Podcast: to rebalance Britain’s economy, we must rethink land and housing economics

Housing sucks up more of our income and more of our savings than anything else. It represents around 60% of Britain’s assets. From soaring homelessness to widening wealth inequality, the relationship between the British people and our homes is deeply troubled: you can’t understand the crisis in the UK economy without understanding what’s happened to housing and land.

Toby Lloyd from Shelter, and Josh Ryan-Collins and Laurie Macfarlane from the New Economics Foundation have a new book out helping us get to grips with what’s gone wrong and how to fix it. I had a chat with Laurie in the NEF offices to find out more – enjoy.

  • Alasdair Riktam de Voil

    Look FWD to getting a copy of this

  • It seems to me that the biggest barrier to solving the land problem is the fact that even reformers treat the underlying distortion as inevitable, when in fact it is the one point that opponents of reform would find impossible to defend.

    Laurie talks, in the interview, about how recent the concept of private ownership of land is, and the way thinkers in past centuries tried to reconcile its benefits with the obvious social harm that came with it. But he doesn’t seem to have recognised that the benefits and harm stem from different features of how land is allocated: the benefits stem from the ability to have a free market in land, but the harm stems from the fact that freehold ownership is heritable and carries no obligation of trusteeship. He therefore suggests new layers of law designed to mitigate the ill-effects of the current system – but those reforms are likely to lock in its underlying flaws, and could create a new set of political footballs.

    Tackling the fundamental flaws would allow us to transition to a system in which everyone inherits a fair share of the nation’s real-estate – and it could be done with a few relatively simple reforms which would reduce the burden of law rather than adding to it. It would, admittedly, take a generation or two to be completed but the benefits would start to be felt immediately and, during that time, it would be much easier, politically, to introduce temporary measures to mitigate the existing inequality.

    The reason I say opponents of reform would find the current situation impossible to defend is that current law is not only blatantly incompatible with uncontroversial principles (such as equality of opportunity) but also inconsistent with its own origins.

    As far as England is concerned, when William I parcelled out land to his tenants-in-chief, he was primarily granting them dominion over the people living on it; landownership was part of the machinery of government and freehold ownership rights were essentially administrative. Among those rights were the power to nominate a successor and the power to charge rent, both of which were administratively important (to ensure continuity of authority and to pay for government). The details are different in Scotland but I’m fairly sure the same underlying dynamic applies: at bottom, the current distortion in the way land is allocated stems from the historical fact of administrative rights mutating into privileges.

    The fact that current landownership law is incompatible with uncontroversial principles and its own origins means that those who benefit from the status quo would have no effective means of defending it against systemic arguments for reform. Looking beyond the land issue, there is a deeper, constitutional problem of incoherent law: the fact that, currently, there is no requirement for law to be consistent with generally-accepted, uncontroversial principles. That means Parliament is able to neglect reforming derelict law (law which has become detached from the circumstances which originally shaped it) unless the public agitates about it, and the courts are left to deal with the resulting mess.

    This is a gaping hole in our constitution which we ought to treat as an outrage. I suspect it underlies many areas of dysfunctional governance (though land law is perhaps the most obvious) so it is a potential reform where many different interests could usefully find common cause. It’s also a flaw which should be easy to put right, because it’s a point where the dysfunctional aspects of our current system would be impossible to defend. But, as long as would-be reformers focus all their efforts into their own specific areas of concern, they are competitors for public support rather than allies.

    This comment is getting a bit long, so I won’t add anything here about how a requirement for coherent law and an effective right to land might be implemented. But neither would be particularly difficult.

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