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Town Planning Review 90.4 Featured Article

The editors of Town Planning Review have selected ‘Change in the political economy of land value capture in England’ by Philip Catney and John Henneberry as the Featured Article for Town Planning Review 90.4.

The paper will be free to access for a limited time here.

When asked to describe the paper and highlight its importance, the authors stated the following:

Land value capture (LVC) has been a subject of increasing interest in recent years. It underlies a proposal by Corbyn’s UK Labour Party to establish an English Sovereign Land Trust to buy sites for development at a cost that excludes any value uplift arising from planning consent. But interest is also cross-party, reflected in the formation of an All-Party Parliamentary Group on Land Value Capture, which was launched in late 2017 and is chaired by the Leader of the Liberal Democrats, Vince Cable.

Assessments of the effectiveness of alternative approaches to LVC have often taken the form of international comparisons of relevant policies and practices. While such analyses make allowance for the different structural contexts within which LVC is pursued, they tend to emphasise the relations between institutional arrangements and policy performance. We felt that this stress on the practical and the instrumental underplayed the importance of changes in political economy – specifically the continuing expansion and deepening of the neoliberal project – for our understanding of LVC. Moreover, this understanding might be enriched by an historical study of the subject that is allowed by England’s long experience of implementing LVC policies. These were the factors that prompted us to write the paper.

In terms of outcome – that is, the amount of land value that is captured – current methods of LVC (a combination of planning obligations and the Community Infrastructure Levy) have proved far more effective than previous attempts (the Town & Country Planning Act 1947, the Land Commission Act 1967 and the Community Land Scheme 1975/76). However, our historiography suggests that one should resist concluding that the former are, therefore, unequivocally ‘better’ than the latter. We identify two inter-linked reasons for this counter-intuitive position.

The first relates to the purpose and ambition of the approaches. The pre-1979 measures are often criticised for ignoring the economic effects of their implementation. But the relevant governments were well aware that taxing development value would hinder the operation of the private market in land. Indeed, their intent was fundamentally to restructure the land market by replacing private with state land trading (to varying extents), making the criticism beside the point. In contrast, extant English LVC policy ‘goes with the neoliberal grain’ and relies upon the continuing operation of the private land market pretty much in its current form. Its practical success has, hitherto, tended to obscure a major weakness of a cost- and market-based approach to LVC.

This is our second point. The use of planning obligations and CIL to capture land value is regressive in its effects. The costs of infrastructure provision vary much less than development and land values. Consequently, the proportionate impact of meeting these costs is much greater in weak markets with low values than in strong markets with high values. It is not surprising, therefore, that the ‘take’ from planning obligations and CIL is much higher in the South East and London than in other parts of England, exacerbating regional differences in property development and investment.

The authors also commented:

Philip: “The evolution of LVC policy in the England offers a window on the protean nature of the neoliberal project. The ‘land question’ can be taken right back to Henry George – whose ideas still have considerable attractions to many – but the post-war period offers two fascinating insights into the evolution of the political economy of land. First, it highlights the power of landed owners to halt unfavourable LVC policies. Aligned with the Conservative Party, such interests were able to fend off radical proposals from the Labour Party. Second, while our picture confirms the conventional broad periodisation of policy paradigms, our analysis also points to the punctuated nature of neoliberalisation after 1979. Neoliberalism did not really take proper hold of LVC until after 2000 and then went through many gyrations.”

John: “I have long had an interest in LVC. My first job as a planner in 1976 involved working with a surveyor colleague to identify ‘relevant development’ under the Community Land Act 1975. This was short-lived because of IMF-induced cuts to local authorities’ land acquisition budgets the same year: an early example of neoliberal intervention in this field. Following my move into academe, I have undertaken, with colleagues, a series of research projects on LVC for various incarnations of MHCLG. These include an early examination of the potential for introducing impact fees into British planning in 1992-93 and, since 2005, several studies of the operation of the system of planning obligations in England and in Wales.”