority alienation from the effects of GNLA/12. 4 9 In September 1977, in GNLA/14, schemes for assisting local employment could be reconsidered. In GNLA/15 125-year leases could be granted and the use of CLS funds could be made available for renovation of derelict buildings and for conservation areas. GNLA/17, in March 1978, made provision for block loan sanctions, the consideration of unprofitable schemes, the resurrection of rolling programmes and the allocation of more funds between 1979 and 1983. Finally, in November, GNLA/19 allowed local authorities to retain 50 per cent rather than 30 per cent of any surplus on their Land Accounts. It was hardly surprising that only £12 million of the £31 million allocated in 1976/77 should be spent, and that £35 million of the 1977/78 fund should be underspent. 50 Expenditure restrictions and controls had emasculated the scheme and destroyed local government enthusiasm. What is surprising is that, despite this abysmal record, in the run up to the May 1979 general election there were a number of professional and property interests who wanted a future Conservative government to retain the CLS. Most of these individuals and groups - including the

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British Property Federation, a former President of the RICS, The Economist, the Housebuilders Federation and academics51 — wanted amendments to the original scheme, in particular the reduction of the tax rate to 50 per cent and the repeal of the Second Appointed Day powers. Nevertheless, due to the successful role undertaken by the Welsh Land Authority, it was argued that the state could provide a useful facilitative role for builders and developers. In particular the state could assist with land assembly, infrastructure provision, site identification, speculative land holding and land supply.52 The predominant view was that regional land and development agencies with monopoly powers in land purchase were necessary to facilitate public and private development. These were the proposals which the TCPA had been proselytising throughout the 1970s: the creation of regional public development and land agencies with a substantial private sector role.53 The Labour government, due to its ideological proclivities, had tried initially to go further than this. As market participants began to realise, however, in office the Labour government's commitments had been gradually transformed until the CLS had become a 'fiscal-interventionist' land trading operating to assist the private sector. This was testament to the power of constraint on the Labour government and the limited freedom of manoeuvre which it possessed in policy initiation and implementation. Unfortunately for policy continuity this 'fiscal-interventionist' approach was not to be maintained. The Labour government lost the May 1979 election to yet another ideologically inclined Conservative government, pursuing policy commitments on the basis of adversarial politics.

PART D

Conclusion

The failure of adversarial policies and the enigma of the Thatcher government

Adversary politics and the Thatcher approach to land and property. A policy framework for land and property.

Adversary politics and the Thatcher approach to land and property The Conservative government which returned to office in May 1979 refused to recognise the developing consensus of' fiscal-interventionism' which a substantial number of market participants - both public and private - had come to accept by 1979.l Despite this and its espousal of free market rhetoric, its initial record in office was somewhat enigmatic. One might have expected, given the rhetoric, a return to the laissez-faire approach pursued under Heath. Ironically, even in opposition, senior Party spokesmen - Hugh Rossi, Michael Latham and Timothy Raison — were unwilling to make this a commitment. 2 True, they were committed to repealing the Community Land Act but they promised to retain the Development Land Tax at a lower level. In other words, the manifesto committed a new Conservative government to a 'fiscalregulatory' approach which was within the basic framework for viable policy continuity and workability set out in Chapter 3. 3 The Thatcher government also went somewhat further than might have been expected to protect the state's role. On entering office Michael Heseltine (Secretary of State for the Environment) stopped any further expenditure on the CLS and repealed the Community Land Act in the 1980, Local Government, Planning and Land Act.4 In its first budget the government also reduced the level of the Development Land Tax to 60 per cent and raised the allowance against tax to £5°> 0 0 0 instead of £ 10,000.5 The taxation decision was surprising because it had been expected that the tax would be reduced to 50 per cent, in line with demands emanating from property and development interests.6 Even 195

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more surprising, given the laissez-faire image of the government, the Land Authority for Wales (LAW) was allowed to retain its powers and role. This was unexpected because, notwithstanding the success this agency had experienced in operation, the government's repeal of the Community Land Act took away similar powers from the local authorities in England and Scotland. The enigmatic nature of the government's policy approach was thereby revealed. It was prepared to reject a positive and facilitative state role in some areas of the country and yet maintain it in others. This apparently contradictory approach can be explained in terms of the continuing dysfunctional effect of adversarial politics in Britain. The Conservative government had learnt the lessons of ideologically based adversary politics in the past, but only to a degree. The detrimental effects of a return to a free market (as under Heath) had been recognised and this explains the maintenance of a betterment tax. But, the government was unable to resist the temptation to make political capital out of attacking Labour policies, even when those policies were geared to facilitating the role of the private sector in the market. In opposition the Conservatives had attacked the CLS as socialist and they apparently repealed it without fully understanding what it could do to help the private sector's development role. Thus in the early 1980s adversary politics undermined the possibility of the retention of the 'fiscal-interventionist' approach which it was argued in Chapter 3 was the best that could be achieved for the maintenance of both private development and a positive state role in planning. Even though the new Conservative approach might be successful in limiting property speculation - in a way that previous Conservative governments have not - problems may well recur in the development market in the 1980s if and when Britain's economy begins to recover from recession. One of the main reasons why there was little property inflation and few problems of land shortage in the early years of the Thatcher government was the general recession experienced in Britain. With high interest rates, a lack of government housing expenditure and falling wage rates there was little demand for house building or property development.7 This was reinforced by internal changes within the commercial property market itself since the 1973 collapse. Speculative property companies and fringe banks were ousted from the market, and the Bank of England and clearing banks apparently learnt the lessons of overextending credit facilities for speculative developments. 8 Given the lack of controls on business rents since 1975 there was a partial

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recovery in commercial property development, but it is clear that this was more soundly based than in the early 1970s. Weak, over-geared companies and lax money supply were replaced by a much higher degree of institution (insurance companies and pension funds) and large construction industry investment in commercial property. This meant that investors in commercial property in the early 1980s were far more concerned with prime sites, as opposed to risky speculative developments, and that with any upturn in the economy a return to the boom of the 1970s was highly unlikely. Furthermore, the government's retention of a betterment tax also contributed to this potential stability by taking some of the speculative potential out of this market. Despite this, however, there are today a number of problems for public and private sector planning and development which the reconstruction of the commercial property market and the government's approach seem to ignore. With the repeal of the CLS, apart from LAW, local authorities in England and Scotland are left with only a negative or regulative planning role. Local authorities can use their planning powers to regulate private development; they are not in a position to control or, more importantly, to initiate socially desirable development, because they lack both the extensive powers and the financial resources (particularly in the light of public expenditure cuts and their inability to recoup betterment directly). The unprofitable comprehensive renewal of inner city areas and the facilitation of land supply through land trading activities to stimulate private housing, industrial or commercial development is now more difficult to achieve than it would have been under the CLS. The Conservative government does have a solution for the problem of land supply. It appears, however, to be based on ideological prejudice rather than any understanding of the problems facing private developers. The government seems to believe that the problem of finding sufficient land for private development can be resolved by the creation of public sector land registers, which local authorities and statutory undertakers have been instructed to compile as a prelude to sales to the private sector.9 This can only be a partial solution because, while there is no doubt that much land is held off the market in the public sector, this is often for reasons of sound planning by local authorities or commercial efficiency in the nationalised industries - two goals which the Thatcher government has said it is committed to. But the main problem is that, if and when there is a recovery in the economy, it is likely that with lower interest rates, higher public housing expenditure and higher wages there will be an increase in demand for residential development. The resultant increase in demand for housing land will probably have to be met by

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the use of privately owned land presently in agricultural uses, because public sector land is often in areas which are unsuitable for private house building. Here, then, is one of the major difficulties of the Conservative government's approach: when an upturn comes, builders and developers will experience the same problems of multiple ownership, site identification, land holding costs at high interest rates, infrastructure provision and land withholding in the private and public sectors, which they have always faced. The problem of land withholding may be exacerbated by the government's retention of a betterment tax, which may also contribute to higher land and house prices. The government's preferred approach of regulative planning, betterment taxation and public land registers is hardly likely to resolve these problems or overcome the traditional recalcitrance of local authorities in the housing pressure areas, who resist demands to allocate additional land for housing on planning grounds. The overall consequence of government policy may, then, be a dislocation of the private development market, conflict with local authorities on planning issues and then higher land and house prices, with all the detrimental effects this may occasion for industrial competitiveness through higher wage demands and a lack of investment in industry. This may well be an acute problem in the 1980s because, despite the return to sanity in the commercial property market, the financial sector has recently adopted a new role in funding residential property ownership. Since the late 1970s the major clearing banks have begun to compete with the building societies for loans to home buyers. This is due to the relative inflation-proof nature of home ownership, assisted as it is by the continuation by the present Conservative government of high income-tax relief to home owners. 10 The banks may well be making the same mistake - if in a different property sector which they committed in the early 1970s. Recognising residential property to be a sound investment as compared with loans to manufacturing industry, the banks are using their present glut of savings to take a substantial share of this market from the building societies. There seems little doubt that while they may be successful in this it may be at the expense of investment in industry (as in the commercial property boom in the 1970-73 period), thus further undermining the potential for British economic regeneration.11 The Thatcher government, due to its continuing attachment to adversarial politics and the defence of those socio-economic interests (the financial sector and property owners) which sustain it electorally, seems unable or unwilling to recognise this

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dilemma. Despite the return to some sanity in government policy after 1979, the basis for a sound recovery in the property market, within the confines of a positive state role, must still be in doubt. A policy framework for land and property It has been argued throughout this study that governments have the power to initiate policy but that this power is only relative. Governments cannot ensure that their policies will be implemented successfully due to the power of constraint in the hands of socio-economic and bureaucratic interests. Throughout it has been argued that only ' fiscalregulatory' or 'fiscal-interventionist' policies fully recognise the power of constraint and the limited freedom of manoeuvre of governments. This means that adversarial policies of a socialist or a free market kind can be initiated, but they will fail in implementation whatever the fervour and commitment of their supporters. The history of post-war land and property policies is ample testimony to this simple truth. All post-war governments have had adversarially based commitments and (with varying degrees of success) they have been able to initiate these into policy. In the end, however, when such policies fell short of or went beyond either 'fiscal-regulation' or 'fiscal-intervention', they generated property speculation and inflation on the one hand or a disruption of the development market on the other. The result in all cases was the gradual transformation of the policies, either in the initiation or the implementation processes, in line with one of the two solutions outlined above. Unfortunately for policy continuity, on each occasion that this shift in policy occurred it also coincided with electoral defeat for the government of the day and its replacement by an alternative government bent on the pursuit of its own adversarial policies. This has been the cause of repeated policy failure and dislocation of positive public planning and of private sector development. This study therefore fully supports the Finer view that the two-party system has been dysfunctional for coherent and consistent policy-making in British government.12 But, while this may well support the view that successful policy can only be achieved with a breaking of the adversarial two-party mould, it should also be clear that such political change in and of itself will not be sufficient.13 Only by recognising the power of constraint, and incorporating the financial, industrial and bureaucratic interests (who hold this power) and educating them to the often contradictory and dysfunctional nature of the pursuit of their own self-interest, will it be

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possible to arrive at sustainable and workable government policy. Achieving this incorporation is clearly a more difficult task than breaking the political mould. The message of this study, then, is that the compensation and betterment problem cannot be resolved merely by the successful seizure of political power by a centrist inclined coalition government, as & t Liberal-Social Democratic Alliance might become in Britain. Unless such a coalition government also recognises the importance of the power of constraint and the need to work with it, it may well initiate the same myopic policies as the two major parties have been guilty of doing in Britain since 1945. To this end, and recognising the author's view that having understood the power of constraint social scientists will be in a better position to advise governments on policy formulation, it is perhaps encumbent on the author to specify what policy might be optimal to overcome the three main problems facing land and property in the 1980s. These three problems are how to enhance and protect positive public planning, facilitate the private development market, and ensure that the financial sector does not become overcommitted to investment in residential (or commercial) property at the expense of other sectors of industry. In Chapter 3 it was argued that the optimal solution to land and property problems is a 'fiscal-interventionist' approach.14 The basis already exists in Britain in the Land Authority for Wales. This agency buys land on the open market net of development Land Tax and then holds, services and sells it. The Authority only brings land on to the development market when it believes that it is socially and economically necessary for private and public sector house building, and industrial and commercial development. Sales normally take place at full market prices to the private sector, by which means the LAW recoups a profit to finance its future land trading activities. This is the kernel, then, of a 'fiscal-interventionist' approach, which seeks to protect the public planning role and facilitate private development. LAW was and is successful, it has been argued,15 because it is divorced from local government. It has its own staff of planners, valuers and surveyors, who are able to pursue their land trading role single-mindedly in a way that local authorities operating the CLS were not. While it consults with local authorities over planning issues in Wales, because it is an autonomous agency it has escaped the recalcitrance associated with political prejudice which colours much of the work of Conservative or Labour controlled local authorities. As the TCPA has argued in its support for New Town Development

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Corporations and regional public land development agencies, such an approach has been used successfully in France and West Germany to facilitate the private development market, while also giving the state some betterment recoupment and finance to underwrite unprofitable public sector planning.16 Clearly, then, LAW provides the basis for a positive state role to overcome the bottlenecks in the land market for both the public and private sectors. Given that these problems may be expected to recur when the British economy recovers in the 1980s, it is surprising that the Thatcher government has supported such an approach in Wales but is unable or unwilling to recognise its suitability for England and Scotland. If it were to be instituted on a national scale, as the TCPA has argued, there are definite benefits in creating a regional structure to ensure that the land trading agencies are not directly embroiled in local government political conflicts and are able to pursue their functions single-mindedly. 17 Some writers have also argued that it would make sense for the state to give such agencies a virtual monopoly of land purchase. The method of land sales could be viable within this monopoly, freehold or leasehold, depending on whether the actual development was to be undertaken by the public or private sectors or by public-private consortia arrangements, and depending also on the degree of risk involved in the development. 18 If this solution were acceptable, the state would recoup betterment through a tax on private land transactions or, in the absence of these, through state purchase at existing use value and sales with freehold or leasehold rent reversions at full market rates. This would be a source of finance for future land trading activities and for development by the agencies themselves. A pool of finance might also be created through which the state might subsidise unprofitable and socially desirable planning schemes.19 As the TCPA recognises, this still leaves the problem of democratic accountability and the relationship between the goals of the land development agencies and positive public planning at the local level. Ideally of course this would be solved by regional reform of local government but, in the absence of this, one solution would be to encourage direct central and local government and private sector participation in such agencies. Local authorities would purchase equity shares in the new agencies. It would be desirable, as the TCPA suggests, that 51 per cent of the equity in these land trading and development agencies always remained with the public sector to ensure the preeminence of public goals over private speculative interests. This does not mean that all public development schemes would necessarily be unprofitable. The agencies would have to be self-financing and perhaps

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quoted publicly on the Stock Exchange. 20 By this method public sector planning goals could be fed into any development decisions but financial considerations would still figure prominently in the activities of the agencies. The actual development might be undertaken by the new agencies or by them in consortia with the private or public sectors. The leases negotiated through these arrangements would also allow a continuing planning influence to be exerted on completed developments. This approach also fits with one of the Conservative government's own preferred solutions of public and private consortia development. The government has advocated this on an' ad-hoc' basis but it has consistently failed to encourage it on a national scale. These proposals could also fit in with preferences on the left of the political spectrum. Depending on the political complexion of the relevant local authorities in any development scheme a higher level of public ownership and control would be possible. The new agencies could have a flexible attitude towards the exact relationship between the public and private sectors which might allay any fears that they would always be dominated by private interests and commercial considerations. Furthermore, the goals of many left-wingers - positive public planning and subsidy for unprofitable developments which the private sector refuses to undertake could also be achieved without the disruptive effect their own solution would create in the development market. If positive planning, betterment recoupment and land supply problems might be resolved by this approach, the more worrying problem of the involvement of the clearing banks in residential property investment cannot. Additional steps would be necessary to solve this problem. The government would need to maximise the powers of policy initiation at its disposal to cajole and educate the financial sector towards a realisation of the consequences of non-industrial investment to Britain's economic recovery. The major difficulty here is that the command of financial resources is a crucial constraint on government action. The government does, however, have some resources at its disposal to counter this constraint. In the absence of nationalising the financial institutions, which would be electorally unpopular, residential property investment could be restrained by first reducing the income-tax relief given to home owners. This too would obviously have electoral consequences and it is unlikely to be popular, which is one reason why a centrist, coalition government might be in a better position to sustain it - a Conservative or Labour government would certainly not. Relatedly the government could seek to educate the financial institutions to the problem of property

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investment by first providing for variable (and advantageous) interest and taxation rates for manufacturing investment and profits, to make this a more lucrative area of investment. It could also threaten to re-impose a freeze on business rents or to raise the interest rates for property loans to levels well above other loans. Clearly this would involve the Bank of England in a far more directive role than hitherto. If these policies could be enacted they would constrain the financial institutions (without having to threaten nationalisation), assist positive planning and facilitate private development. It is clear, however, that neither of the two major political parties - committed as they are to adversary politics - are likely to adopt such policies. This is one further reason why Finer's goal of breaking the political mould may be desirable. Unfortunately, breaking the mould - itself not a foregone conclusion in Britain - may well be an easier task than implementing policies for land and property against the power of constraint and ideological myopia which exists in British society.

Notes

i Power, adversary politics, government policy-making and the implementation problem 1 For a description of power, see Steven Lukes, Power: A Radical View (London: Macmillan, 1977); and, on this issue of power and constraint, see Robert Jessop,' Power and constraint: incommensurable or complementary concepts' (Paper given to EGOS Symposium on Power, University of Bradford, 6/7 May 1976). 2 The debate can be found in the following works. On the 'pluralist' side: Nelson W. Polsby, Community Power and Political Theory (New Haven and London: Yale University Press, 1963); Raymond E. Wolfinger, 'Nondecisions and the study of local polities', American Political Science Review, 65 (1971), pp. 1063-80; and Robert A. Dahl, 'A critique of the ruling elite model', American Political Science Review, 52 (1958), pp. 463-9. On the 'elitist' side: Peter Bachrach and Morton S. Baratz, 'The two faces of power', American Political Science Review, 56 (1962), pp. 947-52, and 'Decisions and nondecisions: an analytic framework', American Political Science Review, 57 (1963), pp. 641-51; Frederick W. Frey, 'Comment: on issues and non-issues in the study of power', American Political Science Review, 65 (1971), pp. 1081-101; and Matthew A. Crenson, The Un-Politics of Air Pollutions: A Study of Nondecision-making in the Cities (Baltimore and London: John Hopkins Press, 1971). 3 For the first empirical analysis using this approach, see Robert A. Dahl, Who Governs? Democracy and Power in an American City (New Haven and London: Yale University Press, 1961). 4 For a rejection of these possibilities, see Richard M. Merlman, 'On the neo-elitist critique of community power', American Political Science Review, 62 (1968), pp. 451-60. 5 Peter Morris,' Power in New Haven: A reassessment of " Who Governs ?"' British Journal of Political Science, 2 (1972), pp 457-65. 6 E. E. Schattschneider, The Semi-Sovereign People: A Realises View of Democracy in America (New York: Holt, Reinhart & Winston, i960), passim. 204

Notes to pages 6-8

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7 Peter Bachrach and Morton S. Baratz, Power and Poverty: Theory and Practice (New York: Oxford University Press, 1970), pp. 3-51. 8 For the first attempts to outline and prove stratification theories, see: Floyd Hunter, Community Power Structure (Chapel Hill: University of North Carolina Press, 1953); Robert S. Lynd and Helen M. Lynd, Middletown (New York: Harcourt, Brace, 1929); E. Digby Baltzell, Philadelphia Gentlemen (Glencoe, Illinois, Free Press, 1958); and William Lloyd Warner et al., Democracy in Jfonesville (New York: Harper, 1949). 9 For studies dealing with business or economic elites, see: Hunter, Community Power Structure; Delbert C. Miller,' Industry and community power structure', American Sociological Review, 23 (February 1958), pp. 9-15; and C. Wright Mills, The Power Elite (New York: Oxford University Press, 1956). On the role of social elites, see P. Toynbee, 'The governing class', Twentieth Century (October 1957), pp. 297-302, and W. L. Guttsman, The British Political Elite (London: Macgibbon and Kee, 1963). On Establishment theories, see Hugh Thomas, The Establishment (London: Blond, 1959) and T. Lipson and C. S. Wilson, 'The social background and connections of top decision-makers', in Power in Britain: Sociological Readings, ed. John Urry and John Wakeford (London: Heinemann, 1973), pp. 185-204. 10 Jean Blondel, Voters, Parties and Leaders (Harmondsworth, Middlesex: Penguin, 1973), pp. 231-48. 11 Robert Putnam, The Comparative Analysis of Elites (unpublished manuscript, University of Michigan, Ann Arbor, 1957), chapter 2: 'Elites and the social structure', pp. 39-41. See also L. J. Edinger and D. D. Searing, 'Social background to elite analysis: a methodological inquiry', American Political Science Review, 61 (1967), pp. 428-45. 12 For this view, see: J. Bryce, Modern Democracies (London: Macmillan, 1923); A. V. Dicey, Law of the Constitution (London: Macmillan, 1959); and H. Finer, The Theory and Practice of Modern Government (London: Methuen, 1961). 13 This phrase was coined by John Dearlove, The Politics of Policy in Local Government (London: Cambridge University Press, 1973), pp. 25-31. 14 For studies using organisational theory, see Charles E. Lindblom, The Policy-Making Process (Englewood Cliffs, New Jersey: Prentice Hall, 1968), and Robert A. Dahl and Charles E. Lindblom, Politics, Economics and Welfare (New York: Harper, 1953). 15 For a study which deals explicitly with these variables, see Graham T. Allison, Essence of Decision: Explaining the Cuban Missile Crisis (Boston: Little, Brown and Company, 1971), pp. 67-143. 16 David Easton, 'An approach to the analysis of political systems', World Politics, 9 (1957), pp. 383-400, and A Systems Analysis of Political Life (New York: Wiley, 1965). 17 David Easton, A Framework for Political Analysis (Englewood Cliffs, New Jersey: Prentice Hall, 1965), p. 89. 18 The newer developments in Marxist writings can be found in comparing the early works, such as: Sam Aaronovitch, The Ruling Class: A Study of

206

Notes to pages 8—12

British Finance Capital (London: Lawrence and Wishart, 1961); the writings of Ralph Miliband, The State in Capitalist Society (London: Weidenfeld and Nicolson, 1970), pp. 496-7, and Ernesto Laclau, 'The specificity of the political: the Poulantzas-Miliband Debate', Economy and Society, 4 (1975), PP- 87-110. 19 For a 'structuralist' position, which argues that policies and choices are overdetermined, see Louis Althusser and E. Balibar, Lire Le Capital (Paris: Maspero, 1968), vol. 11, p. 63, and Nicos Poulantzas, Political Power and Social Classes (London: New Left Books, 1973), pp. 90-110. 20 For this view, see Aaronovitch, The Ruling Class, and Robert Jessop (unpublished manuscript, University of Essex, June 1977), chapter 2, pp. 18-26. 21 This is the view elaborated by Laclau, 'The specificity of the political', pp. 87-110. 22 For the development of this position, see Robert Jessop, Social Order Reform and Revolution (London: Macmillan, 1973), and 'Power and constraint' (EGOS Symposium). 23 Jessop (unpublished manuscript, June 1977), chapter entitled 'Recent Marxist theories...', pp. 27-34. 24 This discussion draws heavily on Jessop's paper 'Power and constraint'. Jessop's critique of Lukes' approach is rejected for the reasons outlined in the text, and also because the 'human problematic' cannot be ignored. To argue that the solution can be found within Marxist theorising may be correct, but this can only be achieved by denying any effective role for the individual. Jessop accepts this 'cost' in his critique, but this implies that men have no scope for misperception and freedom of action in either the short or long term. Whereas one might wish to argue that men are constrained in the long term, in the short term misperception and attempts to change constraints may occur. Lukes' approach may mesh concepts which are incommensurable, but at least the short- and long-term distinction is made possible, enabling an attempt to be made to disentangle the humanist problematic. 25 Steven Lukes, Power: A Radical View (London: Macmillan, 1977), pp. 46-56. 26 Jessop, 'Power and constraint', p. 12. 27 Lukes, Power: A Radical View, pp. 54-5. 28 On the idea and evidence for 'winners' and 'losers' in the urban policy process, see Peter Hall et al, The Containment of Urban England, vol. 2, The Planning System: Objectives, Operations, Impacts (London: Allen & Unwin, 1973), PP- 405-8. 29 For further elaboration of this view, see Robbie Guttmann, ' State intervention and the economic crisis: The Labour government's economic policy, 1975-9', Kapitalistate: Working Papers on the Capitalist State, no. 4/5 (Summer 1976), pp. 225-70. 30 E. P. Thompson, The Poverty of Theory and other essays (London: Merlin, 1979), PP- 193-39731 Ibid. pp. 344-54-

Notes to pages 13-18

207

32 For fuller elaboration of this position, see E. P. Thompson, 'Open letter to Leszek Kolskowski' in The Poverty of Theory and other essays, pp. 9 2 192. 33 On the historically independent role of the financial sector in Britain, see: Sidney Pollard, The Development of the British Economy: igi4~ig6j (London: Edward Arnold, 1973, 2nd edition), pp. 408-99; Hamish McRae, Capital City: London as a Financial Centre (London: Magnum Books, 1974), pp. 1-20; and Richard Spielgelberg, The City: Power without Accountability (London: Blond and Briggs, 1973), pp. 9-90. 34 S. E. Finer (ed.), Adversary Politics and Electoral Reform (London: Anthony Wigram, 1975), pp. 3-32. 35 Ibid. pp. i9~3 2 36 Samuel Beer, Modern British Politics (London: Faber, 1969); C. J. Hewitt, 'Elites and the Distribution of Power in British Society' in P. Stan worth and A. Giddens (eds.), Elites and Power in British Society (London: Cambridge University Press, 1974), pp. 45-64, and 'Policy-making in Post-war Britain: a National Level Test of Elitist and Pluralist hypotheses', British Journal of Political Science, 4, no. 2 (1974); Wyn Grant and David Marsh, 'Tripartism: Reality or Myth?', Government and Opposition, 12 (Summer 1977); Anthony King, 'Overload' in A. King (ed.), Why is Britain Becoming Harder to Govern? (London: BBC, 1976), pp. 8-30; and S. Brittan, 'The Economic Contradictions of Democracy' in A. King (ed.), ibid. pp. 96-137. 37 See note 36 above. 38 Richard Rose, Do Parties Make a Difference? (New Jersey: Chatham House, 1980), pp. 19-32. 39 Michael Stewart, The JekyIIand Hyde Years (London: Dent, 1977), passim. 40 Rose, Do Parties Make a Difference?, pp. 141-62. 41 Hewitt, 'Elites and the Distribution of Power'. 42 W. L. Guttsman, 'The British Political Elite and the Class Structure' in Stanworth and Giddens (eds.), pp. 22-44; R- E. P am< an<^ J- T. Winkler, 'The Coming Corporatism', New Society (10 October 1974), pp. 72-6; Joe Haines, The Politics of Power (London: Coronet, 1976); Brian Sedgmore, Minority View (Eleventh Report of the Expenditure Committee), The Civil Service, HC535-1, vol. 1 (July 1977); Tony Benn, Arguments for Democracy (London: Jonathan Cape, 1981); Hugh Thomas, The Establishment (London: Blond, 1959); C. Arnold Barker, The5000 and the Power Triangle (London: John Murray, 1967); and Max Nicholson, The System (London: Hodder and Stoughton, 1967). 43 Miliband, The State in Capitalist Society. 44 James Meisel, The Myth of the Ruling Class (Ann Arbor: University of Michigan Press, 1962). 45 Peter Bachrach, The Theory of Democratic Elitism (Boston: Little & Brown and Co., 1967). 46 For example see Susan Barrett and Colin Fudge (eds.), Policy and Action: Essays on the Implementation of Public Policy (London: Methuen, 1981), pp.

3-32.

208

Notes to pages

18-27

47 See Sam Aaronovitch,' The Ruling Class' in John Urry and John Wakefield (eds.), Power in Britain (London: Heinemann, 1973), pp. 117-30. 48 Andrew Cox, ' Corporatism as Reductionism: the Analytic Limits of the Corporatist Thesis', Government and Opposition, 16 (Winter 1981), pp. 78-^5. 49 Barrett and Fudge (eds.), Policy and Action, passim. 50 Like the Heath and Labour governments of the 1970s it might be argued that the Thatcher government has started to learn this lesson after two years of dogmatic policy-making. The final chapter of this book further underlines this point. 51 One is tempted to add - like University lecturers ? 52 For a general introduction, see I. Bradley, Breaking the Mould (London: Martin Robertson, 1981) and Stephen Ingle, 'The Social Democrats and the Liberal Alliance: Can the Centre Hold ?' in Lynton Robins (ed.), Topics in British Politics (London: Politics Association, 1982), pp. 63-89. 2 The history of land and property policy in Britain and the development of social democratic solutions (1845-1943) 1 For further elaboration of the issues to be discussed here, see: Sir Frederick Corn*eld and R. J. A. Carnwath, Compulsory Acquisition and Compensation (London: Butterworth, 1978), pp. 1-29; H. R. Parker, 'The history of compensation and betterment' in Land Values, ed. Peter Hall (London: Sweet & Maxwell, 1965), pp. 53-74; Paul N. Balchin and Jeffrey L. Kieve, Urban Land Economics (London: Macmillan, 1977), especially pp. 109-36; and for the classic overview, Report of the Expert Committee on Compensation and Betterment (Uthwatt Report), Cmnd. 6386 (London: HMSO, 1942). 2 For this view in general, see Balchin and Kieve, pp. 111-16, and Ralph Turvey, The Economics of Real Property (London: Allen & Unwin, 1957). 3 This view can best be seen in nineteenth-century measures like the 1945 Land Clauses Consolidated Act, which gave the owner market value compensation, and disturbance and interference allowances. Corfield and Carnwath, Compulsory Acquisition, pp. 3-4. 4 D. R. Denman, Land: Labour's Land Nationalisation Proposals Examined (London: Aims of Industry, 1965), and Land in the Market (London: Institute of Economic Affairs, 1964), Hobart Paper no. 30. 5 Henry George, Progress and Poverty (London: Kegan, Paul, Trench, Truber & Co., 1879), pp. 231-387; Henry George, Justice the object- Tax the means (London: United Committee for the Taxation of Land Values, I93O6 J. S. Mill, Principles of Political Economy, part v (London: Green, Reader and Dyer, 1873), book v, pp. 479-590. 7 Balchin and Kieve, Urban Land Economics, pp. 127-7. 8 For an overview of the approaches taken to land nationalisation, see Nathaniel Lichfield, 'Land Nationalisation', in Land Values, ed. Peter Hall, pp. 107-25.

Notes to pages 27-31

209

9 Corfield and Carnwath, Compulsory Acquisition, pp. 5-6, and 'The land problem', Local Government Chronicle, no. 5148 (30 October 1965), pp. 1793 and 1794. 10 For background to the welfare and public health obligations imposed on local authorities, see Julia Parker, Local Health and Welfare Services (London: Allen & Unwin, 1965), pp. 9-36, and Balchin and Kieve, Urban Land Economics, pp. 116—17. 11 On the general issue of worsenment, see Corfield and Carnwath, Compulsory Acquisition, pp. 314-455. 12 This view was best expressed in the Uthwatt Report. 13 Balchin and Kieve, Urban Land Economics, pp. 109-11. 14 Parker, 'The history of compensation and betterment', pp. 53-4. 15 For a useful summary, see F. M. L. Thompson, 'Land and politics in England in the nineteenth century', Transactions of the Royal Historical Society, 15 (1965), pp. 23-44. 16 Corfield and Carnwath, Compulsory Acquisition, pp. 3-4. 17 Ibid. pp. 4-6. 18 Under the 1909-10 Finance Acts the Liberal government introduced four types of land tax: incremental value duty, which was levied on rises in the value of the original site on certain specified occasions (e.g. the sale of land, a lease granted for fourteen years, or death of the owner); undeveloped land duty, which was imposed as a tax at the rate of £d in the £ on site values of all land declared undeveloped; reversion duty, levied at the rate of 10 per cent on the value recouped by a lessor on the termination of a lease; and minerals rights duty, levied annually at the rate of 5 per cent of the rental value of all rights to work minerals in the land. Parker, 'The history of compensation and betterment', pp. 56-60 provides further elaboration on these points. These measures were distinct from the incremental tax imposed on improvements under the 1909 Housing and Town Planning Act; however they were within the general approach adopted by all Liberal governments since the time of J. S. Mill. In other words, like the modern commitment to site-value rating, these measures sought to derive for the community the incremental value increases resulting from the general pressure of population and urban growth on land, as well as from any state actions. Clearly, such measures were not aimed at giving the state a dominant role in land ownership and development; in essence they were an attempt to 'cream-off' some values without affecting existing ownership rights. 19 Balchin and Kieve, Urban Land Economics, pp. 109-11. 20 Parker, 'The history of compensation and betterment', pp. 56-60. 21 These Acts were respectively the 1932 Town and Country Planning Act and 1935 Restriction of Ribbon Development Acts. Further details of their provisions can be found in Parker, ibid., pp. 60-1, and J. B. Culling worth, Town and Country Planning and Britain (London: Allen & Unwin, 1975, 5th edn), pp. 17-36. 22 Uthwatt Report.

210

Notes to pages

31-40

23 The failure to fulfil party commitments was not confined to land nationalisation. It has been argued that the Party maintained a policy of moderation in everything they did in office throughout these years: David Howell, British Social Democracy (London: Croom Helm, 1976), pp. 9-11. 24 Michael Stewart, Keynes and After (Harmondsworth, Middlesex: Penguin, 1972), passim, and Allen Skuse, Government Intervention and Industrial Policy (London: Allen & Unwin, 1976), p. 10. 25 On the Liberal Party in this period, see Trevor Wilson, The Downfall of the Liberal Party, igi4~igjs (London: Collins, 1966). 26 Robert Skidelsky, Politicians and the Slump (Harmondsworth, Middlesex: Penguin, 1970), pp. 369-43427 David Coates, The Labour Party and the Struggle for Socialism (Cambridge University Press, 1975), pp. 1-41. 28 Jacques Lereux, Economic Planning and Politics in Britain (London: Cambridge University Press, 1975), pp. 2-13. 29 David H. McKay and Andrew W. Cox, The Politics of Urban Change (London: Croom Helm, 1979), pp. 192-7. 30 Nigel Harris, Competition and the Corporate Society (London: Methuen, 1972), pp. 48-61. 31 Harold Macmillan, The Middle Way (London: Macmillan, 1966). 32 Harris, Competition and the Corporate Society, pp. 48-61. 33 McKay and Cox, The Politics of Urban Change, pp. 192-7. 34 Skuse, Government Intervention, pp. 23-32. 35 McKay and Cox, The Politics of Urban Change. 36 Ibid. pp. 27-30. 37 Ibid. pp. 192-7. 38 Ibid. 39 Ebenezer Howard, Garden Cities of Tomorrow (London: Faber, 1965). 40 McKay and Cox, The Politics of Urban Change, p. 30. 41 Ibid. pp. 192-7. 42 J. B. Cullingworth, Environmental Planning, igjg-ig6g, vol. 1, Reconstruction and Land Use Planning, igjg-ig4^ (London: HMSO, 1947), p. 40. 43 Uthwatt Report. 44 Ibid. 45 Cullingworth, Environmental Planning, vol. 1, pp. 14-15, 38-9, 71-2 and 103-446 Ibid. pp. 75-92. 47 Ibid. pp. 14-16 and 103. 48 H. R. Parker, Payment for Urban Development (London: The Fabian Society, 1959), pp. 8-10. 49 Ibid. 50 Cullingworth, Environmental Planning, vol. 1, pp. 40-1 and 81-3. 51 Ibid. pp. 14-15 and 253-85. 52 Ibid. pp. 257-8. 53 Ibid. pp. 14-15, 75-7 and 89-91. 54 Ibid. p. 118.

Notes to pages 41-54

211

55 The Control of Land Use, White Paper (London: HMSO, 1944), Cmnd. 653756 Cullingworth, Environmental Planning, vol. 1, pp. 160-5. 57 Ibid. pp. 110-12. 58 Ibid. pp. 113-15. 59 Ibid. pp. 120-2 and 138. 60 Ibid. pp. 118 and 164-5. 61 Ibid. pp. 68-9, 84-5 and 164-5. 62 Ibid. pp. 162-3. 63 McKay and Cox, The Politics of Urban Change, p. 194. 64 Cullingworth, Environmental Planning, vol. 1, passim. 65 Ibid. p. 6. 66 Ibid. pp. 7-8. 67 Ibid. pp. 103-4. 68 Ibid. pp. 164-5. 69 Ibid. p. n o . 70 J. C. W. Reith, Into the Wind (London: Hodder and Stoughton, 1949), pp. 440-1. 71 Ibid. pp. 407-32 and 494-6, and Cullingworth, Environmental Planning, vol. 1, pp. 14-15. 72 Cullingworth, ibid. p. 16. 73 Ibid. 74 Ibid. pp. 38-40, 51-5 and 71-2. 75 Reith, Into the Wind, pp. 429-31; and Cullingworth, Environmental Planning, vol. 1, pp. 81-5 and 103-4. 76 Peter Ambrose, 'The British Land-Use Non-Planning System'. A paper given to the inaugural meeting of the Conference of Socialist Planning (London, 19 February 1977). 77 Cullingworth, Environmental Planning, vol. 1, pp. 40-1. 78 Ibid. pp. 113-18 and 163-6. 79 Ibid. pp. 40-1. 80 Ibid, pp 110-18 and 160-5. j The structure of the British land and property market as constraint on policy initiation 1 On the early developments of stage intervention, see Gianfranco Poggi, The Development of the Modern State: A Sociological Introduction (London: Hutchinson, 1978), especially chapters 6 and 7. 2 Ibid. pp. 3-7, chapter 3. 3 Gordon E. Cherry, The Evolution of British Town Planning (Leighton Buzzard, Beds.: Leonard Hill Books, 1974), pp. 6-32. 4 For an introduction to the need for the state to intervene in the private ownership rights in land, see M. Harloe (ed.), Captive Cities: Studies in the Political Economy of Cities and Regions (London: John Wiley & Sons Ltd., ) , pp. 1-48.

212

Notes to pages

54-59

5 A useful summary of land values policies is presented in the two articles: Peter Hall, 'The land values problem and its solution', and H. R. Parker, 'The history of compensation and betterment since 1900' in Land Values, ed. Peter Hall (London: Sweet & Maxwell, 1965), pp. ix-xix and 53-72 respectively. 6 For the general arguments relating to 'unearned increment' see: J. S. Mill, Principles of Political Economy (Part v) (London: Green, Reader & Dyer, 1973), book v, pp. 479-590. 7 Parker,' The history of compensation and betterment since 1900', pp. 54-68. 8 Hall, 'The land values problem and its solution', pp. xiv-xv. 9 Ibid. p. xv. 10 John Ratcliffe, Land policy: An Exploration of the nature of land in society (London: Hutchinson, 1976), pp. 19-20. 11 For an overview see P. H. Clarke, ' Site value rating and the recovery of betterment' in Land Values, ed. Peter Hall, pp. 73-96. 12 Hall, 'The land values problem and its solution', pp. xii-xix. 13 This view has been presented by Wyndham Thomas, 'Land values and development values in post-war Britain', Trends (Special report of the American Society of Planning Officials, 1967), pp. 1-13. 14 For an overview of the 1947 system, see: Peter Hall et al., The Containment of Urban England vol. 2 (London: Allen & Unwin, 1975), pp. 33-71. 15 Ibid. pp. 373-4O916 This has been the result of the introduction of the Community Land Act in 1975. Doreen Massey and Alejandrina Catalano, Capital and Land: Landownership capital in Great Britain (London: Edward Arnold, 1978), pp. 167-87, argue that productive and finance capital have not been seriously threatened by this Act, although there has been conflict between governmental agencies. 17 Land nationalisation could be instituted by outright once-for-all land purchase by the state, or by a process of leasehold purchase over 99- or 999-year periods. The latter, known as 'unification of the reversion', is elaborated by Nathaniel Lichfield, 'Land nationalisation' in Land Values, ed. Peter Hall, pp. 107-25. 18 I must thank Professor J. B. Cullingworth for pointing this out to me. 19 Ratcliffe, Land Policy, p. 48. 20 Capital for Agriculture (CAS Report 3) (Centre for Agricultural Strategy, University of Reading, Earley Gate, Reading, March 1978), p. 10. 21 Lichfield,' Land nationalisation', in Land Values, ed. Peter Hall, pp. 107-25. 22 David Harvey, 'Labour, capital and class struggle around the built environment in advanced capitalist societies', Politics and Society, 6, no. 3 (1976), pp. 266-78. 23 For this interpretation of the land use non-planning process see: Peter Ambrose,' The British land-use non-planning system' (Paper presented to the inaugural meeting of the Conference of Socialist Planners, London, 19 February 1977), and C. G. Pickvance, 'Physical planning and market forces in urban development', National Westminster Bank Quarterly Review (August 1977), pp. 41-50.

Notes to pages 59-62

213

24 For an overview, see Parker, 'The history of compensation and betterment since 1900', pp. 53-72. 25 Doreen Massey, 'The analysis of capitalist landownership: an investigation of the case of Great Britain', International Journal of Urban and Regional Research, no. 3 (1977), p. 415. 26 Ibid. pp. 415-17 27 Ibid. pp. 416-17. 28 Church and State (Report of the Archbishop's Commission, London: Church Information Office, 1970), pp. 17-28 and 48-61. 29 This view of the need to be 'responsible' and 'respectable' to have policy influence is a standard political science assumption. For this argument, see S. E. Finer, Anonymous Empire (London: Pall Mall, 1966), pp. 112-46. 30 For an introduction to the role of the CLA, see: F. G. Holland, 'The property revolution: 1947-1960' (Country Landowners Association paper, September 1959) and' Landowners and the future' (CLA paper to the Study Conference: The Countryside in 1970, 5 November 1963, Fishmonger Hall, London EC4); and Peter Self and Hugh Storing, The State and the Farmer (London: Allen & Unwin, 1962), pp. 180-92. 31 Holland, 'The property revolution' and 'Landowners and the future'. 32 This interpretation differs markedly from that presented by Bob Colenutt, 'Behind the property lobby', Street Research (Summer 1974), pp. 1-12. Colenutt argues that the property lobby, representing rented and finance capital interests, has had a direct influence on policy. This view has also been supported by Massey and Catalano, Capital and Land, pp. 16733 Whose Little Acre? (Property Council Pamphlet, London, 18 February 1964). 34 The close connection between the two bodies was indicated in interviews, held independently, with Montague Keen (a former Legal and Parliamentary Secretary with the NFU) and with his counterpart at the CLA, F. G. Holland. Self and Storing, The State and the Farmer, pp. 15-61, also underscores this point. 35 Self and Storing, ibid. pp. 139-56. 36 Ibid, and confirmed in interview with Montague Keen. 37 Wyn Grant and David Marsh, The CBI (London: Hodder & Stoughton, 1977), PP. 96-938 This is revealed in 'The Land Commission Bill' and 'The levy and the development value of land and the Land Commission', and by a detailed study of CBI Council minutes and Director-General reports. 39 This view was expressed in interview by H. E. Sparrow, Secretary's Department, ICI, and former member of the CBI's Land Panel, and also by Miss S. Milman, Company Affairs Directorate, CBI. 40 For their views generally, see Land for Housing (Report of the National Federation of Building Trade Employers Working Party, June i960). For the views of the smaller house builders, as opposed to the formal contractors, see Land for Housing (House Builders Federation Policy Planning Group Report, March 1977).

214

Notes to pages

63-66

41 C. C. Hood, 'The rise and rise of the British Quango', New Society (16 August 1973), pp 386-8. 42 Particularly in the 1960s, the encouragement of wholesale slum clearance and high rise development, to solve rehousing problems, led to assistance primarily for 'system' builders. On this, see Patrick Dunleavy, 'Protest and quiescence in urban policies. A critique of some pluralist and structuralist myths', International Journal of Urban and Regional Research, 1, no. 2 (June 1977), PP. 193-218. 43 The FRHB has recently changed its name to the House Builders Federation. 44 This view was expressed by Michael Latham, MP, who was made Parliamentary Officer of the FRHB in 1967; by J. G. McLean, who was President for much of the 1960s; and C. G. Rowland, who has been with the FRHB and HFBTE in a Parliamentary or Legal Secretary capacity since the Second World War. 45 Dunleavy, 'Protest and quiescence in urban policies'. 46 For an up to date view of their position, see Land for Housing (March 1977). 47 For this view, see Nathaniel Lichfield, 'Land nationalisation', in Land Values, ed. Peter Hall, pp. 107-25. 48 On the role of the RICS, see Oliver Marriott, The Property Boom (London: Hamish Hamilton, 1967), pp. 24-8; the Junior Organisation report, 'Report on compensation and betterment', Chartered Surveyor (December 1961), pp. 326-32; and 'Tax on planning consents suggested: RICS Working Party', Estates Gazette, 192 (5 December 1964), p. 846. 49 Their views were seen in representations to the government over the Land Commission legislation: 'Giving us the Willeys', The Valuer (January/ February 1966), pp 140-1; 'The Land Commission Bill: Memo from the Legal and Parliamentary Committee', The Valuer (May/June 1966), pp. 269-73 > and 'The Land Commission', Land and Property (November 1965), PP- 371-350 For an overview, see Nigel Harris, Competition and the Corporate Society (London: Methuen, 1972), passim, and Patrick Cosgrave, 'The failure of the Conservative Party: 1945-75' m The Future that Doesn't Work, ed. R. Emmett Tyrell (New York: Doubleday & Co., 1977), pp. 95-125. 51 Malcolm MacEwan, Crisis in Architecture (London: RIBA Publication, 1974), and 'The Buchanan Report: A statement of RIBA views', RIBA Journal, 71 (May 1964), pp. 184-6. 52 'On the slippery slope: Leader', RIBA Journal, 73 (August 1966), p. 339; 'Recoding targets: Leader', RIBA Journal, 74 (February 1967), p. 45; and 'The crunch is coming: Leader', RIBA Journal, 73 (December 1966), p. 5389. 53 See Cherry, The Evolution of British Town Planning, pp. 6—32, and L. Ginsburg, 'The evolution of the town planning profession', Architectural Association Quarterly (Winter 1968/69), pp. 13-19. 54 MacEwan, Crisis in Agriculture, passim. 55 M. L. Harrison, 'British Town Planning Ideology and the Welfare State', Journal of Social Policy, 4, no. 3 (1975), pp. 259-74.

Notes to pages 66-6g

215

56 MacEwan, Crisis in Architecture, passim, and Peter Hall et al., The Containment of Urban England, vol. 2, The Planning System: Objectives, Operations, Impacts (London: Allen & Unwin, 1973), pp. 405-8. 57 Cherry, The Evolution of British Town Planning, pp. 3-52. 58 D. Foley, 'Idea and Influence: The TCPA', Journal of American Institute of Planners (1959), pp. 10-17. 59 The Land Question (London: RTPI Planning Paper No. 4, 1974). 60 Massey and Catalano, Capital and Land, pp. 114-38. 61 The need to bring pressure to bear was seen in the activity of the Alliance Building Society in the early 1960s, The Housing Land Crisis (London: Alliance Building Society, 1961) and Four Million Decaying Homes (London: Alliance Building Society, 1961). 62 Investment in Property: Property Studies in the United Kingdom (Reading, Berks: Centre for Advanced Land Studies, College of Estate Management, January 1974), and J.Myers, 'Why property fell', Management Today (August 1974), p. 48. 63 Massey and Catalano, Capital and Land, pp. 167-85. 64 Ibid. 65 Ibid. pp. 137-66. 66 Castells,' Towards a political urban sociology' in Harloc (ed.), Captive cities, pp. 61-6, and Jean Lojkine, 'Contributions to a Marxist theory of capitalist urbanisation' in Urban Sociology: Critical Essays, ed. C. G. Pickvance (London: Methuen, 1976), pp. 119-46. 67 P. Lowe, 'The Environmental Lobby: Political Resources', Built Environment Quarterly (June 1975), pp. 73-6, and 'The Environmental Lobby: Formation and structure', Built Environment Quarterly (September 1975), pp. 158-61. 68 On the Civic Trust's role, see The First Three Years (Civic Trust Report by the Trustees, London, i960). 69 On the CPRE's role, see Lincoln Allison, Environmental Planning: A Political and Philosophical Analysis (London: Allen & Unwin, 1975), pp. 115-21.

70 71 72 73

Hall et al., The Containment of Urban England, vol. 2., pp. 393-7. Foley, 'Idea and Influence: the TCPA'. Cherry, The Evolution of British Town Planning, pp. 34-56. TCPA, The Intelligent Voters Guide to Town and Country Planning (London: TCPA, April 1964). 74 This view was expressed forcefully by Nathaniel Lichfield in his search for a land nationalisation solution to the compensation and betterment dilemma, N. Lichfield, 'Land nationalisation', in Land Values, ed. Peter Hall, pp. 107-25.

75 Harvey, 'Labour, capital and class struggle around the built environment in advanced capitalist societies', pp. 266-78. 76 Ibid. 77 Massey and Catalano, Capital and Land, pp. 167-85. 78 On the role of Shelter, see Des Wilson, / knew it was the placets fault

216

79 80

81 82 83

84 85 86 87 88 89

90

91

92 93

94

Notes to pages 6g-jo

(London: Oliphantes, 1967), and for the CDP view, see The Costs of Industrial Change (London: Home Office, 1977) and Gilding the Ghetto (London: Home Office, 1977). For one case study, see Dunleavy, 'Protest and quiescence in urban polities'. On the recent academic pressure groups' position in the Labour movement, see Jack Brocklebank, Nicholas Kaldor, John Maynard, Robert Nield and Oliver Stutchbury, The Case for Nationalising Land (London: Campaign for Nationalising Land, 139 Old Church Street, undated). John A. Armstrong, The European Administrative Elite (New Jersey: Princeton University Press, 1973). Jack Hayward, 'Institutional inertia and political impetus in France and Britain', European Journal of Political Research, 8 (1976), pp. 341-59. On the role of in-service socialisation, see Hugh Heclo and Aaron Wildavsky, The Private Government of Public Money (Los Angeles: University of California Press, 1974), pp. 1-28. Charles E. Lindblom, The Policy-making Process (Englewood Cliffs, New Jersey: Prentice Hall, Inc., 1968). Derek Fraser, The Evolution of the British Welfare State (London: Macmillan, 1973), pp. 39-46 and 57-66. Jack Brand, Local Government Reform in England (London: Croom Helm, 1974), PP- 59-87On the role of the DOE, see David H. McKay and Andrew W. Cox, The Politics of Urban Change (London: Croom Helm, 1979). Ibid. Prior to the reform of local government between 1972 and 1974 the local authority associations were: the Rural District Councils Association, the Urban District Councils Association, the County Councils Association and the Association of Municipal Corporations. On their defensive role, see Brand, Local Government Reform in England, pp. 88-130. On these problems, see J. J. Westergaard, 'Land-use planning since 1945', Town Planning Review, 35 (1964-1965), pp. 219-37, a n d T. H. Parkinson, 'Memorandum prepared by the Town Clerk of Birmingham for the Purchase Price of Land Subcommittee of the Association of Municipal Corporations' (London: AMC, 11 June 1961). John Gyford, Local Politics in Britain (London: Croom Helm, 1976), pp. 25-92, and J. Lewis, 'Variations in service provisions: Politics at the Lay-Professional interface' in Essays in the Study of Urban Politics, ed. Ken Young (London: Macmillan, 1975), pp. 52-77. Brand, Local Government Reform in England, pp. 131-47, and Gyford, op. cit., pp. 59-^92. On the role and development of quasi-government agencies, see D. C. Hague, W. J. M. McKenzie and A. Barker, Public Policy and Private Interests: The Institutions of Compromise (London: Macmillan, 1975). This represents a very limited list of the quasi-government agencies involved in these issues. For a fuller listing, see C. C. Wood and W. J. M.

Notes to pages 71-85

95 96

97 98

217

Mackenzie, ' The problem of classifying institutions' in Public Policy and Private Interests, ibid. pp. 409-23. Heclo and Wildavsky, The Private Government of Public Money, pp. 76-197. For the purpose of the study as a whole this list should include the four Ministries which were involved in the 1960s, but which were largely amalgamated and abolished in the 1970s. This would include the Ministries of Land and Natural Resources, Housing and Local Government, Public Buildings and Works, and the Department of Economic Affairs. C. C. Hood, The Limits of Administration (London :J. Wiley, 1976), pp. 3-29 and 190-208. Massey and Catalano, Capital and Land, pp. 180-90, argue that this is not, however, a problem for financial capital because it can always find other, more profitable, forms of investment elsewhere. 4 Labour, the 1Q47 system and the collapse of the development market

1 For these different views, see the Sedgmore Minority Report in the nth Report of the Expenditure Committee, H C 535-1 (July 1977), vol. 1, The Civil Service, and Jack Hayward, ' Institutional Inertia and Political Impetus in France and Britain', European Journal of Political Research, 4 (1976), pp. 341-592 Labour Party, Labour and Landowners (London: Labour Party Research Department, 1944). 3 Peter Ambrose, 'The British Land-Use Non-Planning System' (Inaugural lecture to the Conference of Socialist Planners, London: February 1977), PP- 1 - 6 . 4 For a general discussion of the role of pressure groups in this period, see Andrew W. Cox, 'Adversary Politics and Land Policy: Explaining Land Values Policy-Making Since 1947', Political Studies, 24, no. 1 (1981), pp. 16-34. 5 H. R. Parker, Paying For Urban Development (London: Fabian Society, 1959), PP. 3 - i 1. 6 Ibid. pp. 8-11. 7 Ibid. pp. 5-11. 8 This is hardly a novel conclusion of course and it is one shared by Parker, ibid, and J. B. Cullingworth, Environmental Planning, igjg-ig47, vol. 1, Reconstruction and Land Use Planning, igjg-ig47 (London: HMSO, 1975), pp. 251-8. Interestingly it was a view also shared at the time by Morrison and by two economists in the Cabinet Office - C. H. Chester and J. E. Meade - as Cullingworth reveals, pp. 259-61. 9 Cullingworth, vol. 1, p. 256. 10 Parker, Paying for Urban Development, p. 11; and, Peter Hall et al. The Containment of Urban England, vol. 2, The Planning System (London: Allen & Unwin, 1973), pp. 408^9. 11 Hall et al., ibid. p. 229.

218

Notes to pages 85—gg

12 Parker, Paying for Urban Development, p. 12. 13 Culling worth, vol. 1, pp. 234-8. 14 Much of the following discussion relies fairly extensively on the official history of the period by Cullingworth entitled: Environmental Planning, igjg-ig6g, vol. iv, Land Values, Compensation and Betterment (London: HMSO, 1981). On the social democratic proclivities of Labour governments in office, see: Ralph Miliband, Parliamentary Socialism (London: Merlin, 1972); David Coates, The Labour Party and the Struggle for Socialism (Cambridge University Press, 1975); and David Howell, British Social Democracy (London: Croom Helm, 1977). 15 Cullingworth, vol. 1, pp. 251-8. 16 Ibid. pp. 189-91. 17 Ibid. pp. 187-8. 18 Ibid. pp. 183, 187-9 a n d 2 56~719 Ibid. vol. 1, passim. 20 Ibid. pp. 209-11 and 259-61. 21 Ibid. pp. 187-98. 22 Ibid. pp. 192-9. 23 Ibid. pp. 234-8. 24 Ibid. pp. 202-10 and 238-9. 25 Ibid. pp. 211-12. 26 Ibid. pp. 209-10. 27 Ibid. pp. 212-13 and Cullingworth, vol. iv, p. 24. 28 Vol. iv, ibid. pp. 20-7. 29 Cullingworth, vol. 1, pp. 213-15. 30 Ibid. pp. 220-3. 31 Ibid. pp. 183-5. 32 Ibid. pp. 220-33 and 240-1. 33 Ibid. pp. 251-8. 34 Ibid. pp. 259-61. 35 Cullingworth, vol. iv, pp. 15-16 and 27-8. 36 Ibid. pp. 27-8. 37 Ibid. p. 34. 38 Ibid. pp. 40-2. 39 Ibid. pp. 49 and 59. 40 Ibid. pp. 35-53. 41 Ibid. pp. 57-9. 42 Ibid. pp. 52-3. 43 Coates, The Labour Party, pp. 42-74. 44 Cullingworth, vol. iv, p. 67.

45 46 47 48 49 50

Ibid. Ibid. Ibid. Ibid. Ibid. Ibid.

pp. 50-3. pp. 62-7. p. 68. pp. 73-80. pp. 61-2. pp. 75-8.

Notes to pages 100-13

219

51 Ibid. pp. 69-72. 52 Hall et al., The Containment of Urban England, pp. 229 and 408-9. 53 Cullingworth, vol. IV, p. 33. 5 The Conservative free market approach and the 1950s property boom {1931-1964) 1 Nigel Harris, Competition and the Corporate Society (London: Methuen, 1972); Andrew Gamble, The Conservative Nation (London: Routledge & Kegan Paul, 1974); and Trevor Russell, The Tory Party (Harmondsworth, Middlesex: Penguin, 1978). 2 Harold Macmillan, The Middle Way (London: Macmillan, 1966). 3 Harris, Competition and the Corporate Society, pp. 23-76. 4 J. B. Cullingworth, Environmental Planning, 1939-1969, vol. 1, Reconstruction and Land Use Planning, 1939-1947 (London: HMSO, 1975), pp. n o and 128. 5 Ibid. pp. 251-8. 6 Gamble, The Conservative Nation, pp. 33-6. 7 The high point of this success was seen clearly in the 1946 Party Conference restatement of Party policy and in the creation of the 1947 Industrial Charter, ibid. pp. 42-52. 8 Ibid, and Harris, Competition and the Corporate Society, pp. 77-148. 9 For details of the 1947 crisis, see David Coates, The Labour Party and the Struggle for Socialism (Cambridge: Cambridge University Press, 1975), pp. 42-74. 10 Britain Strong and Free: A Statement of Conservative and Unionist Policy (London: Conservative Central Office, October 1951). 11 Much of this discussion is presented in fuller detail in J. B. Cullingworth, Environmental Planning, 1939-1969, vol. iv, Land Values, Compensation and Betterment (London: HMSO, 1980), pp. 85-127. 12 Ibid. pp. 93-197. 13 Ibid. pp. I O I - I I .

14 15 16 17 18 19 20 21

Ibid. pp. 114-27. Ibid. pp. 87-8, 93, 99-100, 114-27 and 166-9. Ibid. pp. 120-1. Ibid. pp. 138-40. Ibid. pp. 173-6. Ibid. pp. 178-215. ibid. pp. 188-93. For further elaboration of the problems involved, see 'An index of housing land prices', Economic Trends (London: HMSO, February 1971), no. 208. 22 Ralph Turvey,' The rationale of rising property prices', Lloyds Bank Review (January 1962), pp. 27-41, and P. A. Stone, 'The price of building sites in Britain', in Land Values, ed. Peter Hall (London: Sweet & Maxwell, PP- I~1^-

220

Notes to pages 113—16

23 For a detailed account of the forces prevailing see: Peter Hall et al. The Containment of Urban England, vol. 2 (London: Allen & Unwin, 1973), pp. 195-246. 24 M. A. Carter, 'Planning and the land market', Estates Gazette, 175 (12 March i960), pp. 541-3, and 175 (19 March i960), pp. 597-601. 25 ' The banks and their properties', Banker, no. 464 (October 1964), pp. 640-5; J. Hyslop, 'Revolution amongst landowners' Time and Tide 18-25 October 1962), pp. 7-8; J. Myers, 'Why property fell', Management Today (August 1974), p. 48; B. P. Whitehouse, Partners in Property (London: Birn, Shaw, 1964); and Oliver Marriott, The Property Boom (London: Hamish Hamilton, 1967), pp. 1-8 and 35-42, all discuss these trends. 26 Marriott, The Property Boom, pp. 35-42. 27 This view differs markedly from the traditional view of why prices rise, which argues it is solely due to consumer demand, cf. A. A. Walters, 'Land speculator-creator or creature of inflation ?'; F. G. Pennance, ' Planning, land supply and demand'; and S. E. Denman, 'Present policies: Aims and results', in Government and the Land (London: Institute of Economic Affairs, 1974). 28 Carter, 'Planning and the land market'. 29 Marriott, The Property Boom, pp. 214-58. 30 J. B. Cullingworth, The Problems of an Urban Society, vol. 1, The Social Framework of Planning (London: Allen & Unwin, 1972), pp. 25-31. 31 J. R. James, 'Land planning in an expanding economy', Royal Society of Arts Journal, 106 (July 1958), pp. 589—608. 32 T. W. Freeman, Geography and Planning (London: Hutchinson, 1974), pp. 70, 106-7, a n d Cullingworth, The Problems of an Urban Society, vol. 1, pp. 3i-533 Freeman, Geography and Planning. 34 The Costs of Industrial Change (London: Home Office, Urban Deprivation Unit, 1977). 35 On the general trends, see R. Bacon and W. Eltis, Britain's Economic Problem: Too Few Producers (London: Macmillan, 1976). 36 Marriott, The Property Boom, pp. 57-64, 168-91 and 234-58. 37 Traffic in Towns (Buchanan Report) (London: Ministry of Transport, HMSO, 1963). 38 James, 'Land planning in ar expanding economy', pp. 589—608. 39 ' Partnership in town centre renewal', The Surveyor and Municipal Engineer, 121 (28 July 1962), pp. 945-6. As this article reveals, the trend towards urban renewal was indicated by the estimate that one-third of the urban authorities with more than 5 million inhabitants, one-half of those with 40-100,000 inhabitants, and one-quarter of those with 20-40,000 inhabitants were involved in redevelopment schemes in 1962. 40 For a detailed discussion of the problems facing urban local authorities in the wastelands left after slum clearance, see Rebuilding City Centres (Report of the Civic Trust Conference held at Middlesex Guild Hall, 15 July i960), and Urban Redevelopment (The Mancroft Report) (London: Civic Trust, 1962).

Notes to pages 116-21

221

41 ' Framework for urban renewal', Official Architecture and Planning (January 1961), pp. 14-16. 42 J. B. Cullingworth, Town and Country Planning in Britain (London, Allen & Unwin, 1974, 5th edition), pp. 78-80. 43 Ibid. pp. 261-7. 44 Peter Ambrose and Bob Colenutt, The Property Machine (Harmondsworth, Middlesex: Penguin, 1975), pp. 68-72. 45 According to Wyndham Thomas, ' Compensation and land values' (Peterborough Development Corporation Paper No. n o , 1972), this did not occur and land prices for public purchase rose. 46 For further discussion of the political responses from the various actors in the market, see Andrew W. Cox, 'Constraint and Contingency in Urban Policy-Making: The Case of British Land Values Policies: 1959-1970' (Unpublished Ph.D. thesis, University of Essex, 1979), chapter 5, section ii. 47 On the Cabinet issue, see John Mackintosh, The British Cabinet (Oxford: Oxford University Press, 1968), pp. 500-4; and, on the planning option, see Jacques Lereuz, Economic Planning and Politics in Britain (London: Martin Robertson, 1975), pp. 81-128. 48 Cox, 'Constraint and Contingency in Urban Policy-Making', chapter 5. 49 ' The Minister is converted', Architect and Building News, 218 (7 September i960), p. 289. 50 Ibid. 51 Derek Senior, 'The PAG report: A fairly revolutionary document', Architects Journal (4 August 1965), pp. 234-5. 52 'The urban planning group of the MHLG', Official Architecture and Planning, 26 (April 1963), pp. 541-3; 'The work of the research and development groups: The MHLG Housing Group', Official Architecture and Planning, 26 (March 1963), pp. 237-8; and 'The work of the MHLG development group', Architectural Association Quarterly (January 1964), pp. 173-81. 53 For the debate over this issue, see Hansard (Commons Debates), 633 (31 January 1961), cols. 751-7. 54 On the realisation of the need for action, see Cox, 'Constraint and Contingency in Urban Policy-Making', chapter 5, section ii. 55 Evelyn Sharp, The Ministry of Housing and Local Government (London: Allen & Unwin, 1969), p. 70. 56 Cullingworth, vol. iv, pp. 255-7. 57 Sharp, The Ministry of Housing and Local Government, p. 63, and' Reflections on planning', Estates Gazette, 190 (23 May 1964), p. 708. 58 J. Westergaard, 'Land-use planning since 1951', Town Planning Review, 35 (1964/65), p. 232. 59 'Land for building', The Builder (11 September 1964), p. 521. 60 Hansard (Commons Debates), 684 (18 November 1963), cols. 654-5; anc * Cullingworth, vol. iv, pp. 236-7. 61 This interpretation relies heavily on discussions with senior civil servants working with Sir Keith Joseph at the time. There is prima-facie evidence

222

Notes to pages 121-4

of his willingness to support a more interventionist position in his acceptance, first of assistance for local authorities in advance land purchase, and then of a taxation approach. For details, see R. Summerscales, 'Division in cabinet on land betterment tax', Daily Telegraph (3 August 1964), p. 4. 62 Signposts for the Sixties (London: Labour Party, 1961); and Culling worth, Mol. iv, pp. 252-64. 63 Hansard (18 November 1963), cols. 654-5, arj d Cullingworth, vol. iv, pp. 237-43. 64 Cullingworth, vol. iv, pp. 237-50, shows that Joseph wanted to go further to create regional development corporations to do a similar purchase job as the old Central Land Board. 65 Further details on Sir Keith's and the rest of the Conservative government's positions can be gleaned from: Desmond Heap,' Betterment levy and land values in 1964', Journal of Planning and Property Law (January 1964), pp. 6-16; Keith Joseph's paper to the TPI on 5 February 1964, reported in Official Architecture and Planning, 27 (March 1964), pp. 333-9 and Nigel Lawson, 'Policy for land', Crossbow (January/March 1965), pp. 13-18. 66 For Rippon's position, see Hansard (18 November 1963), cols. 755-6. Generally, see Summerscales, 'Division in cabinet on land betterment tax', and Ronald Butt, 'The Conservative dilemma over land', Financial Times (17 July 1964), p. 13. 67 Butt, ibid, and private correspondence with Nigel Lawson, who was a personal private aide to the Prime Minister, Sir Alex Douglas-Home, at this time. 68 On the views of Sir Colin Thornton-Kemsley, see 'Why a Land Commission?', Town and Country Planning, 33 (November 1965), pp. 405-7. 69 Summerscales, 'Division in cabinet', and, for the views of John BoydCarpenter, see his article, ' The Conservative land policy', Stock Exchange Gazette (17 December 1965), pp. 5-6. 70 Private correspondence with Nigel Lawson. 71 Hansard (18 November 1963), cols. 755-6. 72 The details of the closure of the Third Schedule loophole are presented in S. Jenkins, Landlords to London: the Story of a Capital and its Growth (London: Constable, 1975), pp. 220-6. 73 The South East Study: IQ6I-IQ68 (London: HMSO, Cmnd. 1952, 1966) and the Minister's reply to the AMC on 23 September 1964 (AMC Land Commission files) indicated that their request for extra financial assistance for local authorities to overcome the ' certificate of alternative use' problem was not possible. 74 The inequity for local authorities under the ' certificate of alternative use' system was indicated in the article: 'Land speculation and the free market', Guardian (6 May 1964), p. 10. 75 Cullingworth, vol. iv, pp. 252-62. 76 Ibid. p. 264. 77 Ibid. pp. 265-71 and The 1Q64 Campaign Guide (London: Conservative Central Office, 1964).

Notes to pages 124-7

223

78 This information was revealed by a number of former and existing civil servants in interviews and in Cullingworth, ibid. 79 Boyd-Carpenter, 'The Conservative land policy', and Lawson, 'Policy for land'.

1

2

3

4

5

6 Labour, the Land Commission and the problems of implementation (1964-1970) A more extensive account of policy-making by the Labour Party in opposition is found in Andrew W. Cox, 'Constraint and Contingency in Urban Policy-Making: the case of the British Land Values Policies: 1959-1970' (Unpublished Ph.D. thesis, University of Essex, 1979), chapter 6, section (a). ' Some examples of current land prices' (Skeffington memorandum), RD.2J (London: Transport House, February i960); Michael Stewart, 'Functions of the Land Commission', The Times (27 July 1964), p. 11; and 'Labour and the Land Commission', Stock Exchange Gazette (9 October 1964), pp. 13-14H. R. Parker, Paying for Urban Development (London: Fabian Society, 1959); 'Nationalised land', Guardian (11 May 1961), p. 10; 'The face of Britain and Mr Gaitskell', Town and Country Planning, 30 (March 1962), p. 124;' Paying for the future', Twentieth Century (Summer 1962), pp. 33-7; and 'Public ownership of central area freeholds essential', The Surveyor (7 April 1962), p. 396. Joyce Butler's views can be gleaned from her Parliamentary speeches: Hansard (Commons Debates), 688 (5 February 1964), cols. 1167-9. These views were first expressed in detail in 'Housing: Looking ahead', RD.62 (London: Transport House, June i960), pp. 2-10; and also 'Planning and the community', RD.IOJ (London: Transport House, January 1961), pp. 1-28. As the Estates Gazette argued in an article (2 July i960), p. 31: 'Mr Gaitskell still needs as many stalking horses as he can muster to take the party's mind off clause IV. That he has decided to make as much fuss as he can about the rise in the price of building land is pretty plain'.

6 RD.IOJ,

pp.

1-28.

7 As the Annual Reports of the Central Land Board, 1948-1956 (London: HMSO, 1946-1959) reveal, the Board only made forty-five compulsory purchase orders to support the 1947 system in this nine-year period. 8 This was emphasised by S. C. Silkin, 'Betterment: What next', Journal of the Town Planning Institute (September/October 1964), pp. 355-60. 9 Henry Wells,' The problem of divided ownership and the financial burden', Estates Gazette, 176 (30 July i960), pp. 221-5; and RD.103, pp. 16-17. 10 This was revealed by the differences in approach between RD.IOJ, with its emphasis on local authority purchase of land, and that outlined in ' Labour looks ahead', RD.124 (London: Transport House, May 1961). This latter document had the first statement that a Land Commission would be created at central rather than at local level. David Howell, British Social Democracy

224

11 12

13

14

15 16 17 18 19 20 21 22 23 24

Notes to pages 127-33

(London: Croom Helm, 1976), pp. 231-2, has argued that this section was produced by Gaitskell alone. Signposts for the Sixties (London: Labour Party, 1961), p. 259. For more extensive discussion of the problems, see: P. Ash, 'Labour and the land market', Estates Gazette, 191 (8 August 1964), pp. 439-41, (15 August 1964), pp. 524-7 (22 August 1964), pp. 585-7; (29 August 1964), pp. 669-73, a n ^ (5 September 1964), pp. 767-71; P. Marber, 'The nationalisation of property', The Chartered Surveyor (April 1964), pp. 517-22; and Cox, 'Constraint and Contingency in Urban Policy-Making', chapter 6. It is shown that Wyndham Thomas (TCPA) and two planners Arthur Ling and Leslie Lane - expressed grave doubts about the scheme during the study group deliberations. These criticisms followed similar arguments to those to be worked out by civil servants when Labour returned to office. These were initially rejected by Arthur Skeffington, the Chairman of the study group, but one or two caveats were eventually accepted privately in April 1964 by the group: it was felt prices might not be reduced and that the full-scale scheme might have to await twelve to eighteen months of detailed drafting and be preceded by a more limited scheme. Harold Wilson, The Labour Government, ig64-igjo: a Personal Record (London: Weidenfeld, 1971), pp. 32 and 45. The senior civil servants at the new Ministry of Land and Natural Resources were: J. D. Janes (Assistant Secretary, Land Commission Policy Division), formerly of Planning Division C, Ministry of Housing and Local Government; J. Catlow (Under Secretary), formerly an Assistant Secretary in Planning Division B, MHLG; and G. H. Chipperfield (Principal), formerly a Principal in Planning Division B, MHLG, now in the Land Commission Policy Division of MHLG. State of the Nation: Labour and the Land (Transcript of a Granada TV programme, London: Granada TV, 36 Golden Square, W i , 3 May 1976), p. 10, and R. E. C. Jewell, 'New government departments affecting planning', Journal of Planning and Property Law (August 1965), pp. 473-80. J. B. Cullingworth, Environmental Planning: ig3g-ig6g, vol. iv, Land Values, Compensation and Betterment (London: HMSO, 1980), p. 286. Land Commission: White Paper (London: HMSO, September 1965), Cmnd. 2771. Cox, 'Constraint and Contingency in Urban Policy-Making', chapter 6, sub-section (c). For an overview of these trends see: J. B. Cullingworth, Housing and Local Government (London: Allen & Unwin, 1966), pp. 53-7. Cullingworth, vol. iv, pp. 286-7. State of the Nation, p. 17. Cox, 'Constraint and Contingency in Urban Policy-Making', chapter 6, sub-sections (a) and (c). Cullingworth, vol. iv, pp. 286-8 and 305. Ibid. pp. 288-9. Ibid. pp. 288-90.

Notes to pages 134-9

225

25 State of the Nation, p. 14. 26 Ibid. p. 6. 27 R. H. S. Grossman, Diaries ofa Cabinet Minister :vol. 1, Minister ofHousing: ig64~ig66 (London: Hamilton & Cape, 1975), p. 101. 28 This is generally accepted, and by Willey himself. Michael Stewart, who had been Shadow Minister for Housing, argued in interview that he would have' fought tooth and nail' for the manifesto commitment. His presumption was that Willey was dictated to by his civil servants. 29 As J. R. James, then Chief Planner at the MHLG and now Professor of Town and Country Planning at the University of Sheffield, put it in interview: 'We had government by seminar'. James was referring to the fact that every Monday morning he would have the new Minister in an office to conduct a lecture/seminar on the ramifications of the Minister's responsibilities. 30 State of the Nation, p. 38. 31 This division was further elaborated upon by Fred Bishop, Willey's Permanent Secretary, in State of the Nation, p. 3. 32 Crossman, Diaries, vol. 1, pp. 101 and 153-8. 33 Janes was the definitive expert because he had been involved, with Evelyn Sharp, in the wartime Reconstruction Secretariat which had formulated the 1944 Coalition White Paper on Land Use and the 1947 Town and Country Planning Act. Janes had, subsequently, been involved in all of the later redraftings of the 1947 legislation in the 1950s. 34 State of the Nation, p. 2. 35 Cullingworth, vol. iv, op. cit., pp. 292-4, 301-5, 323-4 and 333-4. 36 Ibid. p. 314. 37 Ibid. pp. 295-304. 38 Ibid. pp. 330-939 Ibid. pp. 308-16; and State of the Nation, pp. 39-40. 40 Cullingworth, vol. iv, pp. 300-5. 41 Ibid. 42 Ibid. pp. 314-16. 43 Ibid. pp. 322-9; State of the Nation, p. 2; and Fred Willey, 'Land and the Land Commission' (Lecture given to the Town Planning Institute, Central Hall, Westminster, 19 January 1966). 44 Wyndham Thomas, 'Compensation, betterment and the Crown Land Commission' (Paper to the Executive Committee of the Town and Country Planning Association, 19 November 1964), and 'Land problems', RD.684 (London: Transport House, February 1964). 45 Signposts for the Sixties, pp. 19-22. 46 This interpretation relies on interview material from Stewart Greenstreet. For an example of Harold Wilson's emphasis see: Harold Wilson's speech at Leeds Town Hall, 8 February 1964 (London: Labour Party Press and Publicity Department, Transport House, 1964), p. 10. 47 Land Commission: White Paper (London: HMSO, September 1965), Cmnd. 2771.

226

Notes to pages

139-40

48 For a detailed elaboration of how the Land Commission was to work technically, see B. Harris and W. G. Nutley, Betterment Levy and the Land Commission (London: Butterworth, 1967), and G. Seward and W. R. Smith, The Land Commission Act (London: Charles Knight, 1967). 49 This view was expressed by all the senior 'officials' interviewed. 50 Desmond Heap, 'How the Land Commission works', RIB A Journal, 74 (April 1967), pp. 139-4051 T. D. Lynch, 'Final pieces of the jigsaw', Accountants Magazine (June 1967), pp. 252-7, and F. Longdon, 'The Land Commission Act', Estates Gazette (21 October 1967), pp. 257-61. 52 Again this view was expressed by all of the senior civil servants interviewed. 53 Cullingworth, vol. iv, pp. 290-1, 326-9 and 344-5, provides details of this as does Cox, 'Constraint and Contingency in Urban Policy-Making', chapter 6, sub-section (c). In general terms the exemptions given to builders were divided between those granted in the White Paper and those granted during legislative drafting. In the initial Bill, published in November 1965, any land held by builders was exempt from levy if it had been purchased prior to the publication of the White Paper and had planning permission for development. Similarly, land purchased after the White Paper, and on which a 'specified operation' had taken place before the first appointed day (6 April 1967), was also exempt from levy. Any other land bought and developed by builders, whether purchased before or after the first appointed day, was to be liable to levy when development or sale took place. The builders' representatives, however, felt that there were some classes of land which should also be exempt, and that if they were not exempted then the housing drive might be jeopardised. As a result of these pressures, two major concessions were granted by Willey as the Bill passed through Parliament. Builders had assumed that when they purchased land after the publication of the White Paper (22 September 1965) they could start a 'specified operation' before the first appointed day (6 April 1967) to avoid levy, under outline, rather than detailed, local authority planning permission. But there was a confusion in the legislation because it appeared that the government would only give exemption when detailed permission had been granted. The effect of this confusion was to force builders to desist from commencing development because they were unsure of their rights in avoiding levy. The government eventually agreed to the builders' demands that' specified operations' could commence under outline planning permission; but added the caveat that the application for detailed permission should be within the ambit of the outline permission. This restraining caveat was added to ensure that builders did not start development on a small site and then demand exemptions on a much larger one. Related to this first concession was a second. Builders would not buy land between 22 September 1965 and 6 April 1967 because they were not allowed to take the price they had paid for land bought in this period into account for calculating the eventual levy payable. Thus they could pay a high market

Notes to pages 142-3

227

value price for land, but the Commission would eventually only allow them to claim the existing use value as the price paid for the purpose of assessing levy. There was an important reason for this: unscrupulous builders might claim that they had paid a high price for land in order to avoid levy, when they had not in fact done so. Logical as this appeared, the clause in the Bill had the effect of slowing down development because builders would not buy land until after 6 April 1967, when the price they had paid could be taken into account in assessing levy. This obvious threat to housing starts resulted in the government agreeing to allow the purchase price of land bought by a builder for housing between 1 August 1966 and 6 April 1967, and on which development commenced prior to 6 October 1967, to be taken into account for assessing levy. The builders' representatives could, therefore, regard themselves as successful in defending their members' interests. Apart from the two major concessions outlined above, the builders were also able to ensure that their operational land would be exempt from compulsory purchase by the Commission; that demolition would be exempt from levy assessment; and that an extension would be given on the time allowed in which builders could start development on exempted land without incurring levy. 54 For details of these problems in more detail see Cox, 'Constraint and Contingency in Urban Policy-Making', chapter 7. 55 Hansard (Commons Debates), 720 (11 November 1965), cols. 400-1; Arthur Skeffington, 'Ministry reply to GLC criticisms of the Land Commission Bill', Local Government Chronicle (19 February 1966), pp. 308-10; Fred Willey, 'The Land Commission should aid private builders' (Speech to FRHB Annual Conference, Europa Hotel, Grosvenor Square, London, 7 November 1965); 'The case for the Land Commission', Architects Journal (15 December 1965), p. 1413; and 'The Minister on his three main tasks' (Speech to the TCP A Conference, Church House, Westminster, 20 October 1965)56 Hansard (Commons Debates), 723 (31 January 1966), cols. 1697-710, and Arthur Skeffington, 'The Land Commission', Town and Country Planning (January 1966), pp. 9-10. 57 For the details of the difficulty Crossman found himself in with the building societies, see Hansard (Commons Debates), 720 (11 November 1965), cols. 491-501, and The Building Societies Association, Circular 1217A (1965). The problem arose because the Chancellor had attempted to influence the building society interest rates. In the Party manifesto it had been promised that these would be reduced, but due to the government having to introduce financial stringency in office, these interest rates had risen rather than fallen. The government still wanted to maintain its commitment to a bigger housing drive than the Conservatives, so concessions were granted to builders and a commitment to private, as well as public, development was given to the societies in the 1965-66 period. 58 C. Gwinner, 'Facing up to the land shortage', Financial Times (18 October 1967), p. 16.

228

Notes to pages

143-6

59 P. Ellman, 'The Effects of the Land Commission on the Cost of Residential Land' (Unpublished M.Sc. thesis, University of Strathclyde, 1969), chapter 6, pp. 6-29, has argued this case and has been supported by: J. McAuslan, 'The Land Commission; past, present and future', Chartered Surveyor, 102 (November 1969), pp. 222-7; 'Land Commission and high land prices', Estates Gazette (15 June 1968), p. i m ; and Peter Hall et al., The Containment of Urban England, vol. 2 (London: Allen and Unwin, 1973), pp. 197-24560 'Developers survey', Housebuilder and Estate Developer, 29 (November 1969), pp. 76-7, and 'The economic squeeze', RIBA Journal (March 1969), pp. 137-42. 61 Hall et al., The Containment of Urban England, vol. 2, p. 400. 62 Ibid. pp. 182-6. 63 G. R. Chetwynd, 'The Land Commission; friend or foe?', Building Technology and Management, 6 (1968), pp. 150-1. 64 'The economic squeeze', RIBA Journal (March 1969), pp. 137-42. 65 For details of the economic cuts, see Michael Stewart, The Jekyll and Hyde Years: Politics and Economic Policy since 1Q64 (London: Dent, 1977), pp. 70-86. 66 Howell, British Social Democracy, p. 275. 67 This new direction had been indicated earlier by the chief planner at the MHLG, J. R. James, in an article entitled: 'Planning for the 1970s: a strategic view of planning', RIB A Journal (October 1967), pp. 419-28. 68 State of the Nation, p. 43. 69 Willey made this plain in the Dissolution debate, Hansard (Commons Debates), Committee D (4 February 1971), cols. 60-2. It was also forcefully expressed by the Minister in the first directive given to the Commission on 17 April 1967. For details, see Land Commission Report and Accounts (London: HMSO, 31 March 1968), p. 3, and Cullingworth, vol. iv, pp. 355-0470 Wyndham Thomas, 'The Land Commission and local planning authorities' (Paper for the Land Commissioners' meeting on 2 May 1967). 71 As Wells argued:' It follows that the more profit the Commission can make under Part 2, the more it will be able in due course to help the private sector in getting the so-called "twilight areas" redeveloped - and central areas as well - where the high cost of acquisition might otherwise discourage desirable development', from 'The policy of the Land Commission' (Speech to the RICS, Church House, Gt Smith Street, London, SWi, 4 May 1967). 72 Local Government Chronicle (1 July 1967), p. 1049. 73 Ibid. 74 Ibid. IS Mid. 76 D. R. Denman, 'The implications of the Land Commission for urban renewal' (Symposium: Urban Renewal, Dept. of Civil Engineering, University of Salford, 17/18 May 1967), pp. 1-21., indicated the nature of the ' middleman' approach, but he was scathing of its utility.

Notes to pages 146-50

229

77 Cullingworth, vol. iv, pp. 361-4. 78 G. R. Chetwynd, 'The Land Commission - friend or foe?', pp. 150-1; and Cullingworth, vol. iv, pp. 366-73. 79 The specific figures produced were: Land was available for development in the following time periods: South East Kent (2.4 years) It was felt that there was land for 6.5 Berkshire (4.7 years) years in the area as a whole, but in Oxfordshire (4.6 years) Kent and Surrey there was a ' fairly Hertfordshire (8 years) imminent shortage'. Essex (10.5 years) West Sussex (9 years) North West (excluding Manchester) It was estimated that there was only 9 years supply across the area as a whole, but in some areas only one year remained. West Midlands It was estimated that there was only 6 years supply in the area as a whole, but, if demand was maintained, there would be no land at all by 1971. (Sources: C. Gwinner, 'Facing up to the land shortage', and Standing Conference on South East and London Regional Planning Paper, LRP 983 (29 November 1967), Agendum item 14. 80 J. R. James, 'Planning for the 1970s', pp. 419-28; and J. McAuslan, 'The Land Commission: past, present and future', pp. 222-7. 81 Standing Conference Papers, LRP 679 (20 July 1966), and LRP 983 (29 November 1967). 82 Land Commission First Annual Report and Accounts, pp. 2-19. 83 Local Government Chronicle (1 July 1967), pp. 1049-50. 84 Standing Conference Papers, LRP 983, p. 4. 85 ' The Land Commission and high land prices', Estates Gazette, 206 (15 June 1968), p. m i , carried an account of Wells' speech to the RDCA Annual Conference at Torquay (June 1968). The view was also revealed in an article: 'The Land Commission: planning for the future', Building Technology and Management, 7 (January 1969), pp. 2-3. 86 G. Sargeant, 'Land men get going, but is it too late?', Sunday Times (April 1970). 87 L. Marks and J. Hillman, 'Council faces head on clash with Land Board', The Observer (30 March 1969), p. 1-2. 88 Standing Conference Papers, LRP 1004, p. 102. 89 Wells' speech on 28 November 1968 to the NFBTE Annual Conference, Royal Garden Hotel, Kensington, London, was reported i n : ' Building tidal wave may hit Green Belt', Times Business News (29 November 1968). 90 Second Annual Land Commission Report (London: HMSO, 31 March 1969), p. 26. 91 Cullingworth, vol. iv, p. 392. 92 As McAuslan, 'The Effects of the Land Commission on the cost of Residential Land', argued, the Labour commitment was only intended to reduce land and house prices indirectly, not directly.

230

Notes to pages 150-60

93 Second Annual Land Commission Report, p. 8. 94 These problems were spelt out by Wells in a speech to a Joint Meeting of the Edinburgh and S.E. Scotland Branches of the RICS and Law Society of Scotland (20 November 1967, Edinburgh). 95 Ibid. 96 First Annual Land Commission Report,' The Effects of the Land Commission on the Cost of Residential Land', p. 12. This view was supported by McAuslan, op. cit., and also by V. Sadji, 'The Land Commission's betterment levy' (Paper presented to the 12th International Conference on Land Value Taxation and Free Trade, Caswell Bay, Wales, September 1968). 97 On these developments see: Labour Party Research Paper No. J4 (London: Transport House, May 1969); A. Powell, 'Does anybody own this land?', The Observer (29 October 1967), p. 1; and McAuslan, op. cit., pp. 222-7. 98 N F U letter to the MHLG dated 12 May 1969 (Appendix D); McAuslan, 'The Land Commission: past, present and future'; Ellman, 'The Effects of the Land Commission on the Cost of Residential Land'; Hall et al., The Containment of Urban England, vol. 2, pp. 237-54; Ash, 'Labour and the land market'; and J. W. M. Wilson,' The influence of the Land Commission on the supply, demand and price of building land', Chartered Auctioneer and Estate Agent, 49 (October 1969), pp. 411-32. 99 Cullingworth, vol. iv, pp. 383-7. 7 The second failure of the Conservative free market approach and the igjos property boom (igjo-igj4) 1 John Boyd-Carpenter,' The Conservative's land policy', The Stock Exchange Gazette (17 December 1965), pp. 5-6. 2 This view was expressed in correspondence with the author. 3 Martin Holmes, Political Pressure and Economic Policy: British Government igjo-igj4 (London: Butterworth, 1982), pp. 3-14. 4 Ibid. 5 Hansard (Commons Debates), 728 (12 May 1966), cols. 634, 639-42, 707-16; and Hansard (Commons Debates), 734 (27 October 1966), cols. 1561-2. 6 Conservative Campaign Guide: igjo (London: Conservative Central Office, 1970), P- 3707 Hansard (Commons Debates), 804 (22 July 1970), cols. 548-52. 8 NFBTE, Annual Report, igjo (London: 1970). 9 The Land Commission Dissolution Act 1971 and The Finance Act 1971. 10 Circular 10/70 was discussed in Parliament: Hansard (Commonds Debates) 808, (1970/71), cols. 1387-i). 11 Hansard (Commons Debates), 316 (18 March 1971), cols. 590-5. 12 For details of the differences between these types of plans, see T. A. Broadbent, Planning and Profit in the Urban Economy (London: Methuen, 1977), PP- i59-6o13 Andrew Thorburn, 'The difficulties of land assembly by local authorities', Town and Country Planning, 41 (September 1973), pp. 400-3 and' Statement

Notes to pages 161-8

14 15 16

17 18 19 20 21 22 23 24 25 26 27 28

2

3*

by the TCPA on Development Values and Land Assembly', Town and Country Planning 41 (May 1973), pp. 258-67. J. B. Culling worth, Problems of an Urban Society, vol. 1, The Social Framework of Planning (London: Allen & Unwin, 1972), p. 168. Oliver Marriott, The Property Machine (London: Gollancz, 1967). The Brown ban was first imposed on London and was later extended to the whole of the South East and West and East Midlands for all offices above 3,000 sq.ft. Peter Ambrose and Bob Colenutt, The Property Machine (Harmondsworth, Middlesex: 1975), pp. 75-6. 'Property: A Survey', The Economist, 242 (18 March 1972), pp. 10-12. Paul N. Balchin and Jeffrey L. Kieve, Urban Land Economics (London: Macmillan, 1977), p. 127. Nicholas Davenport, 'Through the top: Property Shares', Spectator (15 April 1972), p. 597. Balchin and Kieve, Urban Land Economics, pp. 129-30. John Plender, 'Need for Second Thoughts about Investment Market', The Times (13 April 1973). Christopher Mansell, 'Finance for Property', Management Today (January 1972), pp. 85-91. The Economist (18 March 1972), pp. 7-8. Mansell, 'Finance for Property', p. 85. John Myers, 'Why Property Fell', Management Today (August 1974), p. 48. Ibid. Ibid. Lindsay Vincent, 'Big Boys Barge In', The Observer (5 August 1973), p. 12.

29 The Economist (18 March 1972). 30 Holmes, Political Pressure and Economic Policy, p. 52. 31 Tom Lester, 'The Props Beneath Property', Management Today (August 1973), pp. 50-7 and 122. 32 All asset stripping was not to eradicate jobs. See Mansell, 'Finance for Property', pp. 85-90. But an Inland Revenue survey in 1973 showed that in the GLC area office space was increasing by 5 per cent per annum, while industrial space was only increasing at I - I £ per cent per annum, John Myers, 'Why Property Fell', p. 48. 33 ' Statement by the TCPA on Public Possession of Development Land', Town and Country Planning, 42 (June 1974), p. 328. 34 The case of Wandsworth Borough in London was indicative: the granting of planning permission on one site resulted in its value increasing overnight from £1.5 million to £10 million. John Plender, The Times (13 April 1973). But for an alternative approach see the Tolmers Square issue in which a more favourable scheme for the local authority was arrived at: Christopher Booker and Bennie Gray,' Changing the Face of Property Developers', The Observer (14 October 1973), p. 17. 35 Balchin and Kieve, Urban Land Economics, pp. 127-8. 36 NFBTE, Annual Report, igjo.

232

Notes to pages

168-73

37 Ray Thomas, 'Housing Land Shortage: Reality or Myth?', Town and Country Planning, 40 (November 1972), pp. 531-3. 38 TCPA, Statement on Development Values (May 1973). 39 Maurice Ash, 'What Should be done about Land?', Town and Country Planning, 42 (March 1974), pp. 163-71. 40 Consortia schemes did develop, particularly in London boroughs and also in Buckinghamshire and Hampshire. These however were attacked as an unsatisfactory use of public powers to make profits for private developers at the expense of landowners. See Maurice Ash, 'Will planning be taken by surprise?', Town and Country Planning, 42 (May 1974), pp. 254-7. 41 John Bell, 'How Heath can tackle the property developer', Sunday Times (2 December 1973), p. 56. 42 ' The land the government hoards', The Economist (14 April 1973), pp. 80-1; and Peter Hillmore, 'Mr Walker's shadow boxing', New Statesman (7 July 1972), p. 543 Cmnd. 5280 (London: HMSO, April 1973). 44 Holmes, Political Pressure and Economic Policy, pp. 91-2. 45 TCPA, Statement on Development Values (May 1973); David H. McKay and Andrew W. Cox, The Politics of Urban Change (London: Croom Helm, 1979), pp. 89-90 and 94-5; 'You can't afford to hoard', The Economist (15 September 1973), pp. 38 and 248; 'To let', The Economist (1 December 1973), p. 99; Nicholas Davenport, 'Money and the City', Spectator (30 June 1973), p. 827; and John Plender,' Government controls may end office rents spiral', The Times (13 April 1973). 46 'Bit of a mystery', The Economist (10 March 1973), p. 83. 47 'Forgotten charge?', The Economist (10 November 1973), p. 50. 48 McKay and Cox, The Politics of Urban Change, p. 95. 49 Ambrose and Colenutt, The Property Machine, p. 74, and Christopher Booker and Bennie Gray, 'How the property men got their way', Architects Journal, 80 (November 1973), pp. 533-4. 50 The Economist (15 September 1973), p. 101. 51 Michael Brett, 'How to avoid a collapse', Investors Chronicle, 28 (3 May 1974), PP- 494-552 Ibid. 53 'The City and Industry', The Banker, 123 (January 1973), pp. 9-10, provides details of the somewhat halting willingness of the main City institutions to involve themselves in overseeing management problems in industry or of working closely with the CBI on industrial investment. 54 Myers, 'Why Property Fell', p. 48. 55 Plender, The Times (13 April 1973). 56 Booker and Gray, 'How the property men got their way', pp. 533-4; and John Foster, 'Unfreezing vital funds', Spectator (11 May 1974), pp. 586-7. 57 Booker and Gray, ibid. 58 Graham Seajeant, John Bell and Roman Einstein, ' Caplan: Massive vote of no confidence', Sunday Times (2 December 1973), p. 55; and Brett, 'How to avoid a collapse', p. 494.

Notes to pages 173-8

233

59 John Plender, 'Property: delicate issue for the government', The Times (13 December 1974), p. 23. 60 Exemptions under the 1974 Finance Act included owner-occupiers in their own dwellings, as well as dependent relatives' dwellings. Company sale proceeds of under £10,000 and individuals with sale proceeds under £1,000 were also exempt. Furthermore the calculation of development cost allowed for an additional 20 per cent of the total cost of development (as reasonable profit) to be offset against the tax liability; plus related fees and interest charges. The tax was also to be payable over eight years. On first lettings the tax was only chargeable on rack rents above £2,000. For further details, see Keith Crawford, 'Finance Bill leaves confusion rather than dismay', Investors Chronicle, 28 (3 May 1974), pp. 496-7 and 'Property: it will never be the same again', The Economist (22 December 1973), p. 66. 61 'To let', The Economist (1 December 1973), p. 99. 62 On this, see chapters 2 and 3 and T. A. Broadbent, Planning and Profit in the Urban Economy, chapter 2 and pp. 165-70. 63 For a statement of TCP A ideas, see the compilation in' The Land Question: The TCPA contribution', Town and Country Planning, 42 (December 1974)64 The Earl of Kingston, 'Developers - future indefinite', Spectator (30 March 1974), p. 403. 65 Brett, 'How to avoid a collapse', pp. 495-6. 8 Labour and the failure of the Community Land Act (igy 4-1 gyg) 1 For details of Labour opposition policy-making, see Michael Hatfield, The House the Left Built (London: Gollancz, 1978) and David Coates, Labour" in Power? (London: Longmans, 1980), chapter 4. 2 The Labour Programme for Britain (London: Transport House, 1973). 3 The debate within the Labour Party revolved around a dispute over the degree of state ownership control and the speed with which this should occur. In general the proponents of outright nationalisation of land preferred to vest leasehold control in the state immediately. For this view, see Jack Brocklebank, Nicholas Kaldor, Joan Maynard, Robert Nield and Oliver Stutchbury, The Case for Nationalising Land (London: Campaign for Land Nationalisation, 1973). In the middle of this debate were people like John Silkin, who had at one time argued for a similar approach to that pursued by his father in 1947 but at a lower taxation level of 50 per cent. See John Silkin,' Solving the land problem', New Statesman (23 July 1971), p. 100. The most influential arguments undoubtedly came from those individuals who wanted to follow the logic of the Land Commission approach with more state control of development land ownership and heavier taxation. Indicative of this view were David Lipsey, Labour and the Land (London: Fabian Society, Tract No. 422, April 1973) and R. Barras, Doreen Massey and T. A. Broadbent, 'Planning and Public Ownership', New Society (28 June 1973), pp. 748-9.

234

Notes to pages

ijg-84

4 'A tax to cheer surveyors hearts', The Economist, 251 (4 May 1974), p. 100; Lindsay Vincent, 'Multi-million pound bluff in the property market', The Observer (22 December 1974), p. 11; and Peter Riddell, 'Property losses: how far the banks own fault?', Banker, 125 (February 1975), p. 177 provide details. 5 D. R. Denman, 'Property companies: execution or reprieve?', National Westminster Bank Quarterly Review (May 1975), pp. 22-3 and 'The property trap', The Economist, 256 (9 August 1976), p. 5. 6 Ibid. See also Riddell,' Property losses', pp. 177-83 and John Plender,' The new leviathan; property and financial institutions', The Economist, 267 (10 June 1978), p. 3. 7 Denman, 'Property companies', p. 23. 8 Riddell, 'Property losses', p. 183. 9 John Plender, 'Property: delicate issue for government', The Times (13 December 1974), p. 23. 10 Michael Brett, 'How to avoid a collapse', Investors Chronicle, 28 (3 May 1974), P- 49411 Plender,' The new leviathan', provides details of the three-year moratorium on Stern Group debts and the ability of the Bank of England to organise the sale of £2 billion of property assets up to 1978. Clearly however this would not have been as easy without the unfreezing of business rents. 12 Riddell, 'Property losses', p. 177. 13 Vincent, 'Multi-million pound bluff', argues that the clearing banks lost around £1.2 billion in the collapse and it took over three years for the property bottleneck to be cleared. Furthermore, a number of smaller property groups collapsed or were bought out at low prices by larger property groups or financial institutions. The number of quoted companies in property fell from 129 to 98 between 1970 and 1977. For details of this, see Michael Hanson, 'Most serious setback pushes industry towards brink', The Times (18 October 1976), p. 7. 14 Doreen Massey and Alejandrina Catalano, Capital and Land (London: Edward Arnold, 1978), pp. 184-5. 15 See Robert Nield, 'Labour and the land', New Statesman (28 September 1973), PP- 407-8. 16 For details of the Community Land Scheme, see Susan Barrett, Martin Boddy and Murray Stewart, Implementation of the Community Land Scheme: Interim Report April igj8 (Bristol, University of Bristol, School for Advanced Urban Studies, Occasional Papers no. 3, April 1978), Appendix to section 1, pp. 105-12. 17 Susan Barrett, 'Local authorities and the Community Land Scheme', in Susan Barrett and Colin Fudge (eds.), Policy and Action: Essays on the Implementation of Public Policy (London: Methuen, 1981), p. 70. 18 'Not what Lloyd George meant', The Economist, 256 (22 March 1975), pp. 75-6. 19 Massey and Catalano, Capital and Land, p. 176, and 'Good grief, The Economist, 258 (27 March 1976), pp. 94-6.

Notes to pages 184-g

235

20 Massey and Catalano, ibid., pp. 175-8; Frederick Stafford, 'Land and public ownership', Architects Journal, 161 (5 February 1975), pp. 289-90; and Circular 121/75 (DOE). 21 'A farce's third run', The Economist, 252 (14 September 1974), p. 38. 22 Lipsey, Labour and the Land, and John Young, 'Commercial property: special report', The Times (26 November 1980), p. 19. 23 Barrett, 'Local authorities and the Community Land Scheme', p. 70. 24 'A rather better land bill', The Economist, 256 (2 August 1975), p. 26. 25 Maurice Ash, 'Could do better', Town and Country Planning, 42 (October 1974), pp. 446-8. 26 Barrett, 'Local authorities and the Community Land Scheme', pp. 77-8; Lie of the Land (London: The Land Campaign Working Party, 1977); and Brian Waters, 'The Community Land Act', Architects Journal, 163 (4 February 1976), p. 223. 27 Frederick Stafford, 'Community Land', Architects Journal, 161 (2 April I975X P. 70328 ' A rather better land bill', The Economist, p. 26. 29 Frederick Stafford, 'Community Land Act: the time has come', Architects Journal, 162 (29 October 1975), pp. 783-4. 30 'A rather better land bill', The Economist, p. 26. 31 'RIP', The Economist, 271 (9 June 1979), p. 26 and John Blake, 'Back to square one', Town and Country Planning, 48 (June 1979), p. 73. 32 Barrett et al., Implementation of the Community Land Scheme, p. 77. 33 Blake, 'Back to square one', p. 74. 34 Ray Gazzard, 'The Community Land Act and the environment', Town and Country Planning, 46 (November 1978), p. 493, has argued that in the first year of bids for loan sanctions 88 successful bids came from 49 Conservative and 84 from 42 Labour controlled local authorities. 35 Gazzard, pp. 493-5, and 'RIP', The Economist, p. 26. 36 Stafford, 'Community Land Act', p. 884. 37 Stafford, 'Land and public ownership', p. 290. 38 Barrett et al., Implementation of the Community Land Scheme, pp. 11, 2 4 - 5 and 31; John Brennan, 'The Land Act', The Times (5 April 1976), p. 19; and Circular 171/74 (DOE). 39 John Blake, 'Down but now out', Town and Country Planning, 45 (April 1977), p. 196 and Barrett et al., Implementation of the Community Land Scheme, p. 17. 40 Barrett et al. ibid. pp. 40-1. 41 Ibid. pp. 59-65. 42 Ibid. pp. 27, 36 and 40. 43 Ibid. pp. 41-5 and Owen Luder,' The Community Land Act', Royal British Architects Journal, 83 (April 1976), p. 153. 44 'Floperoo', The Economist, 261 (20 November 1976), p. 128. 45 Blake, 'Back to square one', p. 73; Peter Harris, 'The Land Act in operation', The Planner, 62 (February 1976), p. 37; and Barrett et al., Implementation of the Community Land Scheme, pp. 17—22.

236

Notes to pages igo—8

46 Barrett et al., ibid. pp. 8-10 and 24-9. 47 Ibid. pp. 12-13 and 37, and C. K. Jones,' Problems of the Community Land Act', Estates Gazette (3 April 1976), p. 26. 48 Blake, 'Down but now out', pp. 200-1 and Barrett et al., ibid. pp. 14-15 and 52-9. 49 Blake, 'Back to square one', p. 79, and Barrett et al., ibid. pp. 53-63 and 89. 50 John Blake, 'If at first...', Town and Country Planning, 46 (April 1978), p. 198. 51 For details of these views, see C. K. Jones, op. cit., pp. 28-9; David Lock, ' Land fit for houses', Town and Country Planning, 46 (June 1978), pp. 293-4; Graham Hallet,' British land policy at the crossroads', National Westminster Bank Quarterly Review (November 1978), pp. 16-22; Michael Nanson, 'Growing pressure to amend the Community Land Act', The Times (10 November 1977), p. i; 'Floperoo', The Economist, p. 128; and 'Limping along', The Economist, 264 (3 September 1977), p. 19. 52 Paul N. Balchin and Jeffrey L. Kieve, Urban Land Economics (London: Macmillan, 1977), pp. 136-7, and T. A. Broadbent, Planning and Profit in the Urban Economy (London: Methuen, 1977), p. 169. 53 For the views of the TCP A, see ' Statement by the TCP A on the Public Possession of Development Land', Town and Country Planning, 42 (June 1974), PP- 3 2 8-339 The failure of adversarial policies and the enigma of the Thatcher government 1 Chapter 3, pp. 72-3. 2 Michael Latham, 'Looking at the Land Act', The Times (17 November 1978), p. 9; Timothy Raison, 'The case for scrapping the Land Bill', The Times (10 June 1975), p. 16; and John Blake, 'Back to square one', Town and Country Planning, 48 (June 1979), p. 75. 3 Chapter 3, pp. 72-3. 4 Details of this can be found in Andrew Cox,' Continuity and Discontinuity in Conservative Urban Policy', Urban Law and Policy, 3 (1980), pp. 269-92. 5 Susan Barrett, 'Local Authorities and the Community Land Scheme', in Susan Barrett and Colin Fudge (eds.), Policy and Action: Essays on the Implementation of Public Policy (London: Methuen, 1981), p. 71. 6 John Young, 'Commercial Property: Special Report', The Times (26 November 1980), pp. 19-23. 7 Anthony Williams, 'The recession and the housebuilder', Building, 240 (6 February 1981), p. 21; and 'Don't look for help in the budget', Architects Journal, 171 (5 March 1980), p. 468. 8 John Plender, 'The new leviathan: Property and the financial institutions', The Economist (10 June 1978), pp. 1-38. 9 Cox, 'Continuity and Discontinuity'. 10 P. Kellner, 'Thatcher vetos plan to tax owner-occupiers', Sunday Times (24 February 1980), p. 4.

Notes to pages 1Q8-202

237

11 This view is associated with the arguments presented by Edwards and Harold Lever. 12 S. E. Finer (ed.), Adversary Politics and Electoral Reform (London: Anthony Wigram, 1975), pp. 3-32. 13 Chapter 1, pp. 15-21. 14 Chapter 3, p. 73. 15 John Blake, 'Back to square one', Town and Country Planning, 48 (June 1979), PP- 73-4 ; 16 The TCPA position has been set out in ' Statement on the public possession of development land', Town and Country Planning, 42 (June 1974), pp. 328-33; David Lock, 'Land fit for houses', Town and Country Planning, 46 (June 1978), pp. 293-4; and David Hall, 'Land - third time unlucky', Town and Country Planning, 49 (January 1980), pp. 7-8. 17 Ibid. 18 Ibid., but see also T. A. Broadbent on the benefits of a public monopoly, in Planning and Profit in the Urban Economy (London: Methuen, 1977), p. 169. 19 This scheme is similar in intention, if not in structure, to the scheme proposed in the 1960s by Henry Wells,' The Problem of Divided Ownership and the Financial Burden', Estates Gazette, 176 (30 July i960), pp. 221-5. 20 For the TCPA view, see note 16 above.

Index

Acquisition of Land (Assessment of Compensation) Act (1919), 30-1 adversary politics, 15-16, 20, 25, 80, 154, 157-8, 175-6, 179, 192, 195-6, 199-203 agenda setting, 6 Althusser, L., 12 Ambrose, P., 46 Arnold Baker, C , 17 Association of District Councils, 69 Association of Landed Property Owners, 61 Association of Metropolitan Authorities, 69 Attlee, C , 44 Bains, Report, 160 Baldwin, S., 34 Bank of England, 170-2, 177, 179-81, 196 Barclay, John, 167 Barlow Commission on the Distribution of the Industrial Population, 35-6, 38, 41, 43-4>46, 51, 82, 84 Beer, S., 15 Benn, T., 17 betterment levy and tax, 55-65, 70, 72, 82, 87-90, 119, 120-4, 129-40, 142, 147, 150-1, 153, 156-7, i59> 169, 185, 196-7 Bevan, A., 92 Beveridge, W., 31, 44 Bevin, E., 42, 45 birth rate, 115 Bishop, F., 131

Board of Trade, 85, 87, 91-2, 137 Boothby, Lord, 33 Boyd-Carpenter, J., 109, 123, 156 British Property Federation, 192 Brittan, S., 15-16 Brooke, H., m - 1 2 , 121 Buchanan Report, 116 builders, role of, 47, 113-16, 120-1, 142-4, 147-9, 154, 157, 160-1, 166, 170-1, 186, 189, 198 building controls, 113 building licences, 95 building societies, role of, 169-71, 198 Building Societies Assocation, 66 business rents, 155-6, 164-5, 167, 169-77, 179, 181, 196-7 Butler, R. A., 44, 104, 107-9, i n , 123-4 Cabinet Office, 94 Callaghan, J., 135, 138, 140 capital gains tax, 56, 156-8, 163, 174 Carthery, H. W., 134 Catlow, J., 134 Central Land Board, 83-5, 90-100, 106, 108-9, 132 Centre Point, 167, 169, 173-4 certificate of alternative uses, 117 Chamberlain, N., 34, 43 Chambers of Commerce, 97 charities, 60 Chester, D. N., 94 Child Poverty Action Group, 53, 68 Chipperfield, G. H., 134 Church, role of, 59-60 Churchill, W., 40, 43, 45, 104-5

238

Index

239

City of London, role of, 52, 155, 158 163-4, 167, 169-70, 172-4, 176-7, 180-1 Civic Trust, 53, 67 civil servants, role of, 35, 42-4, 47-8, 60, 69-71, 80-1, 85-9, 91-3, 97, 99-IO2> 107, 109, 120-2, 125-6, 128-9, i3!-5, 138, 140, 182, 184-5, 199

Gaitskell, H., 127-8 George, H., 27 Global Fund, 83-4, 89, 95-6, 108-9 Grant, W., 15-16 Greater London Council, 69, 148 green belts, 146, 149, 161 Greenstreet, S., 135 Guttsman, W. L., 17

Dalton, H., 89, 98-^9 dead ripe land, 39, 44, 83 Department of the Environment, 60-9, 71, 169, 174, 181, 185, 188-91 Depression, role of, 34 development charge, 83, 85, 93-4, 96-7, 109 Development Gains Tax, 173, 176-80 Development Land Tax, 179, 182, 184-8, 195 development plans, 160 dispersal, 68 Douglas-Home, A. (Sir), 122-3 dual land market, 28, 108, n o

Haines, J., 17 Harvey, D., 68 Healey, D., 181 Heath, E., 126, 155-6, 158, 167-8, 172, 175, 181, 195 Heseltine, M., 195 Hewitt, C. J., 15 Highlands and Islands Development Board, 70 house builders, role of, 63 House of Lords, 99 house prices, 170-1 Housing and Town Planning Act (1902), 30 Housing and Town Planning Act (1932), 30 Housing Corporation, 136 housing demand, 115, 160-1, 197-8 housing drive, 130, 144 Howard, E., 36, 67 Hymans, H., 167

Easton, D., 8 Economic Affairs, Department of, 129-31 elite theory, 6-8, 17-19 Engels, F., 12 existing use values, 28, 39-41, 56-8, 93, 95, no, 127, 138-9, 182-3 expedited compulsory purchase, 46, 83, 137 Fabian Society, 53 Fairclough, 63 farmers, role of, 52 Federation of British Industry, 97 Federation of Master Builders, 63 Federation of Registered Housebuilders, 63, 157, 192 Finance Act (1974), 174, 178-9 financial sector, role of, 13, 52, 66-7, 113-15, 120-1, 155-6, 159-68, 170-81, 198, 200-3 Finer, S. E., 15, 20-1, 199, 203 floating values, 29, 37 Forestry Commission, 70 freeholds, 182-3, 201 Friends of the Earth, 67 fringe banks, 166-7, I 7 I ~3, lll-> 180-1, 196

Incorporated Society of Auctioneers and Landed Property Agents, 6 c; incorporation, 21 industrial investment, 167, 180-1, 203 Industry, Department of, 71 inflation, 156, 158, 160-4, I 7°, ll^ infrastructure charges, 169-70 Inland Revenue, 184 inner city areas, 161, 197 International Monetary Fund, 79 James, J. R., 134 Janes, J. D., 120, 134 Jessop, B., 9—11 Jevons, W. S., 31 Joseph, K. (Sir), 121-5, 129, 156 Jowitt, Lord, 85, 89 Keynes, J. M., influence of, 31-5, 44, 104, 106 King, A., 15-16

240

Index

Labour and Landowners (1944), 81 Labour governments, policies of, 14, 31, 49, 71, 78, 80-1, 85, 91, 95, 97-8, 125-54, 158, 161-2, 174-92, 196 Labour Party, role of, 13, 32-3, 42, 48, 67, 70, 78, 81, 85, 91, 126-8, 177-9 Laings, 63 laissez-faire, 51, 64, 105-6, 108, 110-12, 118, 132, 154, 156-8, 160, 163, 167-8, 170, 173, 176, 195-6 Land Accounts, 183, 186-8 Land Authority for Wales, 182-3, 185, 187, 192, 196-7, 200-1 Land Clauses Consolidation Act (1845), 29-30 Land Commission, 41-2, 46, 78-80, 90, 104, 125-60, 169, 174, 178, 184, 188 land nationalisation, 27, 31, 33, 38—9, 42, 49, 51, 58, 60-2, 72, 77-8, 81, 84, 87^1, 127-8, 178, 182 Land Policy Statements, 184 land supply, 57, 89, 97, 120-1, 140-2, 157, 161, 168-70, 187-8, 196-8 land use planning, 26, 28-9 land values policies, theory, 54-73 landed interest, role of, 13, 42, 47, 49, 52-5, 59-60, 73, 78, 93-5, 116, 126, 132, 157, 161, 186 Latham, M., 195 Law Society, 97 Lawson, N., 123, 156 leaseback, 56, 88, 97, 127, 187 leaseholds, 47, 132-3, 139, 188—9, 2 0 1 Liberal governments, role of, 30-1, 43, 59

Lipsey, D., 185 local authorities, role of, 28, 30, 41-3, 46-7, 49, 53, 59, 69-71, 73, 78, 82, 84, 91-2, 100-1, 109-12, 116-17, 119, 123, 125-6, 138, 140, 142, 145-150, 154, 157-61, 167-9, X74> 178, 182-5, 187-92, 197-8, 202

local authorities' Associations, role of, 46, 70, 78, 92, 123, 130, 186 Local Authority Management Schemes, 183-4, 188 Local Government Act (1958), 117 Local Government Act (1963), 120 Local Government Act (1974), 174 local government reform, 160 London and Counties Securities, 173, 180

London Borough Association, 68 London County Council, 30 London, Great Fire of, 27 Lonrho, 167 Lord President's Committee, 90 Lukes, S., 10-12 MacDonald, R., 32 Macleod, I., 123 Macmillan, H., 33, 107-11, 118, 121 Marsh, D., 15-16 Marx, K., 12 Marxist theories, 8-10, 12-13, 17-20 Massey, D., 59 Maudling, R., 123-4, J5^ Maxwell-Fyfe, 104, 109 McAlpine, 63 McLean, J. G., 157 Meade, J. E., 94 Meisel, J., 17 merchant, banks, 166 Miliband, R., 17 Mill, J. S., 27, 31, 45 Ministry of Agriculture, 45, 60, 71, 78, 85, 87, 91-2 Ministry of Health, 42-3, 45-7, 78, 85, 87, 91-2, 94, 98, 107 Ministry of Housing and Local Government, 107-9, 119, 120, 124, 129, 131, 133, 135-8, 141, 143, 145-7

Ministry of Land and Natural Resources, 129-31, 134 Ministry of Town and Country Planning, 41-2, 45-6, 83-7, 89, 92-4, 96-8, 102-3, 107, 129

Ministry of Transport, 45, 71, 78, 85, 87, 91-2 monetary policy, 155, 159, 161, 163-4, 166, 168, 170, 174 Morrison, W., 42, 90 multiplicity of ownership, 55, 116, 198 municipalisation, 57-8, 68, 72 National Enterprise Board, 178 National Farmers Union, 61, 65 National Federation of Building Trades Employers, 63 National Federation of Property Owners, 61 National Government, 32-6, 43 National Trust, 53, 67 nationalised industries, 197

Index neo-liberal philosophy, 21 New Town Development Corporations, 82, 84, 108, 200-1 New Towns, 36, 68, 7 0 - 1 , 111-12, 117, 122, 159

New Towns Act (1946), 82 Nicholson, M., 17 Office Development Permits, 161-3 oil crisis, 178 overload, 16, 20 Page, G., 123, 156 Pahl, R. E , 17 Parliament, role of, 60 pension funds, 165-6, 187 Phillips, T. (Sir), 100 Piccadilly Estate Hotel Group, 173 Pilgrim case, no-11 Planning Advisory Group, 119 planning blight, 117 Planning Bulletins, 119 planning permission, 28-9, 88, no, 124, 168-9, 184 pluralism, 6-8, 15-18 policy implementation, 19, 25, 49, 51, 53, 59, 71, 73, 92, 101-3, 125, 129, 136, 141, 158, 167, 174-5, 177, 187, 199-203 policy initiation, 5, 20-1, 25, 49-51, 71, 73, 77, 129, 140-1, 155-6, 158, 170, 173-7, 179, 199-203 Poulantzas, N., 12 private developers, role of, 47, 49, 52, 84, 144, 169, 171, 191-2, 197-8 productive sector, role of, 53, 61-4 professional sector, role of, 53, 66, 96-7, 186, 191-2 property booms, 66-7, 103, 112-18, 155-75, 190 property companies, 52, 165-7, I 7 I , 173-4, 177, 180-1 Property Council, 61 property developers, role of, 60, 72, 105, 113-16, 120-1, 126, 157, 165 property rents, 162-5 property rights, 26 property speculation, 155, 161-8, 174-8 property trusts, 163 public corporations, 52-3 public expenditure cuts, 144, 183, 190-1, 196

241

public land management agencies, 182-3 public sector borrowing requirement, 176 Public Works Loan Board, 117 Raison, T., 195 Ramblers Association, 67 Rank Organisation, 166 Reconstruction Cabinet Committee, 44 Reconstruction Secretariat, 44-8, 86, 93, 120 redevelopment, 115-16, 139 Reed International, 166 regional problem, 34, 42, 115 Reith, Lord, 44-7 relative autonomy, 177 rental sector, role, 52, 55, 60-1 Review of the South East Study, 144, 146-8 Rippon, G., 123, 156, 169 Rose, R. 16, 19 Rossi, H., 195 Royal Institute of British Architects, 65-6 Royal Institute of Chartered Surveyors, 64-5, 97, 120-1, 130, 169, 192 Royal Town Planning Institute, 65-7, 186 Scott Committee on Rural Land Use, 36,44 Scottish Development Agency, 70 Scottish Special Housing Association, 70 SDP-Liberal Alliance, 14-15, 21, 200 secondary banks, 155, 164, 166-7, 171-3, 175, 196 Securities and Exchange Commission, 164 Sedgmore, B., 17 Selective Employment Tax, 143 Selsdon Approach, 156-7 Shankland/Cox Report, 168 Sharp, E., 120-1, 130-1, 133-5 Shelter, 53, 68-<> shifting values, 29, 37 Silkin,J, 185 Silkin, L., 86-92, 98-100 site value rating, 46-7, 56, 72, 87 Skeffington, A., 130, 133, 142, 144 Slater, J., 167 slum clearance, 109, 116 Snowden, P., 32

242

Index

social democracy, 25, 31-2, 34, 36, 40, 47-8, 52-3, 55, 85-6, 106, 118, 158 socialist philosophy, 21, 32-3 speculation, 52, 60, 126, 138, 142, 155, 1 59-°7, 169, 196 Stern Group, 167, 173 Stewart, M. (Sir), 43 Stock Exchange, 52, 113, 166, 202 Tawney, R. H., 44 Thatcher, M., 195-203 Thomas, H., 17 Thomas, Wyndham, 131, 137-9, 145~6 Thompson, E. P., 12-14 Thorneycroft, P., 108 Thornton-Kemsley, C. (Sir), 123, 156 Town and Country Planning Act (1943), 40, 44, 48, 81 Town and Country Planning Act (1944), 40, 44, 48, 81 Town and Country Planning Act (1947), 77-108, n o , 117, 120, 123, 128, 132, 141, 160

Town and Country Planning Act (1953), 107-9, 127

Town and Country Planning Act (1954), 107-9

Town and Country Planning Act (1959), 108, 111-12, 117, 122, 159 Town and Country Planning Act (1968), 160

Town and Country Planning Association, 35, 53, 67-8, 131, 169, 174, 185, 192, 200-2 Town Expansion Schemes, 108, 111-12, 117, 122, 159 Town Planning Institute, 35, 169

trade unions, 13, 67, 104 Trades Union Congress, 53, 172 Treasury, role of, 42-7, 60, 71, 78, 85, 87-9, 92-8, 109, 129, 133, 135-9, Hi, 146, 153, 183-5, J9O Trustram-Eve, M. (Sir) 91, 96, 100-1 twilight areas, 116 unearned increment, 45, 53, 55-6, 71, 118, 121, 127, 132, 181 Universities, 59-60 urban renewal, 108, i n , 116-17, IX9> 126, 138, 197 Uthwatt Committee Report, 25, 36-42, 44, 46-9, 52, 56-8, 73, 77-81, 84-8, 91, 94-5, 97, 109, 128 Valuation Office, 97 Valuers Institute, 65 Vavasseur, 173 Walker, P., 157, 169 war damaged areas, power for, 40, 46-8, 81, 117 Water Authorities, 70 Wells, H., 126-7, H4> 146-50 Welsh Development Agency, 70 Whiskard Committee, 91 Willey, F., 129-31, 133-8, 142-6, 185 Wilson, H., 129, 138, 181 Wimpey, 63 windfall profits, 126 Winkler, J. T , 17 working class, role of, 68 Wood, K. (Sir), 44 Wootton, B., 32 worsenment, 28-9, 54, 163