Great Britain land privatization fact of the day

What has been Britain’s biggest privatization to date?

…Britain’s biggest privatization has not been of housing or a bank.  It has been of land.  Since Margaret Thatcher entered Downing Street in 1979, and continuing all the way to the present day, the state has been selling public land to the private sector.  It has sold vast quantities — some 2 million hectares, or about 10 per cent of the entire British land mass…my best estimate…is that, at today’s prices, the land that has been sold is likely to be worth something in the order of £400 billion…

That is from the new and useful The New Enclosure: The Appropriation of Public Land in Neoliberal Britain, by Brett Christophers.  Land, land, land!  The author, by the way, is mostly critical of this privatization.

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Why not 20, 50, 100 year leases instead?

Agreed. No need to give away that kind of value but probably worth unlocking productivity subject to environmental regulations etc.

Such as oil and gas? There are annual licenses, taxes, etc. Who sells an oil lease for a fixed price?

Any productive use except those that cause more harm than good

It depends on WHAT is sold. Land held by the government pays no taxes and thus increases taxes for everyone else. SOme land should be held by the public; parks, schools, government offices, etc. A lot of land that governments own is held simply because they choose to just hold onto it rather than use it for it's highest and best use. SO sell the land in a free market and ONLY for a fair price (not a giveaway to friends and fellow elites).

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It doesn't sound like they're giving it away.

see Alistair's comment below but in a nutshell:
- regulations and scarcity of land increase land values
- public investment in infrastructure, utilities, education all increasing productivity and land values particularly in cities
- public sale does not capture these future price increase
leasing would allow the state to partake in some of these gains

Any transaction represents some evaluation as to whether or not the property is going to increase in value, for whatever reason. If it's easy to predict the value will rise, that evaluation can be reflected in the purchase price. If it's not easy to predict which way the land's value will go, then leasing would mean that the government carries the risk of a decline.

If you're suggesting that there's some structural reason that the government is constrained from setting a sale price that accurately captures the likely value of future improvements, then there's no reason to think it would price leases any more advantageously.

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The author, by the way, is mostly critical of this privatization.
The title makes that pretty obvious.

The U.S. federal government should do likewise (and pay someone to take Puerto Rico).

You made me laugh, sir. Thank you.

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Or perhaps grant statehood to Puerto Rico and offer statehood to the Koreas.

Is there a compelling argument against granting Puerto Rico Statehood?

Yes.

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As a Brit, I certainly support land privatisation in principle. But there's an interesting story here.

In 1980 the UK Government had vast amounts of land, much acquired during WWII or the immediate aftermath, with which it was doing nothing or very little. Much of what was used was under-utilised; for example, minor civil service administration in central London real estate. There were certainly large gains to general welfare made by selling a lot of this. Even the (expensive) private right-to-buy had large positive externalities by giving council tenants a stake in their property and community. So a big win.

HOWEVER, there is prima facie evidence of, if not corruption, then perhaps too cosy a relationship between large developers and the Conservative party. A lot of land DID get sold off at rather below market value to a relatively small set of developers over a long period of time. And planning laws have been kept strict; restricting supply, boosting developer profits and creating regulatory barriers to competition with them. "Land Banking" is likewise a real thing, an enrichment of developers entirely enabled by Government supply-side restrictions. In return, developers have been about the most generous backers of the Conservative party.

This is not to say that the criticisms in this piece are entirely justified, but even as a libertarian I think they deserve a hearing.

The term "public land" is a misnomer. It would be more accurate to call it "state land".

It's the UK, thus it's Crown Estate.

If the real estate was idle and there were better uses for it, it's OK to sell. But where's the money? Is Norway's Oil Fund an aberration even among low corruption countries?

Well the money is gone, they sold off the land for far less than it was worth. To paraphrase George Constanza "It's not corruption if YOU believe it". When you're so anti-government it's not corruption to sell off public assets at firesale prices to your developer buddies. Government shouldn't have any money at all.

A word for the defence:

We are appraising the value of the land with hindsight knowledge of land values. At the time, it was not obvious that values would rise and developments would be successful. I'm not sure the prices realised were that unreasonable at the time.

And the general welfare gains were vast as land was taken from unproductive into productive use. I suspect that even if the land had been given away for free, the average UK citizen would have been better off through the indirect welfare gains.

Indeed, it's always easy to characterize development as zero-risk after it succeeds.

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"the average UK citizen would have been better off through the indirect welfare gains." + the additional tax base. I'm sure all this land, now turned tax producing, is filling tax coffers somewhere.

There's no land value tax in the UK.

Some indirect tax may be generated if the land was used for commercial or industrial purposes. Otherwise, no.

True, but there are property taxes, called "rates" and "council tax". There is also a Capital Gains Tax and an Inheritance Tax. And a company that trades in land will pay Corporation Tax.

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"Where's the money"

We spent it.

"Is Norway's Oil fund an aberration..."

Yes.

Size is a factor there. Norway is a tiny population sitting atop an ocean of oil.

Someone ought to invade it.

I tried that, didn't last long.

Yeah, but that was because you invaded like six other countries at the same time, and one of them was the Soviet Union.

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We could use that army that conquered Iraq and isn't occupying it

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"Where's the money?" - in private hands. I think the idea of sovereign wealth funds are highly risky, I would prefer the money distributed to the population via lower taxes (as happened in the UK with the privatisation receipts) rather than being in the sticky hands of politicians ready to support their favorite idea. Large amounts of money under a few people's control also invites fraudsters and corruption, as we saw with the Malay SWF. Bottom line the amount of private assets in the UK dwarves any SWF and that is healthy.

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Stated differently, the government to measures to increase the supply of housing. Which would have the effect of keeping it affordable.

It is a no brainer that the left would oppose something like that.

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I should add that one under-appreciated factors in the sale was the shift of the UK civil service to modern accounting practise over the period in discussion. A lot of land in government control had never properly been part of the accounts.

Once the crown estate was properly audited, Ministers were horrified to learn just how much "dead capital" and depreciating assets, they were sat on. Hence there was a drive to rationalise this.

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President Captain Bolsnaro has oficcially decided to sell state assets worth 20 billion dollars this year alone and eliminate the twin deficits.

Technically selling assets to pay off operational deficits is bad management and a sign of weakness, not strength, a forced move in accounting.

The USA also sold land in the west by almost giving it away to settlers and to mining interests for almost nothing, ironically these westerners are 'free market' oriented despite this socialism. That said, land reform world wide (WWII Japan during the US occupation, same in Korea, same in Taiwan, see Joe Studwell) is often socialist with capitalist characteristics, and Studwell argues necessary to make sure a vested few monopolists don't take over the country as they have in Russia and in the Philippines, also Malaysia, Indonesia to a degree.

This characterization of homesteading in the American West is a bit skewed. Residential buyers certainly paid for their land in the form of required improvements; i.e. by creating taxable value from otherwise uncleared wilderness.

It's easier to characterize mining rights as a giveaway, but it also would have been difficult to assess the value of mining claims ex ante. Most prospectors went bust, I think.

I'm basing my opinion on Walton & Rockwell's book, Econ History of the USA. They are scholars. And most western expansions go bust, it's a boom and bust cycle. TC linked to such a paper that shows in all expansions (even outside the USA) it's a boom and bust cycle that eventually slowly trends upwards for GDP/capita.

Bonus trivia: some scholars like Fogel says US early railroads were not really that much of a stimulus (and many went bust, further evidence) For example, transportation by boat was often cheaper and moved more commodities than trains. That said, trains did allow 'marginal' farmland and farmland in the far west to become connected to the rest of the world, and allowed quick transport of high value added goods, and people. It's a mixed bag, and I think 'catalyst' events like a railroad and better patent laws cannot be captured by crude GDP figures.

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. by creating taxable value from otherwise uncleared wilderness.

Creating taxable value? Otherwise uncleared wilderness? A more accurate description would be the theft of peoples' existing homes.

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Th Guardian had a piece on the book which quite frankly is mystifying. https://www.theguardian.com/commentisfree/2018/feb/08/biggest-privatisation-land-margaret-thatcher-britain-housing-crisis If one is actually interested in facts about housing construction in the UK, I would recommend: https://content.knightfrank.com/research/297/documents/en/uk-housebuilding-report-2018-5682.pdf "The housebuilding industry has responded
strongly to the demand for new housing,
increasing output by 55% over the last five
years. "

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Golly, even the title is a lie. "The New Enclosure: The Appropriation of Public Land in Neoliberal Britain ."

The parliamentary enclosures were nothing to do with public land - they were a rearrangement of the ownership and use of private land.

And how is it "appropriation" if state-owned land is sold to the highest bidder?

To answer my own question: I suppose it was "appropriation" when council houses were flogged off cheap to their tenants rather than put on the open market.

I suppose it was "appropriation" when council houses were flogged off cheap to their tenants rather than put on the open market.

Distressing in direct proportion to the degree of corruption in the award of such properties. If they got them initially through a proper lottery or undisturbed waiting list, not so bad. I'm recalling, however, that the latest round of The Troubles in Ulster started with the witless award of a council house to a 19 year old single girl who had some sort of connection to the local Unionist Party.

In this country, you have huge inventories of grazing and timber land which could be auctioned off, as well as a problematic water rights regime in the arid West.

"If they got them initially through a proper lottery or undisturbed waiting list": well that raised a laugh from me.

A million years ago a friend of mine - a delightful girl from a most proper family - spent a university vacation working in the local council's housing department. This proved to have been of huge educational value. She learnt that the way families got assigned better council housing was that the wife would let Councillor Murphy have his wicked way with her.

How, you might wonder, did the family get a council house in the first place? The tenancies were, astonishingly, inheritable: there need never have been any test that the family involved was so poor as to merit subsidised housing.

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When we "bought" a council house we were buying the remainder of a century leasehold, and did not own the land. I don't know if that was universal, perhaps pertaining more to purpose-built council estates than to individual properties that came into the councils' hands, but reading the cover-copy of the book being discussed, it seems that this particular program isn't what the author is talking about.

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One last point: much land has been sold by Local Authorities - town, city or county councils - rather than by the central government. I'd be interested to know what proportion that was - it was obviously all the council housing, but what else did they flog off? It was at one point a cause for complaint that they often sold off school playing fields, thought the complaints in the likes of the Guardian were probably somewhat muted since it was often Labour-controlled councils that did the selling.

For the reader, slang: "flog off", sell off, at cheap, firesale prices : flog off vt sep (Brit inf) → verscheuern (inf), → verkloppen Sample: "TORY plans to flog off social housing are a Robert Mugabe-style land grab, a former Lib Dem Cabinet minister has claimed."

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The author, by the way, is mostly critical of this privatization.

Good. Anything that upsets a specimen of the foul British chatterati should be assumed to be a salutary policy.

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Henry George. There. I said it.

Why George was not even mentioned in my 7 years of economics, business and public policy education I'll never understand.

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Total rambling novice here, but it should be mentioned that land use rights for the public are much stronger in the UK than in America (i.e. there is Right to Roam).

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Two million hectares is 7% of Nevada's land area, so if the US federal government reduced its Nevada land ownership by two million hectares, it would still own 78% of Nevada land.

85% of nevada is uninhabitable, as was understood in 1864 when Nevada was admitted just in time to cast 3 electoral votes for Honest Abe

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Which is why a citizen of Nevada is not equal to a citizen of Massachusetts.

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400 billion pounds for 20,000 square kilometers sounds pretty cheap. I think over the past twenty years Singapore or Hong Kong probably got more out of leasing (not selling) parcels totaling less than 100 square kilometers.

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Of course the elephant is the room is that land should have a selling price at all. In a civilised society, the exclusive use of natural resources would be on the condition at those excluded would be compensated for their loss of opportunity. The fact they aren't leads to a net transfer of incomes, which is then capitalised into selling prices.

So sure, the state should transfer natural resources from itself into the hands of others able to put them to their best use, but unless the above conditions are met, it will only further increase excessive inequalities.

We then get symptoms like housing issues.

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I'd need to buy the book to really judge, but I've got a lot of questions:

• We "bought" a house from the tenant who bought it from the council. What we actually bought was the remainder of the 99-year leasehold. Does this count as the government selling off land?

• I was reading yesterday the history of the Vicers Viscount airliner, and there was mention of the prototype being flown from Wisley airfield. I had no idea that there was an airfield here, but by golly one can still see it on google aerial view. It was "requisitioned in 1942", and then sold back to the owner in 1982. Does this count as flogging off public land?

The rail companies in the UK were all nationalized, and then privatized, and then the rail operationg company was renationalized and it was discovered that they really hadn't any idea of the details of the land under their control. This was then duly cataloged, and much of the stuff not needed for rail infrastructure purposes has now been used for development. This was pretty much all wasteland or brownfield, but barred from public use, and now it is seeing productive use. Is this included as government land sold off?

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