The Land, The Land, ‘Twas Poseidon Who Made The Land…

October 25, 2010

Astute observers of the press (for a very broad definition of ‘astute’ that includes anyone who reads the Sunday papers) will have noticed that the Royal Family is line for a very literal windfall from the enormous expansion of offshore wind that’s planned for the next couple of decades.

The Crown Estate, the nice chaps who administer the land owned by the Sovereign, own all of the seabed up to 12 nautical miles off the UK’s coast. This has never really been an issue in the past, as the only really economically relevant use of the seabed has been oil pipes and Telecom cables. They have mineral rights, but not hydrocarbon rights.

However, if you want to put anything on the seabed, you have to pay the Crown Estate for a licence to be able to do so – the same sort of rent a landowner receives for having a pylon on their property. Since all the cables bringing in that juicy offshore wind electricity are going to go across the Crown Estate’s section of the seabed, they’ll have to pay for it.

One of the classic Liberal campaigning issues has always been land reform, because of the rent-seeking activity of the people who owned the land. Indeed, the Georgist song referenced in the title of this blog post refers to it; land value taxes having been something we’ve been pushing for over a century. Labour are very recent converts by comparison. The argument is, broadly, that no-one should be able to profit without actually doing work – in other words, if you’re just extracting rent without doing anything useful with the land itself, you should pay for it.

The Crown Estate’s licensing arrangement is classic rent-seeking; they’re charging for access to property they’re not using themselves. This land is going to become increasingly valuable over the coming years, as more and more uses for our maritime holdings become apparent. This affords us an opportunity to institute a bold experiment in land reform and LVT: I propose we sell off our nautical estate and institute a Seabed Value Tax.

The idea is to make some initial capital to help pay off our debt, while ensuring a constant revenue stream to help reduce the deficit. This will initially be low – most likely significantly lower than the current licensing costs of the Crown Estate – to encourage investment in maritime infrastructure. However, as these new industries expand over time, a SVT will help ensure that owners of undersea property will seek to make best use of it.

One objection that could be raised is that the seabed is a more crowded place than you would think – oil pipes here and there, international transmissions cables for communications and electricity, anchorage sites, shipping lanes, marine conservation zones – in fact, almost every type of infrastructure you would find on land has some sort of marine counterpart. The Crown Estate facilitates discussions between those with different interests with respect to the seabed, ensuring that – for example – no-one tries to lay cables across pipes. Selling off all its nautical estate would make it more difficult to co-ordinate these activities. However, similar issues on land are handled by legislation and agreements between parties, rather than a central body. There is no reason to think that something similar would not work underwater.

If this proposal is taken up, I suggest that the page of the Liberator song book that contains the words for the ‘The Land’, which is sung so gustily at Conference’s Glee Club, is replaced with the words to ‘Under the Sea‘…

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