The Ideas Factory is a chance for you to pitch your own idea of what should be in the next Liberal Democrat manifesto. The proposal here is not the policy of the Social Liberal Forum. We will however be passing it – and the response it generates – onto the Manifesto Working Group.
Ed Randall: The author of Supercapitalism, Robert Reich, who was Labor Secretary in the Clinton administration, brilliantly explains how the ways in which we behave as consumers and investors have given rise to a monster. The monster is eroding community and civic virtue, undermining citizen involvement in democracy and destroying democratic accountability. Although his analysis is stronger than his prescription for invigorating democracy his book contains the seed of a policy idea that should appeal to Liberal Democrats. It certainly appeals to me.
On page 224 of Supercapitalism, in what reads like a throw-away line, Professor Reich suggests, and this is my paraphrase: a way to redress the imbalance between commercial lobbies – which have run out of control and invaded the space for public policy making and democratic debate – and citizens, who struggle to see the point in taking part in a ‘democratic’ system where parliamentarians and legislators are easy meat for the lobbyists and the PR skills of lobbyists who are overwhelmingly funded by commercial organisations with seemingly bottomless pockets.
The proposal is for what Reich calls a tax credit, I’m calling it a citizen endowment for an active and balanced democracy. The citizen endowment is a small part of the tax that any consumer, worker and/or investor pays each year. In Reich’s proposal it is $1,000 credit. In mine it is £100 – but that represents an opening bid. The endowment would amount – in the first instance – to about double the fee that a British
political party might charge for membership.
The money for citizen endowments would be placed by the tax authorities in a public fund replenished from tax receipts annually. Every citizen, who is registered as a voter, would be able to nominate an organisation to receive up to £100 from the fund each year. Money that was not committed at the end of twelve months would become part of Exchequer receipts available for meeting the costs of public spending programmes. There are likely to be a number of restrictions on the organisations that can be recognised and approved for receipt of the citizen endowment but, in the UK, we have considerable experience of regulating charities and the problems of identifying appropriate recipients of citizens’ endowments are not insuperable. Organisations that qualify would need to show that they were capable of representing citizens and representing their values.
Recipients of citizens’ endowments might, for example, seek to increase the incomes/earnings of the poorest, campaign for the abolition of higher rate tax relief on pension contributions, introduce legislation to reduce tax avoidance, alter the classification of cannabis. The list is almost endless. The citizen endowment could even go to political parties. If use of citizens’ endowments, as a source of funds for political parties, were to be permitted then funding for political parties from corporate donors, trades unions and private individuals would either be prohibited or tightly controlled. After all we believe in one person one vote and we should also be campaigning for one citizen one citizenship endowment/political contribution.
The recipients of citizens’ endowments would have to be not for profit organisations, but the choice of organisation would be for individual citizens. The objective of the citizens endowment is to provide each
citizen with an opportunity to influence the terms of public debate and to increase political engagement when, as Anthony Downs once observed, ignorance, from the perspective of the ordinary voter, is quite rational.
I am convinced that this proposal would introduce a new and powerful democratic dynamic into British politics. It could also help pave the way for controls on money in politics, which did not come from individual citizens, greatly diminishing the undemocratic influence of purely commercial interests.
Richard Huzzey: I can certainly see the attractions of this for solving the problems of party funding and lobbying. Yet I don’t like the idea of state funding of political parties and I don’t follow whether this would be an addition or replacement to commercial lobbying?
It seems to me that the problem of commercial influence is tied more to their donations to political parties or the shady ‘consultancy’ activities parliamentarians are permitted – as highlighted in the recent Lords-for-hire scandal. I’d have thought that shutting down those avenues was more effective than creating a compulsory charitable endowment, which would throw up questions of its own. Would scientific research charities be excluded if they did not take part in lobbying for government, for example? Is this a £100 poll tax on every individual, or would you cut some other portion of current taxation (in which case, wouldn’t this money be better used reducing class sizes)? I don’t mean to disagree with the corrupting effect of lobbies on the entire political system… I’m just not sure this will address the key issues, as superficially attractive as it is.
As an aside, I’ll have to look at this book as I’d have thought an active consumer identity is similar or identical to active citizenship.
Chris White: Essentially this is state funding for the voluntary and political sector; the fact that it is in the form of a tax credit does not really disguise this.
There is already state funding for both sectors. All this does is give a little influence to the ordinary citizen over where the money might go. It is not clear that most of us would actually bother to nominate (but then it falls to the exchequer so the money is not lost). The rest may care to nominate to the usual bunch of charities and political parties.
There’s the rub: the Charities Commission does indeed have a track record of regulating charities and weeding out the unsuitable. But there is no track record of successfully discriminating between ‘sound’ political parties and those that step outside the mainstream consensus. We tend to rely on a fudge: big parties with seats get money (Short money, freepost etc). Small parties without seats get considerably less and in that way the state funding for undesirable parties like the BNP is reduced.
There is a Liberal dilemma here which may become acutely uncomfortable if our collective resources are made so freely available. The public revulsion at the public funding of the far right or the far right could bring the scheme into considerable disrepute (and there are worse parties than the BNP).
There is also a huge practical problem. Revenue and Customs has shown itself particularly inept in dealing with family tax credits. Do we really expect that this amazingly complex scheme would fail to collapse under its own bureaucracy?
James Graham: As someone who, in a work capacity, has been making the case for a similar model of state provision for political parties, I am more sympathetic to this idea than my colleagues above. I don’t think this necessarily be an overly complex scheme – GiftAid has proven itself to be easy to administer. You simply cannot compare the relative complexity of this system with the monster that is the tax credit system.
As for worries about funding the far right (and other distasteful organisations), I would have thought that could be covered by insisting that any organisation eligible upheld the the anti-discriminatory principles of a Single Equalities Act (something which we may yet get in 2009). That won’t stop the Daily Mail from fulminating about lesbian charities getting funding from it, but I can live with that.
Ultimately there remain two problems: the first is that while this may help us develop a more active citizenship, it would not be a panacea. Parties, charities and other non-profits would still try to get to get as much money out of people for as little effort as possible. Participation costs (even if the internet is bringing the price down) and there will be plenty of people out there who would rather continue as passive consumers than active citizens.
The second is where I agree with Richard and Chris: how would we sell it to the public? I don’t think the argument would be unwinnable, but I would want to see more work on it before it became a manifesto commitment.