He wrote a blog post back in 2007 on What's Wrong With Penal Substitution? While McGrath is a Christian believer, he is not an evangelical. He recognizes the problems with the Penal Substitutionary Theory (PST) of the atonement. He writes: I abandoned the penal substitutionary view of the atonement while I was an undergraduate student at an Evangelical Bible college in the UK, in spite of it being the view of the professor who taught Christian doctrines. McGrath does not believe that the PST is the teaching of the NT nor did the doctrine have a place in the teaching of Jesus. He argues:
Much early Christian literature is focused on the cross. It is worth noting, however, that very little that Jesus says, and certainly little or nothing that can confidently be regarded as authentically going back to Jesus himself, focuses on the cross. This is easily explicable: the earliest Christians in the post-Easter were persuaded that Jesus was indeed the Messiah, and were persuaded that his death could not have been unforeseen but must have been foreordained. And so, beginning with Moses, they went back and made sense of what had happened with the help of Scripture. Probably even more helpful than "Moses" was 4 Maccabees 6, which presents a martyr praying "Be merciful to your people, and let our punishment suffice for them. Make my blood their purification, and take my life in exchange for theirs" (4 Macc. 6:28-29). Clearly there were ideas that existed in the Judaism of the time that helped make sense of the death of the righteous in terms of atonement.
Yet the New Testament does not use the language of punishment and exchange in the way 4 Maccabees (which was written after the early Christians had already interpreted the death of Jesus in atoning, sacrificial terms) does. Paul can talk about sacrifice (and discussing what sacrifice meant in the Judaism of this time would be a subject of its own), but he prefers to use the language of participation. One died for all, so that all died (2 Corinthians 5:14). This is not only different from substitution, it is the opposite of it. Jesus is here understood not to prevent our death but to bring it about! This fits neatly within his understanding of there being two ages, with Christ having died to one and entered the resurrection age, and with Christians through their connection to him having already died to the present age and thus made able to live free from its dominion.
I personally disagree with McGrath as I think one can find the essential teaching behind the PST in the NT. I believe, Leon Morris, for example, makes a strong exegetical case for penal substitution in The Apostolic Preaching of the Cross. But I also recognize that other models of the atonement can be found in the NT and certainly, the participation model, which McGrath holds is one of them.
McGrath has two problems with the PST as it is popularly taught. He writes:
One is Biblical, the other is moral. First, the Bible regularly depicts God as forgiving people. If there is anything that God does consistently throughout the Bible, it is forgive. To suggest that God cannot forgive because, having said that sin would be punished, he has no choice but to punish someone, makes sense only if one has never read the penitential psalms, nor the story of Jonah. The penal substitution view of atonement takes the metaphor of sin as debt and literalizes it to the extent that one's actions are viewed in terms of accounting rather than relationship. It is not surprising this is popular: in our time, debts are impersonal and most people have them, and it is easier to think of slates being wiped clean and books being balanced than a need for reconciliation. But the latter is the core element if one thinks of God in personal terms. And for God to forgive, all that the Bible suggests that God has to do is forgive.
I agree that there are portions of the Bible where God's forgiveness seems to come without any prior punishment or sacrifice. In addition to the OT passages to which McGrath refers, there is also the teaching of Jesus himself in which he forgives based on repentance and faith and without any mention of a sacrifice or an atonement. For example, see Luke 5:20 and 7:44-48. However, there are also portions, large portions in the epistles, which base forgiveness squarely on the fact that Jesus died for sins and his blood was a propitiation to God thus allowing him to forgive (for example, see Rom. 3:21-26; Eph. 1:7; 1 Pet. 2:24; 1 John 2:2). One could try to harmonize these two teachings by saying that the forgiveness that appears to be unconditional actually presupposes the atonement that Christ would make. Or, one could hold as I do that there are contradictory and conflicting teachings in the Bible. Regardless, it is my contention that the idea of penal substitution can definitely be seen in certain parts of the Bible.
Now to where I agree with McGrath. He writes:
The moral issue with penal substitution is closely connected with the points just mentioned. Despite the popularity of this image, to depict God as a judge who lets a criminal go free because he has punished someone else in their place is to depict God as unjust.
The heart of the matter is that there is a stream of Christianity that soothes the conscience of Christians about the misdeeds they do by claiming that (1) God is the only one whose forgiveness matters, and (2) this forgiveness is already available and can wipe away your debt through a miracle of divine bookkeeping. All sense that anyone is harmed by what one does (whether God or other human beings), and that that is what matters, disappears from view entirely (cp. Job 35). Again, I can understand the popularity of this view. But it isn't popular because it is Biblical, neither is it popular because it is self-evidently true. It is popular because it makes people feel good about themselves (emphasis added) in spite of their not following the challenging parts of the Bible that have to do with how we relate to others. I say this as someone who used to hold this view, and so in my discussion of psychological motives for the popularity of this view, I am being first and foremost self-critical. Indeed, discovering that the Biblical view of sin and atonement is not that set forth in the penal substitutionary view was a key step in my ability to be self critical in precisely this way.
I agree that there is a psychological component that makes the doctrine of the PST attractive to people. Most people feel guilt when they do wrong. They sense intuitively that they should be punished for what they have done. When they are told that their sin is really against God, they feel that God has a right to punish them. To think that Jesus took that punishment as our substitute is very appealing. Now the punishment that we deserve does take place but we don't have to suffer it ourselves. The notion that the penalty for all of our wrongdoing has been paid and we are held guiltless is psychologically very satisfying. Its better even than thinking God just forgives without any punishment because we would still intuitively feel like we deserved to be punished. Something that is cheap or free is often not appreciated as much as something which costs a lot. When we are told that the Son of God loved us so much that he paid the penalty for our sin, we realize just how expensive our forgiveness really is. So, I think McGrath is right, the psychology behind the PST leads to its popularity and this fact helps to explain why Christianity, especially evangelical Christianity, has such a large following.