equality politics

Will the Labour party tackle Britain’s vast land inequality?

Britain faces all kinds of problems as it accelerates into the 21st century, and one of the oldest and most neglected is land ownership. Britain never reformed and swept away the old feudal system the way some of our European neighbours did. We just layered some democracy on top and hoped for the best. We still have a royal family. There are still hereditary peers in the House of Lords – people who get to vote on British laws, for life, because they were born into it. And the landed gentry is alive and well.

In medieval times, 50% of Britain’s land was commons, held in communal ownership and with all sorts of usage rights for ordinary people. Successive kings and governments privatised it, often fencing it off for grazing sheep. Kings took bits of it for hunting, or gave new estates to their favourites. Today 5% of land is commons, and that slow theft from ordinary people has never been addressed.

To take one example, Britain’s largest private landowner today is the Duke of Buccleuch. He inherited 277,000 acres because, ten generations ago, King Charles II granted land holdings to an illegitimate son. Nothing personal against the Duke, whoever he is, but do we have to consider these things fixed for all time? Isn’t there some fair and democratic way to rebalance Britain’s land ownership?

The Labour party has been looking into this recently, and produced a research report called Land for the Many. It’s the first time I can remember a British political institution spell out the problem or try to formulate any solutions, and so it’s worth a look.

It’s particularly important now, when housing is such a critical issue. House prices have been out of control in Britain for twenty years, leaving younger generations priced out. Those who have a home can use it to buy a second to rent out, while those on lower incomes can’t afford to save up a deposit. This is a major driver of inequality in Britain. If we want to solve the issue of housing or make a dent in inequality, we have to talk about land.

There are dozens of proposals in the report, some of them to do with land law and technicalities, but here are a few highlights:

  • One of the first issues to tackle is transparency. It has been over a hundred years since there was an official audit of land ownership. We don’t know who owns what, and sometimes the real owner of land can be obscured in offshore territories for tax purposes. So a first step is to open the data.
  • The creation of a Common Ground Trust, which would buy the land under a house in order to bring the price down for first time buyers. The land would then be held in trust, with residents paying a ground rent.
  • A major drive to build and provide more social housing. This should be built on existing public land where possible, and the sale of land to fund local government services should be paused.
  • Replace council tax with a progressive property tax, with higher rates for second homes or empty homes.
  • Business rates could be replaced by a Land Value Tax.
  • Encourage community planning for new developments. I’ve written about this here and would love to see more of it.
  • The right to roam across uncultivated land and water. This already exists in Scotland.

None of this is policy yet. They are proposals to the party, and they will be discussed ahead of the next election. Some of them may get into the manifesto, we shall see. For now, it’s just great to see such a comprehensive set of ideas on land up for debate.

12 comments

  1. https://www.scotsman.com/lifestyle-2-15039/this-danish-businessman-is-now-the-largest-landowner-in-scotland-1-4811678

    The ancient duke possibly now overtaken by an internet billionaire. He is a leading conservationist but the points your raise remain valid.

    Property law in Scotland may be significantly different from England and land reform a longstanding issue, and a highly charged one in the highlands. Check out the work of Andy Wightman for up to date details.

    1. Interesting. Presumably he has bought it all, since it won’t be inherited wealth. Better to manage it for wildlife I suppose, but nobody should own that much of a country.

      I will look up Andy Wightman, thanks for the connection.

  2. Labour’s policies are an incoherent ragbag which will, at best, only scratch the surface of the problem and could make matters worse.

    Astonishingly, the experts on the subject, the Labour Land Campaign, were not invited to contribute.
    http://www.labourland.org/

    1. That’s odd. Since this is a discussion paper, perhaps they’ll be able to respond and bring some coherence before it gets to actual policy stage. The last thing we want is a bunch of half-measures that achieve nothing, and push the land issue back into obscurity for another generation because everyone thinks it’s fixed – see Labour and the House of Lords for example.

      1. Swapping out LVT for the Council Tax and UBR, initially on a revenue-neutral basis, will achieve most of what is required. Completing the Land Registry is a necessary part of the process.

        Right to roam is worth pursuing. Otherwise Labour needs to keep things simple, and its policy makers need to get advice from those of their members who actually know about land economics.

  3. The basic problem with land is treating it as a commodity to be bought and sold in a market. However, as argued by Karl Polanyi in ‘The Great Transformation’, land is one of the three ‘false commodities’, which also include money and labour – and to which I would add food (When Polanyi wrote his book in 1944, supermarkets as we know them today did not exist). A useful summary of the problem of ‘false commodities’, along with analysis in the context of the 2008 crash, can be read here: http://www.paecon.net/PAEReview/issue74/Flomenhoft74.pdf (“Escaping the Polanyi matrix: the impact of fictitious commodities: money, land, and labor on consumer welfare” by Gary Flomenhoft in “real-world economics review”, issue no. 74 2016.
    The first step is to change our thinking and decouple house and land values. Houses (and other buildings and even farming in the sense that land can be starved of vitality) actually fall in value over time unless properly maintained – it is land that rises in value, and since land is fixed, prices will rise whilst ever there is spare money (saved, borrowed, or welfare benefits) to pay rent and mortgages.
    ‘Land for the Many’ addresses solutions. However, as far as I can see from a skim read, the document does not address the underlying problem of commodification of land, and that land value driven by speculation is the real problem. So buying the land under a house could just drive speculation since the government can always borrow money.
    One possibility is state ownership, with land leased to developers, including for housing (which in effect buying the land under a house produces), as in Hong Kong and Singapore, but as I see it, this denies a sense of common ownership – in the end the state is just another landlord – and community land trusts would be much more effective at restoring land as a ‘community commons’.
    For me, the best solution is Land Value Tax (LVT), but you must start with the problem of stopping speculation, not raising revenue. This means that LVT must be high enough such that, as Flomenhoft argues “If holding costs [including LVT] are less than the annual capital gains, then financiers will continue to speculate on land and housing. If land tax or capital gains taxes removed the unearned income from real estate, then land would no longer be subject to speculation or bubbles.”

    1. Land value tax should begin as a replacement for existing property taxes. It is a buoyant and efficient revenue raiser. The present main revenue raiser is taxation of earned wages, which gives rise to vast deadweight losses and is a major cause of unemployment and regional economic imbalance. VAT has the same disadvantages but it is not a significant revenue raiser as the apparent yield disappears in churning losses, deadweight losses, abstraction from other taxes, and consequential welfare costs.

      “If holding costs [including LVT] are less than the annual capital gains, then financiers will continue to speculate on land and housing”

      I am not sure about this. Taxation of rent reduces the value of land by the capitalisation of the amount of tax paid ie a tax of, say, £10,000 per annum reduces the value of land by about £200k. Nobody speculates on a perpetual financial liability.

  4. I’m a member of the Labour Party – and one who joined because of Corbyn too – so I would like to believe this could happen. However, I’m pretty certain even with a Labour government we’ll never see this come to fruition. As being demonstrated so clearly by the Brexit shambles, you don’t get anywhere if you don’t remain loyal to alliances. The Lords and all the landed gentry have things stitched up so tightly that we’ll never see the thing unpicked. In my opinion, obviously, but I’ll eat my hat if I’m wrong!

    1. For me it’s one of the many things that would be easier if we had electoral reform and more proportional representation in government. Then it wouldn’t be dominated by the two big parties. And Lords reform, finally sweeping those medieval landowners out of power. It’s not impossible without that, but as you say, pretty hard to imagine.

      1. The House of Lords reforms of 1910 were designed to curb the power of the lordly landowners, and to a large extent have succeeded. The obstacles are now more entrenched; no longer medieval lordly landowners but banks, charities and educational establishments, all of whose income is derived substantially from land rents. Consequently. the importance of land in the economy has been entirely written out of the body of economic theory which is taught in academic institutions. And why do you think charities like Shelter have never, ever, spoken in favour of land value taxation? Or the Institute of Fiscal Studies, which gets much of it support from the Rowntree Trust, and where does the Rowntree Trust get its money from? And the churches, whose members almost never speak up for land value taxation but just hold up their hands and express concern.

        Then there are the home owners.

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