David Gauke: Johnson’s health and social care plan. A betrayal of Conservative principles? No – because, at one level, there aren’t any.

13 Sep

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire in the 2019 general election.

The Government’s plan for increases in National Insurance (NI) contributions to fund higher health spending and increased health spending has provoked a furious response from some on the right.

It “sounded the death knell to Conservatism” and drove “a coach and horses not only through the Tory Party manifesto, but Toryism itself”  according to Camilla Tominey in the Daily Telegraph.  In the same paper, Allister Heath fumed “shame on Boris Johnson, and shame on the Conservative Party…they have disgraced themselves, lied to their voters, repudiated their principles and treated millions of their supporters with utter contempt” and that “an entire intellectual tradition now lies trashed”.

In the Times, Iain Martin declared that “at this rate, the Conservative Party might as well rename itself the Labour Party”  and in the Spectator, Fraser Nelson questioned whether the “Boris Johnson” definition of conservatism as “a protection racket, where the tools of the state are used to extract money from minimum-wage workers and pass it on to the better-off?”

Meanwhile, Dominic Cummings has argued that “if you think you’re ‘conservative’, and you give those speeches about ‘enterprise’ and ‘responsibility’, why would you support making many more dependent on state money and bureaucracy?”

It’s all jolly strong stuff. And there are elements of the criticisms with which I have sympathy. I share the scepticism about prioritising a tax-funded social care cap, in that those who will gain most are those who have the most (thanks to rising house prices) and that is the wrong priority for public money.

There is a need for risk-pooling, but I think Peter Lilley’s proposal on this site is worth close examination (I suggested something similar when in Government). I also dislike NI as the choice of tax because of the narrowness of its base – and the distortions that this causes – and the dishonesty of employers NICs (no, Prime Minister, it is not a tax on business: it is a tax on jobs and employees’ wages).

In fairness to the Government, raising taxes is difficult, NI is less unpopular than income tax (largely because much of the public misunderstand it) and, being cynical, it is not surprising that Ministers exploit that misunderstanding.

Having said all that, is it a fair criticism to state that Johnson’s Health and Social Care plan undermines everything for which the Conservative Party stands? For a number of reasons (some of which reflect better on the Party than others), I think not.

First, the Conservative Party has an honourable record of fiscal responsibility. When the public finances are in trouble, Conservative governments have been willing to raise taxes in order to put the public finances on a sound footing – not least Margaret Thatcher’s, when Geoffrey Howe raised taxes in 1979 and 1981. The advocates of Reaganomics always find this disappointing, but responsible Conservatives do not believe that lower taxes will pay for themselves (as they did not for Reagan).

In reality, even putting aside any new commitments on social care spending, the prospects for the public finances are not great. Not only do we face some immediate challenges (Covid catch up, net zero and levelling up), but demography and rising health expectations will mean a tax-funded healthcare system will require higher taxes.

Some on the Right will argue for further cuts in spending or an alternative health model, but the political feasibility of such an approach is highly dubious. If we are going to spend more (and we are), taxes will need to rise to pay for it.

Second, the idea that a Conservative government prioritising homeowners is a complete break from the past does not bear scrutiny. Look at the arguments that Thatcher made in resisting the removal of mortgage interest tax relief (although the Treasury rightly prevailed in the end), or the general dislike of inheritance tax from the wider Conservative world. The reaction to Theresa May’s social care policy in 2017 suggests that the instinct to ‘defend our people’ (and their inheritances) amongst Conservatives is a formidable one.

Third, complaints about the Conservative Party not being the party of business are (how can I put this?) a little rich from some quarters. Imposing higher taxes, whether on employment or profits, is not great for business – but making it substantially harder to trade with our largest trading partner is a bigger problem.

It is all very well complaining about the anti-business instincts of this Conservative government, but hard to do if you have been a cheerleader for anti-business policies or, for that matter, Boris “f*** business” Johnson. If your expectation is that the Conservative Party would automatically be on the pro-business side of the argument, you have not been paying much attention in recent years.

The reason why the Conservative Party moved in the direction of an anti-business Brexit is that was where the votes were. And this brings me to the fourth and most important observation about the Conservative Party.

It has one purpose: to be in power. At one level, it is not possible for it to repudiate its principles because it does not have any. This can give it a tremendous advantage in a democracy because the public, as a whole, does not have political principles either – opinions and political alignments shift over time.

The Conservatives have been protectionists and free traders, the party of Empire and the party that facilitated the retreat from Empire, Keynesians and monetarists, the party of price controls and wages policies and the party of market economics, the party of Europe and the party of Brexit. It never stays on the wrong side of public opinion for long.

What is happening to our politics at the moment is that party support is realigning along cultural lines and, as a consequence, much more along generational lines. This has worked to the advantage of the Conservatives, so it is no surprise that it pursues policies that prioritises health spending over lower taxes for people of working age.

Polling suggests that the new, Red Wall voters who switched to the Conservatives at the last election are notably more left-wing on economic issues than traditional Conservative voters who are, in turn, to the left of Conservative MPs. The decision was made to pursue those voters and, if the Conservative Party wants to keep them, it cannot risk the NHS collapsing under financial pressure – which means higher spending and, ultimately, higher taxes.

Johnson’s critics are right to think that this will not be the end of it. Last week’s package was supposed to be an answer to how we fund social care. The reality is that it was a package to boost spending on the NHS. As Damian Green has argued on ConHome, it is hard to see how resources will be taken out of the NHS and switched to social care in three years’ time – and that, at that point, some expensive social care commitments will come into effect.

here will another funding gap and, on the basis of last week’s revealed preference, a further increase in the Health and Social Care Levy. Those who see the purpose of the Conservative Party as delivering low taxes are right to be glum.

Richard Holden: Presence matters

3 Aug

Richard Holden is MP for North West Durham.

The Quebec Tea Rooms, Quebec, Co. Durham

Every MP’s office has them – numbering from a few dozen to a couple of hundred: they are ‘the regulars.’ Mrs B is one of them. In the 20 months or so since I’ve been elected, she’s been in contact more than 20 times. However, despite her regular emails about a diverse range of issues, both local and national, we’ve never actually met – until now.

She is one of four local people who pop down to the Quebec Tearooms for a chat. The “QT” as the locals call it is a lovely café and gift shop in the middle of a terrace in one of the hamlets that dot the Wear Valley, the central rural band of villages that separate the town of Consett in the north of my constituency, from the smaller towns of Crook and Willington in the south. Today, the QT is the 23rd stop out of 60 or so on my two-week summer surgery constituency tour.

Interacting by email, letter, or even telephone and zoom feels impersonal and remote. Sitting with someone in the flesh is different. It takes the edge off, and those small elements that remind both constituent and MP that the other person is human. The last few days have re-enforced to me just how important those chats and conversations in person are.

Last week also saw Kwasi Kwarteng visit The Grey Horse pub and the Consett Ale Works brewery attached to it in Consett. For constituencies ‘out of the way’ like mine – a four and a half drive from Westminster on a clear run – these visits by Ministers really cut through. If you feel that for decades you’ve been ‘ignored’, and then having someone visit, talk to you, and listen, it really makes a difference. They also show that your MP can get a hearing at the top table in Westminster.

For 2019 intake MPs, being in Parliament itself has been a bizarre experience. Those chats with ministers in corridors, the Commons tearoom, or the voting lobby have been far fewer. The place has been a shadow of the parliaments that those elected in previous years have known. Without a doubt that has not helped the collegiate interaction which makes you feel part of a team with a common goal.

Much less commented on has been the fact that the coronavirus restrictions have also reduced the presence of staff in Parliament. I didn’t meet my office manager in person for four months after their appointment, and not being in the same place as your team means things take longer, and you don’t develop that almost sixth sense of understanding and interaction that oils the wheels of any office.

Moreover, the relationships built up between staff from different MPs offices – where they share tips, information, and knowledge – have also been curtailed. The ebb and flow of conversation does not happen via a relatively formalised setting on zoom as it does in the lunch que or while sharing a coffee or a pint.

The return of Parliament in September will remove much of this sub-optimal working. I hope that other workplaces follow suit too, because one thing is clear from Covid: presence matters. While experienced staff can usually work quite well from distance – fulfilling tasks that have been performed before and managing clear objectives and workloads – that’s often not the same for people starting out. Learning and development for young staff best takes place when they’re cheek-by-jowl with more senior members of the team.

With so many people likely to be changing jobs too – given that the pandemic has turbo-charged long-standing economic trends away from certain sectors – being in the ‘new job’, with all the pressures and differences that entails, presence will matter too. Parliament has finally given a clear signal of its direction of travel. Government and the civil service should do the same and expect business to follow.

If not, we’ll all be poorer, but the impact will be felt most by those who’ve already been impacted most by the Covid-19 restrictions – those just starting out. Rather than retreat to the comfort and convenience of video calls from spare bedrooms in nice houses, the senior managers from our civil services to our businesses need to give get back to the workplace. The next generation need to be able to learn as much as possible from the experience of others and that’s done best when they’re in the same room.

James Frayne: Why businesses act woke and what to do about it

22 Jun

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

Those that lean right find can’t understand why businesses decide to pull advertising from mainstream news outlets such as GB News or the Daily Mail – nor why they seem so prone to trash conservative attitudes online.

Right-leaning voters wonder why businesses treat ordinary right-leaning people like dangerous lunatics, when many of their own customers must be aligned to such views.

And why they are so easily pressured from outside – particularly by manifestly ideological campaigns who exist to pursue political ends? As someone who spends most of my time in the commercial world, here are a few thoughts to try to bring some sense to these fundamental questions.

1. Marketing teams control firms’ reputations, not the board (and not public affairs teams). The single most important thing for right-leaning outsiders to understand is this: boards don’t control most of a firm’s political comment, even on the most sensitive cultural issues – indeed, particularly not on the most sensitive issues.

While they might reluctantly exert control when it hits the fan, boards generally stay out of politics, preferring to let marketing teams control political comment. Boards devolve in this way because they’re persuaded that political / cultural issues fall under “corporate purpose” or “brand positioning”; they are further persuaded marketing teams know best how to engage with the public, particularly online.

Public Affairs’ teams have a decisive say on day-to-day political or Parliamentary issues – where issues are discussed within a formal framework – but less so on those sensitive cultural conversations that might not have a clear beginning or end (such as identity, the environment, and so on).

2. Most marketing teams aren’t political and don’t know their customers’ politics. Problems for boards arise because marketing teams don’t come from a political background. While recruitment between political campaigns and corporate public affairs teams (who are usually very politically sophisticated) is common, it’s unheard of between political campaigns and marketing teams.

Most marketing teams know little of Governments’ departmental agenda, and very little about how complex political / cultural issues are likely to develop. The prospect of mistakes are therefore high.

Take Net Zero as an example: many businesses have thrown themselves into an outrageously fraught and complex debate with next to no understanding of how the issue is going to play out politically (many, many businesses are going to come a cropper on this issue in the next decade). Many marketing teams know little about their customers’ approach to politics either. They usually know everything about their customers’ finances, lifestyle and shopping habits but their research rarely extends into political values or ideology. Again, this means mistakes can happen.

3. Businesses mistake social media for public opinion. In politics, it’s become a cliche to note that social media opinion isn’t public opinion; in the corporate world, this isn’t even near to becoming a cliche; people treat the two are one and the same.

This means when businesses are exposed to political comment online, they assume it’s an accurate reflection of where their customers and the wider public stand.

This ought to be corrected by reading opinion research but, because most marketing teams aren’t across political numbers, they can’t discern between a fringe campaign and a national movement.

4. Most corporate executives lean left culturally. Most businesspeople aren’t personally very political; this is true of people on boards, as well as in the marketing teams. To the extent they are, as middle class graduates who tend to live or work in and around big cities, they tend to be “liberal” in the American sense of the term.

While most executives wouldn’t seek out a row with conservatives in their business life, their liberal leaning means they’re more likely to think culturally very left-wing opinion as ordinary, mainstream opinion. This again means that their compass can be unreliable when judging external commentary on outlets like GB News, or on various sensitive political and cultural issues.

5. Boards almost always want to avoid combat. During the very early days of the EU referendum campaign, under Dominic Cummings’ encouragement, Vote Leave was eye-wateringly aggressive – to the point of near-embarrassment – towards the CBI. Why? Because Cummings judged that the CBI was ultimately frightened of combat and it was worth Vote Leave looking a bit daft if the CBI got the message they should stay quiet-ish.

Similarly, most leading businesspeople want to avoid combat; they want to sell goods, make money and take a decent salary; they don’t want rows or political attention.

Usually, therefore, if / when boards do actually sign off a political decision that might be driven by the marketing team, they will do so for a quiet life – judging that such a path is the one of least resistance. This is why pushbacks often lead to U-turns – because businesses conclude that their chosen path wasn’t the quiet one at all. It means that pressure works.

6. Businesses aren’t generally enemies of the right, they’re just dysfunctional like everyone else. The hostile commentary on supposedly woke businesses is therefore mostly overdone.

Of course, some businesses generally have gone woke and are led so from the top. Most, however, bump up against the right because of structural and cultural failings internally.

They take anti-conservative positions because they aren’t able to think politics through properly. This is encouraging; it means there is usually a pathway for the centre-right to have a more constructive relationship.

7. Harsh counter-attacks work – but primarily from the mainstream. As we saw this week, harsh counter-attacks in the media and on social media make a big difference quickly. Many businesses correct course when exposed to reputational risk from the other side.

But while assertive online campaign movements to challenge hard-left boycott campaigns can be useful, right-leaning people should not rely on such movements to secure serious long-term change. What makes businesses reverse course is not being attacked from the right, or merely the fact of negative coverage in the media and online.

Rather, it’s being exposed to allegations – by people who are manifestly mainstream and powerful – of being outside the mainstream or being hostile to it. They hate to be considered on the ideological fringes. As such, by far the most persuasive and powerful course corrections are set via criticism from Government Ministers, MPs and activists and others from the “established order”. Aggressive third party campaigns can’t match this power.

8. Conservative MPs must lead the campaign on corporate wokedom. What does all this mean? Ultimately, that Conservative MPs should come together to challenge corporate wokedom where it appears.

They should not necessarily campaign via the official party – and ideally they should do so in conjunction with other MPs and mainstream voices – but they should do so in an organised fashion.

To businesspeople, while Conservative MPs aren’t their cup of tea, they know Conservative MPs manifestly speak for the English majority; they have the stamp of respectability by being elected officials; they are treated seriously and with some respect by the media; and they have reach and influence. Conservative MPs are the only ones that can really, consistently make businesses think.

George Freeman: This new report shows how we can build on Britain’s vaccine success to make the best of Brexit

16 Jun

George Freeman is a former Minister for Life Science and Chair of the Prime Minister’s Policy Board (2016-18). He is co-author and editor of the 2020 Conservatives book Britain Beyond Brexit.

Nothing better illustrates the advantages of being outside the EU than the UK’s vaccine success. Our leadership in genomics, vaccine research and development, accelerated access trials and our ability to procure at speed has allowed the UK to lead the world in the battle against the pandemic. This has been a London 2012 moment for UK Life Science.

But it could have been very different. In 2010, the UK Life Science sector was in a decline: Pfizer closed its UK R+D HQ, Astra Zeneca announced it was closing its UK R+D HQ to move to Massachusetts, and other companies were reducing their UK presence.

The UK was falling behind as a global destination of choice. The combination of slower and more expensive clinical trials, slow NHS procurement, lack of leadership in genomics and clinical informatics (data on how new drugs work in patients) set alarm bells ringing.

The new Government responded. Having just been elected after a career in the biomedical research sector, I was lucky enough to be appointed Government Life Science Adviser to lead the UK Life Science Strategy.

We appointed Sir John Bell, launched a ground-breaking ten-year strategic commitment to lead in the genomics and clinical informatics so key to modern research. We unveiled Genomics England, NHS Digital and MHRA parallel approvals. I also launched the Biomedical Catalyst, Accelerated Access Reform to NHS procurement, the Early Access to Innovative Medicines Scheme and the UK Life Science Investment Office. We worked with AZ to persuade them to move to Cambridge UK, not Cambridge Massachusetts.

Over the next five years we pulled in over £5 billion of inward investment. It’s a model of what we can do in other sectors.

Boris Johnson gets this. That’s why I was delighted to accept the Prime Minister’s invitation to help lead the new Taskforce for Innovation, Growth and Regulatory Reform (TIGRR) with Iain Duncan Smith and Theresa Villiers. We came from opposite sides of the Brexit debate – two of us having supported Leave and one Remain – but with a shared determination to make this a moment of profound renewal. The urgency of the post-Covid recovery makes this more essential than ever. Our TIGRR report published today shows how the UK can deliver on the promises of Brexit without abandoning our high standards.

We are living through an extraordinary period of technological change – not just in life science but in host of sectors: from AI to robotics to agri-tech, nutraceuticals, nanotechnology, synthetic biology, biofuels, satellites and fusion energy.

The UK is indeed a ‘science superpower’. But we have traditionally been woeful at commercialising here in the UK. There are many reasons. But, in recent years, the EU’s increasingly slow, bureaucratic and ‘precautionary’ approach – copied in Whitehall – has made the EU and the UK an increasingly poor place to commercialise new technology.

In 2013 BASF, one of the giants of German industry, moved its crop science division to the USA because of EU regulations preventing agricultural genomics which are the key to reducing chemical farming by promoting naturally occurring disease resistant traits. That’s why I wrote the Fresh Start Report in 2014 urging the EU to reform to avoid regulating the UK into the slow lane of global bioscience. And why, as UK Minister for the sector, I pushed for reform and warned the EU that they risked the UK leaving if they didn’t reform. They didn’t. We did.

For years the Brexo-sceptics have cynically sneered that there is no Brexit dividend. There is.

We need urgently to usher in a new era of ‘smart’ regulation. That means ensuring that Britain is once again a global leader not just in science but in commercialisation of innovation. We can do that by harnessing the City to make the UK a global innovation financing capital of the world, and through our trade and aid policies to boost global exports and technology transfer. Now those decisions are back in our hands. Our critics assert that the only regulatory dividend is in abolishing workers’ rights and environmental standards in a ‘race to the bottom’. They are profoundly wrong.

Of course, there are some daft regulations we can get rid of like the EU ban on the blight-resistant potato. In fact, the blight-resistant potato reduces the need for around 14 applications of toxic (and highly carbon intensive) fungicide and could help avoid famine and starvation. We can also do without the lobbyists dominating Brussels corridors for big corporates and promoting regulations which exclude new entrants.

Successive governments have announced ‘bonfires of red tape’. But no one would want a vaccine that hadn’t been tested properly. Or food with E. coli. Or dangerous workplaces with high rates of injury.

The key to smart regulation is to play to our strengths. We must embrace global leadership in smart, agile regulation in the highest growing sectors of tomorrow. Around the world, the UK is still highly trusted as a regulator of choice. We have a chance to build on that.

The TIGGR report published today sets out three big recommendations for post-Brexit regulation.

First, a coherent strategic framework for UK regulatory leadership in an innovation age.

Second, ten high-growth sectors we could unlock NOW with the right regulatory structure and where we must focus our efforts for post-Covid Recovery.

Third, a strong commitment to delivery and proper accountability to Parliament. Taking back control means WE set our regulations in a way that reflects UK values and UK public opinion.

Over the course of the last six months, we have held 75 industry roundtables. The result is a serious plan that ensures we become a pioneer of smart, innovative regulation. Not by abandoning our standards but by improving them. The TIGRR report today shows how it can be done.

New event: ‘Back to Business – reopening international travel’, with Grant Shapps

15 Apr

We are very pleased to invite you to ConservativeHome’s next live online event, in which our special guest Grant Shapps, Secretary of State for Transport, will be joined by a distinguished panel for this timely discussion.

Following the recent publication of the Global Travel Taskforce report, there are a host of crucial questions to explore, from the return of tourism and business travel, to the reunification of families separated by the pandemic.

When and how can international travel reopen? What approach offers the best route to do so safely, promptly, and to the greatest benefit for passengers and the wider economy? After a year of unprecedented disruption, how soon will things return to normal, and what will normal look like?

In this event, hosted in partnership with Airlines UK, the Secretary of State will be joined by:

Keith Glatz, Vice-President of Airlines for America and
David Evans, Group CEO of Collinson Group, the UK’s leading provider of Covid-19 travel testing.

The event will be broadcast live via Zoom at 7pm on Tuesday 20th April.

As ever, there will be the chance for the audience to put your questions to the panel.

Click here to register for your free ticket.

Alan Mak: A week on from the Budget, it’s clear that it will boost innovation and productivity

10 Mar

Alan Mak is Vice Chairman of the Conservative Party, Co-Chairman of the Party’s Policy Board and MP for Havant

The pandemic has had a significant impact on the British economy. Over 700,000 people have tragically lost their jobs and the economy has shrunk by 10 per cent – the largest fall on record. And the impact could have been far worse had it not been for the Chancellor’s support schemes that have protected jobs and livelihoods throughout, from the furlough scheme to billions paid out in business grants and loans.

Last week’s Budget needed to continue this support for the economy in the short term. But crucially, it also needed to lay the foundations for building the economy of the future. What this country needs – and what Conservatives can wholeheartedly champion – is a robustly pro-growth, pro-enterprise and pro-innovation economy to turbo-charge our exit from the pandemic and help Britain lead the Fourth Industrial Revolution, all while remaining internationally competitive.

Last Wednesday, the Chancellor delivered, with a series of policies that will ensure technology and innovation are at the forefront of our economy. ConservativeHome readers agreed, overwhelmingly backing the Budget with 58 per cent saying it was “good” or “very good” in this site’s latest survey, as did voters polled by YouGov.

Last July, I proposed an IT scrappage & upgrade scheme to equip our promising start-ups, SMEs and scale-ups of tomorrow with better software and technology, in order to enhance productivity which has historically lagged behind our competitors. For years, governments have needed to target the least productive SMEs which have invested insufficiently in the latest software, automation or information technology. And too often, our brilliant small firms don’t have the time or resources to get the extra skills or technology tools they need to be more productive.

That’s why I warmly welcome the Chancellor’s two new Help to Grow schemes, specifically aimed at boosting the productivity of our small businesses. Help to Grow Management will help SMEs get world-class management training through government-funded programmes delivered through British business schools, with businesses contributing just £750 or 10 per cent of the cost of the course.

And Help to Grow Digital will level up the digital skills of our small businesses with vouchers entitling them to 50 per cent off the purchase of new productivity-enhancing software, up to a total of £5,000 each. Both these schemes are exactly what’s needed to tackle the UK’s longstanding productivity challenge, while laying strong foundations for the pro-growth future economy we all want to see.

The Budget went further by delivering other measures which high-growth, innovative companies should welcome. These businesses account for just one per cent of companies in the UK, but generate an amazing 80 per cent of our employment growth.

That’s why consultations to find ways to improve our research and development regime and reform the Enterprise Management Incentive scheme to support growing companies retain talent, are encouraging. Furthermore, ensuring firms have sufficient access to capital is vital, which is why the new Future Fund Breakthrough initiative, successor to the Future Fund, is welcome support for innovative tech businesses to access finance, match-funded by Government.

As the first MP of British-Chinese heritage, I also believe a global outlook and attracting world-class talent to the UK is pivotal to our future economic success. That’s why visa reforms aimed at making it easier for highly-skilled people to come to Britain are especially welcome. These include a new unsponsored points-based visa, and new simplified processes for scale-up founders and entrepreneurs.

These Budget measures to support our businesses and turbocharge our future economic growth build on the Treasury’s other impressive pandemic support schemes, such as extensions to the furlough scheme; temporary VAT cuts and business rates relief; two more self-employment grants; new recovery loans to help businesses access finance; and Restart grants of up to £18,000 for businesses who have been particularly hard hit. Overall, that’s over £400 billion of support this year and next to protect our economy.

I also welcomed the Chancellor’s frankness about the need to begin repairing our public finances. We cannot maintain the current levels of borrowing and debt and expect to be able to respond with another £400 billion when the next crisis hits. And as Conservatives, we believe in sound money and keeping our borrowing under control hence the Chancellor also explained why corporation tax is scheduled to rise for the biggest, most profitable businesses in two years’ time.

The unprecedented ‘Super Deduction’ policy to encourage companies to invest in capital assets such as new machinery – an effective tax cut worth around £25 billion – will also be key to incentivising our SMEs to adopt the latest productivity-enhancing technology. Last year I wrote about the dampening effect on capital expenditure (capex) and investment caused by Coronavirus already being large and destructive. The Bank of England predicted a 26 per cent drop in business investment for 2020. In 2009, as the financial crisis erupted, the fall was 16 per cent by comparison. The Super Deduction can help reverse the damage to our country’s technology base.

What we needed to hear from the Chancellor was a mixture of realism about keeping the economy going now, plus a dose of optimism for the future, by laying the groundwork for British businesses to lead the Fourth Industrial Revolution. We received both, building strong foundations for Britain’s growth and recovery.

Richard Holden: We shouldn’t try to win a spending arms race with Labour in this Budget – which we would lose anyway

1 Mar

Fight Fitness Guru, Consett, Co. Durham

During the last fortnight, the white wasteland of frozen fields has given way to the flora of spring in County Durham.  The thaw in the land of the Prince Bishops is being met with a broader feeling in the towns and villages that spring is on the way.  With 20,000,000 vaccinations done and accelerating, as well as the Prime Minister’s roadmap providing clarity for the future, there is a real feeling that the tide is turning.

This week’s Budget must be another step along that road.  However, with so many competing concerns it will be a difficult balance to strike.  To get it right, it’s going to be essential to zoom out and look to where we want to be in a few years’ time.

Our economy has taken a pounding because of Covid-19.  Three hundred billion pounds in extra spending and support, paying people’s wages through furlough and supporting jobs and businesses has been provided.

Three hundred billion pounds extra: that is wartime levels of additional expenditure. For context, it is more than twice the size of the NHS budget annually. It’s an extra £4,500 for every man woman and child in the UK, or about £12,000 for every income-taxpayer in extra spending: money that’s had to be borrowed.

The support has been colossal and necessary. It has protected businesses and jobs and crucially will enable our economy to bounce back as quickly as it can. But this backing wouldn’t have been possible if the Government hadn’t taken the necessary decisions to keep spending under control during the last few years.

Colloquially, this point is made frequently by my constituents, along the lines of: “I’m glad it was you lot in and not Labour. If they’d been in ,God knows what would have happened.”

Which takes me to the political.  One of the biggest gateways to so-called “Blue Wall” voters switching from Labour to Conservative was Jeremy Corbyn. But this wasn’t just because of the terrorist sympathising and antisemitism. Or Keir Starmer’s policy of betraying democracy over Brexit. It was also because of Labour’s economic credibility.

People stopped listening to Labour’s promises when they became increasingly outlandish.  Remember them? Free broadband for all, give WASPI women £30,000 each, cancel student debt and make university education taxpayer-funded. The list went on – all with no plan to pay for it: it was fantasy economics that lacked basic credibility.

This is where we Conservatives now need to be careful, and why Rishi Sunak needs to tread a fine line. We cannot, nor should we wish to, win an arms race with Labour over who can spend more taxpayers’ cash.

We’ve not spent the long, hard yards of the last decade, undoing the catastrophic position Labour left in 2010, to let that credibility go. The reason we’ve been able to support the country through the global pandemic is because we’d had credible spending plans for the last decade. The reason Labour couldn’t win in 2010 is because Labour believed its own hubris about having ‘abolished boom and bust’ and, to nab a much-loved phrase from George Osborne, “failed to fix the roof while the sun was shining.” And the result was the famous note from Liam Byrne, then Chief Secretary to the Treasury: “there is no money left.”

Given such an analysis of where we are, then: what’s next? The budget must focus on three things:

  • Recovery. Allowing the country, especially our hardest hit sectors to bounce back from Covid – and in doing so avoid a massive spike in unemployment.  This week, I led 68 Conservative backbenchers in writing to the Chancellor about support for pubs (massive employers of young people) via keeping beer duty down. It’s vital that he also allows our high streets breathing space regarding business rates. And for families in constituencies like mine, where for so many a car is essential, fuel duty rises, which Conservatives have found hard against for a decade, need to be avoided.
  • Delivery. Keep building towards our key manifesto commitments on public services: more police, more nurses, crucial infrastructure and deliver on the levelling up promise that was made.
  • Credibility. Long-term economic stability with borrowing under control to allow us to keep our debt – and crucially our debt interest payments – under control.  We can’t just hope that interest rates stay this low forever: they won’t. Only a balanced plan will allow the Government the space to deliver on the first two objectives of recovery and delivery.

It’s a tall order, and the Chancellor needs to be clear, honest, and fair in what he spells out. Those who’ve profited during the pandemic and those with the broadest shoulders should take the lion’s share of slack as we now deal with the consequences of it.

As for Keir “Goldilocks” Starmer – naturally, nothing will be ‘just right’.  But he won’t come up with any other real proposals, either. He’s opposed to anything that will raise revenue, but Labour MPs will doubtless demand more spending.  The party is all over the place, with a front bench hopelessly out of its depth, and a broader one so divided as to the way forward that it’s hardly a surprise Sir Keir is unable to get them to agree on anything but to abstain.

So Labour’s economic credibility will remain in tatters. We need ours to remain strong.

This spring in North West Durham and across the “blue wall”, let’s ensure that the growth we see is built to last. Unsustainable borrowing might be Labour’s answer, but it can’t be ours. Without doubt, at some point, winter will come again.

And when it does, we’ll need to respond to it from a position of strength with flexibility – as we have this time.  The electorate will not forgive us is we don’t ensure long-term credibility. Without it we put both a sustainable recovery from the global Coronavirus pandemic and delivery of our manifesto in jeopardy.

Perhaps the simplest way of putting it on the Budget is: it’s all about economic credibility, stupid. Because come 2024, it certainly will be.