THE 2014 KEITH JOSEPH MEMORIAL LECTURE
GRAHAM BRADY MP
CHAIRMAN OF THE 1922 COMMITTEE
VIDEO TO FOLLOW
It is a great honour to be invited to deliver this lecture in memory of a great Conservative who helped to shape modern Britain; an especial honour to deliver it under the auspices of the Centre for Policy Studies, the organisation that he founded with Margaret Thatcher to promulgate the new thinking that was so badly needed in our country. I understand that Lady Joseph attended all of these memorial lectures; I was sorry to hear of her recent death but am pleased that so many members of the Joseph family are here this evening.
Margaret Thatcher said of Keith Joseph, "I could not have become leader of the opposition, or achieved what I did as Prime Minister, without Keith," describing Joseph as "my closest political friend’. As august a journal as the Sunday Mirror said he was “a man of strange contradictions: the Tory Minister who really cares”.
Keith Joseph provides much of the inspiration for my remarks this evening, but if you will forgive an uncharacteristic display of sycophancy, so too does our Chairman, Maurice Saatchi. You have all seen Maurice’s Newsnight interview with Jeremy Paxman in which he accepts the challenge of defining the ‘big idea’ that will win the next election for the Conservatives. There is a golden thread that connects Keith Joseph to Maurice Saatchi’s theme of freedom and the connection between freedom and money. In Maurice’s interview he quoted JK Galbraith saying that the greatest restriction on the freedom of the citizen is the complete absence of money. Joseph described,
‘Our [reiterated] conviction that a market economy with freedom to own property and engage in production and services is an essential condition for all other freedoms.’
- Joseph, K., Why Britain needs a Social Market Economy, Foreword, p.4, (London, Centre for Policy Studies, 1975).
This thread was picked up by the current Chancellor to great effect, in his Budget a fortnight ago as he recognised the power of giving people control over their own lives, the fruits of their own labours. I shall return to this later in my remarks.
Few politicians younger than I am will remember Keith Joseph. I was lucky enough to meet him once or twice... and I will always remember hearing him address a CPS Annual Meeting - standing in for Lady Thatcher shortly after her departure from Downing Street. His whole speech was couched in terms of what he imagined she would have wanted to say, had she been there in person. It was a remarkable spectacle given the extent to which he had influenced, even crafted, the ideas that she brought into concrete form. He famously was better at having ideas, than he was at implementing them in ministerial office. One can only wonder at his reaction when after his first parliamentary outing as a junior minister in Macmillan’s government, the Prime Minister complimented him on the performance, but added, "If it's any consolation, it will get worse." He was a slightly unworldly man who didn’t have a television in the house and who reputedly once, dissatisfied with a live television interview, asked to do it again. "I thought you realized, Sir Keith," said the producer, "that this was to be a live interview." "Yes, I know that," said Joseph. "That's why I want to do it again."
Integrity and honesty
This evening I shall begin by quoting Lady Thatcher when she gave this lecture in 1996, she said:
“In politics, integrity really lies in the conviction that it’s only on the basis of truth that power should be won – or indeed can be worth winning. It lies in the unswerving belief that you have to be right.”
“It was not that Keith wore a hair shirt from preference. He was averse to any kind of suffering, especially other people’s – and applying the right remedies to the British disease was bound to require suffering.
“But Keith’s integrity was absolute.
“When he became convinced, finally convinced, - after the endless discussions which were a mark of his open-minded, open-hearted style – that a proposition was correct, he felt he had to defend it. He had to fight for it. When he faced those raging, spitting Trotskyist crowds at our great liberal centres of learning, I suspect he wondered sometimes whether he would have to die for it. But there he stood. He could do no other.”
The Importance of Ideas
This brings me to my first Joseph-inspired theme. The importance of ideas, thought and debate in politics: and the massive damage that has been done to British politics by the fatuous insistence that we should all be ‘on message’ at all times. We know of course, that progress in political thought is only achieved through a constant process of challenge and debate. At the root of the Westminster model is an attempt to guarantee that challenge takes place by formalising an adversarial approach to politics. The propositions advanced by government will be scrutinised by an Official Opposition even if the government’s own side is happy to go with the flow. The inherent danger in our parliamentary model is that both sides can be trapped in a role play – the ever-critical opposition and the lobby-fodder on the government side.
In an adversarial system there is nothing new in the temptation to regard those who from time to time seek to challenge their own side’s ideas as boat-rockers, perhaps even traitors. All these charges were levelled against Keith Joseph in 1974 when he had the courage to ascribe the blame for dangerous inflation to the Heath government and not just to the new administration under Wilson. Joseph had the fundamental honesty to recognise his own mistakes too, famously declaring,
‘it was only in April 1974 that I was converted to Conservatism. (I had thought that I was a Conservative but now I see that I was not really one at all).’
As he travelled the length and breadth of the country making his case for liberty, for a state that would be the servant of free people not their master, his speeches, in Margaret Thatcher’s words,
"fundamentally affected a political generation's way of thinking."
He was quite clear though that if he was to make his case and see his ideas implemented he had to change the mainstream of his own party as well as that of the other side. As he said: in establishing the Centre for Policy Studies: "My aim was to convert the Tory Party."
The Tyranny of Being ‘On Message’
But if it was difficult in the 1970s to challenge a prevailing climate of ideas, how much harder is it in the politics of today. Not only do we have the inherent tension afflicting any party politician – do we speak our minds and exercise the judgment that our constituents have a right to expect? Or do we remain silent, do the whips’ bidding and avoid rocking the boat? Today we have (with a few honourable exceptions, doubtless all here tonight) a dumbed-down media. Some are happy to enter a Faustian pact with those who manage the news for whichever party. Others are looking only for the maverick and the rebel. When good men and women come to differing conclusions within a party it must be written up as a rebellion or a ‘challenge’ to authority.
Political parties have become over-reliant on focus groups and opinion research to identify the key target voters in the key ‘swing’ seats. The message is too often crafted to appeal – not to be right, and the biggest focus group of all – the British electorate grows ever more disenchanted.
All the mainstream parties struggle with falling membership and bemoan the dismally low turnout among younger voters. We shake our heads in consternation that 18-24 year olds appear too often uninterested in the democratic process. It has become a truism, to point out that the young are attracted to single issue campaigns but turned off by party politics, but we accept this as inevitable at our peril. It is my experience that the young are repelled by parties because they equate political parties with humbug. Every time a solemn pre-election pledge is cast aside, the problem grows worse. Every time a politician on television evades a straight question, he confirms the stereotype. It is has become fashionable to regard our democratic system as a pointless charade.
And at the core of the problem lies the readiness of too many in politics to treat the public as fools. The shine eventually wore off Tony Blair when people came to the view that he had manipulated the evidence to justify a war. Gordon Brown’s brief honeymoon as Prime Minister ended when he dissimulated over the election that never was. Nick Clegg’s poll rating has never recovered from a broken pledge over tuition fees – and to prove my even-handedness, I will add that what was perceived as the breach of a copper-bottomed guarantee to hold a referendum on the Lisbon Treaty certainly contributed to the failure of my party to win the election outright in 2010.
I don’t think it is patronising to say that the idealistic young are more readily offended by these traits than those of us who have been disappointed more often – but this view is far from a monopoly of the young. When Russell Brand told Jeremy Paxman that there is no point in voting and advocated revolution we might have allowed ourselves to harrumph – but when Paxman reveals that he doesn’t bother voting either, I think that is real cause for concern.
The trouble is that a significant number of serious, engaged and community-minded people are coming to the same conclusion: that our parliamentary system fails adequately to serve its intended purpose. It may be that turnout in general elections has fallen from 84% in 1950; to 65% in 2010 because people perceive a smaller difference between the parties – in which case Mr Miliband’s leftward shift might help reverse the trend – but there is plenty of evidence from the Hansard Society and others that voter participation has fallen because so many people think that voting doesn’t really change things. As responsibility is shifted to supranational institutions at one end and to quangos or independent reviews at the other: they have a point.
As ever, the Liberal Democrats jump to the wrong conclusion and seek to change the voting system. As the AV referendum showed, there is no public appetite for electoral reform. In fact, we MPs tend to be held in quite high regard by our constituents. They don’t worry too much about how we are chosen; by and large they don’t even regret the people they choose; the problem arises when we arrive in Westminster. It is the institutions of our democracy that need to change: not the electoral system.
Making Parliament Work Better
In 2009, in the midst of a parliamentary crisis David Cameron set out an ambitious agenda for reform. In government he would:
• End the “pliant” role of parliament by giving MPs free votes during the consideration of bills at committee stage. MPs would also be handed the crucial power of deciding the timetable of bills.
• Boost the power of backbench MPs – and limit the powers of the executive – by allowing MPs to choose the chairs and members of Commons select committees.
• Limit the power of the prime minister by giving serious consideration to introducing fixed-term parliaments, ending the right of Downing Street to control the timing of general elections.
Some of this agenda has been delivered. Select Committees are elected and we have (regrettably in my view) a fixed parliamentary term. But free votes? Allowing parliament to timetable bills, made it into the Coalition Agreement, but has been allowed to fall by the wayside in the interests of executive convenience.
I have become convinced that public trust in parliament will only really be restored by radical reform – by removing the Executive from Parliament, freeing Parliament from patronage and control of government, but there remains a rich seem of reforms short of a full separation of powers that would restore confidence and independence to the House of Commons. Control of our own agenda and timetable; more powers for select committees and more free votes might be the next stage of reform. We will know that progress has been made when MPs will no longer give up an elected place on a select committee in order to take up an offer to serve as Parliamentary Private Secretary to a junior minister.
Drawing lessons from the life of Keith Joseph, we should do all this because it is right; we should do it because our country is in desperate need of open, honest debate and a strong, free parliament would allow that; we should do it too because there is a public hunger for change – for the rebuilding of institutions that people can trust.
Our parliament should be a forum for genuine debate, where ideas are welcomed, where real challenge and scrutiny is seen by governments as a benefit not as an inconvenience.
Earlier, I listed some negatives: instances where political dishonesty, real or perceived, has moved the public. The flip side is just as clear. From David Cameron actually vetoing an EU Treaty; to John Prescott’s reputation rising when he delivered a very honest right hook to an egg-throwing idiot; and right to the present day where we see the galvanising effect of a Budget that rings true as a Conservative prescription.
A Savings Revolution
This brings me to my second theme. When I began preparing this lecture a few weeks ago, I planned to call for a ‘Savings Revolution’. Had this event taken place on 2nd March not 2nd April, it would now be regarded as having been immensely influential….
In trusting people to make their own decisions; trusting people to take responsibility for their own future; trusting them with their own money, George Osborne has achieved two important goals in one stroke. Firstly he has done something believable: something that the nation sees as true to our principles. This is key to building the ‘brand identity’ that will be in the minds of the voters at next year’s general election. Secondly, the boldness of the move should help to set the scene for the great challenges that lie ahead.
For, in the announcement of a new, more liberal regime for pensions and savings and in Labour’s reaction to it we see the battle of ideas that was at the heart of Keith Joseph’s conversion of the Conservative party: a battle that is at least as relevant today as it was 40 years ago. Immediately after the Budget, the Labour Party hesitated; instinctively drawn to attack, as irresponsible, the shift of such important powers into the hands of the people most directly affected by them. Within a day or two Labour had rightly come to the conclusion that it would be foolhardy to place itself in opposition to such a powerful alignment of interests.
As Stuart Hall, the Socialist thinker who coined the term ‘Thatcherism’ put it,
“Nothing so rattles the equanimity of Labour leaders as the spectacle of the popular classes on the move, under their own steam, outside the range of ‘responsible’ guidance and leadership.”
The Conservative governments of the 1980s and 90s began an unprecedented period of growth of personal wealth; the increase of home ownership (including for so many council tenants for whom ownership was a new experience), the growth of private pensions, tax exempt savings and attempts to establish popular capitalism through wide distribution of shares in privatisation issues, all played a part.
At the end of the First World War, less than a quarter of people in England and Wales owned their own property. By 1970 there was an equal split between owner occupiers and rental occupancy. By 2001 almost 70% of us owned our own home. Home ownership not only generates personal wealth and means people have somewhere to live; it also gives a psychological sense of worth from owning a sizable asset as well as the comfort of knowing we have something to pass on to future generations.
Nick Ridley described this concept of a property-owning democracy in his book ‘My Style of Government’ as one,
‘first articulated by Anthony Eden, but a course hardly advanced at all by successive Tory governments’
and defined it thus,
“To own one’s own house, or business, or the capital which produced one’s retirement income extended freedom of choice, gave people a stake in the nation’s wealth, and required less tax-payer’s money to be spent on them. It produced a large and growing number of people who were not ‘dependent”.
Margaret Thatcher went further in ascribing a powerful psychological effect,
“Of all the rights that we call ‘liberty’, the right to own property, though one of the more prosaic, is arguably that of greatest practical importance. Owning property gives a man independence against over-weaning government. Property ownership has also a more mysterious, but no less real effect: looking after what one owns provides a training in responsible citizenship...”
There are those who contest that the UK has historically set far too much store by home-ownership and that we should be unconcerned that the average age of the first-time buyer is approaching forty but taken together, this trend; the spread of means-tested benefits; the regime for long term care; the damage done to private pension provision by one of Gordon Brown’s earliest misjudgements; compounded by a squeeze on household finances – from which we are slowly emerging - which saw over a million people forced to abandon contributions to their pension funds, all amounted to a massive turn away from a culture of property ownership with the responsibility and independence that goes with it.
Wider Share Ownership
Our houses sometimes seem a national obsession but we should consider too the progress in creating a share-owning democracy. The Thatcher inspired privatisations of BT and BP made millions of ordinary citizens into shareholders for the first time. Similarly, the introduction of employee share schemes in the 1980s led to millions of employees gaining a financial stake in their employer for the first time.
These actions had numerous benefits. Employee share ownership provided employees with a tax efficient savings and investment vehicle, boosted the UK savings ratio, gave employees a financial nest egg for the future and enabled workers to gain a real stake in the company that they worked for. It provided employers with a more motivated, productive and engaged workforce where their interests became more closely aligned to that of their employers.
These are benefits that continue to be recognised by many British companies and I am pleased that this Government has recently taken steps to re-energise the concept of a shareholder democracy with the privatisation of Royal Mail being a good example. At Royal Mail today more than 99% of employees are now shareholders in the company they work for by virtue of the free shares awarded when privatised.
Even though employee share ownership was neglected by government for many years, approximately 80% of the FTSE 100 already offer some form of all-employee share scheme the Chancellor’s decision last year to increase the allowances for employee share schemes were perhaps an early indication of the wider agenda to promote pensions and savings that we have seen in this year’s Budget.
Public Debt and Private Wealth
Masses has been written and spoken about the baby boomers who have had it all: free tuition, free healthcare, cradle to grave welfare, affordable homeownership, early retirement and low taxes.
The pensions minister recently wrote to me with a pithy encapsulation of how the notional National Insurance ‘fund’ is meant to work:
“The NI scheme operates on a ‘pay as you go’ basis. This means that today’s contributors are paying for today’s social security entitlements and pensions, and those paying contributions previously were paying for the pensioners of that time. In other words, contributors do not accumulate an individual fund of actual monies they have paid, which is personal to them. Instead, payment of contributions entitles them to a range of social security entitlements which are available on the basis of the rules applicable at the time of the claim.”
All very well as long as the proportion of working age, tax-paying, citizens is maintained and productivity continues to increase. Given that neither of these conditions is being met, many of our younger countrymen might be forgiven for thinking they have been sold a pup. They have to pay their taxes to support older generations in retirement whilst increasingly having to provide for themselves and their children, and to work much longer in order to do so.
All this is compounded by the scale of the fiscal mess in which we find ourselves. I haven’t time to rehearse all the figures – but even though the deficit will have been halved by next year from the figure in 2010, the government is still expecting to add £108 billion to the public debt this year and a further £95 billion next. These of course are only the explicit debts – taking no account of the massive unfunded obligations implied by on-going pension, welfare, health and social obligations. So it is clear that the road to be walked by the next government and the one after that may involve just as many tough choices as have been faced in this parliament.
It is pretty clear that future generations will look in vain to the state if they want to retire early, put their children through university or ride on buses free of charge....
Instead of dwelling on the bad news of the massive public liabilities that the developed world faces; I want to turn to the good news story of the expansion of private wealth. As my parliamentary colleagues who are present know well, our constituency surgeries are much more occupied with helping those who depend on welfare or social provision than those who are able to provide for themselves. If you own your own home, have adequate funded pension provision and perhaps even private health insurance, you are much less likely to need to ask for help. And the numbers of people in our country with this buffer of private assets has grown dramatically.
Some of this has been through the kind of savings vehicles that the Chancellor has been promoting. Before the financial crisis; the number of new ISA accounts opened each year had reached over 15 million. By 2012-3 a record £57 billion was subscribed to adult ISAs and the total value of assets held in them had reached £443 billion. Crucially, the majority of ISA holders in 2010-11 had incomes below £20,000.
The privately held wealth of the British people which had remained broadly static from the second world war until 1980 has been growing ever since: from £1 trillion in the 1970s to £5 trillion by 2005 (in 2005 prices). Much of this increase has been in the value of people’s homes but also reflects rising levels of home-ownership. If private pensions are added, the total rises to £6.5 trillion.
Between 2008-10 (not a particularly auspicious time to survey wealth), the ONS Wealth and Assets Survey, found the total value of personal wealth to be fully £10 trillion. Median household wealth including pension savings was put at £232,000 – twelve times the value of median household income. This growing personal wealth comes at the same time as public debt has been mushrooming. Taken as a whole the wealth of the British people, massively out ranks all the Sovereign Wealth Funds of the world.
Keith Joseph said,
“Egalitarianism destroys not only prosperity but freedom and culture... Making the rich poorer does not make the poor richer, but it does make the state stronger – and it does increase the power of officials and politicians, power more menacing, more permanent and less useful than market power within the rule of law. Inequality of income can only be eliminated at the cost of freedom”.
The reverse is also true. As personal wealth expands, the power of the state diminishes; people’s freedom and dignity increases.
Much of modern politics has been about how we can best enhance people’s control over the services that they need. The boards of foundation hospitals or Clinical Commissioning Groups seek to give communities a voice in how their tax money is spent on the provision of hospital or health care services. Academies and free schools seek to extend parental choice in the type of education that the state provides for our children, by spending our taxes on our behalf. Personal Independence Payments seek to go further giving those who need care personal budgets to spend on services of their own choice.
A mixture of policies of this Conservative and Liberal Democrat government, or its Labour predecessor, in health, education or social care, fix on different points on the spectrum of how much control we should be allowed in how we spend our own taxes. At a small level the last Labour government even established a trust fund for every new born child, endowed with a small sum of taxpayers’ money. As growth takes root more firmly, we should revisit this idea of making all citizens into savers, giving all a taste of the real freedom and independence that goes with ownership of assets. So far both governments have agreed that some health services can be provided in private hospitals (or even foreign hospitals) but neither has been prepared to see people exercising the same free choice over the kind of schools that we might be allowed to choose for our children.
We should be bolder. We should accept that it is not for government to make these choices; they are better made by people making their own decisions about what is in their own best interests. Where possible we should seek to assist people in providing for themselves without the intervention of the government at all.
Of course all these choices are easier for people who have. They are harder and more worrying for those who have not.
Both sides of politics say they want equality of opportunity. We should face the fact that access to wealth can have a profound influence on opportunity. It can determine whether parents can afford to buy a house in the catchment of one of the better comprehensives; a few savings at the beginning of your career might allow you to take unpaid work experience, or to set up a small business; parents trading down can help their children get on the property ladder or move to places where there is more well-paid work; quality of life in retirement is often much better for those who have accumulated savings and pension rights.
If we have a nest egg of shares to fall back on or if we are able to down- size from a property we own to a smaller one, then we may have sufficient wealth to see us through retirement but the reality for many is somewhat different. Currently over a quarter of pensioner couples (37% of single males, 43% of single females) have less than £1,500 in savings; in fact 28% of single female pensioners have no savings at all.
So the budget measures to encourage saving are essential; the freedom to spend our pension savings in a way that is right for us is obviously right but as I have just highlighted, more than a quarter of all pensioners have less than £1,500 in total savings. We must do everything we can to make sure pensioners in the future do have savings.
In 2007 we saw the power of the popular conviction that we should be able to cascade wealth down the generations. The pledge to increase the Inheritance Tax Threshold to a million pounds was sufficient to deter Gordon Brown from holding that honeymoon election. As David Cameron has indicated, a Conservative government should return to this theme. Perhaps it should also look at how those leaving legacies might be encouraged to spread benefits more widely amongst younger generations. Reliefs for people providing deposits for children or grandchildren buying homes; relief if funds are paid straight into a relative’s pension fund; providing future security for a younger generation but also reducing a potential future call on the state.
The budget measures have shown us again Stuart Hall’s ‘spectacle of the popular classes on the move, under their own steam, outside the range of ‘responsible’ guidance and leadership.’ It is a powerful force.
Politics focuses a good deal on people’s incomes (and it is good to see Conservatives in government once again reducing taxes on income); it focuses on how people should be allowed to influence the way in which government buys services with our taxes, on our behalf.
We should also make it a central purpose of government to assist more and more of the population to achieve the independence, security and freedom that comes from owning their own material stake in the world. Their own home: not forced to queue for a place to live. Their own funded pension: not subject to the vagaries of when government thinks they should be allowed to retire. Their own funds: to allow them to assist the next generation in making a better life.
Ladies and Gentlemen, Keith Joseph was modest man.
As Margaret Thatcher observed – even though he had less than most to be modest about. Characteristically he said, if I had been Prime Minister, “It would have been a disaster for the party, for the country, and for me.” But it was the power of his ideas, working with Margaret Thatcher and others that fired the biggest explosion of private wealth: for the many, not just the few. Often unnoticed, this has also been the biggest transfer of power from the state to the people.
It is as Maurice Saatchi put it, ‘freedom and money and the connection between them’. It is the dignity that we have when we control our own destiny. The Conservative Party succeeds when it is most effective in spreading that dignity to British people from all social classes and backgrounds.
Graham Brady MP, April 2014