Because more equal societies work better for everyone

Income Inequality Worsened by Land Grabbers and State Imposed Debt

Tuesday, 21 February, 2017

This is a guest blog kindly provided by Rev Paul Nicolson, the founder of Taxpayers Against Poverty, which campaigns for an affordable home and an adequate income in work or unemployment for all citizens.

While income differences are a sure guide to inequality in the UK there are pressures on the lowest incomes which multiply its injustice. They come from a lack of a just policy for decades about UK land and state imposed debt. It is unlikely to be a coincidence that about third of households in England are renters, or seven million households, and at the same time, about a third of the UK population, or 20 million people, are in poverty. 

LAND OWNERS 

The inequality between home owners and renters festers due to a UK tax regime which is biased towards owners. Families who own homes can pass them on from one generation to another free of capital gains tax; there are life time gift exemptions allowed by HMRC to avoid inheritance tax. Home owners are allowed to become wealthy due to a housing market with a limited supply of land by a Parliament comprising home owners and by-to-let landlords. The 1979 government deregulated lending, abolished rent controls and allowed the free flow of money in and out of the UK creating a bonanza for land owners and an ever increasing inequality of wealth and income. 

Infrastructure improvements, often paid for by the State, increase the value of property all of which goes to the home owners. Ask those who live near the Jubilee Line or the Crossrail in London. National and international speculators buy British land as an investment stealing this increase in value for personal gain. In the highest echelons of personal wealth they park the profits in overseas tax-free banks. There has been little or no moral leadership from Church or State about the use of land. To the humanist it is a gift of nature, to the Christian faith it is a gift of a generous and loving God. To both it exists to provide shelter, food, fuel, clothes for all.  The Church Commissioners run their land portfolio as a commercial enterprise with little regard to the impact on the poorest British tenants or for the Christian preferential option for the poor. 

Fred Harrison of the Land Research Trust taught me that the rich and powerful began their land grabbing after the Magna Carta. The land which once belonged to the King was common land on which the people of Britain survived. The enclosures by the Barons took that land from them. The Church and State were not slow to catch on. I was a Parish Priest in the Hambleden Valley Group of Churches in the beautiful Chiltern Hills. Much of the land was once owned by the Monks at St Albans and was often used for the common good as well as the survival of the monks. In 1133 Henry Burgersh, the grandson of a Baron and the Bishop of Lincoln, was given the Manor of Fingest by the Abbot of St Albans. He promptly enclosed the common land; so the local people starved. 

In the 1980s the sale of council houses in the Chiltern Villages to the tenants for £25,000 led to them being sold into the market for £250,000; now they sell on for £600,000 plus. The poorest tenants are priced out of the Chiltern Hills. In the London Borough of Haringey the council is teaming up with an international property developer to regenerate up to 15,000 council tenancies and 508 small businesses on council land. Yet again public land will move into the market to the detriment of tenants. 

LANDLESS TENANTS

For the 7 million landless tenants the housing crisis is now and worsening. There is no equity to fall back on. No escape from council tax, income tax or VAT. Since April 2013 council tax has been charged at 8.5% to 30% against state benefit incomes by 259 councils out of 326 in England; they add court costs and bailiffs fees to the arrears which cannot be paid out of a single adult unemployment benefit of £73.10 a week, which is also required to pay rent since April 2013 because government has cut housing benefit; a cut in housing benefit is an increase in rent for the tenant on top of the ever rising rents due to the chaotic UK housing market. 

£73.10 remains the wobbly bottom building brick of the Universal Credit paid to 4 million people [1].  It does not reach Joseph Rowntree minimum income standards for food, fuel, clothes, transport of £91.80 per week, (see Table 2 from which I have conservatively selected those items) and cannot afford​ the​ rent and ​council tax it has been expected to pay since ​April 2013; before that the £73.10 was ​supported​  by 100% housing and council tax benefits. It has been diminishing in value since 1979. It has not been increased since April 2015. It is so low that debt is inevitable. It is the income the disabled are left with if they fail the Work Capability Assessment. It is removed by a benefit sanction for one month, three months or three years leaving no money to pay for essentials or outstanding debts, the enforcement of which continues. This Jobcentre administrative procedure inflicts punishment greater that a fine for theft. The thief will be left with enough money by the Magistrates Courts to buy food and other essentials and will be fed in prison. A policy of starving people into work hits a scandalous depth of injustice not seen since the 1920s. It is impossible not to speculate whether the impact on the well-being of tenants of increasingly unaffordable rents and of uneconomic state benefits have not contributed to the increases in death rates since 2011 after many years’ reductions and to the steady rise in the cost of mental illness to the economy to £113 billion.

IMMEDIATE ACTION NEEDED

​Crisis Homeless Monitor tells us that there were 3.5 million homeless single adults in England in 2015 a rise of 40% since 2008 (page viii). The Ministry of Justice reports that 42,728 households were evicted from rental accommodation in 2015, a rise of 53% in England and Wales since 2008. ​​Landlords of all tenures evict the tenants when their incomes are too low to pay the rent. On the other hand in London’s 33 boroughs, there are 56,715 vacant properties. When more are built they are snapped up by national and international speculators and left empty. There are 610,123 empty homes in England. The four big builders are sitting on 600,000 unused plots of land. Rent controls on all tenancies and a land value tax on all unused land and empty housing are needed immediately. Hong Kong, Denmark and several cities in the USA show us that Land Value Tax, or Annual Ground Rent, is compatible with capitalist economies. That can be discovered by a visit to the Harrisburg, Pennsylvania Website "Land Value Tax - the Harrisburg Experience".  These solutions are at hand. A Bill ought to be passed rapidly through Parliament before any more damage is done to the health of millions of landless tenants in the UK. Tenants suffer because the "affordable" rents, which are paid on pain of eviction and homelessness, are linked to the ever rising market rent. There is no investigation as to whether paying the rent plus council and income taxes leaves enough income to buy a healthy diet, the fuel to cook it and keep warm, clothes, transport and other necessities. The lack of clarity in the 109 mentions of "affordable" in the new Housing White Paper, about what it ought to mean to provide homes and well-being for the poorest tenants, is a culpable omission. 

[1] See BEN01: Key out of work benefits. - Office for National Statistics

Rev Paul Nicolson, Taxpayers Against Poverty

The views expressed in this blog are those of the author and not necessarily those of The Equality Trust.

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