Think-tank outlines shape of a new nation

NICHOLAS TIMMINS

Public Policy Editor

A restructuring of Britain's economy and an annual "audit" of the nation's wealth, which would measure its social and environmental condition as well as its gross national product, were called for yesterday by an independent commission.

Chaired by Lord Dahrendorf, warden of St Anthony's College, Oxford, and set up on the initiative of Paddy Ashdown, the Liberal Democrat leader, the commission has produced a report on Wealth Creation and Social Cohesion which argues for a new investment strategy, compulsory fully funded second pensions, lifetime education and a new benefit system to make it easier to do some work while unemployed and to provide a basic income for those in work.

Mr Ashdown yesterday warmly welcomed the "forward looking" report, saying that what "shone through" the commission's thinking was "that there is a future for this country we can be optimistic about, and the clear evidence that there is a positive vision that progressive politicians have to offer the British people."

And the Labour leader, Tony Blair, who met Lord Dahrendorf to discuss the findings last week, was said to find much in the report "very interesting".

The report synthesises recommendations from recent studies on Britain's future, including those by Labour's Social Justice Commission, the Joseph Rowntree Inquiry on Income and Wealth, and the National Commission on Education.

While sustained, low-inflation growth is essential, the report says that although people welcome growing individual wealth, "they also want to feel safe in their homes and streets, and belong to thriving and civilised communities . . .

"The exclusion of large numbers from useful and decently paid employment, and often from social and political participation generally, is an unacceptable price for the material wealth of others . . . Social cohesion is an essential part of wealth creation."

The result is a plethora of proposals that include setting growth targets alongside those for inflation, treating capital separately from revenue in the national accounts, and providing new freedoms for public corporations to borrow and tax breaks for small, unlisted companies.

Money for investment should be generated by compulsory contributions from both employers and employees to a second pension on top of the basic state pension, which should have a link to earnings restored. A new National Insurance Fund owned by employees and employers would aim to reduce dependence on means-tested benefits.

The commission also calls for the transformation of income support into an agency encouraging people into work. It would act "as a life raft, taking people safely from benefit into more skilled work". After a year, continued payment would depend on participation in community work, employment or training.

The new Department for Education and Employment should pay benefits to link them more closely to education, while a raft of measures should be taken to improve education, including the creation of "individual learning accounts" made up from compulsory contributions by both employees and employers.

The commission acknowledges that its proposals may mean higher taxes, but says they would be geared towards objectives voters would support.

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