Is it possible to meet these housing requirements without losing too much 'greenfield' land? Furthermore, can this be done in a fair way which will not give a few people unjustified windfalls while many others lose out?
In answer to these questions, we begin by making what looks like a long digression.
All forms of wealth, including buildings, are the product of human effort and intelligence applied to natural resources. These natural resources are what economists call 'land'. The word includes not only the surface of the earth but all that lies buried within it, flows through it or surrounds it. Long, long ago land was regarded as something fundamentally different from chattels which people had made, like knives and tents. Chattels belonged to individuals; land belonged to everybody equally.
Then, over many centuries, this state of affairs gradually changed and some
people acquired land as a personal possession. Their heirs sometimes
continue to derive great wealth from those possessions to this day. To give
but one example, in February 1998 it was reported that Earl Spencer had
agreed to sell 400 acres of his Althorp estate for £50 million.
But the wealth that comes from the control of land can be shared equally if everyone pays into a communal fund, a fair rent for the land he or she occupies. A fair rent would take into account the extent of a particular site, the fertility of its soil, the convenience of its location for trading, the agreeableness of its surroundings, its ease of access to transport systems etc., but would discount what human effort had added to the site: like houses, offices or factories. This arrangement is known as Land Value Taxation or LVT. The revenue from LVT could enable many of our existing taxes to be reduced and, in some cases, disappear altogether.
How would all this bear on the housing problem? It is vital to remember that a 'house' consists of two entirely different things: the building, which was set up by human effort, and the land on which it rests, which no human being has made. Land Value Taxation will allow us to make a good start in solving the housing problem by eliminating the waste and misuse of land that now occurs.
Urban sprawl has been encouraged by the high price of land within towns and cities. Builders and developers have moved out to districts where selling price and rents are lower. Plots of land suitable for housing, industry or commerce have been left empty for various reasons - often because the owners had acquired their plots in anticipation of a future price rise and were able to hold on to their land without putting it to profitable use. A tax on the value of such land would discourage that practice and bring more land onto the market at lower prices. This valuation would be conducted on exactly the same basis as would apply if the owner were seeking to sell it - that is, the question would be how much the land would be worth to the prospective purchaser who could put it to its best use. A tax on such a basis would make brownfield sites more attractive to builders and developers.
Idle land within towns is a deplorable waste. Derelict land is both a waste and an eyesore. Although regeneration of decayed urban areas has been promoted by successive governments since the seventies, there still remained, in 1993, 396 square kilometres of derelict land in England alone. This would be enough for three-quarters of a million new homes at 8 to the acre.
LVT would also help by encouraging suburban 'infilling'. Some suburban plots are much bigger than the owner requires, and often the local planning authority has no objection if the surplus land is used for 'infilling' with more homes. With LVT, the owner of such land would have a further incentive to dispose of it for that purpose.
This would also help reduce the pressure on greenfield land.
As has been seen, one effect of LVT would be to allow other taxes to be reduced. At present, VAT is charged at 17.5% on rebuilding, while there is no VAT on new building. This is one of the factors which inclines builders to prefer greenfield to brown-field sites. Why not make a start in tax reduction by removing VAT on rebuilding?
"Blots on the urban landscape would be transformed"
Removal of taxes on improvements would also help the reclamation of derelict land which is seriously polluted and expensive to reclaim. The problem of cleaning up polluted land must be tackled in various ways and not exclusively by VAT. Allowing those who regenerated derelict land to benefit fully from their enterprise and labour would make it more likely that these blots on the urban landscape would be transformed into places where people would be happy to live and work.
Planning permission can raise the value of a site by millions over-night - a situation that inevitably introduces the temptation to corruption in public life. A tax on the value of land would remove this temptation because the increased value of the land would be collected for the benefit of the community and would therefore not enrich individuals or companies.
Towns would be renewed without gain to speculators, and planners would be relieved of the pressure of landowners intent on maximising the rent from their plots. The will of the community would become the deciding factor in planning decisions.
Land Value Taxation would work to do away with waste of natural resources and of human resources. It would extend production onto all appropriate sites, thus increasing opportunities for employment and raising real wages. A more prosperous community would be in a position to demand a higher standard of design and construction. The use that was made of this power would depend on current taste and prevailing ideas, but opting for fairness and equal opportunities through Land Value Taxation could only increase our chances of protecting the countryside and improving the urban landscape.