Press releases

THE TORIES IGNORE THE SUBSIDIES THE POOREST GIVE TO THE RICHEST

April 8th, 2013

When Iain Duncan Smith and his government try to justify their malicious benefit cuts to the poorest families in receipt of them, they chose to ignore the huge subsidies those same tenants together with other non-property owners give to freeholders and land owners. Taxes paid by all of us fund public services most of which ultimately increase land value and provide hidden financial benefit to owners of land. No tenants (residential and commercial) or other non-property owners get any of this increase in land value they have equally created. Indeed, as land values rise, tenants will normally find their rent increases.

Empty buildings and idle sites, kept out of use by land speculators, blight our communities.

It is not unusual to see these sites kept out of use for decades as their owners wait for more investment in local public transport, roads, schools, health care, street-cleaning and so on to get even more unearned income from their land holdings. Yet these owners are not only denying society the affordable homes, jobs, business premises, goods and services that are needed but take the land value that we all create.

Those taking the hidden subsidies of increased land value ought to concern themselves with the need for a fair tax system that not only encourages good investment but one which cannot be easily avoided or evaded as current tax system allows. A shift in taxation off wages and trade and on to the unearned income land owners receive will address the unfairness our society places on all tenants and other non-property owners.

Who is getting the biggest subsidy – a hard working Council tenant or the land owning Duke of Westminster whose family, for generations, has received fortunes from land value that was created by us as workers, tax payers, investors and consumers?

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817 906299 or visit www.labourland.org.

A BALANCED BUDGET FOR A FLAT-LINING ECONOMY?

March 21st, 2013

A balanced budget for a flat-lining economy? This does not sound like a recipe for growth.

However, George Osborne expects to start the engine by the magic trick of underwriting some mortgages for some prospective first-time buyers. Presumably there are lots of young couples with secure employment whose present rented accommodation is so affordable that they have been able to save a substantial deposit plus enough to cover stamp duty land tax and moving expenses. (The stamp duty relief in this budget was for share transactions, not homes.)

This will supposedly stimulate developers, sitting on land banks with planning consent for several hundred thousand homes, to get building, which will boost employment in the sector; which will increase tax receipts and reduce benefits.

Or will it? Perhaps, instead, developers will just wait for a real recovery before starting the process, when land values start to rise again and they can sell their houses in boom-time. In that case any stimulus to housing credit will merely increase house prices or, more likely help to maintain nominal house prices, the market having just experienced the mother of all house price bubbles.

The Labour Land Campaign agrees with the Chancellor that house building could provide the key to recovery, but we would suggest a few less carrots and a big stick.

What developers need to persuade them to unblock the stagnant market is an annual land value tax charged at the rental value of the land assessed according to its location with respect to local facilities and current permissions. The only reason to own land should be to use it and that is what would happen. The landowners would be forced to either get building or sell it to those who will do so.

But the Labour Land Campaign says, why stop there? If a land value tax were levied on all land for which there is a potential market, assessed in the same way and on a regular basis, not only would more houses be built but the Treasury would be in receipt of a huge and increasing revenue stream with which to fund public services and infrastructure renewal.

To quote from the Economist Growth Manifesto [1]: “One reason why companies sit on development land is because they do not pay taxes until the offices and warehouses are built. It would be much better to tax the land value: that would make hoarding expensive and force owners to sell to someone who can use the site. Once in use, the site value and the tax would rise—creating a virtuous circle, as the revenues pay for better infrastructure, making land more valuable.”

It should be noted that a land value tax could replace all existing property taxes, including Council Tax, Business Rates and Stamp Duty Land Tax plus income tax on the average wage.

ENDS

NOTES

1. 'A growth manifesto: A little faster, George?', The Economist, March 9th 2013 www.economist.com/news/leaders/21573113-british-economy-stuck-it-needs-structural-reform-looser-money-and-more-infrastructure

ARE HOUSEBUILDERS CONTRAVENING THE TRADE DESCRIPTIONS ACT?

February 28th, 2013

Amid the continuing economic gloom, what with credit rating downgrades hot on the heels of yet another negative quarterly growth figure, it’s nice to know someone is doing well.

Two of Britain’s largest housebuilders have reported excellent results for 2012 [1]. Persimmons’ pre-tax profits rose by 52% on selling prices up by 6%. Meanwhile, rival Bovis Homes saw increases of 69% and 5% respectively. So, the housebuilding trade must be going briskly, right?

Wrong. In fact, new housing starts in the last year dropped below 100,000 for only the second time in over 30 years – coming in at 98,290, a drop of 11% on the previous year [2].

So what’s going on? If coffee sales were at an all time low, would you expect to see Starbucks and Nestlé booming? If we all cut back on our weekly food shopping, would we be bullish on Tesco and Sainsbury’s shares? Of course not! So why should housebuilders be doing so well out of so little housebuilding? It’s because these companies, by calling themselves housebuilders, are stretching the Trades Description Act.

With housing supply near enough fixed, prices rise with ever increasing demand. And since homes are mostly bought on credit, rising demand reflects loose monetary policy – both low interest rates and the government’s funding for lending scheme. These companies can pocket these rising prices – without effort – because they are sitting on land; and as the land market is so rigged by landowners, new entrants can’t come in and undercut the existing housebuilders with cheaper homes, as should happen in a competitive market.

Should this worry us, the fact that these companies are making so much money when they are manifestly not doing what they are supposed to do? Yes, because broadly it is wrong for people to prosper without effort or providing useful goods and services. When you can prosper from owning rather than earning, you are rent-seeking. It is both unfair on those who have no choice but to earn their way in the world, and inefficient, as otherwise productive people are diverted into sterile speculation.

Land speculation may be good for landowners’ profits, but, in particular, this is bad for those for whom the dream of home ownership is slipping out of reach, for those whose rents eat up an ever increasing portion of their wages that could be spent on other things, those desperate for any accommodation or those forced to live with parents or friends. It is also a missed opportunity for the economy. After the last great prolonged economic downturn in the 1920s and 30s, economic recovery in Britain was accompanied by a housebuilding boom in the mid to late 30s [3]. Completions ran over 350,000 a year at the end of the decade, leaving the suburban semi-detached houses that still remain a valued and key feature of our built environment.

We could have similar housebuilding now. We certainly need more affordable homes, for which there is a huge pent up demand. Building them would put many to work and spending money. Unemployed youngsters could be trained up in plumbing, carpentry and construction, gaining valuable skills that would last them for life.

Government needs to provide the right incentives for housebuilders to build. Rather than sitting on land banks, waiting speculatively for land prices to rise, companies such as Persimmons and Bovis Homes could release them providing many years housing supply. If an annual Land Value Tax were implemented, sitting on empty homes or idle land which already has planning permission would become costly.

Appropriate land, with planning permissions, would be freed up to build new communities and further excursions into our valued green belts and countryside would become unnecessary as empty homes and brownfield sites in towns and cities are brought back into use. Governments could take advantage of record low interest rates to upgrade and invest in new infrastructure such as the road, rail, social housing, schools, hospitals and public parks which would make these new communities great places to live. And for those worried about this extra borrowing, the increased land values created by this investment would repay the initial cost – the revenues eventually being used to reduce burdensome taxes on wages and enterprise.

The vicious cycle we’ve been living through would be turned into a virtuous cycle. Economic growth could return, and a legacy of great new homes and a fair tax system would be left to us. It’s a legacy we need to start building.

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817906299 or visit www.labourland.org

NOTES

[1] ‘UK funding scheme boosts housebuilders’, Gill Plimmer, Financial Times, February 5th 2013.

[2] ‘Housing starts drop to post-recession low’, Kate Allen, Financial Times, February 21st 2013.

[3] ‘Metroboom: Lessons from Britain’s recovery in the 1930s’, George Trefgarne, Centre for Policy Studies, March 2012

A MANSION TAX IS FAIRER THAN INCOME TAX

February 18th 2013

Ed Miliband is right to look at shifting tax off incomes and on to unearned income by paying for the reintroduction of a 10p tax rate through a fairer property tax on high value homes. A home has two elements that make up its value – the building and the land it is located on. The land value is created by the whole of society not by any property owner and it is unfair that as land values rise because of public and private investments – paid for by us all as tax payers and as consumers - it is only owners of land that receive a financial windfall whereas tenants and other non property owners get nothing.

The Labour Land Campaign (www.labourland.org) reminds people that the “asset rich, income poor widow“ being trundled out by some objecting to Ed Miliband’s proposal applies only to a very small group of people, and there are ways of getting around the problem, such as letting them roll up the tax payments until they dispose of the property. “Asset rich income poor” people have to pay for their gas, electricity, council tax etc today, why should those who can afford to upkeep a £2million or more property be subsidised by those who live in modest homes, a large proportion of whom are tenants or living with family or friends.

Heather Wetzel, Chair of the Labour Land Campaign, says “Ed Miliband could do even better by reforming all property taxes and abolish business rates and council tax and replace them with an annual Land Value Tax being applied to all land according to its optimum permitted use. Such a tax would result in those homes, commercial buildings and idle development sites being used to provide more affordable homes and business premises instead of being held out of use by land speculators.

Land investors do not invest in anything; they actually speculate that land values will increase providing them with an unearned income that has been created by the whole of society. When tax payers from across the UK paid for the London Underground’s Jubilee line extension, it has been estimated that the extension cost £3.5 billion to build and land values rose by over £13 billion around the new stations because of the economic benefit the extension brought to those areas. Tax payers paid but land owners received a huge windfall that should have been collected and reinvested in public services throughout the country.”

If the London to Birmingham/Manchester and Leeds high speed railway (HS2) were funded in the same way then many local rail improvements including CrossRail 2 (Hackney to Chelsea) could be sustainably funded.

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817 906299 or visit www.labourland.org

YOU ARE INVITED TO ATTEND THE AFFORDABLE HOUSING CONFERENCE

October 8th, 2012

The Labour Land Campaign is pleased to announce that it is hosting an Affordable Housing Supply Conference on Wednesday, 14 th November at the Directory of Social Change, 24 Stephenson Way, London, NW1 2DP.

The conference will bring together senior researchers, housing executives, planners and campaigners from across the political spectrum to ask ‘Is there a permanent solution to the permanent housing crisis?’

It is widely recognised that Britain is not providing the affordable homes it needs. Rents are high and rising. Home ownership is out of reach for many younger people. The public sector no longer provides large numbers of council homes, but taxpayers foot the bill for housing benefits and loan guarantees. The private sector does not respond to high house prices with extra supply. What is to be done?

The conference will look at:

We will discuss the underlying problems to our housing crisis, assess the approach of the present government and examine and share solutions. Speakers include Duncan Bowie, Jacky Peacock, Eileen Short, Stephen Hill, Bob Colenutt and Gordon Nardell, QC.

This conference is a must for those working in Communities and Local Government related areas including Housing, Social Cohesion, Planning and Finance. Students and members of the public with a strong interest in the built environment, land and community development issues are also welcome.

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817906299 or visit www.labourland.org

EXTEND LOGIC OF 4G AUCTION TO LAND

October 5th, 2012

Ed Miliband has won plaudits for his bravura notes-free speech at the Labour Conference. He should be heartened; David Cameron won the Conservative leadership largely on the back of a similarly-delivered speech at the Tory Conference in 2005. The British public, living under the continued “omnishambles” of his Government, may be beginning to wonder if we should demand greater qualifications from our leaders than the ability to memorise a speech.

Joking aside, the speech has increase Ed Miliband’s standing with his party, the press and the country. He landed blows on the Government, whilst painting a pleasant picture of a Labour Britain. There is much to applaud in Labour’s policy announcements. Strengthening vocational education. Making banks work for their customers, not bankers. Preventing the increasing marketisation of the NHS. Extending transparency in public sector contracts with the private sector. Pushing for a Living Wage.

One policy particularly caught the attention of Labour Land Campaign – when Ed Balls called for the income received from the auction of the 4G mobile phone spectrum to build 100,000 new homes. It doesn’t sound earth-shattering, but the economic principle behind it is very close to our hearts.

The spectrum used for mobile phones is a limited natural resource which people cannot create. The economic value of “owning” the spectrum is so high because it is a scarce resource. Mobile companies would grow rich not because of their efforts or the quality of their service, but because they own something they didn’t make and which someone else can’t have. This surplus value is economic rent, and this rent can be taken by the Government without reducing the incentives for companies to provide useful services.

The same logic applies to land. Land is a gift of nature, which people cannot create. Ownership of land confers unearned economic rent from ownership of a scarce resource. This economic rent can be collected by Government as an annual Land Value Tax, without in anyway reducing the incentive to provide land for the homes, shops, factories and offices we need. This money can then reduce other taxes, such as on wages, in such a way to make our tax system more progressive and efficient.

Mr. Balls plans on spending the money from the auction of the spectrum on building new houses. We undoubtedly need to increase the supply of affordable homes. The Labour Land Campaign believes that a Land Value Tax is a vital part of achieving this, both by encouraging more efficient use of the housing stock and by increasing the availability of appropriate, affordable land for development. But recognising there are many viewpoints and policies that can help, we are hosting an Affordable Housing Supply Conference, ‘A Permanent Solution to the Permanent Housing Crisis?’, from 9am on Wednesday 14 th November at the Directory of Social Change, 24 Stephenson Way, London, NW1 2DP.

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817906299 or visit www.labourland.org

LIBERAL DEMOCRATS SHOULD PUSH FOR LAND VALUE TAXATION

September 28th, 2012

Plastered on the podium at this week’s Autumn Liberal Democrat conference was the slogan ‘Fairer tax in tough times’. Oh, that our political masters would take it to heart!

The Liberal Democrats offered a radical tax plan at the last election – increasing the income tax threshold while plugging the lost revenues with capital gains tax increases, a mansion tax and a reduction in tax reliefs for the wealthy. It was a sensible plan, taking the tax burden off ordinary working families and onto beneficiaries of unearned windfalls.

Some of these changes have now been partly implemented. But the overall effect is marred by some of the Tory tax policies. If they had a tax slogan it would be Matthew 13:12: ‘ For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath.’ The VAT increase cancels out any gain from the personal allowance increase, putting up bills for low paid workers. The cut in the top rate of tax is a giveaway for very high earners.

At least the conference has reopened the debate on wealth taxes – specifically the mansion tax. A mansion tax has something to be said for it. It might curb housing booms and busts which so harm economic stability and create huge unearned inequalities which cascade through the generations. It might shield the pain of austerity from poorer households.

It also has its disadvantages. It would not raise significant revenue. The £2 million threshold might buy you a mansion in some parts of the country, but only a terraced house in London. The most damning critique, however, is that it would be a diversion from implementing the most sensible tax change of all, a switch to a Land Value Tax.

A Land Value Tax is not a tax on wealth per se; it is a collection of economic rent. As the earliest economists knew, it does not discourage productive economic activity. It will not cause people to work or save less. In as far as it replaces other taxes and discourages speculative land hoarding, it will actually increase economic activity. It promotes efficient use of land – forestalling the planning free-for-all that the Coalition wished to allow, but the rank-and-file Liberal Democrat delegates have bravely stood against this week.

It is not a confiscation of something that has been rightfully earned, as a site’s value is created by surrounding community, not the site’s owner. It is merely returning to the community that which was confiscated from it.

The Liberal Democrats already support changing the tax base of business rates onto undeveloped site values. Nick Clegg and Vince Cable are both Vice-Presidents of the campaign group Lib Dem Action for Land Taxation and Economic Reform, which pushes for Land Value Taxation. Why do they not have the courage of their convictions, and tells us what they really believe while they are in a position of influence?

Labour Land Secretary Carol Wilcox says, “The Liberal Democrats are in dire straits. Nick Clegg may go down in history as a man who sacrificed himself and his Party to other men’s principles.”

“He should recall the great reforming pre-WW1 Liberal Party, when David Lloyd-George and a young Winston Churchill stormed the country, calling for the unearned rents of land monopolists to be used for the creation of the Welfare State. A modern Land Value Tax would protect the Welfare State and create the fair tax system to lead Britain to prosperity”

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817906299 or visit www.labourland.org

LAND VALUE TAXATION IS THE BEST PLAN FOR GETTING THE HOMES WE NEED

David Cameron completed his first reshuffle of the Government this week, but so far shows no sign of reshuffling his failing policies.

The UK’s economic performance is still dire. The Government’s chances of meeting its fiscal targets and getting re-elected will be imperilled unless there is sustained recovery in growth and employment.

The Government knows this, which is why we will continue to hear of a flurry of initiatives and speeches about restoring growth. Today we heard the latest of these - a relaxation of planning laws to boost construction of homes and business premises, and ease improvements to existing properties.

While the aim of more housing is laudable, the policies will fail to have a big impact. The economy’s short-term problem is lack of aggregate demand. People are not spending enough to buy what our economy is capable of producing. This means that, for all the supply-side tinkering with planning rules, people will not rush out to buy new extensions or new houses at any great scale in the next couple of years.

The Government should directly invest in a house building programme and improvements to infrastructure. It can currently borrow at next-to-nothing and could put many people to work, paying taxes and spending money.

In the longer term, supply-side reform is needed, but these reforms do not tackle Britain’s long-running inability to provide the homes it needs. A sensible approach would be replacing existing property taxes with a tax on the site value, a Land Value Tax, which would be collected by local Councils.

For site owners, they would have the incentive to develop sites that have planning permission in order to pay the charge. The Local Government Association released figures showing a backlog of 400,000 prospective homes which have planning permission but have not yet been built. Under Land Value Taxation, these sites would be incurring a tax bill and so the developers would ensure those homes were built in order to pay it. Similarly, empty homes would also be running up a bill, and so it would be better they were used to house people in order to pay it. Land would be used efficiently, so there would be no need for rushed, developments and ugly urban sprawl.

Labour Land Campaign Secretary Carol Wilcox comments “The Government’s plans will not work. It has a few marginal benefits for property owners, but will not get the houses we need built. A few carrots will not be enough to break the cartel of land speculators holding back development; sticks are needed as well. The relaxation of the affordable homes targets are merely a gift to the profits of developers and the unearned income of land owners.”

She continues “A Land Value Tax is needed to provide the right incentives for land owners and developers to provide the homes needed for people to live in and the jobs our ailing economy needs.”

ENDS

Notes to editors

1. This is an amended version of the Press Release ‘Land Value Taxation Is The Best Plan For Planning’.

2. For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817906299 or visit www.labourland.org

A TALE OF TWO EXPORTS – RENT AND THE REST

August 10, 2012

Two pieces of recent economic data highlight why Britain’s economy is both sluggish and unfair.

UK exports fell 4.6% between May and June, with a drastic 8.4% drop in exports of goods over the same period. As imports fell by only 0.7%, the trade deficit rose to its highest ever level at £4.3bn. [1]

Meanwhile it was revealed that foreign investors own 23% of the UK’s property market. This is an increase of 106% over 8 years. [2]

Investors buy property in the hope that its value will increase rapidly – which it has done for many years. However, it is not the value of building that has increased, they depreciate over time like any man-made object. It is the value of the land the buildings sit upon that has increased.

This land value is created by the community. One site is more valuable than another because of its proximity to better public services, more productive industry, better transport links etc – not due to the merits of the site-owner or the improvements upon the site. A field in the middle of London is vastly more valuable than an identical one in rural Cornwall, say, and its owner potentially far richer if the field is developed; precisely because it is surrounded by a large, internationally connected Capital city of millions, not because of the greater sagacity and industry of London landlords relative to their Cornish counterparts. Land value then is that most social of assets – created by generations of communities in an area.

This value accrues as land rent to the landlord under current arrangements and it is this rent that has attracted foreign property investors. Exporting land rent is a great British success story.

Perversely this high rent makes it very difficult for those businesses that could be exporting goods and services. Land is a primary factor of production and is a large cost to many consumers and productive enterprises making our exports uncompetitive.

It does not need to be this way. This rent could be collected as land value taxation and used to fund Government expenses. We could then reduce or replace the heavy taxes on wages, buildings, capital goods and trade such as Income Tax, Council Tax, Business Rates and VAT. This would immediately make British companies very competitive internationally. It would also end the speculative hoarding of land, keeping it un- or under-used in the hope of gaining an unearned increment in its value. Land, rather than sitting idle, would become cheaply available for homes and factories, allowing the productive sector of our economy to grow.

Dave Wetzel, Labour Land Campaign Chair, says “Our economy is set up to benefit the skimming off of rent by wealthy elites; money that is created by the whole of society and should belong to the whole of society. Meanwhile those that produce the goods and services that would allow us to earn our way in the world pay high rents and taxes on productive behaviour.”

He continues “Land value taxation should be introduced as the primary revenue for Government, allowing other taxes to be reduced or abolished. British consumers and producers would benefit extraordinarily as we reward those who make, not those that take.”

ENDS

Notes to editors

1. “UK trade deficit widens to record high”, Sarah O’Connor, Financial Times, 10 th August 2012

2. “Foreigners set to dominate UK property”, Ed Hammond, Financial Times, 10 th August 2012

3. For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817 906299 or visit www.labourland.org

RAIL INVESTMENT SHOULD NOT BE A HANDOUT TO LAND OWNERS

July 18, 2012

The Coalition Government’s announcement of £9.4bn of investment in railways in England and Wales is a welcome move. It will create jobs and growth, and benefit passengers and local businesses. It will also have an immediate effect on the value of the land in the surrounding area, benefitting land owners.

Government investment in public transport and other public services always increases the value of land in the areas they serve. This windfall is unearned by the land owner, who gains it, and could instead be used as a return to the taxpayer’s investment.

Eleanor Firman, Chair of the Labour Land Campaign says “This is yet another example of how our taxes pay for public services and then land owners get an increase in the value of their land with no effort on their part. Taxpayers are subsidising  large land owners ."    

She continues “The Labour Land Campaign calls for a shift in taxes off of labour, buildings and trade and on to land value that is created by the whole of society, not land owners. Why should land owners get the unearned income they receive from land value that is created by the rest of us ?  Why should we as consumers , taxpayers and producers subsidise land owners ?”

A recent example of this effect was seen in the London Underground Jubilee Line extension, which cost taxpayers £3.5 billion. It was estimated at the time that as a result of the extension, land values in the vicinity of just two of the stations, Canary Wharf and Southwark, increased by £2.8 billion; and over the whole extension by some £13 billion. Taxpayers could have been handsomely repaid for their investment – instead private land owners who contributed nothing to the project found themselves substantially richer.

By levying a tax on the annual rental income of all land, empty buildings and   those sites that currently remain idle or underused will be brought into their permitted use - providing homes, business premises and leisure facilities. As the economic benefits flow from public investment ( such as the £9.4bn the government has just announced for our national railways ) , so the levy would recoup the uplift generated by the new investment. This unearned land income should then be used to maintain and develop our public services; whether it is in transport, health care, education, social care, roads or leisure provision.

Eleanor continues “The whole of society pays for our public services as taxpayers and consumers - but land owners get a handout at no cost to themselves. Why should taxpayers and rail travellers subsidise the likes of the Duke of Westminster?”

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 07817906299 or visit www.labourland.org

LAND VALUE TAX IS THE BEST WAY TO ENSURE FAIRNESS BETWEEN GENERATIONS

July 16, 2012

In a wide-ranging speech this week, Tory MP Nick Boles discussed the future of public spending priorities. Despite starting from the wrong premise - that spending cuts are needed – Boles makes the case that spending should be focussed on areas which measurably increase productivity and competitiveness. Of course, little of this was reported. What did make the headlines was his suggestion that we means-test benefits for the elderly.

In today’s political environment, a politician would as soon advocate the killing of the first-born as upset pensioners – after all, they are numerous and are more likely to vote. However it is reasonable to raise the issue of fairness between the generations. Unemployment among 16 to 24 year olds is around 20%, compared with about 8% for the population as a whole (1). Much of the Coalitions’ policies have hit the young – cutting EMA, the child trust fund and housing benefits for under-25s, raising top-up fees, means-testing child benefit etc. Whereas David Cameron has so far ruled out any cuts to pensioners’ benefits.

Consider also that personal wealth is very unevenly distributed between old and young. In 2009, out of a total of £6.7tn, £0.9tn or personal wealth was held by the under-45s, £3.5tn by 45-65 year old ‘baby-boomers’ and the remaining £2.3tn by over-65s (2). This disparity has grown over time. In the decade after 1995, the median personal wealth of the under-45s collapsed by over two-thirds while that of the ‘baby boomers’ tripled (3).

But the problem with this sort of analysis is that the deep divisions in our society are not between old and young but between the haves and have-nots.

The main division is between those that ‘have’ land, including homeowners and those that ‘have-not’. Man neither creates land nor alone can he give it value. Land values are generated by society as a whole. The value of land will increase as roads are built, public services created and improved, private enterprise flourishes. It belongs to the community as a whole, the young as well as the old, renter and owner, rich and poor. However, that value is currently appropriated by the land owner.

And those owners have seen the value of land soar many times over in the last decade as a result of policy decisions – loose credit, low house building, low property taxes – nothing to do with the character, prudence or industry of the owner.

Although not the only beneficiaries – the ‘haves’ come in all ages - the baby boomers have done very well from the process. They were able to buy property when it was much more affordable with higher wages as a share of national income. Higher inflation then eroded their mortgage debts and subsequently their wealth increased through a housing bubble. A narrow age cohort has been very lucky in its timing.

What are the solutions to these inequalities? Nick Boles already knows one of them. He has advocated a Land Value Tax. Such a tax would heal many of the deepest divisions in our society - between regions, homeowners and renters, old and young and ultimately haves and have-nots.

It would ensure that socially created wealth is socialised. It would allow for increase public investment – which is the real solution to our economic problems. It could reduce or replace other taxes, such as Income Tax and the Council Tax. It could help pay for a National Care Service, the final plank of the cradle-to-grave welfare state.

Do pensioners have anything to fear from a Land Value Tax? No. They would not have to pay if they could not afford it; merely roll up their payments until their property changes hands. And let’s not forget that they do not look merely to their own self-interest. They would know that their children and grandchildren and great grandchildren lived in a society where they could succeed on their own efforts, without the game of life being rigged by those lucky enough to be born to the right parents, in the right decade and the right area.

Labour Land Campaign Chair, Eleanor Firman says “We welcome cross party support for Land Value Taxation and were pleased to hear of Nick Boles’ support in the past. We hope he will join the existing Labour and Lib-Dem MPs supporting Caroline Lucas bill calling for research into its implementation which receives its second reading on 9th November."

ENDS

Notes to editors:

(1) Office for National Statistics, Labour Market Statistics, June 2012

(2) Office for National Statistics, 2009

(3) A. Benito, J. Thompson, M. Waldron, G. Young, and F. Zampoli, ‘The Role of Household Debt and Balance Sheets in the Monetary Transmission Mechanism’, Bank of England Quarterly Bulletin, Spring 2007, figures from Chart 3. Pension wealth (which would tend to further increase this disparity) has been excluded.

(4) For more details contact Steven Clarke at steven.clarke@labourland.org or phone 07817 906299.

WHO REALLY GETS THE MOST INCOME FROM “SOMETHING FOR NOTHING” CULTURE?

29 June 2012

The Labour Land Campaign says that instead of attacking the most vulnerable in our society, people on benefits, David Cameron should attack the biggest beneficiaries of the “something for nothing” culture – land owners.

Land values, especially those with buildings in the centre of towns and cities, arise from public and private investment in infrastructure, businesses, services etc. Public and private investments – paid for by all of us as consumers and taxpayers –enable land owners to receive an unearned increase in the value of their land. Tenants (private and commercial) of course get to pay higher rents as a result of increased land values.

The Labour Land Campaign calls on David Cameron to examine the real damage this does to our economy and to change our tax system away from wages and production and on to land wealth through an annual Land Value Tax on all land.

Then, as our economy grows, so the increase in land value will be returned to the public purse to pay for maintaining and improving our public services instead of going to property speculators as unearned income.

The results of this change in taxation would be many, including an incentive to develop all unused and underused sites with planning permission and bring empty homes and unused buildings back into use thus providing homes, business premises and leisure facilities. This would increase employment and therefore reduce Government expenditure on welfare benefits. Instead of properties (i.e. land) having inflated prices, homes would become more affordable whether for buying or for rent.

An annual Land Value Tax cannot be avoided or evaded and therefore the rich would have to pay their fair share of this unearned wealth that is created by the whole of society and not through any effort on the land owner’s part.

Eleanor Firman, Chair of the Labour Land Campaign, says “The real beneficiaries and perpetrators of a “something for nothing culture” have actually been with us for generations since common land that supported many livelihoods was first stolen and then enclosed. Today, we treat houses as assets not homes, and all kinds of businesses (not just landlords) speculate in property for capital gain financed by the taxpayer, or use sale and leaseback to cut their tax bill. The result is lower tax revenues and higher welfare expenditure. We should be cutting the vastly excessive tax benefits to landowners and landlords - not the meagre welfare payments to those on low incomes who have no control over inflated rents.”

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org or phone 07817 906299.

LAND VALUE TAXATION MUST PLAY A PART IN RESOLVING THE EUROZONE CRISIS

18 June 2012

The €100bn bailout of the Spanish banks and the Greek elections are the latest, but no means last, episodes in the seemingly interminable eurozone crisis.

The dominant narrative of the crisis is that of profligate Peripheral European governments who have overspent, running up large debts and deficits. The solution, they are told, is fierce austerity measures to atone for their past sins and so placate the gods of fiscal rectitude who, they hope, will reward them with a return to economic normalcy.

This narrative is a myth. The real problems of the eurozone were sown with the creation of the single currency. It is to do with converging interest rates, trade imbalances, credit flows into the periphery which puffed up housing bubbles, bloated banks which have now blown up, taking economies and Sovereigns with them. The problem is that land prices and debt have been mutually ratchetting each other up - building up of imbalances in wages, prices and competitiveness across the Continent. Imbalances which now need to be unwound in a rigid currency union that doesn’t allow for symmetrical, palatable adjustment between core and periphery, debtor and creditor.

If this is the problem, what are the solutions? Clearly there is no silver bullet. Several interlocking solutions need to be put in place, including but not restricted to: higher inflation, recapitalisation, reform and regulation of banks, debt mutualisation, debt forgiveness, fiscal transfers, fiscal stimulus, perhaps even a move to greater fiscal and banking union. Such things are often suggested by intelligent commentators, but what are they missing?

What is needed is land value taxation. The trigger for the crisis, both in peripheral Europe and the US, was housing bubbles, which are largely land price bubbles. If the land price were to be socialised by being collected by the State for public revenue, speculative debt-fuelled housing bubbles would not get so inflated.

Labour Land Campaign Chair Eleanor Firman says, “In many ways fiscal union is the best way forward, but it would not prevent a repeat of the current crisis. If the eurozone fiscal union shifted taxes from labour to land this would allow land values to be captured for public benefit not by the banks and speculators. This revenue could help resolve the tax gap and stimulate jobs, consumption and sustainable - not volatile, debt-fuelled - growth.”

The tax would provide much needed revenues for cash-strapped governments to provide employment and training opportunities for the unemployed, to protect public services and to improve the long-run fiscal position of their countries.

It would allow for taxes on labour, which is abundant relative to jobs, to be reduced. This would ease the process of getting people into jobs, the most urgent task for all governments.

It would make a public infrastructure-building program more palatable as the infrastructure would raise land values, raising tax revenues.

Thinking more radically, if Europe does move to fiscal union, what should be the European tax? What better than a land value tax – it would fall most heavily on the most prosperous areas of the Continent, making it progressive, it falls on economic rent not returns to production, making it efficient. It should be adopted.

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org or phone 07817 906299.

AS BRITAIN ENTERS DOUBLE-DIP RECESSION, THE CHANCELLOR SHOULD TURN TO LAND VALUE TAXATION

Today’s economic growth figures show that Britain has entered a double-dip recession, casting severe doubt on the Coalition’s economic policy.

It is becoming increasingly clear that austerity is not working. The economy is facing a shortfall of demand that accommodative monetary policy is not sufficiently addressing. The Government must take action to stimulate the economy through fiscal policy.

Labour Land Campaign Chair Eleanor Firman says, “The multitude of voices calling for stimulus via public investment in infrastructure and urgently needed social housing echo around the country, but no-one is listening in Westminster”.

“Such a program would provide employment and spending power within the economy, boosting demand as well as addressing the poor state of our infrastructure and the housing crisis. But it would not be enough.”

“What is missing from the pro-stimulus argument are measures to correct the UK dysfunctional tax system so that land value gains arising from public investment are returned to the community.” Introducing land value taxation would correct this, and provide the long-term fiscal responsibility required of a stimulus package.

Land value taxation has the rare property of being a pro-growth tax – it would stimulate the economy just as it pays down the deficit. Now bearing a cost for leaving land underdeveloped, landowners would receive a huge prod to put underused sites back into use rather than withholding them speculatively. Private development would accompany public investment, as derelict sites are renovated and new homes built.

The uplift in land values created by this development would not only increase the revenues from land value taxation but a virtuous circle would be created, greater development leading to more revenues that could be reinvested. Construction would be a key driver of growth rather than the drag it is now.

The revenues would also be used to reduce other taxes. Business rates should be replaced as suggested by the Mirlees Review. Income taxes for lower-earning consumers should be reduced; money which would likely be spent to provide much needed custom for the nation’s businesses.

At the last Budget, the Chancellor expressed his admiration for Adam Smith. Well maybe now is the time for him to return to Smith’s writings, and find that land value taxation is the most efficient and fair form of taxation. He might just turn the economy around too.

ENDS

For more details contact Eleanor Firman at eleanor.firman@labourland.org, phone number 020 8527 4637 or visit www.labourland.org

Relaxed planning rules are not the key to growth

The government claims that its new slimmed down planning guidelines will give new momentum to economic recovery.

The Labour Land Campaign says there is a far better way to free up land for housing and business development.

It is outrageous that new large scale developments could be more easily allowed on green land when so many sites in our towns and cities are underused or lay idle.

And house builders have no right to complain about planning constraints when they currently hold land with permission for the building of 300.000 new homes.

The Labour Land Campaign says we need a mechanism that brings idle brownfield sites and land banks into their full permitted use to protect our countryside from urban sprawl with developments in areas where the required infrastructure, health care or education provision is not in place, where there is poor public transport and where people are even more reliant on cars to take children to school and to go shopping and to commute to work.

The Labour Land Campaign advocates a fundamental change to taxation whereby taxes are shifted off labour and investment and on to natural resource wealth including all land according to its permitted use value.

Eleanor Firman, Chair of the Labour Land Campaign, says “we need an Annual Land Value Tax (LVT) on all land which will act as an incentive to bring the numerous empty and underused commercial and residential sites and buildings in our towns and cities into full use, providing much needed affordable homes and business premises. LVT will discourage urban sprawl, unnecessary long distance commuting and will use urban land more efficiently.

By eliminating or reducing other negative taxes such as Stamp Duty Land Tax, Business Rates, Council Tax, VAT, Corporation Tax and Income Tax, LVT will encourage economic revival in depressed areas of the country as marginal costs for businesses will reduce. We need to put a stop to property speculation where irresponsible and greedy land owners are only interested in taking land wealth that is created by the whole of society and care nothing about the impact their behaviour has on local communities or on the environment.

Land is a precious natural resource and should be used sparingly; urban sprawl damages our environment in so many ways.”

ENDS

For more details contact Eleanor Firman at eleanor.firman@labourland.org, phone number 020 8527 4637 or visit www.labourland.org

ANOTHER BUDGET FOR THE BENEFIT OF THE LANDED AGAINST THE LANDLESS

According to George Osborne his budget will ensure the richest will pay five times more tax through a cap on reliefs, taxes on high end property transactions and presumed better behaviour.

All of these revenues are highly variable year to year, unlike the minimum annual sum £10,000 Osborne has gifted to the highest earners by cutting the 50p rate. This is unlikely to be fiscally neutral as he claims.

But in any case, the half a billion Osborne thinks these measures would raise is derisory, and as such, a sign of his clear approval of those economy-wrecking Masters of the Universe in the world of financial services who are mostly keeping their telephone number salaries and pensions, unlike those who serve us in the public sector.

The ONS shows gross property wealth in 2010 amounted to 4.35 trillion. Much of this value is actually land - or location- value. Yet Stamp Duty, Business Rates and Council tax barely touch this and these charges fall disproportionately on the least well off. Properties in the highest banding for Council Tax for example, are charged only three times more those in the lowest.

Property owners and property speculators will always say a silent thank you to taxpayers for the underlying and uplift in the value of the land they own when projects such as Crossrail are announced and then created. Property prices in London and parts of the South can be as much as two thirds land value or even more, as a result.

Eleanor Firman, Chair of the Labour Land Campaign says:

“It is unfair that workers wages are taxed, pensions are taxed, business is taxed, goods and services are taxed but land wealth is not taxed.

By reforming property taxes and shifting taxes from wages and production onto land and other natural resources (including oil, airwaves and airport landing slots) we could reverse the current economic decline and relieve those unfairly bearing the brunt of austerity.

The wealth that arises from our collective use of these resources should be reclaimed for investment in our public services. This is far fairer than the current system that lets this unearned income to accrue to those who didn’t create it.

Applying an Annual Land Value Tax on land and other natural resources, will allow new businesses to be able to afford to set up all over the UK as marginal costs to businesses will be reduced and workers are left with more to spend.”

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 020 8653 0248 or visit www.labourland.org

A Mansion Tax misses the spot!

One of the aims of a Mansion Tax is to collect a share of the untaxed wealth the rich currently enjoy. However, its advocates fail to recognise why very expensive properties are so expensive: it is the location of a building that creates high property prices not the building itself.

Advocates of a Mansion Tax also fail to realise that many of the owners it aims to tax in this way will avoid paying it once introduced. It doesn’t take much nous to predict that overnight a £2.3million home would suddenly only be priced at £1.9million but with the contents priced at £0.4million.

Vince Cable apparently fails to recognise what gives a property its value – the building value and the location value. The building value will always deteriorate as happens with all second-hand goods. However, the location value of any property (commercial or residential) is due to society’s overall demand to be located in that area. That demand is determined by a site’s accessibility to public transport, roads, schools, hospitals, other health care, leisure facilities, natural beauty, shops, employment/workforce etc.

Eleanor Firman, Chair of the Labour Land Campaign (www.labourland.org) says “It is society’s combined public and private investment that generates land values –not the owners of land who can - and do - leave land idle and still see it rise in value without lifting a finger.

Much better for the Government to abolish property taxes, increase the personal allowance on income tax, reduce VAT and introduce an Annual Land Value Tax on all land according to its optimum permitted use. This would immediately bring idle sites that blight our towns and cities into full use and reduce the demand for urban sprawl. The wealth that our taxes create would be returned to the public purse to maintain and develop our public services.”

ENDS
For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 020 8653 0248 or visit www.labourland.org.

A Mansion Tax misses the point

Nick Clegg is right to look at the unfairness of those owning expensive homes paying the same Council Tax as those in much less valuable ones.

However, a much simpler and fairer system would be to abolish Council Tax, Business Rates and Stamp Duty Land Tax and introduce a levy on the annual rental value of every site in the UK including all residential, commercial and farming land, as well as privately owned estates. Politicians, economists and other policy makers should realise that land values need to be separated from building values when the combined value of a property is assessed.

The value of land is not created by the owner of any site – it is society’s combined demand for homes and businesses in a particular area that determines the price of land and therefore, to a large extent, the price of each property in that area. The demand is determined by our combined need for the goods and services provided through public and private investments and for the natural attributes of each area and that total demand is what gives land its value.

The multi-million pound homes in Central London would have a totally different price tag if they were in Hull, Truro or Inverness because of the differing location values. Similarly, the high demand for offices in Canary Wharf is owing to their proximity to the City of London and the availability of a skilled workforce able to use the excellent public transport system for access. That public transport network has been paid for by all tax-payers in the UK but it is the owners of Canary Wharf sites (NB, empty sites with planning permission for offices as well as sites on which offices have already been erected) and other such areas that cream off the surplus income these sites generate for property companies, which they take as their unearned income. Society creates land wealth but landowners take it as theirs!

Land deliberately kept out use by property speculators creates an artificial shortage and together with other factors pushes up land prices until the bubble bursts, as has happened in the UK, USA and Europe thereby causing a property crash, with the banks demanding repayment of their loans. Banks’ unfettered greed together with our growing desire for a windfall gain in property price rises encourages speculation. Whilst property owners enjoy unearned gains, residential and commercial tenants face rent increases in line with rising land values but most of us don’t even realise that some 70% of land wealth in the UK is claimed by around 1% of the population.

It is more than likely that even before the Mansion Tax becomes legislation, work is being carried out on how homeowners can avoid paying it on properties worth over £2million. For starters - how about “properties just over the £2million threshold being sold for £1.9million with furnishings, fixtures and fittings making up the rest” or “making a house into two apartments each worth below £2million”?

Eleanor Firman, Chair of the Labour land Campaign said: “The mansion tax proposal is an acknowledgement that our current property taxes are inefficient and unfair, but before embarking on a red herring, politicians should consider introducing an annual land value tax which will encourage landowners to make better use of our land, bring empty buildings and sites into use, reduce the cost of homes and commercial properties and would be impossible to avoid”.

ENDS

For more details contact Steven Clarke at steven.clarke@labourland.org, phone number 020 8653 0248 or visit www.labourland.org

Chancellor’s proposal gives more subsidies to big land owners

When Chancellor George Osborne announced his proposal for a £30 billion investment programme in Britain's infrastructure, intended to try to “breathe new life into the stalled economy”, he failed to also announce “here is another Government subsidy for landowners”.

The Labour Land Campaign says we do need urgent investment in our railways, roads, high-speed broadband network, schools, hospitals, housing, hospitals and other health-care etc. But to do so without making a fundamental change to the UK’s tax system, the outcome will be yet more unearned income going to owners of land in the catchment areas of these infrastructure investments.

Eleanor Firman, Chair of the Labour Land Campaign, said “when the Jubilee Line Extension was built in December 1999 it cost taxpayers £3.5billion, and land values just around the eleven new stations rose by £13billion – that is without the underlying value of the land in those areas that already existed. Think how much unearned income all investment in infrastructure has generated and continues to line the pockets of big land owners”.

The Labour Land Campaign argues that by shifting taxes from wages and production onto land and other natural resources (including oil, airwaves and airport landing slots) these resources will be used efficiently and the wealth that arises from our collective use of them will be returned to be re-invested in our public services instead of going as unearned income to those that claim ownership of land and natural resources. Income tax and VAT are just two taxes that actually depress the economy. By partially replacing them with an Annual Land Value Tax on land and other natural resources, this will allow new businesses to afford to set up all over the UK as marginal costs to businesses will be reduced and workers are left with more to spend

Eleanor Firman explained that “an Annual Land Value Tax applied to all land according to each site’s optimum permitted use will bring empty and underused sites into use thus protecting unnecessary development on green land.”

ENDS

For more details contact Eleanor Firman at eleanor.firman@labourland.org, phone number 020 8527 4637 or visit www.labourland.org.

Land Value Tax - cheap to collect and hard to avoid – an idea whose time has come

5 October 2011, for immediate use

Last week Conservative MP Nick Boles argued in the FT that a Land Value Tax (LVT) would be a very sensible solution to our economic difficulties. Dave Wetzel - President of the Labour Land Campaign, when interviewed by the BBC’s Politics Show South East on 2nd October 2011 – responding to the MP’s proposal stated that:

“LVT works on the principle that all land is provided free for people to use and by taxing land values we are sharing the land’s wealth. LVT is a tax on land speculators who keep land idle to make a profit. But if they knew they would have to pay an annual tax they would use or rent out their sites. LVT would also enable taxes on wages, Income Tax, and sales taxes such as VAT to be reduced.”

The time is therefore now ripe for the Conservative Party, which is the only one of the three main parties that does not have an LVT group, to join the broad alliance – across the political spectrum – of individuals and groups now in favour of LVT. Advocates of LVT include establishment luminaries such as Sir Samuel Brittan, Martin Wolf of the Financial Times; the Institute of Fiscal Studies; the British Retail Consortium; the TUC; the Liberal Democrats; the left, centre and right of the Labour Party (including LRC - Labour Representation Committee, LEAP – Left Economic Advisory Panel, Andy Burnham MP, the Cooperative Party); the Green Party; the Christian Council for Monetary Justice; the Global Justice Movement; the Professional Land Reform Group; the Coalition for Economic Justice; academics such as Prem Sikka, Danny Dorling, Tony Vickers, Munir Morad and Iain McLean; and Nicholas Shaxson (author of the acclaimed Treasure Islands: Tax Havens and the Men Who Stole the World ).

ENDS

Notes for editors

1. For more details contact Press Officer Steven Clarke (steven.clarke@labourland.org) on 020 8653 0248 or visit www.labourland.org
2. The Labour Land Campaign started in 1983 is a voluntary group working for economic land reform. Our members are members of the British Labour Party, Trade Unions or Co-operatives or are individuals who support our aim to share land wealth through Land Value Taxation (LVT). We are mostly (but not exclusively) socialists.

 

Andy Burnham: Land tax not spending cuts

20 October 2010, For immediate use

Talking exclusively to the Labour Land Campaign Andy Burnham of the Shadow Cabinet said, 'We need to renew an old Labour Party tradition and make the case for property tax reform as an alternative to spending cuts. It would be fairer to introduce a new form of land value tax in place of council tax and stamp duty as this - with exemptions for the property rich/income poor - would raise more revenue and, as importantly, make homes for young working people affordable by reducing the price of the land beneath.'

Carol Wilcox of the Labour Land Campaign expressed complete support for Andy Burnham's statement and added 'Young people moving into new houses would create demand for furniture, carpets and white goods so inducing quick growth in the economy while allowing people to move where there's work. We need an annual land value tax as a counter to speculative bankers and landowners and their casino economics. If the deficit needs to be paid back then it should be over time whilst continuing to fund public services and ensuring hard earned wages stay in working people's pockets.'

The mood for land taxation is growing in the labour movement with backing now from the Labour Representation Committee. The Co-operative Party have backed the measure stating in their manifesto 'The Government should replace council tax and national non-domestic rates with a land value tax. While this would be a new method of taxation in the UK, countries such as Denmark, Hong Kong and Taiwan utilise land values to help their economies. Local Authorities in parts of Australia, New Zealand and North America have all adopted local forms of land value taxation. This is likely to not only improve economic stability but also stimulate investment in more productive elements of the UK economy over the medium to long term.'

ENDS

For more details contact Press Officer Paul Brandon on 07749 481600 or visit www.labourland.org

Notes for editors

1. The Co-operative Party, affiliated to the Labour Party, is the second largest UK centre left party and has representation in both Houses of Parliament. Annual land value taxation was adopted at Co-operative Party Annual Conference in Edinburgh, September 2009. For The Co-operative Party Manifesto 2009, visit http://party.coop/pdf/dat_news_file-70.pdf

Burnham backs land value taxation

3 September 2010

Labour Party leadership candidate Andy Burnham has backed land value taxation as a measure to tackle the deficit and replace 'unpopular taxes'.

Labour Land Campaign Chair Louanne Tranchell said " We welcome Andy Burnham's support. He is the first labour leaderhip contender in a generation to back land value taxation and he deserves great credit. We now urge him to campaign to raise the income tax threshold from £6475 to £20,000 and the resulting shortfall met by a new annual land value tax."

The campaign says Burnham shouldn't just see land value taxation as a part measure along with cutting costs or raising taxes to pay back the deficit caused by speculative bankers and their casino economics. If the deficit needs to be paid back then it should be over time whilst continuing to fund public services and ensuring hard earned wages stay in working people's pockets.

The mood for land taxation is growing in the labour movement with backing from The Labour Representation Committee and the PCS Union. The Co-operative Party manifesto states 'The Government should replace council tax and national non-domestic rates with a land value tax. While this would be a new method of taxation in the UK, countries such as Denmark, Hong Kong and Taiwan utilise land values to help their economies. Local Authorities in parts of Australia, New Zealand and North America have all adopted local forms of land value taxation. This is likely to not only improve economic stability but also stimulate investment in more productive elements of the UK economy over the medium to long term.'

ENDS

For more details contact Press Officer Paul Brandon on 07749 481600 or visit www.labourland.org

Notes for editors

1. The Co-operative Party, affiliated to the Labour Party, is the second largest UK centre left party and has representation in both Houses of Parliament. Annual land value taxation was adopted at Co-operative Party Annual Conference in Edinburgh, September 2009. For The Co-operative Party Manifesto 2009, visit http://party.coop/pdf/dat_news_file-70.pdf

BUDGET DAY - 24 MARCH 2010

Tax Revolution Required - Civilisation Under Attack

The Labour Land Campaign is demanding Labour Chancellor Alastair Darling launches a tax shifting revolution to maintain and further fund the key services of a decent civilised society.

The campaign says it shouldn't be a choice between cutting costs or raising taxes to pay back the national debt caused by bailing out the bankers. We need to shift the tax burden onto community created land values. This will allow the deficit to be paid back over time and fund public services whilst allowing hard earned wages to stay in working people's pockets.

To start with the campaign wants the income tax threshold raised from £6,475 to £20,000 and the resulting shortfall met by a new annual land value tax.

Labour Land Campaign Chair Louanne Tranchell says 'The Labour Party should join with the Co-operative Party and back annual land value taxation. Our experts are on hand to help. We eagerly await the call.'

The Co-operative Party's manifesto states 'The Government should replace council tax and national non-domestic rates with a land value tax. While this would be a new method of taxation in the UK, countries such as Denmark, Hong Kong and Taiwan utilise land values to help their economies. Local Authorities in parts of Australia, New Zealand and North America have all adopted local forms of land value taxation. This is likely to not only improve economic stability but also stimulate investment in more productive elements of the UK economy over the medium to long term.'

ENDS

For more details contact Press Officer Paul Brandon on 07749 481600 or visit www.labourland.org

Notes for editors

1. The Co-operative Party, affiliated to the Labour Party, is the second largest UK centre left party and has representation in both Houses of Parliament (29 Co-op-Labour MPs and 12 members of the House of Lords), the Scottish Parliament and the Welsh and London Assemblies, as well as over 350 elected local councillors.

2. Annual land value taxation was adopted at Co-operative Party Annual Conference in Edinburgh, September 2009. The Co-operative Party Manifesto 2009: See: http://party.coop/pdf/dat_news_file-70.pdf

Copenhagen and Budget need the 'Cool' Tax

8 December 2009

The Labour Land Campaign today called on the Chancellor and the delegates at the Copenhagen climate summit to back the Cool Tax by implementing an annual land value tax and removing taxes on wages.

There could be no better way to 'cool' the economy and our planet than by an international agreed policy of shifting taxes away from harmful productive activity and on to community created land values and common resources - currently exploited by landowners and multinationals the world over.

The campaign is calling for a tax revolution and the Chancellor to commit to its policy of raising the income tax threshold from £6,475 to £20,000 and the resulting shortfall met by a new annual land value tax.

Louanne Tranchell, Chair of the Labour Land Campaign says, 'because the land value tax discourages land hoarding and land speculation better use is made of our planet and urban sprawl is replaced by more efficient use of brownfield sites in towns and cities.'

Support is growing for this fresh approach. Backing for an annual land value tax has been growing throughout 2009 from leading economic journalists and recently featured in a debate on BBC Question Time.

ENDS

For more details contact Press Officer Paul Brandon on 07749 481600 or visit www.labourland.org

Note to Editors:

1. For more information about the 'Cool Tax' and its green credentials please visit the Green section of our manifesto.
2. Clive Anderson brings land value taxation into the debate on Question Time, December 2009.

Co-operative Party adopt land value taxation

25 September 2009

The Co-operative Party has adopted land value taxation as part of their manifesto for the next general election. It represents one of the most significant and radical moves in the labour movement for many years.

The Party's 2009 manifesto states "The Government should replace council tax and national non-domestic rates with a land value tax. While this would be a new method of taxation in the UK, countries such as Denmark, Hong Kong and Taiwan utilise land values to help their economies. Local Authorities in parts of Australia, New Zealand and North America have all adopted local forms of land value taxation. This is likely to not only improve economic stability but also stimulate investment in more productive elements of the UK economy over the medium to long term."

Robert Evans, Co-operative Party member says "We have 29 MPs in Parliament giving us a base to put the case for an annual land value tax. It's a policy to tackle the housing crisis without the burden falling on the poorest citizens in society."

Louanne Tranchell, Chair of the Labour Land Campaign says "The Co-operative Party are leading the way by adopting land value taxation. This policy is the radical remedy for our troubled economy. We now urge the Labour Party to back our tax shifting vision by lifting the tax burden of working people everywhere. We are ready to help."

Michael Stephenson, General Secretary of the Co-operative Party, said:

"As we seek to bring stability to the financial system, it is only right that we aim to do the same for the property markets. Instability here has been a key determinant of every recession that we have faced over the last 30 years. Given this, a key policy concern for the future must be to keep growth in house prices consistent with other parts of the economy."

ENDS

For more details contact Press Officer Paul Brandon on 07749 481600 or visit www.labourland.org

Note to Editors

1. The Co-operative Party, affiliated to the Labour Party, is the second largest UK centre left party and has representation in both Houses of Parliament (29 Co-op-Labour MPs and 12 members of the House of Lords), the Scottish Parliament and the Welsh and London Assemblies, as well as over 350 elected local councillors.

2. LVT was adopted at Co-operative Party Annual Conference in Edinburgh, September 2009. The Co-operative Party Manifesto 2009: See: http://party.coop/pdf/dat_news_file-70.pdf

UK Economics Journalists back land value taxation

23 July 2009

This year has seen a number of influential UK economics journalists back land and site value taxation as a measure to tackle our failing economy.

This month Martin Wolf of the Financial Times said 'Arguments for taxes on site values are strong' with Larry Elliot, economics editor of the Guardian, following with 'Darling... could deter speculative holdings of property through a land value tax'.

Sir Samuel Brittan, Financial Times economics commentator, and Ashley Seager, economics correspondent at the Guardian, backed land value taxation earlier this year at a seminar at the House of Commons hosted by the Coalition for Economic Justice.

In April the Labour Land Campaign called on the Chancellor Alastair Darling to start a tax revolution by backing its tax shifting vision in his budget. The Campaign wants the income tax threshold raised from £6,475 to £20,000 and the resulting shortfall met by a new annual land value tax.

President of the Campaign Dave Wetzel says "The case for an annual land value tax grows by the day. The people's long term prosperity and the country's stability depends on implementing this measure. Our experts are on hand to help with its introduction."

ENDS

For more details contact Press Officer Paul Brandon on 07749 481600 or visit www.labourland.org

Note to Editors:

  1. Please visit www.labourland.org for links to articles by Martin Wolf and Larry Elliott.
  2. Report of the Coalition for Economic Justice at the House of Commons seminar on land value taxation is available from www.c4ej.com.

We need a tax revolution : People's Budget 2009

20 April 2009

The Labour Land Campaign is urging Labour Chancellor Alastair Darling to start a tax revolution by backing its tax shifting vision.

The Campaign wants the income tax threshold raised from £6,475 to £20,000 and the resulting shortfall met by a new annual land value tax.

The Campaign has joined with other like-minded bodies in the Coalition for Economic Justice and there is a growing and impressive list of supporters of land value taxation including Financial Times journalist Sir Samuel Brittan, Prof Iain McLean, Professor of Politics– Oxford University and Ashley Seager of The Guardian

The tax shifting vision would release billions into the pockets of millions of working people and their families to spend and make the economy work for them and not landowners, speculators and bankers.

Annual land value taxation is a proven environmental success story elsewhere in the world. Officials in Harrisburg, Pennsylvania, USA described land value taxation as crucial to the revitalization of their city as it encouraged empty sites and buildings back into use.

Labour Land Campaign Chair Louanne Tranchell says "With the financial crisis, the time is ripe to introduce a system to collect the unearned income from the value of the land, which arises from community activity and services and through investment in transport and infrastructure funded by the public purse."

ENDS.

For more details contact Press Officer Paul Brandon on 07749 481600 or visit www.labourland.org

Note to Editors:

  1. It is exactly 100 years since the Liberal Government put land value tax in the forefront of their 1909 'People’s Budget' supported by political giants like Lloyd George, Asquith and Winston Churchill.
  2. Report of the recent Coalition for Economic Justice at the House of Commons seminar on land value taxation is available from www.c4ej.com/

Chancellor receives proposal on resolution for repetitive boom and bust

13 February 2009

The Labour Land Campaign is a member of the Coalition for Economic Justice (CEJ) which has sent an open letter to the Chancellor on proposals for ending the boom-bust cycle, with an invitation to a Seminar to be held at the House of Commons on 24 March, 2009.

Dear Chancellor,

Proposing a long-term resolution to repetitive economic crises

I am writing this open letter to you on behalf of the Coalition for Economic Justice (CEJ). In response to the seriousness of the current economic crisis a number of think tanks, charities and pressure groups across the political spectrum recently decided to join forces as the CEJ. We propose the introduction of an annual Land Value Tax (LVT) to replace or reduce existing taxes on enterprise and labour in order to prevent future economic crises and alleviate the current one. The resolution below, passed at our first meeting sets out our broad position. (Set out at the foot of this letter is a list of the organisations concerned.)

Every economic crisis in living memory has been preceded by an unsustainable and speculative rise in property values, commercial/industrial as well as residential. The link between property values and bank and building society lending is strong and causal. Excessive lending fuels property prices.

We recognise, of course, that you and your colleagues in government are concentrating on the difficult task of dealing with the current turmoil. We support much, if not all, of the measures you are taking to restore confidence in the current economic climate, provide for effective credit systems, introduce proper controls on the financial sector and re-establish a sound economy. Our concerns are concentrated on the need to avoid future crises and to provide long-term security and equity to the economy. However, members of the coalition can already offer proposals that will begin to deliver a clear path out of the current economic situation.

An annual tax on land values – it is the land element that causes property values to rise – would exert a restraining influence on property values and give the government some control over this key determinant of economic stability. Such a tax would also cut the ground from under excessive and imprudent bank lending and remove much of the speculation in land.

In the present market economy the justification for a rise in prices is that it brings forth increased supply. As the land supply is fixed there can be no such increase. As economists from Adam Smith onwards have recognised, land is a monopoly. Rising property prices therefore serve no useful economic purpose. As such, they are the natural and obvious target for taxation. The LVT thus collected on an annual basis would help to reduce those taxes, many of which are unpopular (eg council tax and stamp duty), including income tax, national insurance and business rates which directly discourage production.

LVT is a progressive tax falling most heavily where the benefit to the community is greatest and most lightly where the benefit is least. As the tax is based on permitted land use – not on current use (or non-use) value – LVT will penalise those who hold land out of use. It will therefore encourage land use and stimulate economic activity. With LVT introduced, there will be little or no incentive to speculate in land and hence property. Much of the credit which currently supports land (property) values would no longer be needed and would be available to finance the production of goods and services. LVT is easy and cheap to collect and difficult, indeed virtually impossible, to avoid.

A development land tax, or its latest manifestation, the community infrastructure levy, being a one-off levy on development which inhibits land use, has virtually all the disadvantages that an annual LVT does not. We would be glad to expand on this.

In our view the economic case for the introduction of LVT is a very strong one. So, indeed, is the ethical case. Since the community has created the enhanced land value it is only right that the Government (through an annual LVT) appropriate it for uses, eg infrastructure and local services, that benefit the whole community. We recognise, however, that the political basis for taking this forward, while feasible, requires deeper consideration. We are available to work with you and your colleagues to facilitate its development.

We have set out our views in the hope that you will meet the following requests:

I look forward to receiving your response and hope it will be positive.

Yours sincerely

John Lipetz

Chair
Coalition for Economic Justice

For further information contact

John Lipetz, 02077945343, johnlipetz @ hotmail.com
Tony Vickers, 07950202640, tonyvickers @ phonecoop.coop
Dave Wetzel, 07715322926, davewetzel42 @ googlemail.com
Robin Smith, 07786078836, robinsmith3 @ gmail.com

New pamphlet launched by Labour Land Campaign

23rd September 2008

The Labour Land Campaign launches a new extended edition of the pamphlet Land Value … for Public Benefit by Jerry Jones. It comprises eight chapters, covering the following topics:

  1. How land acquires value – and who benefits
  2. Reclaiming land value for public benefit – the case for a land value tax
  3. How Harrisburg in the US was transformed through a land value tax
  4. Valuing the land – how to measure land values
  5. Differences between a land value tax and other land and property taxes
  6. The case for replacing the council tax with a land value tax
  7. Land value tax and overall tax policy
  8. A strategy for introducing a system of land value tax in Britain

In addition, it contains a summary of proposals for a new fairer tax system, and two appendices covering the topics:

The whole pamphlet can be downloaded here. [PDF File : 282KB]

Ends

Contact info@labourland.org for more information.

Lyons - a whisper not a roar!

21st March 2007

The Labour Land Campaign has called upon the Government to reject the Lyons Report on financing local government and instead to introduce annual land value taxation as the fair, economic and efficient replacement for Council Tax and Business Rates.

The Lyons report is bad news for the lost generation of young homeless households needing affordable housing.

It is bad news for young people excluded from the housing market.

It is bad news for the unemployed and workers seeking fair wages.

It is bad news for business and enterprise.

Whilst recognising that inflated land values are created by the whole of society, Lyons dismisses the idea of an annual land value tax but wants to continue with a tax system that penalises producers and rewards idle landowners.

Brian Hodgson, The Chair of the Labour Land Campaign said today “With his timidity, Sir Michael Lyons has missed this opportunity to rectify the damaging local taxes of the past. The UK needed a “Roar” from Lyons; instead all we hear is a “timid whisper”. His report is a failure, a missed opportunity to shift the burden of taxation onto landowners and to replace the unpopular Council Tax.”

The report has at least one very valuable suggestion (Recommendation 8.5) that "the Government should develop proposals for the taxation of derelict property and brownfield land"

The Labour Land Campaign notes that Sir Michael Lyons is outlining the changes that he thinks should be implemented in the short term to address the most urgent problems in the system, but also "with a view to paving the way for greater ambition in future."

We strongly urge the Government to start planning immediately for a future annual Land Value Tax, which could be introduced in four or five years time when the official Land Register could easily have been completed.

Ends

Contact Dave Reed
01604 644743
dbcreed@hotmail.com

Notes for Editors:
The Lyons report acknowledged that "A number of groups, from the Land Value Taxation Campaign to the British Retail Consortium, supported the idea of a land value tax."

Crunch time over hoarded land

22nd February 2007

The Labour Land Campaign welcomes the research by the Campaign for the Protection of Rural England (CPRE) published today (Thursday 22 February) that shows how much brownfield land is unused in the UK.

The report shows that in London alone landowners waste enough brownfield land for 60,000 new homes!

Landowners always complain that they are hindered by the planning system but the Royal Town Planning Institute (RTPI) recently reported that there is enough land lying unused WITH planning permission to deliver 30,500 houses in London each year until 2016!

The RTPI further reported that in the South East of England there is a six-year supply of land with planning permission.

Meanwhile accusations of land-hoarding are rife in Ireland. In Eire the Minister of the Environment has told suspected land hoarders "Use it or lose it".

Jim Claydon, President of the Royal Town Planning Institute is reported in The Independent (on 17th February 2007) as claiming "All landowners including housebuilders maintain land values by managing supply. It is not in their interests to release large quantities of land because this deflates its value. If we are to build houses at a faster rate we cannot rely on market forces... It will require government intervention".

Such intervention might be the kind of Land Value Tax threatened in Recommendation 8 of Kate Barker's latest report on Land Use Planning.

Carol Wilcox, the Secretary of the Labour Land Campaign has said to land campaigners "the UK needs an Annual Land Value Tax on all land if we are not only going to rid the UK of the scourge of land hoarding but introduce a more just and efficient economy where homes and business premises become more affordable and the whole population shares land wealth that is provided with no cost of production.

Even the landed gentry who support the CPRE might benefit from a Land Value Tax if it gave them a fair (not artificially inflated) price for land near towns, villages and main roads suitable for housing."

Ends

Contact Dave Reed
01604 644743
dbcreed@hotmail.com

Notes for Editors:
The Labour Land Campaign promotes the collection of land rent for public benefit within the socialist/trade union/co-operative movement.

Press release : Complete the land registry!

2nd February 2007

Despite the advent of aerial and satellite survey methods , the ownership of almost 50% of the land in England and Wales is not known by the Land Registry. More was known of land ownership at the time of the Domesday Book (of AD 1086) and the so-called Second Domesday book "The Returns of the Owners of Land" of 1876. The 1876 book can, according to Kevin Cahill, author of "Who Owns Britain?", still be used to work out who owns the nearly 50% of land in England and Wales, mostly estates of the landed gentry, that is unregistered, so little has the regime of Death Duties affected the inheritance of big landed estates.

The Land Registry's Annual Review for 2005/6 states: "Our 10-year Strategic Plan contains six objectives for Land Registry to complete by 2016: No. 3 create a comprehensive Land Register for England and Wales".

But closer investigation by the Labour Land Campaign has revealed that "comprehensive" in the above quote does not mean complete. We invite democrats and those who seek a fair tax system to join our campaign to lobby the Lord Chancellor to fund the Land Registry to publish a complete survey of land ownership in England and Wales preparatory to the introduction of a modernised Land Tax to commemorate Lloyd George's historic People's Budget of 1909, the last time the recovery of land values for the People was attempted.

Ends

Contact Dave Reed
01604 644743
dbcreed@hotmail.com

Notes for Editors:
The Labour Land Campaign promotes, within the socialist/trade union/co-operative movement, the collection of land rent for public benefit.

Press release : Stamp Duty freezes the housing market

24th January 2007

A recent survey* shows that the sale of houses is being slowed down by Stamp Duty with 50% of those surveyed citing this tax as a reason why they cannot move house. So, thousands of people are prevented from moving to more suitable accommodation, taking up jobs in different areas or reducing commuting times. When the housing market fails to function efficiently it is bad for the whole economy.

Point-of-sales taxes on property, like Stamp Duty, always have this effect (as will the proposed Planning Gain Supplement which acts as a disincentive for landowners and developers to build houses in the first place). Housing expert, Professor John Muellbauer of Nuffield College, Oxford has described the Planning Gain Supplement as an 'unwise tax' and a 'step backwards'.

On the other hand, an annual Land Value Tax, as suggested in the House of Commons on 15th January by Dr Vincent Cable, the Liberal Democrat Shadow Chancellor, would raise much more revenue, more smoothly, by tapping into the rise in the value of land which, at £150,000 and upwards for a typical family plot, is the real reason why house prices have risen so far beyond ordinary people's reach.

Contact Dave Reed
01604 644743
dbcreed@hotmail.com

Notes for editors:
*This report was conducted by Prime Move.com and announced on 10th January 2007.

The Labour Land Campaign promotes the collection of land rent for public benefit within the socialist/trade union/co-operative movement.

Press release : Barker Review - Final Report

12th December 2006

Whilst not endorsing Kate Barker's proposals to reduce local involvement in planning decisions nor her plans for permitting building on Britain's precious green belts, the Labour Land Campaign does welcome and support her suggestion that land speculators should pay an annual charge on urban sites they keep out of use.

These empty sites not only deny local people homes, jobs, leisure activities and retail opportunities but they encourage vandalism and crime as well as creating the conditions for unnecessary urban sprawl.

Kate Barker's limited land tax on empty sites is a much better proposal than her previous recommendation for a Planning Gain Supplement only on new developments.

We call upon the government to build upon this advice and to introduce a comprehensive Annual Land Value Tax on all land.

Notes for Editors:
For further information please contact Carol Wilcox on 01425 279307 or carol.wilcox@labourland.org

Press release : Housing market set to 'freefall'

18th July 2006

Claims that house prices will soar 50% within six years have been condemned as "highly irresponsible". The prediction came yesterday (Monday 17th July) from the National Housing Federation. It based its demand for more government action on a report it commissioned from Oxford Economic Forecasting.

OEF based its projections on the assumption that interest rates would average 4.5% over six years - taking the average house price to £300,000.

But Fred Harrison, research director of the Land Research Trust, warned that using this forecast would discredit housing policy in Britain.

"Already, the government's housing policies are in a mess. For decades, now, successive governments have failed to secure a sufficient flow of houses at affordable prices. To try and 'lean on' the government with shady forecasts does no-one any good," claimed Harrison.

Last year, the general consensus of forecasters was that house prices had already reached their peak - and some predicted a crash in prices of 20% or more. Harrison warned that these predictions were false, and that the housing market was merely pausing. Now, according to Rightmove, Britain's biggest property website, the annualised rise in house prices has recovered and is exceeding 10%.

Harrison published his forecast of house prices last year in Boom Bust: House Prices, Banking and the Depression of 2010. In this, he analysed 300 years of evidence and concluded that the top of the housing market would be reached at the end of 2007. "That's when the housing market will stall, and go into freefall over the following 18 months. By 2010, Britain will be in recession, and there is no chance of house prices now rising 50% above today's values," said Harrison yesterday (Monday 17th July).

"For the OEF forecast to come true, building societies would have to advance mortgages at multiples of more than 10 times the average salary. That is never going to happen. It is irresponsible of the Housing Federation to use these numbers to blackmail government into a housing strategy that is likely to fail.

"If the agencies concerned with affordability are really worried about the people who need homes, they should get down to some serious research into why Britain has been locked into policies that have consistently failed for the last 200 years. Unfortunately, the Treasury's hope that weakening the planning system will solve the problem is just whistling in the wind."

The source of the problem is to be found in the fact that it is relatively cheap to supply bricks and mortar and the labour to construct houses.(see the £60k house), but it is expensive to find the land to put them on anywhere where there is work, amenities or natural beauty.The solution is to tax land values, so derelict and under-used land (subject to current democraticly determined use) is forced onto the market and the land element in house prices decreases across the board. But the Treasury has no plans to address this issue, preferring to tax workers and business's earnings, even when they are pushed to the limits by high rents, mortgages and property prices. Thus the problem of affordability will still be with us when the economy comes out of the recession in 2012 - when the average house price will probably be below what it is today.

It should be noted that Fred Harrison, uniquely, predicted the timing of the last crash in his 1983 book 'The Power in the Land'.

Notes for Editors:
For further information please contact Carol Wilcox on 01425 279307 or email carol.wilcox@labourland.org
Fred Harrison can be contacted on 020 8943 3352.