Memorandum-to-the-Prime-Minister-on-Unaffordable-Housing

Economic growth and rising land values
The dynamic relationship between growth and <strong>the</strong> land market was first identified in <strong>the</strong> nineteenth century by
David Ricardo and developed by Henry George.Today it has obvious negative effects on housing affordability,
wealth distribution, social justice and intergenerational equity. Ultimately it leads <strong>to</strong> economic sclerosis as
labour market immobility, <strong>the</strong> misallocation of investment funds and <strong>the</strong> squeezing of non-landowning
enterprises destroy <strong>the</strong> efficiency gains of <strong>the</strong> growth period, forcing <strong>the</strong> economy in<strong>to</strong> ano<strong>the</strong>r down turn. As
prices rise beyond <strong>the</strong> means of many people, social housing becomes increasingly residual and a growing
intermediate sec<strong>to</strong>r of low-middle income working households find <strong>the</strong>mselves unable <strong>to</strong> access housing at all.
In this context, direct housing subsidies intended <strong>to</strong> promote affordability act as a fur<strong>the</strong>r boost <strong>to</strong> <strong>the</strong> market,
meaning that ever greater subsidy is needed for <strong>the</strong> next generation of workers unable <strong>to</strong> afford a home.
Similarly, affordable housing requirements, Section 106 agreements and <strong>the</strong> proposed Planning Gain
Supplement (PGS) all fail <strong>to</strong> tackle <strong>the</strong> underlying causes of unsustainable land and housing price inflation (GLA
2001, Barlow et al. 2002). Planning control will always be necessary, and <strong>the</strong>re may be a role for one-off
interventions like PGS, but we also need a means of capturing socially-created rises in value for <strong>the</strong> community
and locking in any subsidy so that affordable housing remains affordable.
The potential of current planning powers
Despite <strong>the</strong> limitations noted, <strong>the</strong> Stepney Gasworks case in Appendix 9 has shown <strong>the</strong>re appears <strong>to</strong> be no
decisive reason why <strong>the</strong> removal of land speculation, and <strong>the</strong> ensuring of desirable outcomes <strong>to</strong> a prescribed
timescale, cannot be achieved under existing planning legislation. It appears <strong>to</strong> have been habitual practice and
lack of political will, ra<strong>the</strong>r than a lack of legal powers, that has limited an equitable apportionment of <strong>the</strong> land
value gain arising from this development. For a wide range of reasons local authorities have been in <strong>the</strong> position
of granting valuable development consents after sites have been acquired by private developers ra<strong>the</strong>r than
<strong>the</strong>mselves acquiring (or holding) <strong>the</strong> sites before granting <strong>the</strong> consent that generates <strong>the</strong> value.
Community Land Trusts (CLTs) as one way forward
As argued elsewhere, and in Recommendation 5, <strong>the</strong> simplest way of maintaining affordability, preserving <strong>the</strong>
value of subsidy and safeguarding future redevelopment opportunities would be <strong>to</strong> keep a substantial proportion
of housing in public ownership and <strong>to</strong> initiate a renewed public housing development programme. But at
present <strong>the</strong>re is little political appetite for a return <strong>to</strong> council house provision. In addition <strong>the</strong>re is always <strong>the</strong>
danger that future governments may again resort <strong>to</strong> <strong>the</strong> short-term expedient of selling off publicly owned
housing cheaply for elec<strong>to</strong>ral advantage.
A way forward <strong>to</strong> complement o<strong>the</strong>r forms of public provision is now being presented by <strong>the</strong> initiation and
development of some variant of <strong>the</strong> ‘community land trust’ idea. As shown in Appendix 15 this can be
combined with new legal forms and financing mechanisms.
Community Land Trusts (CLTs) were developed in <strong>the</strong> US by Bob Swann in <strong>the</strong> 1960s. Swann was inspired by
Henry George’s idea that land was fundamentally different from <strong>the</strong> o<strong>the</strong>r two fac<strong>to</strong>rs of production (labour and
capital) and should be treated differently in <strong>the</strong> economy. He believed people should certainly be able <strong>to</strong> own
<strong>the</strong>ir homes, but that <strong>the</strong> land underneath <strong>the</strong>m belonged <strong>to</strong> <strong>the</strong> community by right.
Zacchaeus 2000 Trust - <strong>Memorandum</strong> <strong>to</strong> <strong>the</strong> <strong>Prime</strong> <strong>Minister</strong> - May 2005 91