Sark Green Deal – Power to the People

The Sark Green Deal is an action plan or manifesto to mobilise Sark resources and people to a common purpose of energy independence for Sark. The aim is to continuously reduce cost and carbon intensity of Sark’s energy in all its forms, commencing with Sark electricity, and the means is through genuine partnership between Sark’s energy consumers, investors and managers.

Energy Independence 
Sark electricity is not the only expensive form of energy on Sark: fuels such as propane, heating oil & diesel used for heat and power are also extremely expensive and carbon intensive. During several visits to Sark, I found almost complete support for Sark energy independence. Once the electricity dispute has been resolved, it will therefore make sense for all Sark’s energy services (electricity, heat, power and so on) to be provided by a single Sark Energy utility. 

Smart Energy

Following the 1973 Oil Shock, when the oil price rose by 400% from $3 to $12 per barrel, Denmark (with an economy > 90% reliant on oil) faced an existential threat and implemented a new bipartisan energy strategy in order to achieve energy resilience, security and independence.

The organising principle of Denmark’s energy strategy was that for any given use of energy as a service,  Danes would minimise consumption of fossil fuels. Denmark therefore invested massively in renewable energy such as wind, in heat & power infrastructure; a switch in mobility to cycling and efficient public transport; investment in buildings and so on.

So Danes put energy cost before financial cost and the outcome, strikingly illustrated below was to transform a centralised Danish national grid to a localised Danish natural grid


The great Scottish inventor, James Watt, did not sell his new and much more efficient steam pump to Cornish tin mine-owners in 1778 but instead supplied the use of the pump in exchange for a third of the coal that was saved. Watt continuously improved his pump’s reliability and efficiency through an energy partnership with mine-owners delivering pumping as a service.

Capital Partnership
A capital partnership is a production or revenue sharing agreement between users of investment (capital users) and investors (capital partners), with a trusted third party managing partner.. Shared accounting records are maintained by the operating partner, and no single class of member has dominant rights over another. Sark Energy will be incorporated as a Guernsey Limited Liability Partnership (LLP).

Prepay 
Prepay funding is complementary to the conventional company shares and secured debt which Sark’s unique legal system does not accommodate. Prepayment of energy at a discount offers consumers and investors an energy return on investment, while enabling energy suppliers like SEL to access working capital. 

So Sark Green Deal’s Energy Partnership legal design will use capital partnership to fund assets and energy prepay to finance operations. Online implementation and electronic record-keeping lead to the result of simple energy financial technology or Energy Fintech which serves people, not machine processors.

Action Plan
This Sark Green Deal manifesto envisages three phases: Resolution, Transition and Operation. Through the partnership approach it is self evidently unnecessary to own productive assets to share or control their use.

Resolution
The first step is for Sark Energy Holdings Ltd and Sark Electricity Ltd as founder members to incorporate Sark Energy LLP. 

  • Control – Sark acquires nominal ownership of SEL from SEH. Surplus sharing between SEL (capital user) and SEH (capital partner) replaces the current asset lease agreement. 
  • Management – Guernsey Electricity (GE) has for many years provided informal technical and other assistance to SEL. A simple service level agreement as managing/operating partner may be negotiated and included in the LLP agreement. .
  • Working Capital – discounted consumer prepayment for electricity enables settlement of legacy debts (eg legal costs) and thereby finances compliance with the Energy Price Commissioner’s price control order at 53p /kWh.

So through Sark Energy LLP, assets and business may be re-integrated; power may be shared equitably between investors and professional managers, and new working and fixed capital may be introduced without diluting the interests of SEH shareholders. This purely legal and financial Resolution requires financial audit but no examination or due diligence in respect of the physical energy assets under dispute. This potentially enables rapid implementation, probably by 1st February 2020 at the latest.

Transition
Driving transition an agreed energy strategy will frame a rapid programme of investment in solar, wind, energy storage and smart grid updates. Meanwhile a detailed plan for decarbonising other modes of Sark energy use will be developed.

This investment programme will be funded by additional capital partners, including equipment suppliers, who will share in the value of increased production and/or energy efficiency savings. While the target date for transition will be two years, suppliers will be incentivised by the partnership structure to complete the transition earlier and below budget. 

During transition Sark Energy LLP membership may be extended to include energy users as a whole while a legal framework for long term custody of assets is developed. Meanwhile, diesel-powered generation will be drastically reduced from 24/7 operation as the high carbon/financial cost Sark grid is transformed into a low carbon/ financial cost Sark natural grid. 

Following the transition, low cost, long term funding may be raised from a public offering of prepaid energy to risk-averse investors, enabling capital partners to exit their investment if they see fit.

Outcomes
For Chief Pleas and Sark Electricity shareholders the Sark Green Deal aims to resolve the dispute in respect of legacy assets and enable control of this essential utility to pass to Sark through simple, equitable partnership finance and governance which shares risk, cost and power in all its forms.

For consumers, the Sark electricity price determined by the energy price commissioner of 53p/kWh will be applied throughout a  transition period of up to two years beginning as soon as possible, and will be followed by a continuing long term process of further Sark energy cost reduction.

For investors, whether in the transition or in the long term the Sark Green Deal assumes pessimistically that energy demand remains flat. However, to the extent that currently empty hotels and residential properties are reactivated and demand increases, then the return on investment will be higher.

Divided Britain

By Chris Cook

Divided BritainDivisions run deep – so deep we don’t even realise they are there, because they are integral to our everyday existence.

Some divisions are transparent: wealthy vs poor; public vs private, freehold vs leasehold, equity vs debt, black vs whit and the.geographic divisions of often arbitrary political borders.  Others are less obvious such as as the racial, ethnic & class divisions which distract people from economic inequity and inequality by manufacturing Them & Us divisions and the fear of the Other.

The list of binary divisions is long and increasing, and the pervasive spread of direct instant communications is creating the greatest divide of all – the Digital Divide. Machines and mobile devices communicate by arcane protocols of the binary code of 0 and 1  of staggering complexity to drive a communications network of machine, devices and operating software which sits like digital oil on real world ‘analogue’ water.

This digital divide is accelerating at a phenomenal rate: a digital start up enterprise of half a dozen people may create and accelerate a smart concept from zero to a billion dollar valuation in six months. But such a “Unicorn”  valuation does not come from nowhere: it comes from cost savings, which is fine when saving finite resources, but more problematic in the current ‘sharing economy’ of financial technology (Fintech) typified by Uber & Airbnb and now expanding into the financial technology bubbles of blockchains and coins begun by the Bitcoin phenomenon, which everyone knows, but no-one understands.


The new wave of real-world cost, risk and data sharing Fintech now gathering pace is doing to the qualified professional, management and administrator classes what machinery and cheap fuel did for unqualified manual labour. Within 5 to 10 years at most > 90% of highly paid work will disappear. If nothing changes, the beneficiaries of a Fintech transition to a new service economy will be a vanishingly small technocratic elite rich beyond the dreams of avarice because, simply put, the problem of the sharing economy is that Shareholders Don’t Share, and neither do landlords and lenders.

This accelerating division and wealth concentration is clearly not sustainable and the elites who gather at Davos every January at the World Economic Forum and this weekend at the Bilderberg Group gathering in Montreux are now deeply concerned, because they know they cannot withstand a redundant and militant professional & management class bearing real or virtual pitchforks.

So what is to be done?

The Real RevolutionIn the same way that real-world digital online business and government has emerged from the internet bubble, so it is that the second wave of people-centred financial technology is emerging from the current machine-centric bubble and hysteria of blockchain and coins. This Fintech 2.0 wave based upon agreements directly connecting people, rather than protocols connecting machines, will drive a Real Revolution.

Underpinning this Real Revolution is the philosophic understanding that in addition to binary absolute either/or digital choices, there are always and neither/nor. To illustrate this, there is the unique Scottish criminal law which extends the binary absolute black and white choices of guilty or not guilty, into a grey twilight zone of an indefinite Not Proven verdict. As a further example from personal experience, I spent ten years as a member of a fully mutual housing cooperative in East London, where my right to occupy the Coop land and buildings did not come from conventional binary legal tenure choices of either absolute freehold ownership or temporary dated leasehold or tenancy, but rather derived from my indefinite membership of a cooperative Friendly Society: so for as long as I paid an agreed (affordable) rent and followed the rules I had an indefinite and secure right of occupation.

Bridging the Divide


It has been long forgotten, but the original meaning of the word Company described gatherings of people who came together to eat bread and extended to companies of soldiers, merchant venturers and companionship generally. A new generation of Real Companies, not as organisations/corporate legal persons with life and management of their own, but rather as agreements to self organise to an agreed common purpose by sharing the risk, costs, surplus and the 3Ks is now possible, simply by mutual agreement.
From a City background in the legal design of financial instruments and institutions I have come to realise that the enabling instrument for a Real Revolution is a new generation of Real Credit based directly (Peer to Peer) on our capacity as people to fulfil promises to provide goods and services, and also (Peer to Here) on the value of use of land & buildings, or of energy use such as heat/cooling, power and mobility.
So 20th Century divisions cannot be resolved with the 19th and 20th-century legal innovations which caused them. Real change lies with reinvention in the modern form of the unwritten agreements and instruments which still survive everywhere in the world where people trust each other.
The good news is that a Real Revolution requires no change in any law: merely a change in the rules and the narratives within which we interact with each other.
So let’s getReal

Delphi Economic Forum III

Delphi Economic Forum III took place between March 1st and 4th 2018, aiming to identify the main global trends, assess their implications and review the resulting challenges and policy options confronting decision-makers of the wider Eastern Mediterranean Region. Moreover, it placed Greece’s need for structural reforms and new leadership strategies under the microscope with the aim to explore a new model of governance.

 

Energising Scotland – Introducing the ECO

There is perhaps no more crucial or contentious subject in the debate about Scottish independence than the subject of Scotland’s currency. There is nothing new about this: as long ago as 1705, in the run up to the 1707 Act of Union, John Law – the remarkable Scottish adventurer, gambler and originator in France of the first modern Central Bank – published a proposal for a land-backed currency for Scotland Money and Trade Considered: With a Proposal for Supplying the Nation with Money

Few are aware of this, but only less than 3% of the UK money supply is £ credits issued by the Bank of England on behalf of the UK Treasury. Over two thirds of the £ credits which constitute the UK money supply was created privately by banks to back mortgage loans, so that the majority of UK bank deposits are based on UK land. This fact makes it difficult to separate a Scottish monetary and fiscal system from the UK without the permission of Westminster.

But in considering a Scottish monetary system, in addition to the value of land and buildings, there is also the value of goods and services, the value of machinery, technology and (increasingly) of knowledge, data, and other forms of intellectual value.

Above all, there is the value of energy, and this proposal to energise Scotland’s economy through the introduction of the Energy Credit Obligation (ECO) is based on the simple fact that while the value of land use is by definition locally acceptable, the value of the use of energy is global. In other words, energy knows no nationality and no borders.

The ECO will not compete with the existing UK system, but will be complementary to it, being implementable now with no change in UK law.

The Big Picture
There are two strategic trends driving the evolution of modern economies: increasing energy intensity & the evolution of smart markets.

The former Saudi oil minister Yamani observed that the Stone Age did not end because of lack of stones, and that the Oil Age will not end for lack of oil. Whereas 30 years ago one barrel of oil fuelled the production of over 35 barrels, now the ‘easy’ oil has been extracted, and a barrel of oil may now be needed to fuel the extraction of 5 barrels or even less.

So while energy intensity of oil & gas production has increased, the Energy Return on Energy Invested (EROEI) has declined to the extent that the oil price has reached a level at which it is increasingly unaffordable, affecting demand. Moreover, it is increasingly economic to substitute oil with renewable energy, and to reduce oil use through smart interventions in energy efficiency (the Fifth Fuel).

The outcome of this secular increase in energy intensity is that the global $ oil price is effectively capped. Why else would Saudi’s Aramco and Russia’s Rosneft be prepared to sell equity ownership? They would never do this if they expected oil prices would continue to rise.

The current energy market is a transactional commodity market where energy is produced, bought and sold to consumers by middlemen such as oil companies or the Big Six, with a view to investor profit. Finance capital typically takes the form of equity (shares in a joint stock company) or debt (bank credit based in turn on bank equity capital).

For two decades, we have seen direct instant ‘Peer to Peer’ connections increasingly bypassing middlemen who have adapted by changing their business model. There is a transition to services driven by a very simple economic rationale. While owning assets and taking market & credit risk ties up a lot of finance capital, to provide services requires only ‘smart’ intellectual capital – knowledge, know how & know who.

For service providers it makes commercial sense to share assets, costs & risk wherever possible and to compete only on quality of service. However, the fundamental structural problem with the emerging Sharing Economy (exemplified by Uber and AirBnB) is that landlords, banks and above all shareholders don’t share.

National Grid to Natural Grid
No-one consumes raw energy in physical commodity form such as oil and gas. What we actually use is “Energy-as-a-Service”- dynamic energy delivered over time, such as heat/cooling, power, mobility, electromagnetic radiation & light.

Following the 1973 Oil Shock, when the oil price rose by 400% from $3 to $12 per barrel, Denmark (with an economy > 90% reliant on oil) faced an existential threat and implemented a new bipartisan energy strategy in order to achieve energy resilience, security and independence.

The organising principle of Denmark’s resilience-focused energy strategy was that for any given use of energy as a service, the Danes would minimise consumption of oil as a commodity. Denmark therefore invested massively in renewable energy such as wind (creating a global leader, Vestas, founded on Scottish technology), in heat & power infrastructure (again building huge expertise and a technology base); a switch in mobility to cycling and efficient public transport; investment in buildings and so on. In other words the Danes put energy cost before financial cost.

The following image strikingly illustrates how this organising principle transformed Denmark’s energy infrastructure from a centralised National Grid, in 1990, to an emerging distributed Natural Grid in 2014.

What about the economic outcome? Surely this massive infrastructure investment – which broke all the conventional market rules – must have wrecked Denmark’s economy? In fact, while Denmark’s GDP has more than doubled since 1973, the Danes’ energy use declined and carbon fuel use declined significantly, which in turn – as an unintended consequence – reduced Denmark’s CO2 emissions.

So Denmark demonstrated in practice that to apply a strategic organising principle of least resource cost leads not only towards national resilience, energy security & independence but also to a transition to a low carbon economy. However: Scotland is not Denmark.

Denmark was able to achieve this transformation firstly because energy utilities were publicly owned, and secondly because Danish local government is not only more local than in Scotland but also was well resourced fiscally through land value taxation (but note this source has been diluted). Denmark was therefore able to deploy public capital, directly and indirectly (eg through guarantees of bank loans to Coops) to infrastructure which would not have been financially viable using private finance capital of debt and equity and the Nordic commodity market in energy which has since emerged..

Scotland has very different institutions to Denmark: our councils are regional, not local: our energy utilities are in private not public hands; and in any case, energy policy is reserved to Westminster. So Scotland needs innovative institutions and instruments to mobilise resources and moreover, it must be possible to implement these bottom up with little or no change in the law.

But how? Enter Financial Technology (Fintech).

Energy Fintech
The current wave of new data sharing/authenticating protocols between machines (Blockchains) and financial instruments (Coins such as Bitcoin) have emerged completely outside the existing economy and have created what is clearly a financial bubble, akin to the historic South Sea Bubble and the more recent Internet Bubble.

In the same way that modern online businesses emerged from the Internet bubble, we are now seeing Fintech evolve as this new digital layer is integrated with the real world economy, and nothing is more real than energy. This proposal to energise Scotland brings to bear innovative legal design of the institutions and instruments which – Back to the Future – pre-date the modern economy.

Energy Credit Obligation (ECO)
An ECO credit instrument is simply a promise issued by an energy producer in exchange for value received from an acceptor. An ECO holder has no right to demand payment in £ sterling, so it is not a debt instrument. There is no right to demand delivery of energy, so an ECO is not a derivative (forward/futures) instrument. The ECO confers no right of ownership such as a rent or dividend, so it is not an equity instrument. Finally, it is not purely an authenticated receipt or proof of value received or expended without any additional obligation – so it is not a Fintech Coin instrument like Bitcoin.

The obligation of a supplier of energy services who issues an ECO is simply to accept this instrument in payment for his energy supply So if a customer presents an ECO instead of (say) £ sterling this will be valid payment for energy supply and an authenticated ECO cannot be repudiated, and £ sterling claimed instead..

There is nothing new about promises as a means of payment: this instrument pre-dates all others and has been routinely in use for millennia wherever people trust each other. Promises/credits form the unseen foundation of all economies even today.

Historically, governments and banks have been the institutions which acted as intermediary organisations to provide the trust which is necessary for the creation, exchange and fulfilment of promises. This reality is embedded in the English language so that Tax Return refers to the return and cancellation of sovereign tax credits; Rate of Return to the rate at which promises may be returned to the promissor, and Stock refers to the split tally stick wooden tokens which recorded promises.

The question is what are the future Scottish risk, cost and surplus sharing institutions which will provide a framework of trust for the ECO.

Local Energy Companies
A Local Energy Company is not an organisation – there are enough of these already – it’s simply an agreement between existing local stakeholders to create new energy infrastructure.- a local Natural Grid. The aim of an LEC is energy independence (and hence, energy security and resilience) for a locality.

As with all pre-1855 Companies – particularly those incorporated to build civic infrastructure – these Companies would not have limited liability the reason because with all stakeholders as members there is simply no need to limit liability. Neither would the Company have share capital, because any necessary investment is raised by selling energy credit obligations (ECO) to investors to create energy loans.

There are three stakeholder associations/clubs: energy users & producers (who use the energy infrastructure); energy investors; energy service providers (developer/managers). In addition there will be custodian members. Energy service users and investors delegate development & management, while retaining veto rights of governance. The ultimate veto, is held by custodians in the public interest so that infrastructure is held in common in perpetuity. In this participative governance model, no stakeholder has dominant rights to impose his will on others and for that reason I call such an agreement a Nondominium.

The LEC agreement shares costs and surplus, particularly from development of new assets. It also shares risk through a mutual guarantee with shared (Fintech) accounting/clearing of acceptances by one supplier of ECOs issued by another. There is nothing new about such associative agreements: Scottish farmers innovated machinery rings and now compete on quality but collaborate on costs. Ship-owners have clubbed together globally for over 140 years in Protection & Indemnity (P&I) Clubs to cover risks that the insurance middlemen of Lloyds of London will not take. And so on.

What is the role of banks in such an energy market system? Since banks are not energy suppliers they cannot issue ECOs, but there are two important financial services which banks can provide: firstly, as risk managers overseeing ECO issuance and clearing and secondly, in advising and bringing ECO energy investors together with ECO energy loan investments, both for new and completed assets..

Local Energy Companies may be networked through membership of Energy Companies covering a greater locality: so by way of example the Linlithgow Energy Company would simply be a member of the West Lothian Energy Company and so on. LECs may be founded and incorporated at any time, and are complementary to the existing fragmented and commoditised energy market.

Outcomes
ECO energy credits are independent of location; implementable bottom up, rather than top down; have no nationality; and lead directly to energy independence and an energy economy. Scottish economic decisions made on the basis of least resource cost rather than least £ cost will lead to the creation of a Scottish Natural Grid. As energy services markets spread by local implementation, it leads to a broader international Natural Grid as the energy market evolves from a transactional commodity market.

However, while focusing exclusively on objective energy cost may be the dream of technocrats, it leads to nightmares for everyone else. So while score should be kept of finite physical resources in objective energy terms, the minimisation of human cost and the maximisation of happiness, beauty, care and amenity requires subjective measures.

So we shall also need new Scottish institutions and instruments to mobilise relationships between Scots, and between Scots and the land in which we live: that is another story, of Scottish housing, food, care and health services and independence.

 

Delphi Economic Forum

The Εurozone economic outlook & monetary policy

Delphi Economic Forum III took place between March 1st and 4th 2018, aiming to identify the main global trends, assess their implications and review the resulting challenges and policy options confronting decision-makers of the wider Eastern Mediterranean Region. Moreover, it placed Greece’s need for structural reforms and new leadership strategies under the microscope with the aim to explore a new model of governance.

From Peer To Here

CHRIS COOK: FROM PEER TO HERE

Alternative Approach –  the Policy makes the Party

Alternative policies are reality-based. We start with the services we all need and would receive in any civilised society – housing/shelter, warmth, care, health, education – and work out how best to mobilise the resources necessary to provide those services.

Parties will no longer make policy in accordance with a distorted ideology: the policy will make the Party or movement.

Alternative Economics – at what Cost?

Conventional economics is based upon an organising principle of least £ cost decisions. Alternative economic decisions will be based on least resource cost and least human cost decisions.

Resource cost is objective, since it is fundamentally based on energy cost. Human cost is subjective – that is, we know it when we see it – and this requires Alternative forms of governance to implement.

Alternative Housing – Peer to Here & Housing as a Service

Q: If we have land, resources and people sufficient to create new housing, why do we need credit from government or banks to finance it? A. We don’t.

We can create housing as a service, through sharing the value of land use – shared, that is, between investors in land, and providers of land development and management services. The key innovation – which is how UK sovereigns funded themselves for centuries – is that investment will come from prepayment for land use at a discount, probably by pension investors.

These “land-use credits”, as I call them, are not Peer to Peer – they are Peer to Here.

Alternative Energy – a Natural Grid

No one uses raw oil, gas or electricity as a commodity: we all use heat/cooling, light, mobility, electromagnetic energy (communications) and power as a service.

If we apply the Danish organising principle of ‘least resource cost’ we minimise the use of fossil fuels for any given use of energy as a service.  The outcome is a Natural Grid, based upon cross-national-border flows – rather than a dysfunctional National Grid within UK borders, perpetually in danger of the lights going out.

How do we achieve this? Simply apply a levy on fossil fuel use, and on the use of renewable energy commons. Then deploy the resulting fund to roll out massive investment in renewable energy (MegaWatts) and energy efficiency (NegaWatts).

Cheaper energy for all, then? The last thing we need is cheap energy since this is wasted on a massive scale. The Alternative approach is to keep the price high while distributing an Energy Dividend to everyone as of right, and giving people the means to pay.

Alternative Care – a Care for Equity Swap?

Baby Boomers have become land-rich (thanks largely to a bank credit boom) but care-poor. Meanwhile the younger generations are land-poor but care-rich.

Why not put a care levy on the value of land use, and pool the proceeds into a Care Pool fund, while paying a Land Dividend of “Peer to Here” credits to everyone? Renters could use them to pay their rent – and owners could exchange them for care for themselves, or their property.

Alternative Health & Education – Cooperatives of Cooperatives

Health and education services will be provided by networked Co-ops of health and education professionals. They will use buildings and facilities funded by pension investment, with costs shared across the population as health & education levies on earned income.

Alternative Credit

We need banking – but we don’t need banks. Clubs/Associations of businesses and freelancers could extend credit to customers, subject to mutual credit assurance through a Guarantee Society. Accounting and risk management are provided by service-providers-formerly-known-as-banks. The outcome is essentially a credit card owned by producers and consumers – not the banks.

Alternative Investment – Peer to Peer & Peer to Here

Capital Partner investors who are up for taking on development risk may invest in creating new productive assets and share in the new value created. Risk averse investors, on the other hand, may simply invest at a discount in future production or revenues from the new productive assets created. They are the embodiment of “Peer to Here”.

Alternative Transport – Platform Cooperatives

Transport manufacturers will no longer sell cars, trains, vessels or planes: they will supply transport as a service in partnership with energy suppliers, in exchange for a share in the revenues generated.

The balance of the revenues will pay a cooperative consortium of service providers [what has often been described as a “progressive Uber” or “platform cooperativism” – Ed.]. The necessary investment in transport will come from discounted and prepaid transport revenues.

Alternative Outcomes

Competition in a service economy is no longer for money but for quality of service, with service providers co-operating on costs, particularly resource costs.

The economic outcome is compelling, because the more expensive finite resources become the more profitable it is to save them.

Finally, since service providers do not own expensive assets or take market price risk or credit risk – as do middlemen, such as the Big Six UK energy companies – then the result is service providers who will out-compete the middlemen. This is why the smarter companies are already making the transition.

Caring for Scotland

There are plenty of ‘wicked’ problems in UK and Scottish public policy of which the crises in care and affordable housing are perhaps the most intractable.

My generation – at the tail end of the Baby Boom – benefited through no effort on our part from massive unearned gains in land values due to successive booms driven by unconstrained bank credit for mortgage loans and the transactional land development model I have come to think of as the ‘Four B’s’ – Buy, Borrow, Build and B…er Off.

It is an everyday occurrence when visiting London to talk to Londoners whose homes have ‘earned’ more than they have during  their career. But land-rich Londoners are increasingly finding themselves care-poor, unable to look after either themselves or increasingly decrepit and cold homes on crazily valuable sites, while carers themselves are priced out of living in London.

On the other side of the land divide is my sons’ generation, who are care-rich but land-poor with little chance of anything other than a minimum wage job if that, still less any chance of affording anywhere to raise the next generation.

Housing Policy

The unwritten and unspoken organising principle of Westminster housing policy is simple: it is at any cost to keep the banking system afloat. House prices consist of the capitalised future rental value of land/location (which does not depreciate), and that of the buildings and improvements on the land (which do depreciate). So if rental values become genuinely ‘affordable’ ie fall significantly to what is known as a ‘social’ rental level then this will reduce the value of the land which secures bank mortgage loans, and the UK banking system will essentially become insolvent in terms of assets and liabilities.

This same systemic problem of bank solvency now prevents the modern day introduction – as was suggested until maybe 100 years ago by classic Liberals such as Winston Churchill, J S Mill, and back through Adam Smith to Tom Paine – of a tax on land rental values which is once again surfacing as a policy proposal.

Care Policy

As austerity and automation make inroads into the middle class, the attention of local Councils is increasingly turning to accessing equity in the homes of the elderly in order to cover the costs of what has become a rapacious private care industry. Rent-seeking in the care sector is rife, and inaptly named private equity investors who acquired portfolios of care homes and loaded them with debt to take out massive dividends are now being squeezed by Council cuts. Meanwhile carers are paid a minimum wage, if that, and this is a fraction of that charged by agencies and care homes for their services.

It seems to me that underlying both problems is a fundamental question: how can we make a transfer between a generation which is land-rich and care-poor to a generation which is care-rich and land-poor?

Promises, Promises

For thousands of years, the bedrock of economies was – and remains – promises or credit. If someone trusts me enough to give me something now in return for my promise that I will provide something of equivalent value in the future then he has given me credit, by accepting my promise.

But as the economist Hyman Minsky said anyone can issue promises or credits – the problem lies in getting them accepted. Institutions such as temples, government and now banks have long provided a role as a trust or risk middleman (intermediary) who essentially guarantees the performance and credit of the promissor.

It seems to me that the inter-generational transfer may be achieved through mobilising the value of land and care through creating a new framework for guarantee of care credits and land rental credits. But such a framework and system is at the moment only be an aim or aspiration: the question in terms of practical policy is always: “How do we get there from here?

Care Levy

Westminster has left Scotland with few tax options, none of them inviting, to the extent that the power to tax Scots’ income has not been taken up by the Scottish Government.

One of the interesting historical backwaters of UK income tax policy was Schedule A income tax, which was based on what is known as ‘imputed income’. This was based on the proposition that owner-occupiers receive an invisible economic benefit or subsidy from house occupation since if A rents out his  house to B who in turn rents his house to A then both A and B would be in receipt of taxable income. In other words, the proposition that home ownership should be a taxable privilege.

So the first part of this policy proposal is that a Care Levy may perhaps be raised as an imputed income tax in Scotland based on the rental value of residential land. This levy will raise a fund – a Care Pool – available for public investment in the creation of a networked Care service as a co-operative of co-operatives.

Care Dividend

The second policy element is for a Care Dividend then to be paid directly – administered professionally by service providers with democratic Council oversight – as a form of Universal Basic Income to all qualifying Scots. The innovation is that rather than being paid in £ sterling the care dividend will be paid in £1.00 care credits which are returnable in payment for the care levy.

Owner occupiers would be able to use the care dividend to pay their own levy, but if they wish, to use it to pay for care: tenants – many of whom will be carers – would be able to use the care dividend to pay their rent, because landlords would accept it in payment of their own obligation.

The above Levy/Pool/Dividend approach opens up interesting policy options .

Equity Release

Discounted prepayment of land rentals  is actually a simple form of Equity Release which is superior to existing forms of equity release in terms of cost and offers the potential for ‘Care Loans’, which the occupier could repay through buying back credits, or simply leave open until they move or until their death at home. Such discounted prepaid £1.00 land use credits are almost precisely how UK sovereigns funded themselves for 500 years from land rentals, taxes or duties.

This in turn enables anyone – including care home operators – who wish or need to refinance existing bank loans to do so at the same time as creating an optimal asset based on land values for long term investment by pension funds.

A Care Service

Initiatives such as the US Freelancers Union, based upon a need for health insurance, and the Independent Workers Union of Great Britain, which is recruiting members from courier companies such as Deliveroo, are opening up new methods of associating to a common purpose.  This leads to the possibility of what a hardcore Marxist I know in Berlin memorably termed Venture Communism – a new generation worker Co-operatives.

The care pool fund which results from the collection of a care levy could be used to provide the necessary development and working capital required to create a Scottish Care Service as part of the emerging sharing economy.  But as we may observe from  sharing economy platforms such as Uber, Shareholders don’t share value – they extract it. By  using simple collaborative agreements and instruments local councils may sponsor platform co-operatives to enable networked carer Coops to be supported by service providers without value being drained out by rent-seekers.

Independent Living & Resilience

In the same way that resource resilience and energy independence may be achieved bottom up  using simple mutual agreements and credit instruments, so it is that the land and people of Scotland may be mobilised to attain independence and  resilience through building capacity and delivering care for Scots and for Scotland.

West Lothian Questions have West Lothian Answers.

Chris Cook, “Regenerative Land Partnership”

Chris Cook is a leading expert in enterprise and market development and financial instrument design with a unique body of experience in relation to all aspects of legal and financial structures. His 25 years’ experience included six years to 1996 as a Director of what is now the dominant global energy exchange. Since March 2011, Chris has been a Senior Research Fellow at the Institute for Security & Resilience Studies at University College London conducting action-based research into networked, decentralised, and hence resilient, 21st century legal frameworks and ‘Open Capital’ market instruments. On the principle that if you network resilient communities the result is resilient countries, Chris has been piloting bottom-up community development of resources and people and in particular simple but radical new frameworks for land use and investment. On the 4th of November 2016, he spoke on a novel approach to funding called, “land partnership”, which is a non-debt equity purpose-led collaborative partnership approach to funding innovation, and new relationships with the land.