Liz Truss is Chief Secretary to the Treasury, and is MP for South West Norfolk.
2019 is a big year for British politics. As we leave the European Union, we have an opportunity to set out a new economic agenda, leaving the era of post-crash consolidation and recovery behind and entering a new era of growth and opportunity for Britain.
This year, the Treasury will conduct the Spending Review, setting budgets from 2020 through to 2023. It is an opportunity, not just for us to decide on our spending priorities, but to make a real and lasting impact on the British economy and the lives of people across the country. We will have the power to modernise the state and make it sleeker, more effective and better value for the people it serves.
At the heart of the Spending Review will be popular free market conservativism guided by three principles.
First, we’ll focus on what matters to real people, not vested interests. I start from the principle that every pound in the Exchequer is money that somebody has worked hard to earn. That means we have a responsibility to make sure that public money is spent on public priorities.
What do I mean by vested interests? It’s not obvious to those who don’t spend every waking hour in Westminster, but there is a growing blob of lobbyists, corporations, quangos and professional bodies who ask again and again for Government favours – arguing that they are the exception, that their cause deserves special treatment.
This makes me deeply uncomfortable. Some have good ideas which are worth pursuing. But if we only listen to these people, it would squeeze out other priorities of those without big lobbying teams. And should they be taking money from those on relatively low earnings who could be spending the money on a new car, a holiday or a treat for their kids?
I want to make sure that the Spending Review works for people across our country, from Plymouth to Perth and Darlington to Dereham – people that go to work every day and don’t have the time or money or inclination to hang around Whitehall. It should be the People’s Spending Review.
That’s why I’m travelling around the country asking the public what their priorities really are. So far, I’ve been in Felixstowe, Walsall and Tadcaster, and people have told me they want money focussed on core public services – the police, education, roads, defence and the NHS – rather than the waste and bureaucracy of the type which ballooned under Labour.
The public have little truck with the nanny state. They don’t want their hard-earned cash spent on announcements designed purely to get column inches or on billboards that brag about the Government’s generosity. They don’t want to hear that their money is used for corporate subsidies. Or to prop up zombie industries. Or to be told exactly how much to eat and how much to exercise.
After 13 years of Labour government and initiative-itis, we ended up with a horrendously complicated landscape. We have reduced the number of quangos from 561 in 2013 to 305 in 2017. But the administration cost of these budgets is still £2.5 billion, and the various support pots for business including tax credits cost around £18 billion. Too many hard-working public servants and businesspeople are spending their time filling in forms and applying for grants.
At the Spending Review, we’ll take a leaf out of our international competitors’ books – like South Korea and Japan – and show that it is perfectly possible to fund the services that have a real impact on people’s lives while keeping taxes low.
One way we’ll do that is through the zero-based capital review, meaning we’ll take a fresh look at all the major projects we’re investing in and ask whether they are really working for us. We need to make sure we are focusing on projects like local transport around our cities and counties – which generally have the greatest impact on growth.
They may not be glitzy, but fixing the local junction or improving the train service have a big impact on people’s lives, and are some of the top priorities for people I met. By focusing on the core services that matter to the public, we can boost growth – both personal and economic – while keeping taxes low so people have more to spend on their own priorities, and more of a stake in their own future.
That takes me to our second priority for Spending Review – opening up opportunities for people across Britain and ensuring everyone has a shot at success.
I came into politics because I want Britain to be a success story, and that means everyone in the country being a success story. A fully-functioning free market depends on new entrants generating new ideas, so we have to crack down on any entrenched privileges that stop talented people coming through.
Take housing. It’s still the case that – because of our restrictive planning system – people are paying a greater proportion of their income in housing than ever before. In 1947, people were paying less than an eighth of their total spending on housing – now it’s over a quarter. And people who rent in London are spending half their income on rent. And we are all paying the price. Next year, we will spend £34 billion on housing support. If we don’t deal with these entrenched barriers, it will undermine people’s faith in our economic model and lead them on the road to socialism.
We know Labour’s answer to this is further eye-watering public spending. Their latest idea is for a Universal Basic Income, a flat payment given to everyone with no strings attached. There’s a big problem with this: it doesn’t work. Finland carried out a trial in 2017, and found people receiving UBI were no more likely to find a job. What’s more, in order to expand the programme across the country they would have needed to increase income tax by nearly 30 per cent.
What people need is not handouts or Universal Basic Income, but the Universal Basic Infrastructure of life – the foundations of living a full life in a modern free enterprise country, without arbitrary and unfair barriers to success. By that I mean access to good education, a good home with fast internet, and good transport links to get to a good job.
At the Spending Review we’re going to look at every bit of spending and make sure it is delivering for everyone regardless of their background. Unlike Labour, we know one person’s success is not another person’s loss. One person’s success improves all our lives through the jobs they provide and the new goods and services they invent. If we get the conditions right, success is there for everyone to grasp.
In doing so however, we must not be blind to those who aren’t yet able to take those opportunities. There are some people – perhaps who are struggling with health conditions, or have missed out on basic education, or been the victims of crime – who will not yet be capable of taking the opportunities available. Our third priority should be to help those on the margins move to a position where they can take control of their lives, and to stop any more people getting into that position in the first place.
Too often, these people haven’t had the best start in life that’s so crucial to success. Indeed, the academic evidence shows that when it comes to intervention, the earlier the better. This requires us to be patient. Take the successful phonics programme championed by Nick Gibb that has seen our 9-year olds shoot up the European literacy league tables. The benefits will be felt most in 10-20 years’ time, when these children are entering the world of work and starting their own families. In the future, we’ll have more independent adults able to succeed.
For the first time in many years, because of the choices we have made in Government, we have the power to make positive decisions. We can use this to reduce taxes and focus on core services that the public care about. As we throw off the constraints of the post-financial crash world and the European Union, we’ll focus on the public’s biggest priorities, ensuring everyone has the Universal Basic Infrastructure to succeed and targeting support for the most vulnerable in our society so everyone has a fair shot.
This article is based on a speech delivered to Onward earlier this week.