THE mood in Westminster has changed. Sir Mervyn King’s musing that economic recovery is slowly but surely underway has been labelled a potential game-changer in the run up to the general election. Commentators believe a slow recovery may be a trump card for the Tories. It will enable them to use either the 1932 election slogan “Don’t let Labour ruin it”, or else the 1992 warning of “Labour’s Tax Bombshell”. Buttressed with highlighted achievements in other areas, this could be a winning formula.
But I find this attitude infuriating. It is economically fatalistic, assuming we are doomed to much lower trend growth over the next five years and that nothing can be done to raise it. It’s also intellectually vacuous. Negative campaigning offers no marching tune people can respond to, nor any lasting solutions to future challenges.
In part, this is a hangover from the New Labour era. After winning elections in the 1980s primarily on economic issues, many Tories decided in the 2000s that the economics was settled, and that the party should make social policy issues (compassionate conservatives) and other areas such as green energy and international aid (modernisers) a core part of their strategy. In 2005, the Tories fought what Lord Saatchi describes as the “Basil Fawlty” election – “don’t mention the economy”.
The financial crisis and subsequent fiscal challenges changed everything, of course. But even now, many conservatives see economics as a secondary concern, in stark contrast to Margaret Thatcher’s governments. These people have moved seamlessly from saying “the economics is settled, let’s focus on social issues” pre-crisis to “in tough times, social issues are even more important” today.
Last week, for example, Michael Gove delivered an excellent Centre for Policy Studies Keith Joseph Memorial Lecture. His own work is celebrated by conservatives for the way in which he is freeing up schools. But his speech made a wider case for alleviating social deprivation through the state. This could have been delivered at any time prior to the crisis. It celebrated health spending, the pupil premium interventions and reforms to criminal justice. There was scant mention of economics.
Yet the economics are far from settled, and “tough times” are by no means baked in if proper reform is undertaken (not short-term housing stimulus). The problem is a lack of deep-thinking about what reform should entail. The economically liberal message: tackling vested interests from a pro-market, pro-competition perspective; reforming the tax code in a pro-growth way; delivering a new deal for small businesses and entrepreneurs; or radical financial reform, finds remarkably few voices.
It shouldn’t. “Compassionate” policies are only sustainable if the economy grows. Caring that works costs money. Economics is thus wrapped up with all the aspirations of the British people, yet the Tories seem reluctant to re-establish and re-iterate the economic principles which were so successful when the Tories won elections. Why? What could be more noble than setting the conditions for elevating the condition of the people?
Ryan Bourne is head of economic research at the Centre for Policy Studies.