4.18 p.m. The Minister of Land and Natural Resources (Mr. Frederick Willey)
The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has run true to form. He has been mildly entertaining. If there be any policy opposite on this subject, he has carefully concealed it from us. He has been purely destructive. We are talking about the human problems of housing, building and the rest, but we have had no constructive proposals from him. As for the inheritance to which he referred in his peroration, we inherited, in fact, a short-age of building materials when we took office. That was one problem left to us, but, in spite of it, as the right hon. Gentleman himself concedes, there were 23,000 more houses under construction this September than there was a year ago.
My right hon. Friend the Minister of Housing and Local Government will be speaking later about the building societies. Listening to the speech of the right hon. Member for Kingston-upon-Thames, it struck me that he seemed to have very little experience of how building societies work.
Sir Harmar Nicholls
The right hon. Gentleman said that the Government inherited a shortage of materials. Is it not a fact that, led by bricks, the output of material for building houses was at a higher level when they took over than it had been in the past?
[column 390]Mr. Willey
I am glad that I gave way to the hon. Gentleman the Member for Peterborough (Sir Harmar Nicholls). I knew that sooner or later I would have to do it, and I am glad to have done it now. But I have already dealt with that point, and what I intend to deal with today is the problem of land, because it is essential to housing and building, which is what we have been talking about.
The supply of land on fair terms is essential to what we have been talking about. What we are going to do this Session is introduce a Bill, which right hon. Gentlemen will soon have an opportunity of seeing, to establish a Land Commission with power to acquire land for the community and to recover part of the development value realised in land transactions. We intend also to introduce legislation to reform the leasehold system for residential property in England and Wales, including provision for leasehold enfranchisement. To take those together seems to me to be both logical and right.
What the two Measures will deal with are the long established social inequities which derive from land ownership, and it is basic to any programme of social reform that we get a just relationship between the community and that most basic of all commodities, land. We are therefore legislating to strip away the anomalies that so often blight the proper and reasonable expectation of occupying leaseholders. It seems to us manifestly unjust that householders who have built and fully paid for the houses that they live in should, for reasons which are little more than fortuitous, be obliged to surrender the reversion of the buildings at the expiry of the lease.
What interested me particularly a week or two ago was that when I attended the annual conference of the Town and Country Planning Association, I was told what Mr. John Eccles said about the leasehold system. He is not from the Welsh valleys. He has a very distinguished record and was formerly managing director of the Welwyn Garden City Corporation and chairman of the Hampstead Garden Suburb. Mr. Eccles said that
“the fundamental defect of the leasehold system is … the inequitable principle that at the end of a given lease the land-owner is [column 391]entitled to assume possession, free of charge, of all buildings and improvements created wholly by and at the cost of the succession of lessees, irrespective of the real residual value of those buildings and improvements. Moreover the principle itself creates a strong incentive to neglect the maintenance of the property during the last few years of the lease, with a direct tendency towards the creation of slum conditions.”
That is a view that I share, but the interesting thing is that it is a view expressed by someone who has had enormous experience of the leasehold system, in the best sense of the word.
Mr. Leslie Hale (Oldham, West)
I understand that my right hon. Friend was referring to the Land Commission Bill when he said that it would be available shortly. Can he give hon. Members any idea when the Bill on leasehold enfranchisement will be available, and can he say whether it will be on the lines of the Ungoed-Thomas-Hale Report with reference to all long leaseholders with a certain term of years to run, and without exceptions to certain landlords?
Mr. Willey
I must ask my hon. Friend for Oldham, West (Mr. Hale) to await the Bill. It will be introduced, when we can introduce it, this Session.
Mrs. Margaret Thatcher (Finchley)
I understood that part of the function of the debate on the Gracious Address was to elicit information on Bills mentioned in the Address, but we shall not get very much information during the debate if we are not to hear more about the details of leasehold enfranchisement.
Mr. Willey
That is not so at all. The purpose of the Gracious Address is to indicate the Measures that we shall be introducing this Session, and the Measure to which the hon. Lady refers is one which will be introduced during the Session.
Mr. Arthur Jones (Northants, South)
rose
Mr. Willey
No, I will not give way. I really must get on.
I have been asked about the intentions of the Government on leasehold enfranchisement. I have said that we will introduce a Measure this Session, and I am indicating the lines that it will follow. [column 392]
What we are faced with in leasehold is that the Landlord and Tenant Act, 1954, did not go nearly far enough. It succeeded remarkably in achieving two objectives, because it prejudiced both the freeholder and the leaseholder at the same time. It did not tackle the fundamental injustice of the system. I can assure my hon. Friend the Member for Oldham, West, that the Government are determined to deal with the inequities in the system once and for all.
Mr. Hale
That is the second time that the right hon. Gentleman has used the expression “once and for all” . If it is to be once and for all, presumably it is dealing with all leaseholds with a certain time to run. If he is excluding certain landlords, it certainly is not once and for all, and I doubt whether he will get it through once.
Mr. Willey
I have taken note of what my hon. Friend has said. I can assure him that we have paid the fullest regard to the Ungoed-Thomas-Hale Report, but we have to tackle the problem in a more radical sense than they did in their minority Report.
Mr. Arthur Jones
Would you give way and deal with my question now?
Mr. Speaker
Order. It is not in order to appeal to the Chair to persuade the right hon. Gentleman to give way. The right hon. Gentleman has refused to give way, and the hon. Gentleman must be seated.
Mr. Willey
Now I turn to the Land Commission. The right hon. Member for Kingston-upon-Thames has opened what is bound to be a prolonged debate. He has had time to study the White Paper, but has has not told us what are the views of the Opposition.
Mr. Boyd-Carpenter
I have spent a considerable time doing just that. If the right hon. Gentleman would like me to do it again, although Mr. Speaker will no doubt rebuke me for tedious repetition, briefly I said that there is no disagreement with the levy in principle, and that the Land Commission is wholly unnecessary. Will the right hon. Gentleman deal with that?
Mr. Willey
Certainly. But what the right hon. Gentleman has not done is to say what the views of the opposition are [column 393]about the problem that we face. In fact, the right hon. Gentleman appears in a new cloak. There has been and continues to be a very stark division between the two Front Benches, though it was obscured for a few minutes two years ago when we had a similar debate on the Address in 1963.
I should like to remind the House of what the right hon. Member for Leeds, North-East (Sir K. Joseph) said in that debate, because it is something with which the right hon. Member for Kingston-upon-Thames has not dealt at all. The right hon. Member for Leeds, North-East, when Minister of Housing said:
“It is in relation to the bringing of new land into development that the question of betterment becomes really important for it will entail public expenditure on services and roads to bring it into development, and this expenditure will create an immediate increase in value. It does seem right that that increase should be collected by the public. We do it in the new towns, where the land is bought in advance and, when it is developed, or is ripe for development, is leased or sold at current market value, so that the new town corporation recoups itself for earlier expenditure.”
Then he added:
“It is a corollary of regional planning and development that land planned for major development should be bought well in advance by a public authority for disposal to private enterprise or to public enterprise as required, both to control and phase the development and to help in meeting the cost of bringing it into development. We may well have to devise new machinery for the purpose.” —[Official Report, 18th November, 1963; Vol. 684, c. 655-6.]
That was not impromptu eloquence. In fact, Hansard records that when hon. Members said “Oh” the right hon. Gentleman commented:
“I have written this passage out because it is important and I should like to get it right.” —[Official Report, 18th November, 1963; Vol. 684, c. 656.]
Now that was a statement refuting what the right hon. Gentleman was saying today. That was an argument for an authority to purchase and provide land in advance of development.
Mr. Graham Page (Crosby)
rose——
Mr. Willey
No.
Mr. Graham Page
Please.
Mr. Willey
I have quoted the right hon. Gentleman of length and not out of [column 394]context. Before the debate was over the right hon. Gentleman had been abandoned. Mr. Geoffrey Rippon wound up the debate and we got no further proposals from the Government nor from the Conservative Party about dealing with the question of development value. It was not, in fact, until March this year that the right hon. Gentleman then said that
“it would be reasonable to impose a charge related to the increased value realised for development.”
But the right hon. Gentleman today—and this is why I complained about his dealing with the White Paper—has not told us what he regards as moderate. He has told us—this is a new conversion—that he at any rate is now converted to the idea that the community is entitled to recoup part of the development value which itself has created.
When the White Paper was published the hon. Gentleman the Member for Gloucestershire, South (Mr. Corfield) said:
“The difference between what the Conservatives had in mind and the Government's proposal of 40 per cent. levy could perhaps be dismissed as a matter of opinion.”
How authoritative that judgment was I do not know because it seems to me that he has been dismissed, and I regret to see him sitting now on the back benches.
I am glad to see the hon. Gentleman the Member for Orpington (Mr. Lubbock) here. He expressed views which, I think, he would rather bury now. Certainly I prefer the views expressed by the Liberal conference.
This is the position we face, that——
Mr. Eric Lubbock (Orpington)
Just in case there is any doubt about this, my view is still the same as it always has been, that a development levy is quite fair and reasonable, but we shall seek to modify the Land Commission proposals.
Mr. Willey
This is what I am dealing with, the relevance of the Land Commission to the question of the levy, but I think I am entitled to know what the right hon. Gentleman means when he himself refers to a moderate level. We have put forward our own proposals about it.
What the right hon. Gentleman cannot avoid, what he has to face up to, is that [column 395]whilst his own party was in office it took no steps whatsoever to deal with the question of development values and the scandal of land prices. The right hon. Gentleman talked about people being greedy. Well, he should think of some examples which have repeatedly been given in the House, and since we have had to discuss that question of land values our debates have been punctuated by illustrations. We had Sir Frank Markham, whom most of us remember with some affection, who told us that he paid £36,000 for land now worth £1 million. We have had cases like this which did not arouse any interest in the Conservative Party until we took office.
What we have got to do is face the problem and we have to recognise that we in this country accept that there ought to be public control of land use. That we recognise on both sides of the House. What the Opposition have not recognised, what they still do not recognise, is that if one accepts the use of land being determined by the State, by the community, then it follows that that land ought to be provided on fair terms. The objectives which we have set ourselves, therefore, the objectives of the Government on land values are
“to secure that the right land is available at the right time for the implementation of national, regional and local plans; to secure that a substantial part of the development value created by the community returns to the community and that the burden of the cost of land for essential purposes is reduced.”
It is this which is at the basis of our proposals for a Land Commission.
The Land Commission
“will be able to buy by agreement any land which they have reason to think may be needed for development.”
The Commission will have widespread powers to acquire land compulsorily and, as we say in the White Paper
“will do so on a basis which will give the owner the value of the land for its current use and an amount sufficient to cover any of his contingent losses plus a further amount—a part of the value arising from the prospects of development to encourage the willing sale of land for development.”
That is what we set out to do.
Upon this I would make three qualifications, all of which, I am sure, will have the wholehearted support of the right hon. Gentleman. First, that the Government recognise, and frankly recognise, that it [column 396]would be administratively impracticable for the Land Commission to buy all the land needed for the start of its operations.
Mr. F. V. Corfield (Gloucestershire, South)
Does the right hon. Gentleman imply by that that it is the intention that the Commission will eventually buy all the land to be developed, and if he does, can he explain this to me? As I understand it, the Government have in fact switched from existing use plus to market value minus. If we get to the stage at which we have all the land acquired by the Land Commission, can the right hon. Gentleman tell me how on earth we decide what the market value will be?
Mr. Willey
No. What I have said is that if we concede that use is determined by the State, by the community, then it is right that acquisition should be on fair terms. To provide that acquisition should be on fair terms we have the Land Commission, and the basis of the success of land acquisition is that we should give a current use value plus contingencies, plus an amount sufficient to bring the land forward for development.
Mr. Corfield
With due respect to the right hon. Gentleman, he is wrong. His own White Paper in paragraph 10 says:
“The Land Commission themselves, when buying land, will collect the levy … from the price they pay, so that the net payment made to the owner will in effect be the current use value of the land plus a part of its development value. Subject to this” ——
and this is the crux—
“the market value basis of compensation for compulsory purchase at present in existence will continue unchanged …”
Market value is the basis. What I am saying is that if we have disrupted the market by compulsory purchase throughout the area, how do we assess the market value?
Mr. Willey
We do not do this at all. What we have to do is to provide that the Commission will buy at existing use value and give a sufficient inducement to bring land into development. As I have said, first, we frankly recognise that it would be administratively impracticable for the Land Commission to buy all the land needed for development at the start of its operations. Secondly, we recognise that, as we are concerned with the [column 397]supply of land for development and in advance of development, the Commission should not displace any of the present means of acquiring and bringing forward land but should supplement them. Thirdly—I am sure that this is essential if we are to attain an effective, lasting and fair solution—having established the Land Commission, the extension of its operations will be tested in the light of its experience. The proof of the pudding will be in the eating.
Once we accept this approach, clearly we must avoid a two-price system for land. That is why we propose a levy on development values realised on all land transactions, whether public or private. When the Commission buys, it in effect deducts the levy from the price it pays. In all other transactions, the Commission collects the levy.
The general issue—if we isolate for a moment the question of the levy, and I gather that there is now no dispute in principle between us on that—is whether our judgment about the levy is correct or whether the levy is too low or too high. It is about this that we have not heard from the right hon. Gentleman. I would remind those who think it is too low of what we say in the White Paper:
“The rate of levy can thus be determined independently in the light of the requirements of land for development and the need to recover betterment for the community. It will be prescribed by order at an initial rate of 40 per cent, which in the Government's view is a modest rate leaving ample incentive to owners to offer their land for development. But it is the Government's intention to increase the rate progressively to 45 per cent. and then to 50 per cent. at reasonably short intervals. The question of increasing the rate further will be examined as acquisitions by the Commission, and thus their ability to provide land for development, increase.”
This treatment of development value, if it is accepted, is itself a justification for the Land Commission if we are concerned about the development and the bringing forward of land for development. This is the consideration that one has to bear in mind if one is concerned about the supply of land. This in itself is an argument for having a Land Commission.
There are, on the other hand, others—possibly including the right hon. Gentleman, although he has been coy and obscure about it—who think that the [column 398]rate that we are proposing is too high. I do not accept this. I think it is fair. I assure the right hon. Gentleman that I think it must be fair if development is to go ahead smoothly. I think that the balance of opinion has been that the levy we are proposing is fair. I do not always have the pleasure of calling in aid the Financial Times, but this is what it said:
“Neither the Liberals nor the Conservatives will find it easy to oppose a betterment tax on principle. They may have some criticism to offer of the rates suggested, but 40 per cent. is not high in relation to the long-term gains tax, and the warning that it will rise is plainly intended to get land quickly on to the market.”
Those who are concerned about the levy being too high are concerned about two things, first, the price—this is the question that the right hon. Gentleman was dealing with—and, second, the supply of land. On price, the right hon. Gentleman has not even the support of the archcritic of the Commission, Dr. Denman. Dr. Denman said in an article that he wrote for the Daily Telegraph:
“If prices remain steady a 40 per cent. development deduction could cut back the 1964 land price to the 1959 level—a 30 per cent. reduction but house costs would drop no more than 3.7 per cent.”
He is arguing that if we translate the levy into terms of the price of new houses in London and the South-East, the cost of a new house would be cut by only £200. His argument is that one has to look to the house prices, and if one does that a levy of 40 per cent. will affect house prices by only £200. I do not for a moment accept Dr. Denman 's figure, but if there is anything in his argument it is surely an argument for a higher rate of levy.
If we are concerned about price we must be realistic about land prices. The plain fact is that today the landowner whose land is developed is exacting the highest price he can get for his land, and this will not be affected by the levy. Having heard the right hon. Gentleman in particular, we cannot afford to take any risks. It is possible that the levy may be used by some landowners to create an artificial market value prejudicial against a private developer. This, again, is an argument for the Land Commission. If this happens, the Commission must step in to buy at the true market [column 399]value. The right hon. Gentleman dealt with price and he also mentioned supply, and apart from price, there is also the question of the effect on the supply of land. What do all these statements that are made about supply amount to? They amount to an indictment of the landowners. They imply that if landowners are denied a part of their profits, denied a modest measure, they will withhold their land however much it may be needed for development which is essential to the well-being of the country. I have rather a better opinion of landowners in general than the right hon. Gentleman and some of his hon. Friends seem to have. I am sure that landowners will accept that our proposals are proposals made in moderation.
I should be failing in my duty if I paid no heed at all to the warnings that have been uttered, and uttered in profusion, about the possibility that landowners might withhold their land. I therefore propose that the Land Commission should have adequate powers to ensure that in this eventuality the needs of the community shall prevail and land shall be available not only for development by public authorities but for development privately. I emphasise to the right hon. Gentleman that what I am concerned about mainly here is private development. The Land Commission is really necessary if there is any threat of this kind, because the local authorities have neither the means nor the will to help. We have to ensure that private development, private housing, is not thwarted and frustrated.
So we have a Land Commission with two main powers, a power to buy land, compulsorily if necessary, and a power to impose a levy on development value. The Opposition apparently attack one and not the other because they fail to see, or will not see, the essential relationship between the two, a relationship which works both ways.
Recognising that local government finance is not suited to holding land extensively in advance of development, recognising that unified ownership is needed before comprehensive development can be achieved, and recognising also the powerful case that has been made out by the right hon. Member for Leeds, [column 400]North-East, we want the Land Commission to be able to buy land in order to ensure that our regional and national planning can be implemented.
But if we are to operate fairly and not disrupt the land market, we need the levy on all transactions in order to avoid the two-price system. Conversely, if we impose the levy on all land transactions, we need compulsory purchase powers in order to ensure that that development is not frustrated by landowners, on account of the levy, withholding their land. The Opposition are deluding themselves if they think that they could introduce a scheme for a levy alone without having a new body similar to the Land Commission and armed with similar powers.
The right hon. Gentleman expressed concern about compulsory powers. We too are concerned about them. What we propose, therefore, is limited powers for the Commission in the first instance and then more extensive powers. But if we examine those limited powers one by one, they establish the case for the Land Commission.
First, the Commission will be able to buy land in order to secure its early development or redevelopment. That is primarily the compulsory power necessary to support the levy. It is the power which must rest with the Land Commission if landowners should refuse to bring land forward for development when it is ripe for development. As I have said, this is designed primarily to help the private developers who would otherwise be frustrated.
Mr. A. P. Costain (Folkestone and Hythe)
Will the right hon. Gentleman explain how the new towns got their land if the powers to be given to the Commission are not in existence?
Mr. Willey
They got their land in a similar way but as specific instances. We have to deal now with other cases apart from them. It is not only in the new towns where land is required in advance.
The second of the powers is that the Commission will be able to buy land which needs to be acquired for development or redevelopment as a whole. This power the Commission will use when it wants to buy land in advance of need—a rôle which it will play to an increasing [column 401]extent as it develops the scope of its activities. Indeed, as I have said, some hon. Members opposite for some time have recognised the need for such powers.
Thirdly, the Commission will be able to buy compulsorily land required by a public authority, possessing compulsory purchase power for the performance of its functions. I do not think that this power is so fundamental but it is not unnecessary. We must recognise that, in many cases, the Commission will be better placed than some local authorities to acquire land. It would be foolish to hamper the programme that local authorities will have to face by not ensuring that they are able to take advantage of the powers to be exercised by the Commission.
Finally, the Commission will have power to buy compulsorily land for disposal to housing associations or local authorities or directly on concessionary terms for private housing. The right hon. Gentleman expressed his concern about price. In fact, we affect the price by taking the levy and in the case of housing we intend to make available more cheaply for private housing land provided by the Commission.
I should have thought that, in each of these cases, the right hon. Gentleman would have conceded that there is a case for the Land Commission to reinforce the levy and to bring land forward for development. I assure him that we intend to proceed by stages practically and pragmatically. It has certainly been a great encouragement for those who have been at work on translating these proposals into legislation that they have been favourably received. For example, the Town and Country Planning Association has given its judgment that the White Paper
“… lays out a very sound and practical approach to a complicated problem. It should command the widest support because it is workable and it is also fair to landowners and to the public.”
I conclude by calling in aid Sir Colin Thornton-Kemsley who was a Conservative Member of Parliament for 25 years and who speaks with great authority on the subject. After expressing the hope, which I share, that the Commission will be reasonably and fairly operated, he concludes that it [column 402]
“could fulfil a task, and create an image, which would ensure its acceptance as a necessary part of our planning machinery” .That is my view. What we are renewing and restoring sensibly is the work of Lord Silkin.
Mr. Lubbock
I must have misheard that quotation. What planning functions will the Land Commission have?
Mr. Willey
It will not have planning functions but, of course, it will be a necessary part of the planning machinery. Surely the hon. Gentleman would accept that. It is absolutely fundamental. If we provide, by planning, for the determination of land use, it is a corollary that we should provide the instrument to ensure that the land is available, where wanted and on fair terms.
It was the responsibility of the Conservative Party that the free market was restored in land, a situation in which we have suffered the scandal of land prices and the distortion and frustration of planning. It is now our responsibility to ensure that we restore that which Lord Silkin began.