‘How are the mighty fallen!’
2 Samuel 1:27
The BBC Question Time programme following last week’s election results was particularly notable due to the audience’s comments. It wasn't just the frustration felt by older people — what really stood out was the sense of despair among so many young people.
There was intense criticism of the challenge of leaving university with a massive debt burden, and with no chance of being able to have your own home. But the sense of disconnect went much deeper than that: while the Labour government has lifted the two-child welfare cap and put forward proposals to lower the voting age, these are minor issues compared with the big challenge of inter-generational unfairness which is clear for all to see — including such massive youth unemployment — and which has been the result of both Labour and Conservative policy stagnation over the past sixteen years.
There was also a sense of despair amongst commentators of all ages: that no matter how hard people worked, they saw little return for their extra effort. The words ‘stealth taxes’ — the freezing of tax thresholds — didn’t rise to the surface as such but, both in the Question Time audience and in ‘on the street’ broadcast interviews, you could feel that sense of diminishing returns which gives rise to so much despair. And again, that policy of freezing tax thresholds has been relentlessly pursued by both Conservative and Labour governments. No wonder they have both been massacred in the polls.
As Tony Blair reflected recently, Government economic policies are heading for the cliff edge, while young people are suffering the most. Seventy-five years of debt-fuelled Attleean universality, then crowned with an excessively generous pandemic furlough scheme, have resulted in public finances close to the point of total collapse, with the annual cost of interest on public debt now exceeding both the defence and education budgets combined.
The problem is accompanied by a general retreat from appreciating the value of individual ownership for all, by both the main parties. The previous Labour government understood the significance of this. Gordon Brown may not have got all his decisions right as Chancellor — see this week’s Modern Mindset episode on selling off the gold reserves, which has thus far cost the United Kingdom $35 billion — but he did introduce both the ‘All Employee Share Ownership Plan’ and the Child Trust Fund.
Individual ownership is important because with it comes a sense of responsibility and participation. The Share Foundation has put forward proposals to Government for a Child Trust Fund Mark 2, targeted specifically for young people from low-income backgrounds and featuring ‘automatic release at 21’. We are still pushing hard for Government to accept automatic release for HMRC-allocated accounts with the current scheme.
However, the Government has failed to give sufficient priority to deliver Gordon Brown’s Child Trust Fund scheme, and it has not even responded definitively to our CTF Mark 2 proposals, in spite of our willingness to support this with a philanthropic advisory group. Meanwhile, the Conservative opposition would prefer to give National Insurance breaks to young employees to help fund a saving scheme for them — this may represent a small concession to those lucky enough to find jobs, but it doesn't start to address individual ownership opportunities for disadvantaged young people who struggle with NEET status.
Enabling individual ownership for the most disadvantaged costs money, of course, and that means addressing those challenged public finances. However, this is where inter-generational inequity really cuts in and it’s not just about the triple-lock pensions policy. It's about Governments holding onto this mantra of a ‘free at the point of use’ health service for all, which is the direct result of those seventy-five years of Attleean universality.
Many people enjoy the benefits of private health insurance throughout their working lives but, when they retire, the use of this funding process drops like a stone. This leaves the state to pick up the tab just as they enter the healthcare-intensive part of their lives.
If the NHS was able to draw down on mandatory private health insurance for wealthy old people as their services were used, it would release tens of £billions. This would then allow the receipt of at least £10 billion in inheritance levies to be hypothecated in order to fund individual ownership of accounts and life skills for disadvantaged young people.
We have proposed this for the past four years, to both Conservative and Labour governments: it's been pushed back by the Conservatives because they don't want to upset their elderly voters (many of whom are now voting for Reform), and by the Labour government because they are still clinging on to the ideology of Attleean universality. They have both thereby resisted calls for lower demands on public finances, more competitive services and efficiency improvements in the interest of maintaining a bloated and ineffective state monopoly.
So we do need to look at both the necessary inputs and outputs in order to achieve individual ownership for disadvantaged young people. We need to move away from imposing stealth taxes and from policy stagnation and, if government still can't finance individual ownership for these young people, we should encourage philanthropists to put their shoulders behind the wheel and help.
The assessment of UK-wide political opinion following last week's elections showed that the underlying majority preference is for a much more egalitarian form of capitalism, where individual ownership and opportunity is available to everyone. At present none of the political parties are directly espousing egalitarian capitalism — it's high time they did.
Gavin Oldham OBE
Share Radio