Core Values by John Blundell in The Business

Market liberals are far more optimistic about the philanthropic and benign potential of human nature than are socialists .

A favourite optimistic nostrum of Ralph Harris, an influential trader in ideas who died last year, was: “Don’t worry, everything is getting worse.” Optimistic, because his maxim was that the more dreadful political provision of services such as schools and hospitals, the greater the opportunity for reform.

Those of us who loved him will celebrate the life of Lord Harris of High Cross next Tuesday (20 February) at a gathering in Westminster at the Institute of Economic Affairs (IEA), the organisation he ran for many years. We will have a merry afternoon for a jolly soul.

Harris touched the daily life of all of us. Who demolished the absurdity termed “retail price maintenance”, which meant retailers couldn’t choose the price at which they could sell their wares? Harris has a good claim. The reform created the supermarket phenomenon and even gave Richard Branson his start in commercial life.

How was the tyranny of exchange controls relaxed? Harris harried the politicians. Who cajoled ministers to sell off the vast rusting hulks termed “nationalised industries”? And who dared to ask if trade unions were public bads rather than public goods? Harris’s fingerprints are on all the most important free-market reforms of the 1970s and 1980s.

Yet he would not want his fans to dwell on the past. Our mission today is to apply liberal free-market ideas in the many areas in which they are still suppressed. Free-marketeers believe in a competent state. The government must perform some roles – but as a referee, not as a player.

There are several areas which every political party now ducks where voluntary options can be far more diverse, rich – and truly compassionate – than the present statist alternatives.

It is a firm consensus that the National Health Service is inviolate. Yet it is a monster that devours ministers and billions. There are many options for change. One is to switch to health insurance – it could be obligatory, like car insurance, but premiums would be behaviour-related and responsive, and those who couldn’t afford them would be helped. There could be degrees of cover; a market would evolve and better and more efficient healthcare provided.

Most families in Britain are apprehensive about the inadequacies of their schools, which leave millions unable to read and write. It would be perfectly easy to create a true education market by converting every local education authority school into a trust or charity – or even a company.

Parents could be given vouchers to redeem at any school of their choice. Breaking up conscripted schooling and giving parents and pupils the power to choose could be a highly popular policy – as potent a vote winner as council house sales.

Most people assume those provisions titled “social security” are a natural role for the state. I disagree. Private provision of “welfare” could be far more benevolent than our present regime. Membership-based friendly societies could be far more effective. An active friendly society would really work at finding their members jobs and provide them with assistance in times of need. The government may retain a role in funding welfare services but need not provide them. Market liberals are far more optimistic about the philanthropic and benign potential of human nature than are socialists.

Similar arguments apply to pension provision. The state may assist through tax relief or other measures but the government should simply not be in the pension business. Individuals and families are far more prudent than the dreadful chain-letter system that is national insurance.

Taxes should be lower, based on a flat rate (rather than the current sharply graduated rates) and simple; the tax return should be the size of a postcard. Prisons should be entirely run by the private sector, which would be paid for reducing recidivism. The environment is best protected when in private hands so the Forestry Commission and redundant military lands should be sold.

The European Union has some tiny credentials as a liberalising force but it has decayed into a primarily protectionist and sclerotic lump. The preponderant liberal view is Britain should withdraw. Unilateral free trade with the world is a good rallying call.

There are several areas where our socialist heritage goes entirely unchallenged. Do we really need a central bank? Money could be supplied in the marketplace, as it used to be. One theme where free-market thought is all but frozen out is planning, which blights our towns and rural areas. The 1947 Town and Country Planning Act was a high water mark of socialism. It is time we relaxed local authority bossiness.

For 40 years after the Second World War politicians did as their civil servants advised. The man in Whitehall supposedly knew best. Now thinking has moved on. The real question is: does the state do anything well? Harris would not have been astonished at the ineptitude of the Home Office – more perplexed at the acute conservatism of our political leaders and their residual faith in regulations and ever more bureaucracy.

John Blundell is Director General of the Institute of Economic Affairs