Land Value Capture
22 May @ 12:30 pm - 2:00 pm BST
The government is increasingly coming to the conclusion that the key to solving the housing crisis is to invest in infrastructure, thereby connecting available land to jobs. However, the challenge remains as to how this infrastructure should be financed given the precarious state of the public finances.
The £2.3bn housing infrastructure fund announced in the Autumn Statement, although welcome, is insufficient to reduce the infrastructure deficit. Britain’s infrastructure stock as a % of GDP is only 57% versus 71% in Germany. Furthermore, Britain is expected to invest only 2% of GDP in infrastructure versus a 3.5% OECD recommendation.
One reason why the rate of infrastructure investment in the UK is so low is that it tends to be paid for out of general public expenditure. When it comes to prioritising infrastructure against health, education and defence it is not surprising that it has been consistently at the bottom of the list. But financing local infrastructure from general government taxation is the exception rather than the rule internationally. Most of Britain’s competitors across Europe and Asia use land value capture which is a self-financing mechanism, where bond holders are paid back by the revenue streams derived from the uplift in land values.
The Centre for Progressive Capitalism estimates that a small change to the Land Compensation Act could lead to a jump of 25% in infrastructure investment, or an extra £185bn over 20 years for England alone.
The housing White Paper makes numerous references to land value capture, and sets out the government’s determination to explore this key area. To facilitate a wider debate on this issue, the Centre will hold a seminar on land value capture on 22nd May 2017.
Professor John Muelbauer
Professor of Economics and a Senior Fellow of the Institute for New Economic Thinking at the Oxford Martin School, Oxford University.
Commissioner, National Infrastructure Commission
Director, Centre for Progressive Capitalism
If you would like more information or you would like to attend please contact firstname.lastname@example.org
The image is ‘East India Quay’ by Davide D’Amico, published under CC BY 2.0