The UK needs to rethink its local taxes. It’s time for land value tax

We’re saying nothing. Image: Getty.

Labour London Assembly member Tom Copley on the future of property tax.

Last week Chris Williamson left the Labour frontbench after he suggested changes to council tax that are not Labour Party policy. Jeremy Corbyn was right to ask for Williamson’s resignation: shadow ministers floating policy ideas that are not part of their briefs, particularly in relation to taxation, is a recipe for chaos. However, the question of how we should reform local taxation is something the Labour Party needs to consider.

Council tax is fundamentally flawed. For a start, taxing people based on the notional value of their property in 1991 is absurd. Indeed, even calling it ‘their’ property isn’t quite accurate, given the tax is paid by the occupier not the owner – so poor tenants living in expensive properties pay more than richer homeowners whose property is worth less.

Council tax bands have never been revalued, so billionaires living in multi-million pound houses pay the same amount as middle-income homeowners. The most expensive property sold in the UK in October last year went for just shy of £16m in Westminster. The cheapest was £18,500 in County Durham. The owner of the Westminster property would pay just £250 a year more in council tax than the owner of the County Durham property. Council tax bands can’t be varied individually either, so if a council wants to raise taxes on the most expensive properties it must raise taxes for the cheaper ones as well.

There is nothing progressive about council tax. It’s time we scrapped it, along with stamp duty and business rates, and replaced it with a fairer system.


In 2015 I led an investigation for the London Assembly into Land Value Tax (LVT). This led to the Tax Trial report which called for the mayor of London to be given the power to trial LVT in part of the capital. LVT is a tax on the annual rental value of land in its “optimum use” (as defined by a public authority).

Unlike council tax and business rates it is not a tax on the property that sits on the land. It is paid by the land owner, not the tenant, and applies regardless of whether the land is developed or not. It is not only a source of taxation but a disincentive for landowners to “land bank” sitting on undeveloped land and waiting for its value to rise.

Since 1995, the value of land in the UK has risen by 544 per cent whereas the value of the buildings sitting it has only risen by 219 per cent. And the value of land is largely determined by its location, not by any effort on the part of the landowner – a point made by Winston Churchill, a proponent of LVT, in 1909:

“Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.”

When the state invests large sums of public money in a project like Crossrail, land values rise along the route. LVT would allow some of that rise in value to be recouped by the taxpayer.  

Some of the same problems with council tax would apply to LVT: for example, what about homeowners who are asset rich but income poor? I’m convinced that a more progressive system could be constructed to allow people to choose whether to defer their payments until they sell their home, and most people wouldn’t be paying any more than they currently pay annually in council tax in any case. 

What LVT would do is generate a lot more revenue from very wealthy landowners such as the Duke of Westminster who can afford to contribute more. Surely that’s a proposal that everyone in the Labour Party can get behind?

Tom Copley is a Labour member of the London Assembly.

 
 
 
 

Cycling on London’s Euston Road is still a terrifying experience

Cyclists on the Euston Road. Image: Jonn Elledge.

The New Road, which skirted the northern boundaries of London’s built up area, first opened in the 1750s. Originally, it was intended to link up outlying villages and provide a route to drive sheep and cows to the meat market at Smithfield without having to pass through the congested city centre. 

As with bypasses and ring roads the world over, however, it increasingly became congested in its own right. Today, you won’t often find livestock on the route, which is now Marylebone, Euston and City roads. But you will find up to six lanes of often stationary buses, cabs, and private vehicles. In a city whose centre is largely free of multi-lane highways, London’s northern ring road has long been the sort of abomination that you avoid at all costs.

But now, somewhat surprisingly, the road is seeing yet another new use. Earlier this week, the first phase of a temporary cycle lane opened on the Euston Road, the middle section of the route which runs for roughly a mile. As London rethinks roads throughout the city, this addition to the cycling map falls solidly into the category of streets that didn't seem like candidates for cycling before the pandemic.

It is, to be clear, temporary. That’s true of many of the Covid-led interventions that Transport for London is currently making, though those in the know will often quietly admit to hoping they end up being permanent. In this case, however, the agency genuinely seems to mean it: TfL emphasized in its press release that the road space is already being allocated for construction starting late next year and that "TfL will work with local boroughs to develop alternate routes along side streets" when the cycle lane is removed.

At lunchtime on Friday, I decided to try the lane for myself to understand what an unlikely, temporary cycle lane can accomplish. In this case it's clear that the presence of a lane only accomplishes so much. A few key things will still leave riders wanting:

It’s one way only. To be specific, eastbound. I found this out the hard way, after attempting to cycle the Euston Road westbound, under the naive impression that there was now a lane for me in which to do this. Neither I nor the traffic I unexpectedly found myself sharing space with enjoyed the experience. To be fair, London’s cycling commissioner Will Norman had shared this information on Twitter, but cyclists might find themselves inadvertently mixing with multiple lanes of much, much bigger vehicles.

It radically changes in width. At times the westbound route, which is separated from the motor traffic by upright posts, is perhaps a metre and a half wide. At others, such as immediately outside Euston station, it’s shared with buses and is suddenly four or five times that. This is slightly vexing.

It’s extremely short. The publicity for the new lane said it would connect up with other cycle routes on Hampstead Road and Judd Street (where Cycleway 6, the main north-south crosstown route, meets Euston Road). That’s a distance of roughly 925m. It actually runs from Gower Street to Ossulton Street, a distance of barely 670m. Not only does the reduced length mean it doesn’t quite connect to the rest of the network, it also means that the segregated space suddenly stops:

The junction between Euston Road and Ousslston Street, where the segregated lane suddenly, unexpectedly stops. Image: Jonn Elledge.

 

It’s for these reasons, perhaps, that the new lane is not yet seeing many users. Each time I cycled the length of it I saw only a handful of other cyclists (although that did include a man cycling with a child on a seat behind him – not something one would have expected on the Euston Road of the past).


Though I hesitate to mention this because it feeds into the car lobby’s agenda, it was also striking that the westbound traffic – the side of the road which had lost a lane to bikes – was significantly more congested than the eastbound. If the lane is extended, it could, counterintuitively, help, by removing the unexpected pinch points at which three lanes of cars suddenly have to squeeze into two.

There’s a distinctly unfinished air to the project – though, to be fair, it’s early days. The eastbound lane needs to be created from scratch; the westbound extended. At that point, it would hopefully be something TfL would be keen enough to talk about that cyclists start using it in greater numbers – and drivers get the message they should avoid the Euston Road.

The obvious explanation for why TfL is going to all this trouble is that TfL is in charge of the Euston Road, and so can do what it likes there. Building cycle lanes on side nearby roads means working with the boroughs, and that’s inevitably more difficult and time consuming.

But if the long-term plan is to push cyclists via side roads anyway, it’s questionable whether all this disruption is worth it. A segregated cycle lane that stops without warning and leaves you fighting for space with three lanes of buses, lorries, and cabs is a cycle lane that’s of no use at all.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.