Are there unexpected consequences?
underused land into better – that is to say, greater – use.
Will it force the over-use and over-development of sites that would be better left
relatively under-developed – businesses of low economic but high social
value, low-rent housing
Stewardship applies a financial pressure to put each site to the best possible use. Across the country as a whole, however, this brings into use derelict land, underused land and second homes . The new availability of this land relieves some of the pressure on sites of low economic but high social value.
If the pressure to develop these sites nevertheless proves to be excessive, it may be necessary to use the planning system to restrict the use to which those plots of land are put.
We know for sure that the system of unemployment
benefits with which we are familiar in the UK already discourages people on
benefit from working. Mass
unemployment, combined with a conditional benefit system that actually
requires people not
to work at all if they want to receive unemployment benefit, provides
perhaps the worst of all possible solutions.
For some people up to 95 per cent of earned income is taken away from
them through taxation and withdrawal of benefit when they enter work, and
even the most ambitious reforms of the coalition government are to reduce
this to 60 per cent. The
benefit system actually makes it illogical for people to work.
I believe that we should design the benefit system so that it allows
those who want to work to do so without impediment.
Most individuals with a small independent income from the Universal
Income would want to earn more, and they could do so with no more than 30 to
40 per cent of it being withdrawn during transition.
Some of these people might work fewer hours per week than they would
in an ownership economy, but most would probably work just as much, or even
more when Income Tax is lifted.
There is also a big difference between choosing not to work and being
excluded from work. Unemployment in an ownership economy results in a
contraction of choices and possibilities, while being without paid work in a
stewardship economy could be a positive choice and an expansion of
A stewardship economy provides people with
opportunities for self-determination not protection from themselves.
There certainly have been examples where the provision of unearned
income has had a destabilising effect, particularly if it is introduced
rapidly or as a one-off payment. A
win on the lottery or a sudden influx of oil money to a country may be spent
on displays of wealth, for example. But
this is largely a problem of rapid transition.
Perhaps it would be best to ask parents whether they squander their Child Benefit and pensioners whether they squander the Basic State Pension. About a third of the recipients of the Alaska Dividend Distribution Scheme (The Why? Supplement: Chapter 13) spend it all, about half the recipients save it all and the rest spend some and save some (Peter Barnes 2001:71). In Namibia, after introduction of the Basic Income, hunger and undernutrition fell and the use of (fee-paying) schools and health clinics rose. Economic activity and household income increased as people were able to purchase the means of making an income (Basic Income Grant Coalition 2009:3).
on things like sales or wages, for example, are passed on to the consumer -
remember what happens to pump prices when tax on petrol is increased at the
budget. Won’t the landlord
just pass the cost of the stewardship fee on to the tenant, and the tenant
then pass it on to customers through higher prices?
on sales and wages are passed on to consumers because they fall equally on
all competitors, competing products or workers.
Charges on the market rent of land cannot be passed on because they
fall very unequally.
At the marginal site (the least productive site at which anybody
would choose to engage in production) there will be no rent, and thus no fee
or charge, to pay
Why? Supplement Chapter 8). A
high-value site commands a higher rent than a marginal site because it can
charge more for goods or sell more of them.
At these sites, however, any attempt by the landlord to pass the fee
on to the tenant by asking more than the market rent will fail, as no tenant
is going to be able to make enough profit to pay it. It is competition from sites with lower market rents that
makes it impossible to pass stewardship fees on to the consumer.
Adam Smith distinguished between the two components of the rent of a
house, building rent (‘rental’ in our terms) and ground rent (‘market
rent’) (Adam Smith 1776
Volume III Book V Chapter II: 232). Since his time there has been general agreement amongst
orthodox economists that taxes and charges on the market rent cannot be
‘Ground rents are a still more proper subject of taxation than the rents of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether on the owner of the ground rent, who acts always as a monopolist, and exacts the greatest rent that can be got for the use of his ground ........Whether the tax was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether on the owner of the ground-rent’ (Adam Smith 1776 Volume III Book V Chapter II:238).
land-tax, levied in proportion to the rent of land, and varying with every
variation of rent, is in effect a tax on rent;
and as such a tax will not apply to that land which yields no rent,
nor to the produce of that capital which is employed on that land with a
view to profit merely, and which never pays rent, it will not in any way
affect the price of raw produce, but will fall wholly on the landlords’ (David
Ricardo 1817 Chapter X: 232).
You often see business
premises, such as shops in a city,
unoccupied because of the
heavy burden of rent and rates.
a stewardship fee would reduce the profitability of enterprises just as the
rent and rates do?
If the stewardship fee for a site was incorrectly set at a level above the market rent it would indeed lead to that site being unoccupied. That is why it is so important to design the practicalities of valuation so that the stewardship fee really does equal the market rent using direct market mechanisms wherever possible.
A landlord who rents out their land to another enterprise would, if transported from an ownership to a stewardship economy, suffer from having to pay a stewardship fee equal to the market rent. Their income from the land element of their property, net of stewardship fees, would be zero.
A business that rents its land would be unaffected by any liability to pay the stewardship fee, which is paid by the landlord and not passed on to the tenant. Government revenue from stewardship fees is used to fund reductions in taxes such as Income Tax, National Insurance contributions, VAT and Corporation Tax so a stewardship economy would increase the profitability of such a firm.
A business that owns its own land would pay no more in stewardship fees than a competitor who is a tenant pays in rent, or a competitor who is buying their site with a loan pays in interest on the loan.
So the only businesses whose profitability is compromised by the introduction of stewardship fees are those who had previously been receiving a hidden subsidy as the outright owner of their site.
Wouldn’t people take to
the road to avoid paying the stewardship fee, increasing the number of
Most people at present pay rent or a mortgage, and this doesn’t drive them to travel. The stewardship fee is simply a form of rent that is paid to all of us rather than to a landlord.