Last week’s Liberal Democrat News carried the following article from Martin Narey:
The UK is the fifth richest nation on Earth, yet it has one of the highest rates of child poverty in the industrialised world. Labour has made some commendable progress in reducing the truly shocking level of child poverty they inherited in 1997.
But even after allowing for the implementation of Budget measures for which investment has been found, they find themselves a million adrift from their ambition to halve child poverty by 2010.
Poverty can have a profound impact on a child, on his or her family, and the rest of society. It often sets in motion a deepening spiral of social exclusion, contributing to problems in education, employment, mental and physical health and social interaction. But what should really make child poverty alarm us all is the disturbing fact that a child born into deprivation seems now more likely to inherit his or her parents’ disadvantage than at any time in our recent past.
Child poverty is not simply ‘relative’ as many prefer to believe. For many families it is absolute. Today a family of two parents and two teenage children, with dad in full time work but on minimum wage, after taking account of all possible benefits, have to survive every week on just ?240 after housing costs.
This important issue was immediately taken up by Nick Clegg on becoming Leader of the Liberal Democrats in December 2007. In his acceptance speech he said that he wanted to live in a country where social mobility becomes a reality again, so that no one is condemned by the circumstances of their birth.
I welcomed these remarks and Nick’s subsequent invitation to chair an independent commission looking at the reasons for Britain’s apparently low levels of social mobility and seeking to make policy recommendations that would enable children from disadvantaged backgrounds to fulfil their potential.
The Commission is made up of 10 members each with particular knowledge of different aspects of social mobility. We began our work in April with consideration of a background review prepared by the Institute of Public Policy Research (IPPR) on the trends, drivers and impacts of social mobility in the UK.
Our subsequent discussions led us to identify key policy areas in which we should seek changes that will improve opportunities and reduce inequalities. In these areas – education, health, employment, housing, neighbourhoods and communities and parenting and family life – we have asked organisations and individuals working in the field for their thoughts, ideas and examples of initiatives which may have a wider application.
In order to reach as many potential consultees as possible the Commission has set up its own website at www.socialmobilitycommission.org where you will find the names and biographies of all the Commission members and IPPR’s review. The Commission is very keen to hear from as many people as possible in the areas of policy identified above. Submissions can be made through the website or by emailing [email protected]
Over the next few months the Commission will be reviewing the evidence submitted and following up on some of the ideas that we think we may be able to develop and include in the final report. Our final report will be presented to Nick Clegg early next year and the Liberal Democrats will consider how to take forward its recommendations as party policy. The report will also be published and be available to all political parties.
I hope many Lib Dem members will take this opportunity to contribute to our work and help to formulate policy in this very important field.
Martin Narey is the Chair of the independent Social Mobility Commission
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10 Comments
Thanks for the reminder Martin. I will certainly be offering a contribution.
For starters, I would hope there is considerably more focus on the fundamental cause of social inequity/immobility, rather than yet another collection of worthy but ultimately doomed proposals that only address the symptoms.
Unfortunately your initial briefing document fails to recognise the problem, concentrating as it does on income, rather than wealth inequality. Indeed, asset-wealth receives scant if any mention.
Perhaps it is helpful to our re-discovery of the only sustainable solution for this apparently intractable and persistent problem that none of the commission’s members seems to have any background in property matters. Perhaps that will mean they are genuinely open to appreciating the real underlying cause of poverty, crime and negligible life chances. Perhaps they will seize the opportunity to be truly radical, rather than just tinker with “less contentious” policy options for the sake of the next by-election.
After 100 years of our party forgetting that economic liberalism is the pre-requisite of social liberalism, I’m not holding my breath. That said, Nick Clegg apparently has a “Big Idea” – and allegedly it’s all about tax. A People’s Budget for the 21st Century perhaps? Now that would make a difference.
Andrew Duffield
How right you are about concentrating on the inequalities of the stock, or lake, of capital and wealth, for a change , rather than just on the annual flow, or stream, of annual income!
Break the taboo on the judicous positive redistribution of inherited wealth in each new generation! See http://www.universal-inheritance.org re British Universal Inheritance, which is already the party policy of the EU-sceptic continuation Liberal Party – see http://www.liberal.org.uk – adopted at the 120th Annual Liberal Party Assembly at Woverhampton in 2005.
I gave evidence to the Consultation Process in the Treasury on behalf of the Campaign for Universal Inheritance following Gordon Brown’s 2000 sound bite of “Opportunity for All”, but the slippery so-and-so gave the consultation process to a “Savings Incentives Team” in the Treasury instead of to an “Opportunity for All Team”, to the delight of the City, with cynically predictable results. The benefits of the savings incentives for those whose parents can afford to save and give far outweigh the pitiful and inappropriately parentally means-tested £250/£500 universal inheritance.
The amount of British Universal Inheritance should be the same amount for all at 25 (or tax credit for those over 25), independent of parental and family fortunes, generosity, investment and savings skills – 10 % of average wealth in the UK (£9,000 and £90,000 respectively), financed by a radical reform of taxation on Inheritance.
That is roughly what the Fabian Society also suggested in “A Capital Idea” in 2000, which was subsequently almost completely suppressed by New Labour contol freaks terrified of the ‘R’ word.
It is also worth looking back at the 1970s Institute of Fiscal Studies “Accessions Tax” study. But for various reasons there should be not just one tax but two taxes in tandem, a flat rate 10% tax on all giving and bequeathing deductible from a negative and progressive tax, starting at 10%, on lifetime receipt of unearned capital.
Actually Dane, I would abolish inheritance tax (and its derivatives) altogether. If unearned, community created wealth was fairly collected and re-cycled throughout an individual’s life (in lieu of taxes on the value they have added by productive work and genuine capital investment) there would be no need to sting their estate in death. Indeed, taxing capital wealth is in many ways as harmful as taxing productive labour; the former discourages investment, the latter penalises work.
Liberalism should include the freedom to bequeath as much of your earned wealth as you wish, without intervention by the state. The state’s role should be simply to capture the vast swathes of unearned resource wealth/economic rent that daily flows from the poor to the rich courtesy of our superficially progressive and totally dysfunctional tax system.
Redistribution in the form of social infrastructure investment and a socially inclusive universal CI should replace subsidies, tax breaks and the shackles of an intrusive, ineffective and highly inefficient welfare state… but I’m getting into my submission now, so I’ll stop there.
Andrew:
I agree with you about not taxing wealth that has been created, earned, made or saved by its owners – as opposed to inherited wealth or as compared to income. Wealth taxes – other than taxes on the inheritance of wealth – can only ever be on notional income, rather than being redistributive to any significant degree.
But given that the majority of other expenditure is subject to 17.5 per cent tax, a 10 per cent Donor Tax on the luxury expenditure of giving and bequeathing capital is no more denying you or any one else the freedom to bequeath as much of your wealth as you wish than VAT is denying you the freedom to spend as you wish in other ways.
Do you really think it is right that Rupert Murdoch’s children should receive £50,000,000 each tax-free, to be getting on with, as they have done recently, while others never inherit any capital at all?
Why should the state should not intervene in the interests of greater equality of opportunity with an Unearned Capital Receipts Tax to tax the RECEIPT of wealth by you that you – the BENEFICAIRY – have done absolutely nothing to create, earn, save or make yourself, in order to finance a basic unearned British Universal Inheritance for those who would otherwise inherit nothing?
As a Liberal, I believe in people being able to make their own decisions with a basic minimum lifetime British National Inheritance capital nest egg at 25, however unwise their use of it may appear to others. To the extent that they spent this Wealth Welfare State amount well, the demands on the Income Welfare State would be reduced.
I am not sure what you mean by a socially inclusive CI. I suspect you mean Citizen’s Income rather than Citizen’s Inheritance. The snag to a citizen’s income is that either it is enough to live on, or it is not. Problems in either case!
CI, Citizens’ Income and BUI/CI, Citizen’s Inheritance are not strictly incompatible. But compare the discounted present day capital value of a lifetime citizen’s income of £X,000 pa with the 10 per cent of average national wealth in the UK (£9,000 and £90,000 respectively) which I propose for British Universal Inheritance for all at 25!
As I mentioned, the tax on giving would be deductible from the tax on receiving. No net tax would be paid on giving and bequeathing that resulted in lifetime receipts by any one of less than the £90,000 average wealth. The more the giving and bequeathing is spread around, the less tax would be paid.
Of course, once BUI has been introduced, democratic debate about the parameters may lead to a larger percentage amount and a higher rate of tax, in the interests of even greater equality of opportunity (or rather less inequality of opportunity) and of genuinely greater Social Mobility (or rather less social immobility).
The point is that when campaigners say poverty they are using it in an Orwellian manner. They actually mean income inequality. The way to end poverty is to have more wealth – something the LibDems are, in practice, opposed to.
This redefinition is what leads to the conclusion that there is more child poverty in Britain than in North Korea even though kids are starving in the latter.
It is an unfortunate fact of politics that it leads to its less scrupulous practitioners redefining lahguage to suit their interests. This differs from lying only in being more socially acceptable.
“The way to end poverty is to have more wealth – something the LibDems are, in practice, opposed to.”
What total nonsense Neil. Income is not the same as wealth. The way to end poverty is to ensure a more equal distribution of natural and community created wealth, rather than allowing it to be privately appropriated. Increasing wealth sustainably is something all Lib Dems are in favour of. This debate is about how best to “share the proceeds of that growth” (to coin a phrase) – only achievable through systemic reform of the tax system in my view.
You prove my point perfectly.
The way to end poverty IS to have more wealth, not to have poverty for all.
Increasing wealthn is not something LibDems are in favour of – indeed openly wishing it is specificly forbidden by the illiberal Luddites running the party.
That is a simple statement of fact which cannot be hionestly denied.
Your commitment to Doublethink is clear.
“Increasing wealth is not something LibDems are in favour of”
I am.
Liberals are in favour of spreading wealth (and power, as the Liberal Party Constitution says) more widely. Hence British Universal Inheritance in each new generation.
Increasing wealth is one thing. Spreading it more widely is another.
How are the LibDems going to spread wealth more widely? Or are they not in favour of that?
The only time at which it is practical to spread wealth more widely is at the point of transfer from each generation to the next.
Shhhh Julian.
That belief is an expulsion offence.