Saturday, 20 December 2014

Land Reform: key issues

This is a note prepared in a hurry as a discussion document in advance of the land reform workshop at the Birnham Centre, Dunkeld, on 24th January. It is my view, not a consensus view, of the issues to be tackled. If you think I've missed significant issues, please contribute them to the discussion on the mailing list here.

Use

Scotland is lucky to be a net exporter of food. Land reform which ended up with our lowlands being less productive would not be a good thing. On the other hand, our lowland agriculture is now hugely capital intensive and depends on very high inputs of fossil hydrocarbons both in fuels and in fertilisers. This means that (with the exception of fruit and vegetable growing areas, which have high seasonal labour demands), it now employs few people. It's also probably not sustainable in the medium term, although that partly depends on whether new technologies emerge which provide a new high energy density fuel.

The management of our uplands is much less obviously socially beneficial. Steep slopes are overgrazed leading to accelerated erosion, loss of topsoil, development of open scree, landslips, flooding in the valleys. Low-vallue, marginally economic monoculture forestry covers large areas but employ few people most of whom are itinerant with no enduring relationship with a locality.

Further up the slope, moorlands are another monoculture, often managed for grouse to the exclusion of virtually everything else; and where it isn't, overgrazed by sheep and deer to the extent that no trees can regrow. It's worth remembering that Scotland has no natural large areas of moorland; Norway, which is north of us, has productive forest higher than the peak of Ben Nevis. Wide sweeping moorlands are yet another man-made landscape.

Possession

In Western Europe we have a long tradition of ownership and heritability of land. Inheritance enormously privileges the children of the lucky or successful over the unlucky or unsuccessful, giving them in turn a much better chance of being lucky and successful. That's inheritance of capital in a lot of forms: social capital (good networks of firends), cultural capital (knowledge, and a positive attitude to learning and creativity), and wealth capital: money, goods, buildings and land. It's natural, I think, for people to want their own children to have a good start in life. But in the long run this is desperately damaging to the social fabric, and it's essentially how we got into this mess.

I believe that we need to limit possession of land. There are a number of ways we can limit possession:
  • We can limit the maximum size of holdings
  • We can limit the rights people have over owned land (and to a large extent we already do)
  • We can limit the duration for which ownership can persist

Maximum size of holdings

The Land Reform Review Group suggested, among their more interesting suggestions, that there might be a limit on the maximum size of a land holding. I've done a wee bit of research on this. Key large private landholdings in Scotland from which there is substantial public benefit include grangemouth refinery,about  700 hectares, although I think that legally it is two separate holdings owned by two separate companies; and various airports, the largest being Edinburgh at about 400 hectares. Therefore there doesn't seem to be any public policy reason to allow holdings exceeding 1000Ha, and probably 500Ha would be sufficient. The sum total of Network Rail-owned land in Scotland probably exceeds this, as does the sum total of roads and motorways, but it doesn't seem unreasonable that public transport infrastructure should be exceeded by any limit.

So a land-holding limit of 1000Ha seems to be definitely achievable, and 500 probably achievable. However, it would break up only the very big estates; four square miles is still a huge area of land, and estates of that size would be unaffected.

Limitations of rights

We already limit the rights people have over land they own. They cannot, for example, build what they like where they like; nor can they now prevent people from walking, riding, cycling, picnicing, camping and generally enjoying the land, except for some limited exceptions. They are restricted from damaging ancient monuments and sites of special scientific interest, although these restrictions are not currently always well enforced. It doesn't seem to me that there's much public benefit from further limiting peoples rights on their own land, except perhaps for the matter of grazing on steep slopes.

Duration of rights

When you buy a piece of land in Scotland now, you buy it in perpetuity; it is heritable, you can pass it on to your children. I am increasingly of the opinion that you should not be able to, because it entrenches privilege. I am increasingly of the opinion that people should have a life interest in land, only. I know that will be controversial.

Of course, corporations don't have a limited lifetime - and it wouldn't be a good thing if a business in which a lot of folk work was closed down just because someone had died. It seems to me reasonable that corporations should be allowed to hold land for longer than a natural lifespan, provided that

  1. they pay a premium for doing so, and
  2. their occupation of the land continues to be in the public interest.

As I've said above I know this will be controversial, but it seems to me it's worth discussing.

Redstribution

Where we start with land reform is this: Scotland has 7.8 million hectares and 5.3 million people. Evenly divided, that's about 1.5 hectares per person, or about 4 hectares per household. Yet currently a few hundred people own most of it - figures quoted are that 430 people own half the privately owned land, and 600 own half of all the land. Five million of those five point three million own no more than at most a house and garden, and most own none. There is no possible way that that is either just or socially beneficial. I don't think there's any doubt that the big estates must be broken up; the question is how.

On the other hand you can't just divide Scotland up into 5.3 million equal portions, firstly because the land is by no means all equal, secondly because 1.5 hectares is too small an area to farm economically, and thirdly because not everyone will want to actually work their share. But somewhere between no redistribution and equal distribution there has to be a better division of the land than we have now.

Residence

Many of the problems of rural Scotland - loneliness, isolation, poor public transport, poor access to services, even poor broadband - are at least partly to do with low population density. If you could get a lot more people into remote rural areas, these problems would all be ameliorated. By contrast, many of the problems of urban Scotland - poor diet, lack of exercise, stress, and consequent poor health - are related to lack of access to the land. This is the core of what my quarter of a million crofts proposal is about.

Of course I'm not proposing to empty the cities into the countryside; and of course crofts alone won't enable people to live in remote rural Scotland, since the whole point of a croft is that it's too small to provide a household's main income. We would need in parallel to encourage the development of a range of rural enterprises which would provide employment.

But it seems to me that anything which could increase the population of remote rural areas and at the same time give more people access to land has got to be a good thing.

Revenue

Tax has a number of purposes, including but not limited to:
  1. To raise money for public services
  2. To redistribute wealth
  3. To encourage people to do socially beneficial things, and refrain from damaging ones
  4. To compensate the community for loss of public goods
  5. To compensate the community for the costs of clearing up abandoned mess.
All of these are important. Obviously, land tax doesn't have to address every one of these, since there are other taxes; but it can address many of them, and ignoring any of the purposes of tax is a mistake. It's not simply about revenue.

To raise money for public services

Obviously, we all need public services, and they must be paid for. We need roads. We need schools. We need universities. We need health and social services. All these things must be paid for. A just and caring society needs to raise more money for public services, since it must ensure there's resource to provide the poor with services which the rich can afford to buy for themselves.

This is the heading under which Land Value Tax sits. It's a sensible, efficient way to raise money for public services, but it doesn't in anyway penalise large holdings, so (in my opinion) contributes virtually nothing to land reform.


To redistribute wealth

Whatever sort of society you have, some people suffer through no fault of their own - whether from health or poor upbringing or accident. Poverty is not merited any more than wealth is. A good society redistributes wealth from those who have surplus to those who have want.

This is the heading under which a progressive land tax sits. It penalises large holdings and advantages small ones, thus motivating people to break up larger holdings.

To encourage people to do socially beneficial things, and refrain from damaging ones

For example, we use taxes on tobacco to help dissuade people from smoking, and subsidies to encourage people to plant trees.

To compensate the community for loss of public goods

If land is enclosed for any purpose, the community lose some degree of access to it. If a factory is built, or wind turbines are erected; if a stream is dammed or diverted, people's views are affected. If a new road is built, formally safe places to walk are no longer safe - and so on. A reasonably unspoilt landscape is a public good; 


To compensate the community for the costs of clearing up abandoned mess

Scotland is littered with wrecks of abandoned factories and mines. Not as littered as it was thirty years ago, but that's because we've already spent masses of public money cleaning them up. But it's the nature of capitalism that it seeks to externalise its costs. When a business is no longer profitable, capitalism will tie it up in its own little limited company that has no other assets, so when it finally goes bust the parent company doesn't have to pick up the tab for cleaning up the mess. Since we know capitalist businesses will do this, it seems sensible to tax them enough to cover the costs in advance.
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