Taxing dilemma at the heart of politics: Democracy is languishing. People are fed up with government as soap opera, argues Paddy Ashdown, Liberal Democrat leader

FOR our society and for our political system, this is a time of considerable danger. People simply do not believe that politicians are in touch with the ordinary lives, the concerns or the problems of the people they purport to serve.

They look on Parliament with cynicism, if not distrust and growing disrespect. They see the House of Commons as a political soap opera, complete with its cast of Dirty Dens, JRs and Kylie Minogues - good for entertainment, but not of much relevance to their daily lives. They feel less and less control over those who abuse their power, while more and more of the real decisions are hived off to quangos, full of party placemen and empty of real accountability. And they sniff the smell of corruption and decay in a system in which the privileges of one-party government have gone unchecked for 14 years.

This is a triple crisis: not just a crisis of government, not just a crisis of leadership, but a crisis of democracy, too. Unfortunately, Britain is particularly ill-equipped to deal with this. Our resistance to reform has left us with a political system inadequate to meet the needs of the 20th century, let alone those of the 21st.

The fundamental weakness of the British Constitution lies in the structure and nature of power. The distribution of power between individual and state, parliament and government, centre and locality is dangerously out of balance for an effective modern democracy.

Power is concentrated at the top of an over- centralised, over-secretive state. It is exercised by an overmighty, unrepresentative 'elective dictatorship'. The local communities, regions and nations of our kingdom have no independent constitutional status. Individuals have no entrenched civil rights.

The monopoly of MPs and peers in government is one of Britain's last great closed shops. Few other democracies have such a system. They do not confuse the need for effective accountability with the requirement that all ministers be members of parliament. So we should perhaps look at ways of expanding the pool of talent that would be available for service in government.

At the moment, the very people who are supposed to be holding government to account - the MPs - are either in government or have only one ambition in life - to get into government. The conflict of interests this creates is the source of the power of the whips, which has grown, is growing and ought to be diminished.

Under our unwritten constitution there is nothing but an outdated convention to stop governments including talent from outside the ranks of the Commons and the Peers. But to guarantee accountability and limit the patronage of the prime minister, appointment of non- MP ministers should require a consent procedure in the Commons. And those appointed would be expected to answer parliamentary questions, appear before select committees, make statements in the House and respond to debates in the same way as ministers with seats.

We could then, as a counter-balance, greatly enhance Parliament's powers to hold the executive to account, by strengthening select committees, introducing freedom of information and mechanisms for scrutinising appointments.

We also need to think about how we reconnect the people as a whole with the political process. Fair votes, open government, decentralised power will all help. But the working of our representative democracy also needs to be enhanced through more direct methods of popular participation in decision-making.

Taxation is one area where this could be done. For tax lies at the heart of the democratic contract and poses the greatest dilemma for parties of progress.

The old contract that enabled politicians and people to rub along more or less successfully is breaking down, largely because politicians have proved to be unable to win any positive argument for taxation. This suggests it is time to end the argument about higher or lower taxation and introduce the idea of value for taxation.

A recent poll in the US showed that a majority of Americans believe that more than 50 cents in every dollar of public expenditure is wasted. No wonder they are reluctant payers of tax. Here in the UK the reputation of our politicians is so low that a similar poll would doubtless achieve a similar result. Yet the public is increasingly anxious to make the public investments we need.

The challenge is to develop a new culture and language of taxation so that people feel more connection between the taxes they pay and the services they receive, and feel they have more control over the tax and spending of politicians.

This means giving the public more information about the destination of their taxes and finding ways to give people more involvement in determining levels of taxation and spending priorities. The necessary structural reforms must also be accompanied by a new culture of politics. The very style of our political debate is at the heart of the growing public disenchantment with the political system. The challenges we face require candour, constructive debate and popular involvement in the search for solutions. Unfortunately, our politics are more likely to produce secrecy, confrontation and further failure.

The county election results in May, which left 60 per cent of our councils under no overall control, have given us a chance to begin to change the style of politics. Politicians have a duty and an opportunity to show that parties can compete in elections, yet co-operate in power. Open discussion, questioning of assumptions, careful scrutiny, a willingness to compromise - that is what we need now in our national political process - and that is the opportunity we could extract from this moment of danger.

This is an abridged version of a speech given by Paddy Ashdown last night to Charter '88.