The Chancellor should create a People’s Land Bank on Wednesday as the central plank of a People’s Budget for the 21st century, according to the New Economics Foundation.
In a pre-Budget briefing, the think-tank argues that Britain is facing an “economic malaise” driven by falling living standards, growing indebtedness, and increasing wealth inequality. With Brexit only set to make this crisis worse, this is the last chance to take the big and bold action so desperately needed.
In the early 20th century, David Lloyd George proposed a ‘People’s Budget’ to deal with a fundamentally unequal society. The briefing argues that we need a People’s Budget for the 21st century, designed not just for but with people as well.
As the housing crisis sits at the heart of our economic malaise, the single biggest thing the Chancellor could do in such a Budget would be to set up a People’s Land Bank.
Instead of selling off public land (where only one in five homes built are 'affordable'), public bodies would transfer this land to kickstart a People’s Land Bank. By the Government’s own calculations, that could produce 320,000 genuinely affordable homes.
The People’s Land Bank should be supported by a series of other policy reforms designed to address the housing crisis, including:
- The compulsory purchase system should be reformed to enable councils to purchase brownfield or agricultural land at a price closer to its value at current use, as opposed to allowing land traders to charge a price based on what it could be worth with planning permission. With this reform, the People’s Land Bank could acquire additional land at affordable prices in places with acute housing need, and work directly with public and community sector partners to meet that need.
- The borrowing cap, which limits how much councils can borrow to build affordable housing, will need to be lifted, and councils must be allowed to retain 100 per cent of the receipts from houses sold under the Right to Buy to build new genuinely affordable homes in partnership with communities, as opposed to sending the majority of it back to the Treasury.
- The Chancellor should be taking advantage of lower interest rates to borrow for housing investment. This investment should be used to create a £10bn community housing fund that could be used by community groups, local authorities and housing associations to support community-led affordable housing schemes. In the long run, social housing usually pays for itself – it’s a long-term asset, and reduces the housing benefit bill – but in the short term, investment will be needed.
“Today, Britain confronts the most profound set of challenges it has faced in generations. While much of government, its officials and political debates are absorbed in an all-encompassing battle over the question of how the UK leaves the EU, many people are encountering falling living standards, growing indebtedness and increasing inequality.
“For most people, notwithstanding continued growth forecasts, the UK economy does not feel like a success story. Beyond the wealthier neighbourhoods of London and the commuter villages and towns of England’s southeast, economics feels likes something that is done to people and not for or, less still, with them. This, along with the fundamentals of an economy that has delivered such deep inequality and stagnation for most, and that continues to contribute to and not alleviate the climate crisis, must change.
“UK governments have faced great wealth disparity and profound investment challenges before. In 1909, Chancellor David Lloyd George proposed a ‘People’s Budget’ '...to remove the national degradation of slums and widespread poverty and destitution in a land glittering with wealth'.
“Lloyd George’s People’s Budget proposed significant income tax rises for high earners and a land value tax to redistribute unearned wealth. We now need a People’s Budget for the 21st century, which recognises that our land is once again ‘glittering with wealth’ (at least until it is stashed offshore or invested in London property) and aims for radical redistribution.
“The Budget of 2017 is no less significant than Lloyd George’s of 1909. And the measures it should pursue should be no less momentous. In seeking to tackle economic malaise and post-Brexit threat, the Chancellor would do well to draw on his predecessor’s ambition.
“The New Economics Foundation proposes that the single biggest thing the Chancellor could do to demonstrate that he is serious about driving change is to create a People’s Land Bank, shaped by the real needs of those people and communities at the sharp end of the housing crisis. This, in combination with a wider set of policies to deliver more affordable and environmentally sound housing, would be the foundation stone of a People’s Budget for the 21st century.
“The People’s Land Bank is a policy big and ambitious enough to begin the work of confronting the economic malaise we face. By taking that malaise seriously, and by empowering people and communities to take control of their future, it would signal a viable way forward at a difficult time for this country.”