ABSTRACT

The modern system of planning control, that is to say control of land use and development, originated in the Town and Country Planning Act 1947. As is well known, there were several earlier planning statutes, but the system of control that they introduced was of limited scope and effect. The Act of 1947 is in a very real sense the starting point of planning as we know it in Britain. From that point on, no development of land was lawful without the grant of planning permission. Furthermore, development value was to be transferred to the State and a £300 million fund was set aside as compensation in respect of land which was ripe for development at the commencement of the Act. A “development charge” was to be levied in respect of the grant of planning permission, and there would be no compensation for the refusal of planning permission. However, the expropriation of development value discouraged development and it was abolished in 1952. The compensation fund was still available in respect of land ripe for development as at the commencement of the 1947 Act, but over time inflation depreciated the value of the fund and eventually it was not worth claiming, given the cost of recovery. So it was abolished by the Planning and Compensation Act 1991. Thus we have reached a stage where landowners who are refused planning permission receive no compensation, whereas landowners who receive planning permission obtain development value. The only planning compensation payable is for the removal of planning permission or lawful use rights by revocation, modification or discontinuance orders (and similar cases under the Planning (Listed Buildings and Conservation Areas) Act 1990) or the removal of permitted development rights under article 4 of the General Permitted Development Order 1995. There have been various failed attempts over the years to tax “betterment” or development value, but they have all been abolished. However, those landowners who receive the benefit of planning permission may, of course, be liable to capital gains tax and, as set out below, developers may have to make financial contributions for infrastructure and other community benefits by way of connected planning obligations

or the Community Infrastructure Levy. In these respects, some of the value of development is returned to the State.