Repealing the People's Budget - 2007

Anyone who knows about the controversy surrounding Lloyd George's 1909 budget will know that the House of Lords fought tooth and nail to prevent the most important fiscal measures in that budget - Georgist Land Value Taxes - from being implemented. They fought so hard, and were prepared to give up so much, that they emasculated their own power by accepting the first Parliament Act, rescinding their historic rights to overturn anything the elected chamber sent to them - most especially finance bills, in return for their aristocratic land wealth remaining immune as far as possible to the tax collector's predations.

For those of us who still harbour ambitions to complete Lloyd George's work in this area, the past few weeks, and in particular the furore about Inheritance Tax have been very depressing. For we have been witnessing the fight to repeal one of the few measures of land taxation L-G was able to get passed.

The landed interests of his day, represented by the Lords and the Tories, did not want land taxed on disposal, they refused to participate in registering all land to make annual land tax feasible, but they could not resist, ultimately, the calls for a more general taxation on passing an estate down the generations. Though it aimed at all accumulated wealth passed down, it was aimed at land wealth, and the landowners felt that they might get away with it by selling more liquid wealth on death to pay the taxes and keeping their privileged position as landowners.

Now the landed wealth of the country is spread more widely, and the calls to abolish even this small remaining part of the People's Budget are being made in the name of the much wider community of landowners, owner-occupiers. And so they are much more popular calls - many want to hope that they will one day be "accidental property millionaires". And even a Labour government is prepared, as they have shown today, to accept those calls and try to take the family home out of Inheritance Tax for good.

But the arguments made by Lloyd George and Winston Churchill and others around 1909 explaining why land was a good asset to tax - better, say, than incomes or shareholdings - are just as relevant today, notwithstanding that far more of us today, indeed a substantial majority of the population, have some interest in land holdings. The nature of land value and where it arises from has not changed just because more of us own some of it. It is still, as Churchill pointed out a wealth born out of monopoly and restriction of others needs and desires.

We must rework those great speeches to fit with an economy in which land ownership is more widespread and in which, as the past few weeks have shown, those millions of new landowners go through life utterly unaware and uneducated about where the value of their home comes from, who creates that value and how, and, as a result, sincerely believe that it's theirs to keep, merely the result of their good fortune in buying a home when prices were lower than they are today.

We will never produce a just and equitable society without recognizing "land" in its more general economic sense as a factor of production that is the birthright of us all and is the sink in which excess unearned profit collects - depressing the returns to both labour and capital. All the attempts today of Chancellor Darling to close loopholes and attack income abroad and so on are merely making the system more complicated, and his attempts to exclude the family home from Inheritance Tax the complete opposite of the philosophy of his Labour forebears.

We would, of course, prefer not to wait till someone dies to tax their land value, preferring instead to replace taxes on healthy economic activities such as work and investment in productive industry with annual land taxes, but we should also not be effectively repealing the few opportunities we have of capturing land value without replacing them with better ones.