The Ministry of Town and Country Planning was established in February 1943. The 1944 Town and Country Planning Bill enabled local authorities to compulsorily acquire bomb-damaged areas for redevelopment on payment of compensation to owners. The act required planning authorities to undertake a survey and devise a land development plan to include industrial sites, residential areas, public services and transport. Landlords lost their immediate right to develop but could apply for permission. If an application was successful, landlords would pay a development charge equal to the resulting increase in property value.
The act created a fund of £300 million to compensate landowners for the loss of development rights. The new Central Land Board assessed development charges and compensation. Patrick Abercrombie's Greater London Plan addressed concerns about the uncontrolled expansion of London by proposing the establishment of new towns within 50 miles of the city. The government introduced a New Towns Bill in April 1946. The Conservatives were unenthusiastic. Development corporations were empowered to acquire land, undertake building, provide public services and administer new towns. Funding was by government loans, to be repaid by income generated from new property.
Following the act, ten towns were set up, most in the South East, to decentralise settlement and industry from London. Economic difficulties led to cuts to the programme from 1947.
The Conservative government wished to reduce the role of the state in determining land use in favour of the market. In 1952, Cabinet set up a committee to reform the 1947 Act. The committee was in favour of local authority planning, but was critical of the role of the Central Land Board and the development charge. Harold Macmillan argued for the abolition of the fund and reduction of the development charge. Instead, compensation would only be paid when planning permission was refused or land compulsorily purchased.
The establishment of the New Towns Commission under the New Towns Act of 1959 was intended to anticipate the transfer of new town property to a diversity of ownership. In 1957, Cabinet refused permission for another large-scale development outside Manchester at Lymn.
In 1962, Sir Keith Joseph unsuccessfully argued for new developments to ease housing shortages in Liverpool, Manchester, Birmingham and London. The Labour government from 1964 substantially expanded the new towns programme and aimed at increasing owner occupation to at least 50 per cent.
These proposals were controversial. The Chancellor, Richard ‘Rab’ Butler opposed them on the grounds that they would create a 'dual market' between land subject to compulsory purchase and land available for development. Macmillan's proposals were, however, incorporated into the 1954 Town and Country Planning Act.