Ownership is at the heart of conservatism. It is a main foundation of a free society. From the baby’s first protective instincts towards a prized soft toy to the adult’s sense of stability in a home they own, ownership is a fundamental state that usually bestows a sense of security and well-being. Roots go with traditions, family property helps create family bonds and fond memories, a sense of place helps a feeling of belonging.
Socialists try to take property away from people on grounds of inequality. Conservatives want more people to own property. Socialists level down by high taxes and bans. Conservatives level up by providing incentives and opportunity for more to own. Socialism drives the rich away, makes it more difficult for others to become better off, and creates the pocket money society. People can only keep what the state does not take and should be grateful for the remains. The socialist state prefers it if you live in a rented ‘social’ house, depend on earnings from employment or on state benefits, and have no savings or private pensions to sustain a decent lifestyle. At the same time socialism creates a class of public sector rich who enjoy better lifestyles based on access to state privilege and higher state salaries. In communist countries the children of the elite often attend better schools, the elite have their chauffeured cars and zil lanes, and access to foreign travel and even foreign investment others are denied. Socialist governments in democratic societies adopt some of these characteristics.
Economic growth is important to the success of an economy. Growth generates the new jobs needed to raise living standards and do new things. It boosts the value of properties, businesses and shares which people own, allowing them to invest more in promoting the new ideas and new goods and services of the future. Growth in living standards requires new ways of doing things that are faster and use less resource. There needs to be a constant striving for better and cheaper. The luxuries of yesterday need to be the commonplace items of today. In the 1950s tvs and cars were the luxuries of the better off, today practically everyone has one. Only the well paid had mobile phones in the 1980s but they are now near universal and are also very powerful hand computers. Few took flights 70 years ago as they were expensive. Now, many have access to cheap travel.
The right to own
Surveys show many people who rent a home would like to own one. They also show few who own want to rent, with little barriers should they wish to switch. The main constraints on more people owning are the availability of mortgages and the level of house prices relative to incomes.
There are various ways government can help people achieve home ownership. Any tenant of a Council or state financed quango who has followed tenancy rules and paid the rent on time should be eligible to buy their home at a discount. The proceeds from the sale should be reinvested in new social housing construction.
It is a myth that these sales reduce available housing as the same family lives in the home after sale as before. The injection of new capital by buying the home from the state means there is more money available for social home provision. The state can spend the proceeds of the sale on new build to expand the overall stock.
The Government should promote self build. Councils should make planning permissions available for self-build. They can also free land from their holdings to sell it to people who would like to self build.
Where the Government or a council owns run-down property suitable for modernisation or conversion into residential use it should offer this at an attractive price to people willing to improve the property themselves. The state often holds derelict or empty property for long periods, tying up capital and losing more money as the buildings deteriorate.
There should be more social housing built for shared ownership schemes. These should be flexible, offering a sufficiently large proportion of the property for purchase according to the means of the tenant, and allowing purchase of more equity as the person’s financial position improves. Shared ownership is popular. The criticisms usually relate to the size of share people are allowed to buy at outset and thereafter. People are keener to own more, whilst the state is often reluctant to share more of the equity with the buyer.
Permitted development rights could be made more generous.
Working for yourself
This decade we have lost 700,000 self-employed people. Part of this was Covid lockdown, but a lot of it may have been the 2017 and 2021 changes to the IR35 taxation regime. HMRC are right to want to stop people who in practice work for one employer declaring themselves self-employed for tax advantage
In their enthusiasm to stamp out some malpractice the Revenue have now made it very difficult to build a multi-client business, especially if you want to sell to larger companies. Businesses do not want to get tied up in any disputes over your status with the Revenue where they may suffer loss or reputational damage if the judgement went the wrong way. We need to go back to the position before the tax changes.
Self-employment is the ultimate form of accountable and flexible business ownership. The business owner is responsible for the whole design and delivery of the good or service, and benefits or loses from whatever profit or loss the turnover generates. Successful self-employed people can go on to grow a substantial business employing others, or they can perfect their offering whilst keeping it select and avoiding the complexity of employing others.
Like self-employment, small business offers flexibility, innovation and good customer service, often personalised. Many small businesses grow out of self-employment, when the self-employed person takes the important step to employ someone else and expand their activities.
In the early years of a small business the demands on the time and expertise of the prime owner and manager can be large. To allow more small businesses to be formed and to get through their early stages of growth, government needs to be more understanding of these limitations, whilst of course insisting on safety and fitness of product and safety and fair treatment for employees. Small business is spared the need to impose VAT and enter the complex accounting and reporting requirements for this sales tax at turnovers under £85,000. This was the maximum allowed under EU law. Now we can make our own tax decisions this should be raised to £250,000. This single measure would give a big boost to capacity and growth of the small business sector, as many businesses deliberately limit their activity to keep beneath the threshold. Raising the limit is said by the Treasury to lose us revenue, but it will also gain some by making legal some of the turnover that currently happens for cash only. More business will be reported for other tax purposes when illegal cash transactions reduce.
There are many opportunities today to further wider ownership of public assets. More people working in the public sector should have the opportunity for an employee buyout or for a direct link between the success of their part of public service and their own rewards.
The most obvious state service that could be transformed by wider ownership is the BBC. The BBC currently depends on revenue from a tax on people watching live TV. Its revenues are being eroded by the switch of many people to downloading films and other material rather than watching live TV on traditional channels. It is losing audience to the new competitors, and is often out of touch with many of its potential audience.
The Government should announce that the BBC will be given to the licence payers on a stated date, creating The People’s BBC. Anyone who is paying a licence fee should be granted a single share in the BBC which would be newly incorporated to reflect its changed ownership. Only UK residents would be eligible as licence fee payers from their stated UK address. It could also be a requirement that anyone wishing to sell their share had to sell it to a person or company resident in the UK. The Government would also announce a phased reduction in the licence fee over a suitable transition period, and would decriminalise non payment, making the licence fee a normal service charge. The Government could set out what public service broadcasting they wished to buy with state grant to preserve important features like the World Service. Given the BBC’s diminishing scale compared to the emerging new media giants, it could also raise additional new share capital and could take out a long-term loan to beef up its financial firepower and expand its activities more rapidly. It would be good to have the BBC as a more positive and financially enabled competitor in global markets.
Selling NatWest
The Government still owns 38.6% of NatWest, worth more than £8bn at current share prices. It is planning to sell this slowly in modest tranches as it has been doing for sometime.
The Government should not be owning large commercial banks. It creates a conflict of interest when it is the tax authority and banking regulator. It has been a poor owner, with the shares still way below the Government’s original purchase price some 14 years ago.
The rest of the shares should be offered for sale in a single major transaction. The sale should be conducted like previous large utility privatisations. The financial community should be free to bid for shares for their clients. There should also be a retail market offer of shares direct to the public. There should be discounted and some free shares available for staff to help build a greater identity of interest between employees and the bank.
Modern government carries out various activities through so called arms length agencies. The idea was to split off those activities which are technical or non-political from the more sensitive matters that form the substance of political dispute.
Ministers should review all these bodies and talk to staff and management in them about a possible employee buyout or partnership model to harness greater efficiencies and to empower staff by being part owners.
Conclusions
Many share a passion to own. Having your own house or your own car or a stake in the firm you work for brings pride and some sense of greater security. Many people take greater care of their own property than of public property, and most seek value for money in anything they buy for themselves. There can be a more casual approach to spending taxpayers money by politicians and officials. Polls show that ownership is popular, and many would like to feel they are participating through ownership in the gains that come from the assets concerned.
Government can do more to make it possible for more people to realise their ownership dreams.
The UK has a major public sector productivity problem. There are still too many people with too few assets. It is time to launch another ownership revolution. In the Thatcher period the CPS pioneered great ideas to help everyone become an owner. It needs to do the same again. The UK should not slip back into nationalised railways, government directed water and energy companies and an ever larger civil service trying to mend the holes and cover the cracks. We need another healthy dose of private investment offering choice, quality and ownership for the many.
This article by John Redwood MP was published here: Britain needs another ownership revolution - CapX
