Coalition for Economic Justice: Annual Report April 2016 – March 2017
1. CEJ Steering Group
The end of March 2016 marked the end of an era for the Coalition as John Lipetz stepped down as Chair. This followed shortly after the seminar on Land Value Taxation held at the House of Commons and chaired by Kelvin Hopkins MP. Almost exactly eight years previously a similar event also held at the House of Commons had marked the formation of the Coalition. Since that time John has provided steady, encouraging and consistent leadership which has helped mould the form of the Coalition and the development of its policies and initiatives. Although John has stepped down as chair he remains an active member of the steering group.
In April Peter Bowman took over as chair with Ed Randall and David Hirst as deputy chairs. Peter Challen also stood down as deputy chair. Although he remains a committed supporter of the Coalition Peter has not been able to attend steering group meetings regularly. Rob Blakemore remained as secretary.
During the year, some new members were welcomed to the Steering Group: Andrew Purves of the School of Economic Science, Peter Smith of the Labour Land Campaign and Professional Land Research Group, and Laurie Heykoop a young economist.
The Steering Group continues to operate as previously with monthly meetings hosted at Mandeville Place.
2. CEJ Website
In June the status of the CEJ website was reviewed. It was concluded that we should be very grateful for the services of Rob Blakemore in providing and maintaining an effective website at no charge to the coalition. It was recognised that although the website serves a very important function in providing the “shop window” for the coalition, it has been underutilised. Subsequently there has been an updating and refreshing of the site and following training given by Rob much greater participation by members of the steering group in contributing to it. Important documents relating to previous CEJ projects have now been uploaded. These include the Parliamentary Bill on research into Land Value Taxation prepared for Caroline Lucas MP, the report on the IPSOS Mori poll on land value taxation and the report on the Colloquium on LVT held at the RICS. An additional welcome feature is a news page, provided courtesy of Anthony Molloy.
3. London
The final report of the GLA Planning Committee (composed of three Labour Assembly members and two Conservatives) produced by Tom Copley entitled “Tax Trial: A Land Value Tax for London?” had been published in February 2016. Paul Watling, the scrutiny manager for the report, had stated his intention to put the report on the new London Mayor’s desk. On May 5th, Sadiq Khan was elected to this post and Tom Copley was re-elected to the GLA and became deputy chair of the Housing Committee. (He has subsequently said that he would join the Labour Land Campaign). Nothing was heard for quite a while about the report which was not surprising as there was a lot for the new mayor to attend to and the Brexit referendum dominated events in the middle of the year. However the Finance Committee of the City of London took the report sufficiently seriously to publish a response themselves through their Chamberlain.
We were informed in November that the report was with the Mayor but his response was not published until 23rd January 2017. Broadly it was very positive and the report’s three recommendations had been taken seriously. There was interest in the idea of implementing a pilot scheme by the Old Oak and Park Royal Development Corporation (OPDC) but the belief was that primary legislation would be needed before it could happen. The reason for the delay in the publication was the Mayor was awaiting the publication of two other important reports which the LVT report were connected with and which it had influenced.
The first was the report of the London Finance Committee under Dr Tony Travers Devolution: a capital idea published on January 27th. The main argument set out in this report was that a broader tax base with stronger fiscal controls at the local level will support the delivery of more integrated and efficient services and increased infrastructure investment, while allowing for the reform of individual taxes. The focus for tax devolution was on property taxes which at present are council tax, business rates and stamp duty. The report spelt out the deficiencies in these taxes and the reluctance of central government to reform them. There was specific mention of the piloting of a land value tax: “We also recommend that national government should work with London’s government to trial the operation of a land value tax pilot on undeveloped land”. There was also discussion in the report of the importance in capturing uplifts in land values as a means of financing infrastructure.
The second report was the joint report by GLA and TFL on Land Value Capture which was published in February. This was a very thorough exploration of the ways of capturing land value uplift as a way of funding infrastructure development such as railways. The context was devolved property taxes for cities such as London as explored in the LFC report and there was again reference to its recommendation for a pilot land value tax on undeveloped land. The summary was a ten-point plan to improve the extraction of land value uplifts on new and existing stock.
These three reports together reveal a growing understanding and appreciation of the significance of land in the urban context and a growing appetite to capture land rents for public benefit.
4. Scotland
Scotland has been an area of hope for economic reform and with London shares the opportunity that devolution from the stranglehold of highly centralised government could afford. The Commission on Local Tax Reform had published its report in December 2015 after a very thorough consultation. Although the idea of replacing council tax with a land value tax did feature in the report its overall conclusion was non-committal. As mentioned in last year’s report, early in 2016 Dave & Heather Wetzel and John Lipetz had visited Scotland and held meetings with Labour and SNP SMPs.
On April 22nd 2016 the Scottish Land Reform Bill received Royal Assent. During the previous October as the Bill was passing through the Scottish Parliament, the SNP Conference had taken place and there had been an unusual occurrence when the grassroots membership rejected (“remitted”) the motion on land reform on the grounds that it was not strong enough. In her response, SNP Land Reform Minister Aileen McLeod promised to give “very careful and close consideration” to all proposals to amend the Bill and said the Scottish Government is doing “more detailed work than has ever been done before” on introducing a land value tax.
Although the Land Reform Bill contained new protections for tenant farmers, an end to tax relief for sporting estates and is accompanied by a new Scottish Land Fund available to help community buy-outs, amendments including the restriction of ownership by offshore companies and a tax on unused land were excluded. Overall the conclusion was that it was a small step forward with far more to be done. One outcome of the Bill is the setting up of the Scottish Land Commission. This came into being on 1st April 2017 to provide direction, leadership and strategic thought to land reform in Scotland.
On 5th May 2016 the Scottish election took place. Although the SNP remained the largest party they did not gain an overall majority as the Tories gained seats at the expense of Labour to become the second largest party. Well-known land reformer Andy Wightman gained a seat as a Scottish Green Party member.
In September 2016 Dave and Heather Wetzel visited Scotland again and held meetings with MSPs Murdo Fraser (Conservative) and Claudia Beamish (Labour).
In the SNP Conference on 18th March 2017 land reform was again on the agenda. It was reported that Graeme McCormick (Helensburgh SNP convenor) brought the conference to its feet backing an amendment making support for land taxation explicit in the land reform motion. The amended motion said the government “must include exploring all fiscal options including ways of taxing the value of undeveloped land” in its gradual land reform programme. Mary Mccaig added that a tax would bring down the extortionate cost of land purchases—swathes of which are deserted clearances left derelict from forced depopulation—and would stop “land owners from hanging onto it for speculative purposes”. Proposing the motion was former MSP Rob Gibson, who chaired the committee that scrutinised the new land reform legislation. Cabinet Secretary for Land Reform Roseanna Cunningham spoke for the motion focusing on calls for development of derelict land. However, the enthusiasm for land taxation came from members Graeme McCormick and Mary Mccaig. McCormick called on cabinet secretary for finance Derek Mackay to start research on a land tax.
Graeme McCormick is a member of the SLRG (Scottish Land Revenue Group) and promoter of the idea of “Annual Ground Rent”. Duncan Pickard is also a member of the group and works actively in Scotland. To establish a connection between the CEJ and SLRG an arrangement was made whereby Duncan is included in the circulation list of the minutes of the CEJ steering group and he in return reports back on activities in Scotland.
Shortly after the SNP Conference, the SLRG held a one-day conference in Edinburgh on 24th March. The speakers were Fred Harrison, Andy Wightman and Mark Wadsworth. There were about 60 attendees.
5. The Labour Party
As mentioned in last year’s report, MPs and Peers of all parties (as well as their advisors) were invited to a meeting at the House of Commons on Wednesday 23rd March 2016 to discuss “How a land value tax could work to improve the taxation system”.
The meeting was chaired by Kelvin Hopkins MP, with speeches from Stuart Adam (Institute for Fiscal Studies), Heather Wetzel (Labour Land Campaign) and Molly Scott Cato (Green MEP). John McDonnell MP, the Shadow Chancellor, joined to say a few words and lend his support. Afterwards John Lipetz had informal conversations with both John McDonnell and Jeremy Corbyn to follow this up. Rob Blakemore received a supportive response from Chuka Umunna MP. However, JL’s persistent attempts to work with Labour Policy Advisers have met with some frustration. It was not until January 2017 that he reported that he had (at last) received a response concerning the work of Rory Macqueen and John Meadway (policy and economic adviser respectively to John McDonnell MP– Labour’s Shadow Chancellor), informing him that Labour’s fiscal and economic policies were currently being developed, and requesting him to provide McDonnell’s team with documents and briefings about LVT. John passed on the papers in early February but did not receive a response until mid-April by which time the announcement of the general election and the need for parties to rapidly produce manifestos had taken over.
6 Professional Land Research Group (PLRG)
The PLRG (Professional Land Reform Group) was set up several years ago by Dave Wetzel as a non-party-political vehicle to promote land value taxation and related issues. It has effectively been inactive for a couple of years and so it was decided it should either be re-launched or folded. Peter Smith, who joined the steering group in September, expressed an interest in re-launching the organisation as the Professional Land Research Group and was supported by Laurie Heykoop. A preliminary discussion was held in December and a meeting took place on February 21st. A Facebook page has been set up and a Research Library Catalogue established. It is hoped to hold an open meeting later in the year.
7 Economic Modelling
Over the year, Mark Wadsworth working with Andrew Purves and Anthony Molloy, has been developing a spreadsheet that enables individuals to work out for themselves the effect of changes in the tax system on their net income. These changes include the replacement of existing taxes by a tax on land values. To do this he had to estimate residential land values for each postcode district in England. Mark found a method of doing this based on housing market data. He has shown his calculator to the IFS (institute of Fiscal Studies) who initially expressed some interest and then to Oxford Economics an economics consultancy who do modelling work. Mark presented his work to the Steering Group and then to the IU conference in September. The arrival of this calculator led to several discussions within the steering group on the issue of economic modelling and the need and usefulness of an economic model which, unlike conventional models, included land values. The conclusion was that this was a subject worthy of further pursuit but Mark’s calculator, although an effective tool in dealing with individual circumstances was not necessarily the best starting place[A1] .
8 Mapping
The arrival of Mark’s calculator also raised the issue of mapping land values. This topic had been covered by Tony Vickers’ PhD thesis (see http://www.landvaluescape.org ). However, since then the technology has moved on rapidly and open source GIS (geographical Information Systems) such as QGIS and googlefusion maps are readily available which enable the mapping and overlaying of large amounts of geographical data. For example, computer technology is available to map the land value data by postcode that Mark Wadsworth has established for England and Wales.
In the March Ole Lefmann presented to the Steering Group samples of the hand drawn land value maps used in Denmark for much of the twentieth century which show that establishing regularly updated land values for all sites in a country is practically possible.
9 IU Conference
The International Union for Land Value Taxation and Free Trade (The IU) has been a long-standing member of the CEJ. Recently David Triggs has taken over as President. The IU has status within the UN – specifically with the Economic and Social Council (ECOSOC) the United Nations organisation facilitating international cooperation on standards-making and problem-solving in economic and social issues. David’s stated intention as President of the IU is to advocate LVT at a global level. Earlier in the year he had attended UN Conferences in Prague and Barcelona, the latter on public spaces. David has spoken with Joan Clos (Secretary General of the UN Conference on Housing and Sustainable Urban Development (Habitat III)). He proposed to attend the Habitat III Conference on Housing and Sustainable Urban Development in Quito Ecuador in October.
Last year the CEJ received a suggestion from Alanna Hartzok of the IU who is based in New York to hold a Conference on Implementing Land Value Taxation. To respond to this and gather ideas before Quito, a Conference was held in London on 17-18th September. Entitled “Common Rent for the Common Good – Implementation” the format for the London Conference was designed to be fully participative so that everyone present could have an opportunity to offer constructive responses to each of the “Seven Key Questions” that had been set. Over two days there was a good combination of prepared presentations and discussion, most of the former by CEJ Steering Group Members. The special guest was Lee Yin Zhang of UCL, co-leader of Habitat III Policy Unit 7.
David attended the Quito Conference doing his best to promote the importance of economic rent and its collection for public purposes. The outcome of the Conference was production of the Habitat III New Urban Agenda. It is an extensive document which contains many references to land including the following section (137) :
We will promote best practices to capture and share the increase in land and property value generated as a result of urban development processes, infrastructure projects, and public investments. Measures could be put in place, as appropriate, to prevent its solely private capture as well as land and real estate speculations, such as gains-related fiscal policies. We will reinforce the link among fiscal systems, urban planning, as well as urban management tools, including land market regulations. We will work to ensure that efforts to generate land-based finance do not result in unsustainable land use and consumption.
10 Taxpayers Against Poverty (TAP)
Although Paul Nicolson is not able to attend Steering Group Meetings he is one of the most active members. He has been campaigning unstintingly for the least well-off, particularly focussing on the effects of those on benefits of having to pay Council Tax and the consequences of non-payment. This year he has supported his active work with two sets of blogs written by invited experts. The Affordable Housing Campaign focussed on housing and contributors included Fred Harrison and Professor Danny Dorling. This was followed up by a seminar at Portcullis House co-hosted by the APPG on Poverty and hosted by Kate Green MP which a number of Steering Group Members attended and where the speakers included Duncan Pickard. The second set of blogs was a health equality campaign of nine blogs about low income, debt, hunger, mental and physical health with Richard Wilkinson and Kate Picket of the Equality Trust as key contributors. This campaign will also supported by a seminar in Portcullis House in July. This year Paul has reported on his work to the Gladstone Club and SES Study Group and will be the speaker at our next open meeting in June.
11 New Economics Foundation (NEF)
In December 2015, some Steering Group members attended a seminar hosted by the NEF in conjunction with the Oxford Department of Politics & International Relations on “Rethinking Public Assets Land and Capital” in which Josh Ryan-Collins and Toby Lloyd were among the presenters. The Labour Land Campaign later reported that they had been in discussion with Alice Martin and Duncan McCann. Following discussions with Andrew Purves, Josh gave a presentation to the SES in November on Land and Money. In February his new book written together with Toby Lloyd and Laurie Macfarlane was published: Rethinking the Economics of Land & Housing. It is well written, emphasising the importance of land in economics and the need for it to be restored to its rightful place in the subject if current problems—particularly those of housing and inequality—are to be tackled. It has good coverage of land value taxation. So far it has been well-received and obtained some good reviews. Toby Lloyd’s evidence—published in the House of Commons Report on Housing in April 2017—also clearly spelt out how the present UK housing crisis is an effect of policy on land and its ownership.
12 Institute of Economic Affairs (IEA)
In November 2016, the Institute of Economic Affairs published a thorough and wide-ranging report: Taxation Government Spending & Economic Growth. This advocated simplification of the tax system and included a shift onto taxing land values as one of the most economically efficient ways of collecting public revenue. The Adam Smith Institute, which has similar political alignment also now openly supports and advocates land value taxation.
In December, the IEA launched the Richard Koch Breakthrough Essay Competition. It looked for essays that will exuberantly and openly seek new, exciting free-market solutions to improve the prosperity of the bottom third in advanced economies. At least five members of the steering group and member organisations submitted entries. Although there were no winners it was heartening to see this level of responsiveness to the challenge and willingness to participate.
13 Land Registry
In March 2016, the Government launched a Consultation into the Privatisation of the Land Registry.
Some member organisations made submissions. Fortunately, there was again strong opposition including a 38 Degrees petition. The issue was debated in Parliament in July and by September Theresa May’s Government had abandoned the idea. The pendulum now appears to have swung the other way and the Housing White Paper Fixing our Broken Housing Market published in February 2017 contains some very encouraging remarks concerning the Land Register with reference to its completion and its increased openness:
A.30 … HM Land Registry will be modernised to become a digital and data-driven registration business within the public sector. This is central to achieving genuine transparency on land ownership and control. HM Land Registry is committed to becoming the world’s leading land registry for speed, simplicity and an open approach to data.
These intentions were re-iterated in the recent House of Commons Report on Housing.
14 RMT
In May 2016 Dave Wetzel completed a report commissioned by the National Union of Rail, Maritime and Transport Workers entitled Underground Treasure, which explores how land value taxation could be used to fund rail transport. A draft has been circulated to the Steering Group. The completed report was delivered in September but we are still awaiting publication.
15 Open Meetings
We have continued to hold Open Meetings three times a year on Friday evenings in the middle of the term and these have attracted quite good audiences from the members of the Coalition’s Organisations
In June 2016, Steering Group Member Andrew Purves spoke on Hong Kong and the funding of the Mass Transit Railway based on his recent book: No Debt Low Tax High Growth. The arrival of Andrew’s book has been timely and corresponds to a growing interest in financing infrastructure by capturing land value uplift as spelt out in the GLA/TFL Report mentioned above. Andrew’s work was also referred to in Josh Ryan-Collins new book described above.
In October 2016 John Christensen of the Tax Justice Network spoke on Tax Competition. John announced that after 13 years as the organisation’s executive director he was stepping down and taking up the post of Director of Research. His talk focused not on tax evasion and avoidance but on the pernicious effects of tax competition between nations. It was an expansive and quite challenging talk as it covered new ground. Ironically this was the same topic covered by this year’s prize winner in the Koch competition mentioned above.
In February 2017 David Triggs reported back on his attendance at the UN Habitat III Conference in Quito described previously. He also spoke of some of the ways land value capture is used in South America.
16 Conclusion
Over the year although there have not been any concrete steps towards tax reform in the UK there have been clear signs of a growing general understanding of the importance of land in the economy, particularly in the urban environment, and the need to develop policies that take this into account. As the year moves on new opportunities continue to open up.
The continued efforts of all Steering Group Members and the significant contributions they have made is greatly appreciated. A special thanks goes to the secretaries whose carefully compiled minutes provided a very clear record of the activities over the year on which this report was based.
The Steering Group also expresses its gratitude to the School of Economic Science for continuing to provide a location for our meetings to take place in a welcoming, helpful and hospitable way.
Peter Bowman
Chair, CEJ
May 2017
[A1]although it is by no means sure that Mark's methodology for calculating land values can be integrated into the kind of models that are used in econometrics and forecasting