Why all progressives should support a land value tax

Through no effort of their own, landowners reap a £100bn annual windfall. Caroline Lucas's bill shows the way towards a moral capitalism.

Caroline Lucas, Brighton’s Green MP, has submitted a private member’s bill promoting a land value tax. After some delay, it should have its second reading on 1 March. Every progressive politician in Westminster should support this bill.

David Cameron considers it part of his job as Prime Minister to provide moral leadership. It’s worth recalling a few of his words: "we need to reconnect the principles of risk, hard work, and success with reward." According to him, markets are moral: "open markets and free enterprise can actually promote morality" because "they create a direct link between contribution and reward; between effort and outcome".

Connect effort with outcome, and markets will flourish, entrepreneurs will create jobs, work will get done and society will prosper. Woe betide those who cleave them apart. Karl Marx tried to separate effort and outcome with the words: "from each according to his abilities, to each according to his needs". When this was tried in the Soviet Union the powerful made sure their own needs were well catered for while the economy collapsed and the powerless starved in their millions.

Back home, Her Majesty’s Revenue and Customs is assiduous in disconnecting effort and reward. Every year, the people of Britain are rewarded with £600bn for their efforts at work. HMRC takes one quarter of this reward away as income tax: £150bn.

There is an alternative. Taxes on windfall gains arising through no effort are popular and just. The tax system should target windfalls, not work, whenever possible. This is the aim of the land value tax proposed by Lucas. It targets a £100bn annual windfall that at present is hardly taxed at all. The lion’s share of this goes to powerful and privileged freeloaders who fight tooth and nail to keep every penny. In doing so they harm the economy and, as we shall see, damage the environment.

Who are these freeloaders? Nobody has explained this better than Winston Churchill in a speech in 1909: "Roads are made, streets are made, railway services are improved, electric light turns night into day, electric trams glide swiftly to and fro, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still… To not one of these improvements does the land monopolist as a land monopolist contribute, and yet by every one of them the value of his land is sensibly enhanced."

Churchill knew that landowners cannot change the value of a plot of land. Its value depends only on location and size. Is it near a station? A park? Good schooling? All of these factors are determined by the community, not the landowner. The landowner can increase the value of the property, by building on it, or extending existing structures. But any increase in the value per square foot of the plot on which the buildings stand is a free ride, and any profit made from this is pure freeloading on the efforts of the community.

Landowners, including homeowners, are freeloaders on a gigantic scale. The total value of the housing stock in the UK was £1.3trn in 1990. With only inflation it would now be worth £2trn, but instead its current value is over £4trn. This £2trn increase above inflation has come through a rise in the value of land itself, not through new buildings; comparatively few houses have been built in the last two decades. Landowners have gained £100bn yearly on average from a rise in land values. As Churchill might have said, never in the field of human endeavour has so great a reward been given for so little effort.

Lucas wants to reclaim this windfall via a land value tax; a tax which is levied on the value of the plot of land, without taking into account any building on it. A vacant plot in a row of houses would be taxed the same as a similar built-on plot. Buildings are the result of effort and enterprise by the landowner who should be rewarded with their use or profit. The value of the plot is not the result of any effort on the part of the landowner and any increase is a windfall.

The Green MP realizes our current tax regime harms the environment. Throughout our towns and cities, vacant sites are left derelict. Developers sit on vast land banks, create an artificial housing shortage, and blame the planning system for resulting problems. The tax system encourages land hoarding. Keeping a property empty and unused makes excellent sense to speculators, since minimal tax is payable on an empty plot. They cover our green fields with concrete and create urban sprawl, whilebrownfield siteslie abandoned.

This is the strange politics of today’s Britain. The Conservatives profess to be the party of enterprise, but are actually beholden to entitled freeloaders; Cameron’s fine words are so much empty rhetoric. Vince Cable champions a mansion tax but is slapped down by his coalition partners. Labour half-heartedly copies Cable’s best policies. It is Caroline Lucas, our only Green MP, who shows the way towards a moral capitalism and an enterprising economy. All progressives should wish her bill well and rally around her bold initiative on 1 March.

David Cooper is secretary of Liberal Democrat ALTER (Action on Land ­Taxation and Economic Reform), a Liberal Democrat campaign group

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Our union backed Brexit, but that doesn't mean scrapping freedom of movement

We can only improve the lives of our members, like those planning stike action at McDonalds, through solidarity.

The campaign to defend and extend free movement – highlighted by the launch of the Labour Campaign for Free Movement this month – is being seen in some circles as a back door strategy to re-run the EU referendum. If that was truly the case, then I don't think Unions like mine (the BFAWU) would be involved, especially as we campaigned to leave the EU ourselves.

In stark contrast to the rhetoric used by many sections of the Leave campaign, our argument wasn’t driven by fear and paranoia about migrant workers. A good number of the BFAWU’s membership is made up of workers not just from the EU, but from all corners of the world. They make a positive contribution to the industry that we represent. These people make a far larger and important contribution to our society and our communities than the wealthy Brexiteers, who sought to do nothing other than de-humanise them, cheered along by a rabid, right-wing press. 

Those who are calling for end to freedom of movement fail to realise that it’s people, rather than land and borders that makes the world we live in. Division works only in the interest of those that want to hold power, control, influence and wealth. Unfortunately, despite a rich history in terms of where division leads us, a good chunk of the UK population still falls for it. We believe that those who live and work here or in other countries should have their skills recognised and enjoy the same rights as those born in that country, including the democratic right to vote. 

Workers born outside of the UK contribute more than £328 million to the UK economy every day. Our NHS depends on their labour in order to keep it running; the leisure and hospitality industries depend on them in order to function; the food industry (including farming to a degree) is often propped up by their work.

The real architects of our misery and hardship reside in Westminster. It is they who introduced legislation designed to allow bosses to act with impunity and pay poverty wages. The only way we can really improve our lives is not as some would have you believe, by blaming other poor workers from other countries, it is through standing together in solidarity. By organising and combining that we become stronger as our fabulous members are showing through their decision to ballot for strike action in McDonalds.

Our members in McDonalds are both born in the UK and outside the UK, and where the bosses have separated groups of workers by pitting certain nationalities against each other, the workers organised have stood together and fought to win change for all, even organising themed social events to welcome each other in the face of the bosses ‘attempts to create divisions in the workplace.

Our union has held the long term view that we should have a planned economy with an ability to own and control the means of production. Our members saw the EU as a gravy train, working in the interests of wealthy elites and industrial scale tax avoidance. They felt that leaving the EU would give the UK the best opportunity to renationalise our key industries and begin a programme of manufacturing on a scale that would allow us to be self-sufficient and independent while enjoying solid trading relationships with other countries. Obviously, a key component in terms of facilitating this is continued freedom of movement.

Many of our members come from communities that voted to leave the EU. They are a reflection of real life that the movers and shakers in both the Leave and Remain campaigns took for granted. We weren’t surprised by the outcome of the EU referendum; after decades of politicians heaping blame on the EU for everything from the shape of fruit to personal hardship, what else could we possibly expect? However, we cannot allow migrant labour to remain as a political football to give succour to the prejudices of the uninformed. Given the same rights and freedoms as UK citizens, foreign workers have the ability to ensure that the UK actually makes a success of Brexit, one that benefits the many, rather than the few.

Ian Hodon is President of the Bakers and Allied Food Workers Union and founding signatory of the Labour Campaign for Free Movement.