Karen Bradley: The Government should think twice about privatising Channel 4

13 Jan

Karen Bradley is a former Secretary of State for Culture, Media and Sport, and is MP for Staffordshire Moorlands.

It may not be the highest-profile job in the cabinet but, in terms of the breadth of the issues it covers, Secretary of State for Digital, Culture, Media and Sport is one of the biggest.

From broadband to broadcasting, from print media to social media, from opera to football, from castles to libraries, DCMS has a role in some of the most important and life-enhancing elements of British life. Every incoming Secretary of State has to set their own priorities whilst also inheriting a huge set of pressing decisions from their predecessors. That was true for me when I was given the job in 2016, and it’s true for Nadine Dorries now.

One issue which was handed to me when I entered the department, and which has been left on Nadine’s plate too, is the future of Channel 4.

Then, as now, that was an open question, with privatisation a live option which I seriously considered. The case for privatisation of Channel 4 has been made repeatedly over the years, ever since its creation by Margaret Thatcher in 1982 as a publicly-owned but self-funding free-to-air public service broadcaster – a vital addition to the media landscape which has more than justified its existence over almost four decades.

It is a case that has to be listened to – and I did listen to it, as I know Nadine will. But in the end, I decided that while Channel 4 needed some quite significant changes to the way it was run, its ownership model was not part of the problem.

What is unique about Channel 4? Unlike other public service broadcasters such as the BBC, ITV and Channel 5, and unlike paid-for streaming services such as Netflix, Disney+ and Amazon Prime, Channel 4 produces none of its own programming: it is what is called a publisher-broadcaster.

This means that it relies more than anyone else on independent production companies for its content, therefore commissioning work from a wide range of UK businesses, large and small, and playing a crucial role in helping them get started and stay viable.

Indeed, around 15 independents a year get their first ever TV commission – their first break – from Channel 4. This makes Channel 4 perhaps the most important start-up incubator in the TV production industry.

That doesn’t mean that nothing ever needs to change. The media industry has always had a London-centric bias, and Channel 4 has been no exception. That’s why, along with deciding against privatisation, I encouraged Channel 4 to build a major presence outside London – and I’m delighted that its new Leeds HQ opened in September 2021.

Leeds represents not just a symbolic move, but a real shift in Channel 4’s focus, creating jobs and opportunities outside the capital and helping to make sure that a national broadcaster has a national mission that benefits the whole of the UK. Its new regional sales and creative hubs in Manchester, Glasgow and Bristol are making a major contribution to that too. Channel 4 has committed to commission at least 50 per cent of its content outside the M25 by 2023 – far more than the 35 per cent it is required to commission, and far further than any other public service broadcaster. That is levelling up in action.

I don’t believe that the move to Leeds – which Channel 4 initially resisted – could, or would, have happened under a private ownership model. I don’t believe that a private owner would freely choose to commission from as diverse a range of independents as Channel 4 does. The incentives for a new owner to move production – including out-of-London production that meets Channel 4’s Nations and Regions quota – to in-house studios, for the sake of economies of scale and rights retention, will be very strong, and I worry about the knock-on effect in terms of lost commissions for independents, especially small and regional ones.

Any conditions placed on a sale – such as a requirement to keep the HQ in Leeds, or imposing a higher regional quota on Channel 4 than on anyone else – would reduce the attractiveness and price to a potential buyer. A far simpler solution is to keep Channel 4 where it is.

As a Conservative, I have no instinctive preference for public ownership. However, when it comes to thinking about broadcasting and our world-leading creative industries as a whole, the Channel 4 ownership question has to be about the best way of supporting private enterprise and promoting Global Britain. It is also especially important to consider what is best for start-up companies in the TV and film production sector all around the UK. That was Margaret Thatcher’s vision, and I hope it will be Nadine Dorries’ vision too.

David Willetts: Is it too hard for Ministers to exercise power in modern Britain?

17 Dec

Lord Willetts is President of the Resolution Foundation. He is a former Minister for Universities and Science.

One of the most extraordinary features of the debate on Covid measures has been the interventions of Conservative MPs who think that we are on our way to a Soviet or Nazi state. There are legitimate arguments about balancing the costs of new measures with the benefits, but that is a far cry from authoritarianism.

A requirement to show you have been vaccinated or offer evidence of a recent negative test before entering a crowded place is not an over-mighty state. The price of liberty is indeed eternal vigilance, but this seems to be going rather over the top. A limit of £50 on the amount of money you could take abroad as part of post-War exchange controls until 1979 was a far more illiberal extension of the state.

Meanwhile, many ministers feel the very opposite – how hard it is to exercise power in modern Britain. They chafe particularly at the legal constraints on their actions as everything is now up for judicial review. Will the MPs who voted against the new controls because they extend the power of the state nevertheless vote to weaken judicial scrutiny of what governments do?

When I was working for Margaret Thatcher in the 1980s, the obstacles to her reforms were essentially organised opposition from trade unions, left wing local councils and then Jacques Delors and the European Commission.

Trade union power is much weakened –if anything today’s gig economy workers could do with innovations to strengthen their voice. Locall councils are not the force they were, and the Government is trying to give them a bigger role. And the Delors agenda of using majority-voting to impose European social regulations on us had been seen off long before Brexit.

Coming back into Government in 2010, I was struck by how the constraints on ministers had changed. Everything we did was susceptible to legal review and challenge in a way that had not applied during the 1980s. Many more decisions came with elaborate advice on legal pitfalls and constraints.

Sometimes the advice could be very cautious. David Cameron rightly said to Cabinet that we should not automatically be inhibited from acting because of the risk of legal challenge. We should be willing to go ahead and then see our judgements tested in the courts – if we lost, that was not to be seen as a political blow. He would rather that than our being reluctant to do anything because of the fear of legal challenge.

Moreover, sometimes these legal protections can serve Conservatives as much as socialists. It would be terrible if the cancel culture spread as far here as it has in the US. One reason I still hope it won’t is that there are more legal protections for workers here than in the US, so an employee can’t just be sacked because they get caught in a social media storm.

Judicial review is clearly more intrusive than it was a generation ago. It can be surprising, even, shocking when you find how far some lawyers want to go.

For example, I did my best to resolve a constituent’s complaint about child support but I failed to get the result he had hoped for. But what took me aback was then getting a letter from his lawyer saying that they wanted to take me to court for failing in my duty of care for my constituent. Nothing came of it – but still it was a reminder of how the legal environment was changing.

However, this is not something peculiar to politics. Boards of companies, trustees of charities and indeed even conventional media outlets are much more legally constrained than they were. Indeed, some of these intrusions have been led by politicians themselves, who are then surprised when they themselves are subject to similar constraints.

These constraints can be very tiresome when you are trying to get something done. And then the paranoia which can creep up on any busy and harassed Minister means you start thinking there is a deep-state trying to stop you doing anything. But it is not an organised conspiracy like that – it is the checks and balances which protect us in a liberal democracy.

Now ministers ought to be worried about another constraint. A strong majority and the belief that you will be around as a Government for a long time does give extra authority and capacity to do things.

But if your majority is falling, and people think you may not be around in a couple of years then authority drains away. One Cabinet minister said to me that he thought his officials were much more helpful when the Government had a healthy lead in the polls than when it was behind. He was too pessimistic, but perhaps sometimes advisers might go through the motions but don’t believe you will be around long enough to check what has been done. Then making things happen really would get hard.

Darren Henry: Driving new growth in the East Midlands

14 Dec

Darren Henry is MP for Broxtowe and Co-Chair of the Midlands Engine APPG.

At the last general election, I was proud to be elected on a manifesto that prioritised two of the biggest challenges facing the UK: tackling the climate crisis and delivering levelling up.

This transformative levelling up agenda sits at the heart of the Government’s ambitions, and stands to galvanise communities that have historically been under-represented and consistently underfunded. As Co-Chair of the Midlands Engine All-Party Parliamentary Group (APPG) I believe nowhere is more in need of this commitment than the Midlands, where 38 per cent of local authorities have been defined as category one: places with the highest levels of identified need for the Government’s Levelling Up Fund.

Levelling up must also actively enable regional collaboration to drive technological advancement and innovation in a range of sectors, by keeping top talent in the region and building on existing expertise.  This exists in our world-leading research institutions, our growing life-sciences and manufacturing sectors, and in our ability to develop and roll-out the technologies which will be key to our transition to a zero-carbon economy, with high-paid, high-skilled green jobs at its heart.

Hydrogen is central to this transition, with the Department for Business, Energy and Industrial Strategy (BEIS) forecasting a need for 5GW of  low carbon hydrogen production capacity by 2030. This represents a huge transformation to our energy system, with potentially staggering impacts for our transport sector, the way we heat our homes and power our heavy industry.

And it is not just the climate which stands to benefit from these plans – with Government funding into our hydrogen economy having the potential to unlock £90 billion of private investment and support 440,000 well-paid green jobs in 2030.

The Midlands is perfectly placed to support this target. We have a proud legacy of manufacturing, a history of automotive production, and are placed at the heart of UK freight and logistics.  This proximity to the aviation sector, combined with plans for the East Midlands Development Corporation and the Freeport at East Midlands Airport mean that, as the UK scales up its production of hydrogen, it will be met by demand for the applied technologies that the Midlands leads on, and that have the power to connect hydrogen generators with consumers.

The Midlands also has the existing industry and academic collaboration, convened by the Midlands Engine partnership, to deliver this transformative step towards maximising the environmental and economic benefits of the fuel of the future, while underpinning the security of our nation’s energy supply.

The Midlands Engine partnership this week launches the pan-regional Hydrogen Technologies Strategy, answering the call made from the Business Department this summer in their own strategy – for business and research all over the UK to collaborate in the shared vision of scaling up hydrogen production and demand.

The Midlands Engine Strategy identifies and connects transformational opportunities through the region’s Hydrogen Technologies Valley. With a vision to deliver high quality job creation and economic growth, the strategy provides a framework for the region’s growth in this vital area.

The benefits on offer include the opportunity to generate over 85,000 jobs through the production, storage and supply of hydrogen; over 60,000 jobs through the decarbonising of HGVs and refuelling infrastructure and almost 2,000 jobs supporting the use of hydrogen as an alternative aviation fuel – all with the potential to contribute £10 billion GVA to the Midlands economy.

At the heart of the Midlands Engine’s strategy is a unified vision and desire to collaborate, particularly in the sectors such as manufacturing, energy and transport, which are vital to the low carbon transition. The strategy will see these sectors, which were once responsible for large-scale emissions, become the key components of a hydrogen economy – where the technologies which the Midlands is renowned for become the driving force in the scale up of hydrogen supply and demand.

Pan-regional partnerships like the Midlands Engine are key to driving this agenda. Our sustained work is vital in bringing stakeholders together, liaising with Government to highlight potential areas for growth and delivering on the needs of business and communities.

As we look to recover from the pandemic and level up across the UK, we must encourage these partnerships and existing collaborations to grow and thrive. That is how we will continue to create environments in which industry expertise can directly shape and guide solutions to the challenges we face as a nation, while delivering long-term, transformative change and level up regions across the UK.

Howard Flight: What we can learn from Dyson

6 Dec

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

Scandals about Ministers benefitting from public expenditure are damaging and have clearly damaged the Government’s popularity. But what really matters over the longer term is the success of economic policies.

Here, while there was a case for increasing public expenditure while Covid-19 was closing down too much of the economy. Government spending as prescribed in the Budget looks to be far too high and risks serious permanent damage to this administration’s standing.

I am one of the traditional Conservative voters wanting to see Government expenditure reduced significantly as soon as is possible. I cannot understand a Tory Government indulging in such huge deficits. As inflation rises, the cost of financing the public deficit rises more substantially. There is the danger of the Government being forced to cut back expenditure materially and, with this, losing its credibility.

My wife recently gave a party for old friends to celebrate getting back to normal. Most had been vaccinated three times, and the majority had had Covid-19. It is clear that we have to live with the virus and as vaccinations increase, the incidents of Covid-19 (and, in particular, fatalities), should reduce to relatively modest numbers.

This is one area in which the Government has faired well, and our economy is thus better positioned than are most European economies. The main area of Government weakness is excessive spending – and the inflation risk that comes with it.

– – –

The parliamentary magazine, The House, has conducted an interesting interview with Sir James Dyson. He has been greatly concerned about the future of British manufacturing and innovation for many years. His main worry is that we do not produce enough engineers.

In Britain. we produce 20,000 a year, China produces 600,000 and India 350,000 pa. Even the Philippines produce more engineers. In the global completive world in which technology is everything, we risk getting left behind.

We have excellent design and engineering universities in the UK, but the majority of students and researchers in them are from outside the UK. Dyson thinks the problem is our lack of interest in manufacturing which has existed since Victorian times.

The major problem is that the status of an engineer in the UK is low by comparison with Germany and France. Manufacturing is still seen as something done by the less successful. Factories are seen as places providing employment – not producing great products which we can sell all over the world. As a nation ,we admire the wrong things.

In 2017, Dyson established the Dyson Institute of Engineering and Technology – a private Higher Education institution. It is based in Malmsbury. Students are paid a salary for working three days a week: they study for the other two days, and have their tuition fees covered for the four-year course.

If they want a job, there is one guaranteed at the end of the course. Recent winners of the Dyson Award covering 29 countries have included a Spanish student who created a box which can detect cancer, and sends the results to a cloud and then informs the user what cancer they have and what to do next; and a Pilipino student who discovered a way to generate electricity by mashing up certain fruits and vegetables, spreading a thin film across a pane of glass and shining a light on it.

Not surprisingly, Dyson is a champion for entrepreneurs. He favours lower tax for investors and innovators. In 2010, he wrote a report for David Cameron on how to make the UK the leading tech exporter in Europe, including additional tax relief on research and development investment. Government should not try to pick winners, but make it attractive for entrepreneurs and engineers to come up with new ideas themselves.

Dyson now employs more than 12,000 people in 89 countries. In 2002, he shifted most of his manufacturing from the UK to Malaysia – largely because it was hard to find UK suppliers who could deliver components on scale.

In 2019 he was criticised for moving his headquarters to Singapore, although his UK based employees have since doubled.

As a country we need to learn from Dyson’s experience. Government needs to apply itself to reducing unnecessary red tape; if anything it is still increasing it.

We need to boost our manufacturing sector and to reduce planning constraints, both in relation to factory accommodation and housing. Our SME sector continues to be very successful – substantially the result of the Enterprise Investment Scheme and Venture Capital Trust tax incentives on investing and smaller businesses.

Government needs to sort out our finances. Faster economic growth is needed, but the money supply needs to be controlled. We need to be doing more business in Asia, where the Foreign Office can assist by identifying opportunities on the ground. There are also plenty of business opportunities for the UK in the EU, particularly in Poland and other Eastern EU countries.

We need to have a Government focusing on improving our economy – and to put behind us both Covid-19 and politically damaging scandals. Going forward the priority must be what is good for the economy.

Roger Gough: Levelling up. We need to move from country deals to county relationships.

1 Dec

Cllr Roger Gough is the Leader of Kent County Council

Levelling up, seen initially as a nebulous, impressionistic concept, is starting to take shape. In his speech in July, the Prime Minister emphasised the importance of counties as well as traditional urban and industrial areas, in achieving it. Michael Gove heads a new levelling up department. The White Paper is reportedly imminent.

The Guardian is not the typical place for a Conservative government’s foundational text, but Neil O’Brien’s October article established four key elements: strong local leadership; growth in the private sector and in living standards; extending opportunity and good public services; and restoring local pride.

Why did the Prime Minister put such a focus on counties? In part, because shire counties, even in the south east, are not homogeneously leafy and prosperous. The ‘core cities’ focus of much development and regeneration policy in recent decades has, whatever the other arguments in its favour, neglected smaller towns, rural and coastal areas.

In addition, counties can operate at a big, strategic scale while carrying a strong sense of identity and accountability. In some cases, though not all, they share boundaries with other major public services. It is a strong combination.

All of this is true in spades for us in Kent. With a peninsular geography, a history stretching back to a Saxon kingdom, its Garden of England identity and a population bigger than eleven US states, it is a big and distinctive place. People take pride in living here. Historic Kent – made up mostly of the Kent County Council area, but also Medway unitary authority – is coterminous with the emerging NHS Integrated Care System as well as police and fire.

And Kent has its own profound needs for levelling up. On most indicators, the county comes close to the national average. However, this average masks a gulf between centres of prosperity (many, though not all of them in the London hinterland) and deep deprivation, especially in a number of coastal communities. By levelling up living standards and life chances within Kent, we can not only provide a huge economic and social boost to local towns and communities; given the size and scale of the county, we can make a significant contribution to levelling up nationally.

So far, the small number of county deals that may be announced at the time of the White Paper have reportedly been quite individual and bespoke (full disclosure – Kent is not one of them, though like most counties we have been exploring the implications of levelling up and county deals with government). The White Paper should, however, establish more common parameters, even if there remain (as there should) elements that reflect distinct local needs and identity.

The building blocks of devolution deals seen in mayoral combined authorities provide a starting point: transport, business support and economic development, adult education. I would extend the latter much further into the wider area of skills; not only is this an area in which Kent has significant gaps to close, but the damaging effects of nationally driven policies and funding streams in undermining local collaboration and generating mismatched skills to the needs of local business are well documented. Locally, we have built strong partnerships that can deliver.

On transport, we need to deliver the shift from counties just being a highways authority to becoming a full transport authority. It is neither fair nor sensible that metropolitan areas are able to fully integrate transport when the need for better integration is starker in more rural areas, where a lack of affordable transport between towns and communities limits connectivity and economic opportunity, and sustains dependency on car usage for quality of life. For both transport and economic development, there is a need to switch to devolved funding settlements over a number of years rather than the current merry-go-round of bidding systems.

Delivery of infrastructure is also vital, even if a little separate from levelling up strictly defined. For counties (and especially a county such as Kent, which has had exceptionally high rates of housing growth) the detachment of planning and infrastructure over the last decade, and the funding and distribution of developer contributions have not worked.

Hopefully, the rethink of housing projections by the new Secretary of State will ease some of the pressure on south-eastern counties; but that remains to be seen, and where development does take place, the need to deliver properly funded infrastructure first, remains a clear articulated demand from our residents. The logical conclusion from all this is the need, not only for changes to the developer contribution regime, but for a more strategic approach to spatial planning.

Delivering on net zero and on climate change resilience and adaptation presents distinctive challenges in predominantly rural areas, ranging from the viability of public transport to vulnerability to flooding. Kent and Medway have developed robust and far-reaching plans, but a comprehensive approach to the issue will have to draw together transport, strategic planning, skills, economic development and more.

Finally, county deals should be the catalyst for a new strategic partnership between national government and local leadership, so that when a matter of local importance also has national significance, the two can address the issue together systematically.

For Kent, that is our border with the continent and the massive volume of trade, as well as passenger traffic that passes through it and across the Short Straits. This has been and remains a point of vulnerability for both the county and the country, seen most sharply (and for some Kent communities, traumatically) when the French authorities closed the border in the days before Christmas 2020.

National and local authorities worked together remarkably effectively to prepare for the end of Brexit transition. Now, however, there is no one deadline to work to, but a series of continuing changes at the border, and an ever-present vulnerability to disruption with some of the special measures and capacity available a year ago no longer in place.

That effective local-national operational partnership to deal with a specific event needs to take on a standing, strategic form. This can then develop the measures (in road and border infrastructure, lorry holding capacity and much else) to reduce the vulnerability of both Kent and the UK to shocks and disruptions in the Short Straits.

None of this simply makes asks of national government; it presents challenges for counties too, above all in terms of governance and capacity.

The first is sometimes taken as code for a directly elected or mayoral model. But it need not be so; some of the arguments (stability, convening power, accountability) seem to be set up against a straw man of weakly-led councils, perhaps under No Overall Control. The reality is that much council leadership is at least as stable and durable as national leadership (and much more so than typical ministerial tenure) and a large strategic authority can convene very effectively.

Less talked about is the question of capacity; that councils are able to discharge a stronger strategic role when they face huge budget and managerial pressures from demand-led services such as adult social care and children’s services. There is no simple answer to this, but councils have to make a conscious choice to commit money, time and thought to this when all those resources will feel more than spoken for already.

The corollary is that county deals have to be a relationship with the whole of government, not simply with individual departments; it is only through this that central government will be able to understand and support the choices that councils have to make.

Bim Afolami: After the Budget, we won’t deliver levelling up without putting economic growth first

1 Nov

Bim Afolami is MP for Hitchin & Harpenden.

In the wake of another Budget, I have been wading through the Red Book and the other documents. One word keeps coming to my mind. Growth.

Why has it been stubbornly weak? What can the Government do about it? What are the political consequences of low growth over the medium and long term?

Growth has been stubbornly weak across most of the Western world since the financial crisis. Britain’s economic performance has been even worse than those of our main competitors, such as Germany, the US and Canada.

Between 1979 and 2010 (including three recessions), growth averaged 2.3 per cent each year and, if you exclude the major recession years of 1980, 1991, and 2009, growth averaged 2.8 per cent.

But since the financial crisis up and until Covid hit in early 2020, growth has averaged 1.8 per cent – with no recession during that time. If you look at the Office for Budget Responsibility’s forecasts for the coming years, you will see that it predicts the medium term outlook for growth is 1.7 per cent per year, in line with the post-financial crisis growth pattern. Why do we accept this?

I am boring you with these statistics to evidence a simple point. Our growth is a lot lower than it used to be: roughly 30 per cent to 40 per cent lower than it used to be, every single year. There are lots of purported reasons for this low productivity – and hence low growth: over-reliance on foreign labour, preventing investment in automation; regional inequality; poor skills in middle management and SMEs; the over-allocation of wealth in housing; low private capital investment levels; weak exports; poor numeracy, poor transport infrastructure, and many more.

The Chancellor is acting to fix the problems. The Help to Grow scheme is specifically focused on improving the management capability and outcomes for thousands of SME owners across the country. We are investing record amounts into R&D and reforming R&D tax reliefs, taking us forward to being a science and tech superpower. We are continuing to deliver on our promise on investing record amounts in infrastructure. We are maintaining such tax reliefs as the Enterprise Investment Scheme and Seed Enteprise Investment Scheme, which encourages those with capital to invest them in fast-growing British businesses, rather than buy property or land. The Chancellor launched a new £500 million scheme, Multiply, designed to target one of the biggest complaints from business owners:the poor numeracy of many staff entering the workforce.

I strongly support what he is doing. We should hope that all of these measures have an impact over the medium term. However, I have a nagging sense that, despite our best efforts, these policies alone will not move the dial on growth sufficiently. Let me explain why.

A few months ago, I finished the books of the brilliant economic historian, Deirdre McCloskey, whose trilogy (Bourgeois Virtues, Bourgeois Dignity, Bourgeois Equality) incessantly remind us of the exceptionality of economic growth.

The three books comprise an intellectual journey which aims to answer the great riddle of modern economic historians: why did the Industrial Revolution, with its immense economic growth, take off precisely when and where it did? Why Britain? Why the eighteenth century?

Her answer is that it was culture that needed to change so that the economy eventually could tpp. Materialistic enrichment had non-materialistic causes. She argues that “talk and ethics and ideas caused the innovation”. In particular, “ordinary conversation about innovation and markets became more approving”. Wealth could be created on a grander extent than ever, but only as soon as wealth creation was no longer deemed a filthy purpose by the educated elite.

It was the championing of innovation (not merely capital accumulation) which fundamentally transformed our economic prospects as a nation, and we led the world. Ideological and societal changes were the sine qua non of transformative growth of the eighteenth and nineteenth century, not tax policies nor our legal system nor stable national institutions (though these were all undeniably helpful).

Margaret Thatcher’s governments understood the importance of boosting economic growth and dynamism in that era. Nigel Lawson’s Chancellorship was pivotal for the pro-enterprise policies and tax rates that he introduced. However, a huge element in our success during the 1980s was the social change that saw innovation and enterprise and getting richer as an unambiguously good thing – particularly for the working classes.

This social change was partly driven by the atmosphere, rhetoric and tone of the Government, backed up with concrete pro-growth policies. Looking at a very different society to ours – China – one sees that the 40 year explosion of its economic growth was not just about legal and policy changes.  The Communist Party allowed a new spirit to sweep the country: soon after Mao Zedong’s death, Deng Xiaoping declared that “to get rich is glorious” and “it doesn’t matter whether a cat is black or white – so long as it catches mice,” which was indicative of his view that socialism was not incompatible with a market-economy. These sentiments had a huge impact.

We need two things if we are to have a hope of reviving our growth rate.

First, on the technical side, we are going to need to continue the many pro – growth policies that this Chancellor has introduced and, in addition, significantly reduce the tax and regulatory burden for SMEs – which are far too high at the moment.

Secondly, we will need to shift the whole focus of the Government’s energy towards a pro-growth mindset overall, not just a redistributive one with regards to levelling up (important though this is). Conservative politicians should champion the nobility of wealth creators, work with those in universities and civic society to promote a more positive image of innovation, and praise these things because they are a good in themselves – not just because their taxes help the Exchequer.

Perhaps by linking innovation to the green agenda, and the unifying cause of saving the planet from gradual decline, we can actively argue that more economic innovation is a social good because it enriches society.

What would all this look like? It could mean a reshaped honours system – to champion innovators and wealth creators much more. It might mean Government policy in all areas being publicly changed to optimise for growth as the primary goal above all else (i.e: universities policy and regulatory policy). It could mean a shift in the national curriculum to teach children the positive virtue of setting up a business with clear, ethical goals, and that this is a positive way to help your community.

If we fail to significantly lift our growth rate, we will have a growing list of problems. There will be an ever-increasing tax and debt burden, because demographic changes mean that our public services (particularly NHS) will need more money every year. It would mean the failure of levelling up, because redistribution of a stagnating cake is not politically sustainable in the medium term. Finally, it would mean continuing generational inequality, because the tax rates of working (younger) people will be so high that they will have no ability to build up capital assets; and any attempt to tax older generations to a much greater degree than today will be politically tricky.

Much higher growth is the necessary condition for us as a country to be successful in the future. This Chancellor has diagnosed the problems, and is acting to fix them; but the Government overall will need to take a lead to make this the central rhetorical, atmospheric, policy focus of the country as a national mission.

Sunak declares Brexit will bring “a renewed culture of enterprise” – conference speech in full

4 Oct

“Whatever it takes.

That phrase and those press conferences were my introduction to so many of you as Chancellor.

It was daunting to face such a challenge in my first days in office.

And what it also meant is that more than a year has gone by before I’ve had the chance to meet you all properly.

That’s why these last few days have been such a joy meeting you all face to face and hearing so many of you say to me…“Wow! You’re even shorter in real life!”

Nothing can ever prepare you to become Chancellor especially in recent times.

 There have been occasions when it really did feel like the world was collapsing.

 In those moments there are certain things I fell back on.

 Yes, my family.

Yes, my colleagues.

Yes, my tremendous Treasury team.

And yes… the person who made all this possible..the person who delivered a thumping Conservative majority. My friend, our leader, the country’s Prime Minister… Boris Johnson.

But the other thing I fell back on is something we all have in this room. Our values. Our Conservative values.

I believe in some straightforward things.

I believe that mindless ideology is dangerous.

I’m a pragmatist.

I care about what works not about the purity of any dogma.

I believe in fiscal responsibility.

Just borrowing more money and stacking up bills for future generations to pay is not just economically irresponsible it is immoral.

Because it’s not the state’s money .it’s your money

I believe that the only sustainable route out of poverty comes from having a good job.

It’s not just the pounds it puts in your pocket it’s the sense of worth and self-confidence it gives you.

So I will do whatever I can to protect people’s livelihoods and create new opportunities too. And when it comes to those new opportunities I am very much a child of my time.

I spent the formative years of my career working around technology companies in California.

 And I believe the world is at the beginning of a new age of technological progress which can bring jobs, wealth and transformed lives

So pragmatism fiscal responsibility a belief in work and an unshakeable optimism about the future.

This is who I am. This is what I stand for. This is what it will take. And we will do whatever it takes.

And there can be no prosperous future unless it is built on the foundation of strong public finances.  And I have to be blunt with you. Our recovery comes with a cost

Our national debt is almost 100 per cent of GDP. So we need to fix our public finances. Because strong public finances don’t happen by accident.  They are a deliberate choice. They are a legacy for future generations. And a safeguard against future threats.

 I’m grateful and we should all be grateful to my predecessors and their 10 years of sound Conservative management of our economy.

 They believed in fiscal responsibility. I believe in fiscal responsibility and everyone in this hall does too.

 And whilst I know tax rises are unpopular, some will even say un-Conservative, I’ll tell you what IS un-Conservative: Unfunded pledges, reckless borrowing and soaring debt.

Anyone who tells you .that you can borrow more today and tomorrow will simply sort itself out just doesn’t care about the future.

Yes, I want tax cuts. But in order to do that our public finances must be put back on a sustainable footing.

Labour’s track record on the public finances speaks for itself. Since 2010, we’ve had five Labour Leaders, seven Shadow Chancelleors and innumerable spending pledges. And in all that time they still haven’t got the message the British people won’t trust a Party that isn’t serious with their money. That’s why they vote Conservative.

We must never forget that the fundamental economic differences between us and Labour run very deep.

Differences not just about debt and borrowing but about how to deal with the real pressures people face in their lives.

And right now we are facing challenges to supply chains, not just here but right around the world and we are determined to tackle them head on.

But tackling the cost of living isn’t just a political sound bite it’s one of the central missions of this Conservative government.

Picture this: You’re a young family. You work hard saving a bit each month. But it’s tough. You have ambitions for your careers… for your children. You want to give them the best more than you had.

Now you tell me: Is the answer to their hopes and dreams just to increase their benefits? Is the answer to tell that young family the economic system is rigged against you and the only way you stand a chance is to lean ever more on the state? Be in no doubt. That is the essence of the Labour answer. Not only does Labour’s approach not work in practice it is a desperately sad vision for our future.

 But there is an alternative.

 An approach focused on good work better skills and higher wages. An approach that says ‘Yes we believe in you. We will help you and you will succeed.” And better still it’s more than words it’s a paln in action. A Conservative plan and Conference it is working.

Governments rarely get to set the tests by which they will ultimately be judged.  

And our test is jobs.

Remember as economies around the world pulled the shutters down forecasters were predicting unemployment to reach 12 per cent. Millions of people were on the precipice of losing their jobs their livelihoods and their homes. Well, the forecasts were wrong.

The unemployment rate is at less than five per cent and falling. That’s lower than France, America, Canada, Italy, and Spain. And we now have one of the fastest recoveries of any major economy in the world. Now it wasn’t that the forecasters had bad models. No.  It’s just their models did not take account of one thing and that was this Conservative Government. Our will to act and our plan to deliver.

An increased national living wage. The restart programme. Sector based work academies. Doubling work coaches. Job finding support. Traineeships. Apprenticeship incentives. Skills Bootcamps. And the Prime Minister’s Lifetime Skills Guarantee.  

All things we are doing that won’t just help people but will give them the means and opportunities to help themselves.

I believe in good work, better skills and higher wages. I believe that every person in this country has the potential to become something greater

And I know that we.and only we the Conservative Party are the ones who can make that happen.

And our economy cannot be what we need it to be without the courage, creativity and sheer force of will that each new generation brings.

Yet, at its peak just under one in three workers under 25 were on furloug. One in three. That’s one million people who didn’t have the fall back of a career history or a network of contacts and in many cases hadn’t even moved into their first job.

And so what did we do? We created the Kickstart scheme up, running and working in a matter of months.  A landmark programme that is helping young people start exciting new careers. And thanks to our plan young people just like John Chihoro who introduced me today are starting those new jobs in their thousands.

So to give more young people the same chance as John I can confirm we are expanding our successful Plan for Jobs into next year. The Kickstart scheme. Extra support through the Youth Offer. The Job Entry Targeted Support scheme. And our Apprenticeship Incentives. All extended. Because we believe in the awesome power of opportunity. And we are going to make sure that no young person in our country is left without it.

But what we do today .means little if we don’t also have a plan for tomorrow. A plan for the future. A future economy shaped by the forces of science, technology and imagination.

The years I spent in California left a lasting mark on me, working with some of the most innovative and exciting people in finance and technology. Watching ideas becoming a reality. Seeing entrepreneurs build new teams. It’s not just about money.

I saw a culture, a mindset, which was unafraid to challenge itself, reward hard work and was open to all those with the talent to achieve.

I look across the United Kingdom and that culture is here too. In the young people I’ve already spoken about today unencumbered by timidity and orthodoxy.

And it’s there in our willingness to take risks not just on companies but on people.

People with the raw potential to create a wave of the most dynamic high growth companies.

 A wave that will reach the farthest corners of the world.

That optimism that unshakeable belief that the future can be different and better was also at the heart of Brexit.

I remember over five years ago being told that if I backed Brexit my political career would be over before it had even begun.

Well. I put my principles first and I always will.

I was proud to back Brexit proud to back Leave. And that’s because despite the challenges in the long term I believed the agility flexibility and freedom provided by Brexit would be more valuable in a 21st century global economy than just proximity to a market.

That in the long term a renewed culture of enterprise willingness to take risks and be imaginative would inspire changes in the way we do things at home.

Brexit was never just about the things we couldn’t do. It was also about the things we didn’t do.

That’s why we introduced the super deduction a UK first in tax policy which is triggering an explosion in capital investment.

That’s why we created the Help to Grow scheme another UK first to help small and medium sized companies digitize skill up and scale up.

That’s why we launched the Future Fund another UK first in government investment  backing high potential start-ups.

My point is this: Even if you can’t see it yet I assure you the future  is here.

Last year alone the UK attracted more venture capital investment to our startups than France and Germany combined.

And. along with enhanced infrastructure and improved skills we are going to make this country not just a Science Superpower not just the best place in the world to do business. I believe we’re going to make the United Kingdom the most exciting place on the planet.

Take Artificial Intelligence once the stuff of science fiction.  Now it’s reality and we’re a global leader.

The steam engine kicked off the industrial revolution. Computers delivered automation. The internet brought information exchange. And as the latest general purpose technology AI has the potential to transform whole economies and societies.

If Artificial Intelligence were to contribute just the average productivity increase of those three technologies that would be worth around £200bn a year to our economy.

And so today  I am announcing that we will create 2,000 elite AI scholarships for disadvantaged young people and double the number of Turing AI World-Leading Research Fellows helping to ensure that the most exciting industries and opportunities are open to all parts of our society.

New policy focused on innovative technology supporting jobs for the next generation, a sign of our ambition for the future.

Because that’s why we are here. All of us.

That’s why we became members of the Conservative party.

That’s why you all give up so much of your time sacrificing things that are important to you in order to help build a better future.

You know the longer I spend in this job the more I realise that the worst parts of politics are driven by fear

Fear of change. Fear of losing. The fear of being wrong Even fear of the future.

And when people get scared they create divisions. They say you’re either with us.or you’re with them.

But you cannot make progress if you’re pitting people against each other.

That’s what you get from a tired, fearful sort of politics.

We saw it last week in Brighton.

It’s not just that Labour don’t like us. They don’t even like each other.

Whereas we, the Conservatives, are now and always will be the party of business and the party of the worker. The party of the private sector and the public sector. A party for the old and the young.

The British people want a party that can get things done.

 So at just the moment when it feels like we’ve done enough that we’ve gotten through that we can take a rest we must not stop. Now is the time to show them that our plan will deliver.

And now is the time at last, at long last, to finally turn to the future.

Thank you.”

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.