Comments on: Why have the government and the Bank of England failed us on inflation?

By: Carsen

Carsen — Wed, 07 Oct 2009 01:42:29 +0000

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By: Nick

Nick — Sun, 11 Jan 2009 21:27:15 +0000

"Reply:…………If we have a sharp fall in house prices there will be bankruptcies in the housebuilding and related industries and services, job losses, reduction in the number of new homes etc. I am surprised you want that."
I want house prices to fall to represent building costs and provide affordability. Any one at work should be allowed to afford some form of shelter.
If the falls mean that certain factions suffer, then so be it. Myself, and many others, being unable to pay these hyper inflated prices is due to the gross mismanagement for the years the bubble was allowed to inflate. We the people were not protected.
I look forward to a total collapse in house prices. It will serve us right and may we learn the lesson. albeit the hardway.
Using bricks and mortar as an investment is wrong, and we need to take this on board and make it part of our culture for the good of all.

By: Tenuc

Tenuc — Fri, 06 Jun 2008 08:08:13 +0000

The economic mess we and the rest of the West are in needs to be sorted once and for all. Slight tweaks to the interest rate in either direction will not solve the fundamental underlying problems.

The first step should be to for us to draw up a UK national emergency plan to deal with the following issues:-

Regain control of the money supply from the global merchant bankers.

Start the long and difficult task of returning our currency to the gold standard.

Disentangle the UK from the UN, NATO and the EEC, as these bodies prevent us managing our own country and impinge our civil freedoms.

Stop wasting money on our useless nuclear deterrent, and invest the money saved in building a strong, well equipped 'home defense' army and police force capable of upholding our laws.

Pull our troops out of Iran and Afghanistan and stop interfering in the politics of other countries, we do not have any right try to impose our brand of â€˜shamocracyâ€™ on all the countries of the world.

Stop the phony 'War on Terror' â€“ anyone stirring up an hornets nest deserves to be stung. As we know from our experiences in Northern Ireland, these matters are only resolved by negotiation, not guns.

Invest significant resource in the quick development of nuclear fusion reactors to meet our long-term need for cheap, clean power.

Stop the high levels of immigration and only invite people who can contribute their skills or wealth to our country to work here.

Bring honesty and integrity back to UK politics and stop the media cartels manipulating the UK public so that they, along with the bankers, become the real arbiters of how our country is run.

Stop treating the UK public like children, who's every need must be met by all invasive government. Most of us are quite capable of looking after ourselves. Think context, not content when dealing with UK issues.

By: Acorn

Acorn — Fri, 23 May 2008 10:36:06 +0000

John
Sorry but I am not getting your argument about nationalising land. DBC put it better than I (above) and I would add that land planning is THE major issue for any government to sort out.

Land planning law is a mess. As a ex local councillor, I have seen the results at many Planning and Development committee meetings. Numerous conflicts between national planning "guidance" diktats and local citizens desires, expressed through their Councillors. The requirement for PPS 12 Local Development Frameworks, just added insult to injury.

Land owners / Developers all know that making a local planning application is just the stage before you go to appeal to some Inspector in Bristol who will decide the application according to Whitehall rules! As he does with LDF submissions, his (Whitehall's) word is final. We already have "nationalised land".

LVT will not change this on its own; but, it will force owners to think about holding land out of the economy for decades. It will force planning authorities to think about the land value impact of their decisions and how local tax payers can get a share of it – they are not allowed to at present – the ballot box will tell them if they are getting it wrong.

By: DBC Reed

DBC Reed — Fri, 23 May 2008 07:46:13 +0000

My misgivings over replying to "a reply" are overcome by the fairly
serious misunderstandings that have arisen.
Nobody is talking about nationalising land. Where has this notion come from? Land tax no more nationalises land than corporation tax nationalises business.
Reframed in the terms that were being discussed: the question beomes how does LVT increase the supply of land for development?
The answer would appear to be pretty obvious: people banking land would either have to bring it into use or pay a carry cost for keeping it out of use.
The Royal Town Planning Institute published figures showing that there is enough land locked up in developers' land banks to meet supply targets for new housing in London for six years.They went on to accuse the developers of deliberately restricting supply to keep up prices.
There are hundreds of thousands of empty homes according to the Empty Homes Agency .(There should be an empty land agency).
On a local level , most people know valuable sites which can be collaterlised as loans, that have stood empty for years (or a generation in my town).
And then there is asset stripping by which largish local firms employing hundreds of people with a large turn-over but low profit margin get bought out by private equity operators who first off sell the factories for conversion into luxury ( i.e.very small) apartments.
The whole post-war asset -stripping farrago derives from the fact that inflated land values are an easier way of making money than providing goods and services.
LVT provides a means of creating a high wage/ low accommodation cost economy.When the euphoria of Crewe is over, Conservatives must needs think about their current offer to the public: we can't get you good wages but we can make sure your house goes up in value. It looks like the banks have called time on that one.

reply: Land Value taxes amount to nationalising land, as the government decides on how the land should be used and prices its accordingly. The owner no longer takes the lead in determining how to use it. Govwernment can then take people (and businesses) out of house and home.

By: Acorn

Acorn — Thu, 22 May 2008 07:26:04 +0000

I may be the epilogue for this thread – notice that house and petrol prices still bring in the longest threads!

Land Value Tax – which will start out as a property value tax; if we adopt it – is for me the answer. It could replace Council tax and inheritance tax, even Business Rates.

The concept of sitting on a plot of land, that was bought for peanuts; watching its value go up because of private and public investment all around it; at no cost to the owner, is unfair to all taxpayers and local council finances.

LVT would put an annual cost on holding this land out of the economy. As said above, it is relatively easy to get back to the land value – not the development "residual" land value – from the property value.

Apart from increasing the supply of land into the market, it will reduce its price. And, it may even cross the mind of the local planning committee that the more land they zone for development, the richer their council becomes.

Reply: Why does nationalising land increase its supply – everything else nationalised reduces supply and raises price.

By: mikestallard

mikestallard — Tue, 20 May 2008 16:48:28 +0000

I want to duck out now – but allow me to say that, I hope, we are all in favour of MUCH lower taxes!

By: DBC Reed

DBC Reed — Mon, 19 May 2008 22:45:35 +0000

I would n't want to impugn the motives of Mike Stallard's father in law (or Mr Stallard himself) but the money that he put it to his house was very much less than what it is now worth.The difference is accounted for by the inflation in the land value , the bricks and mortar having been subject to depreciation ( A rough guide to what the building is worth can be gauged by looking up the ABI [ Association of British Insurers]Insurance re-build calculator which is on the Net. Subtracting this re-build value from the current market value gives you the land value)
Of course up until 1963 Mr Stallard's father in law would have paid schedule A on the house i.e. a form of Income Tax proportionate to the rental value of the property.John Redwood analysis of a tax like this is that it would serve to ruin the financial system In fact, it tended to temper the effect of MIRAS which was still in operation (and still is in the US ) but shortly afterwards the Tory Mods had a giveaway budget which in the absence of Schedule A and credit controls led house prices to go up 70% in two years, a secondary banking crisis then had to be quietly taken care of , followed by union trouble then ,worst of all, Thatcher.
A local tax (or rate as they still call it) very similar to Schedule A is valued on the capital value of houses in Northern Ireland and a very effective form of LVT is levied in Harrisburg Pa. which has gone from second most poverty stricken city in the USA to one of the most prosperous. Doubtless Boris Johnson will view this successful raising of revenue and stimulus to business in the USA with the same horror at genuine not socialist radicalism that grips Mr Redwood.

Reply: I want to live in a country where people are better off and can afford their own homes. That requires lower and fewer taxes, not higher and more taxes.

By: mikestallard

mikestallard — Mon, 19 May 2008 17:01:34 +0000

I have thoroughly enjoyed reading about the strangely bearded Henry George, the Physiocrats, and the Liberals. Every State in the US, apparently, uses the land tax which is, so they say, better than our council tax (which taxes the improvements people make on their property so that they are discouraged from improving their properties!) My problem with it is this: does an acre – sorry hectaire – of fine Scottish heather equal a hectaire of London concrete?
My father in law worked all his life as a teacher in the state system except for the Second World War when he was in Bomber Command. As the Reply said, he invested his money in property. He spent his salary on that. Money, after all, reflects value. I am sorry, but I cannot myself see why this is either wrong morally or wrong mathematically. You see, like the Â£20 note, I believe in Adam Smith and the invisible hand.
I am also sure that a land tax would be seen, at least by the present government, as an additional rather than as a stand alone form of taxation…

By: David Page

David Page — Mon, 19 May 2008 15:25:52 +0000

It just doesn't makes sense, does it John? You and your political colleagues (of whatever hue) effectively regard the housing market as the business that is too big to be allowed to fall, so you make policy on the fly to cosset it.

i.e., "…bankruptcies in the housebuilding and related industries and services, job losses, reduction in the number of new homes…"

However, your new-found concern (never evident when you were in power) fools no-one, and look at the consequences: savers lose out (indeed, saving is dicouraged while debt is encouraged), first-time buyers are squeezed out of home ownership in favour of BTL investors, low interest rates cause the economy to inflate in every other area, and for what? So that political parties and financial institutions can coast along on a feel-good factor largely predicated on debt and the illusion of prosperity. At least the ECB is keeping its powder dry.

Watch the economy fly when a house can be bought for Â£50,000 again — you will never see so much spending (of real money). Get interest rates up and people will only borrow what they can afford; thankfully, it looks like the banks will force this issue through self-interest, by only lending to secure borrowers / those with deposits.

I don't think we can expect a reasoned response from the politician here but it is encouraging to see so much common sense from individual people. If only economic policy had the same, we might see our individual and societal propensity for greed also reigned in.

However, I think we all remember what the Conservatives said of society in their last term in office.

I wonder if Vince Cable has a blog?