Text of a leaflet:
A Permanent Solution to the Problem of Urban Decay
Land close to the heart of a city tends to retain a high value even when derelict.
Almost every city in Britain is disfigured by areas of idle, ugly wasteland. The Department of the Environment’s Survey of Derelict Land in England, made in 1993, shows the stock of derelict land to be 396 square kilometres. This includes only land "so damaged by industrial or other development that it is incapable of beneficial use without treatment". It does not include land simply left empty and neglected. Nor does it include the derelict land of Wales and Scotland.
Why do we have these blots on our city landscapes? Is this land just surplus to requirements? Surely not, since office rents and the selling price of houses remain high in urban areas. Why do developers not rush in to build on these empty sites and take advantage of the market? How has it come about that in crowded cities where there are large numbers of people needing offices and factories to work in, houses to live in, parks, swimming pools, pubs and theatres to play in, land is wasted and left empty?
Change is of course natural and inevitable in the economic life of a community. Certain industries, like the cotton industry in Lancashire, fall into decline; passenger shipping is replaced by air travel and once busy ports fall into disuse; urban sprawl can make an inner city area less convenient for trade because its roads are inadequate for an increased volume of traffic. For reasons like these, factories, warehouses, customs houses, shops may become redundant. But economic change does not explain why these redundant buildings are not converted to different uses or pulled down for others to build in their place. Nor does it explain why empty sites are left to decay and become a magnet for vandal is and crime.
The main reasons for this waste and neglect of inner-city spaces are land price inflation and land hoarding. When population is growing and industry expanding, land is greatly in demand and the price rises rapidly. Seeing this, owners of land hold on to it as an ‘investment’ for the future, waiting for its price to rise still further before they sell or rent. This action increases the scarcity and inflates the price. Anticipating a need for building land in the future, both commercial firms and local authorities acquire or hold on to land they will not need for many years because they believe that, when they do need it, its price will have soared. This too contributes to the price rise.
In times of inflation, people acquire land as protection against loss when money is losing its value. Even in times of recession, those with the means to do so buy land as the most secure of possessions; it cannot be destroyed and in time it is bound to be in high demand again, for land is a limited resource. As land is simply the habitable surface of the earth, no one can respond to increasing demand by producing more of it, and no human activity can go on without it. Wasteland represents an opportunity for employment foregone. Urban decay is as much a cause of poverty and unemployment as a symptom.
Land close to the heart of a city tends to retain a high value even when derelict. When a high outlay for reclamation has to be added to a high price for buying or renting the land, it becomes a serious discouragement to potential developers as they weigh up the opportunities involved in regeneration.
These causes of inner-city decay are aggravated by our system of taxation. The owner of an urban site who neglects it is charged little or nothing in taxation. The owner of a similar site who clears it, makes it safe for human habitation, builds a factory or office block where others find employment, is punished for his efforts by a hefty charge in business rates. Business rates operate as a check on regeneration and reduce opportunities for employment. Since the seventies, successive governments have made strenuous efforts to tackle the problem of urban decay. Government offices have been moved out of London to less prosperous areas, Development and Enterprise Zones have been set up, new roads and motorways built and grants made available for reclamation. All of this has cost taxpayers money and has benefitted landowners. Local authorities have been ordered to sell certain sites and development corporations have been set up to simplify and speed up the planning procedures which have been a discouraging cause of delay and expense to would-be developers.
Certain areas, like the Docklands in London, have been regenerated by such means, but others have meanwhile decayed further. The problem persists. The main difficulty is that measures designed to encourage development put up the value of the land and in the long run taicourage land speculation and land hoarding again.
Having seen that the root cause of urban decay is land price inflation aggravated by an unfair tax system, the solution becomes obvious: change the tax system so that it works to discourage the holding of land out of use and to encourage regeneration.
This can easily be done by transferring the tax base from the value of buildings to the value of
the sites on which they are built. Land of the same type in the same area would then attract the same level of taxation whether used or unused. Owners who neglected land and left it unused would no longer be rewarded by a tax exemption. Owners who cleared and decontaminated land and built useful buildings on a particular site would no longer be penalised. This form of taxation, known as Land Value Taxation (LVT), would be a powerful incentive to redevelopment or resale. It would bring land onto the market, lowering its price and encouraging development, production and employment.
Anybody who did not wish to pay the LVT could sell the site. Under this sytem of taxation, no one
would be robbed of any wealth they had created by their own efforts because, unlike that of the buildings erected upon it, the value of a site is not created by its owner but by the presence of the surrounding community: nearness to town centres, convenient transport facilities, schools and parks; all such features put up the value of a site.
As well as being fair and encouraging production and employment, land value taxation would also be easy to assess and impossible to evade. Land cannot be hidden or transferred to a tax haven. Above all, it would provide the means of tackling urban decay at its root instead of trying to deal with the symptoms piecemeal.
For further publications please contact:
HENRY GEORGE FOUNDATIONSuite 424, London Fruit Exchange
Brushfield Street, London El 6EL
Tele: 020 7377 8885 Fax: 020 7377 8ô86
E-mail: [email protected]