Council Compulsory purchase act - use of land aquired.

[Jonathan---]

Hi,
my father had 2 derelict houses compulsory purchased by the council in the 70s. He thought their offer of �500 for 2 houses was well below valuation and a figure was never agreed. However the small row of houses were knocked down with all the other owners accepting the money. This land has still not been used for any purpose and the council are happy to sell the entire original plot back to us, BUT, they will not price the land until he has accepted the �500 plus interest coming to app �2000.
From our point of view we think it is only acceptable for the entire plot to be valued first and then his area to be deducted.
Is there a law stating CPO must use the land for a purpose within a timescale and is it worth taking the council to court if we cannot agree?
Thanks,
Jonathan