Making It Mutual: Common ownership of land, infrastructure and natural assets

15^th April 2013

Dan Gregory and Kate Swade on how to make better use of our assets

Land is the ultimate non-renewable resource: they really aren’t making it any more. So does it matter who owns it?

Owners of land come in many guises: private companies or individuals pursuing purely private ends, government in the interests of citizens, or not-for-profit organisations with a social or community-driven purpose. These owners can operate at an international, national, regional or local scale.

The UK’s pattern of land and infrastructure ownership is complex and is rooted in its history. Scotland has undergone substantial land reform in recent years, notably opening up the potential for community buy-outs of some privately owned land, [1] but in England and Wales ownership is still mostly polarised: owned privately or by the state. The 20th Century saw some substantial changes in land ownership, notably an increase in state-owned land, peaking in the 1940s. The 1980s saw increasing amounts of state land transferred to the private sector, whilst the 2000s have seen an increase in community-owned land in Scotland.

These changes are not neutral processes. In many cases they are driven by a combination of economic pressures and ideology. Is state ownership of land inefficient and monopolistic or a democratic route to a more equal distribution of wealth? Is private ownership a rigorous and efficient way of delivering value or an opportunity for individuals to profit at society’s expense? Is community or mutual ownership a damaging reduction of private property rights or the foundation for a more sustainable economy?

We believe that the issue of ownership has been ignored for too long and want to make the case for ownership to be more central to the political debate in England and Wales.

Who owns Britain?

What do we really know about ownership, how it is changing and what is driving the changes?

Robert Home’s 2009 report, Land Ownership in the United Kingdom: Trends, preferences and future challenges, distinguishes between private ownership, state ownership and land owned by the third sector. [2] Even with Scottish land reform, UK land ownership is concentrated in the hands of private individuals and the state. Home identifies a number of changes over the past century: “the growth of home ownership, the survival (mainly in the countryside) of concentrated hereditary land ownership, the decline of leasehold tenure, the expansion (and then contraction) of state land ownership, and the growth of legal forms of communal ownership.”

He includes common land in his discussion of ‘communal’ ownership. There are almost 1.4 million acres of common land in England and Wales alone: owned privately or by local authorities, but with long established and protected rights for ‘commoners’, mostly specific rights to graze the land or collect firewood. [3] The freedom to access public space – space that we see as ‘common’, even if it is not common land – is also changing: increasing private corporate ownership of large parts of our cities, such as the centre of Liverpool and Canary Wharf in London, can limit public rights of way and rights of access. [4]

In 2012, Country Life and Kevin Cahill, author of Who Owns Britain, reviewed the biggest UK landowners. [5] The largest by far is the Forestry Commission, but even its 2.6 million acres only account for 4.3% of UK land, with others, such as The National Trust and Ministry of Defence, pension funds and the Crown following behind.

Smaller landowners own the vast majority of land. Country Life estimates that the 36,000 members of the Countryside Land and Business Association (CLA) own 50% of rural UK land. [6] Cahill concludes that ‘just 0.3% of the population – 160,000 families – own two thirds of the country and less than 1% of the population owns 70% of the land.’ [7]

When it comes to forests, the forest certification organisation, PEFC, outlines how of the 3.9 billion worldwide hectares of forest, 86% are publicly owned. [8] Yet England, in comparison to the rest of Europe and elsewhere, has a very low proportion of publicly owned forests at only 18%. [9] There is little data on community ownership of woodland in the UK as a whole, but the Woodland Trust indicates that it is as little as 0.2%. [10]

What about physical infrastructure? Who owns our energy, water, waste, communications and transport infrastructure, including roads and railways?

Again, the market and the state are the dominant players. In 2010, the Office of Fair Trading (OFT) undertook a ‘stock-check’ of our national infrastructure, exploring models, patterns and trends of ownership. [11] Understandably, given the OFT’s remit, it was only concerned with market distortion and “how ownership might affect outcomes for consumers”. It is disappointing, however, that the only occasion in recent history when ownership of our country’s real, tangible infrastructure base has been seriously investigated was with a view to how it is consumed. The OFT suggests that models of infrastructure ownership “have changed markedly in recent years” and that private ownership “now accounts for around one third of assets that we mapped”, with most of that third being public listed companies.

The report concludes that “the data illustrates a trend towards greater use of private unlisted ownership”, and ownership through funds and consortia. Given the importance of infrastructure to almost every aspect of modern British life (and recent concerns about the risks of the relentless pursuit of private profit in other contexts, such as care homes, banks and utility companies), should we be asking questions about the potential risks of such a shift?

Diversifying ownership

It seems that many are quietly concerned about the growing concentration of ownership of land and infrastructure. While not yet a national debate, the argument for co-operative and social ownership has been gaining traction in recent years, whether in Government, in opposition, within civil society or across our cities, towns and villages. Unconstrained by public sector limitations or beholden to single-minded shareholders, mutual and social enterprises can offer the promise of both commercial nous and community interest when it comes to the ownership and management of our national assets.

In practice, emerging successful examples of social and co-operative ownership of land and infrastructure at scale are rare, but they do exist. The OFT points to significant not-for-private-profit models of ownership, for example Trust Ports [12] (run by independent boards and serving regional and local interests), local authority investment in airports (through an arms-length public enterprise), Network Rail (a ‘not for shareholder dividend’ company with profits reinvested in the railways) and Welsh Water (now a not-for-private-profit company after a handful of entrepreneurs led a takeover).

Other examples include Hill Holt Wood (a charity proving that ancient woodland can turn a social and environmental profit); Coin Street Community Builders (a social enterprise and development trust pursuing people-driven regeneration of London’s South Bank); and the community takeovers of Scottish Islands such as Gigha (held in trust). A community approach can blend entrepreneurial flair and social responsibility, enhancing a local area’s economy, environment and community. The focus of such models is directed to what is best for the asset and the community that surrounds it. However, when regulatory regimes, policy, politics, competition and EU law are all ownership blind, any shift towards social or co-operative ownership often depends on determined action by a handful of commercially-savvy, socially motivated entrepreneurs.

So there are alternatives to the distinction between public and private ownership of land and assets. DCLG’s work towards a comprehensive public sector assets map for England will give a better indication of the extent of state owned land and assets. [13] Its aim is to encourage efficiency savings, but it also offers communities a way to find out exactly what the public sector owns. It is a welcome development in a field where information is currently neither clear nor comprehensive.

The future of land and infrastructure ownership

We believe that our investigation into the nature of ownership across the UK suggests a need for a better-informed national debate on land ownership. The unfortunately ignored Ownership Commission report on business ownership pointedly concluded that “Britain does not take ownership sufficiently seriously”. [14] We would suggest that this must apply to land and other infrastructure as well.

Yet there is no lack of interest in ownership when it hits the headlines – see the outcry on the Conservative-led Government’s attempt to put tracts of public forest land up for sale. The public has an instinctive sense of the importance of land ownership. When change is more gradual and piecemeal, however, changes in ownership attract much less attention, but may have just as permanent results.

Recognising this, then, should issues of ownership be a greater part of the narrative at the next election?

Devolution prompted Scotland’s debate, leading to the Land Reform Act, enabling an opening up of some opportunities for community ownership and management of land: is it too much to think that England and Wales could have a similar debate? The Localism Act offers communities some limited tools for increasing control of land, which were opposed by many private landowners. It may be fascinating to see how effective these tools are.

It is perhaps naïve to think that a reasonable and informed debate might crystallise some agreed general principles around ownership. These would perhaps be informed by the Ownership Commission’s assertion that good ownership involves three dimensions: plurality, stewardship and engagement. The need for transparency and to strike a balance between social, commercial and environmental interests could also be taken into account.

Social approaches are not a panacea – they need support and nurturing and are often initiated by one or two visionary and entrepreneurial people. But there is increasing hope, belief and some evidence, if not yet consensus, that social approaches can contribute to more sustainable economic development. If the debate around ownership matures, we might even find that people across the political spectrum increasingly support an approach that focuses on the asset and its impact and use, not only on private profit or public control.

Even if we begin to move out of the financial crisis, the threat of a resource crisis will remain; with the management of land and infrastructure at its heart. The traditional dichotomy of land being owned by either the state or private interests is flawed, and can preclude the more creative and sustainable outcomes that a social approach can bring. Elinor Ostrom’s Nobel Prize winning work has shown that taking a local approach to management of important ‘common pool resources’ can be an effective way of ensuring their sustainability.

Land and infrastructure ownership have for too long been ignored in political discourse in England and Wales. We believe we need a more explicit and grown-up debate about who owns what, who is selling what and why, in order to consciously make better use of our assets in our enlightened self-interest and with due and balanced regard to commercial, environmental and community interests.

Let’s not sleepwalk into a society where control of the land and infrastructure we need to thrive has slipped through our fingers.

This article was originally published in ResPublica’s Making it Mutual: The ownership revolution that Britain needs, a collection of essays covering all areas of policy – energy, financial services, education, infrastructure, welfare, public services, competition – proposing entrepreneurial and innovative policy proposals for structural reform.