Why is the UK suffering a financial crisis?

Sir, It is puzzling (to me, at least) that, during this period of intense debate about the current financial crisis, one word is never mentioned: ‘land’.

The unsustainable rise in house prices may be recognised as being at the heart of the crisis. Reference is made to previous property price bubbles, particularly that which has so afflicted the Japanese economy. But where is the debate about the land market which underpins property values?

Land is not just any old asset. The price of gold or dot-com shares do not have any profound effect on workers or businesses, but land is part of the real economy and its price impacts on every one of us as owners and users. If the land market worked efficiently no one would own more land than they could use, there would be no waste – there could not be, given that land is a finite resource.

A very simple permanent solution to land price bubbles is annual land value taxation. This collects as public revenue publicly created land values. This would remove any incentive for speculation. There would still no doubt be asset price bubbles but these wouldn’t have the capacity to rock the entire sector.

Carol Wilcox
Labour Land Campaign