Creating a property-owning democracy
Margaret Thatcher wanted Britain to become a property-owning democracy, and she succeeded to an extent no-one thought possible when she took office in 1979. At that time, there were four times as many members of trade unions than there were people who owned shares. When she left office 11 years later, there were more share-owners than trade unionists. When she started, 35 percent of Britons lived in subsidized state housing. When she left, millions had bought their homes through the right-to-buy policy.
To achieve a similar transition today would require us to introduce ways to help people acquire property. Most UK people are much richer than the statistics tell us. That is because they typically do not include the right to free healthcare, to free education for their children, and to the right to receive a state pension upon retirement. These are wealth, but they are not property, in that they cannot be alienated, given away or bequeathed to heirs. They die with the person.
The pathway to a property-owning democracy lies along two parallel routes: access to home ownership and to an investment portfolio. Both of these are property that belongs to the owner, and can be passed on to heirs and successors.
Home ownership can be made more accessible by a massive increase in the supply of housing. This means we have to streamline and liberalize planning laws, particularly in high-demand areas like London and the South East. We must simplify the process for obtaining planning permission and reduce local opposition barriers. The Town and Country Planning Act has passed its sell-by date.
We could build new towns and garden cities. As was done post-WWII, we might develop new towns with modern infrastructure and homes that would be affordable because land values would drop as limits on planning permissions were removed. Brownfield development could be promoted to provide incentives for developers to build on previously used land in cities. We could use public land for housing and use government-owned land for housing developments. We could allow the purchase of farmland at market prices, then give it planning permission to combine house-building with an increase in local revenues to benefit the community.
On the investment side, we should follow the trail marked out by Sweden and Chile by requiring everyone to establish a personal pension fund and to choose between approved providers to handle it. The fund managers would handle the investment portfolios, so ordinary citizens would not have to master the intricacies of the stock markets. They would nonetheless acquire investment portfolios that would grow as the economy grew, and give them a stake in the country’s prosperity, a stake they could bequeath.
These reforms, done with attention to detail, would lead to a future Britain in which most people had property they could pass on to their children, leading to what Margaret Thatcher described as ‘wealth cascading down the generations.’ All it takes is political will. There must be some of it out there.
Madsen Pirie