Photo: Roxburghe Estate Photo reference Library
Scotland’s landed class made the front page of the Scotsman yesterday under a headline “Lairds in warning over new buy-out powers”. The story is based around submissions of evidence to the Scottish Government’s Land Reform Review Group (LRRG) which will publish its final report in April 2014. These submissions can all be read here.
Since January 2013, when the LRRG call for evidence closed, I have submitted two Freedom of Information requests for these submissions to be made public. (1) The LRRG had originally stated that they would not be published until April 2014 which is patently ridiculous. I responded by inviting those who were willing to publish their responses on my website.
Both FoI requests were refused but I am pleased that the responses (or rather those from the two-thirds who were willing to have them published) have now, six months later, finally been published. As the Scotsman story illustrates they make for interesting reading not least in relation to the sense of entitlement expressed by the five white male members of the landed class that the paper quoted (including the Duke of Roxburghe pictured above who, according to his website, is correctly referred to as “His Grace”). Much more insight into these discourses on land and power can be gleaned from reading all the responses. But more on that later.
What I should have done some weeks ago is to review where the land reform process is and what’s been happening. Calum McLeod recently provided a well-written overview on his blog. There have been two important developments.
Land Reform Review Group
When the LRRG published its Interim report on 20 May 2013, many interested parties were disappointed in its lack of ambition and vision and critical of its defeatist and limiting agenda on the topic. (2) Following the report, the Scottish Government moved quickly to strengthen the Review Group by appointing new members and a special adviser. On 26 June the Group gave evidence to the Rural Affairs, Climate Change and Environment Committee.
This was quite revealing. The new members, it was reported, were keen to see the submissions made public as soon as possible and their efforts have now borne fruit. The Group has also undertaken a mid-term review of its progress to date. One consequence if this is that the work programme identified in the Interim Report has been expanded (thus addressing one of the key criticisms of the Group that it had narrowed what had been a wide original remit). In summary, the Group appears to have found a new focus and direction which more faithfully reflects the wide remit given to it and the Scottish Government’s wish to see it develop bold and radical proposals. The Group has also published Declarations of Interests of its members.
The test of course will be in whether the final report delivers on this ambition but the new Group already has a different feel to it and has the services of a special adviser with a track record in the topic and wide expertise. I should add at this point that it has been suggested in some quarters that I declined to become a member of the LRRG. This is incorrect – I was never invited either at the outset or during the recent expansion of membership. I wish the LRRG well in its work over the coming months.
Scottish Affairs Committee
The Scottish Affairs Committee of the UK Parliament meanwhile has launched a consultation on the future of landownership in Scotland and, in particular, on the corporate and fiscal dimensions of how Scotland is owned. A briefing paper (432:50 – Towards a comprehensive land reform agenda for Scotland) was published. This is a very welcome move since a Select Committee of Parliament has, unlike an independent review, the power to call witnesses and the authority to probe official bodies. This consultation (which is expected to lead to an inquiry in the Autumn) compliments the work of the LRRG and indeed the Review Group has written to the Committee to welcome the inquiry
“The SAC inquiry will complement the work of the LRRG as it takes forward its phase 2 analysis. The LRRG shares the view that there should be a comprehensive approach to land reform in Scotland, and agrees that the relationship between public funds and patterns of land ownership is an essential aspect to investigate. The LRRG recognises that the Scottish Affairs Committee is particularly well positioned to consider matters related to taxation.”
Scottish Land and Estates, however, issued an intemperate statement to the media.
“The individuals submitting this report have been well-known land reform activists for many years and are using this approach as another tactical ploy” and argued that “such an investigation is unnecessary and unwarranted”.
I understand that the Chair of the Scottish Affairs Committee has spoken to SLE to ask them to correct this statement.
The individuals who wrote the report (which includes myself) did not “submit it” to the Committee. It was commissioned from us by the Committee. The consultation and inquiry are not a “tactical ploy” by us or anyone else. It is the work of a Select Committee of the House of Commons!
For the record, a number of members of the Scottish Affairs Committee have been very interested in exploring further aspects of the land question since the publication of the Committee’s excellent and thorough report on the Management of the Crown Estate in Scotland in March 2012.
I know this because they have discussed it with me on occasions. As it happens I was initially quite sceptical about what might be achieved by such an inquiry but it became clear that there was much to be examined in relation to what might be described as the “reserved dimensions” of land reform.
The recent EU Council agreement (see previous blog) as highlighted by Ian Davidson in his question to the Prime Minister has merely added impetus to such a move.
All in all it seems that following over a decade of no political action on the land question, there is rather a lot happening. As David Ross eloquently put it in a recent column in the Herald
“Land reform campaigners used to complain that legislators in London danced to the Scottish landed lobby’s tune, but it seems Westminster is expanding its taste in music.”
(1) Some responses were made on a confidential basis and these remain unpublished. I have never sought to have these released and respect and understand why some people feel that they cannot openly say what they think.
So, the juggernaut rumbles on!
Well Stuart, there are no rewards for giving up and the best time for gathering sticks is after a storm.
For a true juggernaut, have a luck at this website: http://www.landmatrix.org/get-the-idea/web-transnational-deals/
I never asked for my meagre submission to be private and it did not appear. I have now filled in FORM RIF….apparently that allows them to release it!
There is no such thing as a meagre contribution in all this. It is going to take a lot of contributions to move this mountain. Yours is no less important than any other.
Excellent piece. For those of us passionate about, but not as immersed in, the subject as you and hence lacking significant amounts of knowledge and understanding, this sets out where we are and where we might be going, wonderfully well.
Me thinks, the Land Reform Review Group is the most paternalistic committee I’ve come across for a long time. All members belong to the same quango / NGO / voluntary and charitable organisation mindset. I suppose normal farmers / crofters and landowners are regarded as being to thick to debate such weighty matters as their own future.
Well Andy has not been asked to join, but I think that’s because he is definitively NOT too thick!
Here’s what I wrote in my website on reading an article before the Landowners front page
Good to get people back into the Highlands
Alf Young in his recent article on a visit to Kilmartin Glen in the Scotsman decries the situation where the only visitors on a hot summer day were a few Europeans and a solitary Scot. Kilmartin Glen is one of the richest glens archeologically in Scotland with cist graves dating back to 2000 BC.
He also makes the point that the region is slowly depopulated – particularly the young. Scotland as a whole is slowly growing but not the west, See
Andy Wightman in contrast decries that fact that the Scottish Highlands are owned by just a few landlords whose ancestors have in the nineteenth century acquired the land as one acquires works of art – and the land now needs to be made available to the Nation in some form.
These two factors are in apparent contradiction. No point in the Nation taking over the Highlands if there is no one wanting to live there.
It’s like the US and the British overthrowing Saddam Hussein with no idea what to do with Iraq once he’s gone.
I therefore suggest that the priority is first to give reason to the people to want to re-populate the Highlands.
Comrie is a good example of a Community Development which has got to grips with itself
But it is unique.
If we are to take Kilmartin Glen as an example of the Western Highlands then there needs to be modern amenities. Alf Young points out that Internet is poor and there is no mobile comms – now considered fundamental to young people.
What possible opportunities are there for Kilmartin? There has to be tourism – 4000 years of archaeology and my own experience there is no lack of facilities for the tourist to explore the archaeology. But clearly this is not enough. It can’t be agriculture; the glen is not suitable for modern agriculture. What about high tech businesses? – small transport costs – lovely setting far from the crowded expensive cities – I remember a guy who used to build fish farm feeders on Skye, another who was technical director for a word processor company in the US. But these do need the Internet and the Scottish Government has plans, but most of all the Scottish Government needs to go out and sell the opportunities not only to the Scots but to the English and even in London and High Tech Europe. It needs to bring the venture capitalists on board.
Given the demand for land for development there will be a way to wrest it from the landowners. As a start the law already gives Communities the first call on the right to buy when landowners seek to sell
Derry Vickers rightly identifies toursim – and I mean: ethical quality tourism – as one of the drivers of economic development of the Highlands, far more important than tinkering with ownership issues. Unfortunately, there are strong ant-tourism sentiments around. My wife Sheileagh and I built up the highly successful croft tourism enterprise The Brochs of Coigach. The chairman of the local community development company CCDC commented in the Ullapool News on 4 May 2012 “isn’t it a shame that R Luyken thinks that all we’re good for is a bit of tourism? Coigach doesn’t need to accommodate any more tourists […] Though R Luyken
seems particularly enamoured of it, I think our community deserves something better to look forward to than Saturday change-overs spent picking other people’s pubes out of shower trays.”
Reiner, what are you talking about?
Reiner: It would be helpful if you could go through the PSVA routine—Problem, Solution, Vehicle, Action.
Thanks for the update Andy.
Encouraging to see SLAE being pulled up for their spin. Making out that the 432:50 was created by a few chancers and some how slipped into the Scottish Affairs Com.
A step that the LRRG could adopt next, is to select some of their submissions and follow them up with detailed examination. I have just read one from an estate on the west coast and it is full of lies. They even manage to make the sad truth sound positive, like…. “the estate works with seasonal grazers to create agri environment schemes” this in reality means that multi millionaires now get even more public money. They don’t do anything to the land, just let it go rank then stirm a path for shooters to position themselves to kill the very birds they have been paid to protect. We need to expose all this nonsense.
The worst phrase i came across was a comment regarding availability of land…. “The important point to take from this is that it is not the estate’s lack of willing to let land but the tenants’ inherent reluctance to give it up that makes land scarce”
What a terrible attitude to live and work under, just like the photo above, a ‘DISgrace’
and lets not forget the ‘old’ 7:84 epithet either. Your last paragraph says how far we are yet to travel and why.
It was interesting ,in an an earlier thread on this site, that an article written by the leading figure in SL&E, ceased to be commented on by pro SL&E posters very sharply, after they saw that all they were doing was hanging themselves on an ever tightening intellectual and moral rope. They were obviously told not to make further comment. We can take that as a small victory.
We often talk about the ‘land monopoly establishment’ because its tendrils are embedded in so many aspects of our lives and the social and economic administration of the country( eg; check out the repeating occurrence of the same familial names in various Quangos and NGOs). Those tendrils reach out into the major financial institutions, the military and of course the much of the printed and electronic mainstream media. We are up against a monster fit for a Dr.Who series, only this one is real. The fact that the land monopoly cabal had to call in a favour from one of its MSM buddies for a front page spread of special pleading and subsequent articles from embedded sycophants, is another small victory and a sign that they are getting worried. Dig in deeper then guys, for this is no time to throw a wobbly.
The highly reproachable retrenchment, indeed retreat, of an erstwhile radical land reforming SNP, via the anaemitised and imploding LRRG, has of course raised intense commentary here and in the MSM. There is no doubt that this helped spur the various resignations and the attempts by the SNP government to shore it up with new blood, some of which has some ‘DNA’ in proposing radical reform. However it seems once more to be going through the community buy out filter and avoiding the demonstrated success of the extensive participatory democratic land tenure systems that operate alongside financially and politically empowered in Fennoscandia, Europe and North America. Further it does not seem to be engaging in the Land Rental Value issue that it is vital not only in the rural situation that tends to dominate discussions at the moment, but in the urban situation where the really massive rip off of publicly created wealth by the land monopoly cabal is going on. Worth a peek at http://www.utopiantendencies.com/ for a good intro.
oops pre coffee typo, should have been ’empowered communities’
Ron, interesting! what do you think the effect would be on large letting estates if LRV was implemented? would they be able to hang onto all their land and tenants? Would anything really change for a sitting tenant?
i would be worried that the super rich will just take the hit and keep doing what they are already doing. They just want control of the local people, that is what makes them feel privileged, would they try and hold onto land and let communities sink even further just to try and prove a point?
don’t get me wrong i thing the future lies in dismantling these estates, you just need to read their evidence, that in turn makes you feel unwanted.
you are right we have won small victories and we need to push on even harder.
Slurry-Stirrer The full 100% collection of Land Rental Value is probably the nearest thing to a ‘philosphers stone’ that we are going to get in the wider field of strategic politics, but it’s not the end point of change. It does however put any other potential changes in direct specific legislation on land tenure and use into a different arena altogether.
It’s most profound impacts will be on ‘land hoarders’ holding large property portfolios in those urban, industrial and arable areas with the greatest site desirability( ie high LRV), The magnitude of impact in lower LRV areas in rural areas, especially in what might be called LFA will be relatively less, but still of great signifcance in terms of what is happening now. At present those owning large rural or Highland estates, are often nondoms or the property is held as an offshore company/non tax paying ‘trust’ and as such they are contributing nothing or, at best, small nominal amounts to public revenue. In both scenarios all that will change and it will no longer be possible for them to sit on their @rse making money by waiting for publically created LRV to increase. On the other hand with a reduction or indeed total replacement of taxation the incentive for greater economic activity is enhanced and this will be of benefit to either a tenant or owner.
An important thing to remember is that the LRV is eventually due from the owner. Currently a tenant’s rent comprises two elements : the site value( LRV) and value of the bricks&mortar and facilities made available to the tenant. Only the LRV is collected and there is no tax on the improvements made either by the tenant or the landlord. The landlord cannot gain from trying to up the charge for the site value as it would immediately just be taken off him as public revenue. The only way the landlord can get more money for the bricks and mortar etc is by upgrading them to a new assessed market value and he can only do this by employing artisan and professional labour, thus creating employment opportunities. He will pay no income tax on the original or improved rent for the provision of the physical property. Likewise a tenant will not pay tax on his improvements or labour and the landlord cannot up the rent just because the tenant has increased income due to his vision and hard work.
CONT’D. Yes and after all that, the super rich might indeed just take the hit and’ tough it out’ BUT they are not taking any kind of hit at present. Some will thole it and some will cut and run, especially as any price they get for selling up won’t be taxed. Others might just knuckle down to a more decent, humane and democratic working relationship with their tenants. However the other element taking away their ability to dominate and indulge in control freakery is ‘ financially and politically empowered local communities’. To give you an idea of what’s in mind, I would refer you back to the previous thread where mention was made of the general situation in Fennoscandia and a specifc example given of a Swedish kommune( the Norwegian ones are very similar.)
When there is a surplus of money in a society (The business and cycle is on the way up) it always ends up in the land market.
“Any good economist will tell you, as people’s real disposable incomes rise, that money ends up in one place, and one place only, the LAND MARKET. As there is growth land values rise, and it should rise. Except, the problem occurred when that increase in value went into private pockets instead of going into services: highways, hospitals, schools and so on, that created that value in the first place”
“This is the sources of our problem, not bankers, big bonuses, sub-prime mortgages in America and the other excuses they have. This is the heart of the problem of the market economy, we have to address it. There has to be political consensus, there has to consensus, with no body playing party politics”
“over the business cycle the highest capital gains are from land – that is the secret”
absolutely John. It’s difficult to encompass the enormity of the blatant theft of what is rightfully due back to the society that created it. Land of course has no capital value whatsoever, it’s just a chronologically compressed estimation of LRV and that’s ‘ours’. On the other hand labour and improvements have a capital value and it is one that the state, through the de facto theft of taxation has no right to. The collection of LRV would prevent the nightmare you have described.
This situation in the whole of the UK is just plain disgusting. However the situation in Scotland highlight the problem and brings it into the face of the whole population. Full LVT will naturally redistribute the land without any legislation to make him sell. Just a tax shift.
Passing legislation that no one can own over so many acres etc is very nice and will prevent monopolies. But!!! Ireland redistributed land and in 2000 completed the task the Irish Land Commission was set to do in the 1800s by Whitehall. Did it stop the Celtic Tiger falling flat on its rear end and devastating the country economically? No.
Land Valuation Taxation would have prevented the Celtic Tiger from pouring debt after debt into land creating a land bubble which was bound to burst as they always do.
When money is borrowed to buy land the money stays locked up in the land and does not circulate. When buying capital items likes a car the borrowed money, which banks create from thin air, immediately circulates into the economy. The dealer is paid, he pays his staff and the car a maker which has to pay his staff and suppliers. They all go out and buy things with the borrowed money for the car. Borrowed money for land, which is inelastic, stays locked up. The UK’s land market’s value is now over £7 trillion. £7 trillion of money locked up and not circulating in the economy.
Land Valuation Taxation would naturally redistribute land of course and as land is taxed it will divert money into enterprise activities (production) which will circulate in the economy and also prevent harmful, and at times devastating, land speculation. – it will stop the 18 year land cycle:
Martin Wolf of the FT:
Why we must halt the land cycle:
Dominic Frisby, writer of the film The Four Horsemen on Max Keizer a few days ago, who goes into the land stats – at 24min 05 secs:
I once more make a plea for the term land value tax to be condemned to the dustbin of inaccurate terminology. We are not talking about a tax here, we are talking something more akin to hiring a hotel room or paying for a parking bay. TAX comes with a whole load of pejorative and negative connotations that turn people deaf on hearing about yet another burden they have got to bear. The idea is that eventually a 100% collection of LRV would REPLACE other 3 letter word for bad.
The injustices of the Highland Clearances and the enclosures has to put right. Such injustices cannot linger for centuries – people have not forgot.
watched the youtube clips, very interesting. Ron, John. (1)what would LRV mean for the average family farm if they owned 500 acres. (where a similar farm would have a rental of say, £8000) What would this farmer pay into the LRV? (2)What would a forester pay on a block of productive forest say worth around £750,000? (3) what would a laird pay if he had 35 tenant farmers collecting £150,000 rental, but his estate was valued at £10m?
sorry if these questions are a bit general, but i think i like the concept of LRV, just need to know how it drills down to individuals.
” (1)what would LRV mean for the average family farm if they owned 500 acres. (where a similar farm would have a rental of say, £8000) What would this farmer pay into the LRV? ”
It depends on the “value” of the land. The less it is worth the less he pays. With full LRV he would pay little to no income and sales taxes to boot.
“(2)What would a forester pay on a block of productive forest say worth around £750,000? ”
Whatever the land is “valued” at.
“(3) what would a laird pay if he had 35 tenant farmers collecting £150,000 rental, but his estate was valued at £10m?”
He collectively pays whatever the land is “valued” at. The market dictates.
If you live in a house and a nuclear power station is built opposite, the land values will drop like a stone. Then you pay less LRV, as it is geared into the value of the land, not the bricks on to which are not assessed and ignored.
Conversely, if you live in a cheap house and the council decide to install a rapid transit rail station near to you with a smart shopping complex attached, converted derelict land opposite into a smart park and new office blocks were built only 10 minutes walk away giving employment to 3,000 local people, the land values of your house will rise. Then you pay more LRV. The infrastructure and jobs around you creating economic activity were created by others, public and private – this makes your land desirable for what the location offers and land price rises. The commonly created wealth around you soaks into the land and crystalizes as land values. The land value lift on the surrounding land was not made by the landowners. LRV captures the wealth created by public and private economic activity. The public spending was in the infrastructure which attracts the private sector which creates economic growth – LRV captures what the infrastructure created to pay for the infrastructure.
With full 100% rental value LRV, all benefit, even a landowner and landlord of houses. The only losers will probably be a few stinking rich land owning billionaires , which when you look back in history their ancestors stole the land anyhow. They are receivers of stolen goods.
I concur with your summary. LRV is offering no free lunches in Nirvana. Since it REPLACES direct taxation however, if that family farmer increases his/her income through better husbandry, an inventive value added product, or even gets a $70 million movie franchise from writing novels about a boy wizard who goes to wizard school, falls in love with a girl wizard and fights the forces of evil wizards, the LRV is not increased and his $70 million is due no income tax. An extreme example perhaps but it makes the point very clearly. Such is the simplicity of the enormity and the enormity of the simplicity of LRV—but simple and easy are not the same thing.
Ron, an efficient farmer who is productive and inventive and makes more money is doing the right thing and is rewarded for his efforts. There is no penalty on his production with LRV as his production is not penalized by income and sales taxes. He may find that using a certain fertilizer on his type of land the yield increases by 50% and the many, many other farmers follow in his area. Then the land in that area becomes in demand as it is makes quite a bit of money per acre, then the land values rise. Then they pay more in LRV. The collective efforts of all the farmers made the demand for land. They then can press the council to build better and wider roads and uprate the water mains, etc, again increasing demand for the land in the area. The LRV pays for the road infrastructure. The more the farmer works efficiently the more they keep of their efforts.
A billion selling author. who sits in an attic, deprives no one of land, its use and access to that land. That author creates production in the making of paper and binding of books, and the buildings and shops these books are sold, and in the production of films and the production knock-ons of studios, cameras, vehicles, etc. All this has to be on land and this subject to LRV.
Top medical consultants only occupy an office and make millions, as do some accountants etc. The example of Amazon is at times given as way of negating LRV, as they operate on the Internet. They have warehouses on land. Their delivery companies have vehicles which had to be made and bought on land and parked on land. The land is subject to LRV.
True Geoists want no copyright or patents, as this is “unearned income”. If the patents in the UK were set to 5 years we would save 25% of the cost of the NHS in reduced drug costs. We, as nation, create the situation by our patent and copyright laws which penalizes ourselves.
Your last paragraph says it all so well.
I think John has answered your questions very well and I hope my additional comments have been helpful too. An Australian colleague once summed up the LRV versus tax scenario thus ‘we will pay for what we hold and take and not for what we do and make’ So no rewards for holding land and doing nothing with it, and no punishments for working your bollocks off or showing entreprenuerial flair.
A tandem concept that is also being considered, to compliment and synergise with LRV, is the replacement of the complex Byzantine inanities of the current welfare system is a universal, graduated, non- means tested Citizens Income paid directly to individual bank accounts.
The Citizens Income is a nice idea, but I think only when their is HMG surplus. We may be giving everyone money would could be better used for infrastructure, etc. Getting a Citizens Dividend when looking at poor roads in front of your house may not be that attractive.
The detractors stay it would make people lazy. But a town in Canada tried something similar and it worked. Production went up. Once people’s basics are covered they are more relaxed and become more productive. It worked so obviously it was scrapped.
The lazy would still just be lazy and it’s not always the poor who are lazy, but they are anyway and we know it’s the LRV spongers who are the worst scroungers of public money. On the other hand many people would be encouraged to develop that business idea, they couldn’t risk before or even just take an extra PT job ( tax free of course). If all the LRV was collected, including from that land under water in our territorial Continental Shelf, then I would imagine HMG would have quite a pot of money hanging around. This time it is your last sentence that is the most telling—a measure of what we are up against with the political classes.
A Citizens Dividend has to be well thought out as it can be manipulated for political purposes. If a dividend is issued just before Christmas, then a manipulative government may up the dividend before an election. They could also point to the previous government saying their dividend was less than what they gave. Then real matters are forgotten and a large part of the population are focused on an annual lump sum.
guys, im going to ask another agri question. if the farmer who owns the 500 acre farm is due to pay 100% LRV. and you say that it is the value of the land ie around £750,000, is he expected to cough this up annually? Now i know that you have said that the price of land will come crashing down and this farm could eventually become worth about £15,000. this sum then paid annually, have i got you right?
The only thing that i don’t think will work, is the multi millionaire laird who makes my life a misery aint gonna sell. So in order to release the potential of the land and the people working it, i still firmly believe that secure tenant farmers should be granted the ARTB.
P.S. many tenants are registering support for STAG it is gaining strong momentum.
The full rental value is based on the value of what the land would cost on the market to “rent”. It is the most accurate way of assessing. LVR has been implemented in many countries. In Denmark on a national level in the late 50/early 1960s when implemented land values went up. It was expected to stabilize though as the economy progressed. The land price rise was a shock. It came about as money that was used for land speculation was diverted to enterprise (production). The increasing economy created a demand for land.
Yes it is due annually like tax is now. Schemes are available to pay on a monthly basis. One assessment in the UK was on man with a family of two kids and earning £40,000 per ann. As income and sales and other stealth taxes are eliminated he would be approx. £6,000 better off in his pocket per ann. He would also enjoy stability as the boom-bust land cycle was eliminated.
The Laird will have to pay LRV on all all land. The land he cannot make productive he will have to sell, unless he wants his bank account to dwindle fast. Taiwan was owned by a few families in 1945. LRV naturally redistributed the land. Taiwan went from a backward paddy fields to a world techno super-power in a generation using only a partial version of LRV.
I would welcome laws to restrict ownership of land to avoid monopolies – land monopolies can easy occur in urban areas. We intervene in industry to prevent monopolies, but miraculously we do not do it in land!! Those in power made laws to suit themselves.
Slurry Stirrer, LRV is based on rental value of land in its unimproved state. So, let’s say the market rent for the farm is £20,000 per year. That rent comprises two elements – the unimproved value of the land itself and the value of the improvements. Let’s assume the unimproved value of the land component is 30% – that means that the LRV is £6000. If one were to collect 100% of that then the annual LRB would be £6000. More likely it would not be 100% for quite some time – let’s say it is 50% – the LRV annually is then £3000. If LRV were to replace only existing property taxes then Council Tax would no longer be liable on the farmhouse. Assuming CT = £1000 then the owner is liable for an extra £2000 over and above what they are paying at the moment. Remember also, however that land values will steadily fall to their economic value rather than value as an investment.
XXX EDIT – I typed the following comment before I saw Slurry Stirrer’s comment at 12.42pm and John’s reply at 1.15pm XXX
With respect Ron and John, I don’t think you’ve answered Slurry Stirrer’s question at all. I suspect he gets the general theory of LRV as you’ve explained above but I think SS was asking what sort of sums the owners of the three example types of property he quoted would pay in actual pounds, shillings and pence. [edit – SS said assume the farm is worth £750k.]
If you’re going out to sell this to the electorate, that’s *exactly* the sort of question you’re going to get asked: “How much will I have to pay?”
To take SS’s question and put it on a more macro scale, I assume the sums have been done to demonstrate that 100% LRV can replace all existing taxes in terms of providing the government with the same amount of revenue. Can you link to studies showing this?
A few other questions of my own:-
1) I understand the general principles and theory of LRV except for one aspect as follows. As I understand it, the point of 100% LRV is, in effect, to suck out the capital value of bare land and transfer that to the state in trust for society at large. But if bare land becomes worthless in the hands of its owners, that logically means the government’s tax base collapses to zero. To avoid that, are properties going to have to retain in perpetuity a sort of notional value that the LRV is based on rather like rateable values (except not subject to revaluation?). Do you see what I mean and how will this be dealt with in practice?
2) I didn’t understand the analogy about the farmer with the new type of fertiliser. You say other farmers will come in to that area, values will rise (from zero? This links in to my previous question) and they’ll pay more in LRV. That seems to penalise the farmer who introduced the new fertiliser and I thought the whole point was to escape that. (Anyway, do the other farmers have to move into that area to use the fertiliser? Can they not use it in their own area?)
3) You said “The only losers will probably be a few stinking rich land owning billionaires”. Are there not also likely to be more losers, namely, people who own property but don’t pay tax – not because they’re dukes with land held in offshore trusts etc. but because they’re retired (a growing sector of the population)? Will some sort of allowance or relief have to introduced for them? (I realise that these people will be compensated to the extent of not having to pay VAT, fuel duty etc. etc. but it shows the sums will have to be done carefully to make sure property owning pensioners aren’t net losers.)
4) What happens if, in year one, the Govt. imposes 100% LRV but then the following year needs more money so ups it to 101%, then 102% the next year, then, before a general election, reduces it to 99% (amid cries of foul from the opposition)? Do we not risk just getting back to the same old arguments about deficits and surpluses as we have now? In other words the “simplicity of the enormity and the enormity of the simplicity” is at risk.
5) Two points I noted you can already do/happens under the existing system (a) “press the council to build better and wider roads and uprate the water mains, etc,”; and (b) “The more the farmer works efficiently the more they keep of their efforts.”
Supplementary question in response to John at 1.15pm – you mention Denmark. Did it introduce 100% LRV and abolish other taxes or just a small percentage LRV a la the papers Andy W wrote to replace Council Tax and rates? Has any country gone down the 100% LRV with no other taxes route (Taiwan?)
Enough for now! Thanks.
A propietor-developer builds two absolutely identical houses for £200,000 each . One is in a half acre plot in Blackhill/ Saughton mains and the other is in a half acre plot in Morningside/Bearsden. He puts them out into the rental market. Since the two houses are absolutely identical in every respect it would be reasonable to assume that they would attract the same rent, but it would not take Mr Spock or Sherlock Holmes to point out that the house in Beardsen/Morningside would attract a greater rent than the one in Blackhill/Saughton. The difference in the two rents is down to another factor—-and yes you have just worked out that the difference as being the Land Rental Value. With the collection of LRV to REPLACE income tax etc, the owner would keep the rent due for the provision of the bricks and mortar totally free of income tax and the LRV would go to public revenue. The tenant would be due the gross rent, but only that due for the bricks and mortar would accrue to the owner as net income.
Lets say that the B&M rent would be £1000 per month for both houses. The Blackhill LRV would be £250 per month and the Bearsden LRV £500. Thus the Blackhill tenant would pay £1250 gross and the Bearsden tenant £1500 gross. There would be no rates or council tax due and the tenants income tax would either be greatly reduced or with 100% LRV collection be zero. If the tenant got promoted worked 3 nights and a Sunday double time, won the lottery or made £50 million from writing a string of Harry Potter type novels the LRV due would not increase and the landlord would still only be due the rental market value for the building. The same would apply for farms on varying agricultural desirability.
Thanks Ron. My comment above was also typed before I saw Andy’s at 1.29pm which did very helpfully put an actual figure for LRV on an average farm and thereby answer Slurry Stirrer’s question.
I totally get the general theory of LRV as you explained with the house examples above Ron but what are the answers to the other questions in my post?
The maximum of anything is 100%. It is not possible to collect 101% of income or LRV. Income tax is an arbitary level of de facto robbery of labour by the State, but LRV is determined by societal demand and society and the State are not one and the same thing. Right now, the government gets the bulk of its income from imposts on labour, entrepreneurial flair, and the exchange of goods and services all of which are depressive of economic activity and recession enhancing, hardly what we need in the present situation.
I wish to see 100% of annual LRV collected, because the only value land has( it does not , and cannot possibly have, a capital value) is this and it is 100% created by societal demand. This level, unlike any % of tax, is thus 100% fair and 100% unavoidable( even by nondoms and offshore holding companies). I fully concede that it may not be possible to go immediately to the 100% level, but this is the ultimate end point and so for a period public revenue would come from a mixture of LRV and traditional State robbery of individual/ corporate labour. In this situation any government attempt to suck-@rse votes by reducing LRV collection would mean an increase in the State robbery levels to make up the loss of public revenue. Once people have got used to holding on to more of their income, they are not going to like losing more of it again.
Ron, I would suggest that you read Karl Marx’ Das Kapital before you make preposterous claims such as that “land cannot possibly have a capital value”. What about the human labour that has gone into the development of wilderness into fertile acreages over thousands of years? Do you want to wipe that out from economic history?
Still struggling with this, I’m afraid Ron.
You say “It’s not possible to collect 101% of income or LRV” but go back to the example Andy quoted earier of a farm with a market rent of £20,000 of which the land component is 30% (£6,000). While LRV is set at 50%, it is £3,000. When it eventually reaches 100%, it will be £6,000.
My question is, what is to stop the government saying: “Next year your LRV is going to be £6,060” (101%)? And the following year £6,120 (102%)? And then, before an election, back down to £5,940 (99%)?
You say “Once people have got used to holding on to more of their income, they are not going to like losing more of it again.” But that doesn’t by itself prevent tax rises (as witness double figure % increase in VAT in 2011).
Political checks on tax rise are effective only up to a point so to prevent LRV ever going over 100%, you would need some sort of constitutional guarantee prohibiting it. That in itself raises a number of questions including (i) 100% of what? This is my Q1 above. Andy spoke of values falling to economic value post LRV so it would need to be 100% of pre-LRV value or 1++% of economic value; (ii) what would happen if that maximum were not enough for the gov’t’s spending requirements? (Do other countries have constitutional max taxation limits? If so, how does it work in practice.)
What’s the answer to my question 3) above (property rich cash poor pensioners)? I suppose the answer to that is they get to roll up the arrears to be paid when they die and the house is sold, yes? Unemployed people?
Reiner: did Karl Marx say and prove that either God or the Big Bang had any production costs and is there any evidence in historical texts or archaeology that invoices were presented to Adam&Eve or Professor Hawkings for these costs?
So where does any supposed capital value come from and was it there in the Pliocene but the early apes just hadn’t realised that yet?
About 95% of the writings of Marx were about the failures of Capitalism. He got a hell of a lot right in that respect. He failed to understand Ricardo’s Law of Rent. He wrote of the merits of Capitalism in the technological advances, etc. He could not see a way of reforming Capitalism to eliminate the grinding poverty level, so his solution was to get rid of it.
Henry George, who had spats with Marx, came out with a much more elegant solution to Capitalism’s problems. Marx said George’s book Progress and Poverty was “Capitalism’s last ditch”.
The problem with George was that he went for the Single Tax, which failed to gain universal acceptance. Understanding LRV was difficult for masses. Communism was easy to understand and hence over half the world took up Marx. Henry George used the wrong words and sold it incorrectly. If he did, we would not have had the carnage of two world wars and two world-wide financial crashes.
Well it might go up or down 50 or 60 quid, or even more, but that will be determined by societal demand in the market and not the government. Can the government directly command house prices to rise or fall at will? On the other hand the government can directly impose an arbitary rise in income tax or VAT.
Neil: The government can’t take £21,000 in tax from someone earning £20,000. Yes, you raise the hairy old spectre of the wee Tory widow living off her pensions in a big hoose in a posh suburb with a high LRV level. Well lots of options to discuss here and none any tougher or complex than someone who would like to say in a ***** hotel, but only has enough income to stay in a travel lodge. Well I remember tales of the days when my terminally ill grandfather was ‘on the parish’ and was advised to sell his furniture by a Tory- factor–he could exercise that choice. Well the eponymous property- rich, cash- poor widow, could sell her property( tax free) and since the only reason the LRV would be high is because of demand for the site being high, it is likely to be very easy to do so. She could then move to a lower LRV area and live off her tax free interest on the tax free lump sum she got for the property and add that to the income from her tax free pensions. Alternatively, in her multiple- roomed house she could rent out the rooms to lodgers and get this income tax free boost to her tax free pensions and yes the option of deferred payment on her estate until post mortem is another possibilty. When are you raising the ‘garden tax’ spectre? That’s usually next on the list.
Don’t know if you have noticed or not that poor and/or unemployed people tend to live in low potential LRV areas and rich people in high potential LRV areas( hence the derivation of ‘des res’). If we stop taxing labour and the exchange of goods and services then the chances of being employed increase. However we have already accepted, even under our Byzantine inanity of a welfare system, that unemployed/low income people should get assistance in terms of CT and HB, so we could transfer that principle or take up the option of a graduated Citizens Income/Dividend as John and I discussed earlier.
“Remember also, however that land values will steadily fall to their economic value rather than value as an investment.”
A very important point.
thanks, i now understand. The big lairds will maybe not push for higher rents if it is set at 100% but at the same time they would be even more attracted to clearing the land of secure tenants so they are no longer liable for the renew & replacement of fixed equipment. They can afford the hit, and on the quiet they will let other existing farmers seasonally graze, take silage, but do all this ‘off’ the IACS form.
They, the lairds will play the long game, try and destroy the secure tenanted sector, hope everything turns sour and then get things changed back to the good old days.
I think i like the concept of LRV but also need something bullet proof as well….ARTB.
You can really see just how much value is locked up and wasted by these lairds, and to make it worse they are the biggest scroungers of public funds, benefit junkies!
SS, LVR cannot be pushed onto the tenant. Economics make that virtually impossible. If he ups the rent the tenant will go. If he clears the land of tenants he still has to pay the full LVR. There is no relief if land is vacant and unused.
He may clear the tenants and hope that the laws will change. But his bank balance will suffer in the meantime and the laws hopefully would not change. In the UK as a whole the country does need an anti-monopoly law on land. Scotland highlights the problem. That would mean large landowners would have to sell up to those who occupy and make the land productive. Compulsory purchase.
No one thinks ill of people who claim on their car insurance. Those on benefits are claiming on their National Insurance. I see no problem.
But the lords and lairds are true scroungers in the subsidies they get.
Slurry Stirrer: I hope my reply to Neil King, above, helps a bit.
The Land Reform debate continues, and each day more and more sound points are made for changing what has now become known as the injustice to Scotland.
When I started reading the Scotsman article, I truly believed it was being written with tongue in cheek, to expose how the ridiculous the lairds viewed their contribution to our nation. Alas no, it was, I now believe, written with great seriousness. So there it remains in print, the best piece of anti-landlordism we could have hoped for.
The LRRG appear to have had a rethink, and have been brought round to understanding that tenant farmers actually are part of the community ! However, it’s going to take a lot of convincing for tenant farmers to have any faith in this group, after it’s recent interim report, casting the tenants into the TFF den. Thankfully we’ve been rescued by Richard Lochhead, who gave the welcome, and much needed news at the highland, of the ATRB being back on the agenda.
Then came the sweetest one of all, the 432:50 report…….Ya beauty !
Slurry Stirrer makes note of the new Scottish Tenants Action Group …STAG . They have obviously timed this well, and are making great progress in rallying all tenants who wish to support efforts towards the ARTB. Delighted to say I am one of the supporters.
So all in all the Land Reform Debate moves up a gear indeed Andy, and we have the lairds coming away with spin on spin, in an effort to try and move attention away from this crucial debate
And yes Ron, this blog has been missing a few contributors recently. I have to say I miss them ! It just isn’t the same without them…..not being able to set the record straight about their claims.
So, I look forward to the next chapter in the metamorphosis of our nation.
I think the ‘usual suspects’ have been advised by their peers/Peers and colleagues not to engage with us, as they know they would be on a hiding to nothing!
yeah, but they will still be reading this. DT, ABW, DM. they know there is no point posting because we destroy their spin. Their sign off was, that we were all too rude.
this post has been constructive and informative, no coincidence.
yes and while some of them might appreciate the points we are making from an intellectual POV, they can sit there with the smug satisfaction that their grip on land tenure remains intact and in the knowledge that the SNP are not going to do what’s necessary for the time being. However with a YES vote comes the inevitable possibility that a future Scottish government might actually carry out the radical reform required.
“No matter where you live, the market value of your land is based on the services your neighbours provide (public or private), ”
– Joseph Stiglitz (Nobel prize winning economist)
“Ron, I would suggest that you read Karl Marx’ Das Kapital before you make preposterous claims such as that “land cannot possibly have a capital value”. ”
Products of production:
How can LAND have a CAPITAL value?
BTW, LRV is assessment on the “unimproved” value of the land.
Indeed John and of course capital is only created by the action of labour upon the land and with LRV that labour will not be penalised.
CAPITAL is a derivative factor that comes out of LABOUR and LAND.
“My question is, what is to stop the government saying: “Next year your LRV is going to be £6,060″ (101%)? And the following year £6,120 (102%)? And then, before an election, back down to £5,940 (99%)?”
They can do all sorts of snide things, we all know. But LRV is mainly transparent. LRV, and Geonomics in particular, should be cast in concrete with the public not tolerating any change. As they would not tolerate reversing votes for women. However, if the percentage is increased people can always move to lower LRV area – like an internal tax haven.
“You say “Once people have got used to holding on to more of their income, they are not going to like losing more of it again.” But that doesn’t by itself prevent tax rises (as witness double figure % increase in VAT in 2011).”
A 100% rental LRV system is not related to the current dysfunctional system.
“Political checks on tax rise are effective only up to a point so to prevent LRV ever going over 100%, you would need some sort of constitutional guarantee prohibiting it.”
Yep. The calculation can be set for all to see.
“What’s the answer to my question 3) above (property rich cash poor pensioners)? I suppose the answer to that is they get to roll up the arrears to be paid when they die and the house is sold, yes? Unemployed people?”
Oh no not the Old Widow Bogey again – as Winston Churchill called it. I think this has previously been explained to you. There could be exemptions, deferred until death, etc.
But!! If Mr Smith is in a house worth £500,000 and on only a state pension (asset rich, cash poor), should we subsidise him to stay in that place when he can sell and move to smaller house that costs less? The value of the £500,000 will go to his kids, who never worked for it. mmm, no, at is not quite right.
Mr Jones is in a rented house and has a state pension (cash rich, asset poor in comparison to Mr Smith). He pays no LRV as the landlord pays. When he dies he leaves no major assets. Mr Jones’ landlord will subsidise Mr Smith.
The unemployed could have an temporary exemption. These are all quite minor issues that are easily overcome to the whole point of the great social and economic benefits of implementing LRV.
Slurry Stirre( et al), another interesting link http://www.youtube.com/geophilos?feature=
John: regarding your post regarding Marx and George, I would of course agree with your observations and especially in respect of George’s choice of terminology—that T–A—X word was indeed lethal!
Ron, Henry George failed in promoting the Single Tax – it flopped big time. Not the idea, which was sound, but the selling of it. People couldn’t get it, or if they did they would not believe one tax would fund HMG. George focused only on land. Fred Harrison said he wasted 30 years banging on about LVT. When he changed his language and angle he started to make an impact. He never used the world Land Value Tax.
“Economic rent” is available from Capital as a well as Land. “unearned income” is from many sources”. Geonomics concentrates on all sources. Value which is created by the community is clawed back to pay for our services. Geonomics also has Pigovian taxes – such petrol tax because the fumes pollute. Taxes on congestion and tobacco and alcohol, etc.
Ron, brilliant clip, i want to listen to more of this guy. ‘taking power back from the elite’
it would be so easy for me to move away to Glasgow, but the last time i was there i didn’t see any ploughing or anyone clipping sheep, so i better just stay here and fight.
i like you and John’s words regarding land having no capital value, when you think it right through from the start it makes clear sense.
You are now probably experiencing the ‘simplicity of the enormity and the enormity of the simplicity’ that many of us did when we first came across the concept of LRV. However as we all know from other experiences in life—simple and easy are not the same thing!
Fred Harrison. He is prolific on Youtube. Do a search on Youtube and lots comes up. I have just finished reading his latest book The Traumatised Society. A point he makes is that all major world wars came about because of an economic collapse. The economic collapses came about because of greed – people seeking “economic rent” (economic freeloading). The seeds are here right now for World War Three. We have to act to stop it happening. Look at:
This is good:
So is this:
SS, land was not made by man – there is no costs to its raw production.
Land has no intrinsic value whatsoever. The value derives because of its location and what the location offers.
John what about the productive value added by crofters and farmers, allotment holders, physically importing seaweed and other nutrients and organic matters onto it, clearing stones and weeds and digging drains to try to make it more productive. Don’t you feel that is adding a value to its raw state?
land reform is within the remit of Holyrood as is Scottish land law, otherwise we’d not even be discussing ARTB. LRV is not a tax, it is rent and within the devolution settlement remit.
oops, this one was for Hector!
Daye: These are ‘improvements’ carried out by labour and as such should not be taxed. That labour can be costed, but neither God or the Big Bang had any production costs and no invoices were issued or wages paid.
Yes daye, that improved value was added by generations of tenants, and nicked by the lairds. Time to give it back.
I am delighted to see such lively exchanges concerning LRV in these comments but comments policy does say that comments should be relevant to the blog. LRV is – but only tangentially. I don’t wish to discourage such conversations which are very interesting and useful but am concerned that many or all my blog posts may lead to long discussions of LRV. If that happens then I will have to do something. The problem is that it discourages others from commenting.
OK Andy, please suggest some non tangential issues you would like to see covered and discussed. I would like to hear thoughts on why we tolerate privately owned national parks. Why don’t we have our equivalent of a national parks service, a fish and game department or bureau of land management? How about the setting up of national wildlife refugia with no automatic right to roam, no sports hunting, angling, mountain biking etc. —diverse and varied commentary almost guaranteed!
Hear what you’re saying Andy but is it fair to call LRV merely “tangential” to the land reform agenda? You yourself have said that fiscal reform is very high on your land reform wish list and I think there are those who believe that all that is required is 100% LRV and everything else will fall into place automatically. Perhaps you could do a blog entry focussing on the consequences that would flow from the application of 100% LRV – perhaps a worked example based on a hypothetical estate showing how LRV would lead to its dissolution into smaller affordable owner occupied units?
I agree, it is not tangential, it is one of the fundamental issues around land reform and especially regarding the unusually high concentration of land in so few private hands in Scotland. I do not wish to see large scale expensive and totalitarian state expropriation of land being the mechanism, nor compulsory hostile buy outs by ‘local gangs’ foisted on individuals to change this. Democratic fiscal measures are more in phase with my philosophical and moral viewpoint. As others and I have said on this and other threads, we also need more politically and financially empowered local government( eg the various Fennoscandian models). No LRV is not the one trick pony that will solve all the problems, but it would change the nature of the playing field very considerably.
I did not suggest LRV was tangential to land reform – it is not. it is central. I said it was tangential to the topic of the blog which is about the political process around land reform at the moment.
I think this qualifies for the most absurd debate on this blog so far!
please expand on that Reiner.
Since LRV tax is currently outwith scotlands control, we have to deal with current issues, and ARTB is most current.
Security of tenure for lp (limited partnerships) tenants is an absolute necessity. They are the biggest doubters on artb as they fear eviction, which is totally understandable.
LDT tenants should also get security.
What a change in 2 months, from the utter dispair of the salvesen riddell appeal and the LRRG cop out, suddenly the tide has turned.
Great to see the lairds on the ropes for once, gasping for air.
well said hector, ARTB to break up the large estates and unleash the potential of the people and the land. You are right with the concept if theft regarding improvements to land, i have improved bogs on the farm and then faced a rent rise based on ‘unlocking the intrinsic value’ as the Janitor(factor) said. No more land improving for me! they even tried to con me into paying for a march fence. Just proves the point that working land and putting so much into the soil just doesn’t work with a laird/tenant set up. They want rid of all long term tenants, so that naive or big established farmers will pay the rent for grazing on a 364. This is what they are aiming for, and it isn’t even tenant farming! its just grazing lets, yet they bang on about the need for a tenanted sector. But the biggest con they are trying right now is blaming the ARTB for not letting to new entrants, these estates ARE letting to new entrants….on 364 grazing lets! and even if the ARTB was dealt with and put to bed, they wouldn’t start giving out secure leases, they are trying to con us all to hold onto power, the big laird watching over his tenants.
I agree very much with your last sentence. I would like to see ‘lairdship’ legally ‘asphyxiated’ out of existence and replaced by an extensive system of private democratic land tenure, with a variety of holding sizes, with many thousands of people being involved in the tenure. Further I would like to see this mixed, where the national community feels fit, with true national parks or the alternatives I suggested above. To get there, we have to go through due political and legal process. In this I am reminded of Disraeli’s comment, ‘All the great issues of politics eventually come down to the ownership of land.’
I have not been impressed with that process so far, after ( happily) participating in the Scottish Land Commission, set up by the SNP when in opposition and whose report was accepted by acclamation at National Conference, only to see this ignored, indeed cast aside when in government. I have expressed my cynicism with the LRRG in several recent posts and letters to the press, and I note with approval your comment on it above. Somehow phrases such as cop out, implosion and charade hardly do justice to my sense of disgust and betrayal over its action( indeed inactions). The recent changes in personnel may be more constructive and it’s heartening to see someone of Robin Callendar’s calibre in the mix, but Andy should have been in at the very start. If it hadn’t been for the ‘stooshie’ that many of us in the wider land reform had created in fora like this one, then even this limited progress would not have been attained.
My gut instinct, after 40 years involved in land reform/use issues and political campaigning, is that the SNP strategic management has been suborned and traduced by the land monopoly vested interests. This is going to make things very difficult, because the land reform process is intertwined with the political process. In the end, we have only two main tools to work on the ‘great problem’ of Scotland’s land tenure; the concentration of so much privately owned land in the hands of so few. These are fiscal measures ( eg Land Rental Value collection) and direct compulsory expropriation at either local or national level. In respect of the latter, we have to be especially careful that the can of worms we might open, might actually contain venomous vipers, that will come back to bite the very people who released them.