What would a “new land contract” for the UK—written from scratch with fairness in mind—actually look like? Can we do some of it straightaway?
From Open Systems Lab
There will be so much visionary content coming out of Civic Square’s Re/ festival - which A/UK participated in last month - but there’s one presentation that really got to the core of community empowerment.
It addressed the question of how we value and control land in British society - which is far from a rural topic, as we’ve covered here in many posts, but maybe the most basically unjust economic question of all.
The presentation was made by a young systems designer called Alistair Parvin, of Open Systems Lab. We recommend you read his opening analysis of what’s wrong with our existing land system - it’s centred on the deep unfairness of property values on our cost of living - but we’d like to just focus here on Parvin’s positive solutions, posted below.
A New Land Contract
If we were to go back to the drawing board and redesign a new 21st century land economy from scratch…what might it look like?
Well, the good news is that pretty much every major economist and philosopher who has looked seriously at this question, from Marx to Milton Friedman, from Martin Luther King to Mariana Mazzucato from Adam Smith to Abraham Lincoln, from the the ancient Israelites to Eleanor Ostrom, has always come back with the same basic principle.
Which is that land is a natural commons — it belongs to everyone, and that land value (rents) should be recaptured by the community, who create the value in the first place.
So, as a landowner, you shouldn’t be a Lord over anyone, you should be a steward. You are effectively renting a piece of land from Everyone for as long as you want it, and in return you should pay a proportionate ground rent — or ‘Land Value Tax’ (though I don’t like that term) — back to the community for its use.
What we might then use those rents to pay for is a matter for debate. If you’re towards the centre-right of the political spectrum, you might want to use it to cut other taxes on income, employment, or productive enterprise.
And certainly I’d say there would be a clear case for getting rid of council taxes immediately. Essentially rent is a tax you’re paying anyway, so the moment it goes to the treasury instead of to landlords, government can afford to cut other taxes.
Or you could even pay some of it out directly as a citizens’ dividend to every single person. And I think even if it’s only a small symbolic amount, this might be a good thing to do. It would serve as a monthly reminder that the land belongs to all of us — and that we all have a stake in society.
Or, most obviously, you could reinvest that money into community services and infrastructure — including using the land revenues from overheated locations like London to invest in creating new location value in the rest of the country — to reverse this corrosive, unnecessary North / South divide that is perpetuated by our current land system.
But there’s an obvious problem.
The inflated value of property rights represent 83% of Britain’s ‘wealth’ — and that is propped up by banks’ mortgage loans. Introducing a Community Land Rent might well involve a write-off (or buy-out) of money (debt) on a scale probably not seen since the abolition of slavery.
A reform of this scale, however morally and economically justified, would require a government of extraordinary vision, courage and skill, to design the transition in a way that is fair to everyone. And you’d have to win a mandate to do it from the British public in the face of an unprecedented campaign of disinformation and misinformation.
In reality, almost everyone is losing out in our current system (even homeowners, who think they’re wealthy, but aren’t really).
But let’s not be naive: a very small number of very powerful vested interests would unleash a misinformation machine on the British public that would make Brexit look like a picnic.
So I’m not holding my breath. Especially given that almost every housing policy in recent years — though often dressed-up to look like support for first time buyers — has, in reality, been a measure to subsidise land speculators in some way or another.
Which is the logical equivalent of trying to encourage ticket touts at a concert to sell more tickets by giving them more tickets for free.
So let’s start with the assumption that that’s sadly not likely to happen any time soon. What are our other options?
1. Public land buy-backs
Instead of introducing a Land Value Tax another way for the public to recapture land rents is to simply buy the land ourselves. One proposition put forward by Martin Farley is the idea of land buy-backs.
He has worked out that because of the way the cost of our failed land system is falling back onto the taxpayer anyway, we could actually buy every single private rented property in the UK.
And, as taxpayers, we would actually be saving £6bn a year — and it could save renters £35bn a year too. With land values probably dipping now because of COVID, now would be a perfect moment to do that.
2. Land value capture
A second related move does involve a small change in legislation — but its one that already has cross-party support.
Basically its a small change to the text of the 1961 Land Value Compensation Act. This would allow local authorities to buy agricultural and ex-industrial land at its current value — only a few thousand pounds per hectare– and then use the uplift that is created by us, the community, to pay for community infrastructure, or to keep the land affordable.
It has been estimated this alone would reclaim an additional £9.3bn per year of public value.
3. Soft landings
Another idea put forward by the economist Beth Stratford is the idea of creating a National Land Trust and Building Society that slowly buys land from under people’s homes, and then leases it back.
She is, as far as I know, one of the only economists looking explicitly at a ‘soft landing’ / climb-down strategy in the event of a crash, which would give home owners a way out of negative equity.
4. Fairhold
An overlapping idea that we have been beginning to look at is the idea of going back to the original piece of paper—and inventing a new form of land ownership, which we call Fairhold.
This is where public authorities buy land, and instead of selling it to speculators, public authorities retain long term ownership of land and lease—or licence it—directly to citizens or steward organisations (like community development companies or community land trusts [see our recent A/UK presentation on Development Trusts]). In exchange, they have to pay a fair community ground rent.
So essentially it’s creating an opt-in parallel land economy that can exist alongside the existing one: like a kind of lifeboat, to transition to as the old one fails.
This idea is something we’re hoping to test and design further in collaboration with Dark Matter Labs and as many other organisations as possible. But in its simplest form, it’s something councils could start using tomorrow without permission from central government.
If it was used at scale, it would effectively allow local authorities to end their housing emergency within a few years — for zero cost.