Sarah Ingham: No, Prime Minister, Britain does not need to atone for so-called ecocide

7 Jan

Sarah Ingham is author of The Military Covenant: its impact on civil-military relations in Britain.

“We were the first to knit the deadly tea cosy of CO2 that is now driving climate change.”

The Prime Minister’s speech at the 2021 Global Investment Summit at the Science Museum back in October was initially a zinging endorsement of the free-market capitalism which had delivered the Covid vaccine.

Conservative cheers could well have turned to bafflement when the PM warned that Britain must atone for being a world-leading scientific and engineering pioneer more than two centuries ago. As the first nation to industrialise, sending up plumes of smoke from the Midlands, “We have a responsibility to set an example – and we are.”

Two weeks later at COP26, that gathering of private jets on Clydeside, Boris Johnson was at it again. The Industrial Revolution, one of the most seminal shifts in human history, was painted as a historic eco-crime for which Britain must make reparation. It is “one minute to midnight on that doomsday clock” of climate change. That clock had begun to tick 250 years ago in Glasgow where “James Watt came up with a machine that was powered by steam that was produced by burning coal”. Consequently, nations like Britain have a “duty” and “special responsibility” to divvy up $100 billion a year to support developing countries finance green alternatives.

The Prime Minister is not alone trying to establish a narrative that the apparent threat of looming ecocide demands that today’s Britain must pay for yesterday’s wrongs. In February 2020 Michael Gove told the Green Alliance that, as the first country in the world to industrialise, the UK must acknowledge “our debt to the planet and our debt to others”. As the earliest adopter we now have a “moral responsibility” to lead a green revolution – and to make Britain’s voters pay through the nose.

The agenda-setting Committee for Climate Change (CCC) might well have encouraged the Government into following this line of argument. Back in May 2019, it stated Britain should “bear more of the costs of transition to a low-carbon economy”, not least as the birthplace of the Industrial Revolution. Apparently, in the past we have made a “large” per person contribution to man-made global warming. (p.106 of Net Zero: The UK’s Contribution to Stopping Global Warming, should interest be, er, ignited).

How large is large? It seems that since the start of the 19th century, a whopping two to three per cent of global warming attributable to greenhouse gas emissions has come from the UK, according to the CCC, whose members don’t seem too troubled by that other large 97-98 per cent coming from elsewhere. This of course raises the question of whether, over the past 200 years, we in Britain have indeed knitted a deadly tea cosy, or even crocheted a lethal egg-warmer.

Preoccupied in the last decade or so by the impact of a global financial crash, Brexit, a pandemic and matters woke, we have all been in a comparative slumber as the new green orthodoxy embedded itself in public policy, spurred on by the 2008 Climate Change Act. Hands up if you were paying much attention in June 2019 – during the Conservative leadership contest – when the Act was amended by Statutory Instrument, ushering in the target of Carbon Net Zero by 2050.

Created by the 2008 Act, the CCC wields the sort of influence enjoyed by SAGE, whose previously off-the-radar members have been gracing the airwaves seemingly non-stop for the past two years. Like SAGE, the CCC includes a behavioural scientist. (Why?) Unlike SAGE’s pandemic priesthood, an economist sits on the CCC. This is just as well, because like a drowsy giant, the public is beginning to awaken to the impact of green taxes and Net Zero on their pockets.

Rainforests of paper can be sacrificed by government agencies and quangos in an effort to push their pet policies, but nothing cuts through like hitting taxpayers where it hurts. In November, The Financial Times reported that getting to Net Zero by 2050 will cost £1.4 trillion – or the equivalent of £1,700 per average household per year.

Green taxes are now on the media agenda, with reports this week that they might account for a quarter of the cost of rocketing fuel bills. Poll tax, anyone? One MP has recognised the thin political ice. On Wednesday, the Education Committee chairman Robert Halfon called for the suspension of green levies.

Just as SAGE seems to lack any lockdown-sceptical scientist, it must be wondered whether the CCC has ever included a member who might not sign up to its doomsday world view. Perhaps Lord Deben’s successor as Committee Chairman could be self-styled sceptical environmentalist, Bjorn Lomborg. He argues that trillions of dollars set to be allocated to the impact of climate change could be better spent. Think of it as levelling up, just on a global scale.

The rural poverty in the developing world today was last seen in Britain in the pre-industrial era. If late 18th and early 19th century life in Britain was indeed an Eden of artisan produce, hipster beards and charming cottage industry, why did so many flee to the new manufacturing towns?

The Industrial Revolution was precisely that, a revolution. A seismic, shattering upheaval. It wrought enormous change, enriching the country and its people. It was a force for global good and thank goodness for it. Life for one day today without electricity, piped water and a mobile phone is a glimpse of yesterday’s Hobbesian nightmare.

The United Kingdom is currently responsible for generating about one per cent of global greenhouse gases. However, that is too large according to our Net Zero-fixated government, which is deploying the past to justify present and future public policy.

By invoking a two centuries-old deadly tea cosy the Prime Minister unwittingly raised questions about collective moral responsibility, usually best left to theologians and lawyers. How far should any of us be punished for historic actions of others? What about considerations of intent and agency? Didn’t the prophet Ezekiel have something to say about children not being punished for the sins of their parents?

The Industrial Revolution-reparation narrative just won’t (green)wash: as an attempt to explain away ripping out 30 million gas boilers and justifying a surge in fuel poverty, it’s a tea cosy short of some stitches.

Like SAGE, the CCC needs far greater scrutiny over the quality of its advice to government. And Conservative ministers and MPs should be mindful that, like civil servants, quangocrats are never voted out.

Shanker Singham: Today’s signing of the UK-Australia deal symbolises a new economic era for Global Britain

17 Dec

Shanker Singham is CEO of Competere. He is a former adviser to Liam Fox when he was Secretary of State for International Trade, and to the Office of the United States Trade Representative.

We have often taken the special relationship for granted on this side of the Atlantic. While we rest on our laurels, often the US’s other allies and trading partners steal a march on the UK.

What is needed is a comprehensive re-engagement with the US at multiple levels – Prime Minister, Cabinet, ministerial and parliamentary. There is already a lot of private sector to private sector dialogue but these need to be accelerated with ministerial sponsorship.

It is clear that on matters as diverse as the Northern Ireland Protocol, to our interest in a comprehensive free trade agreement, the UK has not been able to land forensic, knock-out blows, whereas others, notably the Irish and the EU have been more successful in prosecuting their interests with the new administration.

There are signs of improvement however. We have seen a significant uptick in the frequency of UK ministerial engagements in Washington recently. There were at least five UK ministers in the US, the week of the December 6 for example. Importantly, UK engagement is not limited to Washington DC and New York. Penny Mordaunt, the trade policy minister has just returned from the longest ministerial visit to the US in recent history – a tour of five US states lasting over 10 days, a lifetime for a minister.

Liz Truss, the Foreign Secretary, made a very important speech at Chatham House on December 8, where she acknowledged that the world had broken down into those countries that supported a vision of capitalism based on competition versus those whose capitalist model is based on distortion and cronyism – and that the countries in the former camp constituted a network of liberty. AUKUS was just a start to bring those countries together to pursue an international economic policy that maximised open trade, competition on the merits and property rights protection.

Anne-Marie Trevelyan, the Secretary of State for Trade, also made a recent intervention at the CPS’ Margaret Thatcher conference on trade, where she specifically addressed the cancer of anti-competitive market distortions which are plaguing global trade. In this the UK and US have very similar concerns and are looking for similar solutions – a mechanism to deal with the problem that does not drive a coach and horses through the international trading system.

On what the UK’s regulatory system will look like in the future, Lord Frost was also crystal clear when he discussed this in the House of Lords, noting that the UK will diverge from EU regulation, not just for the sake of it, or because it can, but because it must do so in order to promote a pro-competitive regulatory agenda that both increases economic growth at home, but will also make it easier (and faster) to do trade deals.

The trade policy minister’s long trip led to substantial progress on Memoranda of Understanding with a number of states, as diverse as Tennessee, Oklahoma, North and South Carolina and Georgia. She made a very important speech to the Carter Centre. In it she was much more forensic about a case that does not get made often enough – why a free trade deal with the UK is in the American interest, not just the British one.

The UK leaving the EU’s Single Market and Customs Union is a massive global event. The UK, to quote Minister Mordaunt, has made itself a piece on the global chessboard, and a powerful one at that. It alone is negotiating or discussing international economic policy issues with all the key players, including the EU with which it is one of the few major players to have an FTA already.

The UK has made it crystal clear to its trading partners which side of the table it is going to be on – to inter-operate with the world on the basis of equivalence and adequacy, as the US and CPTPP countries do, instead of pushing its own regulatory vision on the rest of the world as the EU and China do.

This shift is a seismic one in geo-economic terms. If the Americans fail to capitalise on it, they will have lost a huge opportunity to win the battle for the world’s operating system, and to ensure it is based on voluntary exchange, underpinned by open trade and competition, including regulatory competition based on outcomes. This would unleash wealth creation and economic growth at a time when it is so crucially needed as the world struggles to emerge from Covid-19.

But the UK is not just making speeches. It is delivering. Today’s signing of the UK-Australia deal means that the UK’s entirely de novo trade negotiating agenda is now in full swing. Contrary to the naysayers who said that trade deals take 10 years to do, this was initiated in 2020 and concluded in 2021 – within a year of the UK leaving the EU.

It is anticipated that the NZ deal will quickly follow. Within the year, the UK also concluded a deal with Japan that contains important new elements and departures from the EU’s deal especially in the crucial data area, signed a deal with Australia, established its working group for accession to the CPTPP, and will doubtless conclude a number of MOUs with US states as a down payment on an eventual FTA with the US. This has all been done within a year of concluding the FTA with the EU, the point at which our trading partners knew whether we could do trade deals or not.

The UK and US must now use the recently announced Atlantic Charter to push for the key initiatives such as the reduction of anti-competitive market distortions around the world and the commitment to open trade and competition on the merits.  They must tie other nations into the AUKUS deal which is much more than an agreement about submarines, especially the Japanese.

The geo-economic tectonic plates are shifting as we said they would, but even faster than even we hoped and anticipated. For the first time in a long time, the network of liberty countries look like they might be winning.  We are far from out of the woods, and the world remains a very dangerous place for freedom, but these countries now have line of sight to victory, and the UK is their champion. We may yet lose, but if we do, it will be because this moment of opportunity was wasted.

Liam Fox: The free market is not the problem in climate change, but it can be the solution

10 Nov

Liam Fox is a former Secretary of State for Defence, and is MP for North Somerset.

In a rational world, facts matter. Evidence matters. Clarity matters. So, let me be clear where my own starting point is in terms of the climate debate.

In his excellent book, Paleoclimate, Michael Bender points out that in the history of our planet there have been huge swings in our climate. We have had multiple periods where the earth was glaciated to the equator, lasting millions of years, and others when it was so warm dinosaurs lived on Antarctica.

He set out the four factors that have caused these climate modifications: changes in atmospheric greenhouse gas concentrations, changes in the amount of sun’s radiation reflected directly back to space, changes in the position of the continents that guide winds and ocean currents, and changes in the brightness of the sun itself.

I think it is very difficult to come to any other conclusion than that global warming and climate change, with all their unpredictable consequences, are real and that changes in greenhouse gas concentrations are by far the most likely reason.

The question then becomes how we should best respond to this most vital challenge?

I believe that we need to look to our own experiences from the past to determine our direction and to look to our own technological capabilities to provide a roadmap for the way forward.

In the pandemic, it was not the socialist or totalitarian states that produced the vaccines, and recently the medicines, that offer the best way out of this global tragedy. Rather than being the enemy of government strategies, the Oxford/AstraZenecas, the Pfizers and the Johnson & Johnsons utilised their private sector experience, flexibility and financial independence to help governments achieve their public policy aims.

Our choice will be between the de-growth agenda of the left, constantly telling us what must be forbidden in our private and public lives or one of innovation, creativity and technological advance. Only the latter will allow the developing nations to share in the prosperity, health and freedom that we too often take for granted. De-growth of the richest economies will do nothing to help fund crucial development for some of the world’s poorest people.

The instincts of socialists will always be to tell us what we cannot do and the issue of climate change will be used ruthlessly to set a political agenda in their own image if we allow that to happen. It will be used as a war against capitalism by proxy.

Instead, we need to use the power of the free market to find ways of ensuring that progress continues, including for the world’s poorest, in a way that is consistent with the need to deal with what scientific evidence increasingly tells us is an existential threat.

One of the environmental issues that makes me most angry is the way in which we are polluting our oceans in the most disgraceful ways.

In the years from 2000 – 2010, human beings made more plastic than all the plastic created up to that point in history. Estimates suggest that there are now between 15 and 50 trillion pieces of plastic in what were once pristine waters.

The knee-jerk reaction is to ban the sale and use of plastics which, although potentially a crucial weapon in our armoury, can only ever be a partial solution.

What we need to do is to harness our scientific ingenuity, to ensure that we can develop environmentally friendly alternatives.

It can never be achieved simply by state dictat, but by the encouragement of the innovation and creativity that powers our technological progress and which can be supercharged by financial incentives in a free market.

Is there a role for government in helping to provide the encouragement, incentives and framework in such an approach? The answer has to be yes, but it must be a model where the state acts as the enabler for the private sector, not a substitute.

When it comes to the broader arguments around climate change, it is clear that we need to develop a decarbonisation agenda that is affordable, sustainable and which commands public support, at least in the Western democracies were such a thing actually matters.

There are tough policy questions that we must answer that go well beyond well -meaning aspirations and end dates for the process.

What is our actual starting point on the journey towards decarbonisation, what is our current energy pattern and how much change will be needed?

How realistic is our timescale to achieve net zero?

How much capital will the decarbonisation agenda require, where will it come from and when?

What will be the role of new technologies in this process?

How do we avoid creating the risk of energy poverty amongst our people?

What is the wider international geopolitical context of the debate?

How do we avoid becoming dependent on potentially hostile states for our energy supplies during our transition to this brave new world?

These questions, and more, need urgent and detailed answers.

Simply wishing to arrive at a particular destination is no substitute for a detailed roadmap of how to get there.

Those who advocate a “de-growth” alternative fundamentally fail to understand human nature.

It should come as no surprise that more organic foods are bought by those with higher incomes or that the political salience of environmental and climate issues diminishes in times of economic hardship or with higher levels of unemployment.

It is only natural, and commendable, to want to put food on the family’s table and provide basic necessities such as clothing and heating.

It is not only irritating, but politically naive at best, to hear an often Metropolitan middle-class telling those less wealthy than themselves what they ought to be giving up.

Our best way forward is to invest in proven technologies, encourage those in their infancy and continue to innovate to produce those capabilities that will, in the future, enable us to ensure that development, prosperity and sound environmental stewardship can safely coexist.

In the nuclear arena, the twin pressures of carbon mitigation and long-term rising global energy demand necessitate broad and significant deployments of nuclear energy worldwide.

The advances in SMR (Small Modular Reactor) technology should be a green light for governments, regulators and investors worldwide to rapidly expand the sector.

Emerging technologies which can dramatically cut emissions, even from the cleanest fossil fuels, should be given every help and encouragement. They will enable us to transition to a decarbonised world while minimising social or political dislocation. Many of these tech advances are being pioneered here in the UK.

Finally, the promising trends in areas such as hydrogen power need to forge ahead at full speed, alongside the supporting capabilities in transport and safe storage where, again, in the UK, research is already well advanced.

All these pathways to a secure decarbonised future will need to come from the incubator of the world’s most developed nations. They have the skills, the innovation and the financial capability to produce these results – and this is no accident.

The free market incentives, the lack of state interference and the innovative culture that all of these help nurture is the best hope that we have of reaching our climate change goals without reducing living standards in the developed world or holding back the fully justified hope of development in some of the world’s poorer nations.

Going backwards or slowing down our economic advance and technological prowess is not the answer to the challenge of climate change. In fact, it will be a huge impediment.

The leaders of the free, democratic and capitalist world must recommit themselves to the principles that produced the innovation and scientific advance that has been our hallmark – an agenda based on creativity empowered by the free market.

It is time to have the courage to ensure that these same values drive the progress of tomorrow – for all the people of the world. And for the world itself.

David Willetts: If we’re to have less migration into Britain – and more productivity – we must move around more within it

5 Nov

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

Behind last week’s Budget and the Prime Minister’s conference speech there are deep questions about how Britain is going to pay its way – and hence pay ourselves well too.

In the 16 years leading up to 2008, average earnings grew by 36 per cent. In the next 16 years up to the end of the period covered by the Budget, it is forecast they will have risen by just 2.4 per cent. One reason for the anger and frustration in our public discourse is quite simply that we have stopped delivering the great promise of capitalism – of increasing prosperity for us and our children.

The only viable way to get us back on the path to higher living standards is by boosting our productivity. GDP per hour worked is now about a quarter higher in France and Germany than ours. We ought to be able to catch them up: that is the challenge we should set ourselves.

There is a clear agenda for it in the Budget. Invest in human capital at all stages of our lives. Invest in physical capital with public spend on infrastructure at record levels. And invest in science and innovation where increased public spending should crowd in more private spending too. And, crucially, get business investment growing again.

That is an excellent agenda. But it may not on its own get to the deeper reason for the decline in performance of the British economy: we are not dynamic enough.

The rate of economic change has been declining. Our research at Resolution Foundation shows that over the decade before Covid struck, the rate at which labour moved from one broad economic sector to another was at a post-War low. Similarly, the rate of voluntary job moves in 2019 was a third lower than in 2001. Labour mobility, geographical mobility and social mobility are all linked. We are quite simply not moving enough.

We are anyway going to have change forced upon us, thanks to the need to decarbonise and advances in technology. We ought to be able to use these drivers of change to boost our performance rather than trying to hide from it. That is why we at Resolution Foundation have set up an inquiry in partnership with the LSE into the future of Britain’s economic model.

The health advice during Covid – “stay home” – in a way summarises what has been happening to our economy for two decades. It is a striking contrast with the 1980s when Norman Tebbit famously told us to “get on your bike”. We had record rates of creation of new jobs (and the painful loss of old ones) and record shifts between different industrial sectors.

One clear signal about which jobs to move to was larger pay gaps between jobs. Nowadays, the places with higher pay also have higher rents and as fewer people are owner-occupiers this directly reduces their incentive to move. The 1980s did see rising inequality but, at the same time, there were record increases in absolute incomes – including for the less affluent half of the population.

This poses acute dilemmas for any Conservative. We are the party of freedom, mobility, and enterprise. But we are also the party of community, belonging, and tradition. What is it to be – roots or wings? These are tensions we all feel within ourselves. And we may reach different views at different stages of our lives. Young people need their chance to fly the nest but this is getting harder – with the move to independent adulthood slower and harder.

The mood in the Party and perhaps in the country seems to favour the ties of place. If you were still living in the county of your birth you were 10 per cent more likely to vote Brexit. In this sense, rather paradoxically, it is the remainers who were the Brexiteers. The balance is tilting in the endless debate on whether people should move to the jobs or jobs to the people.

This is why universities – a crucial means of detaching us from the family home and giving us the chance to move on and move up – appear to have fallen out of favour. But the higher education route has long been used by the more affluent for whom the residential university served as a natural successor to boarding school. It is still the case that the more affluent a student’s family, the further their university is likely to be from their hometown.

The Conservative Party owes its long political success to its skill in balancing these conflicting instincts – leave or stay – and needs to find a way to do it now. One way of reconciling them over the past 20 years – migration – is now diminishing. If we didn’t want to move but there were new requirements for new jobs, some of them unappealing ones, then the new migrant came in to plug the gap. We brought them in to the places and occupations which were short of people, so we didn’t have to retrain or move around ourselves. Reduced reliance on them means we have to be more flexible and mobile.

There are other smart ways of resolving these conflicts without forcing people to face anything like the disruption of the 1980s. Birmingham and Lyons are cities of roughly similar size. But many more people can get to the centre of Lyons in half an hour because local transport is so much better. It creates a bigger labour market. There are towns stranded on the edge of major cities outside London which would really benefit from such investment. So this sort of transport spend really makes sense and we got some of it in the Budget.

Next, social housing is a real barrier to mobility. I remember from my time as an MP the appalling bureaucratic hassle if you are a tenant of one association and trying to move to another social tenancy in a different area. Easier and standardised rules for easier transfers would make a big difference. Meanwhile, stamp duty acts as a disincentive for home owners to move as well.

Then if we are to boost the prestige and values of vocational qualifications, we could also provide some maintenance loans for residential training courses. The original idea of the apprenticeship was that the apprentice left home to live with his or her new master. Conscription and apprenticeships have both declined as ways of semi-supervised living away from home. Instead, the university has become the dominant model. Rather than trying to suppress demand for university places we should try to enable other forms of vocational training to offer that residential experience as well.

The 2020s can a decade of renewed dynamism and mobility. Our Economic Inquiry is already identifying some reasons for optimism too. In the week of COP26, the happy accident that our renewable energy in wind and tide are distributed across the country will attract economic growth to those areas. Carbon capture and storage means ingenious repurposing of ageing industrial plant.

There is also a surge of young people into the labour market – the baby boom of the first decade of the new millennium will drive economic change just as Thatcherism rode an earlier tide of incoming young people born in the 1960s. Lots of new workers is a fantastic opportunity to move into new jobs in new sectors with higher productivity and higher earnings. The Conservative Party needs an agenda for dynamism and change. It is what the economy needs too.

Tim Montgomerie: Lessons for ideology-free Johnson – and the Conservatives – in ideology-free Merkel’s legacy

29 Sep

Tim Montgomerie is the founder of ConservativeHome and is a contributor to Reaction.

‘He is the most remarkable politician of our age’. ‘The most formidable of election winners’. ‘His recipe of extra showbiz and a small side of policy fits our celebrity age perfectly’.

‘The economy’s iron lady’ of 40 years ago might famously have been against turning, but Boris Johnson prefers to see himself as the voters’ ‘flexible friend’. Oozing self-confidence, he does not feel restrained by the rules that Margaret Thatcher laid down, and which inhibit ‘principled, conviction politicians’ who – bless them – see ideas and policies as defining their mission.

And, electorally, he is fundamentally right that turning towards target voters is rarely a bad thing in this age of consumerist-programmed minds. Brits, increasingly used to getting precisely what they want from their shopping platforms; or in their entertainment, travel and leisure options; and even, perhaps especially, in their bedroom activities, like this servant leadership/ political pragmatism/ naked opportunism. (You can choose what to call it!).

Average voters are certainly more keen than the many newspapers and pundits who sell themselves as partly ideological, truth-telling products.

If, therefore, you are a politician who tends to be shamelessly, relentlessly obsessed about retaining power, then shuffle, shift, switch and even somersault your (dizzying) journey through elected office.

And all that s-bending is especially plausible for politicians who, happy days, via one big issue (like Brexit) already possess a loyal core of voters, and can consequently enjoy greater licence on almost everything else (as long as that litmus first big impression stays intact).

Four decades after the Iron Lady, our Flexible Friend in Number 10 isn’t relaxed about how he shifts his shape, however. This Downing Street’s u-turnery is almost scientific in its precision.

Directed by a government polling operation that is so gargantuan, pricey and relentless that it would make Blair and Clinton blush, ‘The Boris Offer’ is sold as ever-fresh and usually one step ahead or, at worst, barely one step behind opposition parties, and their ever more uphill search for issues that will give them an advantage over the Government.

So, in short, the Boris approach is an electorally effective one but – of course there is a but. The shape-shifting eventually becomes all that there is. The ruling party and government loses its principles and character. Incoherence can follow. Commitment from allies weakens. It stops attracting candidates and thinkers who aspire to be more than door-to-door salesmen. Policy innovation dries up as donors give up on think tanks who are unable to devise policies that can readily survive a run of bad focus groups or negative newspaper splashes.

The thinner set of policies that do succeed in getting to drafting stage in government don’t benefit from the Rolls Royce-style lab and road-testing that (allegedly) the civil service once lavished on them. And who can blame a seasoned Sir Humphry, government backbencher or even expert outside volunteer for judging that any time they give to the nurture of ambitious projects will very likely be wasted. Because ambitious almost always means risky, and risky – in any government that fears short-term unpopularity – equals project termination.

Angela Merkel, and last Sunday’s collapse in her party’s vote, is something of a cautionary tale for the British Conservative Party in these early years of “flexibility”.

Mutti’s innate caution might have been the main driver of the German experience – rather than the same BorisInc desire to turn politics into a branch of market research – but the basic inoffensiveness of pitch, and therefore the consequent lack of big mission, are shared features.

Political popularity appears to be broad and sustained but, when it eventually is exhausted, the falling away of support is dramatic. No one is loyal to you because you weren’t ever loyal to much that – at core – they really cared about. The popularity may be of long duration for ‘flexipols’ like Johnson and Merkel, but the list of big achievements ends up being pretty short. Big geopolitical problems like the rise of authoritarian China or dependence on energy from a gangster state like Russia only tend to grow even bigger.

During Merkel’s 16 years, Germany’s Christian Democrats ceased to be adequately distinguishable from the leftish Social Democrats. But it’s not too late for the Conservative Party to fight to stay robustly Conservative.

On tax, free markets, support for the family, basic civil liberties, the essential equality of the four Union nations, and in the fundamental character of our foreign and defence policies, the early sense of drift is real. The electoral operation and philosophy behind Johnson are formidable, but they should serve our mission and not, bit by bit, supplant it.

Those rightist scribblers in newspapers and online who have recently – and in chorus –  written obituaries for conservatism and/or Thatcherism are premature. The warning signs are real though. And the fightback must become real too.

David Green: Wealth extraction, not wealth creation. The Morrisons takeoever – and why government should be prepared to intervene.

11 Jul

David Green is Director of Civitas.

The Government is in a philosophical quandary. Its commitment to levelling up implies economic interventions in favour of left-behind regions. As a result, it has been attacked for abandoning the ideal of low taxes and small government. Simultaneously, it is pursuing some policies that imply continued commitment to the principle of non-interference in economic policy – not least in its approach to takeovers of British companies by private equity, brought to a head recently by offers to buy Morrisons.

The paradox was particularly striking when Kwasi Kwarteng announced new subsidy rules under the Subsidy Control Bill. He felt bound to say that the Government was not returning to the industrial strategy of the 1970s. There would be no ‘picking winners’ or bailing out of unsustainable companies. Producers will be backed only if they have good prospects of success and especially if they are supportive of decarbonisation. An innocent observer might conclude that a policy of avoiding lame ducks and backing promising ‘green’ technologies was picking winners.

The Government appears to have no clear criterion to help it distinguish between policies compatible with personal freedom and those that undermine it. Fortunately, one of the greatest defenders of liberty in the last 100 years grappled with this very problem.

Hayek argued that the main criterion was the rule of law, by which he meant that the Government should act through general laws that applied equally to all, including itself, and specifically that it should not grant preferential treatment to specific people. To do so would undermine the process of competitive discovery by which we reveal better ways of meeting human requirements.

What would this criterion imply for decarbonisation policy? It suggests not pre-judging which producers or technologies will be preferred. In vehicles, for example, there may be a role for hydrogen, hybrids, diesel, petrol, or all-electric. We should allow the competitive system to reveal the best approaches through trial and error.

But what should the Government do about private equity taking over British companies. Must it be accepted as an inevitable consequence of a free market and its ruling doctrine of non-interference?

Again, Hayek thought it through. It was the character of government activity that was important, he said, not the volume. Many measures were compatible with freedom. Moreover, he thought that a government that was ‘comparatively inactive but does the wrong things’ could do much more to ‘cripple the forces of  a market economy’ than one that is active, but confines itself to measures that assist ‘the spontaneous forces of the economy’.

How should this reasoning be applied today? The Morrisons takeover has come under strong fire from others in the financial sector. Legal and General, the City’s biggest fund manager, cautioned against loading Morrisons with debt and selling off its property assets on the cheap. Andrew Koch, a senior fund manager, feared that this strategy would lead to reduced tax paid to the Exchequer (because debt interest is deducted from profits).

Concerns in the City have been multiplied by the experience of Cobham, the defence group, which was sold to American private equity owners about two years ago. At the time, many warned that the new owners would break up the company, but the Johnson Government authorised the deal after getting some promises. Today, more than half of the business by value has been sold. James Anderson of Baillie Gifford, one of the world’s most successful investors, has recently described the underlying problem as a ‘deep sickness’ in UK capital markets.

The claims of these critics is consistent with the thinking of Adam Smith who warned against misplaced trust in manufacturers, speculators and merchants. They were ‘an order of men, whose interest is never exactly the same with that of the publick, who have generally an interest to deceive and even to oppress the publick, and who accordingly have, upon many occasions, both deceived and oppressed it’.

The Government should not fall into the trap of thinking that it should never intervene in corporate takeovers. There is a public interest in stopping the Morrisons takeover. The company’s model is to own the vast majority of its shops and run some its own manufacturers and farms. It is profitable. Private equity has been granted preferential advantages. Owners are allowed to pay tax as if they make capital gains and not profits subject to higher corporation tax. And owners are able to take advantage of the preferential treatment given to company debt compared with equity. A government that used its powers to encourage Hayek’s ‘spontaneous forces’ would equalise the treatment of debt and equity to preserve responsible private ownership.

If the Morrisons bid is allowed to proceed the owners will probably sell off the shops to another company they control and lease them back, giving them a capital gain and an income stream at the expense of Morrisons. This is wealth extraction not wealth creation. If the Government allows its squeamishness towards intervention to paralyse it into inaction, it will drop helplessly into the trap described by Hayek: that of crippling the spontaneous forces of a market economy by inaction.

Nick King: Luntz’s polling shows a crisis of confidence in capitalism. Here’s how we can change that.

8 Jul

Nick King is a Research Fellow at the Centre for Policy Studies.

The recent survey work conducted by Dr Frank Luntz on behalf of the Centre for Policy Studies think tank was some of the most extensive ever undertaken in the UK. It is no surprise, then, that it has been the subject of media attention and scrutiny for days, with an array of organisations poring over its findings and implications.

Their attention has mainly been focused on the publics disillusionment with the political class, our increasing polarisation as a country and the rising division between the woke and the anti-woke.

Equally concerning, though less commented on, have been Luntzs findings in relation to capitalism, enterprise and business all of which, I am sorry to say, the public seem to take a pretty dim view of.

ConservativeHome readers might point out – when asked their opinion of British business – that our firms create jobs and opportunities, provide salaries to their employees, pay billions in taxes, are innovative and socially responsible. But Luntzs poll found that the associations that spring to mind for most people are about profit over people, tax avoidance or excessive CEO pay.

This cynicism was all the clearer when voters were asked what business and economic leaders care most about. The British public chose making as much money as possible for themselvesand using loopholes to pay as little in tax as possibleas their second and third most popular answers. Only making a profit for their companies and shareholderswas more frequently pointed to. But before anyone takes too much comfort from the publics familiarity with s172 of the Companies Act, I should point out that I am not sure that those polled meant it in a good way.

To those of us who are supportive of free and open markets, this rings serious alarms bells. Not least because it’s the latest example in a worrying trend. Similar notes of caution were struck by a report published this week by the Institute of Economic Affairs entitled Left Turn Ahead? It points to widespread distrust of business and capitalism among the young almost three quarters of whom think our current economic system fuels racism, greed and exploitation. Crucially, the report argued that this sentiment no longer diminishes with age.

Luntzs findings suggest that the British public has fallen out out of love with business and that they are not convinced its a cause worth fighting for. A majority of voters even agreed with the statement: “When I look at the corporate leaders and how they treat us, I just think ‘f*** them all’.” Although at least business executives can console themselves that they fared slightly better than the politicians.

I wholeheartedly disagree with such attitudes. Britain has so many great businesses, and it needs more of them. Businesses create the jobs and wealth and innovation that keep this country going.

But it is clear that if we going to convince the public to change their minds, we need to carefully consider the terrain on which we are fighting and the battles which will win the war. Here are some ideas:

First, as Luntz has consistently pointed out over his long and distinguished career, language matters. Capitalism is unpopular. But to many of capitalism’s advocates, terms like free enterprise and open markets can be used interchangeably with it – and other polling suggests these concepts are more favourably received. If a phrase is more appealing than capitalism to those who reject it as a concept, then it makes sense for those who believe in the benefits of this system to adopt the language which people more readily accept.

Second, we need link the benefits of the economic system to individuals’ lives and livelihoods in the most direct way possible. Those surveyed by Luntz and the CPS were clear that they prefer the term “employers” to “companies” (and both, overwhelmingly, to “corporations”), as well as “employees” to “workers”. This suggests they want a sense of participation and reciprocity – something which comes out more generally in the polling. Again, it makes sense to adopt this language and point out the symbiotic relationship between employers and employees as far as possible.

Third – and this is not something brought out in the survey – we should talk more about the sorts of businesses people are typically more supportive of. As previous work I have undertaken at the CPS demonstrates, people are far more positively inclined towards the sorts of small and family businesses which make up the vast majority of companies within the UK. When trying to convince people of the value of businesses we should “think small” wherever possible.

Finally, we need to remind people of the role businesses play in society. This is not a plea for businesses to publish well-intentioned but often meaningless ESG strategies. Nor is it a suggestion that businesses should demonstrate their right-on credentials – the British people left Luntz in no doubt that they did not want business leaders weighing in on culture wars. But it is a suggestion that we draw out the link between business and the things the British people care about all the more clearly.

When asked the fundamental purpose of the economy and presented with a dozen options, more than a third of those asked responded “to pay for public services like the NHS”. It might not be the purpose I would pick, but the British public are absolutely right to draw a link between businesses and the revenue needed for the proper running of our public services. So lets remind them of the link whenever we can.

All is not lost. Luntzs polling data also showed that most voters (especially Conservative ones) put a value on hard work and that they think success in this country is typically earned and deserved. But the survey presented a fascinating and sobering insight into the crisis of confidence in capitalism which this country faces. If we do not heed its lessons, we will be faced with a crisis not just in confidence, but in capitalism itself.

Nick King: Levelling up. The challenge is less defining it than delivering it, for which Johnson will need the private sector.

25 May

Nick King is a Research Fellow at the Centre for Policy Studies.

To level up or not to level up? That is certainly not the question. If theres one thing the Government has been admirably clear about, it is its determination to do it. But that begs rather a lot of other legitimate questions, such as: what does levelling up really mean? How will we level up? What level are we levelling up to? How will levelling up be measured? And if answers to these questions are not forthcoming, how can we ever really know whether weve levelled up or not?

Some of these points were recently put to ministers from the Business and Housing departments by the Business Select Committee. The answers forthcoming were clearly not to the (Labour) Chair of the Committees satisfaction. He suggested there was no clarity in terms of understanding what levelling up means or the policy which sits behind it.

But there’s actually a strong argument – although you wouldn’t expect the ministers themselves to make it – that the lack of specificity around levelling up, and the catch-all nature of the term, have added to its value as a concept.

The Conservative Partys last general election manifesto talked about levelling up every part of the UK, levelling up skills and levelling up through investment in infrastructure. Prior to that manifesto, I produced a report for the Centre for Policy Studies, which called for greater devolution, enhanced skills, increased infrastructure investment and new Opportunity Zones as the principal means of levelling up.

Since the election, various other think tanks have put their own spin on levelling up, with Onwards taskforce looking at levelling up the tax system and innovation, the Centre for Progressive Policy developing its own Levelling Up Outlook, the Institute for Public and Policy Research suggesting we level up health, and Bright Blue looking at levelling up in the context of deprivation.

This all-encompassing nature of the phrase, not yet defined by any mainstream dictionary, is surely more of a strength than a weakness. We saw this during the election. Then, across the former ‘Red Wall’ seats of the Midlands and the North, people voted in their millions for levelling up, without needing a detailed policy prospectus outlining which departments would take the lead and what metrics they would apply. Yes, they wanted to ‘get Brexit done’ – but getting Brexit done was just one half of the equation to making their lives better: levelling up was the improvement that would come afterwards.

For all of its lack of explicit definition, those of us who are who committed to the levelling up cause – and I include myself in that number – feel we know what it’s aiming at. We know that at its heart it is about addressing the long-standing inequalities which exist in the United Kingdom.

Levelling up is about the life chances of people, the prospects of places and about making sure our country is the United Kingdom it should be, not the divided realm it risks becoming. In that spirit, it can be seen as a continuation of One Nation Toryism, of efforts to extend social mobility and even of various Governments rebalancing efforts.

Perhaps that is why, when Boris Johnson returned to Downing Street, having won his crushing majority in the election, he stood on the steps of Number 10 and promised to unite and level up’ our country. There followed measures such as substantial increases in infrastructure investment, the creation of the Towns Fund and, more recently, the creation of the Levelling Up Fund and the Community Renewal Fund. These all suggested a centrally-driven, targeted approach, relying on the funding of specific projects to level up specific places.

But the ambition to level up goes much wider and deeper than that. Ever since the election, every Government department has been tasked with thinking about levelling up and how to deliver it. In education, that means better schools and improved skills outside London and the South-East. For the Transport and Culture departments, that means greater national transport and digital connectivity respectively. For the Department of International Trade, it means getting more investment into the regions and more companies around the country exporting.

Now, to bring coherence and strategic intent to the levelling up agenda, the Government has promised a Levelling Up White Paper. This White Paper is to be produced by ConHome columnist, Harborough MP and the Prime Minister’s Levelling Up adviser, Neil OBrien. He is, in many respects, the perfect man for the job, with a first class brain and a long history of considering these issues, raised in the North but representing a Midlands constituency, and someone who knows his way around Whitehall.

This last point is critical given the clear intention to make this a ‘whole of government’ exercise. Virtually every department has been instructed to play its part in levelling up; the Prime Minister and the Chancellor recently put it at the heart of their Plan for Growth, and OBriens White Paper is being run out of Cabinet Office, suggesting an ambition to reach into various Whitehall departments.

He will, no doubt, have received direct orders from the Prime Minister as to what he wants in the White Paper and perhaps the slight shift in language within the Queen’s Speech gives us a clue as to what to expect. That speech promised to level up opportunities’ and the accompanying Briefing Note – prepared by the Treasury – tied the levelling up agenda much more closely to public services, such as health, education and policing. 

This suggests the Government will be looking as much at the opportunities presented to people, and within places, as the outcomes which those opportunities might lead to.For my part, the most important factor I would urge the Government to remember, is that whether we want to improve opportunities, or outcomes, levelling up needs to be centred on the potential of the private sector. As I argued in my recent Centre for Policy Studies paper with Jake Berry on rejuvenating the North, only the private sector can offer the scale of investment, the jobs and the opportunities which can lead to long-term sustainable change.

Government, of course, has a pivotal role to play. It needs to think about where it invests, about the implications of the gravitational pull of London and the South East and how it can best break the trend of self-perpetuating economic failure in the least successful parts of our country. But, most importantly, it can help create the conditions in which private enterprise can thrive.

After all, to business-loving, capitalism-supporting types like me, levelling up can only really be delivered through the dynamism of the private sector. It is its agility, investment and innovation through which life-changing opportunities will be created. Absent of that, levelling up will mean very little at all.  

Greed can have good consequences, generosity bad ones. What counts isn’t the motive. It’s the result.

24 Mar

At the risk of invoking Godwin’s law, we will risk the following.  Hitler believed his persecution of the Jewish people was right – morally justified.  That he believed he was doing good does nothing to make the Holocaust less evil.  Ditto Stalin and the Kulaks, Mao and the Rightists.

Now imagine a vaccine producer – to take a topical example – who is driven entirely by greed.  His motive does nothing to lessen his product’s effectiveness.  It doesn’t lop even a single life off the list of those saved.

By the way, it’s unlikely that he would be driven entirely by anything.  Most of us aren’t.  We’re powered by a mass of motives, the mix of which we can’t identify: greed, altruism, fear, compassion, anger, lust, shame, love – and perhaps, above all, by the elemental urge to “keep going”, as the sergeant yells at the shell-shocked First World War soldier in Ted Hughes’ radio play The Wound.

To be clear: greed isn’t good in itself, but its by-products can be.  Generosity, by contrast, is good in itself, but it’s by-products may not be.  What good comes of generously giving the addict money for the fix that will kill him?

Whatever you may say about Boris Johnson, he never fails to give us all something new to talk about – in this case, his half-remark about those vaccine firms yesterday, quickly made and just as quickly withdrawn.  As he sometimes does, he was offending the spirit of the age.

Which crowns virtue signalling as the ultimate virtue.  What matters isn’t what you do, but what you say – the signal you send.  It shows that you have the right motive, and everything else follows.  Except, as we’ve seen, that it doesn’t.

If you want societies that seek to impose virtue by force, leave the rest of us to muddled old Britain, and try Jim Jones’ Jonestown, with its murders and mass suicides, or Mao, Stalin, Hitler – and so on.  Compared to the lot of them, a greedy capitalist is a study of morality.

Ryan Bourne: “Levelling the playing field” is no argument for an online sales tax

5 Aug

Ryan Bourne holds the R Evan Scharf Chair in Public Understanding of Economics at the Cato Institute. 

Some time soon, we’ll see more automation in the fast food sector. Burger-making machines are real. Franchises such as McDonald’s have rolled out self-ordering touchscreens. It’s not difficult to imagine a world in which fast-food worker numbers collapse. In the longer-term, when the technologies become widely affordable to businesses, cost reductions from these sorts of labour-saving investments will benefit consumers through lower prices.

Not every competitor chippie, kebab shop, or burger outlet will make the transition, of course. Some will struggle under what will then become the higher cost, labour-intensive model, finding their niche in the market. Others may simply go out of business – unable to compete on price and without the ability to invest in the machinery.

Would this be a problem? Or is it simply an example of capitalism’s creative destruction? 

Imagine if the struggling companies and their employees demanded Parliament pass a “burger automation tax” under the premise of “levelling the playing field” with those companies that took the plunge. Think how dangerous supporters of consumer-led capitalism would consider it for popular price-reducing innovations to be held up as a problem. Consider how bemused we’d be if the savings in labour costs were dubbed “unfair competition,” simply because not every company realised them.

Well, we are seeing an analogous argument capture policymaking today. And, bizarrely, free-marketeers within the Conservative party are not really speaking out against the muddled thinking.

The UK government is kite-flying about an online sales tax of two per cent, or taxing online deliveries to consumers. One of the many justifications given for even considering these Luddite measures is to “level the playing field” between online retailers and the High Street, given the latter face business rates.

Here’s the problem: there already is a level playing field. Just as all businesses face the same minimum wage laws, they also face the same overall tax regime. This includes business rates – which is a tax on the rental value of commercial property, not sales.

Faced with those policy realities, businesses are free to decide how to operate and structure. Innovative online sellers such as Amazon have simply adopted business models that repudiate the need for a high fixed‐cost physical presence in expensive inner‐city areas.

Operating from out-of-town warehouses is a cost-saving business decision akin to the potential automation in fast food. To then suggest that online retailers not needing to rent high-value property is some distortion of competition that requires a corrective tax, as the Treasury reportedly believes, is just bizarre.

It’s this business decision that partially explains why online sellers can provide low prices for consumers, enhancing their welfare. The idea that adopting this model is some underhand advantage is as daft as saying that Amazon’s packaging costs are a disadvantage for it, requiring a “packaging-equivalent tax” on High Street stores’ sales.

To echo the 19th century classical liberal economist Frédéric Bastiat, the bricks-and-mortar retailers using this level playing field argument are akin to candlemakers petitioning the Government about the sun flooding the market with cheap light.

Now if the Government thinks that the current business rates regime is an inappropriate tax on rental values or has distortionary impacts on commercial property use (I agree, but think the impact overblown) then, by all means, they should change the law faced by all. If councils are worried about car parking charges’ impact on high street retailers, then they are within their rights to adjust them.

But let’s not talk as if it’s unfair competition when firms, faced with a tax regime, innovate to reduce costs to provide a service in a way that consumers prefer. For make no mistake, it is customers that will ultimately bear the costs of any new sales or delivery tax in the form of higher prices, especially those whose use of delivery is less responsive to price, such as in rural areas.

Of course, increasingly traditional retailers are themselves re-orienting to online, especially during Covid-19. Any cuts to business rates (to the extent they are passed through by landlords) might allow for some consumer price reductions to “compete” better with online firms for sales. But if these same traditional retailers then face a new tax on their growing online sales anyway, the Government will have given with one hand and taken with another. 

And which companies will suffer disproportionately from the new administrative burden of having to deal with an online sales tax, do you think? Will it be Amazon? Or is it more likely to be smaller companies navigating the online market for the first time?

This whole debate highlights a broader gripe I’ve had with Conservative policy thinking for some time. Conservatives used to understand the case for consumer-led markets, as extolled by Jeff Bezos in a US Congressional hearing last week. They trusted customers to make choices in their own best interests. Our revealed preferences were thought to represent us trying to maximise our wellbeing under the circumstances we face.

But increasingly MPs seem to think they know better. Sure, customers might be flocking to online retail, especially during a deadly pandemic. But what they really want, we are told, is a thriving High Street. Who you gonna believe: MPs or your lying eyes?

The idea that any business providing the same product must face the same tax and regulatory cost base to truly compete on a “level playing field” is easily dismissed. Wind and nuclear power both produce electricity. But if someone told you we needed a tax on wind power to make up for the safety costs of nuclear, you’d think they were utterly mad. So what do we think is different about retail, after we’ve decided that it’s appropriate to tax commercial property consumption?

Now perhaps the Government’s real aim is not to “levelling the playing field.” Some say a tax on online deliveries would reduce congestion – a daft argument given a van delivering to 30-40 places would cause far less traffic congestion than everyone going to stores. Some say that the Government simply needs the revenue – in which case £2 billion is a relative drop in the ocean. Our communitarian friends, with their stale 1950s vision of High Street’s somehow engendering “community,” want to pull any lever to try to preserve the town centres of yesteryear.

Yet those arguments are self-evidently absurd or futile in the face of ongoing trends. The “level playing field” line is more dangerous precisely because it sounds as if it’s pro-competition. If Conservatives really believe, however, that the role of Government is to correct for businesses finding ways to reduce their fixed costs, as if this were some unfair advantage, then they are further through the economic looking glass than I’d realised.