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Simon Taylor

Could Ending Farming Subsidies Solve The Housing Problem?

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If we do end up leaving the EU, there might be more spotlight on how the NFU has been very adept at preserving large scale subsidies for big estates. With the help of the UK government,and specifically Owen Patterson, it successfully fought off attempts by the EU to cap the amount which any single landowner may claim at £250,000.00 meaning that the majority of the money paid out in agricultural subsidies are paid to the owners of extremely valuable capital assets.

Whilst it is rare that I would agree with the political views of George Monbiot, he nails the problem in this Grauniad piece

https://www.theguardian.com/commentisfree/2013/jul/01/farm-subsidies-blatant-transfer-of-cash-to-rich

Post Brexit, farming subsidies will, once again be a matter for the UK government. This is the sort of luxury socialism we cannot afford . So it needs to be reformed.

Clearly removing this revenue stream overnight is not reasonable but recipients should certainly be put on notice that the bounty will cease at some point and payments should start to be reduced immediately, perhaps with a cap of £200k kicking in. I cannot see this causing any immediate hardship to those who currently receive it.

But wailing and gnashing of teeth there will be; the NFU is a powerful lobby interest and knows how to work the system. Here, then , is an opportunity to relax the planning laws to allow landowners to sell off small tranches of land, a couple of acres here, 5 acres there, on the edge of existing towns and villages for self build. Selling off small plots of marginal farmland which are only viable with the area payments they receive , would provide a capital sum which would offset any loss of subsidy. Valuations of said land would need to be subject to a calculation based , perhaps , on something like 20 years of lost farming income or agricultural rent rather than the absurd valuations currently applied to land with residential PP.

The benefits? Towns and villages grow in a measured, organic way as they once used to; people with the skills and finance to self build will be able to do so and not have to buy a crappy identikit box from a volume housebuilder. The quality of our housing stock is improved. No taxpayers are harmed and estates which wish to keep the land in the family are offered a way to do. They still, after all, retain generous inheritance tax advantages.

To sensible?

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Ending Low Irs

QE

FLS

HTB

BTL

Housing benefit (aka landlord benefit)

Mass immigration

would fix it tomorrow.

Edited by TheCountOfNowhere

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Ending Low Irs

QE

FLS

HTB

BTL

Housing benefit (aka landlord benefit)

Mass immigration

would fix it tomorrow.

I agree. The solutions are simple, but the truth is high house prices are not a problem for the government - HPI is designed, engineered and executed by government policy. It's not an unintended consequence.

Edited by canbuywontbuy

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Ending Low Irs

QE

FLS

HTB

BTL

Housing benefit (aka landlord benefit)

Mass immigration

would fix it tomorrow.

True - unlikely to happen. In fact I would say that we could even have moderate immigration and still have cheaper homes if the rest was done.

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Ending Low Irs

QE

FLS

HTB

BTL

Housing benefit (aka landlord benefit)

Mass immigration

would fix it tomorrow.

I agree entirely. But in a world where large numbers of voters are the beneficiaries of at least one of the market interventions you list, it isn't going to happen. Large estate owners, on the other hand, are electorally insignificant and if it was done whilst showing better support for small farmers who are really struggling, it would get public support.

And of course, none of the resulting houses would qualify for HTB..

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Potentially interesting:

WTO’s Azevêdo ready to help UK and EU after warning Brexit would lead to tough talks

...He said the UK would likely have to renegotiate its entire portfolio of trade agreements with the other 161 World Trade Organisation (WTO) members, including tariff rate quotas (TRQs) on agricultural exports and farmer subsidies.

The UK would need to establish its own negotiating position on whether to be unilaterally liberal or to retain some protection and support, before it approached the WTO’s membership.

Analysts say that the task facing the UK could be simple if other countries bend over backwards to accommodate London’s demands, or if the UK decides to lower tariffs and slash farm subsidies unilaterally without demanding too much in return.

Lengthy talks ahead

Otherwise, the negotiations on re-establishing the UK’s WTO membership terms are likely to be lengthy and complicated because some issues are political and because consensus would be needed among a membership with diverse trade interests, including the EU, US, China, Russia, India, Brazil and any trading nation or group of nations that matters, large or small, rich or poor...

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I think other changes will be necessary. Property prices are still cheap in German rural areas, even within easy (by UK standards) commuting distances. At the moment, rural life is considered negative, many local businesses and services have disappeared, even families with children are relocating to major cities. On the other hand, France still seems to have successful rural communites and reasonable rural property prices..

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What is the rationale for giving these subsidies in the first place? Maintaining food self-sufficiency? Lowering food prices? Personally I'd much rather pay a fair price for my food and not have any hidden subsidies at all.

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What is the rationale for giving these subsidies in the first place? Maintaining food self-sufficiency? Lowering food prices?

My understanding is that the subsidies are intended to dissuade over-production that could, otherwise, lower (wholesale) food prices.

Edited by A.steve

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My understanding is that the subsidies are intended to dissuade over-production that could, otherwise, lower (wholesale) food prices.

Really? That's even more insane, although I'm sure their argument is that it helps the small farmers in some way. So we are paying extra in tax to keep our food prices higher?

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I agree entirely. But in a world where large numbers of voters are the beneficiaries of at least one of the market interventions you list, it isn't going to happen. Large estate owners, on the other hand, are electorally insignificant and if it was done whilst showing better support for small farmers who are really struggling, it would get public support.

And of course, none of the resulting houses would qualify for HTB..

Stop .. these utopian dreams are killing me! It would be like 40 years ago .. and I can't see us getting back there without the extremely large amount of violence (2nd world war) that brought those good times around.

edit: edited for more specific reference to violence.

Edited by Kinky John

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My understanding is that the subsidies are intended to dissuade over-production that could, otherwise, lower (wholesale) food prices.

Yep. And these subsidies also keep farmland prices higher; you don't really need to do any farming. Buy land, rent it to a tenant farmer, claim the AP. Keerrrching.

Ending subsidies will mean that land ends up in the hands of those with the desire and expertise to farm it efficiently and productively rather than use it as a tax shelter/subsidy harvest.

Stop .. these utopian dreams are killing me! It would be like 40 years ago .. and I can't see us getting back there without the extremely large amount of violence (2nd world war) that brought those good times around.

edit: edited for more specific reference to violence.

Is seeking an end to this mad system, which takes tax revenue off the working population and hands it to the wealthiest 1%, protects and entrenches privilege and inherited wealth and discourages agricultural innovation really utopian? Good old common sense I reckon. When it does end, and it must, eventually, we will wonder how we ever let ourselves get to this sorry pass.

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I agree. The solutions are simple, but the truth is high house prices are not a problem for the government - HPI is designed, engineered and executed by government policy. It's not an unintended consequence.

By my estimates, and happy o be corrected, Osborne made £58,000 tax free last month from property if the 1.3% rise is to be believed.

The people in power and the selfish decisions they make based on their world experience is the real problem.

The HoC is not a cross section of the oublic, it's an elite club where the rich/middle classes decide how best the run the country for the rich and themselves.

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By my estimates, and happy o be corrected, Osborne made £58,000 tax free last month from property if the 1.3% rise is to be believed.

The people in power and the selfish decisions they make based on their world experience is the real problem.

The HoC is not a cross section of the oublic, it's an elite club where the rich/middle classes decide how best the run the country for the rich and themselves.

He made more than that; he rents his London house out for around £70k/year whilst living at No 11. Nice work.

And in any event, it's more likely to be the HoLwhich provides an effective barrier to any real reform of farm subsidies.

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If we do end up leaving the EU, there might be more spotlight on how the NFU has been very adept at preserving large scale subsidies for big estates. With the help of the UK government,and specifically Owen Patterson, it successfully fought off attempts by the EU to cap the amount which any single landowner may claim at £250,000.00 meaning that the majority of the money paid out in agricultural subsidies are paid to the owners of extremely valuable capital assets.

Whilst it is rare that I would agree with the political views of George Monbiot, he nails the problem in this Grauniad piece

https://www.theguardian.com/commentisfree/2013/jul/01/farm-subsidies-blatant-transfer-of-cash-to-rich

Post Brexit, farming subsidies will, once again be a matter for the UK government. This is the sort of luxury socialism we cannot afford . So it needs to be reformed.

Clearly removing this revenue stream overnight is not reasonable but recipients should certainly be put on notice that the bounty will cease at some point and payments should start to be reduced immediately, perhaps with a cap of £200k kicking in. I cannot see this causing any immediate hardship to those who currently receive it.

But wailing and gnashing of teeth there will be; the NFU is a powerful lobby interest and knows how to work the system. Here, then , is an opportunity to relax the planning laws to allow landowners to sell off small tranches of land, a couple of acres here, 5 acres there, on the edge of existing towns and villages for self build. Selling off small plots of marginal farmland which are only viable with the area payments they receive , would provide a capital sum which would offset any loss of subsidy. Valuations of said land would need to be subject to a calculation based , perhaps , on something like 20 years of lost farming income or agricultural rent rather than the absurd valuations currently applied to land with residential PP.

The benefits? Towns and villages grow in a measured, organic way as they once used to; people with the skills and finance to self build will be able to do so and not have to buy a crappy identikit box from a volume housebuilder. The quality of our housing stock is improved. No taxpayers are harmed and estates which wish to keep the land in the family are offered a way to do. They still, after all, retain generous inheritance tax advantages.

To sensible?

Sadly no chance. A planning application in the village where I live to convert a knackered stable into a two bed cottage has over 1,000 objectors already.

The Nimbies say no.

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Well, it would require a change in the planning laws but that is at the whim of government. Would any policy which reduces the amount of subsidy panhandling by the likes of the Duke of Westminster and offers people a real chance to build their own homes alienate many voters?

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Sadly no chance. A planning application in the village where I live to convert a knackered stable into a two bed cottage has over 1,000 objectors already.

The Nimbies say no.

We do indeed.

It's a farce.

Farming subsidies are a joke, did you hear Boris say how he'd protect them if the UK voted for Brexit? Telling imo, we all know the landowners ultimately benefit via asset price anflation and/or increased rents to tenant farmers.

Would like Monbiot's view on other benefits that end up in the pockets of asset rich people, and yes I am looking at you, Housing Benefit. Might be paid to the recipients but to borrow a phrase it doesn't touch the sides of the bank account before it is whisked into the account of someone with few scruples. Even more blatantly the claimant is no more than a front for their landlord if they get cut out of the transaction entirely and the money goes straight to the LL.

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Sadly no chance. A planning application in the village where I live to convert a knackered stable into a two bed cottage has over 1,000 objectors already.

The Nimbies say no.

In London the Nimbies use things like parking etc which has some resemblance of truth. What possible reason can anyone have to object to one stable becoming a house? It can't make any difference can it.

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We do indeed.

It's a farce.

Farming subsidies are a joke, did you hear Boris say how he'd protect them if the UK voted for Brexit? Telling imo, we all know the landowners ultimately benefit via asset price anflation and/or increased rents to tenant farmers.

Would like Monbiot's view on other benefits that end up in the pockets of asset rich people, and yes I am looking at you, Housing Benefit. Might be paid to the recipients but to borrow a phrase it doesn't touch the sides of the bank account before it is whisked into the account of someone with few scruples. Even more blatantly the claimant is no more than a front for their landlord if they get cut out of the transaction entirely and the money goes straight to the LL.

There's not much of a difference between the two; both cost huge amounts of tax revenues/borrowed money, both sustain the prices of assets they support at levels way above what a free market would settle at and both allow the ultimate recipients to hold on to assets that they might otherwise not be able to support.

I'm not aware of Monbiot's views on LAHB but I doubt he'd support its phasing out because of his dogmatic, left wing view on these things. But both are totally bonkers and make the lives of the vast majority of the people harder to benefit a narrow minority. Socialism Luxe.

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Farmer here...

Such recipients includes Stephen Strathdee (pictured above with what appears to be a Bentley Continental GT) . His company, Glenmore Properties Ltd. (from May 2010 Strathdee Properties Ltd.) owns 39 farms. On one farm alone, 18 housing plots have been sold for £1.3 million since the the farm was originally bought for £300,000). In March 2009, a total of 24 plots of land were being advertised for sale at a total guide price of £2,935,000. He is a farmer and a property developer.

Mr Strathdee and his family clearly work hard. He started life with £200 in 1970.

But why, when benefits received by poor families in the UK are to be capped at £26,000 and housing benefit at £400 per week, did Mr Strathde’s company receive £1,038,124.52 in public subsidy in 2009? And why, in the years since 2000, did it receive a total of £3.5 million in public subsidy? And why do all the other noble families listed above receive such largesse from the public purse?

http://www.andywightman.com/archives/91

Could make a politician?

4. Stephen Strathdee’s Glenmore Properties, based at Viewfield Farm at Craigellachie in Aberlour was given £1.04 million in 2009. Along with his family, he runs 39 farms in Moray, Aberdeenshire and the Highlands, as well as a quarry, forestry and other businesses. “I was entitled to the money and it’s within the rules,” he said. “I’ve worked hard for everything I’ve got.”

http://www.robedwards.com/2010/05/revealed-scotlands-farm-subsidy-millionaires.html

The Express suggests another £916k in 2015 while listing lots of individual amounts

http://www.express.co.uk/news/uk/648108/EU-farming-cash-squandered-wealthy-David-Cameron-wealthy-uncle

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It would only shift the monies to the next person in the queue. People don't buy houses on a cost+profit basis, they pay as much as they can afford for the place. If they could afford to spend more, the vendors would ask for more. If the landholder gets less, the developer gets more.

The only way to bring house prices under control is to 1) stop speculation (eg, put full capital gains tax on all property transactions, or have a 3% (ish) property tax on all property, and/or 2) stop the supply of money (eg increase interest rates, force maximum LTV, change risk ratings on bank lending).

Sadly no chance. A planning application in the village where I live to convert a knackered stable into a two bed cottage has over 1,000 objectors already.

The Nimbies say no.

This is one of the few planning regulations I actually approve of. At the moment a farmer can readily get planning for a farm related building - and I'm happy with that as they're just trying to make a living just like everyone else. But there is the knowledge that it is really, really difficult to change from agricultural PP to residential. If they relaxed the agricultural->residential process you'd just get thousands of 'stables' springing up all over the place, all in the knowledge that you just have to wait 5 years (or whatever) and then apply for residential planning. This way you know that if an agricultural building pops up locally then it is likely to stay agricultural - the farmer has kind of blighted his chances of ever getting residential planning on that site.

[i know there are examples of this happening, but it is unusual and, as I say, for good reasons.]

[i'm one of those people who believe that the problem in the UK isn't insufficient housing, but more that people see housing as an investment, and have been willing to bid up the price enormously.]

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It would only shift the monies to the next person in the queue. People don't buy houses on a cost+profit basis, they pay as much as they can afford for the place. If they could afford to spend more, the vendors would ask for more. If the landholder gets less, the developer gets more.

The only way to bring house prices under control is to 1) stop speculation (eg, put full capital gains tax on all property transactions, or have a 3% (ish) property tax on all property, and/or 2) stop the supply of money (eg increase interest rates, force maximum LTV, change risk ratings on bank lending).

[i'm one of those people who believe that the problem in the UK isn't insufficient housing, but more that people see housing as an investment, and have been willing to bid up the price enormously.]

I am in favour of taxes on property but not on buying and selling property. I can understand paying more tax than someone else because I have a nicer home but not because I lose my job and have to relocate or my daughter has special needs and has to go to a school 100 miles away.

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In London the Nimbies use things like parking etc which has some resemblance of truth. What possible reason can anyone have to object to one stable becoming a house? It can't make any difference can it.

That is a fine question. I am persona non grata in the village for even asking it.

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I am in favour of taxes on property but not on buying and selling property. I can understand paying more tax than someone else because I have a nicer home but not because I lose my job and have to relocate or my daughter has special needs and has to go to a school 100 miles away.

Capital gains taxes. The aim would be that there weren't any capital gains so that there wouldn't be any tax to pay.

The trouble is that these days there are a myriad of semi-pro property developers who put all their labour into doing up a house and selling it, and because they register the property as their main residence pay no tax on their efforts, and, because they don't have a salary, can claim all sorts of benefits. It is pretty much the only job you can have these days where you can legally get away with having a 0% tax rate. If you put CGT onto all property then this activity would at least be taxed at the CGT rate.

[and then you would discourage the 'lick of paint' type of property developers, allowing young owner occupiers to buy up tired old houses and do them up to live in. I despise the way the modern property market forces all to buy newly decorated houses, pretending that they're doing the buyers a favour through their limited efforts. Buying a shitty older house for cheap in your 20s and then doing it up used to be a great frugal way into buying your first home]

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Capital gains taxes. The aim would be that there weren't any capital gains so that there wouldn't be any tax to pay.

The trouble is that these days there are a myriad of semi-pro property developers who put all their labour into doing up a house and selling it, and because they register the property as their main residence pay no tax on their efforts, and, because they don't have a salary, can claim all sorts of benefits. It is pretty much the only job you can have these days where you can legally get away with having a 0% tax rate. If you put CGT onto all property then this activity would at least be taxed at the CGT rate.

[and then you would discourage the 'lick of paint' type of property developers, allowing young owner occupiers to buy up tired old houses and do them up to live in. I despise the way the modern property market forces all to buy newly decorated houses, pretending that they're doing the buyers a favour through their limited efforts. Buying a shitty older house for cheap in your 20s and then doing it up used to be a great frugal way into buying your first home]

How would it work with inflation? I am quite keen on the idea if there is no tax on any gains less than RPI. (Ideally prices would not rise more than RPI anyway).

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