11. Land and Planning Reform

Part 11: Land and Planning Reform - part of The Country That Works For You series ← 10. Governance · Series index · Next → 12. The Press and State Capacity

The Machine That Creates Landed Wealth

Here is a fact that is not in most political debate: land ownership in England is not a market outcome. It is a political artefact, maintained by the planning system, the tax system, and the inheritance system working together. The concentration of land in the hands of a few thousand families is not the result of entrepreneurial success or superior productivity. It is the result of a set of rules written in favour of those who already own the land.

That matters for this series because the housing post addressed the building problem. This post addresses the ownership problem. And the ownership problem is harder, because it is not primarily about building enough homes. It is about who captures the value when those homes are built.

The concentration of land ownership is one of the three mechanisms of oligarchic capture named in this series, alongside the captured state described in the programme introduction and the institutional capture described in the Governance post (Part 10). Taken together, they describe a country that has stopped working for the people in it, in part because a relatively small number of people benefit from the current arrangements and have the political power to defend them.

This post is about breaking that arrangement. It is also about being honest about how difficult that is.

The Land Ownership Data

The Who Owns England project, led by Guy Shrubsole, has produced the most comprehensive mapping of land ownership in England in recent history. The findings are striking.

Approximately 70% of England is agricultural land. Of that, a significant proportion is owned by a relatively small number of aristocratic families and institutional landowners. The top 10 landowners in England own roughly 1 million acres between them. The top 100 landowners own something approaching 4 million acres.

The composition of that top tier matters. It includes:

Aristocratic families: the Duke of Westminster, the Earl of Plymouth, the Marquess of Salisbury, and dozens of others whose holdings date from the enclosures of the 18th and 19th centuries
Institutional landowners: the Church of England, Oxford and Cambridge colleges, the major public schools, the Crown Estate (though the Crown Estate is different in kind, being a public asset)
Major property companies: companies whose share registers reveal ownership structures that would surprise most people who think of land ownership as a middle-class pursuit

The Duke of Westminster's Grosvenor Estate is worth noting specifically. It spans approximately 300 acres in Mayfair and Belgravia in central London, making it one of the most valuable pieces of urban land in the world. The family did not create that value. The City of London created that value, through centuries of investment, infrastructure, and economic activity. The family inherited the land, holds it, and collects the rent. When planning permission is granted for development on that land, the value uplift accrues to the family. Not to the city that made it valuable. Not to the public that funded the infrastructure. To the family.

This is the absentee landlord problem in its modern form. The landowner may live in the house. They may not. Many of the largest aristocratic estates are managed by professional letting agents and property managers. The landowner collects the income. The community bears the cost of the services, the infrastructure, and the social consequences of however the land is used.

The Who Owns England findings also reveal the degree to which land ownership in England is opaque. Title registration is incomplete, offshore structures obscure beneficial ownership, and the Land Registry's records are not systematically analysed in a way that would allow the public to understand who owns what. A government serious about land reform would start by requiring transparency: beneficial ownership registration for all land holdings above a threshold, with offshore structures included.

The Planning System as a Value Transfer Machine

When a local authority grants planning permission for residential development on agricultural land, it does something that is rarely described plainly: it transfers a planning gain worth millions of pounds from the public to the landowner.

Here is the mechanism. Land on the edge of a town or city, currently in agricultural use, is worth perhaps GBP 10,000 to GBP 30,000 per acre. The moment planning permission is granted for residential development, that same land becomes worth GBP 1 million to GBP 5 million per acre, depending on location. The landowner has done nothing to create that uplift. The community around the land has grown. The infrastructure has been built. The transport links have been laid. The jobs have been created. The value is a product of public investment and public activity. And the planning system hands it to the landowner.

This is not a technical detail. It is a redistribution mechanism. And it operates every single time planning permission is granted.

The standard defence of this arrangement is that landowners are incentivised to release land for development by the prospect of the planning gain. This argument conflates the landowner's incentive to release land with the public interest in them doing so. The fact that a landowner will only release land if they are paid a ransom does not mean the ransom is in the public interest. The public interest would be served by the state acquiring land at existing use value and capturing the development margin for the community.

The development margin is large. In Greater London, the gap between existing use value and residential development value frequently exceeds GBP 1 million per acre. In the South East more broadly, it is frequently in the hundreds of thousands per acre. These are not marginal differences. They represent a systematic transfer of public value to private landowners, occurring every day, on every planning permission granted in England.

The housing post in this series described the planning reform programme. This post is not about streamlining the planning process. Streamlining planning permission without addressing the value capture question makes the problem worse, not better. If you make it easier to get planning permission, you make the planning gain more valuable, and the landowners who hold permission-ready land capture more.

The Planning System as a Two-Tier Machine: Who It Serves and Who It Punishes

The value transfer mechanism above is not the only way the planning system fails. It also fails in how it treats different applicants - and the difference is not subtle.

The same planning system that processes a major commercial application from a logistics company or a housebuilder in three months, with pre-application consultation, a dedicated case officer, and conditions negotiated rather than enforced, will process an individual's planning application for a barn conversion or a home extension over twelve months, with discretionary delays, demands for additional information not in the guidance, and enforcement that is pursued without negotiation.

The mechanism is not corruption in the formal sense. It is discretionary power without accountability. A planning officer can delay an individual's application for months on grounds that are not reviewable. They can refuse permission for something that the guidance says is acceptable, and the appeals process is slow, expensive, and uncertain. The same officer processes a major commercial application on a tight timeline because it has political weight behind it. The two-tier outcome is real and systematic.

This is not a bureaucratic inconvenience. It is a political signal. When a person living in their own barn on their own land is prosecuted by the state, while a multinational building a warehouse on green belt gets approved in three months, the message is: the system is not for people like you. That message generates grievance, and the grievance goes somewhere. It goes to the far-right, which says: the system is rigged, and we're the ones who'll fix it. The far-right is wrong about the fix. But the grievance is legitimate.

The reform required is not just about the rules. It is about the character of the system. A planning system that treats ordinary people with basic dignity is one where:

The rules are published and consistently applied, not subject to officer discretion
Individuals can access a fast, cheap appeals process when permission is refused or delayed
The same standards apply to a barn conversion and to a logistics warehouse
The enforcement of conditions is non-negotiable for everyone, not selectively pursued

This is a planning reform that serves a political purpose beyond its technical function. A system that treats citizens with dignity does not produce the grievance that fuels the far-right. A system that prosecutes a woman for living in her own barn while letting multinationals build on green belt does exactly the opposite.

The Right to Grow: Community Enabling as Planning Reform

There is a specific reform that addresses both the land ownership problem and the civic enablement question simultaneously. It is simple to describe and largely absent from current policy: a statutory right to grow on council land.

The detail: any community group can apply for a license to use council-maintained green space for food production. The default is yes. The council must demonstrate specific grounds for refusal - not discretionary objection, but demonstrated reasons related to public safety, habitat protection, or equivalent. The license is low-cost, issued within a defined timeframe, with simple conditions around maintenance and public access. It is not a planning application. It does not require a planning officer's discretion. It is a right.

This is a planning reform because it removes the discretionary power that makes the current system arbitrary. It is a land reform because it puts council land to productive community use without requiring the community to purchase the land. It is a civic programme because it gives people something to do together - to grow food, to build community, to make their neighbourhood work in a way that has visible, tangible results.

The "Dig for Victory" parallel is deliberate. That was not a prepper programme. It was a state-enabled civic programme that gave people something to do that was practical, collective, and purposeful. The current equivalent would include: allotments on council land, community food networks, neighbourhood food growing schemes, community orchards, and the other forms of neighbourhood food production that the current planning system makes unnecessarily difficult.

The political case for this reform is straightforward: it gives people hope. It gives them something to do together. It produces visible evidence that collective action works, which is the thing that generates the political will the programme needs. A community garden is not a policy outcome. It is proof that the other world is possible.

The implementation is cheap. The return is measured not in fiscal terms but in social cohesion, community capacity, and political resilience. A government that enables communities to feed themselves is a government that people have reason to support. That is the political foundation the programme requires.

Land Value Tax: The Design and the Politics

The economic case for Land Value Tax has been made by economists for over a century, from Henry George's original argument in Progress and Poverty through to Joseph Stiglitz's modern treatment. The case rests on three propositions.

First, the supply of land is fixed. Unlike buildings, which can be built or demolished, the total stock of land in any given area cannot be increased. A tax on land cannot, by definition, reduce the supply of land, and therefore cannot generate the deadweight losses that make most taxes economically harmful.

Second, land value is created by the community, not by the landowner. The value of a piece of land is determined by its location, which is a function of surrounding economic activity, public infrastructure, and social investment. The landowner who holds a plot in the path of urban expansion has done nothing to create that value. Taxing it is not a punishment for effort. It is a correction for an unearned windfall.

Third, Land Value Tax discourages land banking. If landowners must pay an annual charge proportional to the value of their land, holding land speculatively without development becomes expensive. This creates an incentive to release land for development, increasing housing supply.

The revenue potential is real. Various estimates have placed the annual yield of a fully implemented Land Value Tax on residential land in England at between GBP 5 billion and GBP 15 billion per year, depending on the tax rate and the valuation methodology. Those are not precise numbers and should not be treated as such, but the order of magnitude is meaningful. For comparison, the current annual spending on the Affordable Homes Programme is roughly GBP 2 billion.

The critical design point: Land Value Tax is not a property tax. It is a tax on the unimproved value of land. A homeowner who extends their house, refurbishes their kitchen, or adds a conservatory does not see their Land Value Tax bill increase, because the value of the improvements belongs to them. A Land Value Tax bill rises only when the value of the underlying land increases, typically because of public investment in the surrounding area. The tax falls on the location value, not the structure value.

This distinction matters politically. It means that improving your home is not penalised. Only the passive accumulation of location value is taxed. That is a principled position, and it is one that a government proposing Land Value Tax should make repeatedly, because the political opposition will try to characterise it as a tax on homeowners rather than a tax on land speculation.

The political difficulty is still substantial. Land Value Tax falls on asset-rich, vote-rich older homeowners in high-value areas. A pensioner living in a GBP 1 million house in central London on a fixed income would see their Land Value Tax bill increase substantially, even if their income had not changed. The political objection is that this pensioner has "saved" through property ownership and should not be penalised for having done so.

The counter-argument is that the pensioner's property wealth is substantially a product of public investment in the surrounding area, that they have already benefited from decades of capital appreciation funded by the community's activity, and that the next generation should not be required to rent from the previous one or to pay lifetime rents in order to access housing wealth they had no part in creating.

The political economy of Land Value Tax is almost perfectly designed to make reform impossible. The costs fall on a concentrated group of voters who are wealthy, politically active, and well-connected. The benefits are diffuse, falling on renters, younger households, and the public balance sheet. Under normal political conditions, concentrated interests defeat diffuse ones. That is why Land Value Tax has been proposed by every major political party in the UK at some point in the last century and has never been implemented.

The answer is not to make Land Value Tax palatable to landowners. The answer is to make the political case honestly, to phase the implementation, and to provide transition protections for those who would face genuine hardship.

The Agricultural Transition Question

The land reform described in this post shifts some agricultural land to residential and commercial use. This raises a question that the right-wing objection to land reform will raise first: does the UK have enough land to build on without compromising food security?

The honest answer is: yes, with managed trade-offs. The UK imports roughly 40% of its food by value. Domestic food production is one input to food security, not the entirety of it. The agricultural land that is released for housing under the reform proposed here is not the productive arable land in the east and south of England that produces the UK's core staple crops. It is land at the urban fringe - lower-quality agricultural land, often in areas with poor drainage or limited agricultural value - that is currently in agricultural use partly because it has no better use, not because it is irreplaceable for food production.

The trade-off is real but manageable. A planning system that releases lower-quality agricultural land at the urban fringe, combined with the food security investments described in Part 2 of this series, produces a better outcome than a planning system that prevents any release and compounds the housing crisis. The agricultural transition requires: a clear classification of which land is available for release without compromising food production; investment in intensification of remaining agricultural land to maintain output per hectare; and food security diplomacy (Part 2) to diversify import sources so that the UK is not dependent on any single agricultural trading partner.

The right-wing objection - that land reform means concreting over the countryside - is a framing problem, not a substance problem. The countryside that matters for food production is largely protected by good agricultural land classification. The land that matters for housing is the land at the urban fringe that has limited agricultural value and maximum housing value. Making this argument clearly and specifically is part of the political case for land reform.

The Phased Implementation

A Land Value Tax cannot be introduced in a single reform. The political and administrative prerequisites are too large. The phased approach is not a compromise with principle. It is the only realistic path to implementation.

Phase 1: Commercial Land (Business Rates Reform)

The starting point is commercial land, because the political obstacles are smaller and the administrative infrastructure already exists. Business Rates are a proxy for a land value tax on commercial property: they are levied on the rateable value of commercial premises, which is based substantially on land value. The current system is broken in ways that compound the planning gain problem, because it taxes online retail at lower effective rates than physical retail, distorting the market and incentivising the conversion of town centres to residential use without capturing the uplift.

The reform: equalise Business Rates between online and physical retail. This is straightforward and long overdue. Then, progressively restructure Business Rates to shift the burden from building value to land value. The administrative mechanism exists: rateable values already distinguish between land and buildings in principle. The practical implementation requires valuation reform, but it is achievable within two to three years.

Phase 2: Residential Land (Gradual Reform of Council Tax)

The announcement of a residential Land Value Tax should come early, but the implementation should be phased over five to ten years. The revenue from commercial land reform provides the transition funding. As the residential Land Value Tax is introduced, Council Tax is reduced proportionally, so that the net change for most households is small in the early years of the transition.

The long-run distributional effect is significant. A Land Value Tax on residential property, replacing Council Tax, would redistribute the burden from low-value properties to high-value properties. A household in a modest suburban semi pays less. A household in a large detached house in the Home Counties pays more. A household in a central London penthouse pays substantially more.

The transition protections are essential. Households on low incomes, including pensioners on fixed incomes, should be protected through a deferral mechanism: the Land Value Tax liability is registered against the property and collected when the property is sold or transferred, not as an annual bill. The deferred charge accrues at the consumer price index (CPI), not at commercial interest rates - using commercial rates would compound the deferred debt substantially over time and would convert a humane transitional protection into a regressive burden on low-income homeowners who have held property through no fault of their own. At CPI, a pensioner deferring £8,000/year of LVT for 20 years accumulates a deferred debt of roughly £160,000 in nominal terms, which is manageable against a typical estate. At 5% commercial compounding, the same deferral produces approximately £260,000 - a substantially more punitive outcome that would in effect be an inheritance tax on modest housing wealth. This distinction is a design choice that must be made explicit, not left to default commercial practice.

Compulsory Purchase at Existing Use Value

The 1947 Town and Country Planning Act introduced a mechanism that is worth understanding precisely because it worked, and because it was subsequently dismantled.

The 1947 Act required that when planning permission was granted, a development charge would be levied equal to the increase in land value attributable to the permission. The effect was to capture for the public some portion of the planning gain that would otherwise have gone to the landowner. The development charge was set at 100% of the uplift above the existing use value at the date of designation.

This is the key concept: existing use value. The landowner is compensated at the value of the land in its current use, not at the value it will have after planning permission is granted. The community keeps the difference. That is the principle. It is a defensible principle. The landowner created nothing. The community created the value. The community keeps it.

The 1947 system was dismantled systematically after 1951. The incoming Conservative government reduced and then abolished the development charge. The argument used then, and used ever since, is that landowners should not be penalised for the state changing the planning rules around their land. This argument has a surface plausibility. It does not survive scrutiny. The landowner holds land subject to the planning system. The planning system is a public institution. When the public changes how that institution operates, it is reasonable for the public to capture the value that results.

The current compulsory purchase regime operates on a different principle: the acquiring authority must pay compensation reflecting the "open market value" of the land, which in practice means the value the land would fetch with planning permission already granted. This is the mechanism that makes large-scale land assembly for new towns, for urban regeneration, and for infrastructure projects so expensive. The landowner captures the planning gain through the compulsory purchase process, just as they capture it through the planning permission process. The community pays twice.

The reform required is not complicated. It requires amending the Land Compensation Act 1961 to establish existing use value as the primary basis for compulsory purchase compensation, rather than market value reflecting planning permission. It requires a new appeals mechanism, with standardised valuation methodologies and faster timescales. And it requires political will, because landowners will litigate every significant compulsory purchase order that uses the new basis.

The legal objection that compulsory purchase at existing use value is "theft" from landowners is circular. The state created the planning system. The planning system creates the value. It is reasonable for the state to capture some of that value when it assembles land for public purposes. The 1947 Act demonstrated that this approach is legally sound. The subsequent reversal demonstrated that it is politically contested. A government that wants to build the homes the country needs must be willing to fight that political battle.

The Community Land Campaign Model

The planning system already contains mechanisms for capturing value from development. Section 106 agreements allow local authorities to negotiate planning obligations from developers: affordable housing requirements, infrastructure contributions, community facility provisions. The Community Infrastructure Levy allows a flat-rate charge on development to fund infrastructure.

In practice, these mechanisms are weak. Section 106 is negotiated on a site-by-site basis, which means it is slow, inconsistent, and subject to developer lobbying. Developers with planning permission already granted have substantial leverage to negotiate down the obligations. The result is that Section 106 contributions are often far below the genuine cost of the infrastructure the development requires.

The Infrastructure Levy, proposed in the 2023 NPPF reforms, was designed to replace Section 106 with a flat-rate charge on development value, set locally and applied consistently to all development. It has not been implemented. The government should implement it, with the following specifications.

The Infrastructure Levy should be set at a minimum of 20% of gross development value for residential schemes above a threshold size. It should be non-negotiable: once set, it applies to all developments in the area, removing the scope for developer lobbying to reduce obligations after permission is granted. The revenue should be hypothecated: ring-fenced for infrastructure in the local authority area, including affordable housing, transport, schools, and community facilities.

The Community Land Campaign model, which has informed much of the thinking on this issue, goes further. It proposes that communities should have the right of first refusal on land released for development, and that planning gain should be captured at a rate of at least 50% of the uplift above existing use value. These are more ambitious proposals than the Infrastructure Levy alone, and they should be the direction of travel. But the Infrastructure Levy is the immediate, achievable step.

The Distributional Question

Land reform has a distributional profile that is unusual in public policy: the losers are concentrated, wealthy, and politically powerful. The winners are diffuse and largely not yet politically active, because the winners include people who cannot yet afford to live in the areas where the land reform would have the greatest effect.

This asymmetry is not accidental. It is the reason that land reform has failed in the UK for a century. It is the reason that the 1947 Act was dismantled. It is the reason that Land Value Tax has never been implemented despite being supported by economists across the political spectrum. Concentrated interests beat diffuse ones in almost every political environment.

The political case must therefore be made carefully and honestly, and it must be made to different audiences with different concerns.

To the political centre: land ownership concentration is not a conservative or progressive issue. It is an inheritance issue. The next generation should not be required to rent from the previous one, or to pay lifetime rents in order to access housing wealth they had no part in creating. A society that locks in the advantages of the previous generation at the expense of the next is not a meritocracy. It is a rental arrangement dressed up as a property market.

To the progressive left: land ownership concentration is a question of power and democracy. A country in which a few thousand families can hold the housing supply of an entire nation hostage, and can capture the value created by public infrastructure investment, is not a functioning democracy. It is a feudal arrangement maintained by the political capture described in the programme introduction. The case for land reform is the case for democracy.

To the economic right: land ownership concentration is an allocative inefficiency. Land that could be used for housing, for economic development, for productive purposes is held out of use by landowners who profit from scarcity. This is not the free market. It is a market distorted by the political artefact of the planning system, maintained in the interest of those who benefit from the distortion. Land Value Tax, by ending the subsidy to land banking, would increase the effective supply of development land, reduce housing costs, and free capital for productive investment.

The political reality is that land reform has never won in the UK because the political coalition for it has never been built. The 2024 election result suggests that coalition is now available. But it is not automatic. It requires a government that is willing to name the problem plainly, to make the distributional case honestly, and to take on the landowners who will fight back with every tool available to them.

What This Costs Versus What Inaction Costs

The direct fiscal cost of the reforms in this post is relatively modest. The Land Value Tax reform involves administrative investment in valuation capacity, estimated at a one-off cost of GBP 200 million to GBP 500 million. The compulsory purchase reform requires legal capacity and faster tribunal processes, estimated at GBP 50 million to GBP 100 million annually in additional administrative spending. The Infrastructure Levy is self-funding: the levy revenue exceeds the administrative cost.

The indirect cost is political. Land reform takes on a small number of very wealthy, very well-connected people and institutions. They will litigate. They will lobby. They will use their media presence to argue that the reforms are an attack on property rights and an assault on the certainties that ordinary homeowners have built their lives around. That campaign will be expensive, sustained, and professionally executed. The government proposing these reforms must be willing to fight it.

The cost of inaction is not modest. The UK has some of the worst housing affordability in the developed world. The ratio of house prices to earnings in London and the South East exceeds 12:1. In some local authority areas, it exceeds 20:1. These ratios are not the product of a market failure. They are the product of a political artefact: a planning system that systematically transfers the value of public infrastructure investment to private landowners, and a tax system that does not capture the land rent that would otherwise moderate land prices.

The planning gain captured by landowners through the grant of planning permission is estimated by various researchers at between GBP 5 billion and GBP 15 billion per year. That is the annual transfer from the public to landowners that occurs simply because the planning system operates as designed. A government that fails to capture that value is not being neutral. It is being complicit in a redistribution mechanism that operates against the interests of everyone who does not already own land.

The housing post describes a building programme that requires land. This post describes how to acquire that land without paying a ransom to the people who have done nothing but hold it while the community around them grew. These are complementary reforms. Planning reform without land value capture produces expensive housing and wealthier landowners. Land value capture without planning reform produces a smaller housing programme, but one in which the value stays with the public rather than leaking to landowners.

The programme introduction to this series names three mechanisms of oligarchic capture: the captured state, institutional capture, and land ownership concentration. This post has addressed the third. The first two are addressed in other posts in the series. Together, they describe a country in which the rules are written for those who already hold the assets, and in which public investment systematically enriches those who were already rich.

That is not a technical problem. It is not solved by streamlining planning permission or by building more homes alone. It is solved by changing the rules so that the gains from development are shared with the public that creates them.

The political economy of that change is not favourable under normal conditions. The conditions this country faces are not normal. A government that accepts the urgency of the compounding crises described in this series must also accept the land reform agenda. The two are not separable. A government that builds homes but transfers the value of those homes to landowners has not solved the housing crisis. It has subsidised it.

Part 11: Land and Planning Reform - part of The Country That Works For You series

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