In Brexit-Land

The way we use (and misuse) land is at the core of the housing crisis. I’ve written before about the huge disparity between agricultural and residential land prices, the fact that land is the major element in the value of a house, the appalling level of EU subsidy that goes to big landowners and which props up an inefficient system of land use, and the benefits of a land value tax.

Is there a chance that Brexit could lead to a better and more efficient use of land, and perhaps make more land available for housing?

Well, that will depend upon a number of imponderables or “known unknowns”. But here is my take on some of the key forces that could determine the pattern of land use in post-Brexit England.

At present, 40 percent of the EU budget is spent on agriculture and around 55 percent of farm incomes in the UK come from the EU, a total of over £3 billion a year, or £20,000 a year for the average farm. But this largesse tends to favour the largest landowners. The Queen, James Dyson and the Duke of Westminster received over £2.5 million between them last year and the  RSPB trousered almost £2 million. You only have to own this land to receive EU subsidy, you don’t have to produce food. Yet if you own less than 5 hectares you get nothing, so smallholders cannot join the party.

About 70 percent of England’s land area (9.4 million hectares) is used for agriculture, whereas only 10 percent of England is built upon (and the actual footrpint of housing is less than 2 percent). Even if we built 3 million homeson the countryside it would take up less than 1 percent of England’s land area, so Brexit could be an opportunity to re-think subsidies to land owners (perhaps diverting some of the cash to the NHS!), to create a more streamlined system, getting rid of some of the abuses, producing as much food from less land, releasing more land for homes and yet protecting the best landscapes.

Strangely, a clear majority of farmers supported leaving the EU (they don’t like the bureaucracy) so they can hardly complain if subsidies are re-directed and reduced. The government has pledged to protect subsidies until 2020 but beyond that date the system could be nudged to make farming more efficient. In New Zealand all subsidies were withdrawn over a five-year period in the 1980s. Farming re-invented itself, improved its productivity, and now trades very successfully on world markets.

A number of potentially conflicting forces could be in play over the next few years. MarmiteGate suggests that the UK might be vulnerable to the rising price of food imports, putting pressure on UK producers to grow more foods for home consumption. On the other hand, the EU puts up high tariff barriers to food from the rest of the word (18 percent on average) so the UK could be free to reduce these and lower the cost of imports, providing cheaper food for consumers. But if the pound stays low this also means that our food exports will be more competitive, making farming more profitable. Given that 60 percent currently go to the EU the shape of any trade deal with Brussels will be critical. (We export £11 billion to them but we take £26 billion of European food each year so it will be in their interest to negotiate a good deal.)

The competitiveness of UK agriculture will also depend upon labour costs. At present about 80 percent of seasonal agricultural workers are non-UK citizens and if farmers find it harder to procure cheap labour this could also put up the price of their products. Again, the future arrangements for allowing in seasonal workers will be critical.

So these conflicting issues – subsidy policy, currency changes, trade deals and labour costs – will all have an impact upon the future shape of the farming industry. Of course, we will still have to feed ourselves so these competing forces could be used creatively to produce as much food, or more food, from less land. And if the economy  struggles there is no better way to boost it than investment in housing, so the pressures to release more land could be powerful.

The countryside lobby has consistently argued that the need to feed ourselves should stop any countryside being built upon, but this ignores the fact that vast areas of the countryside produce no food at all; golf coursesand pony paddocks are prime examples, and it ignores the fact that farming could be more efficient. A land value tax would also help to reduce the amount of land that is wasted.

Whatever happens over the next few years, Brexit does represent an opportunity to think more critically about land use, to end some of the present abuses of subsidy, to direct support to more efficient and smaller farmers whilst protecting the best landscapes, and most important of all, to accept that we need to release more land for much-needed homes.

 

(This blog first appeared on the Inside Housing website on 19th October 2016)

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