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...or "we should shackle the permanent secretary of the Treasury along with a clutch of Treasury ministers to the derelict barge in the stinking Hackney cut. And throw away the key."

In today's Observer Will Hutton comes out for Land Value Tax to fund the potential gap in capital funding for the Olympics. Okay, he doesn't actually understand it - why should you issue bonds when you can instruct the money to be created and then retired as the tax comes in but hey - it's a step.

"Tickets, television rights, sponsorship, the lottery and even an Olympic surcharge on London ratepayers have all been stretched to the limit. More is needed. The Treasury refuses additional help. Without some imagination, the Olympic vision will be the casualty. The answer is obvious. If the games go as planned, there will be a huge increase in land values and property prices throughout east London. If the government could capture just a fraction of the increase in those land and property prices, then it could more than repay any bonds it issued today to pay for the games.

"The Chancellor praises entrepreneurs; now is the moment for Treasury officials to practise what they preach. What they have to do is invent a way the government can capture some of the wider gain that its own development is creating. We could copy the Americans and tax the incremental gain. We could insist that private developers form public-private partnerships, with the development gains earmarked to repay Olympic bonds. What we cannot do is to penny-pinch and roll back the ambition.

"It is a pivotal moment. We have to find a way of breaking out of the self-defeating logic that all Britain can afford in any public development is what the taxpayer stumps up, while private developers pocket the benefit. That way, we always build small. You only have to smell the sewage at Old Ford locks and gaze at the desolation to see the results.

"The Olympics must be funded as imaginatively as the project has been devised and the precedent then used across the country. If not, we should shackle the permanent secretary of the Treasury along with a clutch of Treasury ministers to the derelict barge in the stinking Hackney cut. And throw away the key."

This is more than a little parochial for me, and just a tad conservative with a small "c" - it reminds me again why little changes can deeply affect people in all sorts of ways. And whilst my own thoughts on this are probably unprintable, and not only because the decision has been made by my employer and landlord and I wouldn't really want to find myself sleeping under a hedge next week, I cannot let this little bit of Oxford's history disappear without some commemoration...

Headington Hill Hall, mark II (mark I is to the far left of this picture), built by James Morrell.

When John Henry Brookes was entering his job as first principal of the Oxford City Technical School in 1928, which, by a circuitous route is the fore-runner of Oxford Brookes University (and so allows us to celebrate our "150th anniversary" in 2015), the Morrell family, already an unusually important non-university influence in Oxford had, six decades previously, built not one, but two grand houses on this side of Headington Hill and had laid out the arboertum/park in their grounds that is now Headington Hill Park, Oxford's most beautiful urban park, if I do say so myself.

Indeed, their estate straddled what is now the main Headington Road out of town, encompassing what is now South Park, Cheney Lane, Cheney School and Oxford Brookes University's main Gipsy Lane Campus, its sports centre and the Cheney Student Village (another hall of residence). They built the land-mark iron bridge across Headington Road on the hill when it replaced what is now Morrell Avenue and Old Road as the main London road, and they owned a farm and other properties on the north west side of Headington Hill Hall that are now allotments and, until yesterday at least, "Morrell Hall" of residence.

The family, which included I believe two Liberal MPs and of course the famous Lady Ottoline Morrell (who started the nearby Garsington Opera which will also, once again, be coming to an end soon I gather) had not lived in Headington Hill Hall since before the second world war, during which it and its park was requisitioned as a wartime psychiatric unit and in 1953 the family sold the hall and park to Oxford City Council until Robert Maxwell started renting it off them ("the best council house in Britain" I believe he used to describe it).

But they retained some of the land around, including that set out by then as allotments on the Marston side of Headington Hill and when the last of the family directly connected with the hall died in 1965, James Herbert Morrell (son of Emily, the last occupant of the hall, and George Herbert Morrell) they made available part of the allotments to the City Council for the development of residences for the students of the now named Oxford College of Technology which had some twenty years previously managed to acquire some of the other Morrell family estate on the other side of Headington Road, which is now our Gipsy Lane campus.

New signs, no sign of Morrell Hall (I'm not sure I'd put the lavatorial status on a road sign!

And those halls have been called Morrell Hall ever since. Until now.

Ten years ago the by then Oxford Brookes University bought land adjacent to Morrell Hall that had been used by government offices since before the war and built what is now called "Clive Booth Hall", named for Sir Clive Booth, the last director of the Oxford Polytechnic and first Vice-Chancellor of Oxford Brookes University who left office the year after I arrived at Brookes. It seems right and fair to want to commemorate the person who managed that momentous transition from polytechnic and council ownership to fully fledged independent university. Indeed I like Clive, for all that he has made his later career out of high office in some of the most powerful QUANGOs in the country - first SEEDA and now the Big Lottery Fund, he is down to earth and always friendly and happy to stop and chat. He was telling me last week in fact how flattered he was, or he thought he maybe ought to be, that there was now a bus running around Oxford with his name on the front (it stops at the halls on Marston Road)!  One of the nice things about working in a university community is that the chief executives, in my experience at least, are nowhere near as remote as they probably would be in private sector businesses of a similar size.

But the university has decided to extend the Clive Booth Hall name to the adjacent, Morrell Hall, site - they were already functioning in terms of management as one site with two identities - with the utilitarian description differentiating the two halves of the hall of either "Clive Booth Hall (ensuite)" and "Clive Booth Hall (non ensuite)".  One might wonder what these titles may be shortened to in the sometimes wicked humour of students!

In a very real sense, we're not talking about a family who happened to live on this hill side but who quite literally made the hillside, in a similar way to the Churchill family or Cavendish family created the landscape of Blenheim or Chatsworth. And so we have to say goodbye to the university's only commemoration of the family without whom the university might still be looking for a suitable home.  You could say that wittingly or unwittingly the Morrells have been the university's biggest benefactor.

"Here lies James Morrell Esq, who died at his bedside at Headington Hill Hall, Sept 12th, 1863, Aged 53" - the grave near the entrnace to St Clement's Churchyard which the family used to reach through the park via the gate on Marston Road.

New blocks are replacing the old at the former Morrell Hall, and they are to have some kind of green energy plant. Little did I suspect at the time that what was intended was to harness the power from over the road in St Clement's churchyard where James Morrell lies no doubt a-spinning in his grave!

You can find lots more information about the Morrell family and Headington Hill Hall and its history at Stephanie Jenkins' very informative Headington website (which also has other links to more information).

And in other news about destruction of historic local interest, here's now what's left of the the majestic old chestnut tree the City Council have just killed in the Headington Hill Park grounds that James Morrell planted 150 years ago:

Felled horse chestnut in Headington Park - apparently this was dangerous. Or something.

...or why we must not base all our assumptions about housing and how to solve our needs on Gordon Brown, Yvette Cooper and Kate Barker's diktat that "we must simply build more to supply the demand".

In last weekend's Sunday Times, Simon Jenkins in Housing crisis? What crisis? The most puffed up panic in the land hits many nails on the head:

"There is no housing crisis. There is just a housing market. There is no housing “need”, unless you are sleeping in the street. There is just housing demand and housing supply. There is also housing panic, housing lobbyists and housing stark raving madness, the last much in evidence last week.

"The news that the government wants all children to learn economics is fine but ministers should go to the head of the queue.

Most especially, he floats the idea of Land Value Tax:

Need in an open economy is demand and demand is a function of price and supply. This demand for 40,000 unavailable and affordable homes a year could vanish with a change in interest rates or a tax on underoccupancy or encouragement to students to live at home. All might be sensible policies but none is mentioned.

Get that? A "tax on underoccupancy" - that's Land Value Tax. It encourages people to consider whether remaining at their current location after their need for all the particular unique benefits of that location have gone is justified. Do you still need to be in that school catchment area once your kids have grown up? Do you really need to be within walking distance of of the rail station for your 50 minute commute to Marylebone once you've retired? All of these, things over which you have no say or influence as merely the owner of a prime location benefitting from a good school or nearby rail station feed into the land value of your property. If that land value were taxed, instead of your income for example, you might decide voluntarily that paying a relatively high tax compared with your new needs and financial circumstances for holding onto something you no longer absolutely need while others clearly do is not worth it and you can move to a lower tax area - where you'd be freer to spend your newly increased income on luxuries and "nice to haves".

And let's not underestimate the extent of underoccupancy in the UK. I actually found Jenkins' article Googling for a report from 2006 mentioned in another housing article, this time in the Observer, this weekend that claimed that:

36.4 Percentage of English houses that are under-occupied , according to a 2006 local government survey.

2.5 Percentage of English houses that are overcrowded , according to the same survey.

I would quibble with a couple of things in Jenkins' article though. First...

The assumption that every adult citizen has a “right to a decent home” that they can “afford”, courtesy of the government, must be the last hangover of postwar socialism and a brainless basis for policy.

Well, he might be right that we should not expect housing "courtesy of the government" but there must be an absolute right to somewhere to "lay your hat", derived merely from the fact that we only have this one planet on which to be born, live, work and die. And since location is a quasi monopoly, there is a role for the community as a whole, call it government if you will - though I'd prefer to take the politics out of it by making it automatic - to intervene in that natural monopoly. Else eventually, when someone else owns everything (as they already in fact do) those without ownership of land have no means of self-ownership - the ability to keep what you toil for, because the land owner can charge you what he likes for access to somewhere to base yourself in order to earn your crust. Even John Locke agreed with that.

And secondly...

Owner-occupation in the United Kingdom is now 70% of housing tenure, against 42% in Germany and roughly half in most comparable countries. The private rented sector, the most fluid and efficient form of housing, is ridiculed and persecuted with red tape, comprising a mere 12% of the market, against 23% in France and 53% in Germany.

The first part of this is trotted out with monotonous regularity - that Britain is somehow unique in high rates of home ownership. But actually we're about slap bang in the middle, sharing 69% with the US, and while France and Germany are low (but catching up, in Germany at least, partly because of government allowing a lot of flexibility in the way municipalities plan and develop increased housing) Ireland (at 77% off its peak of 80%+ a few years ago), Spain (85%), Greece (83%), Hungary (a whopping 92%), Italy (70%), Norway (77%) and so on are all ahead of us in ownership... Sweden is an interesting one, where there is only 42% home "ownership" but 40% of urban homes are in a type of mutual tenure much as some of us here want to develop in Community Land Trusts. But it's not actually terribly relevant - housing should be a cost of living, and a fairly predictable cost of living at that - not an alternative living...

...which is where my criticism of the second part of that comes in - that private rentals are efficient. This is not necessarily the case - private landlords, just like owner occupiers, are mini monopolies at the location of their "investment" so the majority of their rental income comes straight from the land values that they have done nothing to contribute to - and are, as in Oxford, actually seen as having a negative impact on. Land Value Tax would also mean that they had to consider the quality of their property, the "improvements" on the land value, because that's what their income would be based on after the tax for the location value was taken into account. Yes, private rental provides liquidity in the market but it's reaping what it does not sow.

But there are other snippets of wholesome goodness in Jenkins' article pointing towards a thoroughgoing change in the way we understand housing and policy to make best use of the land we already have:

Even so, if we can tear our eyes away from crazy headlines about London prices, the rate of house price inflation has not wildly outstripped other forms of saving. Only in the past two years (of cyclical boom) have houses caught up with the 10-times rise in equities since 1980. Terrorising the British people out of lending to the productive economy into oversupplying themselves with living space has been the stupidest thing this government has done. Then to claim a “housing shortage” is absurd.

Nor is there anything exceptional or “critical” about present housing costs. Political attention focuses on first-time buyers. For them the key figure is not the purchase price of a house, which they will probably sell long before they have paid for it, but the cost of finance. Lower interest rates have led to this plummeting. Median housing payments for first-time buyers were 16% of income in 1975, 18.4% in 1980, a savage 27% in 1990, 14% in 2000 and 16.8% last year. That is why banks will lend five times income today as against three in the 1980s.

The "Eddie George" effect - low interest rates kept us borrowing more and more against land so that we didn't go into recession in the mid-late nineties. Who pays? We all do - in artificially inflated house prices and now in higher interest rates to try to stem the flow before it becomes too inflationary - the price-earnings ratio of buying a house has been artificially ramped up because the dividend cover was so high, but now comes the crunch, and both must inevitably fall.

The housebuilders’ lobby argues that prices are high because of a shortage of developable land. There is no shortage of land any more than there is of houses. The prime minister might care to join me on a tour of Portsmouth or the Thames Gateway, of the west Midlands from Solihull to Wolverhampton, of Derbyshire and South Yorkshire from Chesterfield to Barnsley, of the Merseyside M62 corridor, of Wearside and Tyneside.

A sound planning policy would encourage all new developments towards city and town centres, expecially in the Midlands and north, for the simple reason that this uses roads, sewers, schools and shops more efficiently, discourages car use and promotes community. Urban Britain is woefully underdeveloped but this is reversible. In a matter of five years, the population of inner Liverpool has risen fivefold simply by good planning of private sector activity. It could rise another fivefold.

Exactly - we just need to encourage that land to be developed up to its optimal market use - presently housing in most places - by levying Land Value Tax so that owners again are forced to look at whether they are making the best use of their asset given the tax due on it. And establish a corporate taxation policy that encourages business to locate to underused areas - for housing is no good without work and economic activity. But again - that points to replacing Corporation Tax with Land Value Tax.

If such effort, backed by land clearance grants, were repeated across Britain, Brown’s new homes would emerge overnight.

Don't give them grants though - why do you now argue for subsidy? Just make it financially attractive to redevelop land based on the tax payable on it!

But the message is clear - we need, no must, look beyond Barker, beyond the crude supply and demand calculations and the very crude "finger in air" centralised/regional planning. Yes, we can build our way out of a crisis, for a while, but it will return one day, in another round of blighted areas (now called "Housing Pathfinder" areas) and another round of pressure points of unaffordability. The answer to all of Simon's points is, unequivocally, Land Value Tax. Until we have that, we will never, literally, have a level playing field.

Technorati Tags: affordable housing, housing, land value tax, Simon Jenkins

As our Lib Dem Tax Commission prepares to promote its policy paper in advance of Conference, where members will have to debate and vote on adopting what are really quite complex policy issues, and the Tories are getting the evidence together for their own tax policy group, William Norton helpfully outlined a "ten point briefing on tax policy" at ConservativeHome today.

It hasn't generated as much interest as the Bow Group suggestions from yesterday but it's equally important for the questions it seems to ask of policy movers and shakers when they are considering tax direction and what can be sold to the electorate. It charts the history of Tory tax pledges since the mid-seventies and the sort of promises that have been successful and the circumstances in which they can be successfully delivered.

For the Lib Dems, I think the most pertinent section lists the various Tory manifesto pledges during Mrs Thatcher's period in office. What surprised me was that when we think of that Tory government we have been conditioned to think of cuts, in tax and spending, in "selling off the silver" and yet the specific promises in those manifestos are so short, so light on detail that they're worth quoting here:

• 1979 Conservative Manifesto: “We shall cut income tax at all levels …and reduce tax bureaucracy. It is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale….Raising tax thresholds will let the low-paid out of the tax net altogether…The top rate of income tax should be cut to the European average and the higher tax bands widened.” It was made quite clear that this would be paid for by an extension to VAT. More space was devoted to trade union reform.
• 1983 Conservative Manifesto: “Further improvements in allowances and lower rates of income tax remain a high priority, together with measures to reduce the poverty and unemployment traps.”
• 1987 Conservative Manifesto: “In the next Parliament: We aim to reduce the burden of taxation. In particular, we will cut income tax still further and reduce the basic rate to 25p in the £ as soon as we prudently can. We will continue the process of tax reform”.
• There was more detail in the 1992 Manifesto, which was only to be expected since the Election immediately followed Norman Lamont’s Budget and it repeated what he had said. For the longer term it promised: “We will make further progress towards a basic Income Tax rate of 20p. We will reduce the share of national income taken by the public sector. We will see the budget return towards balance as the economy recovers.”

Now sure, we all know that there must have been much work done behind the scenes, many figures checked and double-checked and the feasibility of different methods and time-scales for doing each of these studied in depth. But if it were today, someone like the Institute for Fiscal Studies would be straight on the story at the first whiff of a policy popping out to check whether the sums add up, seemingly to the penny.

Indeed we often deride politicians who suggest that they want to see the "books" properly when coming to power before risking making specific proposals for implementing such ideas. But it's common sense isn't it. Opposition parties do not have access to the whole of the Whitehall machine. Why should they be expected to know in advance whether their policies are absolutely solid? Gordon Brown is in power and changes the rules every so often to magic up some adjusted statistic, what chance those who cannot change the rules unilaterally?

And remember, in 1979 the Tories were also promoting what to many seemed a fanciful but far reaching shift in economic focus - from Keynesian state support for the economy to concentration at all costs on tight money supply control (I seem to remember even as a teenager at the time that their various Chancellors also changed the rules to suit them in this period - changing which monetary aggregates to monitor and the targets that should be applied).

And the public is skeptical too; perhaps - I don't know - more-so now than twenty-odd years ago, or maybe it's just more demanding, more prepared to believe Evan Davies than any politician. Rightly or wrongly we policy wonks seem to think they want all the detail before they can be convinced. And perhaps more crucially that more detail makes it all sound more convincing. And I'm not entirely sure that it does.

Direction rather than detail

So, when we get stuck into our debates up to and at Conference in a few weeks' time we should be thinking about very broad direction and not necessarily the detail of individual measures we might use if in power to get there. It might even help to be that much clearer about direction if we find ourselves having to choose one of the other parties to support after the next election. Parties traveling in the same direction on tax would find it easier to agree on different steps.

Yes, all the wonk work is necessary to give conference in particular and more widely the media and public some sense of how we would implement that direction but is far less important than we wonks would make out. The detail will change for a start, almost every day, every month from the day it is set in stone as "policy" as the economic environment changes. It will change dependent on the successes of implementing other policies should the opportunity arise. And direction, tax philosophy call it, is easier to convey to people than hypothetical examples of what we would have done in the particular circumstances of 17th September 2006.

A concentration on the detail as if it sells itself is what troubled Charles Kennedy that day during the 2005 election when he couldn't quite remember one specific set of variables that in the end really didn't mean much to real people I suspect.

And so...

William Norton finishes by reminding us that "perhaps the most important policy before either stability or tax cuts are sought is to decide how much public spending the country can afford, the items on which you want to spend it, and why."

As Liberal Democrats this is more apt even that for Tories. If we see economic and fiscal policy more as means to particularly desirable public or social ends then we ought to be ready, as we have shown in the past, to change our tax policies and outlooks in response to other policy desirables and external circumstances. Such was the case, for example, with the penny extra for education - we get criticism for dropping it, but dropping it was the right thing to do in acknowledgment that the right amount was now being spent, if not wisely or efficiently, in education, and that we no longer needed to raise more to fund it.

So here's my pitch - we already have a stated direction, from our mini manifesto of 1998 that we should reaffirm:

"[to] create a more sustainable and fairer tax system by shifting taxation onto pollution and resource usage and off people"

And for the detail, decide merely that this will mean:

• progressively lower taxation on incomes, profit and capital, replacing them with
• progressively higher taxes on scarce or depleting natural resources such as land, non-renewable energy, water, clean air of which the abuse hurts us all and of which the stewardship is ultimately a strategic function of us all expressed through the state.

If you believe us land taxers, we would have you believe that this will over time lead to a lower share of national income needing to be taken in taxes (even allowing for the current apparent consensus on higher spending on public services), as they will help stimulate efficiencies in an ever more uncertain market and raise economic prosperity more equally around the country and reduce the need for the massive intra-regional transfers that happen to prop up less prosperous regions.

Paying for what we take and use, not for what we make and save.

Technorati Tags: land value tax, lib dems, tax shifting, taxation, tories

I've just been watching Prime Minister's Questions, something I rarely get the chance to do, but I'm off work not very well in this heat so I happened across it today.

Is Blair always so patronizing towards Campbell? It's a good job Ming's one of those polite well-bred advocates - though I dislike PMQs as a rule, even I would say Ming could be a bit more pugilistic against the arrogance of Tone. Anyway, Ming was of course right to ask about mid-east ceasefires and about why, in particular, the rest of the world is not being terribly forthright in demanding one of Israel.

But Blair's response gives me the hook for something I've been pondering about writing since the latest Israeli attacks on Lebanon began last week. Blair was responding to the notion, implied by Campbell, that Israel's response to Hezbollah's kidnapping and subsequent rocket-bombing of northern Israel is "disproportionate".

Set aside for the moment the question of "which came first" (because although it's clear that this immediate inflammation is ostensibly a reaction to the kidnapping of the two Israeli soldiers it' not at all clear for example that Hezbollah would have been shelling northern Israel quite so strongly - 1600 rockets according to Blair - if they themselves were not now under attack). The big problem I have with Blair's response was that it appeared to place Hezbollah and the Israeli government on a level of moral equivalency they simply do not share.

What's happened is that a more or less maverick and self-selecting group, which yes, has some influence at the government level of the country (Lebanon) in which they base themselves, but over whom the civil government of that country is hopelessly ill-equipped to exercise control, has taken it upon themselves to commit criminal acts against citizens of the neighbouring country.

Hezbollah is a terrorist organization under any definition of that word. Ehud Olmert heads an elected government. Moreover he heads a government whose forces are amongst the best armed in the world, in quantity and technology, and whose intelligence services have, or at least had, a reputation second to none for the most part. A government that is fairly elected. It can be said to be better representative of the people of Israel for example than Tony Blair's can of Britain's. Much moreso than representing merely their idea of political policy, they stand as representatives of the moral conscience of their citizens.

So, in the red corner, we have a bunch of criminal thugs. They may or may not have a real grievance against Israel over their perception of justice that has put dozens of their colleagues in Israeli prisons, but they go about addressing that using criminal means - kidnapping on some kind of tit-for-tat basis. But they are criminal, immoral, or at best amoral.

In the blue corner, we have one of the most advanced and sophisticated nations on the planet. One would have thought that even if they were so frustrated by the inability of the neighbouring government to exercise control over the criminals harrying their citizens from the other side of the border, and having concluded that diplomatic efforts were a waste of time (if they genuinely tried, which I doubt, given the reaction of clear surprise around the world), and so deciding to do something about it themselves, a surgical strike of some kind against the criminal organization itself would not be beyond the bounds of their capabilities.

But what route do they in fact take? They aim to "set Lebanon back twenty years". They cut the country off from the rest of the world. And far from any technologically surgical attack they lob shells from T-17 tanks and motorized artillery all over the place, destroying civil infrastructure. They kill countless of for all we know totally innocent and Hezbollah-hating ordinary civilian citizens of the Lebanon. Of course the destruction of the infrastructure has the pretense that it is used by those criminals or their supporters on occasion, but that does not mean it's justified to so affect the ordinary lives of ordinary Lebanese, to terrorise them, trapped by blown up bridges, ports, airports and expecting their homes to be shelled any minute.

This has all the morality and justice of hanging any ten men, women and children in in the village square because you believe some insurgent might have operated from there. It is not the action of a moral state. Iain Dale at the weekend mentioned that Olmert was never a military man and had to prove his credentials, but when that assuredly involves killing civilians, turning their world upside down in a foreign country, it is just as evil as any terrorist. It is the politics of the old testament - "Saul has killed his thousands, David his tens of thousands" - immoral.

Yet the rest of the world's reaction is what really gets me. We sit here scribbling in the media and so on about whether the response is justified, proportionate, yet do very little about it. We are too comfortable. We have four million counsellors counselling people affected by reading about the London bombs in their newspaper the next day; we cannot imagine what life is like when everything is suddenly taken away and there's no help on offer. It's bad enough when such a tragedy is inflicted by nature, and we all jump to help with aid appeals and so on, but when it's inflicted by other humans, humans moreover that are the moral agents of their countryfolk, and the world does so little to help, it's sickening.