Tuesday, 21 July 2015

We will never run out of land to sell....

The Government is to try, a little bit harder, to cut the deficit. As always, the old chestnuts are brought out, dusted off and ritually burnt to impress us.

Mainly that oldest of old wheezes, the great land sale. The Ministry of Defence owns 1% of UK land dontchaknow, plenty to be sold. All the other departments too - also we need 150,000 new houses.

I am sure I have heard this before somewhere, oh, yes, from every Government ever elected in living memory. There is always a big land sell off that will raise billions in any budget.

The thing is, rather weirdly for Politicians, it turns out to be true, there is always more land to sell off. The Government owns a lot (the Queen too, another story for another time....) and can grant planning permission for anything on its own land.

Hooray - all our problems are solved.

Except of course, if you are one these holy Land Value Tax believers, then you have to have limits to land - otherwise your plans to tax everyone solely on the value of their land has big problems  - either incessant inflation as land comes to market or, more likely, huge deflation as the value of land decreases as more is released to the general market.

Either way, the evil Tories are no doubt int he gamer for killing LVT as a concept once and for all....

26 comments:

Sackerson said...

No, we don't need 150,000 new houses. The assumptions behind that need unpacking.

Blue Eyes said...

... and that's just public sector land. Something like 95% of the UK is open space. Ok so much of that is in the socialist wastelands of Scotland and Wales, but stil plenty of England is left empty. Jeez, there is even quite a lot of London that could be built up if the will was there (and a bit more infrastructure).

Have you seen that the zillionaire residents of Chelsea are up in arms about the building of a Crossrail station in the Kings Road? Presumably they are worried that their prime bit of inner London will be converted from a quaint village into midtown Manhattan. Bring it.

We wouldn't need all these extra homes, of course, if we banned people from having children, forced all the grannies into tower blocks, and killed everyone who couldn't prove that their ancestors arrived before the Armada.

Sackerson said...

On the other hand, we need to (approximately) double the amount of agricultural land, simply to feed ourselves.

Nick Drew said...

what on earth must RAF Northolt be worth?? the RAF museum at Hendon? Biggin Hill?

(to name the first big patches of tarmac that come to mind, it wouldn't take long to come up with more)

seriously, HMG only needs one of those sites at most

Nick Drew said...

PS yes I know HMG doesn't own Biggin Hill ... just thinking of some simple real-estate optimisation

rwendland said...

Some time in the past, there was a govt plan that central govt would take "ownership" of all land from the departments, and departments would have to annually lease the land it needed back. This way depts would optimise and minimise land usage to reduce costs, instead of the inefficient "free" use of land bought ages ago, and unneeded land would eventually be sold off.

Of course this plan made the MOD apoplectic, along with some other depts, as their costs would soar. I assume this plan was buried without trace (was it?). But it sounds a great way of the MOD reaching the 2%-of-GDP NATO spend target without spending any real money, as well as figuring out which land is really needed.

Steven_L said...

... you have to have limits to land - otherwise your plans to tax everyone solely on the value of their land has big problems - either incessant inflation as land comes to market or, more likely, huge deflation as the value of land decreases as more is released to the general market.

Doesn't make any sense, none whatsoever. There are, of course, obvious limits to land.

Electro-Kevin said...

350,000 newcomers every year (at least) and it has no impact on the housing shortage. None whatsoever. I would set that aside were it not for the fact that the housing crisis works to the Tory Government's advantage. It keeps house prices high (satisfies Tory voters middle aged and beyond) and keeps revenues coming in.

So now the Govt wants various departments to sell off land to raise money to reduce the deficit and eventually pay down debt - to mitigate the 40% of budget cuts to come.

To inject badly needed money into the economy we're going to have to sell our land to foreign owners. Otherwise we're circulating wealth already here.

So who will own Britain ?

We are beyond selling the family silver to consuming our own marrow.


Anonymous said...

@rwendland, " made the MOD apoplectic"

Yes, when the govt starts fishing for every last shilling, they do crazy things.

http://www.e-goat.co.uk/forums/showthread.php?49755-GPSS-sold-off-on-the-quiet-Anyone-notice-%28From-Private-Eye%29

Anonymous said...

@ND - the 4th runway for Heathrow is already built - the M4. Add Northolt and its extra A40 runway, all the capacity we need.

@Sackerson - odd how we have to pay more for electricity to save the planet but apparently we can pave over good agricultural land. Take a drive from Aylesbury/Bicester/Woodstock/Evesham/Chelt/Gloucester - new houses going up everywhere. Vale of Evesham is some of the most productive land in the country and it's being built on.

@E-K - remember those "invisible earnings" that used to (and still do) feature in the balance of payments ? Part of that was our earnings on overseas shares or other assets - historically much larger than the corresponding outflow of dividends. This is changing and becoming a negative balance as UK firms are sold off.

Budgie said...

BE said: "We wouldn't need all these extra homes .... if we .... killed everyone who couldn't prove that their ancestors arrived before the Armada."

Seems a bit extreme, BE, even for you. But it is true we wouldn't need all these extra homes for a stable (even falling) population. That's just straightforward supply and demand. And one way of doing that is to revert to the sort of immigration policies under that deluded xenophobic racist redneck John Major.


Blue Eyes said...

Yes, a falling, ageing, population is *exactly* what will give the economy a boost.

Sandalista said...

"Some time in the past, there was a govt plan that central govt would take "ownership" of all land from the departments, and departments would have to annually lease the land it needed back."

They did this with the NHS using a vehicle called "NHS Property" (catchy). They went into reverse and started having intermediaries (some with links to Trust board members) who are leasing the sites back to the hospitals at eye watering amounts to the Trust.

Then there is the issue of taking staff from the Trust and rehiring them back at agency rates plus commission to do the same jobs.

And don't forget PFI where they have silly financial rates to reflect "risk" rather than have HMG doing it.

Yes you can claim efficiency and improvements; fail to demonstrate them but say you are improving and learning lessons; while at the same time the party's friends having their cut of the government money-go-round.

Look forward to their plans for Housing if they are the same for energy and health.

dearieme said...

"the Queen too, another story for another time....": if you are referring to the Crown Estate, it isn't Her Majesty's, it's just more government land under another rubric.

If you are referring to land actually owned by Her Maj (or Windsor family trusts, or what have you) then taking that would be theft.

dearieme said...

I would like to know whether the Windsors pay Inheritance Tax like the rest of us. But if great chunks of the Balmoral and Sandringham estates would get Agricultural Property Relief, perhaps it wouldn't matter much.

By the way, I think that APR is a rather disgraceful set-off against IHT.

Bill Quango MP said...

Dearime - We looked at APR back in 2012 when Vince was planning to mansion tax almost everyone in the South east.

http://www.cityunslicker.co.uk/2012/03/mansion-tax-kiling-goose.html

surprisingly, few of the C@W readers agreed with me that taking wealth destroys it permanently.

Only CU and I were adamant that this is so.

Its why farmers are exempt. Without the relief, in two generations, the farms would be gone.

That's not an economic think tank guess. We've done it before.Historically, that's what happened. And why farmers get exempted from real life taxation.

So we don't starve.

Arul said...

Thumbs up!!

dearieme said...

In what sense could the farms "be gone"? A farm ploughed by a different chap is still a farm.

And our starving or not depends on the merchant marine of many lands, not on our farmers. This small mountainous archipelago couldn't feed 60 million. And if we tried then we would depend on the merchant marine of many lands bringing in fertiliser and farming machinery.

Budgie said...

BE said: "Yes, a falling, ageing, population is *exactly* what will give the economy a boost."

BE, of course our GDP would (probably) be boosted by increasing our population. But recent experience shows that we have lost productivity as a result. And the other consequence is more housing, bigger cities, less agricultural land, stretched infrastructure, and so on. I prefer not to *boost* our GDP at the expense of all of the above, thanks.

Bill Quango MP said...

Its not ploughed by anyone else.
Who would buy a farm knowing full well that if the owner died the family must sell it to pay the taxation due? Regardless of whether the famhas ever made any kind of profit?

What nation would outsousce its entire food producing operation to foreign powers?

Anonymous said...

@BE - "the economy" is not some God to be worshipped. If you up the population by 10% an raise GNP by 5%, the per capita GDP falls and we're worse off (although I don't doubt that Stanislaus may be better off). Talk about price of everything but value of nothing!

Steven_L said...

#BQLogic

Who would buy blue chip equities knowing full well that if the owner died the family must sell some of them to pay the taxation due? Regardless of whether the likes of Coca Cola and Shell ever paid any kind of dividends?

Who would invest in buy to let knowing full well that if the owner died the family must sell some of the portfolio to pay the taxation due? Regardless of whether the tenants ever paid any rent?

Ben Jamin' said...

The amount of intramarginal land, thus aggregate land rent, doesn't change. No matter how many homes gets built.

People will always pay to access better wages/public amenity/ natural amenity.

All that will therefore happen is to increase the number of property occupying marginal locations. So, we'll end up with more vacancy and under occupation.

Yes, aggregate house prices may go down, but aggregate land rents, the tax base for LVT will not.

Indeed, by adding capacity to London and the SE, the increase in GDP due to agglomeration effects from higher migration rates would probably see land values rise.

After all, everywhere in the World, we see the highest land values where populations and development is highest.

Because spatial Land is fixed, the normal rules of supply and demand do not apply.





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