‘The road to hell is paved with good intentions.’
John Wesley
The news that Gary Lineker has joined more than one hundred British-based millionaires in calling for the Government to impose a 2% levy on wealth over £10 million reveals a breath-taking absence of common sense. They clearly have very little understanding of the long-term tragedy which has caused public finances to spiral out of control over the past seventy-five years, or the exodus of wealthy people which would result from such a scheme.
The letter was organised by ‘Patriotic Millionaires UK’, and we should indeed applaud their philanthropic motives. However, they clearly have little comprehension of the gargantuan waste of public money over these past seven decades, which has resulted in debt and payment obligations on future generations of over £9 trillion (that is: national debt, unfunded state pensions and unfunded public sector pensions).
This has resulted from the consistent application of universal rather than targeted welfare since the end of the Second World War, by governments motivated only by their very short-term electoral cycles.
Splashing out yet more money will simply encourage Government to continue with this dysfunctional system, rather than grasping the nettle in order to help those who really need it.
There is, however, a solution for redirecting their misguided generosity: to allow an alternative whereby anyone who wishes to do so can make the equivalent donation into a registered charity of their choice. This means that those who really care about changing the world for the better — and particularly for future generations — can concentrate their philanthropy on the issues that they know need addressing; while those who don't care about the profligacy of government can simply throw their money into the Government's bottomless bucket.
And, for those who think that the Government, once elected, has the democratic right to apply the use of transferred private assets, I would remind them that there is still no long-term democratic oversight of public policy, as we commented on 16th December 2024.
Not surprisingly, The Times ‘Letters to the Editor’ page on Saturday 25th July was well-supplied with reaction to the ‘Patriotic Millionaires UK’ initiative. One of the writers, Chris Rhodes from Horsham, referred specifically to the opportunity for charity donation; but without the suggestion of using it as an alternative to this naïve suggestion for further Government seizure of assets.
He may well have the opportunity to do just that, if The Share Foundation’s proposal for a Child Trust Fund Mark 2 funded by philanthropists is accepted by the new Government of Andy Burnham. As a reminder: it would only apply for young people from low-income backgrounds, it would include incentivised life-skills learning, and the accounts would all be HMRC-allocated with an automatic release process applying at the age of 21 (if the account remained unclaimed). Most relevantly, however, it would be funded as a result of a Philanthropic Advisory Group established by The Share Foundation for this purpose.
In other words, under The Share Foundation’s proposal, the Government would act as the catalyst for putting these accounts in place, not as the primary funding vehicle. This would enable philanthropists to ensure that their help is targeted as opposed to universally spread, in much the same way as Michael Dell is supporting the most disadvantaged young people in the United States.
Last week's commentary, ‘Are individual freedom and egalitarianism incompatible?’ argued the case for a total re-think of public policy and, in particular, the need for a new emphasis on inter-generational rebalancing. If the Government is really serious about tackling the injustice currently being applied to future generations, there is a very good way for making that clear: by stating their determination to hypothecate (or ring-fence) inheritance tax (IHT) receipts for this purpose. IHT currently generates £8.5 billion per annum.
At present, there is no indication whatsoever of such a resolve at HM Treasury: my frequent requests to introduce such a policy as a constitutionally embedded resolve to break the cycle of deprivation have been consistently rejected by HM Treasury. It is clear evidence of the fact that Government heavily discounts the future in determining where its priorities lie.
Wealthy old people do, however, need to be in a constructive mindset towards empowering future generations with their resources: you can’t take that wealth with you when you die!
Obviously, people will do what they can for their own children and grandchildren, but they need to be aware of the Carnegie Conjecture — that too much money passed on within families removes the ‘Get up and go’ for their descendants. There is, however, already a route for significantly reducing IHT by allocating at least 10% of your assets to charity. This has the effect of reducing the IHT rate on the remainder of your assets from 40% to 36%, and it therefore means that 75% of the money which goes to charity as a result is effectively funded by Government, as a result of that lower overall IHT charge.
Inter-generational rebalancing means thinking in a joined-up way between the suppliers of funds — these wealthy old people threatened by both high inheritance tax and the ‘Patriotic Millionaires UK’ proposal — and the recipients of those funds: that is, disadvantaged young people who will be empowered with starter capital accounts and the life skills which they will gain from incentivised learning. Due to the failure of our democratic system to include a reliable system of long-term oversight, we need the intelligence and logic of the former to direct these benefits to the latter.
This recognition of the importance of the human life cycle has been overlooked in the past three hundred years of developing economic theory, and we cannot continue to ignore it while at the same leaving such colossal burdens to be carried by future generations.
There’s a 19th century hymn with the verse, ‘Take my silver and my gold; not a mite would I withhold. Take my intellect and use every power as thou shalt choose’. It’s interesting that both endowment and intellect are bracketed together in this verse, and that’s exactly what we are trying to achieve by proposing that a charitable giving alternative is provided, if the ‘Patriotic Millionaires UK’ proposal ever gets to see the light of day.
Gavin Oldham OBE
Share Radio