Andy Burnham and the way to regional productivity

Andy Burnham  has mentioned land value tax as a specific policy. He is clearly thinking beyond  Mansion Tax which is already planned for 2028 but only applies to dwellings valued £2m value and above.  

This blog supports the idea of a land value tax on the value of all land and for a land tax on residential land it should be allowable against personal income tax paid. This will ease the transition of the  reform as it will take into account the ability of the owner to pay and for most will not be an extra tax burden.  Those unable to pay due to low income should be able to defer some of the tax until a sale. 

Fred Harrison the UK's leading advocate of land value tax has just released a YouTube video:  Why Andy Burnham Will Fail: Fred Harrison on Britain's Last Chance  on which he says that Burnham's idea of spreading prosperity from London and the south-east  will not work unless money goes out from London. Land value taxation of itself will not achieve regional prosperity.  Harrison explains that Ricardo showed that the spare  wealth of a country after the basic costs of survival gravitates towards the centre of highest  productivity and finds its way into land values (also known as economic rent). For the UK, London and the south-east is where it mostly ends up. Fairness dictates that London's wealth  should be spread out.

A very comprehensive way of achieving this is to start issuing  universal basic income (UBI) to every person in the UK  using the tax from the land value as a way of redirecting land wealth. This would channel the land wealth gains direct to individuals and households who would then have the choice of spending  it, rather than a council or a quango having that choice. The poor who rent would be quick gainers with new income but without land value tax to  pay. Regionally local businesses activity and investment would pick up and the prosperity of the regions would grow.  The UBI  would be the same for all and without means testing and its value would be greater away from London as costs and prices are often lower there.  Because UBI would be guaranteed into the future it would encourage people to spend and this would raise economic activity.  

Annie Miller in A Basic Income Pocketbook shows that it is likely that costs of the new UBI measure would exceed current welfare costs  so higher taxes on the wealthier would be needed. This would come from the higher value of the land  their larger and better located houses are built on. 

Increasingly taxing land and not buildings would mean that other taxes could be reduced.  Land values are a product of the whole community's success and it is equitable to share that gain for the common good. Taxes on work and on goods are  a disincentive to work and produce and they should be reduced.

Posted by Charles Bazlinton. Author: The Free Lunch - Fairness with Freedom 

Hartlepool levelling up: Was that it?

What did 'levelling up' mean in the Hartlepool swing to the Tories?  The Hartlepool constituency, returned a Tory MP Jill Mortimer, 'farmer and business woman', after a 50 year run for Labour. That day was also the vote for the Tees Valley mayor and Ben Houchen won a resounding victory. Perhaps the Mayor Houchen factor was at work. Perhaps it was that in  Hartlepool with the Labour candidate still an EU fan who wants a second referendum, and with Hartlepool  very strongly Leave, maybe that prompted the strong rejection. Who allowed that to happen?

Ben Houchen, in winning his first Tees Valley contest in 2017 as a Tory promised to nationalise the local airport which he did and it created many new jobs.  Nationalisation is a policy borrowed from Labour.  Houchen has always said he is locality oriented and the use of socialist policies shows he is a non-ideolgical Tory.  The Boris-Rishi government has supported his Tees Valley projects - including environmental climate change schemes - by directing spending to the area. Also Treasury North, which is a partial government departmental move to Darlington, is a rather socialist, state planning idea. It probably helps in all these local changes that Chancellor of the Exchequer Rishi Sunak holds a nearby constituecy.  

Freemarket conservatives wanting small government (don't move but reduce the Treasury?), low borrowing and 'let the market rule'  are rare these days. Covid-19 financial support has meant Tory central government money is now always on tap for lots of schemes. The (allegedly) penny pinching austerity gloom of the Cameron-Osborne era is well gone, and now seen merely as anti-Labour sound bites, but which helped dampen expectations of government-directed productive investment which now the New Tories are unashamedly borrowing from Labour.  But remember: the high priestess of the free market, Margaret Thatcher secured a deal for Nissan in Sunderland in the 1980s with a  special central government money deal for Nissan.     

So the Conservatives are doing what is needed to remain in power whilst favouring neglected voters by boosting their local economy with cash handouts. Old fashioned pork barrel politics, as ever. The latest scheme is the Community Renewal Fund which will share £220m with 100 favoured places in a year and five of those are the five towns of the Tees Valley. Red Tories are in town.

The problem with such politics - sensible enough given the limited vision - is that only some groups of voters are favoured rather than producing a fairer outcome for all. Under Old Labour it might be such as union members,  managers of state institutions, and home renters; under Old Conservatives it might be shareholders, capitalists eager for state grants and home owners. 

When will overall fairness prevail? Instead of a hope that a trickle-down of government money may come my way via my Mayor, why not each citizen respected as contributer and beneficiary of a good recovering economy?   The previous blogpost on Universal Basic Income  illustrates how that idea of a payment to everyone unconditionally is well researched to be affordable - 'revenue neutral'. Even better an extra measure would be the funding of UBI to include land value tax charged on the land value underlying all homes, and allowable against income tax,  along with a reform of council tax. Renters would benefit as they would pay no charge, the landlord would. 

We need a re-set in our politics and economics in favour of fairnes for all, not just for instance the homeowners who are benefitting  from a housing boom. That would be better levelling up. Our society is becoming increasingly divided as defined by owning or renting a home. Renters are being sidelined as they have no unearned nest-egg accumulating on the value of the land with their house as homeowners do. We all contribute to our economy as we work and run things and a healthy economy raises house (actually land) prices, but that value is soley due to land ownership. Too bad if you rent your home, no level playing field for you from your contribution, it all gravitates down to the owner. What's fair in that?

Posted by Charles Bazlinton author The Free Lunch - Fairness with Freedom

 

Communitarian conservatives? 1832 Reform Act follow on? Universal Basic Income, obviously.

The Spectator published this letter recently as the groundswell for an universal, unconditional Basic Income grows ever stronger.   Maybe Basic Income a.k.a: Citizen's Income/Citizen's Royalty will be introduced as the Covid-19 economic outcomes  bite really fiercely. When millions of citizens find themselves having fallen outside the safety net of the patchy monetary and fiscal support schemes. It would start to address the contrasts of income, wealth and ways of life that the current crisis  is starkly showing up. 

Letter 2 May 2020:  
Sir
The leading article ( The case for trust,25 April) tells that The Spectator was fighting for the extension of the franchise prior to the 1832 Reform Act. Is it open to a modern battle at an opportune time to empower many more? Universal Basic Income is surely an idea whose time has come. Under Covid-19, the  government on the one hand is pouring patchy financial support into some businesses through a hotchpotch of measures, while Universal Credit has been shown that it is an inadequate personal welfare idea even in high employment time. In certain ways, UBI would address both these issues rather better by giving  financial backstop to every individual in the new unknown post Covid-19 'normal'.

James Forsyth ( The communitarian Conservatives', 18 April) quotes Rishi Sunak : 'the simple idea that we depend on each other'. The Citizen's Income Trust has done much research and has careful proposals to make UBI affordable and workable. In the times of high unemployment likely to be ahead, Conservatives could catch trending communitarianism by helping individuals and families directly. The time is ripe for a new empowering of citizens.
Charles Bazlinton. 

Empowering individuals and families the  way of Basic Income was mooted by labour at the last election. For the Tory- leaning Spectator to publish a letter on the  subject is interesting. Bi-partisan support?

The Basic Income idea is a theme of  the book : The Free Lunch - Fairness with Freedom. But safeguards are needed in its implementation. 
Posted by Charles Bazlinton.
Author The Free Lunch - Fairness with Freedom. Buy the book: £3 post free.    

Brexit is done. Get Fairness Started

The boring and brilliant 'Get Brexit Done' tag did it for the Tories with Brexit voters gifting the election to the Tories with an extraordinary 80 seat majority for Boris Johnson as Prime Minister. Labour's diligently crafted policies were ignored in the face of the big issue that triggered the winning votes.  Some long established Labour constituencies switched to the Tories. Is this a sea-change or a one-off blip? In five years time will Labour voters revert? Or will Labour fade away as a major party?  For the new Tory administration pressure must be on to do whatever will retain the old Labour seats in an election by 2024. 

Young people voted heavily for Labour in 2017, and also this time; with Remain not being a big enough issue for enough of them to abandon ship for the pro-EU Lib-Dems or Greens. Of these,  full-time students voted massively for Labour with x3 times as many as voted for Conservative. Their manifesto pledge to abolish tuition fees and bring back maintenance grants obviously did it for Labour. The Tories would be advised to do something similar and neutralise the appeal of Labour for students. After all there will be added students next time and some older Tory votes may just not be - both trends will endanger the Tories. How about a lifetime grant for education with created money as proposed by Prof Richard Werner? 

Home renters tended to vote Labour, and owners Conservative. This aligns with the age bias generally, with older people voting Tory. The disparity of home ownership between age groups continues to grow for all income groups. This despite the Conservative Help-to-Buy schemes which become Help-to-Bonuses for house developers . If a carefully designed land value tax scheme gradually replaced income tax, property prices would adjust and affordability of ownership return for the younger, lower earners, and even homeowners might see the fairness of getting their family on the housing ladder as they did for themselves decades ago See this blog Jan 30, 2018.  Does it matter that the home-owning dream is dying in the UK? Are Conservatives still the party of the home owning democracy?  Does this growing unfairness bother them?

The new government is being given advice about spending £billions on infrastructure in the midlands where their new ex-Labour voters live.  The lead time for these is many years and is not a particularly personal vote winner - so why not borrow a Labour proposal and pilot a Universal Basic Income scheme to tackle enduring poverty? What better and fairly quick way to capture and keep voters voting for you? Fairness, particularly for young, poor voters. Use UBI as a basis for Universal Credit reform. 

Incidentally, if spending £billions on infrastructure the Bank of England agrees that it is possible to create money for public spending interest-free and debt-free (no tax cost) and George Osborne (remember him?) agreed too but didn't bother, or dare, to use this monetary tool for the common good.     

And what about promoting local banks to supply credit where needed - locally? Labour were going to do so based on the Post Office network. Dr Plamen Ivanov, a leading proponent of economic benefit through local banks, argues the local case from a new study of the origin of the Bank of England. 

Is the Tory victory to be compared with Benjamin Disraeli stealing Gladstone's Liberal policy of extending the voting franchise in 1867? Not quite in the same way. Brexit as an issue will fade, bringing other election issues. If the Tories come up with 'borrowed,' policies Boris may do a full Disraeli, next time. But don't forget that in 1868 the Tories lost the next election even after 'Dishing the Whigs' having added new voters.             

Posted by Charles Bazlinton:  Author of The Free Lunch - Fairness with Freedom. Also: Promoter of Local Community Banks.