Click on the policy to see my thoughts on how it will apply to this constituency.
|1||Local government funded by property tax|
|2||Local government funded by sales tax||?|
|3||Support for NHS Reinstatement Bill||?||?||?||?|
|4||Bring railways back into public ownership|
|5||Open national electricity grid|
|6||No more nuclear power stations|
|7||‘Austerity’, cuts to public services|
|9||Scrap Trident and other nuclear deterrent||?|
|10||High Speed Rail 2|
|14||Minimum wage must be a living wage||?||?|
|Date: 25 January 2015|
1. Local democracy funded by annual tax on property value
In my opinion: The Green Party proposes to use the world-standard system of funding democratic local government. In nearly all developed countries, municipalities set property taxes based on a proportion of the annually recalculated value of each property. The idea is that the municipality uses the tax to improve the quality of life in some localities; land values rise as a result, benefiting property owners and generating more tax. A virtuous circle is thus created. One way in which the municipality can improve the quality of life for everyone is to subsidise social housing in the local area for the lower-paid workers who provide local services used by everyone rich or poor. High property values in the best neighbourhoods can therefore increase access to affordable housing rather than diminishing it.
Britain used this system up until the 1990s, (‘domestic rates'; Northern Ireland still uses the system and Scotland is thinking of restoring it). The Conservative government abandoned it to curb an outbreak of extreme left-wing municipal councils which were refusing to increase property taxes (rates) to fund their services. Central government’s solution was to impose a scale of property values and to specify a relatively low level of property tax depending on a property’s position on the scale. Only around 20% of local services are funded by this local ‘Council Tax’ which is related to valuations which are now long-out-of-date. The rest of the money for local services is provided by central government out of national tax revenue, and local authorities are not able to ask local people to decide how much tax to pay and how it should be spent, as they commonly do in the US and elsewhere. Over the years land values in different areas of the UK and different parts of the same area have steadily diverged so that in the best places landowners pay trivial property taxes while in run-down areas the tax is proportionally much higher.
How to bring back annual property tax. It can’t be emphasised enough that this is not an additional tax but a replacement for other taxes. Most obvious questions can be answered by seeing how other countries do it, but we do have a unique challenge in Britain because of the 25-year break when people paid their share of tax in other ways. It is not proper or practical to tax people on all the increase in property values during that period. A common percentage of tax in US urban areas is 1 per cent of property value; if this were applied to the average property in Westminster the tax would be nearly £10,000 p.a. instead of the current maximum of £1,350. On the average property in depressed Sunderland the tax would be about £860 where it is now almost equal to Westminster’s £1350. Obviously the Green Party proposes a relatively long migration period to adapt to the new system, gradually increasing property tax while reducing income and other taxes. One way might be to tax only the increase in property value after the annual tax was restored. The proposal does not require a huge software investment: there is a well-tried IT capability in every local authority which at present processes a very small amount of tax from each household, so the technology is in place to hit the ground running. It is also possible to reform tax along these lines in a particular local authority without waiting for a national change, which favours Green Party candidates for local office.
Bad effects of not using annual property tax. The small amount of tax raised locally under the present Council Tax system obliges central government to impose other taxes which are high and harder to collect than value-based annual property tax. They also distort economic behaviour. A high property transfer tax discourages labour mobility. The complexity of income and corporation taxes, designed to extract tribute from every nook and cranny of the working economy, employs thousands of private sector personnel in processing the paperwork involved. To save money during the recession the government dismissed 45,000 public sector tax collection workers and a huge ‘tax gap’ has opened up between what should be collected but isn’t, running to £30-40bn a year. The overall tax burden in the UK is still way above that of the US, even now that much of our once-prized social state has been dismantled. Transport links and other services in the sparsely-populated USA do not come cheap on a per-capita basis compared to the compact UK and there is reason to believe that our tax burden could be reduced by a quarter. The excess tax we pay is the price of abandoning the easiest-to-collect tax in the world so as to give absolute power to central government and avoid a Trotskyist takeover of Liverpool. The Green Party can argue that this threat has now passed.
The main losers from the restoration of normal property tax would be 1) land speculators who pay no tax at all on unused land and can therefore profit from the boom-and-bust cycle of land prices in the UK caused by central government’s attempts to provoke house-building booms before each election, and 2) foreign oligarchs who have bought monstrously expensive property in Central London and do not pay UK income tax which would have made up for the absence of property tax.
The demographics of Central London make it a suitable place to start reforming Council Tax in this way. It would stabilise prices because property would no longer be so attractive to absentee foreign oligarchs. It would ensure that empty properties are brought into use. Some of the ‘location value’ of Westminster property will not arise from schemes funded by the local tax, so other levels of government are entitled to take a share for redistribution.
Other political parties are coming round to the idea. Many activists in the ‘main’ parties have been persuaded by the Green Party’s arguments (documented in a study by expert Andy Wightman commissioned out of our funds) and have tried to make their leaders commit to restoring sensible property tax but it is hard to convince the leaders, who now have almost absolute power, to give back some of it to local authorities. With no independently elected second chamber, and with local authorities reduced to ‘branch offices of Whitehall’ as Michael Heseltine put it in his No Stone Unturned report to the Chancellor in 2012, no other national government enjoys as much spending power. All of the power and none of the knowledge; an ideal basis for launching what Tony Blair called ‘eye-catching initiatives’ like HS2.
From the table it can be seen that UKIP is the only other national party to propose local tax-setting power. It has proposed a local sales tax rather than the world-standard annual property tax. This parallels the calls from Tea Party activists in the US for abolition of annual property taxes and use of local sales tax instead. There’s something satisfying in the idea that a person could actually own the land free of tax in perpetuity, unlike in the real world USA where, believe it or not, if you don’t pay your property taxes for five years the State auctions your land off to pay your back taxes and gives you the change.
The Green Party is the only national party committed to the National Health Service (NHS) Reinstatement Bill. This Bill has been drafted and proposed by a wide range of groups with the principal aim of reversing the provisions of the 2012 Health and Social Care Act which abolished the government’s duty to provide publicly-funded health care in England. Two Labour MPs have endorsed the Bill, and another Labour MP, Clive Efford, has introduced a Private Member’s Bill which attempts to achieve much of the same thing.
In my opinion: Publicly-funded health care which delivers one standard of care to both rich and poor has one great strength overlooked by financiers: staff psychology. Communal and egalitarian care of other humans is a key trait in our genetic inheritance; it works by giving pleasure to the carer, and this is being confirmed more and more strongly by research in anthropology and behavioural ecology. Of course, like other traits it can be modified by circumstances. This is why Hinchingbrooke NHS Trust achieved the regrettable distinction of being the only NHS establishment found by the Care Quality Commission to be deficient in caring for patients. Labour and Conservative governments had privatised Hinchinbroooke. The recent abandonment of the hospital by its private operator is the end of the road for the policy.
Staff motivation is not enough, and there is no question that the NHS needs to be informed by more private sector expertise. On a visit to one NHS Trust hospital it seemed to me that the maternity unit was a production line which ignored the obvious needs of a baby factory. Normally it was kept running by the Herculean efforts of the midwife, up to her shoulders in blood and juggling babies and sutures with speed and skill. Now she was idle; induced mothers in labour were being put in ambulances where paramedics would deliver their babies on the way to another hospital, because there was no room in the recovery ward. Nobody had the authority to call the pediatrician in the middle of the night to get them to come in and sign out the recovered mothers and babies.
The solution to the lack of cross-fertilisation from the private sector is not private equity. It is to appoint active, accountable non-executive directors with years of experience in industry, with community spirit and no conflicting interest in hospital services. Let them walk the floors and feast on the improvements they can introduce with the tact and political skill that only comes from years of results-oriented work in industry. Instead of this, in the current fad for financial manipulation, the non-medical skill usually requested of non-exec candidates is finance. Move over, bean counters. You’ve given it your best shot.
In 2002 the privately-owned track company Railtrack was returned to public ownership as Network Rail. The Green Party is calling for the renationalisation of the train operating companies as well.
In my opinion: Privatisation of the railways, after a long sequence of other privatisations was widely seen as a privatisation too far and has been partially reversed. I was involved in the first of the series, the privatisation of British Telecom which was considered risky at the time but which I think is now accepted to have been the most successful of all. Perhaps this is why the simple formula of privatisation caught the imagination of politicians. The reason it worked in telecoms is that there turned out to be a massive suppressed demand for communications, and new technologies such as mobile and internet were on the cusp of development. Innovation on that scale would not have been possible under public ownership, not just because of financial constraints but cultural ones as well. Competition, introduced properly ten years later in the 1990s, caused a radical restructuring of the industry with former dominant IT firms like IBM and BT being overshadowed by new entrants. None of this has happened in subsequent privatisations, such as rail. All the innovations subsequently introduced by private rail companies were well within the core competencies of the old British Railways: there has been evolution, not revolution. Unless competition changes beyond recognition the industry structure inherited from the previous dominant operators, it does not really achieve anything. It has great costs too: in the railways competition has led to fragmentation which impedes coherent planning. The project for a new High Speed Rail route (HS2) is an example of this fragmentation. It will compete against the existing network for funding.
Surprisingly perhaps there is another privatised industry in the UK which is about to go through the same rebirth as telecommunications did two decades ago. That is the energy industry, which will open up to nontraditional competition under the impact of new network technology: the open grid.