Government statistics show that agricultural land, which is granted planning permission for residential use, would, on average, increase in value from £21,000 per hectare to £1.95 million per hectare. The Committee’s report made the case for local authorities and central government to capture a ‘significant proportion’ of this uplift in value to invest in new infrastructure and public services
Chair of the Housing, Communities and Local Government Committee, Clive Betts commented:
“Overall, this seems a wasted opportunity by the Government to use the Committee’s reflective report to engage with, and open up, the debate on this issue. It is pleasing that the Government has recognised that there is scope to capture a higher proportion of land value increase, yet there is a distinct lack of vision and urgency in how it would be achieved beyond existing mechanisms.
The current system allows landowners to make substantial profits from the increases in land value that arise from public policy decisions. It is only right that a significant proportion of these profits should be shared with local communities.
The HCLG Committee put forward meaningful proposals, including reform of the 1961 Land Compensation Act and simplification of CPO processes, to enable local authorities to compulsorily purchase land at a fairer price. We have seen the success of similar policies in the past, notably with the creation of New Towns, and they can be a vital pillar in creating new housing projects we so badly need.
We are not alone in our view – Shelter, the Local Government Association, the County Councils Network, and the Centre for Progressive Policy have all called for reform. We urge the Government to revisit the issue and bring out proposals that will make a real difference.”
Key recommendations include
- Reform of the Land Compensation Act 1961, to give local authorities the power to purchase land at a fairer price. This reform – which has growing political support – would provide a powerful tool for local authorities to build a new generation of New Towns, as well as extensions to, or significant developments within, existing settlements.
- Further simplification of the CPO process, to make it faster and less expensive for local authorities, whilst not losing safeguards for those affected.
- Reform of the Community Infrastructure Levy (CIL) to remove complexity and the extensive range of exemptions that currently limit its effectiveness.
- More resources for local authorities to ensure they are able to negotiate robustly with developers to secure the appropriate level of planning obligations.
- Securing the maximum value for new infrastructure and public services from public land put forward from residential development, with much to be learned from Germany and the Netherlands in this respect.