The Future of Politics

Unfortunately, it takes more than three budgets and a New Deal to reverse major trends like these, and undo the damage already caused – benefit cuts were almost the hunting cry of the Tory party in the 1980s. The most vulnerable sections of the nation are still suffering them under Labour. Anyone who receives invalidity benefit and has a modest private pension (£85 a week or more) will lose benefit at a rate of 50p in the pound. Severe disablement allowance has also been abolished, placing many severely handicapped people below the poverty line. The state pension was 20 per cent of the average income in the early eighties. It has now fallen to 15 per cent and is still falling. The government’s answer was to make a derisory change which amounts to 75p a week for the average single pensioner. Meanwhile, a study by the University of Kent has shown that half those over eighty are surviving on less than £80 a week. Pensioners, distressed at their treatment under the present government, are among the most regular and vocal contributors to my daily postbag.

We can also see how little things have improved for the poor when we examine public health. Areas such as Glasgow, Newcastle-upon-Tyne and Liverpool have premature death rates more than twice those in affluent southern counties like Buckinghamshire and Berkshire. Within London, poor boroughs such as Woolwich have premature death rates twice as high as wealthy boroughs like Kensington and Chelsea, as well as disproportionately high rates of asthma, eczema, heart disease and depression.

The urban poor face unique sets of problems which Labour is doing little to address or even understand. A 1999 University of Glasgow study pointed out that Britain’s twenty major cities have been hardest hit by unemployment. The decline of manufacturing industries has led to huge numbers of male manual workers being put out of their traditional employment. The report indicated that the cities had lost nearly a quarter of their 1981 stock of full-time male jobs by 1996 – equivalent to over 500,000 jobs – and these people are not going on to find work elsewhere. The service industry, it is often said, is expanding, but it is, according to the study, doing so least in our cities. The decline in skilled manual jobs has, on the whole, resulted in downward movement for most urban men into unskilled, lower-paid jobs, or into unemployment, casual work and the black economy.4 The upshot is that there is a massive jobs gap in our cities – that is, large numbers of men able to work, and no jobs for them to go to.

Labour’s current policies are directed towards equipping the urban unemployed with more skills and motivating them to find work. All this is totally missing the point. In the words of the study’s authors: ‘national economic and social policies need to give greater emphasis to expanding labour demand in the cities’. Of course, training and motivation are vital – but they are pointless when there are no jobs for people to go into.

We must also not overlook the very real problem of rural poverty. It’s not just farmers who are angry about the present government. The Rowntree Foundation interviewed sixty young people from rural backgrounds, and found that only two of them had secure accommodation and financial independence, and all felt that the only long-term solution to their housing and employment difficulties was to leave the countryside. Poor transport, lack of affordable housing and decline in the traditional sources of rural income are creating poverty blackspots in areas many urbanites still think of as idyllic. The problems of the countryside are likely to be exacerbated by the government’s decision to make benefits payable by Automatic Cash Transfer rather than over the counter at Post Offices. This means that many rural sub-post offices will become economically unviable and be forced to close, and since these are usually twinned with village shops, rural Britain risks losing a vital hub of community life.

On a recent visit to the West Country, a farmer asked me why Labour had seemingly abandoned them, even though it held more rural seats than ever before. I knew the answer, and it becomes clearer every day. The present government has more rural constituencies, certainly, but among them plenty that it neither needs nor wants. The bulk of its ministers are from an urban background, and its outlook is consequently not particularly sensitive to the needs of the rural population. Many of Labour’s rural seats are expendable – it doesn’t need them to stay in power – that’s why they can happily tell farmers to stop whingeing and diversify.5

Wherever it occurs, poverty breeds poverty and further exclusion. In our nation, significant numbers of people are growing up with limited access to the sort of services that are normally considered essential for full participation in society. A recent study by the University of Newcastle looked at people’s access to energy, food, telephones, banking and food retailing in two poor neighbourhoods. It was clear that service providers, like phone and other utility companies, as well as the discount supermarkets, were physically withdrawing from low-income areas. The more limited the access to a service became, the more it cost the people who could least afford it: for example, prepayment electricity meters, small food shops, public telephones and loan sharks all cost the user significantly more. This is the Tory legacy of ‘market forces’ and ‘no such thing as society’. It is the ultimate proof that the market is not the guarantor of freedom. To escape the cycle, people need to find jobs, but when they have to spend their benefits travelling into town to charge up the electricity meter, there is understandably less spare cash for making phone calls. So the cycle repeats itself – across Britain, in our cities and villages, there is an underclass, with significantly lower life expectancy, lower levels of health and fitness, and with compromised access to good education, to transport, to society itself. How can we talk about democracy when large numbers of our people are disenfranchised in this way?

The real question is whether New Labour has either the attitude or the ability to reverse these worrying trends. I started to worry when I heard Tony Blair calling the public sector ‘inflexible’. Certainly, there are areas that need reforming, and there is still too much Old Labour sentiment in some small yet influential areas of the union movement. But is it really inflexibility that leaves patients on trolleys in hospital corridors and forces pensioners awaiting cataract operations to fly to India to bypass eighteen-month waiting lists? That compels the NHS, in the grip of a flu crisis (the idea of which was in any case exaggerated to cover up Labour’s health failures), to send patients to France because our hospitals have reached critical mass? Or that leaves children in schools with woefully inadequate books and equipment?

Arguably, in some areas of the public sector, there is a little too much flexibility. In Britain’s universities, there is a profound sense of unease over the working conditions of academics. Increasingly, universities are being forced to hire people on short-term contracts, often for a term or a year, and often on a part-time basis. Academics, particularly young academics seeking to make a mark, are forced to publish at such a rate of knots that their work does not meet the quality that would have been expected only a few years ago. In the university environment, where we need people to think in a considered and long-term manner, that is far from ideal. Yet that is what flexibility breeds, and in the university context, it is self-defeating.

The real problem is not inflexibility. It is a deliberate reluctance on the part of New Labour radically to address poverty and the countless other injustices blighting our society. A reluctance born of the fact that New Labour dare not be honest about the money it needs to spend to put these things right, for fear of losing the support of the wealthiest sections of society, who have benefited from New Labour’s concessionary attitude to tax.

I am not delivering a blanket criticism of the Labour government. A recent University of Cambridge study suggested that the incomes of the poorest tenth of the population have risen over the last three budgets, while the richest tenth have, on average, not become any richer. The study said that the poorest families with children have seen their income rise by 16 per cent. At the same time, Labour’s welfare programme was met with howls of discontent from the start. Witness the furore when Harriet Harman announced in autumn 1997 that she was going ahead with the Conservative plans to phase out additional benefits for single mothers, and the similar uproar when the government cut disability benefits, and introduced tuition fees for students in 1999.

In contrast to the Cambridge study we also have to consider the figures released by the Office of National Statistics in April 2000, which indicated that the gap between the earnings of the richest and the earnings of the poorest has widened to its highest level since Margaret Thatcher was Prime Minister. The government was visibly embarrassed by these findings, which overshadowed John Prescott’s plans for a ten-year drive against poverty in the inner cities, launched only days before. They argued, in response, that the figures were unrepresentative, because measures such as the New Deal and the Working Families Tax Credit had simply not had time to take effect.

We cannot deny that Labour is spending money – but its record of benefit cuts indicate that it is doing so very selectively. There have been no universal increases in cash benefits – though academics have argued that this was what was desperately needed for a country where nearly 14 million received below half the average income.6 They have also not funded these increases from income tax.

In fact, they are still adamant about cutting income tax, because Labour believes this is the right way to win middle-income voters back from the Tories. This in turn means that, whatever Labour does for the most disadvantaged, it cannot do nearly enough to address the problems facing them. In 1997, journalist Nick Davies wrote:

Labour thinking seems to take no account of the damage which has been inflicted on the poor in the past twenty years … that by flicking the switches of the benefits machine … people can be manipulated into families or into work or out of crime, as though they were carefully calculating their rational self-interest, as though their lives and sometimes their personalities had not been scrambled by the experience of the last twenty years.7

His words are just as true now. And the solution is not simply to raise taxes and throw more money at the poorest sections of society. The solution requires as much of a revolution in thought as in deeds.

The Alternative

I have repeatedly stated that Liberal Democrats do not and will not inherit the vacant lot to the left of New Labour. Such a strategy would be tantamount to our party embarking on the search for a political cul-de-sac, but, at the same time, I believe that our party is the only party truly concerned with social justice, and we will fight the next election on that basis.

This is not a new stance for the party. Nor is it something I have chosen because it is fashionable – or unfashionable, for that matter. Far from it: Liberals and Social Democrats have a long tradition of fighting the war against social inequality. Some of the key thinkers of twentieth-century politics, who had a decisive impact on the shape of millions of people’s lives, were Liberals. William Beveridge produced the proposals for social security that became the bedrock of the post-war welfare state, and John Maynard Keynes was the economic guru of much of the post-war economic settlement. Before them, turn-of-the-century New Liberals such as L. T. Hobhouse and J. A. Hobson were among the first people in Britain to make a persuasive case for a government role in fighting poverty. We are and must always be the definitive political movement of conscience and reform.

Hobhouse’s view that ‘the struggle for liberty is … a struggle for equality’, is the basis of liberal attitudes to social justice. For all to be free, argued Hobhouse, there had to be equal access to opportunities for education and employment, and only individuals together, acting through government, could ensure that happened. Progressive social reform has deep philosophical roots within the Liberal Democrats.

It also has deep roots in Labour history, but the current leadership seems to have forgotten this. As a result, active public enthusiasm for New Labour (as opposed to national opinion polls) is at an all-time low. The desultory turnout for the 1999 European elections clearly indicated the nation’s deep cynicism towards the political process. At a time when war in Kosovo had been raging for seventy days, less than a quarter of the population found European politics sufficiently relevant to leave their houses and vote.

People only pay attention to politicians when they are dealing with issues that immediately concern them. From my travels across the country, I know that inequality is an issue of great contemporary concern, but the present government has all but stopped trying to redress it. It feels it is doing enough, because it can always churn out figures that prove it is. When one of its own ministers, Peter Kilfoyle, resigned from office because he felt that Labour was not doing enough for the poor in his own Liverpool constituency, the response from the leadership was an embarrassed silence. There was much talk about regretting his departure, not so much about regretting what he said – or whether it was true.8

One practical measure in particular would make a radical and immediate improvement, and put issues of inequality at the centre of political debate. Just as the Budget dominates the national news once a year, so we need an annual Social Justice Audit of similar importance, which would examine the impact of all government policies that have any link with social inequalities. It would be published in full in the newspapers and be publicized to the hilt, and every year the government would be expected to show whether they had met the targets of the previous year. This would, combined with an audit of their environmental performance, and the traditional Budget, establish a ‘triple bottom line’. The government is already encouraging ethical companies to report upon these aspects of their yearly performance; maybe it should learn the lesson itself.

Such an audit would have to be genuinely independent of government, and carry significant weight behind its conclusions. A variety of bodies would be consulted in its creation, and a panel of respected independent figures would be established. It would include representatives of, for example, the Economic and Social Research Council, the Bank of England, the CBI, the BMA, the National Audit Office and the Audit Commission. Not all of these bodies are primarily associated with the cause of social justice, and so they would not be seen as having axes to grind, but they could all provide significant expertise at evaluating evidence produced by government departments. In addition, they would be supported by a permanent team of researchers, independent of any government department, whose job would be to examine the figures produced by government. With such support, finding any inaccuracies in government figures would not be difficult – as Liberal Democrat researchers regularly prove even without such support. This would be an enormous improvement upon the government’s present self-congratulatory Annual Report, an exercise which ranges from the anodyne to a brazen attempt at political propaganda at the taxpayers’ expense. Mercifully, nobody appears to pay much attention to it.

What would this audit look like in practice? It would begin with the announcement of Bills in Parliament. Take some of those put forward by the government in the final Queen’s Speech of the last century, November 1999. The audit would apply two key questions to them. First, how would different parts of the country, and the inequalities between them, be affected? Second, how would the inequalities between social groups be affected?

Measures such as the Care Standards Bill, intended to promote better care for the elderly, would have to include information on how those measures would affect people with different incomes and savings. If the Bill increased the access of people on low incomes to high quality care, then it would pass the Social Justice Audit. As the Bill presently stands, it would not pass, and nor would the Electronic Communications Bill, which does not consider how disadvantaged groups can take advantage of new technologies, nor how government can encourage them to participate.

The Social Justice Audit would be similarly scathing of government transport policy, which has not met its targets for traffic reduction, and has decreased spending on public transport. This is a social justice issue just as much as it is one of the environment, for car ownership is only possible for people above a certain level of income, and those below it have to rely on public transport. We need to subject every government policy to intense scrutiny if we are to have a more informed debate on the inequalities in Britain, which goes beyond mere questions of tax and benefits.

I do not pretend for one moment that a Social Justice Audit would solve all of Britain’s social problems, but, given sufficient priority by government, it could change the nature of our political discourse, so that politicians would be forced to be clear about how they will tackle definite inequalities, and be held accountable when they don’t deliver. If a Bill is judged to have failed, it might be automatically rescheduled for reworking in Parliament. The Audit would also highlight the extent to which social justice is affected by a wide range of policies – a fact often overlooked. For example, in terms of the environment, poorer areas suffer most from pollution.

Refocusing politics and reshaping our political language, so that politicians reconnect with the real concerns of millions of ordinary people, will have a tremendously positive impact on the quality of our democracy. It will give genuine meaning to politics, for people who at present feel that it has little to offer them. Otherwise we face a future in which 25 per cent election turnouts are seen as the norm, rather than a cause for concern. And we will continue to live in a Britain in which privilege, rather than ability, determines the achievements and the resultant quality of life.

Tax for Freedom

New Labour is reluctant to mention the word taxation, except, of course, to claim that it is coming down, but if we accept that every citizen of our nation has a right to first-class education, to comprehensive health care and a welfare safety net, then we also have to accept that we all have a responsibility to make those priorities possible. They cannot be achieved without radical changes in the way our taxes are applied and collected. To pretend otherwise is simply to con the voters.

I am not arguing for a simplistic ‘high taxes, high public spending’ model. I believe that the main increase should be in terms of efficiency. Increased efficiency in the way taxes are imposed, gathered and, most importantly, spent. Four guiding principles should govern all socially responsible policies on taxation.

The first is adequacy: taking exactly and only what is needed, from precisely those who can give. Penalizing the successful only deprives the nation of entrepreneurial talent. Bleeding the rich dry as a policy has more to do with old-fashioned antipathy – what Winston Churchill called ‘cool-blooded class hatred’ – than the search for social equality. At the same time, government cannot be starved of the money it needs to pay for good schools and teachers, quality health care, adequate pensions and people in need. That is why I urged the present government to spend its 1999–2000 budget surplus on the public sector, instead of sweetening the least needy sections of society with tax cuts and patching up the shortfall with the surplus cash.

That is also why I greeted Gordon Brown’s 2000 Budget with scepticism: £1 billion goes into education, but £2.6 billion is devoted to a further cut in the basic rate of income tax – a clear indication of Labour’s priorities. The Budget will do nothing to provide nursery education for all three year olds, and little to reduce class sizes in our secondary schools, or to address the backlog of repairs. Nor will it do anything towards abolishing or reducing tuition fees for higher education, or addressing the massive gap between the needs of business and the training on offer.

Physics tells us that matter can never be destroyed – it simply converts into other forms. Similarly, in politics you can never cut taxes unless somebody else pays. In the case of New Labour policy, much of the tax burden has shifted away from income tax and on to council tax, which has risen by a third in four years. Much of the pain will also be felt by the young and the old, as education loses out, and as do the pensioners, who received the staggeringly generous sum of an extra 75p a week. The only provision of extra money for pensioners was in a small increase (£50 – less than £1 per week) on the one-off winter fuel payment, when it is clear that what is required is an increase on weekly income across the board. That would be far more empowering than handouts on fuel. Perhaps the only consolation we could take from the Budget was that things would have been far worse under the Tories, but still, current Labour taxation policy does not satisfy the criteria for adequacy.

The second principle for responsible taxation is honesty. Politicians need to be straight with people about the choices involved. It is simply not acceptable to say, as William Hague’s Conservative Party has done, that you can have tax cuts and more spending on schools and hospitals. That is an implausible position to take, and one clear indication of why the Conservative Party has become so irrelevant. In the run-up to elections, politicians must tell the public precisely how much their programme of public sector spending will cost, and how it will be paid for. Wherever they wish to introduce new taxes or set different levels they must explain exactly why the changes are occurring, and where the new money is going.

Liberal Democrats have produced a fully costed manifesto at both of the last two general elections. We have shown how much our plans would cost, and how we would pay for them. Some people have responded to this by saying, ‘You can afford to be honest about it because you’re the third party.’ But being the third party does not mean we can get away with being out of touch with the mood of the nation! Our decision to be honest about taxes is based on an awareness that this is what the nation wants.

When we first proposed that we would, if necessary, raise taxation by 1p in the pound to pay for investment in education, commentators believed it would be unpopular. It was the subject of much passionate debate within the party before the 1992 General Election. People like Robert Maclennan, Simon Hughes, Matthew Taylor and myself were strongly in favour. I supported it because it was such a clear-cut, honest platform upon which to fight an election, and it was a definite departure from 1983 and 1987, when no-one, least of all ourselves, really understood what issues we were fighting on. Most importantly, it sent out the message that we were a party prepared to be honest about the money we needed in order to change things. Now, polls regularly indicate that as many as seven out of every ten voters are in favour of paying an extra penny on the pound for education or health.

Hypothecation is a term redolent of something technical and extremely complex. In reality it is just the opposite. It is the principle that people are able to see exactly where their money is going. If more money is needed for schools and hospitals, then hypothecation means that government will explain the costs to people, and where the money will be raised. People do not resent giving money in such a situation. I want every citizen to receive a statement with their tax return, which sets out in simple terms where their money has gone. It should also say what the main targets were for the public services, and how far they are being achieved.