The British wealth gap

The gap between rich and poor people in the UK is one of the widest in the developed world, according to a study by OECD reported in the Daily Telegraph.

No surprise there. A commentator on the BBC mentioned the huge amounts of taxpayers’ money being spent on wealth redistribution. A goodly chunk of this money comes from the poor in the first place and is just churning in the system. Nobody asks why income is maldistributed in the first place.

There are powerful vested interests against reform in the UK. The most valuable areas of central London are owned by public bodies or a handful of families who acquired these estates in the seventeenth century and earlier. The most important is the Crown Estate, all the rents from which pass direct to central government. That’s fine. Another estate in public ownership is the City of London’s Bridge House Estate, originally established to pay for the upkeep and renewal of London Bridge. All the money from this estate is used for public or charitable purposes. That is a historic anomaly but there is nothing wrong with the arrangement. Then come a clutch of estates owned by aristocratic families. These are

• Grosvenor Estate: Belgravia and Mayfair, reaching Oxford Street to the north and Victoria station to the south, with much in between.
• Cadogan Estate: Sloane Square, Knightsbridge, Chelsea
• Ilchester Estate: Holland Park and parts of Kensington
• Portman Estate: Portman Square, Baker Street and areas to west and to north toward St John’s Wood
• Howard de Walden: Marylebone and towards Regent’s Park
• Bedford Estate: Bloomsbury

All of these estates are managed to the highest standards and make a substantial contribution to the attractiveness of London as a world city. That is not a state of affairs that needs to be changed – on the contrary, nothing should be done to jeopardise their status as estate managers. The problem is that these estates are also harvesters of land value that they did not create and depend on the public at large to maintain. This income stream turns up as ground rents, though in the case of old leases, it is the tenants that are in part or often substantially, in receipt of the income stream or imputed income derived from their land occupation. The history of these estates is diverse, usually involving a grant from the monarch and some advantageous marriages, though in at least one instance there was a downright fraud. But that was a long time ago. Can anyone explain why this state of affairs should continue?

Other monarchs have taken back land granted to aristocrats. The most notable example is that of the Swedish king Charles XI. Short of money in the later seventeenth century, following a series of wars with Denmark, he devote the rest of his life to the task of rehabilitating the country by means of a reduction, or recovery of alienated crown lands, a process which resulted in the complete readjustment of the nation’s finances. Counties, baronies and large lordships reverted to the Crown. This lack of a landowning aristocratic interest probably has much to do with the present day state of Swedish society.

Isn’t it time for a similar reduction in Britain? Why should these family estates not revert to the Crown Estates?  The Crown henceforward becomes the recipient of the ground rents, leaving the present owners in possession of all their buildings, and their management companies free to continue precisely as they do at present. Why not, indeed?

Note: these views are those of the author and not of the Land Value Taxation Campaign