The power of initiation: Heath and the Selsdon approach. The power of constraint: the speculative property boom of 1971–1973. Heath at the crossroads: social democracy versus market constraints.

In the early 1970s the compensation and betterment problem was made more difficult to resolve because the government had to deal with financial speculation in the rental values of commercial properties. This speculation was encouraged by the Heath government's return to an adversarially based policy for land values. The Land Commission was abolished and a ‘regulatory’ solution was imposed on the market similar to that which had existed between 1959 and 1964, when an earlier boom in property had occurred with adverse electoral consequences for the Conservative government.

The aim of the government in 1970 was the stimulation of industrial regeneration through the private market. But very limited state taxation on property speculation, no state role in facilitating land supply and a lax monetary policy was to lead, with declining industrial profitability, to a sustained property boom. This came about because the government's power of initiation was used in ignorance of the power of constraint which its free market approach gave to financial institutions. The government found, between 1972 and 1973, that it was unable to control these interests: they invested in property rather than industry. Consequently, massive capital gains were made by a few, and property millionaires became part of the ‘unacceptable face of capitalism’. This led the Conservative government to set aside its free market ideals and to impose controls on business rents.