Thursday, 4 January 2018

They own land! Give them money!

From the BBC:

UK farmers are to receive the same level of subsidies they get from the EU for five years after Brexit, the environment secretary is to say. Michael Gove was due to tell farmers a new system prioritising the environment will start in 2024, instead of 2022.

The current subsidies - £3bn a year - are based on the land farmers own. Farmers will have an two extra years to prepare for the new payments, which would reward initiatives such as planting wildflower meadows and woods.

Mad, they get paid for doing nothing? I'm with Monbiot on this - scrap the subsidies and impose a flat £20* (or whatever low-ish figure gets the optimum balance) per acre LVT on them instead. Farmers will happily abandon the most marginal sites with the lowest yields and thus escape the LVT. As it happens, the nicest places to enjoy nature - near settlements, along river banks, on cliff edges and hill tops - are the worst places for farming, and vice versa - flat fields in the middle of East Anglia are the best for farming, but it's not much fun tramping across them.

In case anybody thinks I am anti-farming (which I am not, it's tough work and I love food), we could and should just exempt farming from tax altogether as a quid pro quo - no VAT refunds, no income tax or corporation tax on profits (so no capital allowances either), which we already have with forestry, no Business Rates on farm buildings/greenhouses, no PAYE on farm wages (farm workers can pay voluntary NICs to keep up their pension entitlement if they wish). You can nail this down by continuing to tax farm rental income, meaning a net tax saving for owner-occupier farmers, so we could and should exempt purchases of farm land from SDLT as well.

That'd would be more or less a break even from the government's point of view. If there's a net saving, then by all means spend it on rural broadband or rural public transport etc.

As we know from the allotments vs commercial farms example, this would increase the amount of food grown per acre and rural employment.

Everybody wins!

... Meanwhile, a report warns Brexit trade deals could threaten UK food security.

Well, they would say that wouldn't they?

MPs and peers in the All-Party Parliamentary Group on Agroecology (AAPG) say ministers must ensure famers [sic] are not undermined by future trade deals which permit imports of food produced with lower welfare or environmental standards.

Aha, so they don't mean "food security" from the consumers' point of view (the important one), they mean "income security" from the landowners' point of view?

Here's the best bit - five minutes in a TV studio with a YPP candidate last year seems to have worked wonders:

Detailing how the European Union's Common Agricultural Policy (CAP) will be replaced after Brexit, Mr Gove will say taxpayers' money should be used to boost public access to the countryside, and be spent on infrastructure and supporting rural communities.

He will say the CAP is "unjust, inefficient and drives perverse outcomes".

* OTOH asks: "Why should the LVT be flat? Shouldn't land with a higher value pay more land value tax?"

1. As I have pointed out often enough, the total rental value of UK farmland is so low (1% or 2% of rental value of urban land - hardly surprising as farming is 1% or 2% of UK GDP and employs 1% - 2% of all workers) that it's not really worth collecting anyway, such a tax serves a different purpose: to act as a cliff edge to encourage farmers to leave marginal land to be rewilded/for ramblers to enjoy.

2. Scrapping the subsidies (negative land value tax) will be a big enough shock for the big fat rent-seekers.

3. We do not know what farm rents will be once the subsidies are replaced with a blanket tax exemption. Will probably be lower; might be higher, but still negligible compared to urban land.

4. Urban land is all about location and little to do with the physical qualities of the soil or land itself, so it's easy to value, you can get it 90% accurate in a weekend with spreadsheets and HM Land Registry data. Farmland is difficult enough to value anyway, you've got to go and physically inspect it. Identifying the pure location element is even harder.

5. With farmland, the physical qualities of the soil are - to a greater or lesser degree - dictated by how well farmers have looked after it in the past and are looking after it today, which we wouldn't want to discourage with higher taxes, again, it's difficult to split out what's the naturally occurring element (taxable) and what's down to centuries of careful husbandry/wifery.


ontheotherhand said...

Why should the LVT be flat? Shouldn't land with a higher value pay more land value tax?

Mark Wadsworth said...

OTOH, I will update article to explain.

Ben Jamin' said...

But the poor hardworking hill farmers (equivalent of PWiMs) will be driven off their land by £20 tax per acre. You heartless bastard.

Mark Wadsworth said...

BJ, I'm afraid so, but they can get better jobs in more productive areas.

A K Haart said...

"flat fields in the middle of East Anglia are the best for farming, but it's much fun tramping across them."

I assume there should be a "not" in there because it isn't much fun - I've tried it. Our favourite walks tend to be those with the smallest number of fields.

Mark Wadsworth said...

AKH, thanks well spotted I have updated.

Bayard said...

"But the poor hardworking hill farmers (equivalent of PWiMs) will be driven off their land by £20 tax per acre. You heartless bastard."

What makes you think they are all owner-occupiers? LVT is paid by the landowner, not the tenant, so tenants won't see any change. Anyway, most really poor hill land (moorland etc) has public access already, so since LVT is a user charge paid for the exclusive use of land, such land should be tax-free.

Mike W said...

Aha, so they don't mean "food security" from the consumers' point of view (the important one), they mean "income security" from the landowners' point of view? Lovely - typical MW.

Unrelated. The funny thing is Mark, if I had joined the Greens as planned, and become a single issue bod, fighting for farmers to push field boundries back from the rivers (a mini rewilding if you like).I would have still have had to come here to figure out how it could work!

Mark Wadsworth said...

B, "public access" is meaningless in this context.

- land is owned privately, in which case, owner decides whether to pay the £20 and farm or rent to a farmer. If there are public footpaths across it, then clearly, those bits are exempt from the tax.
- land is owned publicly, i.e. by the council for the benefit of its residents, in which case the council decides
- it's common land (to the extent there is any left) in which case the council can decide what you can or cannot do on it.

MW, ta, join YPP, you know you want to.

Dinero said...

How does it work, what is the criteria, for a piece of land to qualify for a payment.

Lola said...

I live and 'tramp across' 'flat East Anglian farmland' pretty well everyday (in all weathers) and me and the dog both think it's fun...

Bayard said...


You have missed out a category: land that you can wander anywhere on, not having to stick to a footpath, so like a public park, but privately owned, e.g, the North York Moors. That's what I was referring to.

Din, you need to have the following:

1. At least 5 hectares of farmland,

2. The "entitlements" to the payment (these do not run with the land and can and are bought and sold separately to it, don't ask me why).

3. The patience of Job and the persistence of a bulldog to persuade the Rural Payments Agency actually to give you any money. Their waiting times make the NHS look like a model of efficiency.

Mark Wadsworth said...

B, a public body can own land in its capacity as private landlord (like councils buying up shopping centres) or for public use (like a park). If the North Yorks Moors are one giant public park neither suitable nor used for farming, then clearly, no LVT applies.

DBC Reed said...

We have chewed over the matter of dreary East Anglian farmland before. The keypoint (literally) is Holme Post which was driven into the ground in 1852 twenty plus miles from Kettering and near the A1 (so quite far eastwards).This shows that the top 13 ft of rich alluvial soil that the area was originally drained for has been blown away so the land is now intrinsically worthless as it is in need of artificial fertilisers.

Mark Wadsworth said...

DBC, other sources say that this is down to subsidence, which seems more plausible to me.

Even if it is true that we need more fertilisers, it is still the case that the flat areas of East Anglia are better for farming that a mountain side in the Cairngorms.

DBC Reed said...

If it was simply a matter of subsidence, the tops of the Holme Posts would still be resting on the ground surface;peat "shrinkage" might be a more apt description.There is a great deal that is truly odd about the draining of the fens and all the fighting by the Fen Tigers: it is not simply a matter of "More food, Hooray". A balanced(-Ish) write up is "The shrinking fens-Discovering Britain." Who can be said to truly own the fenlands is open to question: the whole shooting-match depends on constant pumping.Something that Vermuyden never thought of( when he steamed in with what was basically an enclosure scheme).

Bayard said...

Mark, like most moorland, the North York Moors are suitable for sheep grazing but nothing else.

DBCR, AFAIK, the reason why large swathes of the Netherlands are below sea level is due to peat shrinkage, except that the sea broke in and flooded a huge area to form the Zuider Zee in 1287.

Mark Wadsworth said...

DBC, ok, call it shrinkage. But earlier you said the soil had blown away. Which is it?

DBC Reed said...

@MC You obviously have not read "The shrinking fens" which includes "Trees and fens were grubbed out for large-scale mechanised farming and so in in dry spells , when the winds blew across the unbroken fields , the soil was literally blown away."
It concludes "Draining the Fens has been described as the greatest single ecological catastrophe that ever occurred in England " with a a further remark about the food production/ ecological balance.
I was trying to discuss this balance by developing the point that the food production on the muddy brown East Anglian fields is massively subsidised by pumping and flood prevention,was carried out by violence against long term resistance from locals and is depleting fertility levels.

Mark Wadsworth said...

DBC, no I have not read it.

But you are changing the topic. Fact is, flat fields in East Anglia, whatever their history, are the best places for farming and the worst for strolls in the countryside (unless you are Lola with his dogs).

Bayard said...

"I was trying to discuss this balance by developing the point that the food production on the muddy brown East Anglian fields is massively subsidised by pumping and flood prevention,was carried out by violence against long term resistance from locals and is depleting fertility levels."

You are conflating two separate thinks here. The subsidised agricultural production and the incompetent husbandry are separated by centuries from the "violence against long term resistance from locals". The ecological disaster has little to do with the actual draining of the Fens in the C18th and much to do with the mismanagement of the resulting agricultural land in the second half of the C20th.

The Fens are just another piece of collateral damage caused by the Cheap Food Policy pursued by governments of all flavours since WWII and possibly before that.

ontheotherhand said...

Thanks for the extra explanations Mark. If it's not worth collecting, then I don't think we should bother. The admin on both sides would make it expensive to collect. If the purpose is to rewild marginal land for public enjoyment, then I think it would be a more honest exercise to compulsorily purchase the land (arguing for zero compensation). This would require identification and valuation once, rather than annually. I actually think monitoring the productive capability of land is quite easy with satellites (and saying 'it is too hard to value' is an argument used by homeys on residential land, dismissed by you). French farmers get a small allocation each to grow tobacco for example, and this is monitored by satellites.

How do you propose to deal with land that farmers sit on hoping to get a planning uplift? The asking price for a field next to my house in the village is 10X its agricultural value, owing to nothing other than its location value. The low tax you propose is not enough for them to use it or sell it.

How do you propose to deal with micro-abandonment? The swampy patch in the middle of my field, the land under the hedge, or even the stripes the tractor traverses year after year? I suppose it could be a minimum size, but an island of abandoned land in the middle of private land would not be accessible, so it has not benefitted anyone.

Mark Wadsworth said...

OTOH, good questions on the administration and enforcement of this. No system will ever be perfect, that's for sure, it's a question of costs v benefits.

On potential planning, that is a non-isssue.

The selling price of land with planning is the net present value of the future site premium that can be collected by the owner. The LVT on housing will depress that amount, so the planning uplift will be lower - quite how low depends on how high the LVT is.

So even if planning is never applied for or granted, the hope value will be diminished accordingly.

If nobody ever applies for planning, then the flat £20/acre a year applies. In extreme situations, councils could award planning permission unilaterally and charge the higher residential LVT, but I don't see that happening too often - we've got plenty enough housing for the time being.