A Nation Of Takers Cannot Be Taxed Back Into Health

Start by conceding what is true, because pretending otherwise has cost the right a decade. Sebastian Milbank writes in The Critic that "contemporary UK capitalism is largely rent-seeking, cashing in on lucrative government contracts and seeking to monopolise passive income streams from land, property and debt" — a line that runs from the PPE contracts of the Blair years through outsourcing to the privatised water and rail companies. Housing, the same piece says, is "the most brutal bifurcation between classes and generations", with owners realising huge gains and then cashing in twice by taking out buy-to-let mortgages on the homes the young must rent.

The ledger underneath it is the part nobody says aloud. More than half of British households are now net recipients of state spending. The largest single burden is the elderly, with "an average of £6000 more a year spent on pensioners as compared to children". The young carry student debt, higher effective taxes and worse prospects than their parents, and are told this is intergenerational solidarity. It is not solidarity if it only runs one way.

Britain has been persuaded that a house is a pension and a pension is a right. Both beliefs are now claims on a young worker who owns neither.

The arithmetic is worse than the rhetoric. By 2050, with the triple lock, state pension spending rises 25 per cent, social care 54 and pensioner benefits 71 — £150bn a year once healthcare is added, or 5.9 per cent of that year's output. Against the argument that pensioners are only drawing what they paid in, Charles Amos notes that "the average baby boomer has taken £1.20 out of the welfare state for every £1 they have paid in". Britain's fertility rate is 1.41; it last touched replacement in 1972. One pensioner per four workers in the 1970s is one per three now and close to one per two by 2050.

So the remedy is not a levy, which "would only redistribute a short term rush of cash to the state, and cause a mass exile of the wealthiest" while leaving low wages and assetlessness where they are. It is to change the ownership itself. "Foreign money and the flood of foreign labour will have to be locked out of Britain's property markets. New housing must be built, and set aside for those who contribute." And welfare rebuilt on the social insurance principle, "so that those who give more, get more". That is a harder programme than a tax, which is why nobody has attempted it.

Start by conceding what is true, because pretending otherwise has cost the right a decade and an electorate. Sebastian Milbank writes in The Critic that "contemporary UK capitalism is largely rent-seeking, cashing in on lucrative government contracts and seeking to monopolise passive income streams from land, property and debt" — a line that runs from the PPE contracts of the Blair years through the outsourcing industry to the privatised water and rail companies that charge a captive public for a service they cannot refuse. Housing, the same piece says, is "the most brutal bifurcation between classes and generations", with owners realising huge gains and then cashing in twice by taking out buy-to-let mortgages on the very homes the young are obliged to rent from them.

The ledger underneath it is the part nobody in office says aloud. More than half of British households are now net recipients of state spending — the country passed that tipping point without remark. The largest single burden on the public finances is the elderly, with "an average of £6000 more a year spent on pensioners as compared to children". The young carry student debt, higher effective taxes and worse prospects than their parents and grandparents, who receive free services and an inflation-beating pension, and they are told the arrangement is intergenerational solidarity. Solidarity that runs in one direction for fifty years is not solidarity; it is a standing order.

Britain has been persuaded that a house is a pension and a pension is a right. Both beliefs are now claims on a young worker who owns neither.

The arithmetic is worse than the rhetoric, and it is published. By 2050, with the triple lock intact, state pension spending rises 25 per cent, social care spending 54 per cent and pensioner benefits 71 per cent — some £62bn in today's money, £150bn once the projected increase in healthcare is added, or 5.9 per cent of that year's output — with the national debt forecast above 230 per cent of GDP by 2066. Against the argument that pensioners are merely drawing out what they paid in, Charles Amos writes that "the average baby boomer has taken £1.20 out of the welfare state for every £1 they have paid in", so the contribution argument, taken at its own word, would require cutting their entitlement by a sixth. Britain's fertility rate is 1.41 and last touched the replacement rate of 2.1 in 1972. One pensioner for every four workers in the 1970s is one for every three now, and will be close to one for every two by 2050.

Here the honest objection arrives, and it comes from the right rather than the left: is this not simply the politics of envy with a Union Jack on it? No, and the test is what each remedy leaves standing. A wealth tax reaches the assets that cannot move — a farm, a family firm, a house in a town where the jobs went — and leaves untouched the holdings of anyone with an accountant and a second passport. It "would only redistribute a short term rush of cash to the state, and cause a mass exile of the wealthiest, whilst decimating those most invested in the national economy", and it does nothing whatever about the underlying condition, which is "low wages and a lack of assets amongst the British working and middle class, especially young workers without inherited wealth".

The alternative is to change the ownership rather than to tax the owner. "Foreign money and the flood of foreign labour will have to be locked out of Britain's property markets. New housing must be built, and set aside for those who contribute." Investment and employment have to reach beyond the South East, so that a young family is not obliged to bid for a London flat in order to have a career. And welfare and pensions have to be rebuilt on the social insurance principle, "so that those who give more, get more" — which is what the system was sold as and what it has quietly stopped being.

This is a harder programme than a levy, which is exactly why no party has attempted it. It requires telling pensioners that the formula will change, telling landlords that the tax treatment of a second house will not survive, telling the City that a foreign buyer is not the same as an investor, and telling the country that the last thirty years of rising house prices were a transfer rather than an achievement. The triple lock's real damage may not even be fiscal: it has taught a generation of politicians that a price can be fixed by fiat and the arithmetic sent on afterwards, which is precisely the reasoning now being applied to rents. Both are attempts to legislate a number instead of changing the thing the number measures.