‘It's a barrier to young people feeling that democracy and capitalism are working for them. It's simply harder for us to make that case if people … feel that they’re being shut out.’
Michael Gove
Michael Gove sparked quite a debate last week with his warning to the Conservative Party that it must urgently appeal to young people — or risk them turning their backs on capitalism and democracy. His focus was on the fact that housing is out of reach for so many, an issue to which we drew attention back on 26th March 2018.
However, the challenge is much deeper than that. It encompasses a generation who have emerged from higher education saddled with huge debts, and they face the denial of politicians to pass on even the modest endowments granted to them via their Child Trust Funds.
It amounts to an almost complete indifference to the interests of young people from the political elite. James Marriott of The Times may have tried to assure his readers that Gen Z ‘aren't going to rip up democracy’ in his article on 15th February, but his statement that young people are ‘full of new ideas and intensities that we forget we once possessed ourselves’ ignores the fact that 20-30 years ago young people had a significantly more secure economic foundation with which to start adult life.
There is a direct link between having adequate economic well-being and being able to generate those ‘new ideas and intensities’, whether in the shape of democracy or otherwise. The basic necessities of life include not just accommodation but also sustenance and the ability to travel. If trying to cope with the absence of these essentials takes precedence, it's hardly surprising that a young person’s wider interest falls away, as was demonstrated in the by-election turnouts last week.
If politicians really want to break the cycle of deprivation, as Sir Keith Joseph called it fifty years ago, they must accept their part in the need to nurture the empowerment of young people. If a young person's family is not in the position of being able to provide that nurture, then the state must step in. It calls for a targeted provision of resources and life skills, much more targeted than was the case with the Child Trust Fund. If a family is able to provide that nurture itself, they should do so, bearing in mind of course the risk of over-doing that support. As Andrew Carnegie, the 19th century philanthropist, showed, if descendants receive too much money as inheritance, it can significantly undermine their drive to achieve their own potential. This is known as the ‘Carnegie Conjecture’.
But for low income, disadvantaged families there is no resource on which to provide that nurture — it has to be delivered as part of a systemic, long-term approach of inter-generational rebalancing. And the logical route for providing this is to recognise the role of the human life cycle: you can't take your wealth with you when you die!
That's why we should not be talking about abolishing inheritance tax: instead, we should be aiming to hypothecate it as soon as the state of public finances allow. A long-term approach to funding resources and life skills for disadvantaged young people from inheritance levies could deliver the opportunity for disadvantaged young people to achieve their potential in adult life, not just in the United Kingdom but across the world.
However, this needs to be a systemic structure framed in a constitutional, not political, character. It cannot be switched on and off at the whim of incoming administrations, as the coalition government did with Child Trust Funds in 2010. It must override the short-termist nature of western democracy in order to reach across generations as they move forward.
As a rough example of what a new scheme might look like, here is a proposal which The Share Foundation drew up for the State of California following an approach to learn from the experience of the Child Trust Fund. We proposed an initial payment of $1,500 to open a starter capital account with an incentivised Financial Awareness course through which they could earn an additional $3,500.
For a scheme like this to be re-introduced here in the UK we must, however, be able to demonstrate the effectiveness of the Child Trust Fund scheme. Over the past few days The Share Foundation has discovered how focused the ‘unclaimed adult-owned’ challenge is for low-income/disadvantaged young people: 98% of the 51,000 accounts which it has successfully linked were administered by HMRC-allocated account providers. These accounts originally comprised just 28% of of all CTF recipients, held for the most disadvantaged.
If they are not delivered to the young people to whom they belong, it will simply put ammunition in the heads of those people who wish to maintain the status quo, with its wholly excessive polarisation of wealth and opportunity. That's why the Child Trust Fund half-day conference taking place in Church House, Westminster on Tuesday 5th March is so important, particularly as we approach the 50% mark of young people who have reached adulthood without any knowledge that this money is waiting for them.
Gavin Oldham OBE
Share Radio