Letwin_lotrOliver Letwin is one of the most influential members of David Cameron’s team.  He was Mr Cameron’s biggest backer in the early days of his campaign and has been appointed to oversee the new leader’s policy process.  His Kyoto environmentalism and cautious approach to taxation have also been adopted by the new Tory leader.  When the Notting Hill set compared David Cameron to Frodo, Letwin was seen as a Gandalf figure – Middle Earth’s older and wiser statesman (picture and story from The New Statesman).

Oliver Letwin has travelled a long way since being one of the authors of the controversial poll tax (I mean community charge) – one of the most regressive forms of taxation ever introduced in modern Britain.  Mr Letwin’s journey has taken him from regressive taxation in the 1980s to redistribution today.

In an interview with The Telegraph Mr Letwin tells Rachel Sylvester: "Of course, inequality matters. Of course, it should be an aim to narrow the gap between rich and poor. . . not by trying to do down those with most but by enabling those who have least to share an increasing part of an enlarging cake."  Ms Sylvester is struck with Mr Letwin’s use of "the R-word": "It’s more than a matter of safety nets," he says, "We should redistribute money."

A Telegraph leader is unimpressed:

"In one sense, Mr Letwin is merely stating the obvious when he says "we do … and we should redistribute money". It is, however, a naive choice of word, with overtones of the belief that national wealth is a fixed and limited sum, to be divvied up "fairly" by the government… The way to demonstrate compassion, however, is not to echo the obsolete consensus that has delivered such tragedy. Britain has enjoyed redistribution on a vast scale since 1997, yet the degree of income inequality has remained unchanged. Unless radical reform is undertaken in the public services, more money and more people will be sucked out of the productive and into the unproductive sectors of the economy."

SmithadamAdam Smith – the intellectual father of capitalism – thought more like today’s Letwin, however.  In The Wealth of Nations, Smith said that a society’s idea of ‘life necessaries’ changed over time. Two centuries ago he wrote:

"By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them.”

Mr Letwin says that the Social Justice Policy Group, under the chairmanship of Iain Duncan Smith, has been charged with finding solutions to inequality.  He also tells The Telegraph that the pursuit of social justice "is not just about money… it is about the homes people live in, the lack of supportive relationships, the way parents bring up their children."

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