Green Party responds to Lords Committee report 'Building More Homes'

I thought readers would be interested in this release from the House of Lords Economic Affairs Committee and the Green Party's response

In their report, Building More Homes, published today LINK, the cross-party House of Lords Economic Affairs Committee criticises the Government’s housing policy for:

· Setting a new homes target which will fail to meet the demand for new homes or moderate the rate of house price increases.

· Restricting local authorities’ access to funding to build more social housing.

· Creating uncertainty in the already dysfunctional housing market by frequent changes to tax rules and subsidies for house purchases, reductions in social rents, and the extension of the Right to Buy. All of these changes reduce the supply of homes for those who need low cost rental accommodation.

· A narrow focus on home ownership which neglects those who rent their home.

The Committee makes wide-ranging recommendations to address the housing crisis, including:

· Restraints on local authority borrowing should be lifted. Local authorities should be free to borrow to fund social housebuilding as they are other building programmes. This would enable local authorities to resume their historic role as one of the major builders of new homes, particularly social housing.

The current historically low cost of borrowing means local authorities could make a large contribution to building the houses we need for the future. Further, the new Prime Minister has announced that the Government will abandon their fiscal target. This paves the way to increase local authority borrowing powers.

· Council tax should be charged on development that is not completed quickly. The Government’s reliance on private developers to meet its target of new homes is misguided. The private sector housebuilding market is oligopolistic with the eight largest builders building 50% of new homes. Their business model is to restrict the volume of housebuilding to maximise their profit margin. To address this the Committee recommend that local authorities are granted the power to levy council tax on developments that are not completed within a set time period.

· Maximise the use of public land. The Government must take decisive steps to build on the very substantial holdings of surplus publicly owned land. The Committee recommends that a senior Cabinet minister must be given overall responsibility for identifying and coordinating the release of public land for housing, with a particular focus on providing low cost homes. The National Infrastructure Commission should oversee this process.

· Local authorities should be given the power to increase planning fees. Local authorities should be able to set and vary planning fees to help fund a more efficient planning system and the upper cap on these charges should be much higher than the current limit.

Commenting Lord Hollick, Chairman of the Committee, said:

We are facing an acute housing crisis with home ownership – and increasingly renting – being simply unaffordable for a great many people.

”The only way to address this is to increase supply. The country needs to build 300,000 homes a year for the foreseeable future. The private sector alone cannot deliver that. It has neither the ability nor motivation to do so. We need local government and housing associations to get back into the business of building.

Local authorities are keen to meet this challenge but they do not have the funds or the ability to borrow to embark on a major programme to build new social homes. It makes no sense that a local authority is free to borrow to build a swimming pool but cannot do the same to build homes.

The Government are too focussed on home ownership which will never be achievable for a great many people and in some areas it will be out of reach even for those on average incomes. Government policy to tackle the crisis must be broadened out to help people who would benefit from good quality, secure rented homes. It is very concerning that changes to stamp duty for landlords and cuts to social rent could reduce the availability of homes for rent. The long term trend away from subsidising tenancies to subsidising home buyers hits the poorest hardest and should be reversed.

If the housing crisis is to be tackled the Government must allow local authorities to borrow to build and accelerate building on surplus public land.

Responding to the House of Lords Economic Committee’s report ‘Building More Homes’, Green Party Housing Spokesperson Samir Jeraj said:

Many of the committee’s recommendations -  on breaking the monopoly on developers, enabling council house building, and the misguided nature of the government’s focus on home ownership - reflect long-held Green Party positions.

However, they do not go far enough in some areas, particularly on Right to Buy. This damaging policy has rightly been scrapped in Scotland, and is on the way to being scrapped in Wales - it must be abandoned in England too.

To make council tax genuinely fair, it should be replaced by a Land Value tax, which would return to the community the value added to a property because of improvements that have been paid for by the public purse.
 

Tackling the housing crisis must be at the top of the new Prime Minister’s priorities, and taking on this report’s recommendations would be a positive first step.

GLA put Land Value Tax on the political agenda with Old Oak in the spotlight

The GLA today publish a report on the potential of a Land Value Tax in London. LINK
The report was commissioned by the GLC Oversight Committee in September 2015 to look at the case for and against the Tax.

In his foreword rapporteur Tom Copley, Labour AM says:  

The greatest challenge facing the next Mayor will be achieving a step change in the level of house building in London. Last year we built fewer than half the number of homes the Mayor’s own estimate says is needed to solve the housing crisis over 20 years. Clearly, new and bold thinking is required. 

This report seeks to offer the next Mayor a potential solution, by examining the argument for and against introducing a Land Value Tax in London. Land Value Taxation provides incentives for bringing land into more productive use, and discourages keeping land empty or derelict. Thus, it would have serious potential to bring more land forward for development, including for
housing. There are examples from cities around the world that have brought in Land Value Taxation that suggest this would indeed happen. 

Our conclusion is that the next Mayor should fund an economic feasibility study and, subject to a positive conclusion, request the powers from the Government to trial a Land Value Tax in part of the city. 

The potential of introducing Land Value Taxation in this country has been discussed for more than a century, and has supporters from across the political spectrum. Economists like the fact that it is highly efficient, with minimal distorting effects on the market. Of course, we recognise that making such a radical change to how we tax land and property would not be without difficulty. 

This report looks at both sides of the argument, and offers the next Mayor a clear course of action to pursue.

The report is particularly concerned with bringing land into use for much needed housing but the arguments for LVT in terms of a more progressive tax to replace Council Tax are also noted:

  Proponents of LVT argue that by replacing council tax and business rates with LVT, not only would the public sector secure returns on its investment in infrastructure, the average tax payer would actually pay less. The tax base would be broader and owners of vacant or underused property would pay more than under the current system.

The Land Value Taxation Campaign LINK make the case for LVT thus: 

A single-issue non-party/all-party organisation based in the UK, we propose that the rental value of land should be collected and used as the principal source of public revenue, as a replacement for present taxes on wages, profits, goods and services. This policy is a prerequisite if chronic economic problems are to be eliminated.

How? Nearly every country in the world is affected by poverty and unemployment; widening divisions between rich and poor; boom-slump cycles; housing shortages; inadequate infrastructure; and damage to the environment. These economic ills persist, seemingly intractably, despite unprecedented developments in science and technology. All of them are ultimately related to the different economic behaviour of 'land' in contrast to man-made consumer and capital goods, whose supply can be, and normally is, varied and transported in response to demand.

Land is otherwise. No more can be made: each plot of land is unique and immovable. Its total supply is fixed. Consequently, the market in land behaves differently from the market in products. Land value comes from the natural and man-made advantages of location, which derive from the presence and activities of the community as a whole.

It follows that the value of land, its rent, is peculiarly suitable as the basic source of public revenue. This is not really taxation, but payment for the right to occupy land and enjoy the benefits of occupation; however, the policy is usually known as "Land Value Taxation" It operates as an annual charge on the rental value of land, assuming that each site was in its optimum permitted use. Since the idea cuts across all political divisions, the Campaign has no party political affiliations.

The GLA report suggests that 'theoretically' the Old Oak and Park Royal Development,  which already gives the London Mayor additional powers, could be the site for him or her to trial LVT.

Dave Wetzel of Fares Fair fame leaves Labour for the Green Party

Ex public transport lead for the Labour Greater London Council (GLC), Dave Wetzel, has announced on Facebook that he has joined the Green Party.

Wetzel said: 

As a new Green Party Member I consider all Government cuts are unnecessary and left the Labour Party this year because the Labour Front Bench intend to continue with cuts. This is totally unnecessary as instead we could adopt the Green policy and introduce an annual Land Value Tax so that rich landowners like the Duke of Westminster repay the land wealth we all create.

Wetzel alongside Ken Livingstone introduced the Fares Fair policy of low
transport charges which contributed to Labour's 1981 GLC election victory.

The popular policy went all the way to the Law Lords and was eventually over-ruled leading to a massive increase in fares.

Following the introduction of the new fares structure and the travel card car usage in London dropped by 10%, tube travel went up by 44% and bus by 14%.

In retrospect many saw the policy as ahead of its time and it certainly puts the current high fares into  perspective. LINK

A battle with the Tory government led eventually to the abolition of the GLC and the Inner London Education Authority.

Dave Wetzel is the President of the Labour Land Campaign and CEO of the consultancy Transforming Communites.

It will be interesting to see how his thinking influences the Green Party.