Caring for Scotland

glasgow_poverty_webThere are plenty of ‘wicked’ problems in UK and Scottish public policy of which the crises in care and affordable housing are perhaps the most intractable.

My generation – at the tail end of the Baby Boom – benefited through no effort on our part from massive unearned gains in land values due to successive booms driven by unconstrained bank credit for mortgage loans and the transactional land development model I have come to think of as the ‘Four B’s’ – Buy, Borrow, Build and B…er Off.

It is an everyday occurrence when visiting London to talk to Londoners whose homes have ‘earned’ more than they have during  their career. But land-rich Londoners are increasingly finding themselves care-poor, unable to look after either themselves or increasingly decrepit and cold homes on crazily valuable sites, while carers themselves are priced out of living in London.

On the other side of the land divide is my sons’ generation, who are care-rich but land-poor with little chance of anything other than a minimum wage job if that, still less any chance of affording anywhere to raise the next generation.

Housing Policy

The unwritten and unspoken organising principle of Westminster housing policy is simple: it is at any cost to keep the banking system afloat. House prices consist of the capitalised future rental value of land/location (which does not depreciate), and that of the buildings and improvements on the land (which do depreciate). So if rental values become genuinely ‘affordable’ ie fall significantly to what is known as a ‘social’ rental level then this will reduce the value of the land which secures bank mortgage loans, and the UK banking system will essentially become insolvent in terms of assets and liabilities.

This same systemic problem of bank solvency now prevents the modern day introduction – as was suggested until maybe 100 years ago by classic Liberals such as Winston Churchill, J S Mill, and back through Adam Smith to Tom Paine – of a tax on land rental values which is once again surfacing as a policy proposal.

Care Policy

As austerity and automation make inroads into the middle class, the attention of local Councils is increasingly turning to accessing equity in the homes of the elderly in order to cover the costs of what has become a rapacious private care industry. Rent-seeking in the care sector is rife, and inaptly named private equity investors who acquired portfolios of care homes and loaded them with debt to take out massive dividends are now being squeezed by Council cuts. Meanwhile carers are paid a minimum wage, if that, and this is a fraction of that charged by agencies and care homes for their services.

It seems to me that underlying both problems is a fundamental question: how can we make a transfer between a generation which is land-rich and care-poor to a generation which is care-rich and land-poor?

Promises, Promises

For thousands of years, the bedrock of economies was – and remains – promises or credit. If someone trusts me enough to give me something now in return for my promise that I will provide something of equivalent value in the future then he has given me credit, by accepting my promise.

But as the economist Hyman Minsky said anyone can issue promises or credits – the problem lies in getting them accepted. Institutions such as temples, government and now banks have long provided a role as a trust or risk middleman (intermediary) who essentially guarantees the performance and credit of the promissor.

It seems to me that the inter-generational transfer may be achieved through mobilising the value of land and care through creating a new framework for guarantee of care credits and land rental credits. But such a framework and system is at the moment only be an aim or aspiration: the question in terms of practical policy is always: “How do we get there from here?

Care Levy

Westminster has left Scotland with few tax options, none of them inviting, to the extent that the power to tax Scots’ income has not been taken up by the Scottish Government.

One of the interesting historical backwaters of UK income tax policy was Schedule A income tax, which was based on what is known as ‘imputed income’. This was based on the proposition that owner-occupiers receive an invisible economic benefit or subsidy from house occupation since if A rents out his  house to B who in turn rents his house to A then both A and B would be in receipt of taxable income. In other words, the proposition that home ownership should be a taxable privilege.

So the first part of this policy proposal is that a Care Levy may perhaps be raised as an imputed income tax in Scotland based on the rental value of residential land. This levy will raise a fund – a Care Pool – available for public investment in the creation of a networked Care service as a co-operative of co-operatives.

Care Dividend

The second policy element is for a Care Dividend then to be paid directly – administered professionally by service providers with democratic Council oversight – as a form of Universal Basic Income to all qualifying Scots. The innovation is that rather than being paid in £ sterling the care dividend will be paid in £1.00 care credits which are returnable in payment for the care levy.

Owner occupiers would be able to use the care dividend to pay their own levy, but if they wish, to use it to pay for care: tenants – many of whom will be carers – would be able to use the care dividend to pay their rent, because landlords would accept it in payment of their own obligation.

The above Levy/Pool/Dividend approach opens up interesting policy options .

Equity Release

Discounted prepayment of land rentals  is actually a simple form of Equity Release which is superior to existing forms of equity release in terms of cost and offers the potential for ‘Care Loans’, which the occupier could repay through buying back credits, or simply leave open until they move or until their death at home. Such discounted prepaid £1.00 land use credits are almost precisely how UK sovereigns funded themselves for 500 years from land rentals, taxes or duties.

This in turn enables anyone – including care home operators – who wish or need to refinance existing bank loans to do so at the same time as creating an optimal asset based on land values for long term investment by pension funds.

A Care Service

Initiatives such as the US Freelancers Union, based upon a need for health insurance, and the Independent Workers Union of Great Britain, which is recruiting members from courier companies such as Deliveroo, are opening up new methods of associating to a common purpose.  This leads to the possibility of what a hardcore Marxist I know in Berlin memorably termed Venture Communism – a new generation worker Co-operatives.

The care pool fund which results from the collection of a care levy could be used to provide the necessary development and working capital required to create a Scottish Care Service as part of the emerging sharing economy.  But as we may observe from  sharing economy platforms such as Uber, Shareholders don’t share value – they extract it. By  using simple collaborative agreements and instruments local councils may sponsor platform co-operatives to enable networked carer Coops to be supported by service providers without value being drained out by rent-seekers.

Independent Living & Resilience

In the same way that resource resilience and energy independence may be achieved bottom up  using simple mutual agreements and credit instruments, so it is that the land and people of Scotland may be mobilised to attain independence and  resilience through building capacity and delivering care for Scots and for Scotland.

West Lothian Questions have West Lothian Answers.

Comments (6)

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  1. Dougie Blackwood says:

    This is a rather complicated way of advocating a land tax or land rent.

    Our present taxation is grudgingly paid by only those that cannot find a way out of it. These that must pay are on PAYE, pensioners and those on benefit. For those others a good tax accountant can reduce the liability to little or nothing.

    Ownership of land can be defined and the benefit from it taxed to ensure an equitable means of collection; we all need to live somewhere.

    Many are afraid of making the change as they fear doubling rates of tax but by casting a wider net most people would pay no more than they do now. Those that presently pay little for large land holdings might lose out and be coerced into selling some. A good thing that reduces land prices and makes more available for productive use.

    It’s time our Scottish government got on with it.

    1. Donnie McRitchie says:

      Oh how easy it would have been provided our colonial masters had devolved the ability to vary tax between bands!?

      Nationalists and socialists in Scotland of all persuasions would have agreed raising tax on those who earn, say above £50 000 (or ŵhatever threshold is identified by Holyrood.

      What Scotland needed was the ability to raise tax for selected groupss without compounding and penalising the working poor even further.

      You are asking the SNP to clear up the intentional penalising policies of labour and tory unionist goverments without the tools or capacity to do so without hurting those the policy is intended to help in the first place – that place is called britain!

    2. Chris Cook says:

      As I point out, the problem with land value tax – and I completely agree that if one must have taxation then it should be based upon taxation of privileged property rights – is that it reduces the private land rental value which are available to be capitalised through sales of freehold land.

      In other words, it acts to reduce the assets available to support bank balance sheets. In my opinion this is why the UK government housing policy has been to maintain land values- at whatever the cost in human misery.

      The effect of this proposal is essentially to cut out the Treasury and the banks as middlemen between citizens.

  2. c rober says:

    I have for years wondered about a better way , and to encapsulate many problems , just like you are suggesting Chris , I cannot fault your logic on approach but again its complicated , agree on the wealth protection of banks by Govts being the stop for change – so this is what needs addressing first , housing 2.0 as well as Energy 2.0 in order to reduce the outgoings of all and not just the few increases GDP… which is something that Holyrood should be thinking about for any post indy yes.

    My long term belief is that communities are made through participation , as the proverb says it takes a village to raise a child – it also must take the same village to look after them in kind as they age. This in theory is the NHS , and benefits system , which up until relatively recently worked – that is until it became a bloated blame hound of the civil service trough , which only this week we hear that once again the companies that are there to reduce the benefits bill , by removing claimants are costing more than the savings themselves.

    Today though we live in little boxes , with hour plus commutes for work and education , or longer with public transport to get to underpaid jobs or out of postcode super schools.

    No more village , we now have a virtual one of self gratification and instant on/off everything to distract us once we eventually get home and sit down to a takeaway by app , too exhausted mentally and physically to cook a meal from scratch for ourselves and family , so as a village unable to raise the child , never mind care for the disabled and old.

    Yet we expect our horse trading Wesminster , Holyrood , and council politicians , though their legislation of care services , housing , and education systems , to be in control without our input as we trudge on as social network zombies paying those taxes , mortgages and rents , essentially keeping wealth for the few as we netflix and chill while our media directs their masters plans.

    As we unwaringly participate , through non participation in the privitisation of services and healthcare , then we are removing the wider village if you will – to faceless corporate profit making by privitisation. And as yet I have yet to see exactly where privitisation of many things has actually improved anything for the villagers , well other than the shareholder , directors , banks and politicians that drove it there with thicker back pockets as a result of it.

    We are in very worrying times with care needs and housing supply to tackle the aging population.

    We only need to look at Japan , Italy , Lithuania etc to see where our problems need to be tackled now for that supply in the near future , never mind the exponential increase predicted over the next 30 years. We are a net importer of food , as farmland is turned into executive commuter housing , through those we elect to Holyrood and Westminster prop up developers and banks.

    We are seeing a need for food in over half the world countries approaching drought and starvation , while the other half , the supposed developed world is dying from food related illnesses – while being propped up by the NHS and benefits system pre retirement in the UK , as the private pension pots tank , the state pension age is ever upward and out of reach due to the Glasgow effect , or the private care system in the likes of America mean the poor are being culled by its politicians….. so elects a failed billonaire to remove the wealth though communistic dispersal and employment rhetoric?

    So if we accept that the politicians themselves are to blame , elected on a promise of change , as well as the old adage for evil to prosper it only takes the good people to do nothing , then why are we not seeing marches like the poll tax days from our McSocialists , storming the parliaments like Greece or Italy , a McArab spring ? Well that I am afraid is all down to conditioning , more than any yoon agenda , so accepting our lot one self preservation of what little wealth they grant us. That same self preservation was the main reason for tribal living , ie the original village , shared workload shared resources.

    So the future , beyond EU , beyond the UK – well its local , and back to the beginnings then , the selfish of many , of a village that not only raises the child – but just like the NHS and Benefits system once promised , CRADLE TO THE GRAVE.

    Housing 2.o
    Energy 2.0

    AGR I dont have to explain as I would only do it an injustice – best to google it.

    Housing 2.0

    THe Scots national average house price is over 7x the median wage , and has been rising for more than 2 decades and shows no sign of slowing , it is protected by our politicians and banks

    Thus they are the problem that needs to be tackled.

    Local devolving , “councils” , and national control , “Holyrood” , needs to be in sysnc with the ACTUAL local need , the village , and not the wider profit making machine .

    So communties need to have the final say in supply , ie a local need as well as for rejection ie executive commuter belt increasing impacting local services.

    As its stands today , despite our commandants in Holyrood stating otherwise it is geared still towards developers – and with even more powers to ignore objections being added by our “only socialist in the village” the SNP.

    Frankly its not good enough , they have no long term plan past an election window , so perhaps housing should be devolved from the politican to a civil service , then local , bypassing the problems altogether.

    Housing 2.0 can be achieved through a state bank removing the corporate and private central bank , as well as through taxation of house sales and agr lite , section 28 like orders for ALL developers sites , moving social developments to NFP builders without paid directors as Community Council via college campuses , or back to council ownership as builders once again , thus creating an income for Councils as a seller , developer and landlord – whom may well have an increased income as mortgage holders using a RTB 2.0 based on 3x median wage costings for building replacements instead of deep discount to renter.

    For that we need low cost housing , but not low grade , so we need to change how we build the actual houses. Today brick makers are mothballed , trades are lacking in numbers , so this may mean factoryised housing , aka flatpack housing.

    Japan , China , are already adressing FPH , the former has done so for over 60 years , the later is churning out flat pack and 3d printing housing costing less than the Scottish median salary , thus a very short mortgage timespan as well as the cost.

    Toyota , not just a car maker you know , makes FPH with 65 year warranties – our house builders your lucky to get 10 or 20 , that is if the developer doesnt go bust and walk away to appear as another company. Toyota may well be one of those companies that may be advantageous to have in a trade deal for imports , Japan needs an export stream exaclty along those lines , and sea freight prices are the lowest for 20 years.

    But still our councils base their supply on the Scottish house price average , as mandated by Holyrood as they give them up to 75k , for a new built social rented home , and still need to find another 75k through selling land to developers whom land bank or via council services cuts .75k which is the magic figure for the 3x main income earner mortgage , and where a home can be built for that price already , by the council using forward contracts , and on land it already owns or costing less through using offsite campuses via “training while employing” through on the job education or even work to benefits.

    OF course there is also the argument that the likes of our Independent and Progressive minded politicians should instead be creating a fund to socialise the building aspect of social rented homes , and of course as a byproduct the affordable bought home , through creating state owned factories at the council level and selling plots to selfbulders rather thna sites to developers .

    But I wont hold my breathe on that one , housing today is still being made the same way it has done for over a hundred years , but with more mouths in the trough – so its not that technology hasnt caught up , its that it is being prevented.

    Energy 2.0

    Energy 2.0 is related to Housing 2.0 in that today we can set the standards for energy use and creation , but the bar is set far too low , and still increases the wealth creation of the privitised former tax payer owned monopolies.

    After Housing costs the next biggest drain on home income , thus national GDP is energy use.

    We simply arent using one with the other in the manner we could be , say by legislating that all houses built today have Solar water and power roofs , perhaps paid for by the electric companies , and importantly that house orientation is making the most use of it. Nor are we making our green generation available to the wider global village as an export because we lack the grid , so this is something that Holyrood , Westminster , the monopolies and external governments need to get behind – and remove the reliance on imported coal , gas and oil.

    So perhaps we need to nationalise again the energy companies , and find willing countries to do the same. Germany , France , Norway still have state energy – then maybe we could also empower the worlds poor with cheap electricity , say to Africa , and where they could also do the same with any green grid in reverse?


    Many of these things which are considered blue sky socioeconomic ways of thinking are prevented , by industry or politicians , too costly to implement being their war cry , or fudging the maths.

    But when the village idea came along in pre history it was through selfish survival instinct , …. therfore we must follow that mindset from long before we had politicians or industry willing to have us only as their wealth creators.

  3. William Richardson says:

    Apart from the rich, who is care rich?

    1. Chris Cook says:

      Virtually the entirety of our younger generations, plus a myriad of unemployed & underemployed currently doing useless bullshit make work ‘jobs’. Plus any number of volunteers getting burnt out & feeling exploited by government & increasingly corporate charities & social enterprises.

      As for the rich, would most of them be rich if they actually cared?

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