The highest paid 1% receives around 8% of the national income. The wealthiest 1% owns 23% of the national wealth. It is in property where greatest inequalities lie, not income.
Most people are in favour of higher wages and benefits for the poor, higher taxes on the rich 1% and the provision of food, clothing, shelter and health care for all. Who are against this? The rich. Even though the vast majority of our population is in favour of progressive and fairer policies, the rich are better placed to influence politics. Why else do wealthy individuals give so generously to political parties? The rich have always prioritised their own self-interests above the needs of the many.
The UK residential market is a prime example. The rich have squeezed out any resemblance of affordability for the many, through ever-higher house prices and declining real term wages. Demand from private buy-to let landlords, who have the benefit of generous tax breaks that homebuyers do not, have helped force house prices ever higher at the expense of working first-time buyers.
Policies such as ‘Right to Buy’ have reduced the amount of affordable, state-owned homes for rent by people on low wages or benefits. The result, those that need to rent are being forced into the private rental sector, with higher demand from those receiving housing benefit resulting in the rich landlords increasing rents ever higher, when rents can be covered by taxpayers to the tune of up to £15,000 a year, irrespective of what is considered a ‘reasonable’ or ‘affordable’ rent.
The case against housebuilders
Like the rich, housebuilders have lobbied government and continue to enjoy many state-funded handouts that help the profitability of their businesses such as the ruinous “Help to Buy” scheme, without any conditional requirements attached. Indeed the “help” on offer has long since been eroded by greedy housebuilders increasing their average selling prices way beyond the state-funded 20% “help”. Housebuilders have even managed to reduce their planning condition burden, reduced or eliminated the requirement to build affordable or social housing on their sites and have not made any attempt to build better quality new homes or provide a better customer after-sales service when things inevitably do go wrong.
Housebuilders have not even responded to the increase in demand, fuelled by government schemes, building just 8% more homes in 2014 than in the previous year. Britain’s housing problem won’t be solved by easy money policies and has nothing to do with restrictive planning laws or delays. It is a simple matter of supply and demand and building more houses is the only solution.
Housebuilders need to be given an incentive to build more homes. Not in the form of more schemes funded by the taxpayer or lower corporation tax, but a punitive land tax levied for hoarding land in their landbanks year after year. Ed Miliband’s “use it or lose it” land grab was a move in the right direction. Land value is rising faster than house prices so housebuilders have good reason to drip feed new homes on the market. They make more money from land speculation than they do from their core business, building new homes. A Land Value Tax would stop this. The alternative is a lifetime servitude to the landlord class. But don’t expect a government bought and paid for by the rich, for the rich, to go against their selfish interests. Of the major parties, only the Conservatives lack a campaign group promoting Land Value Tax.
Any land value tax should not be appiled to developed land or existing homes. This would encourage the re development of brownfield sites saving the British countryside from the housebuilder’s preferred, easiest and most profitable option – greenfield land.
