Author Archives: Joe Bourke

Launch of All Party Parliamentary Group on Land Value Capture

In July of this year ALTER floated the idea of a Progressive Alliance round Land Value Taxation and put out a call for the formation of an All Party Parliamentary Group on Land Value Tax in advance of our fringe at Bournemouth on this theme.

In a pre-budget speech in the City of London this week, Sir Vince Cable laid out Liberal Democrat proposals for tax reform including investigating the feasibility of Land Value Taxation (LVT).

He said;

Authoritative analysis of the British tax system, notably the Mirrlees Report, makes it clear that the taxation of land is the

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The Philosophy of Henry George

Liberal economic philosophy has its roots in land reform and economic justice. John Locke said that “God gave the world in common to all mankind….” Thomas Paine stated that “men did not make the earth… It is the value of the improvements only, and not the earth itself, that is individual property.”

John Stuart Mill wrote: “When the ‘sacredness’ of property is talked of, it should be remembered that any such sacredness does not belong in the same degree to landed property.” Mill also wrote: “The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.”

In a free market capitalist economy markets allocate resources through the price mechanism. An increase in demand raises price and businesses produce more goods or services, but they cannot produce more land.  The quantity of products consumed by people depends on their income, but rising income translates to increased land rents when supply is static.

John Maynard Keynes challenged the idea that free markets would automatically provide full employment. He instead argued that aggregate demand determined the overall level of economic activity and that inadequate aggregate demand could lead to prolonged periods of high unemployment. Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions.

William Beveridge set out the framework for the modern welfare state to tackle poverty, health, housing, education and unemployment.  Following the principles of Keynes, the post-war government took control of key industries. Under this managed economy tax money could be used to keep an industry afloat, even if it faced economic difficulties and maintain full-employment.

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Basic Rental Income

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The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) published its detailed proposals for a basic income in 2015.

The proposals are based on the Citizen’s Income Trust ‘pure Basic-Income’ model. Disability support and housing costs are not included in the scheme as they are not in the Citizen’s Income Trust’s scheme.

Housing and council tax benefits (and, for the record, disability payments) are an important source of support to those at the bottom of the income distribution.

An option which the RSA proposes for further exploration is the introduction of a ‘Basic Rental Income’. The Basic Rental Income would not be income-contingent and therefore does not have the same disincentive or perverse incentive (eg family break-up) effects as housing benefit and council tax credit. A Basic Rental Income based upon local market conditions would be granted to every individual who rented rather than owned a property. Local authorities would retain their statutory duty to house the homeless and should be given freedom to borrow and invest in new low-cost housing.

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Funding Social Care costs

Andrew Dilnot, the economist who reviewed social care for the coalition government has described the social care system as a classic example of market failure  where the private sector cannot do what’s needed.

On the Tory plans, he said:

The changes just fail to tackle the central problem that scares most people. You are not tackling the big issue that people can’t pool their risks. There is nothing that anybody can do to pool their risk with the rest of the population, you just have to hope that you are not unlucky.

It is not providing insurance. You could easily have care costs of £300,000 each if you are a couple; you are not able to cover that extreme risk which is what we all want to do faced with anything else which we can insure. That’s the market failure and these changes do nothing to address that.

Shadow Health Secretary Norman Lamb has said:

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Crackdown on unfair Leasehold Practices

 

The Communities secretary, Sajid Javid, has issued a consultation to look at a range of measures to tackle unfair and unreasonable abuses of leasehold.

The Leasehold Knowledge Partnership and Carlex seek to represent the interests of residential leaseholders and end unfairness in this form of property tenure.  Carlex, the Campaign Against Retirement Leasehold Exploitation, represents the interests of retirement leaseholders. They provide the secretariat to the new All Party Parliamentary Group on leasehold and common hold, formed on September 7 2016.

Ed Davey MP, has been closely involved in the investigation of Cartel-like practices and Leasehold abuses in retirement homes.

England and Wales are unique in the world in perpetuating flat “ownership” in the form of a tenancy – leasehold – with all the vulnerability that that involves. Many who live in flats are young, old and single. Often knowledge of leasehold is very limited, and in disputes they are disadvantaged.

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It’s time for an All Party Parliamentary Group on Land Value Taxation

The rioting in Hamburg on the occasion of the meeting of the G20 this month highlights the oftentimes violent confrontation that exists between alternative theories of capitalism and socialism, as represented by the established orthodoxy and those that would seek to tear it down.

 At the heart of this conflict lies differing interpretations of economic theory, often depicted simplistically as left v right; Keynes v Hayek; socialism v capitalism; social liberalism v economic liberalism; or progressives v conservatives.

Henry George’s Progress and Poverty envisioned a capitalism that would allow all people to own the product of their labour, but that things found in nature, particularly land, belongs equally to all humanity. 

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Adult education and skills training

Since the election there has been much angst among Liberal Democrats over the party’s position on University tuition fees.

Martin Lewis is said to be among the most trusted source on personal finance with the general public. He has recently posted a detailed review of tuition fees arguing:

The student loan isn’t a debt; if we changed its name to the more accurate ‘graduate contribution’ this myth busting guide would be less needed.

What is missing, however,  from much of the debate over tuition fees has been the ongoing training needs of the 60%+ of school leavers who are unable or choose not to take a degree course.

Skill shortages are having a detrimental effect on the UK’s productivity and this needs to be addressed urgently in order to meet immediate economic and workforce challenges, including those arising from Brexit. The UK faces a particularly acute issue in the thousands of adults who lack English, maths and digital skills, creating a serious barrier to their progression in employment, training or education. This is compounded by the diminishing availability of adult education opportunities and the inequality of access to provision where it does exist. The current level of provision does not support the needs of our economy or our society. Add to this the pace of technological and demographic change and the need for a fresh new approach to adult skills and learning becomes crucially apparent.

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A progressive alliance round Land Value Taxation?

The Grenfell Tower fire has focused attention on the extent of the crisis in the UK social housing system.

Reverend Paul Nicolson of Taxpayers Against Poverty comments:

There are rows of empty “investments” in London, and the four big builders have 600,000 unused plots in their land banks.

The Liberal Democrat 2017 Manifesto included genuinely progressive housing proposals

  • a new national Housing and Infrastructure Development Bank,
  • increasing housebuilding to 300,000 homes a year
  • allowing councils to end the right to buy, lifting the borrowing cap and targeting “buy to leave” empty homes with a 200% council tax.
  • penalising land-banking with with a penalty on failure to build after three years of winning planning permission.
  •  a “community right of appeal” in cases where planning decisions go against the approved local plan.
  • a “rent to buy” model, where rental payments give tenants an increasing stake in the property, leading to outright ownership after 30 years.

However, the manifesto incorporated only a single sentence with respect to LVT. “We will also consider the implementation of Land Value Taxation.”

Labour’s manifesto went a little further with respect to describing its LVT intentions promising:

 We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.

The Greens promised “Action on empty homes to bring them back into use and a trial of a Land Value Tax to encourage the use of vacant land and reduce speculation.

The SNP have previously included LVT proposals in their manifesto and at their spring conference this year adopted a resolution “must include exploring all fiscal options including ways of taxing the value of undeveloped land” in its gradual land reform programme.  Other parties like Plaid and the Alliance Party have incorporated LVT proposals in the past.

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What does the latest Social Attitudes Survey say to Liberals?

The 34th British Social Attitudes survey has found 48 per cent of Britons would back the government increasing taxes to bolster spending, the highest support for such measures since 2004. Britons think the government should prioritise spending on health (83 per cent), education (71 per cent) and the police (57 per cent).

The key findings of the report are summarised broadly as a country that is becoming:

Kinder: after 7 years of government austerity, public opinion shows signs of moving back in favour of wanting more tax and spend and  greater redistribution of income. Attitudes towards benefit claimants appeared to have softened, with the proportion of people saying benefit claimants don’t deserve help dropping from 32 per cent in 2014 to 21 per cent in 2016, the lowest level ever recorded by the survey. People particularly favour prioritising spending on disabled people.

Not soft-hearted: the public in general continues to take a tough line on the response to threats at home and abroad. More than half of Britons want the authorities to be given strong powers to respond to terrorism and crime, and record numbers want defence spending increased.

After pensions being protected from austerity, the public are losing sympathy with the idea that this should be a priority for further spending.

The public takes a dim view of benefit fraud and tax evasion, with many thinking that exploiting “legal loopholes” is also wrong. Further, more people consider benefit fraud wronger than tax evasion. While the proportion who prioritise more spending on increasing the benefits for disabled people has risen, there is little support for more spending on benefits for the unemployed, perhaps because half of people think the unemployed could find a job if they wanted to. Only 16 per cent of those surveyed said they would back more spending on the unemployed.

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Irish Liberal Democrats and LDV St Patrick’s Day fringe at York

Theresa May dealt a blow to Ireland in her Brexit white paper when she said she wanted in effect to leave the EU customs union, confirming Brexit poses a huge threat to frictionless cross-border trade on the island of Ireland, the mainstay of the Irish economy.

The Irish Ambassador to the UK, Daniel Mulhall said last month that comprehensive customs and border checks between Ireland and Northern Ireland are not remotely possible

Northern Ireland polled more europhilic than other regions in the UK before the election. Its Remain vote of 55.7 per cent was the third strongest in the country. Nationalists wanted the UK to remain in the EU, but unionists generally wanted to leave. Sinn Féin, the SDLP, the Ulster Unionists, Alliance and the Green Party wanted to stay. The Irish government also wanted a remain vote. The DUP, the TUV and the left-wing People before Profit party backed Brexit.

As Sinn Fein and the DUP jostle for position in a new power sharing agreement at Stormont the Brexit divide has come to the fore. If the parties are unable to agree an accommodation, we may yet see a return to direct rule of the province from Westminster.

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UK-Irish post Brexit relations

Malta assumes the presidency of the EU at the start of 2017. Maltese Prime Minister Joseph Muscat, in setting out his priorities, has said the ‘Irish Border’ Issue must be settled before Brexit talks can begin in earnest, injecting some urgency given that talks are expected  to get underway in April next year.

Helpfully, the House of Lords EU select committee published a report this week titled Brexit: UK-Irish Relations. The report notes the special ties between the UK and Ireland and the friendship that has developed as the Northern Ireland peace process has advanced. Also noting that Ireland’s common membership of the EU has been one of the foundations of this close relationship.

The report draws attention to: the serious economic implications of Brexit for Ireland, North and South; the consequences for the Irish land border of potential restrictions to the free movement of goods and people; the
implications for the Common Travel Area (CTA) and for the special status of UK and Irish citizens in each other’s countries, including the right of people born in Northern Ireland to Irish (and therefore EU) citizenship; the potential impact on political stability in Northern Ireland; and the challenge to the
institutional structure for North-South cooperation on the island of Ireland, and East-West relations between the UK and Ireland, established under the Belfast/Good Friday Agreement.

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Donald Trump’s very liberal plan to pay off the US national debt

 

In April this year, Donald Trump was proposing to pay off the US national debt of $19 trillion over two presidential terms.

He laid out his initial proposals in an interview with Bob Woodward of the Washington Post, suggesting that he could pay off the national debt by renegotiating trade deals.

As the Washington Post explained, eliminating a trade deficit does not mean the money ends up in government coffers. The post goes on to explain that before the debt can be reduced the current budget deficit needs to be tackled. So the task is not $19 trillion, but nearly $26 trillion over eight years.

By May, Trump was backtracking on the idea of paying off the debt over 8 years and was promulgating a new plan.  The New York Times reported that this new plan was based on persuading creditors to accept something less than full payment. The Times goes on to recall the consequences of a potential default scare back in 2011, when federal borrowing costs climbed as congressional Republicans refused for a time to increase the federal government’s statutory borrowing limit, raising doubts about the government’s ability to repay its debts. The Bipartisan Policy Center calculated that the resulting higher rates cost taxpayers about $19 billion.

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Sharing the Rents: The Economic relationship Between Humanity and Nature

alter-logo-300Action for Land Taxation and Economic Reform (ALTER) seeks to build on support for Land Value Taxation amongst Liberal Democrats and to promote and campaign for this policy as part of a more sustainable and just resource based economic system.

The ALTER fringe meeting at Brighton this year was chaired by our MEP, Catherine Bearder. Jock Coats, a former Oxford city councillor, presented a paper aimed at infusing the Liberal Democrat mission statement as set out in the “preamble to the constitution” with explicitly “geoist” principles.  The paper argues that only publicly collecting the “economic rent” from land and natural resources enables a genuine market and democracy to work together to optimally distribute economic welfare and save the planet.

The premise of the paper is that neither markets nor democracy can function properly whilst a monopolistic class, rentiers, captures so much of economic productivity. It leads to a two caste society, one of which reaps the benefits of public need and public programs through land values, while the other pays for it. “Tenants pay twice so landowners don’t have to”.

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Opinion: Tackling Housing Benefit reform

Matilda HouseThe Liberal Democrat policy paper on housing notes that the primary driver of growing housing benefit and Local Housing Allowance bills has been the shortage of housing, leading to higher rents, and increasing number of people unable either to buy or to access social housing. The paper focused on the most pressing issues:

  • Building more homes – providing environmentally sustainable homes where people need them, creating jobs and kick starting the economy.
  • Giving tenants more power and security – making social landlords more accountable and improving standards and security in the rapidly

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Opinion: Lib-Lab Pact

infographic2014The Lib Dem campaigning message is encapsulated in Stronger Economy, Fairer Society, with Conservative messaging focusing on ‘the long term plan for economic recovery’, and Labour’s focusing on the decline in living standards of the poor and the squeezed middle.

Nick Clegg’s response that, were Labour in the future to ask Libdems to form a coalition with them the first demand would be ‘Don’t break the bank’,  seeks to emphasise Lib Dem economic competence.

It should come as no surprise then that the voting public should surmise that coalition economic policy is just what we say it is – a joint Conservative and Liberal Democrat long-term plan for economic recovery with “not a cigarette paper between us”

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Opinion: Back to basic principles on welfare reform

"Demand the Beveridge Plan", 1944The basic principles of the Beveridge Report were:

  1. The right of every citizen to a minimum level of subsistence;
  2. The need to preserve incentive, opportunity and responsibility.

The post-war National Insurance system was based on the assumption that there would be full employment, and that wages for men would be sufficient to maintain a wife at home raising children.

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Opinion: Immigration and unemployment – an idea

Words.Two popular arguments deployed against immigration are that immigrant’s take jobs from British workers or that immigrants are a burden on the welfare state. Both arguments have been shown to be largely invalid: the Lump of Labour fallacy  has long been dismissed as economic bunkum; and existing evidence suggests that the net contribution of recent migrants to Britain’s public finances is positive. However, according to this evidence from  Centre for Research and Analysis of Migration (CReAM) at University College London not all groups of migrants make a positive fiscal contribution …

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Opinion: the biggest threat to global security

Free Syrian Army rebels fighting against Assad militias on the outskirts of the northwestern city of Maraat al-Numan, Idlib - SyriaThe Arab spring has receded into the nightmare that is Syria today; continuing instability in Libya and Yemen and death penalties by the hundreds in Egypt. We have been shocked by the atrocities of Boko Haram in Nigeria; Al Shabab in Somalia; conflict in the Central African Republic, Mali and Chad.

Tony Blair, in a recent speech reminded us Why the Middle East matters

What is presently happening there, still

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Opinion: Russia and the Great Illusion

imageIn 1910, British journalist Norman Angell published “The Great Illusion”, arguing that the integration of the global economy was so all-embracing and irreversible that future wars were all but impossible. Released shortly before the outbreak of the Great War, the idea that humans had outgrown their propensity to mass slaughter did not stand the test of time for long.

We face today a similar dichotomy in Putin’s Russia. Europe and Russia are intertwined in mutual trade dependency and the major oil companies – BP and Shell among them – are increasing …

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Opinion: The Generation Gap

Day 46: Generation GapThe generation gap used to refer to the differing attitudes of young people and their elders to sex, drugs and rock and roll. For young people today, it has come to mean what the American author of the article linked below describes as “the economic hellhole our parents have handed us.”

Earlier this year, Rolling Stone magazine published an article under the title Five economic reforms millennials should be fighting for.

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Opinion: We can conquer unemployment

unemploymentIn 1929, Lloyd George launched We Can Conquer Unemployment, the policy document that was to form the basis of the Liberals’ election campaign.

This week, George Osborne said “I am committed to securing the “fullest” possible level of employment by helping business to create new jobs and cutting taxes.”

Nick Clegg has said “… many people had accepted real terms pay cuts in recent years to safeguard their jobs and the government must continue to support them as well as creating the climate for new jobs. All I want is the maximum number of people to be employed in the economy and the minimum number to be jobless.”

Just as the productivity gains of the decades prior to the financial crash, were largely captured by the wealthiest in society, so too has the benefit of the asset price inflation generated by monetary policy accrued to the holders of capital at the expense of wage earners and savers.

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Opinion: Mind the gap

EconomyWith the economy showing strong signs of a recovery and budget projections forecasting a period of healthy growth seven years on from the start of the financial crisis – have we now reached the ‘escape velocity’ required to run clear of this long slump?

The answer to this questions relies on judgements of an indicator that has proved almost impossible to gauge i.e. the output gap or measures of spare capacity in the economy. Most economists believe that the UK economy still boasts plenty of spare capacity, by which they mean that …

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Opinion: A Peace Plan for Syria

Nick Clegg has said about Syria “I am very proud that, as a country, our reaction isn’t just: ‘Oh this is happening, it’s got nothing to do with us. We want to wash our hands of it.’ We struggle with what can we do. It is the wonderful thing about Britain. We don’t stand by. We don’t walk the other side of the street. We want to get stuck in and sort stuff out.”

I think there may be a way to bring about a ceasefire and political negotiations that avoids the obvious dangers of arming rebel groups.

Turkey has called for …

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Opinion: Decriminalising drugs

drugsThe 2011 Liberal Democrat conference passed a motion calling for all criminal penalties for personal possession of drugs to be scrapped, the introduction of a regulated market in cannabis, and the expansion of heroin maintenance clinics for the most fervent users.

The UK Drugs Policy Commission (UKDPC), published its final report in 2012. According to UKDPC, the cost of implementing current policy on illicit drugs is at least £3bn a year, but a lack of evidence for what works and provides value for money, and politicians’ unwillingness to act on available …

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Opinion: Arming the Syrian Rebels

The Independent reported this week that Cameron faces serious Cabinet split over arming Syrian rebels.

Nick Clegg is said to have warned at a recent meeting of the National Security Council that supplying weapons to the Free Syrian Army might only escalate the conflict, killing many more people without any realistic prospect of decisive victory and that it could be “next to impossible” to ensure that British arms do not fall into the hands of Islamist militants.

A Whitehall source said Mr Clegg did not believe “there was a military-only solution to Syria” and would not back any attempt to arm …

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Opinion: Saving what’s left of Syria

President Obama and the European Union continue to agonise over whether to lift the arms embargo on Syrian rebels.

The al-Qaeda-linked Jabhat al-Nusra control several areas and bring Sunni Islamic law, religious persecution and ethnic cleansing under their slogan of “The Alawites to the grave and the Christians to Beirut.”

Israel strikes the Assad regime even as Iran and Hezbollah equip and train a rump Alawite militia in preparation for the fall of the regime.

The western democracies mull over no-fly zones and safe havens while Russia continues to transport weapons to Assad’s forces.

The lessons of Iraq and Afghanistan loom large …

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Opinion: Putting the political back in economy

“The Liberal Democrats are working for a stronger economy in a fairer society enabling every person to get on in life.” What key policies will reinforce this simple message? How do we ensure that economic liberalism supports and advances social democracy?

My answer to these questions lies with the words of J K Galbraith – “economics does not usefully exist apart from politics. The separation of economics from politics and political motivation is a sterile thing. It is also a cover for the reality of economic power and motivation. And it is a prime source of misjudgement and error in economic …

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Opinion: A Comprehensive Middle East Peace Settlement

Simon Hughes said this year,  “We are near to the end of the opportunity of being able to get a peaceful two-state solution because of the extent of the settlements. The separation of Gaza from the West Bank and the increasing encroachment of the settlements mean that an alternative to the two-state model must be explored. We need to be honest and realistic about having a Plan B and a Plan C as well as a Plan A, as an international community.”

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Opinion: Amnesty for 120,000 illegal migrants

During the 2010 general elections, I campaigned in Barking and Dagenham, where the BNP concentrated much of their electoral effort on the back of council seats they held there.

Our policy of offering families, who have been here for years and want to pay taxes a route to citizenship (provided they want to work, speak English and want to commit to the UK in the long term) came under attack not just from the BNP, but Labour and Tories as well.

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Opinion: We need all parties to work together to solve London’s housing crisis

Sarah Teather’s recent interview in the Observer graphically reminded us of the social impact of the housing crisis on large numbers low and moderate earners in London.

Vince Cable, on the Andrew Marr show, emphasised both the need to counter the tabloid rhetoric of benefit scroungers and restrain the growth in the welfare budget. Vince pointed to the urgent need to expand the provision of affordable housing in the …

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