Mark Lehain: The Government can’t afford to surrender in the war on woke

20 Nov

Mark Lehain is Director of the Campaign for Common Sense, and the founder and former Principal of Bedford Free School.

While the media and Westminster insiders have been excited about all the Cummings and goings at Number 10, one has to wonder what the rest of the country makes of it.

My hunch is that people care more about rising unemployment and falling incomes than who is up and down in Downing Street. That said, even if personnel changes had not occurred, we are about to enter a post-Covid and Brexit transition phase, and so it is fair to consider what the Government should do from here.

Among a whole range of other urgent issues, the country will have to confront the decimation of the private economy and public finances wrought by the pandemic and measures taken to combat it. Things will be challenging, to say the least.

So it’s quite understandable that some are arguing that as part of Boris’s Johnson’s Reset, the Government should stop its (so far modest) attempts to address the left-wing political and cultural biases that have spread unchallenged through so much of life.

They argue that it is a distraction from the business of economic recovery and government delivery, and that it is divisive at a time when the Government needs to bring people together. I think they are wrong for two very important reasons.

First of all, as a wise person once said, “culture eats strategy for breakfast.” And until recently, Conservative-led governments did little to address the spread of divisive values and ideas from academic faculties and leftist movements into the civil service, executive suites, and elsewhere.

Wary of appearing unkind or stuffy, a blind eye was turned as universities discouraged freedom of thought and imposed niche ideologies on staff and students. Ministers stayed quiet as children were taught by their schools that “white privilege” is a fact, or told by groups such as Mermaids and Stonewall that their sex is whatever they feel it is.  And they did little to challenge the sneering and condescension by the arts, media, and others towards those who didn’t share their outlook on life.

The facts of life are (small-c) conservative but, time and again, opportunities to point this out were avoided. Conservatives didn’t start the fire – that was the radical left – but neither did they try to extinguish the flames as they burned through society and scorched the common ground.

Only recently have ministers started to challenge the metropolitan grip on quangos, pushed back against Critical Race Theory, reminded schools that they should be politically impartial, and told museums they shouldn’t bend to the whims of activists. All this shouldn’t be remotely controversial for anyone in the centre ground of politics. They’re modest moves to allow some diversity of thought in sectors otherwise captured by groupthink – not Tory takeovers.

So this Government can focus solely on economic and environmental policies, and pretend that values and culture don’t matter. But if it does, woke ideas will continue to hollow out institutions, turn people against one another, and ultimately undo any other good work it does.

The other reason as to why I’d encourage Downing Street ‘21 to persevere with challenging the cultural hegemony is that it makes good political sense: it is where the vast majority of the public are.

It’s not that people are opposed to improving the lives of trans people or examining ways to reduce disparities in health or education outcomes by different communities – far from it. They lead rich and diverse lives, have friends from all backgrounds, and families of all shapes and sizes. They care deeply about others, and want to do their best for their community and country.

They just don’t want to be told that they have to do this in a certain way, or hold specific views, or “educate themselves” to see the world as determined by academics who’ve never had to turn a profit or balance a household budget.

Research at the Campaign for Common Sense has found this again and again – on everything from political correctness, to comedy, to protests, historical statues, and the BBC. In contrast to the impressions given by the media, arts and political sectors, across all ages, socio-economic groups, and regions, people hold common sense, down-to-earth views on values and culture.

I saw this as a parliamentary candidate in the north east last winter. I was repeatedly told on the doorstep that politicians patronised voters who didn’t share their views on things. People also said that under Johnson they felt they were finally being listened to. In so many ways, Brexit was a proxy for the desire for their views and communities to be respected, not treated as something to be made better by others.

Whoever has the ear of the Prime Minister when things settle needs to bear this in mind as they plan the next stage of things. Labour and the Lib Dems are still obsessed with niche causes, and Nigel Farage and Laurence Fox are waiting in the wings to peel away voters if the government drifts that way again too.

Come the next election, Brexit will have been long done. However, the voters who delivered such a stonking majority in 2019 can be held together, but only if Johnson and his team show respect for them and their values.

So the war on woke must continue – both to bring people together as a country and an electoral coalition. It might mean a few awkward conversations for people at posh dinner parties, but it’s the right thing to do. The next few years are certainly going to be interesting times.

Mark Lehain: The Government can’t afford to surrender in the war on woke

20 Nov

Mark Lehain is Director of the Campaign for Common Sense, and the founder and former Principal of Bedford Free School.

While the media and Westminster insiders have been excited about all the Cummings and goings at Number 10, one has to wonder what the rest of the country makes of it.

My hunch is that people care more about rising unemployment and falling incomes than who is up and down in Downing Street. That said, even if personnel changes had not occurred, we are about to enter a post-Covid and Brexit transition phase, and so it is fair to consider what the Government should do from here.

Among a whole range of other urgent issues, the country will have to confront the decimation of the private economy and public finances wrought by the pandemic and measures taken to combat it. Things will be challenging, to say the least.

So it’s quite understandable that some are arguing that as part of Boris’s Johnson’s Reset, the Government should stop its (so far modest) attempts to address the left-wing political and cultural biases that have spread unchallenged through so much of life.

They argue that it is a distraction from the business of economic recovery and government delivery, and that it is divisive at a time when the Government needs to bring people together. I think they are wrong for two very important reasons.

First of all, as a wise person once said, “culture eats strategy for breakfast.” And until recently, Conservative-led governments did little to address the spread of divisive values and ideas from academic faculties and leftist movements into the civil service, executive suites, and elsewhere.

Wary of appearing unkind or stuffy, a blind eye was turned as universities discouraged freedom of thought and imposed niche ideologies on staff and students. Ministers stayed quiet as children were taught by their schools that “white privilege” is a fact, or told by groups such as Mermaids and Stonewall that their sex is whatever they feel it is.  And they did little to challenge the sneering and condescension by the arts, media, and others towards those who didn’t share their outlook on life.

The facts of life are (small-c) conservative but, time and again, opportunities to point this out were avoided. Conservatives didn’t start the fire – that was the radical left – but neither did they try to extinguish the flames as they burned through society and scorched the common ground.

Only recently have ministers started to challenge the metropolitan grip on quangos, pushed back against Critical Race Theory, reminded schools that they should be politically impartial, and told museums they shouldn’t bend to the whims of activists. All this shouldn’t be remotely controversial for anyone in the centre ground of politics. They’re modest moves to allow some diversity of thought in sectors otherwise captured by groupthink – not Tory takeovers.

So this Government can focus solely on economic and environmental policies, and pretend that values and culture don’t matter. But if it does, woke ideas will continue to hollow out institutions, turn people against one another, and ultimately undo any other good work it does.

The other reason as to why I’d encourage Downing Street ‘21 to persevere with challenging the cultural hegemony is that it makes good political sense: it is where the vast majority of the public are.

It’s not that people are opposed to improving the lives of trans people or examining ways to reduce disparities in health or education outcomes by different communities – far from it. They lead rich and diverse lives, have friends from all backgrounds, and families of all shapes and sizes. They care deeply about others, and want to do their best for their community and country.

They just don’t want to be told that they have to do this in a certain way, or hold specific views, or “educate themselves” to see the world as determined by academics who’ve never had to turn a profit or balance a household budget.

Research at the Campaign for Common Sense has found this again and again – on everything from political correctness, to comedy, to protests, historical statues, and the BBC. In contrast to the impressions given by the media, arts and political sectors, across all ages, socio-economic groups, and regions, people hold common sense, down-to-earth views on values and culture.

I saw this as a parliamentary candidate in the north east last winter. I was repeatedly told on the doorstep that politicians patronised voters who didn’t share their views on things. People also said that under Johnson they felt they were finally being listened to. In so many ways, Brexit was a proxy for the desire for their views and communities to be respected, not treated as something to be made better by others.

Whoever has the ear of the Prime Minister when things settle needs to bear this in mind as they plan the next stage of things. Labour and the Lib Dems are still obsessed with niche causes, and Nigel Farage and Laurence Fox are waiting in the wings to peel away voters if the government drifts that way again too.

Come the next election, Brexit will have been long done. However, the voters who delivered such a stonking majority in 2019 can be held together, but only if Johnson and his team show respect for them and their values.

So the war on woke must continue – both to bring people together as a country and an electoral coalition. It might mean a few awkward conversations for people at posh dinner parties, but it’s the right thing to do. The next few years are certainly going to be interesting times.

Ryan Bourne: A British overspill from America’s result. Why the debate on the right over economics will now intensify.

11 Nov

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute. 

Donald Trump loyalists might not yet admit it, but their man was defeated handily in the U.S. Presidential election. A post-mortem will soon be undertaken within the Republican party, and with it a debate that has been bubbling since his primary victory in 2016 on both sides of the Atlantic: what economics should conservatives champion?

Ideally, that debate would be about what policies actually work to improve our lives or liberties. But winning elections is politicians’ raison d’être. So it’s little surprise that those representing major strands of Republican economic thought have conflicting economic narratives of the results already as to what is electorally desirable, a division made somewhat easier by the fact that “Trumpism” blended free-market policies with protectionism and interventionism, in turn offering something for everyone.

Free-market Republicans’ story goes like this: tax cuts and deregulation delivered by a Republican Senate and Presidency delivered robust pre-pandemic economic growth, low unemployment, and rising household incomes. So strong was that economy before Covid-19, that even after a deep pandemic-induced recession, 56 percent of surveyed voters nationwide said their family was still better off financially after four years of The Donald in the White House. Tellingly, Trump led Joe Biden in every battleground state on who voters trusted most to “manage” the economy.

Combine that evidence with the party’s unexpected electoral resilience in the Senate, and huge pick up of Cuban-American and Mexican-America votes in Florida and Texas, and it’s easy to conclude, as former Presidential candidate Mitt Romney has, that more free-market Republican economic policies are not unpopular.

In fact, polls suggest voters baulked at the socialist ideas aired in the Democratic primary, and were wary of even Joe Biden’s quite ambitious progressive agenda, particularly on decarbonisation. What lost Trump the election was, in this view, not his domestic economic policies then, but his personal conduct, handling of Covid-19, and, possibly, even downsides of his trade wars, the most obvious consequences of which were government welfare for Americans farmers and manufacturers struggling with inflated input costs.

The “national conservative” counter-blast provided by, for example, Samuel Hammond in the Guardian, says the exact opposite. The last two elections supposedly show the party’s future is to reach into working-class communities of all ethnicities. This opportunity, in part, came about from Trump’s willingness to challenge traditional Republican views on free trade and industrial policy, giving him a hearing with voters suffering the effects of market-led deindustrialisation. The party should build on that to become a true “workers’ party” by embracing a more interventionist abour market and manufacturing agenda, according to the Missouri and Florida senators, Josh Hawley and Marco Rubio.

This interpretation even posits that Republicans may have failed to win the Presidency because they did not sufficiently embrace the “good government can do” (to use a Theresa May phrase.) Hammond postulates, for example, that Biden was able to pick up white working-class votes in the Rust Belt by going further on nationalistic “Buy American” agendas and tax incentives for re-shoring manufacturing jobs than Republicans would ever opt for. A more serious policy agenda and a compassionate Republican frontman could therefore build a whole new electoral coalition on this type of platform that Trump opened the door to, if only the Republicans could move on from Reaganism and their commitment to free market ideas.

Now, on the facts, I (perhaps unsurprisingly) find the first narrative more compelling. Exit polling shows that, contra the national conservative view, Republican support still skewed towards those on higher incomes, not lower. If preferences for a more interventionist agenda, as opposed to, say, the culture war or Donald Trump’s personality, are the dominant explanation of vote patterns, it’s difficult to square that with Republican Senate candidates, most of whom are more free market on economics than Trump, outperforming the current President. Of course, in reality voters don’t vote according to policy preferences, so a monocausal link between economics and electoral outcomes is dodgy ground on both sides.

But at heart here is a debate that we’ve heard plenty of in the UK: how far does the political realignment we are seeing necessitate a change in conservatives’ economic ideas? The new “national conservatives” in the U.S. and modern “One Nation” Tories in the UK, such as Nick Timothy, want to throw-off any libertarian influence  with the latter even thinking the 2017 Tory manifesto an appropriate place to caricature the “libertarian right,” as if voters would read that document and take that signal as a cue to shift their vote.

Two things have frustrated me about these intra-conservative debates to date. The first is that the anti-market conservatives appear to just assume that the left is correct and that economic policy is class-based: that policies that are pro-the interests of the working class must necessarily be more interventionist than conservatives have previously considered acceptable.

I’ve written before about why that is not true and how market-led policies could deliver pro-poor outcomes. The U.S. results also show that the assumption is a sham in electoral terms: working class minorities in the south were frightened of Democratic industrial strategies when it meant cheap energy was set to be sacrificed and vast new regulation of a structurally sound labour market were proposed.

But my second frustration is deeper. Thus far thinkers such as Timothy and others in the U.S. have written extensively on why conservatives should move on from free market ideas in the abstract. They document social and economic phenomena that have moved in the wrong direction in the past three to four decades, and then link these to the Thatcher-Reagan revolutions and supposed commitments to “market fundamentalism”.

Yet anyone who has followed conservative policy closely since the 1990s would find it laughable to frame recent offerings as being influenced by an unabashed commitment to libertarian ideas. So this narrative is best understood as rolling the pitch for an even more interventionist conservative economics.

What we have had far less off yet is the specifics: what, exactly, do those such as Timothy want from policy instead of what we see today? National conservative thinkers have hid behind the shield of big picture views of what is electorally desirable to win in the Rust Belt or the Red Wall as a substitute for outlining what actually should be done, and providing evidence for why those proposals would in fact work where previous dalliances with industrial planning have failed.

One consequence of this messy Presidential election outcome and its failure to clearly repudiate Trumpism is that those debates will now be crucial in determining the future direction of the Republican party. And stateside narratives have a tendency to be imported into UK politics too.

Ryan Bourne: A British overspill from America’s result. Why the debate on the right over economics will now intensify.

11 Nov

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute. 

Donald Trump loyalists might not yet admit it, but their man was defeated handily in the U.S. Presidential election. A post-mortem will soon be undertaken within the Republican party, and with it a debate that has been bubbling since his primary victory in 2016 on both sides of the Atlantic: what economics should conservatives champion?

Ideally, that debate would be about what policies actually work to improve our lives or liberties. But winning elections is politicians’ raison d’être. So it’s little surprise that those representing major strands of Republican economic thought have conflicting economic narratives of the results already as to what is electorally desirable, a division made somewhat easier by the fact that “Trumpism” blended free-market policies with protectionism and interventionism, in turn offering something for everyone.

Free-market Republicans’ story goes like this: tax cuts and deregulation delivered by a Republican Senate and Presidency delivered robust pre-pandemic economic growth, low unemployment, and rising household incomes. So strong was that economy before Covid-19, that even after a deep pandemic-induced recession, 56 percent of surveyed voters nationwide said their family was still better off financially after four years of The Donald in the White House. Tellingly, Trump led Joe Biden in every battleground state on who voters trusted most to “manage” the economy.

Combine that evidence with the party’s unexpected electoral resilience in the Senate, and huge pick up of Cuban-American and Mexican-America votes in Florida and Texas, and it’s easy to conclude, as former Presidential candidate Mitt Romney has, that more free-market Republican economic policies are not unpopular.

In fact, polls suggest voters baulked at the socialist ideas aired in the Democratic primary, and were wary of even Joe Biden’s quite ambitious progressive agenda, particularly on decarbonisation. What lost Trump the election was, in this view, not his domestic economic policies then, but his personal conduct, handling of Covid-19, and, possibly, even downsides of his trade wars, the most obvious consequences of which were government welfare for Americans farmers and manufacturers struggling with inflated input costs.

The “national conservative” counter-blast provided by, for example, Samuel Hammond in the Guardian, says the exact opposite. The last two elections supposedly show the party’s future is to reach into working-class communities of all ethnicities. This opportunity, in part, came about from Trump’s willingness to challenge traditional Republican views on free trade and industrial policy, giving him a hearing with voters suffering the effects of market-led deindustrialisation. The party should build on that to become a true “workers’ party” by embracing a more interventionist abour market and manufacturing agenda, according to the Missouri and Florida senators, Josh Hawley and Marco Rubio.

This interpretation even posits that Republicans may have failed to win the Presidency because they did not sufficiently embrace the “good government can do” (to use a Theresa May phrase.) Hammond postulates, for example, that Biden was able to pick up white working-class votes in the Rust Belt by going further on nationalistic “Buy American” agendas and tax incentives for re-shoring manufacturing jobs than Republicans would ever opt for. A more serious policy agenda and a compassionate Republican frontman could therefore build a whole new electoral coalition on this type of platform that Trump opened the door to, if only the Republicans could move on from Reaganism and their commitment to free market ideas.

Now, on the facts, I (perhaps unsurprisingly) find the first narrative more compelling. Exit polling shows that, contra the national conservative view, Republican support still skewed towards those on higher incomes, not lower. If preferences for a more interventionist agenda, as opposed to, say, the culture war or Donald Trump’s personality, are the dominant explanation of vote patterns, it’s difficult to square that with Republican Senate candidates, most of whom are more free market on economics than Trump, outperforming the current President. Of course, in reality voters don’t vote according to policy preferences, so a monocausal link between economics and electoral outcomes is dodgy ground on both sides.

But at heart here is a debate that we’ve heard plenty of in the UK: how far does the political realignment we are seeing necessitate a change in conservatives’ economic ideas? The new “national conservatives” in the U.S. and modern “One Nation” Tories in the UK, such as Nick Timothy, want to throw-off any libertarian influence  with the latter even thinking the 2017 Tory manifesto an appropriate place to caricature the “libertarian right,” as if voters would read that document and take that signal as a cue to shift their vote.

Two things have frustrated me about these intra-conservative debates to date. The first is that the anti-market conservatives appear to just assume that the left is correct and that economic policy is class-based: that policies that are pro-the interests of the working class must necessarily be more interventionist than conservatives have previously considered acceptable.

I’ve written before about why that is not true and how market-led policies could deliver pro-poor outcomes. The U.S. results also show that the assumption is a sham in electoral terms: working class minorities in the south were frightened of Democratic industrial strategies when it meant cheap energy was set to be sacrificed and vast new regulation of a structurally sound labour market were proposed.

But my second frustration is deeper. Thus far thinkers such as Timothy and others in the U.S. have written extensively on why conservatives should move on from free market ideas in the abstract. They document social and economic phenomena that have moved in the wrong direction in the past three to four decades, and then link these to the Thatcher-Reagan revolutions and supposed commitments to “market fundamentalism”.

Yet anyone who has followed conservative policy closely since the 1990s would find it laughable to frame recent offerings as being influenced by an unabashed commitment to libertarian ideas. So this narrative is best understood as rolling the pitch for an even more interventionist conservative economics.

What we have had far less off yet is the specifics: what, exactly, do those such as Timothy want from policy instead of what we see today? National conservative thinkers have hid behind the shield of big picture views of what is electorally desirable to win in the Rust Belt or the Red Wall as a substitute for outlining what actually should be done, and providing evidence for why those proposals would in fact work where previous dalliances with industrial planning have failed.

One consequence of this messy Presidential election outcome and its failure to clearly repudiate Trumpism is that those debates will now be crucial in determining the future direction of the Republican party. And stateside narratives have a tendency to be imported into UK politics too.

Eamonn Ives: The Government should be doing all it can to give Britain’s green entrepreneurs a head start

6 Nov

Eamonn Ives is a researcher who specialises in environmental and energy policy. He is the author of Green Entrepreneurship, which was published by The Entrepreneurs Network with the Enterprise Trust.

Unless you have spent the last several months under a rock – which is, admittedly, not the least attractive proposition right now – you’ll know that the economy has taken a beating.

Unemployment and the public debt are up, while gross output and business investment are down. For many of those who have managed to hold onto their jobs, their situation is precarious.

As well as fire fighting various economic challenges, the Government is also contending with the small matter of ensuring the house is in order before it hosts COP26.

Delivering on these two objectives need not be mutually exclusive endeavours. A new report, published by The Entrepreneurs Network and the Enterprise Trust, highlights a handful of ways in which the Government can unleash the inventiveness of Britain’s environmental entrepreneurs – simultaneously giving the economy a shot in the arm, and helping to deliver the sustainability solutions necessary to clean up our planet.

So, how do we advise the Government proceed? Fundamentally, the report argues that more needs to be done to address instances of environmental market failures.

This is not to say that we should be ruthlessly clamping down on every single source of carbon, or simply throwing what precious little cash the Treasury still has at every eco-idea under the sun. Rather, it means recognising that it is not unreasonable to expect polluters to take more responsibility for the harms they inflict on third parties. It also means that innovators who are developing solutions should be supported in doing so – such as through targeted R&D grants – given the benefits they bequeath to us all.

These are inherently conservative ideas, and it does appear that in the current Government the broad principles underpinning them are reasonably well understood.

As well as this general thesis, we make 20 separate policy recommendations. These focus on how to improve the environmental credentials of the energy we produce, the transport we make use of, and the consumer goods we buy. They are not an exhaustive list of how to combat each and every environmental issue, but taken together should at least point the country in a greener direction.

For instance, instead of using Britain’s foreign aid budget and export credit agency to promote fossil fuel projects abroad, why not funnel that money into renewables or ‘cleantech’ solutions being worked on by British inventors? Not only would the climate and green entrepreneurs benefit, but taxpayers would too, if it means less of a risk of loans defaulting on polluting projects which could soon become stranded assets as the pace of renewables accelerates.

Or, instead of effectively banning genetic engineering techniques, why not listen to the scientific community and allow trials to take place, opening up a huge market for crop scientists? Bigger yields would minimise how much space is necessary to grow the food we need, and this regulatory reform is a genuine example of a Brexit dividend, given how the obstacle to doing so emanates squarely from Brussels.

Or, to help deliver on a clean, modern transport system, what about committing to a comprehensive liberalisation of the rules pertaining to e-scooters, instead of clouding the industry in uncertainty? This would be a victory for common sense, carbon emissions, and air quality – and also for the entrepreneurial tech start-ups involved in developing software for platforms associated with them.

From polling we commissioned for the report, it seems that the business community is on board for the shift to a greener economy, too. Fully three-fifths believed that opportunities await them in a more sustainable future, while a mere eight per cent did not. Meanwhile, over half of businesses agreed that employees increasingly want to work in environmentally responsible firms – again, just eight per cent did not. We also found that there was no end to the sorts of environmental problems businesses believed their customers wanted to see addressed – from embracing sustainable packaging, to sourcing greener materials, to using cleaner energy.

British entrepreneurs could be at the forefront of developing solutions to all of these challenges and more – and indeed many already are. But the Government must go further still. In the case of environmental innovation, the case in favour is all the stronger.

Consider what the major industries of the future will be – green, clean, and environmentally conscious. The Government should be doing all it can to give Britain’s entrepreneurs a head start in these markets, lest it want the jobs, investment, exports and growth potential to be captured by other economies. 

With our hosting of COP26 just one year away, there is no time to waste. If the UK is to not be embarrassed in its own backyard, it has to be as ambitious as possible. The Prime Minister talks the talk better than most, but that counts for little if it isn’t backed up by a suite of tangible policies which facilitate entrepreneurs and the business community to do the heavy lifting behind the scenes.

Our report maps out a few extra ways he can make that a reality – delivering a cleaner, more competitive economy.

Matthew Oakley: Levelling up. We need to measure it in order to deliver it – and know that it’s worked

12 Oct

Matthew Oakley is the Director of WPI Economics and a former Treasury economist.

Aside from Getting Brexit Done, the promise to strengthen and level up every part of the country was perhaps the most salient part of the Prime Minister’s 2019 general election manifesto.

The nine months since then have changed many things, but the need to level up is still just as strong. Yet despite this need, we are no still no clearer on what levelling up actually means, how we will know if the Government has been successful and how people, families and communities across the UK might actually benefit.

Today’s report from the Covid Recovery Commission, tackles this question; showing why levelling up is needed, how the Covid-19 pandemic has impacted on this, and how the Government must frame this issue as they seek to tackle it.

The first thing to consider is why some sort of levelling up is needed. Many reports, over many years, have focussed on headline estimates of output and productivity across the UK’s four nations and England’s regions. This comes as little surprise given that some measures of productivity put output per head in the North East at less than half of that in London.

Of course, output, productivity and the jobs and opportunities which they are related to, are of prime importance in understanding the relative success of different areas. However, focusing on such broad economic concepts, misses two important points.

First, that levelling up should be about more than just broad economic concepts and second that inequalities and the need to level up are just as apparent within regions, cities and towns as they are between them.

This is the main finding from the Covid Recovery Commission’s first report, published today. It shows that, up and down the country, there are individuals, families and communities that are struggling. Most striking here are findings from the Social Metrics Commission that poverty rates in London are ten percentage points higher than in some parts of the North of England.

More broadly, whilst the North of England is host to many of the most deprived neighbourhoods in the UK, more than half of people living in the ten per cent most deprived neighbourhoods are found in other parts of the county (36 per cent in the rest of England, 15 per cent in Scotland, Wales or Northern Ireland).

The links between the economic success of regions and local authorities and deprivation is also not clear cut, with some of the highest levels of deprivation being found in some of the wealthiest areas of the country (18 per cent of people in the most deprived neighbourhoods – 1.15 million people – in the UK are living in local authorities with the highest economic output).

Broader research shows that inequalities, or the need to level up, are not just about finances and economics. In fact, across the UK there are huge disparities in outcomes including life satisfaction, happiness and mental and physical ill health. Most concerningly, it is those struggling financially who are often the hardest hit.

For example, people from lower socioeconomic groups are more likely to have long-termhealth conditions, and the King’s Fund highlights that those living in the most deprived areas spend around a third of their lives living in poor health; twice the level of those in the least deprived areas.

Concerningly, these inequalities have been seen for decades and under Governments of all colours. And they are also about to get a lot worse.

In this respect, the Covid Recovery Commission’s report also shows emerging findings of where the health, social and economic fall out from the Covidpandemic have hit hardest.

Amongst other findings it highlights that mortality rates from Covid-19 are highest in the most deprived neighbourhoods in the UK. Even after controlling for a range of other factors, in the 20 per cent most deprived neighbourhoods there has been an average of 21 more Covid-19 deaths per 100,000 population compared to the least deprived neighbourhoods. Unemployment benefit claims have also risen most in those areas that were already suffering from high rates of claims.

Those neighbourhoods in the highest 10 per cent of unemployment benefit claims prior to Covid-19 have seen a 5.4 percentage point increase in claims, compared to a 2.3 percentage point increase for those in the 10 per cent with the lowest claim rate prior to Covid-19.

So what can be done? At the start, recognise that the Government has set off in the right direction; levelling up and promoting opportunity for people right across the country is exactly what needs to happen. Putting this front and centre of a strategy to drive the economy and strengthen society post-Covid is a clear priority.

But for this to be a success the Government now needs to do three things.

First, it needs to recognise that levelling up can only truly be a success if it delivers better outcomes for left behind people, families and communities in central London as much as it improves productivity and the economic success of towns and cities in the North of England.

This leads to the second point: that it must define what it wants to achieve in levelling up and set out a range of metrics with which that can be judged. Without this, it will be impossible to track progress or to design and implement effective policies.

Our work has shown that these metrics should be as local as possible (ideally evaluating impacts and progress at a neighbourhood level) and consider measures beyond economic fortunes to focus on underlying issues like mental and physical health and family and community resilience.

In turn, this leads to the third point, that central Government is too far removed from much of what will drive progress in these areas. As such, politicians and policymakers in councils, mayoral combined authorities and the UK’s devolved nations have a key role to play in driving forward this agenda. The Government must provide these areas with the remit to focus and report on levelling up and the policy and financial tools they need to tackle inequalities. A future Devolution White Paper is a prime opportunity to start to take that forward.

To many in Government, setting out a clear way of measuring success against a key manifesto commitment and devolving more power and funding away from Whitehall might sound like a risky agenda. But it is also a significant opportunity. It would show that the Government is committed to making the UK work for everyone and, if successful, could provide the electorate clear evidence of impact that Government has had on the lives of people and communities across the UK. 

In a UK faced with continued health and economic struggles, that evidence might be just what the Government needs in the next election.

‘I cannot save every business. I cannot save every job. No Chancellor could.’ Statement to the House – full text

24 Sep

Mr Speaker,

Thank you for granting me permission to make this Statement to the House today.

Earlier this week the Prime Minister set out the next stage of the government’s health response to Coronavirus.

Today I want to explain the next phase of our planned economic response.

The House will be reassured to know I have been developing plans to protect jobs and the economy over the winter period.

Plans that seek to strike the finely-judged balance between managing the virus and protecting the jobs and livelihoods of millions.   Mr Speaker,

I know people are anxious, and afraid, and exhausted, at the prospect of further restrictions on our economic and social freedoms.

I share those feelings, but there are reasons to be cautiously optimistic.

We are in a fundamentally different position than we were in March.

And we now know much more about this virus.

Public awareness of the risks, and how to mitigate them, is far greater.

And we have met our promise to give the NHS whatever it needs, with significant new funding for NHS capacity, for PPE, and, I can inform the House today, we have now provided over £12 billion for test and trace.

In economic terms, while our output remains well below where it was in February, we have seen three consecutive months of growth.

And millions of people have moved off the furlough and back to work.

But the resurgence of the virus, and the measures we need to take in response, pose a threat to this fragile economic recovery.

So our task now is to move to the next stage of our economic plan, nurturing the recovery by protecting jobs through the difficult winter months.

Mr Speaker,

The underlying rationale for the next phase of economic support must be different to what came before.

The primary goal of our economic policy remains unchanged: to support people’s jobs.

But the way we achieve that must evolve.

Back in March, we hoped we were facing a temporary period of disruption.

In response, we provided one of the most generous and comprehensive economic plans anywhere in the world with £190 billion of support for people, businesses and public services, as we protected our economic capacity.

It is now clear, as the Prime Minister and our scientific advisers have said for at least the next six months the virus and restrictions are going to be a fact of our lives.

Our economy is now likely to undergo a more permanent adjustment.

The sources of our economic growth and the kinds of jobs we create, will adapt and evolve to the new normal. And our plan needs to adapt and evolve in response.

Above all, we need to face up to the trade-offs and hard choices Coronavirus presents.

And, Mr Speaker, there has been no harder choice than the decision to end the furlough scheme.

The furlough was the right policy at the time we introduced it.

It provided immediate, short-term protection for millions of jobs through a period of acute crisis.

But as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough.

We need to create new opportunities and allow the economy to move forward and that means supporting people to be in viable jobs which provide genuine security.

As I’ve said throughout this crisis, I cannot save every business.

I cannot save every job.

No Chancellor could.

But what we can and must do is deal with the real problems businesses and employees are facing now.

In March, the problem was that we ordered businesses to close.

In response, we paid people to stay at home and not work.

Today, the problem is different.

Many businesses are operating safely and viably, but they now face uncertainty and reduced demand over the winter months.

What those businesses need is support to bring people back to work and protect as many viable jobs as we can.

To do that, I am announcing today the new Jobs Support Scheme.

The government will directly support the wages of people in work giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.

The Jobs Support Scheme is built on three principles.

First, it will support viable jobs.

To make sure of that, employees must work at least a third of their normal hours and be paid for that work, as normal, by their employer.

The government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours.

And the employee will keep their job.

Second, we will target support at firms who need it the most.

All small and medium sized businesses are eligible.

But larger businesses, only when their turnover has fallen through the crisis.

Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme.

The scheme will run for six months starting in November.

And employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus.

Mr Speaker,

Throughout this crisis, we have sought parity between employees and the self-employed providing more than £13 billion of support to over 2.6 million self-employed small businesses.

So I am extending the existing self-employed grant on similar terms and conditions as the new Jobs Support Scheme …

Mr Speaker,

These are radical interventions in the UK labour market; policies we have never tried in this country before.

Together with the Jobs Retention Bonus, the Kickstart scheme for young people, tens of billions of pounds of job creation schemes, new investment in training and apprenticeships, we are protecting millions of jobs and businesses.

Mr Speaker,

If we want to protect jobs this winter, the second major challenge is helping businesses with cash flow.

Over the last six months, we’ve supported business with tens of billions of pounds of tax deferrals and generous, government-backed loans.

Those policies have been a lifeline.

But right now, businesses need every extra pound to protect jobs rather than repaying loans and tax deferrals.

So I’m taking four further steps today to make that happen.

First, Bounce Back Loans have given over a million small businesses a £38 billion boost to survive this pandemic. To give those businesses more time and greater flexibility to repay their loans, we are introducing Pay As You Grow.

This means:

  • loans can now be extended from six to ten years – nearly halving the average monthly repayment
  • businesses who are struggling can now choose to make interest-only payments
  • and, anyone in real trouble can apply to suspend repayments altogether for up to six months

No business taking up Pay As You Grow will see their credit rating affected as a result.

Second, I am also changing the terms of our other loan schemes.

More than 60,000 Small and Medium sized businesses have now taken out Coronavirus Business Interruption Loans.

To help them, I plan to extend the government guarantee on these loans for up to ten years, making it easier for lenders to give people more time to repay.

I am also extending the deadline of all our loan schemes to the end of the year. And we are starting work on a new, successor loan programme, set to begin in January.

Third, I want to give businesses more time and flexibility over their deferred tax bills.

Nearly half a million businesses deferred more than £30 billion of VAT this year.

On current plans, those payments fall due in March.

Instead, I will allow businesses to spread that VAT bill over 11 smaller repayments, with no interest to pay.

And any of the millions of self-assessed income taxpayers who need extra help, can also now extend their outstanding tax bill over 12 months from next January.

The final step I’m taking today will support two of the most affected sectors: hospitality and tourism.

On current plans, their VAT rates will increase from 5% back to the standard rate of 20% on January the 13th.

So to support more than 150,000 businesses and help protect 2.4 million jobs through the winter I am announcing today that we are cancelling the planned increase and will keep the lower 5% VAT rate until March 31st next year.

Mr Speaker,

Today’s measures mark an important evolution in our approach.

Our lives can no longer be put on hold.

Since May, we have taken steps to liberate our economy and society.

We did these things because life means more than simply existing.

We find meaning and hope through our friends and family, through our work, through our community.

People were not wrong for wanting that meaning, for striving towards normality, and nor was the government wrong to want this for them.

I said in the summer that we must endure and live with the uncertainty of the moment.

This means learning our new limits as we go.

Because the truth is the responsibility for defeating Coronavirus cannot be held by government alone.

It is a collective responsibility, shared by all.

Because the cost is paid by all.

We have so often spoken about this virus in terms of lives lost.

But the price our country is paying is wider than that.

The government has done much to mitigate the effects of the awful trade-offs between health, education and employment.

And as we think about the next few weeks and months, we need to bear all of those costs in mind.

As such, it would be dishonest to say there is now some risk-free solution.

Or that we can mandate behaviour to such an extent we lose any sense of personal responsibility.

What was true at the beginning of this crisis remains true now.

It’s on all of us.

And we must learn to live with it and live without fear.

I commend this Statement to the House.”

Andrew Griffith: How the Government can put enterprise at the heart of the recovery

19 Sep

The author is a former Chief Business Advisor to Boris Johnson, former Chief Operating Officer of Sky plc and founder Chairman of the Campaign for Economic Growth. Follow the Campaign @C4EG_UK.

Economic statistics each week now reveal the state of the Covid-impacted economy like charred stumps emerging from clearing smoke.

This week it was the turn of the employment data, which showed 700,000 jobs have been lost since February, and unemployment will get worse before it gets better despite the Chancellor’s excellent interventions.

The Government is rightly shifting gears from an immediate crisis response to fostering a post-pandemic recovery. There is a vibrant debate about how to do this but it is widely recognised that private sector businesses have to be at its heart.

That’s one reason why I have founded a new group – the Campaign for Economic Growth – to utilise the expertise of those who have started and run businesses to promote ideas for growth. It is the challenge of our time if we are to deliver employment and prosperity for current and future generations.

With a Budget and a Comprehensive Spending Review as well as COP26 and EXPO2021 on the horizon, the Government is presented with the perfect platform to support those growing sectors where the UK already has competitive advantage. With the right policies, we can create excellent new jobs in all parts of the country, unleash billions in private investment, and grow the export revenues that are vital to maintain our standard of living and pay for the quality public services we demand.

The good news is that Covid-19 spared or even accelerated many of the sectors in which objectively the UK already has a world-leading position: artificial intelligence, quantum computing, the life sciences, FinTech, space, sustainable aviation and clean energy. No need here to “build back better” as these were already thriving, and each represents an outsize opportunity to create multiple billions of revenue and thousands of new high quality jobs.

Hydrogen is one good example. The UK has best-in-class academic institutions and pioneering businesses producing cutting edge hydrogen technology. The world’s first hydrogen ‘giga-factory’ will open in Sheffield next year, the world’s first tests of hydrogen in the gas grid are taking place in Cumbria, and the world’s first hydrogen double-decker buses are made in Northern Ireland. The UK really does have the ability to lead the global hydrogen economy. And unlike either oil or rare-earth-rich electric batteries, hydrogen can be produced entirely domestically, without the geo-political challenges of relying on supplies from the Middle East or China.

My own constituency of Arundel and South Downs looks out over the Rampion Wind Farm off the Sussex coast. This area alone has the potential for a four-fold expansion that could be used to generate clean, green hydrogen and provide the same boost to the British economy that North Sea oil gave in the early 1980’s.

The global hydrogen economy is set to be worth $2.5 trillion by 2050, create 30 million jobs, and meet a quarter of the world’s energy demand, and the UK should aspire to a big slice of this. This is precisely the sort of opportunity the Campaign for Economic Growth wants to see the UK seize. The Government has recognised the potential, recently establishing a Hydrogen Advisory Council, but it has many more levers to pull – not least as a major player in the purchase of the next generation of buses, trains, lorries and ships.

As in many other aspects of policy delivery, we must not allow the tendency of Whitehall departments to operate in Nineteenth Century silos to result in a merely linear response to exponential opportunities for growth.

Whilst some of our public services have been found sadly wanting, by contrast businesses have demonstrated their resilience during the pandemic. After the psychological ‘wobble’ of consumers panic buying, private sector food supply chains have been remarkable for quietly and capably getting on with their important job of feeding the nation. Many other businesses have re-purposed or reinvented their operating models and got back to work – again without fuss or headlines. Whilst the state and voluntary sectors have a vital role to play in society, we forget at our peril it is only businesses that create jobs, investment and tax revenues at scale.

The Covid-19 pandemic has had a devastating effect on families and economies alike. The road to recovery will be hard, but it also presents us with the exciting opportunity to use this as an inflexion point and to shape the economy of the future. The right decisions now will ensure the UK emerges from this challenge stronger and better equipped for the next one.,

Angus Groom: Sunak must act to unshackle business from the dead weight of Covid debt

10 Sep

Angus Groom is a Research Fellow at Onward and the author of ‘Paying it Forward‘. He is also an ESRC Doctoral Training Partnership scholar studying Economics at Nuffield College, University of Oxford.

The economic recovery may be gathering pace, but we are not out of the woods yet. In our focus on how quickly demand will return to pre-crisis levels, it is easy to forget that many firms have spent the last six months piling on unprecedented levels of additional debt.

This is a double-edged sword: many have survived the worst of the crisis as a result, but there is a risk if ministers do not act that companies will spend the next few years paying down their liabilities rather than driving a dynamic recovery.

The coronavirus pandemic has meant that, both as a result of mandatory closures and lockdowns and due to voluntary public health precautions, people have been spending less and so businesses in almost all industries have been making less money. The unprecedented grant support from the Treasury, from the furlough scheme to tax payment holidays, has helped many businesses through the worst of the crisis. My new report for the thinktank Onward estimates that 350,000 businesses, employing five million people, would have faced a cash flow crisis in the absence of this government support.

But in addition to grant support the Government has provided what they call “liquidity support”: new debt that weighs down corporate balance sheets and that is mostly or entirely underwritten by the taxpayer. The CityUK’s Recapitalisation Group estimates that by March 2021 UK business will be holding £35 billion in coronavirus debt, accumulated in the space of a year. Even if the demand-side of the economy quickly recovers, this debt pile means that economic problems are far from over.

In fact, my report today estimates that nearly one in twenty firms are now technically insolvent as a result of losses and debt built up since March, and over one in five (21 per cent) could now be classified as so-called zombie firms, in that their operating profits at best only just cover their debt interest payments. There is a real risk that these companies spend the next few years worrying about how to make their repayments rather than investing in jobs and growth to spur the recovery.

Research published by the Bank of International Settlements, the OECD, and the NBER shows that zombie firms can harm investment, employment and productivity growth. Using this research, we estimate that the drag caused by the growth of zombie firms so far this year means that business investment will be lower by more than £40 billion annually and that productivity growth will be lower by by 0.39 percentage points – meaning missing GDP over five years equal to 1.9 per cent of current GDP, or over £500 per person in the UK.

Meanwhile the drag on employment suggests that unemployment will still be 6.4 per cent at the end of 2024, rather than the 5.1 per cent predicted by the OBR. This equates to an additional 400,000 unemployed in the year of the next general election.

To deal with this looming crisis, we propose a simple scheme, New Start, to allow firms to transfer their coronavirus debts into a long-term tax liability repaid out of profits—shifting payments to when firms are able to make them in the same manner as student loan repayments.

The benefit of the CBILS and BBLS, and to an extent the CJRS, is that they were designed in Whitehall but implemented by banks and businesses in the real world. The New Start Scheme keeps this flexibility as it can be run by the banks who have already issued the debts, and the scheme can run regardless of who owns, buys or sells the underlying asset.

The growth of corporate debt sounds like something that occurs in the balance sheets of City firms, but how it is dealt with will determine the strength of the recovery. The Chancellor has so far been reluctant to intervene in this debate, but this position cannot hold without the scarring effects of debt taking hold in the economy.