At the bottom of this post is a link to a Guardian Article which I recommend you read. In fact don't just read it, print it out and pass it around to people in your office. It will be that controversial.

The plan, in short, is to change the Compulsory Purchase Compensation Rules, which govern how much individuals get paid when the State commandeers their land  (or homes), to exclude the potential development value of the site. A change which has the effect of reducing the price of the land which the state wishes to requisition to significantly less than market value.

Labour's rationale for the policy is that lowering the price paid for land will enable more houses to be built at a lower cost. 

Unfortunately, there are so many holes in this theory that I could use it as a sieve. Below are just a few of the problems which immediately spring to mind:

  1. CPO powers are rarely used to acquire large sites in single ownership. In most site-assembly schemes, the properties that tend to be compulsorily purchased by the state are small - people's homes, or gardens, or the sites of small businesses. This is particularly true when dealing with the regeneration of urban areas or major infrastructure projects such as the expansion of Heathrow - which will require the demolition of an entire village*. The idea of the state purchasing these homes to make way for new development is often controversial enough without the owners being forced to sell at an undervalue.
  2. The state and state controlled organisations already own vast tracts of developable public land, which has not as yet been released for development. The NHS,  the MoD and many local councils all have huge under-utilised estates, which could be released for housing. Similarly Network Rail controls land around a number of railway stations, which could be used more efficiently.  It would make sense to utilise land already in state-ownership before forcing individuals to sell to the state for less than market value.
  3. This policy will only succeed in transferring land from private hands to the state. It will not, in and of itself, increase the number or affordability of homes built in the UK. The state is not a major house builder - in fact - following the recession the vast majority of new build houses in the UK were built by a relatively small number of large development companies. Although Labour policy is also to promote the largest state house-building programme  since the end of WW2, there is currently a massive skills gap in local government, which would make it nigh on impossible for councils to deliver it. 
  4. As a result, it is hard to see how taking private land into public ownership will deliver the new homes promised - unless the government provides the land to private developers to build out. This seems an insidious use of CPO powers if they are also depriving the landowner of the 'hope value' to which they would have been entitled if they sold directly to the developer in the first place.
  5.  The policy could actually be counter-productive; as it provides a disincentive for private sector site-assembly. Who would want to go to the expense and risk of assembling a site for development, if there is a risk of the state arbitrarily stepping in and taking the land from you at an undervalue?

Fundamentally, the policy tramples on the most basic principle of compulsory purchase compensation, and indeed the relationship between the state and the individual: If the state appropriates your land, it will pay you its fair value as if it were a sale for market value between a willing seller and a willing buyer. If one part of that value can be arbitrarily taken away, then what confidence can anyone have that any other aspect of value will be respected in the future.