By Dane Clouston
Thomas Paine is someone I had heard of, but not known much about, in spite of having read for a degree in Politics, Philosophy and Economics at Oxford between the ages of 32 and 35, as part of my youthful ambition to become Liberal Chancellor of the Exchequer. I had previously been in the Royal Navy and in banks in the City, to which I returned having decided that I could not afford to continue with academic studies. I had hoped to study the Economics of Inheritance. I still hope to arrange for the republication of the book of that title by Josiah Wedgwood. I had scraped an Upper Second and had simultaneously just failed to become Liberal MP for Newbury in the two 1974 General Elections, regrettably on either side of my finals. It was not until after I had left Oxford that in conversation with Alan Ryan, my erstwhile tutor and now Warden of New College, I mentioned to him what I thought had been my original idea of Universal Inheritance_ In response, he remarked – rather absent-mindedly – that Tom Paine had suggested something along those lines. I was not pleased, but thought no more about him!
I had already published “Inheritance for All” in the Liberal Party magazine New Outlook in March 1976. The idea was to make the sale of council houses to tenants fair to others, and to spread wealth more widely. In the event, the sale of the century went ahead. Lucky for some, but not for others. Then, over the years, I went on arguing in the City and elsewhere for my views about the need for “greater equality of opportunity in education, health and the inheritance of wealth”, together with “the privatisation of all activities except those which cannot, or ought not, to be rationed by price”. Liberal Party discipline had been even weaker in 1974 than it is now, and that had been the platform upon which I had stood in Newbury. The voters had approved, but it is still not a combination available from any political party. Had I known there was to be a second General Election in October 1974, I would have spent the summer canvassing Labour voters instead of completing my degree. With those views, it would not have been difficult to squeeze the February Labour vote enough to turn the October Con 24,000, Lib 23,000, Lab 10,000 result into a very unexpected Liberal victory. If pigs had wings! The same ideas were included in my Liberal Party Election Address in the 1979 South West Herts Parliamentary By-election, in which I was unwise enough to stand, early in the Thatcher years. But maybe some seeds were sown.
Years later, in 1998, having been inspired by a life-stopping moment two years earlier, I formed the Campaign for Universal Inheritance. In 2000, to my great delight, the Fabian Society came out with a very similar idea in a leaflet entitled, amusingly for a socialist society, “A Capital Idea”. This no doubt encapsulates and explains why I could never persuade Labour Party activists whom I met in the course of politics to take the idea seriously. The authors of the leaflet claimed originality ten years beforehand, in 1990, while very fairly drawing my surprised and recollected attention to Thomas Paine’s original proposal in Agrarian Justice written in 1795-6.
Hence my joining the Thomas Paine Society. I am only just beginning to learn more about him. I have also been helped by the enthusiasm of my cousin, Louise Simson, a great Thomas Paine admirer, who has written a film script about him that I hope will come to fruition. l have also briefly met Lord Attenborough at my request, through Anthony Smith, the President of Magdalen College. If a film is made about Thomas Paine, I hope to get in a plug.
What is the proposal? Paine suggested in 1796 that every young person should receive an inheritance of capital of £15 at the age of 21, financed by a fund to be created out of a levy on inheritance. I unknowingly reinvented this idea and named it Universal Inheritance, in parallel with Universal Suffrage. It will transform our country, as did universal suffrage.
The Campaign for Universal Inheritance’s most recent formulation is as follows:
“Every young man and woman born a British citizen should have the right not only to a vote but also to an inherited share in the wealth of the country, regardless of the fortunes or misfortunes, generosity or lack of generosity of parents. Lower the rate of British Inheritance Tax on giving from 40 per cent to between 10 and 20 per cent, according to political taste. Introduce in tandem with it a new progressive tax, starting at the same chosen rate and remaining there for most beneficiaries, on all inheritance and capital gifts received, except from partners or spouses.
Avoid double taxation by transferable tax credits. Use the proceeds to give every British-born young man and woman on reaching the age of 25 a minimum British Universal Inheritance of between £5,000 and £10,000, itself subject to the new progressive tax on lifetime receipts of capital gifts and inheritance received. The figures and tax rates should be arrived at in the context of political preferences and of the average wealth in Britain at the end of 2002 for every adult and child, which according to the Office of National Statistics was £85,000.”
As I wrote in a recent memorandum to the members of Michael Howard’s new Shadow Cabinet, this is an entirely extra instrument of economic and social policy. It is a meritocratic proposal as radical and revolutionary in its way as the Thatcherite sale of council houses.
Unlike the New Labour Government’s hare-brained Baby Bond proposal, which will go not only to those babies who will inherit nothing else but also to those who will become inheritance billionaires – British Universal Inheritance is means-tested by reference to other inheritance and capital gifts received. It could, if necessary, absorb the Baby Bond proposal, which is for £250 or – if parents just happen to be on income support at the time – £500. This could be treated as just another inheritance, to be received at 18, added to the chosen figure of between £5,000 and £10.000, and be likewise subject to and financed by the 10 to 20 per cent tax on inheritance received.
The Baby Bonds, sadly, are a cynical New Labour “good news story” that sounds good but will benefit no one except for investment advisers for 18 years. They are the products of New Labour’s unwillingness to tackle the last class, media and political Great Taboo – on the judicious positive redistribution of inherited wealth in each new generation. As a result the government is eschewing the means test in the one area in which it would be wholly beneficial – the inheritance of wealth.
British Universal Inheritance will enable home ownership and enterprise. £5,000 is the maximum the Prince’s Trust will invest in a small business. (He should pay inheritance tax too!) It will help to reduce alienation, crime, policing costs, social exclusion and welfare state dependency. This judicious, positive redistribution of the stock of capital will enable taxation on the flow, or stream, of income and expenditure to be reduced (towards Oliver Letwin’s 35 per cent target?). 25 is a good age for financial responsibility. Banks would be able to lend against the certain receipt of British Universal Inheritance for certain approved purposes after the age of 18. The Fabian Society suggested £10,000 at 18 – too much too young, at least during the introductory period. Once introduced, the amount and the progressive rate of tax will grow under the pressure of democratic debate.
There are always problems of transition. On first introduction, British Universal Inheritance should ideally be tapered down from the chosen figure at the age of 25 to zero at 30 – with a balance making it up to the chosen figure at the age of 75 and above, so that all may expect to benefit eventually. The amount and initial tapering will have to be set with this in mind.
The wider spread of the private ownership of capital will transform society, just as did the wider spread of the right to vote – another human right for all. Being self-financing, the cost of this country-transforming proposal will be merely the annual yield of the present exemption-riddled 40 percent British Inheritance Tax – about £2.5 billion a year.
At present, receipts by the next generation of £ billions of business, farming and shareholding assets and of lifetime gifts are scandalously and shamefully free of tax. While others inherit nothing at all. Unless New Labour comes to their senses, the Conservative Party may well adopt British Universal Inheritance first. This will confound New Labour and make sense to many more voters of Conservative Party policy slogans for “choice” and “a fair deal for all”, not to mention “making this country theirs as much as it is ours”.
Given that the New Labour government has completely ignored the idea, it is left to OPPORTUNITY (The Campaign for British Universal Inheritance) to carry forward Thomas Paine’s original proposal for positive redistribution of inherited wealth and popular – as opposed to dynastic – capitalism in Britain. Fairer Capitalism in the United Kingdom. (FCUK?) Let us make it happen. It will be very good and inclusive for all citizens of our British community, including, topically – all our British-born Muslim brothers and sisters. Maybe The (continuing and British) Liberal Party, whose constitution still calls for the wider spread of wealth and power (not the same as the Euro-fanatic Lib Dems) will get there first. That will be a start, for others to follow.
And let no one get away with talking about the importance of reducing poverty, either nationally or internationally, without being reminded of the need for National Universal Inheritance schemes in all countries. It will be easier to gain support in rich countries for aiding poor countries if wealth in the rich countries and also in the poor countries is more evenly spread. In every country, those who would inherit great wealth should inherit less in order that all others in their country should inherit at least some minimum amount of capital at the age of 25, to be gradually clawed back by initially modest taxation on further receipts of capital gifts and inheritance.
Let us vindicate again Thomas Paine, that great reformer.