Author Archives: Tony Vickers

Solving the crisis in Local Government

What’s the point of a Motion bemoaning a crisis but failing to suggest a solution?

Liberal Democrats have conferences to decide Party policy, not indulge in hand-wringing! Declaring that local government has a funding crisis without stating what we’d do about wastes our time and money as conference-goers. That’s why I’m asking for a reference back to FPC for F23 at York.

The Party last seriously debated local government  and its funding in 1998 – the year I co-founded ALTER. We’ve progressed since then but in 2019 we funked the big one: reform of Council Tax.

In the 1998 policy paper the most significant citation was a 1996 House of Lords report that “demolished the circular argument” that local government expenditure is all part of national government expenditure, saying it’s “Humpty Dumpty” logic! Its only because Treasury says so and only because councils are over-controlled and haven’t in living memory had real freedom of action: “other economies can be successful while doing things differently” (4.1.5).

If we believe in devolution then what Whitehall compels councils to do, as minimum levels of statutory services, ought to be funded centrally – 100%, taking appropriate account of geographic and demographic differences in cost of delivering services. Councillors should only be held to account by local electors for how efficiently they use those external funds. 

Anything that democratically elected councils decide to do in addition should be 100% funded from local taxes, set locally using their local choice of tax bases, as was decided by Conference in 1999.

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The Housing Crisis and Land Value Taxation

In submitting our amendment to the motion on Tackling the Housing Crisis (F31), ALTER is not wanting to change anything called for in the policy paper that will, we hope, be adopted nearly unanimously. Our purpose is to remind Conference that we can and must use our existing policy on tax reform, namely Land Value Taxation (LVT), to solve the underlying cause of the crisis.

We call for the commitment in the 2013 policy paper Fairer Taxes, endorsed by Conference that year, to be honoured. This was to conduct “early in the next Parliament …. a full-scale review to look at how (LVT) might best be implemented”. We do not suggest any new tax policies but merely call for FPC to do what Conference asked it to, which we feel is entirely appropriate given the motion’s subject.

The motion points out that “successive governments have pursued policies that benefit homeowners”. However there is no proposal to correct that imbalance between owning and renting. Our amendment emphasises that it is land value and not the value of “bricks and mortar” that is the cause of this fundamental unfairness. It is the major homebuilders and landowners who most benefit: obscenely and without economic or ethical justification.

Governments in England – both Conservative and Labour – have failed to review the grossly unfair Council Tax despite it being the main source of local and regional inequity in housing costs for occupiers. Whilst tax policy was outside the remit of the working party, it should have been able to point this out without us seeking to amend this motion.

The paper identifies the “main drivers of the housing crisis” as principally not overall supply but about:-

  • Provision of social housing
  • Economic prosperity of the area
  • The role of finance.
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Bulls, ostriches and national housing targets

Would-be Prime Minister Liz Truss agrees with the Homes & Planning Working Group (HPWG) about scrapping the top-down national housing target! “Cakeism”? Could a Sunak Government spend more while cutting taxes?

It depends what taxes are cut – and how. Perhaps there is a way, which today’s politicians and their advisors have ignored. From John McDonald to Milton Friedman (with David Ricardo, Adam Smith and Vince Cable as classical Liberals) some have supported: the “Tax Shifting” way.

Our traditional taxes are almost all “welfare negative”: causing a huge “deadweight loss” of real growth. Taxes on earnings, dividends, profits and most transactions such as house sales (“Stamp Duty Land Tax”), fall on those parts of the economy that create wealth and prosperity.

However, it is those who simply hold title to the passive element in human activity – what economists used to call “Land”, i.e. everything not made – who are the main beneficiaries. Land exists in finite quantity and without it Labour and Capital cannot operate. The growth in national wealth since the 2008 financial crash has, according to ONS figures, gone almost entirely into inflating land values.

It is this deadweight loss that keeps the poor in poverty and causes inequality to grow unless governments act: corrective action including ‘progressive’ taxation which is unproductive. This is unintelligent and wholly unfair.

We Lib Dems have traditionally understood this. Hence our policy of Land Value Taxation (LVT).

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Targets aren’t policies – the flawed Liberal Democrat position on homes and planning

The “Building Communities” motion last autumn left us with a target of 380,000 new homes a year, despite opposition from ALDC and most of the Party hierarchy. The grassroots, especially the young, don’t trust their colleagues who have to work with government at all levels.

Targets like this are gestures that discredit our radical tradition. They are not policies and they are bound to fail unless a Party has policies that can deliver them. Noticeably none of the policies in the motion were opposed. Just the target.
The national housing target merely “feeds the beast” that is the cartel of national homebuilders and speculative landowners, in combination with lenders who between them kill our real economy. I began my working life 50 years ago as a chartered builder working for one of them. I wondered why housing site construction always made a loss until the regional manager took me aside at a training function and said: “Tony, we make all our money on land deals.” So began my inyerest in land economics.

“Investment” in a finite natural resource simply hands over wealth created by entrepreneurs and workers, to be locked up in bank balances as unearned gains. Legalised theft. It inflates the balance sheets of large companies that plunder and speculate at our expense. That wealth needs to be re-invested in things society needs, not in pandering to greed.

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Fairer Share and local government finance

It was very disappointing that a motion calling for a Proportional Property Tax (PPT) to replace Council Tax, Stamp Duty Land Tax and “Bedroom Tax” was rejected for debate a second time at this Spring Conference 2021. It represents a big step towards Land Value Taxation (LVT), which ALTER helped Sir Vince Cable retain within the last three Tax Commission policy papers – all passed overwhelmingly. It has a much greater chance of gaining cross-party support than LVT. Under this Government, it might even see the Statute Book, since most support seems to come from “Red Wall” Tory MPs in hard-up northern regions.

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Why we need a residential Landowners’ Levy

There are two motions for debate at Brighton that I particularly welcome, as founder member of ALTER and campaigner on Land Value Taxation (LVT) for 20+ years. There’s the one on Commercial Landowners Levy (F26), which is based on an excellent paper by four esteemed experts in our Party. Then there’s F34 “Promoting a Fairer Distribution of Wealth”.

Having read both motions, I was unhappy that F34 failed to match the combination of thorough research and analysis in F26 and also falls short on radical policy proposals to address the main cause of wealth inequality: the so-called Land Question. As a …

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Opinion: Why fear this tax?

Our last Manifesto included a commitment to “reform business rates, creating a fairer system where rates are based on site values rather than rental values. “Site Value Rating” (SVR – a purely local tax) had been party policy for decades but until 2010 never made it to a manifesto. The Party had never embraced a Land Value Tax (LVT) as a key part of our national economic policy.

Since the debt-fuelled property boom led to the present global financial crisis there have been statements in support of LVT from leading figures in all the other parties. Tory Planning Minister Nick …

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Opinion: Lo-Tax for the Lib Dems

landRaising the tax-free personal allowance is the Lib Dems’ headline contribution to this Government – so popular that the Tories are trying to claim it as theirs! But when Danny Alexander said that our next manifesto should include a promise to raise and peg the personal allowance to the National Minimum Wage (almost £13,000) he was setting his tax policy working group a challenge: to find £12bn a year from elsewhere.

According to the Institute for Fiscal Studies this isn’t progressive. Highest earners and others benefit, while …

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New book: The Case for a New People’s Budget

To many of us, notably Vince Cable, it has for long been blindingly obvious that the property boom would end – and end in pain for millions around the world.

The scale of the crash may have surprised even most who expected something like it at this time, as borrowing against unsecured ‘bubble’ land values was bound to lead to massive default.

However the Lib Dems’ campaign group on land value taxation (LVT) which I chair, ALTER, believes that the ‘Credit Crunch’ can be turned into a major opportunity for the Party, if it can press home its renewed conviction …

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Opinion: Where for Land Value Tax after conference vote?

A week after the Lib Dem Conference debate on “Green Tax Switch Mark 2”, how does our tax policy look from an ALTERnate perspective (i.e. not Chris Rennard’s)? Well, I’ve almost sold out of my book’s first printing (would someone like to post a review on Amazon?) and most LVT supporters who were there agree that having Vince Cable claim membership of ALTER and fulsome support for its aims in his summating speech was worth more than any show of hands in the conference hall.

Even Arnie Gibbons, who until recently used to move away – or mutter most foul – on hearing any discussion at Conference about Land Tax, was quite nice about us. We are accepted in polite circles – well Liberal ones anyway.

Posted in Conference and Op-eds | 2 Comments

Opinion: Lib Dems must support LVT

I’ve been asked to preview the conclusions and argument for my book Location Matters: Recycling Britain’s Wealth here. If you subscribe to Liberator or Challenge (the Green Lib Dems’ journal) you will get reviews by others of the book before Conference. In the current Challenge you will also see a piece by me about how the Liberal Democrats’ Tax Commission got in such a depressingly non-radical place with Land Value Taxation (LVT) – which is what my book is about.

What I want to do here is explain the conception of the book, its purpose and what I hope happens next. But first, as requested, in a single sentence: conclusions and arguments. If the Liberal Democrats do not go into the next General Election campaign with a pledge to retain some form of nation-wide property tax at the same time as scrapping Council Tax, they will have betrayed their forebears and – more importantly – future generations of British people and will not deserve the support of voters.

Posted in Books, Conference and Op-eds | Tagged | 6 Comments

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