‘Jefferson's laudable principles were damaged by his wilful blindness to the contradictions between his rhetoric of freedom and equality.’

Canon Rod Garner, writing in the Church Times on 3rd July

Is this true? As Rod Garner recounts, Thomas Jefferson’s own lifestyle may have grated with his extraordinarily perceptive statement, but that doesn’t deny the essence of his declaration: 

‘We hold these truths to be self-evident, that all are created equal, that they are endowed by their creator with certain inalienable rights, that among these are life, liberty and the pursuit of happiness’.

But Canon Garner’s view is clearly shared by the great majority of politicians, who pursue either individual freedom or egalitarianism, but not both. Our new UK prime minster Andy Burnham may lean heavily towards the latter, but he would do well not to stand in the way of the former.

On the left of politics, the conviction is that egalitarianism can only result from government intervention and control. On the right of politics, free enterprise means the rich get richer without any constitutional check or inter-generational means of breaking the cycle of deprivation. Meanwhile the centre ground of politics is a mishmash of parochial policy-making, devoid of any clear logic.

Andy Burnham's claim that UK politics have taken the wrong direction for the past forty years suggests that he sees the root of the problem as the free market; but that's not what has caused public debt to spiral to nearly £3 trillion.

The core problem is the universal provision of public services, without any charge for those who can afford to pay. As a result, not only is government unable to provide proper empowerment for the most disadvantaged, but also taxes have been driven so high that ‘cost of living’ despair — and emigration — are now commonplace.

Universality started with the concept of national insurance, whose original structure was designed to finance health services and pensions throughout society. However, when people take out their own health insurance they aim to keep annual premiums under control by staying fit and healthy; in contrast, ‘premiums’ which are entirely publicly-funded remove all such personal incentives.

But in any case, ‘National Insurance’ is no longer treated as such by government. It has just become another source of general taxation, and one that bears down hard on working people — since it has retained its exclusion from those who are past retirement age.

State pensions have also lost their connection with the logic of retirement saving, because there is no funded public pensions scheme in the United Kingdom. The payment obligation is now a huge liability for public finances going forward: the total accrued gross liability for UK state pensions is estimated at between £3.8 and £4.8 trillion. Additionally, the UK government holds about £2.6 trillion in unfunded public sector defined-benefit workplace pension liabilities (for example, NHS workers, teachers, and civil servants).

All these liabilities are also unfunded, meaning the government does not set aside a pool of capital to cover them. Instead, they operate on a ‘pay-as-you-go’ basis, funded entirely from annual tax revenues and National Insurance contributions which will be passed on to future generations of taxpayers.

No wonder politicians agonise over whether to axe the ‘triple lock’ or push retirement age up at a rate faster than life expectancy. As This Is Money reflects, they are likely to resort to the latter in order to avoid the electoral challenge of the former. However, this is really just another form of stealth imposition, alongside freezing tax thresholds and repayment terms for student debt.

These universal systems of state provision therefore bear far more responsibility for our broken public finances than the radical free enterprise shake-up in the 1980s. A large proportion of the ‘baby boomers’, who have benefited so much from economic growth and higher house prices over these past forty years, understand full well that they should be making more of a contribution, even if it were on a voluntary basis.

However with respect to this last point, my own experience of trying to refund the annual cost of my free ‘old-age bus pass’ shows that government has no idea how to accept such voluntary contributions: after months of sitting on an uncleared cheque, it was finally paid into an account ‘for the redemption of the national debt’!

Andy Burnham must therefore tackle the legacy of seventy-five years of Attlee-an universality, but he needs to do so with an eye on some logical principles:

  • First, there needs to be a presumption in favour of inter-generational rebalancing. It is ridiculous that, as Paul Johnson reported at the Share Alliance conference in May, so many young people feel let down in comparison with their parents’ journey into adulthood. This means hypothecating — ring-fencing — inheritance tax receipts in order to provide starter capital accounts and incentivised learning life skills for disadvantaged young people in order to empower them for enjoying individual freedom in adult life;
  • Second, we need long-term oversight of the short-term executive decisions taken by government. This means restructuring the House of Lords so that it isn’t full of prime ministerial appointments, but is elected on the basis of how people want to see the country in fifty years’ time;
  • Third, we need more focus on effective global governance, because all our major problems — the polarisation of wealth, climate change and geopolitical instability — are global in nature. It's time to build democratic accountability directly into the United Nations, starting with our own national representatives. Enabling mass participation in tech wealth creation is a global, not national, challenge, as Share Alliance’s work for Stock for Data and Creativity shows. Also, we need to reverse parochial policies such as significant reductions in overseas aid, and to look closely at the issues which are driving mass migration, rather than just trying to stop it at the English Channel;
  • Fourth, Government must learn that it can achieve far more by being a catalyst than by just trying to control and run everything itself. There are very large numbers of philanthropists who care and will help, particularly on that global scale. Don't just bear down on their ability to help — get their shoulders behind the wheel of changing the world for the better.

These are the key components of integrating a significant move in the direction of egalitarianism alongside individual freedom: they are not incompatible. At the heart of the matter is the human life cycle — use it to achieve the former, while at the same time encouraging the latter. If Andy Burnham starts to explore this logic, rather than harping back to the economic damage and individual discouragement caused by seventy-five years of democratic socialism, we may be able to look forward to a brighter future, a genuinely new political and economic model.

Gavin Oldham OBE

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