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Towards equality: a Quaker campaign for a Land Value Tax

Both socialists and people of faith share this sense that the individual is not the final yardstick by which everything can be judged and justified. Possession may be nine tenths of the civil law, but not of God’s law, or ultimate reality… Capital we hold without a moral right may be envisaged as theft.

Jonathan Dale, 2011

In recent years I have been part of a wider group of Quakers who are connected by a desire to better understand the economic and social problems we face, and seek radical change together. Quaker Peace & Social Witness have supported our concern by offering an online economic mythbuster course and establishing new economy reading groups.

I have not been educated in political economy, and being part of a new economy reading group helped me to understand a little more and feel able to join the discussion of alternative economic systems. In particular, I am better informed on how to move towards a fairer and more equal distribution of resources.

In November 2017 I was able to develop my interest in Land Value Tax (LVT) at QPSW’s new economy training weekend in Manchester. Friends encouraged me to write down why LVT feels right for me as a Quaker and right for the country as a means to fair resource distribution. I have written a briefing that introduces what LVT is, argues why it is needed and suggests how Quakers could further help to bring it about.

I am motivated to do this by a concern for peace and justice which has been at the core of my Quaker witness of the last ten or so years. Equally, as someone who has more than once been in housing need, I have been aware of the UK housing crisis as it has developed over the past twenty years. And I have always felt enormously supported by the words of Friends who express a sense that we could be more effective:

We are very good at feeling bad about injustice, we put a lot of energy into sticking- plaster activity (which obviously has to be done), but we are not having any effect in challenging the causes of inequality and oppression.

Susan Rooke-Matthews, 1993, QF&P 23.46 P a g e | 2

How is land ownership connected to our economic problems?

The first privatisation was the Enclosure Acts, which took common land and handed it to the large farmers… In 1381, the Reverend John Ball said: "Things will not go well in England till all property is held in common". In 1649, the Levellers said: "The land is a common treasury. It is a crime to buy and sell the land for private gain." If we study the history of the subject, we find that the people feel that the land belongs to them.

Tony Benn, MP, 1996

Land, the most important resource in our economy, has been privatised. So how can we claim back the value in land, given by nature, and added to by the whole community, making it equally available to all?

Land reform is concerned with the ownership, use, distribution and control of land, and taxation is one aspect of it. Others include: access to land, land hoarding and speculation, the UK housing crisis, planning laws, food production, farm subsidies, community land trusts and energy schemes, environmental degradation and the right to roam.

Introducing LVT: a brief history

Since the days of William the Conqueror, successive parliaments have found ways to shift taxes away from landowners onto workers and businesses. This is perhaps unsurprising when we consider that it was only in the last 100 years that people who are not landowners have been allowed to vote.

However, since the eighteenth century there have been progressive voices calling for a fairer distribution of land wealth:

Every proprietor owes to the community a ground rent for the land which he holds.

Thomas Paine, 1797

In the late nineteenth century the hugely popular writings of the American political economist Henry George investigated the use of land value tax and other anti-monopoly reforms as a remedy for social problems. George believed that people should own the P a g e | 3 value they produce themselves, but that the economic value derived from land (including natural resources) should belong equally to all members of society.

In Britain, Winston Churchill assisted in passing the Lloyd George government’s 1909 ‘People’s Budget’, which introduced a Georgist land tax. However, to placate the landowners in their own party, they compromised the tax’s simplicity with many exemptions and complications.

The board game Monopoly is thought to be derived from the Landlord’s Game, which was designed by a Quaker woman as an education tool about the unfairness of property speculation. Her 1924 version had an alternate set of rules called the Prosperity rules. These would implement a tax on land values – and guess what – instead of one player eventually bankrupting everyone else and winning, the game goes on forever! Imagine the family feuds that could have been prevented!

Scottish Young Greens, 2011

Until WW2, LVT was the Labour Party's main economic policy. But in 1945 the policy changed to one of nationalisation, whereby the government would have to pay compensation to landowners. Through the mid-twentieth century British land reform stalled as Labour governments created land reform statutes and succeeding Tory governments promptly repealed them.

More recently, Caroline Lucas, MP’s Private Members’ Bill asking for "research into the merits of replacing the Council Tax and non-domestic rates in England with an annual levy on the unimproved value of all land..." failed to complete its passage through Parliament before the end of the session. However, campaigners in Scotland, including many Scottish Quakers, have achieved significant gains in land reform, and influenced the political discourse around the feasibility of LVT.

So how does LVT work? LVT is based on the idea that the wealth you create is yours, but the wealth which exists in nature – the ‘common treasury’ – belongs to everyone. So, rather than valuing land according to what it can be bought or sold for, every parcel of land, from scrub land to land rich in minerals, or in prime locations, is assessed for its rental value. P a g e | 4

LVT assesses the value of the site alone, not counting any improvements to the site. Thus, the value of any buildings, crops, drainage or anything else which people have put on, or done to, the site would be ignored.

Values start low in agricultural land, and increase as the development proceeds to industrial and commercial land to the high value associated with retail and services based on finance and investment. Proximity to a major metropolis will therefore enhance land values.

Then, after the land has been valued, a tax is fixed on the basis of that value. The derelict plot and the adjoining plot with a block of 100 luxury flats on it, are of equal value, as long as both have the same permitted use, i.e. they have or would get planning permission on it. The two parcels of land are in the same place with the same access to amenities & services.

An increase in land value usually accrues from public-sector investment. Thus rather than being a tax, this is more like asking landowners for a payment for benefits received, a share of the unearned income they get from their asset, without having had to do anything. For example, when the Jubilee line in London was extended in the 1990s, at a cost to the public of £3.5 billion, increased land values within 500m of Canary Wharf station amounted to £2 billion. All this land is now owned by the China Investment Corporation, a sovereign wealth fund. This return of 200% a year on a public sector investment all went into private pockets.

In the case of gentrification, as prices in a neighbourhood or town centre rise with improvements to the area such as better transport links, street markets, enterprise hubs or community gardens, the tax paid on the increased value is made available for reinvestment to the community that produced the improvement, rather than developers and speculators who own land.

The introduction of Land Value Taxation can be seen as a tax shift rather than as an additional tax. It would permit other taxes to be reduced or, in some cases, to be abolished altogether. Exemptions can be made and caps can be set: in Australia, for example, LVT was introduced with an exemption for farmers and the elderly. P a g e | 5

An ideal tax?

Land is far more powerful than money: If you had all the money in the world, and if I owned all the land, how much money would I charge you for your first night’s rent?

Martin Adams, 2015

The rate of return on land (regardless of any new buildings) vastly outweighs returns from the productive economy. LVT would tend to fall on those most able to pay: it would be fair.

LVT is difficult to avoid: as land is a fixed asset which cannot move or hide, even when owned by an offshore company it can be collected. And if the tax goes unpaid, the land can be expropriated.

Without needing to assess buildings or other improvements, the value of the land could be assessed quasi-automatically, and more easily than for council tax. So LVT would also be easy to collect: payment could be direct like council tax.

Unlike income tax, LVT does not inhibit work and labour. Unlike VAT, it doesn’t discourage economic activity. And unlike business rates and corporation tax, it doesn’t penalise enterprise and investment. It is therefore economically efficient.

When public support for LVT exists, experience from other countries shows that the actual mechanics of introducing LVT is relatively simple. But first, public opinion must be won over. Perhaps this could be through a cross-party campaign across the political spectrum, since the social and economic benefits of LVT cut across economic systems and political ideologies.

LVT and the UK housing crisis

The current Chancellor has recently identified low productivity, the housing crisis and inequality as the main challenges facing the UK economy, and LVT would help in all three cases.

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Housing is a basic human right, but house prices and rents are unaffordable. However, there is a vast amount of wasted land, derelict sites and empty property, often on the most valuable urban land, and owned by speculators. With an annual tax liability, the 40% of prime property currently being sold to often absent foreign investors would be less attractive. LVT would encourage the sale of unused land, making more land available and lowering its price. This would reduce the cost of housing and commercial buildings and enable economically productive businesses to expand.

With lower land values away from London and the South East, it would help to correct regional imbalances: it would redistribute wealth across the country by incentivising businesses to grow in deprived regions, where workers could also then find more affordable homes.

We need to build more houses… and there is no shortage of land: only 10% of land is built upon. 1% of our population owns 70% of the land – these are often huge estates of designated agricultural land which is not farmed but for which landowners get EU subsidies… Government could designate large areas of land as residential instead of agricultural. This means the tax payable would be higher as would the value of the land. The sale price of the land would drop as the tax on the land is high... This redistributes land wealth and it makes land cheap, so that councils can buy land to actually build council housing.

Carol Wilcox, Labour Land Campaign, 2014

LVT would lead to the eventual disbursement, at fair price, of some of the millions of acres currently owned by a few. It would mean that the most valuable real estate – in city centres – would be developed, so the tendency for urban sprawl would be much reduced. And lower property costs would free up more private income to be used for investment instead of servicing property debt, benefiting the banks.

How Quakers can help

The greatest source of wealth is in our land, and it’s the most enduring source of wealth in any human community… and for that reason, the monopoly of land ownership is the greatest source of injustice in our community, and yet it is very rarely talked about… and I think that is a crucial political change we need to make.

Molly Scott-Cato, MEP, 2017 P a g e | 7

At the moment public understanding of land reform as a whole, and of LVT specifically, is very low. When public interest turns to issues like the revaluation of the council tax base, Friends could help shape the discussion across a variety of platforms, for example:  calling radio phone-ins  writing letters to local and national newspapers  talking or writing to politicians  organising hustings

If you have felt any lack of confidence in discussing the economy, I encourage you to join or start a new economy reading group at your own meeting. The issue of land ownership is explored in the sixth new economy booklet, which you can read online here, or contact QPSW for free paper copies.

These – and other – kinds of actions might help others to engage with the ideas. In this way, in time, we can change the political discourse, just as the Scottish campaigners are doing.

Change is urgently needed, and I hope Friends will join me in being inspired to action by Jonathan Dale’s ministry:

More often we claim that whilst in principle love does also require us to work for the removal of the causes of injustice, such work is in practice so complex that Friends cannot become involved corporately; it should be left to Friends individually as they think fit… Complexity, however, may depend on whether we are the well-fed or the hungry. Our delicate refusal to dirty our hands in political turmoil may itself be another way of passing by on the other side. Change seems most complicated and controversial to those who do not personally need it.

QF&P 23:50

Jocelyn Gaskell attends Yealand Local Meeting. For further information, including references and resources on LVT, as well as expressions of interest in supporting a possible Quaker campaign for LVT, send her an email at [email protected].