Point Gourde & English Housing
Do you want a break from the wind and rain-lashed countryside hereabouts, preferably somewhere with more than the bleak view of bare street trees from your living room window?
Transform yourself, shut your eyes and think of Point Gourde, a small but perfectly formed peninsula in Trinidad, an emerald in a sapphire sea, with a neat yacht harbour at Coral Cove.
Amazingly, this sleepy, sunny little corner of the world played a role in creating our housing shortage here in Southern England. I refer, of course, to the matter of Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands 1947, a legal case about a UK Government plan to buy land for a limestone quarry in Trinidad to facilitate the building of a US Naval Base.
I know that in the leader post on this Blog I said ‘no diatribes’. But I am going to permit myself one. But just in case you think I am losing the plot at this point I will add that Point Gourde is indeed mostly underlain by limestone and low rainfall means that it is covered in deciduous woodland, with some dry Tropical forest. There is a 'bikmap' route there if you want it but it's not for me, my knees wouldn’t appreciate a 700m climb. Link: To Point Gourde
The English legal system is like an octopus. It has tentacles throughout the countries once coloured pink on the globe. Their legal systems feed off our precedents and the opposite can also be true. Sometimes I bitterly reflect that we march to hell together, but that isn’t fair. English common land law, is truly ancient and often based on precedents. It usually seems sensible to me.
Anyway, the precedent established in this case gave us the ‘Point Gourde Principle’ and the wonderfully named ‘No Scheme World’ rule, which cripple plans to improve our housing supply.
This sounds strange so I will try and boil it down.
Dave the developer wants to buy Freddie the farmer’s land. While Dave doesn’t have planning permission to build houses, he is fairly confident that he will get it because it is earmarked for that in the Local Plan. He knows that he will be paying far, far more than agricultural prices for the land as a result.
Freddie reckons he will be pocketing millions, even after he has been taxed on the gain. You might ask, what gives him a right to an exorbitant rake off? He has done absolutely nothing to earn it, because the things that made the farmland so valuable for development such as access to roads, pipes and other services, were all paid for by you and I, the tax payers.
You might also wonder why the Council or another public body doesn’t compulsorily purchase the land for what it is worth as a farm, plus a bit to grease the wheels? The difference between what would be paid for the land across the country and what it is worth for housing is an enormous sum, perhaps billions, that could be used to provide a better and cheaper mix of homes, or to invest in local services. And Freddie would still get a just reward for his own efforts as a farmer.
|(Credit : FT)
The answer lies in that sun-kissed little Peninsula in Trinidad. The Point Gourde case is the basis of our current system for determining what Freddie should be paid for the land if it is compulsorily purchased. It sets out that the owner should be paid a sum that reflects, not necessarily what the land is worth as a farm, but rather what it might reasonably be expected worth for what it might be used for in the future. This is known as the ‘hope value’.
There are a few caveats and let-offs, mostly around avoiding a situation in which compensated with a price that includes a benefit from current or planned public investment, for instance in a new road. But this ignores all the stuff directly or indirectly paid for by the public in the past. In practice this means that Freddie would getting a sum which reflected the amount that Dave might be expected to pay and not the amount that the Government might pay. This legal principle has now been enshrined in English statute law
Is this fair? I think not and recruit to my argument one Winston Churchill who was not a known socialist. His view on the right of the landowner to cream off this profit was recorded in 1909. In what follows, Freddie is effectively the ‘land monopolist. No one else owns it!
“Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived”.
In other words, Winnie is telling Freddie that he did nothing to earn or deserve that windfall. Quite right too. And he could have riffed on the Book of Genesis and reminded us that when ‘God gave the land to the people’, he didn’t mention individuals and certainly not Freddie.
The usual objection to this is a chirrup about people’s right to property. I have even heard people quote the European Convention of Human Rights to defend a property owner's right to profit by shafting everyone else. Maybe they hadn’t read it. After all, they would have had to get as far as Article One to get the gist. It says:
‘Every natural or legal person is entitled to the peaceful enjoyment
of his possessions. No one shall be deprived of his possessions
except in the public interest and subject to the conditions provided
for by law and by the general principles of international law’
So far, so good. But it goes on…..
‘The preceding provisions shall not, however, in any way impair
the right of a State to enforce such laws as it deems necessary
to control the use of property in accordance with the general
interest or to secure the payment of taxes or other contributions
In other words, when it comes to issues in relation to private property, Parliament has a broad right to look to the public interest. That seems clear enough to me. Our collective interest is surely that there are enough houses to go around and that there should be decent public services.
Before anyone gets hot under the collar about the EU, Eurocrats and how we should back out of this Convention, is is worth remembering that it was drafted under the auspices of a British Conservative Government.
There is even a precedent in the UK. The ‘New Towns’ that surround London like Milton Keynes, Hemel, Stevenage and Crawley, were created by the New Towns Development Corporation who had powers to buy the land they needed at its value in its current use. In this case it was usually farmland. This programme was supported Conservative Governments from 1950 through to 1970. And it certainly isn't unusual in Europe. The Dutch and German systems have the same effect and Vienna, which probably has the most admired social housing sector in Europe, has achieved this through public land acquisition decades ago.
It doesn't even follow that all of the land involved would need to be compulsorily purchased. In practice, the fact that this is a possibility, will tend to drive down land prices in the market. Housebuilders won't want to buy land at a high price when there is a risk that it might then be bought off them at a lower price.
I am not crazy enough to argue that private property should be abolished, or that in the ‘public interest’ Freddie should not be compensated for the loss of his farm. Rather, the simple point was that the rules of the gain shouldn’t undermine efforts to achieve those things just in order to allow Freddie to laugh all the way the way to the bank having trousered millions which he did nothing to earn.
But if he does, I do hope he choses to spend some at Point Gourde, where a project of despoliation to support building a military facility, indirectly led to his enrichment.
This is a long way from that small, green peninsula between the Caribbean and the Atlantic. And it is way past time that we put an equal distance between the rules established by a legal case that frustrates the ‘public interest’ in order to leave individuals with the right to vast and unearned profits. We might then have a better chance of getting housing where we need it and for those who need it.