Ben Knight: How we can revive the capitalist dream

Ben Knight is a former civil servant turned Parliamentary Researcher, who embarked on a three-year career in adult social care at the beginning of the pandemic. He has since worked in sales.

Our nation faces a perfect storm of intractable political and economic tides. The government is grappling with the issue of welfare reform, seeking to shrink an ever-ballooning bill for both the out-of-work young and the state-pensionable old. Access to the property ladder is, for many young people, nothing more than a pipe dream – and the free market economic consensus built by Mrs Thatcher is under a growing threat, from Trumpian tariffs and trade wars, and from the pernicious sense among many Britons that the nation is lost, the promise of opportunity buried, and the prospects for growth and prosperity dimmed.

In such times, politicians must plan for the long-term and eschew short-term political gain. They must be bold and imaginative. They must be prepared to tear apart the systems which have draped the United Kingdom in a mourner’s shroud.

Reviving the capitalist dream for future generations of Britons will require policies which imbue our people with a sense of ownership and a real stake in our market economy. Mrs Thatcher understood this, and it is why she pursued initiatives such as the Right to Buy and share ownership schemes.

In the spirit of Thatcher, I propose a policy which would, over the next few generations, revitalise the promise of the market, all-but eliminate government spending on non-disability welfare, and go some way to resolving the looming pensions crisis of increasingly long retirements with little in the pot to pay for them.

The government should open an ISA invested in 60 per cent equity and 40 per cent bonds for every British citizen born after 1 January 2026, worth £10,000. The cost to the Exchequer would be around £6.5 billion each year, assuming a stable rate of population growth.

At the age of 21, beneficiaries of the “Cradle to Grave Fund” or the “Lifetime ISA would be entitled to draw down 25 per cent of the value – which would sit at around £40,000 based on 7 per cent capital appreciation – to pay for a deposit on a property.

The remainder of the fund would be kept under lock and key, accessible to the beneficiary under only two conditions:

1) They are unemployed, and need to draw on the fund to meet their costs of living. Under this scenario, monthly withdrawals would be capped at the level of the full-time minimum wage. The fund in the beneficiary’s name would, in effect, completely replace Universal Credit for out-of-work benefits claimants; benefits for the jobless could be abolished or scaled back extremely dramatically. A £40,000 pot would last for well over a year, and the advantages are clear: welfare for those who have fallen on hard times and who are seeking employment would be paid for out of money in their own name rather than the largesse of the taxpayer, and it would be inherently time-limited. The state could save billions of pounds in payments to jobseekers who would lean on their own wealth during times of hardship.

And the phrase “their own wealth” is important, by the way, because this policy *gives* a sum of wealth to millions of people who might otherwise have none, all for the princely sum of a £6.5 billion investment each year. In the very long term, once all working-age Britons were part of the policy, the savings in welfare spending would reach into the tens of billions: Universal Credit costs £67 billion a year (although this includes payments to those who are deemed unfit to work).

Assuming an individual drew down 25 per cent of the fund at age 21 and otherwise left it alone, the next juncture at which it would become available would be at the point of the retirement age: currently 67-years-old. By this time, the ISA could be worth almost £700,000, and would comprise a very significant pension fund in the name of the beneficiary.

So too could be abolished, then, the state pension and pension credits; welfare payments which currently cost the Exchequer in excess of £140 billion every single year.

It would take more than half a century for the benefits of this policy to truly be realised. In the short term, it would be a not insignificant pressure for the public purse to bear. There would also be cries of unfairness: people born on 31 December 2025 would miss out on a significant benefit by only a day. And there would be virulent political opposition, certainly, to the abolition of jobseekers’ benefits and the state pension – even if they were a distant prospect.

But governments of this country have, too often and at too great a cost, learnt the penalty of failing to take long-term decisions at the time when the opportunity is most ripe. From nuclear power, eternally decried as twenty years away, to investment in new runways; from defence expenditure, the victim of the “peace dividend,” to root-and-branch reform of the civil service.

But if Sir Keir Starmer wanted a policy to solidify his legacy as a leader into the next century and beyond, if he wanted to take a radical step today which would ensure a much brighter tomorrow, he could do an awful lot worse than consider the “Lifetime ISA.”