18 April 2019

The 1% own half of England. How worried should we be?


Half of England is owned by just 1 per cent of the population. That’s the eye-catching headline in today’s Guardian, based on a new report about who owns land in the UK.

The figures have been compiled by Guy Shrubsole, a Friends of the Earth campaigner and author of Who Owns England? The answer, at least when it comes to land, is a mixture of titled aristocrats, oligarchs, corporations and the public sector, along with a fairly hefty 17 per cent “unknown”.

Jeremy Corbyn — or at least whoever manages his Twitter account — says the study is a sure sign that the UK needs “radical change” and his colleague Jon Trickett solemnly declares that it’s yet more evidence of a country “for the few, not the many”.

And, the headline number is undoubtedly eyebrow-raising. But as ever with alarming-sounding statistics, a bit of scrutiny reveals a more complicated story. First, at the risk of stating the bleeding obvious, not all land is created equal. An acre in Northumberland, delightful though it may be, is not going to fetch the same price as one in the middle of London.

Shrubsole’s own organisation Friends of the Earth have inadvertently illustrated this point with a rather beautiful and informative video detailing how the UK is divided between different types of land. As the video makes clear, we may feel as though we live in a densely populated small island, but the overwhelming majority of the UK Is more or less empty. Admittedly, Shrubsole’s report deals only with England, but the point remains.

Consider, for example, that seven per cent of the UK is sheep-grazed heathland and nine per cent is peat bogs. By far the biggest sectors, perhaps unsurprisingly are given over to farming – 27 per cent to crops and 28 per cent to pastures for various animals.

To lump these different kinds of land together into one category and then declare that a certain number of people own a certain percentage seems a rather obtuse way of going about things.  As KPMG’s Ben Southwood observed on Twitter, judging wealth by how much land someone owns is a bit like looking at stock ownership and saying that someone with a trillion 0.0001p shares is the country’s biggest capitalist.

The rest of the British population may collectively own a comparatively small slice of land in terms of acreage, but the five per cent of the country given over to houses and gardens is also by far the most valuable. After all, not many people are going to swap their suburban semi in the home counties for 100 acres of remote heathland any time soon.

Analysis from the ONS makes this clear. In 1995 the value of land (excluding households) was worth 64 per cent of the value of land held by households (£0.378 trn vs £0.59 trn). Since then the gap has widened significantly. By 2017 the value of land (excluding households) was worth only 32 per cent of the value of land held by households (£1.315tn vs £4.108 tn).

This is, of course, intimately linked to the explosion in house prices in recent decades — a topic we touch on regularly on CapX —  especially in the south-east. As CapX contributor Sam Dumitriu has noted, a hectare in the south-east without planning permission is only worth about £10,000 — with planning permission the price rockets to somewhere between £500,000 and £1m.

Now, you needn’t be a dyed-in-the-wool collectivist to agree that a small number of people owning vast amounts because of their ancestry is not an ideal scenario. But given that Corbyn’s team are clearly looking at this area keenly, the bigger question is what a future Labour government might do to try and remedy it. The state could simply buy up a load of land, taking vast swaths of the country under “public control”. While that might make some people feel a bit better about the state of the nation, it would be a worryingly illiberal move — as well as a dubious use of public money. Added to which, governments have a pretty chequered record when it comes to seizing property from private landowners.

Just as pertinently — and hats off to Guy Shrubsole for pointing this out on his blog — the Government, including local authorities, are not even clear on what land they own at the moment.

The fear is that the kind of ideologues who surround (and include) Corbyn are not particularly interested in granular policy debates might push through reforms that are altogether more heavy-handed. This is not simply speculation — we already know from the Labour manifesto the swathes of British industry the party plans to renationalise. And given that one of the biggest corporate landowners highlighted in today’s report is United Utilities, that renationalisation programme would also result in land coming back into public ownership.

A more sensible measure that attracts supporters right across the political spectrum is a Land Value Tax. As the economist Julian Jessop explains here, an LVT is a tax on the value of the underlying land, independently of any specific improvements such as the value of any property built on it. Its proponents range from the likes of Adam Smith and Milton Friedman to the IMF, the OECD and the Institute for Fiscal Studies, and it has already been implemented in countries such as Australia, Singapore and Hong Kong.

The beauty of an LVT is that it is paid even if the land is unused, meaning landowners are encouraged to make use of their property — rather than distorting incentives, it actively encourages economic activity. It’s also pretty difficult to avoid, unless someone invents an invisibility cloak for fields. And given that, as the Shrubsole report points out, the rich own much more land than the poor, it is also eminently progressive.

There are difficulties with how the land would be assessed. You would also need to design it in a way that would not punish people who might own land but have little income. Still – taxation of this kind makes a lot more sense than the kind of land grab some of the Corbynistas would probably love to enact if Labour won power.

None of this is to pooh-pooh the painstaking work done by Shrubsole and his colleague, Anna Powell-Smith. Who owns what and how to expand ownership is an absolutely crucial debate, and one we all ought to engage in — but let’s do it on the basis of meaningful statistics, rather than eye-catching but ultimately misleading headlines.

John Ashmore is Deputy Editor of CapX