SLRG – Focussing on Equality, Shared Prosperity and a Fair Society

AGR includes natural resource rents such as those deposited in Norway’s $1tn oil fund

When considering AGR, do bear in mind that the $1tn Norweigian Oil Fund is composed of AGR in the form of oil rents. Just one strand of Annual Ground Rent, the equivalent of which has been sucked out of Scotland to London and the South East within the toxic mechanism called the UK Idea.

https://www.thisismoney.co.uk/money/markets/article-4900670/Fund-Norway-richer-hits-1-trillion.html

That mechanism could be mended: an AGR/LVT version of the UK would be one in which each member nation or location (e.g. The North) was treated equally. In such a union the returns on investments from each region (taxes invested in amenities) would be returned to their producers.

Such is not the case in the UK today; instead people and resources are sucked out of the periphery and deposited at the economic centre (London and the South East). This socially corrosive process, by which wealth that is produced by others is extracted, unearned, is called Rent Seeking.

To be clear, what happens today to £1 of tax contributed at the UK margin and invested in a London amenity is this: the benefiting site value is increased by up to 5 times (e.g. sites that benefited from Crossrail). But the £4 returns on the investment do not go back to the margin as would happen in a VALID ‘UK Idea’. The returns are instead pocketed by London site owners.

The devastating compound effects of the malignant UK tax mechanism, from decades and centuries spent draining wealth form the economic periphery, can be seen all around the UK margin in 2019.

Had Clause IX of the Treaty of Union been maintained and enhanced (the Land Tax), we would already be living in a just and properly functioning union. Surplus wealth, shared over the intervening centuries, would have produced a prosperous Scotland and UK.

Instead we inhabit a UK with a prosperous London and a periphery where communities wither and populations die up to an average 20 years prematurely. They die because arbitrary taxes cannot be afforded at the margin. The enterprises that would, with AGR/LVT, be the employers at the margin, simply do not exist! The annual value of such ‘deadweight losses’ inflicted by government choice on the UK is at least £500bn (Fred Harrison​).

Until such time as the UK is reformed, Scotland would be better off going it alone. But only if Scotland itself embraces AGR/LVT, so that it can achieve viability and escape otherwise perpetual annual deficits.