Tuesday, January 31, 2006

The Land Song

I have always had some sympathy with Land taxers. I know -it is like confessing that you are a Chartist or supporter of some other High Victorian worthy cause like the Temperance Movement. However, as we examine the facts about land ownership in the UK, I can not help feeling that Land Use has become a massive problem. As you fly over the UK, it is fairly easy to see that urban development is a very small percentage of land use. While I for one am not in favour of unrestricted development, I am also not in favour of building homes in places where it is dangerous to do so- like flood plains. Yet more and more we are doing just that. Meanwhile the large majority of land in the country remains under the ownership of the same families, in some cases for centuries. Since the Landed Estates are structured as trusts and their legal ownership (as opposed to the beneficial ownership) does not change over the generations, there is a large percentage of our country where land title is not even registered and where it is extremely difficult to find out who actually controls it. This lack of transparency is at the root of a highly rigged market.

Instead of a sensible debate about development, the question quickly becomes an emotional appeal to people to oppose the "threat to the countryside". Frankly, the planning laws are a gift to NIMBY-ism: they are neither clear nor applied evenly. However, what concerns me is that many of the most prominent "defenders of the countryside" are not acting to do anything more than to defend their own narrow interests. It is therefore hard to take the braying privileged seriously in their "love of the countryside" until they can disclose what their financial interest in that countryside actually is. All land, not just that which is bought and sold, must now be registered and the title to it revealed- then perhaps we can see a little more clearly those who talk about green issues from the perspective of financial gain and those who genuinely understand that NIMBY-ism and Green issues are not the same thing.

In short we have an entirely rigged market in land- and it is driving up the cost base of the UK in economically dangerous ways. Land ownership is not transparent, the economic benefit of land ownership, which is now substantial, is not taxed at any level, while Labour and Capital are taxed severely. The high cost of land forces people into smaller and more expensive places- making the cost of housing in the UK one of the highest in the world. But meanwhile, the suggested benefit from a more empty rural environment is more than matched by a decline in the quality of urban living- not precisely a green benefit either. John Prescott now proposes high density development in risky areas like the Thames Gateway- we must after all "protect the Countryside"- but hang on, it is our failure to permit smaller, less dense development, in villages that has undermined the economic viability of many a country shop or pub- and made rural life in turn less attractive. What I suggest is that we now have a full debate about Land Use- with full disclosure of who is getting the economic benefits. Arguably a more diverse land use pattern would create more balanced cash flows for British farmers, and reduce the need for monoculture in agriculture that is one of the least green aspects of British land use. The distorted pattern of land use coupled with the rigged development market is a growing economic problem- perhaps we really should examine the case for switching the burden of taxation from Capital and Labour and think more about whether a Land tax truly makes sense.

1 comment:

Bishop Hill said...

I don't think a piece on the lack of land for development should avoid the issue of planning regulations.