A business manifesto to make poverty history

Article by John Blundell in The Business

EVERY political autobiography of the past hundred years begins with an explanation of why the subject chose to enter politics. I have yet to read one that does not claim that the author, left or right, wanted to “help the poor”. Politicians have to legitimise their roles – as do the rest of us.

While we mostly want to look after our families or some other natural activity, it is the politically active who have to invest themselves with an altruistic halo. I don't doubt their self-belief. I do doubt the wisdom of their policies. “Fighting Poverty” is usually camouflage for ideas that trap people in misery.

Let me offer a business or capitalist manifesto against poverty.

The two biggest expenditures of those on most modest incomes are housing and food. Yet what does our consensus politics do?

First, it constricts the supply of cheap accommodation by a tyranny termed “planning”. The tight restrictions imposed upon every community since the 1947 Town and Country Planning Act have shrivelled the supply of modestly priced homes to buy or rent. The entire system is rigged for expensive suburban homes.

There is now a very effective lobby wanting to deter new building. It is not just housing. An active economy needs small, cheap, commercial premises like railway arches or sheds. Some of the greatest ventures start in garages.

Second, what do we do to grocery prices? We handicap Tesco, Morrison, Asda and Somerfield by the grotesque absurdity of the Common Agricultural Policy (CAP). The price of food shopping would tumble by as much as 50% if the supermarkets were not impeded by the CAP.

Note the official pretext of subsidies is to help small-scale farmers valiantly toiling on their hills. The reality is that the wealthy and the big companies get even wealthier. It is common to all “poverty” policies that they create a vested interest of a different nature, one that inevitably helps the already rich.

However, if I were to commend just a single gesture to open up employment opportunities for the marginalised, it would be to slash National Insurance (NI) and have a lower and simpler flat rate of income tax.

National Insurance sounds admirable. It was Lloyd George’s great idea to “fight poverty” in 1906. Now it is merely a tariff that deters employers from offering jobs. It is a fraud. It pretends it funds designated benefits such as pensions when it merely uses this week's revenues to pay next week's benefits. It is a chain letter scam.

Income tax, introduced to pay for the fight against Napoleon, achieves the impoverishment of the poor. It cannot be said often enough: the poorest pay proportionately more of their earnings in tax than the wealthy.

The prosperous can take artful measures to avoid taxation. Inheritance taxes, designed to hit the wealthy, in fact dispossesses poor widows. Income tax does not redistribute to the poor. It punishes those on the lowest incomes. They are pulverised while the rich can take lawful evasive action.

These are all tangible ideas: reduce residential costs, cut grocery prices and liberate the jobs market. Yet much of what preserves poverty is of a more intangible and elusive nature.

It is deemed coarse in polite society to refer to the truly dreadful nature of the state schools that supposedly service less well-off communities. There is no shortage of euphemisms – bog standard, urban deprivation, inner cities, blue collar. What there is a shortage of is good education. Another few billion are promised each year but our young people are rendered without the simple reading, writing or counting skills needed to prosper.

The Prime Minister has had to back off from his ideas that defied the producer groups within the LEAs. But, for the poor, education must be opened up away from the municipal and pedagogic restrictive practices. I rate school vouchers the most elegant way to give dignity to poorer households. Give them all choice. Our schools operate on a system not unlike the old naval recruitment method – they are press ganged.

Opting out of pointless lessons is termed “truancy”. Let us make the teachers entrepreneurs. Let them own the schools. Their self respect and morale and income would soar.

Poverty is far more than the absence of cash. Rather it is the lack of real choice in life’s options. It seems to me quite plain that to begin life on a forlorn council estate and attend a dud local school is to start a life with severely stunted options. Note, I do not denigrate the good intentions of those who gave birth to these abject social policy failures. I simply assert that they were mistaken because they lacked the capitalist virtues.

Most of the great agencies of the British state ignore or harm the poor. Look at curiosities like the Arts Council in its Westminster palace and with its stream of subsidies. Just like farming, this is another example of poor people being creamed to help rich people enjoy the opera or ballet or theatre. Every time I walk by its colossus I make the sign of the cross to protect myself.

The word “welfare” is deployed in a manner to short circuit criticism. Of course we all favour benevolence for those who need help. Are we correct to regard the Department of Work and Pensions as the best that can be done?

I would like to see a wholesale revival of the Victorian agencies of welfare – the friendly societies. Now hamstrung by petty regulations and strict ceilings to donations these once potent forces have receded even from memory. If a person or family is suffering an adversity it is in the interests of a friendly society to get them a job, or counselling or real help of some nature. Welfare becomes intimate, alert and critical. It becomes responsive.

To most this may seem impractical or quixotic but whenever I encounter the British welfare system I see it as lumbering, bureaucratic and monstrously expensive. It is also utterly inhumane and as Roger Daltrey recently asked a chum of mine: “If everybody gets so little why can it all turn out to be so expensive?” Well spotted Roger.

Some exponents of the businesss cause, such as the Confederation of British Industry, seem to think the capitalists’ role is to be milked, sorry taxed, to supply education, welfare, and other services. I argue the market can supply most of these duties far more effectively than the civil service or local authorities.

The vast computer of the market place can enrich us all. I am not arguing against kindly instincts. I am saying they should be redirected from the coercive to the voluntary. As that great Victorian advocate of self-help, Samuel Smiles, said refreshingly: “The poor want to lift themselves and their families.”

We are more sophisticated than Smiles and his contemporaries. We know there are those with medical or psychiatric problems for whom the state may be the best resource. However, we also know what naive early socialists did not understand, that bureaucracy creates its own empires.

I look forward to reading the autobiography of the politician – the Chris, Dave or Gordon – who understands how the state oppresses our less well-off and has the courage to liberate them for all our good.

See Peter Hewitt's, Chief Executive of the Arts Council in London, response

Why John Blundell is wrong about art subsidies

John Blundell is Director General of the Institute of Economic Affairs.

IEA Brexit prize