Warwick Lightfoot: Today’s Budget. Conservatives should not be afraid of public borrowing to ensure a rapid recovery.

3 Mar

Warwick Lightfoot is Head of Economics at Policy Exchange.

What sort of Budget should the Chancellor present? Britain needs a confident and audacious economic policy to respond to the Covid shock and the economic stagnation of the last decade following the banking crisis and Great Recession. It needs to be based on realism about the constraints that limit effective policy and the opportunities for action.

It should recognise that both arms of macro-economic policy – fiscal and monetary policy – need to be used and the roles assigned to them need to reflect contemporary circumstances, in particular low interest rates. A Conservative economic agenda should encompass three arrows: an active fiscal policy to stimulate the recovery, a realistic monetary policy, and an ambitious supply-side agenda of tax reform and changes to regulation to improve incentives and the functioning of the economy.

As Policy Exchange has set out in a new report, What is to be done with the British economy?, we should not be afraid of allowing public borrowing to take the strain. The big question in public finance is how much is spent, not how it is financed. We are right to ditch the artificial fiscal rules that have been used since Gordon Brown that were at best economically irrelevant.

We should take advantage of three things: exceptionally low nominal and real interest rates, which remove the constraint of debt service charges on the use of fiscal policy as a stimulus; that in modern internationally-integrated global capital markets, government borrowing does not have the sort of crowding out effects it used to have; and that the UK is exceptionally well placed to take advantage of cheap long-term debt, and should lengthen the maturity of its debt.

The Government should continue to borrow to ensure a rapid recovery and minimum scarring. Preventing as much long-term damage to the economy as possible now will shore up future revenue from taxation and ensure the long-term health of the Government balance sheet.

As I highlighted to ConservativeHome readers in 2008 in the wake of the financial crisis, fiscal policy must in the current climate be used as a stimulus instead of monetary policy, and conservative economists in America at the time had already recognised this.

The opportunity to borrow coincides with the need for tax reform. One lesson I learned when I advised three Conservative Chancellors in the 1980s and 1990s is that it was a mistake to put so much emphasis on balancing the budget and more should have been done on tax reform.

The tax burden actually increased over this period and, as Lord Lawson recently advised the Chancellor, the Conservative party should not become the party of high taxes. The Chancellor should embark on an agenda of tax reforms to improve incentives by lowering marginal tax rates and creating a more coherent system overall.

In particular, he should end the Manhattan skyline of marginal tax rates across the earnings distribution, which means that some employees face marginal tax rates of around 60 per cent when they are earning between £50,000 and £60,000 and £100,000 and £125,000 due to the withdrawal of child benefits and personal allowances in these income brackets. These changes would create a simpler tax system that improves the incentives to work, save, and invest, for some of the most productive people in the labour market.

There is a risk of inflation given the disruption to supply chains constrained by Covid restrictions and rising oil and commodity prices. Although zero interest rates mean that monetary policy has been ineffective as a stimulus over the last decade, it has actually become stronger as a tool of tightening. The current environment of corporate leverage upwards means that tighter monetary conditions may be a more powerful instrument to curb economic activity than twenty years ago.

Despite the fact that a return to higher interest rates and a more normal bond market yield curve will push up the cost of servicing debt, it will improve the micro-economic functioning of money and credit markets. Looser fiscal conditions offset by tighter monetary conditions is undoubtedly a preferable macro-economic mix to that exercised over the last decade.

Reform of the planning system offers the greatest potential yield in terms of deregulatory reform, with particular benefits to the supply side of the economy and for renters trying to get onto the property ladder. Covid has only accelerated the need for planning reform, as the pandemic appears to have expedited trends in the use of technology, remote working and internet shopping.

This will result in a reallocation of capital and resources, meaning that there is changing demand for the location and nature of homes, business premises, office space and the use of buildings in city centres. Fundamental reform of the planning system will ease these shifts allowing for a more efficient and productive use of land and capital.

Regardless of what happens in the Budget tomorrow, it is vital that policy makers are nimble and responsive to changes in economic circumstances over the next year. Economic data over the course of the Covid crisis has been particularly unreliable, which means we are effectively flying blind.

The yo-yoing falls and rises of GDP are out of the parameters of the models to forecast the economy, the practical work of data collected by statisticians has been hampered, the weights employed in index numbers are distorted by changing behaviour, and Government interventions such as the furlough scheme have distorted our understanding of idle resources in the economy.

This has compounded issues in the collection of key data that was emerging before the crisis, such as the difficulty of measuring the effect of intangible assets on the economy. Economists and policy makers must therefore be particularly flexible in their approach to fiscal and monetary policy over the next year, a time frame in which we can expect to see huge shifts in production and consumption as we come out of the pandemic.

Although we do not know how strong the recovery will be, the Government must do all in its power to ensure we regain the full productive potential of the UK economy pre-Covid and stimulate future growth. While there are questions as to how much consumers will spend their accrued savings, the fact remains that interest rates are almost zero and there is slack in the economy that the public sector balance sheet should take up. Now is not the time to slam on the brakes and cut back on the use of fiscal policy as support.

Profile: Tony Blair. Driven, unrepentant and urgent – the leader who took us to war in Iraq is reborn as our saviour from the pandemic.

25 Feb

It is always difficult to know what to do after being Prime Minister, unless one can become PM again. In recent times, Harold Wilson managed that, and so did Winston Churchill, while Sir Alec Douglas-Home returned as Foreign Secretary.

In June 2007, when Tony Blair’s prime ministership was terminated by his own party (cf. Margaret Thatcher), he ruled out a comeback by standing down from the Commons too.

He didn’t have to do this. It would, of course, have been painful to remain in the House, for it enforces proximity, and he would have had to rub shoulders with those who had overthrown him. But Theresa May has shown it can be done, as did Edward Heath.

Blair has chosen another path, for which it is hard to find any precedent. What furies drive him? Why this frantic activity?

Almost 14 years after he left Downing Street, he addresses us, not as an elder statesman, but with the energy and urgency of a man who has persuaded himself he would be a better Prime Minister now, as a 67-year-old, than he was on entering Downing Street at the age of 43.

It is possible he is right. Not for him the error, committed by some on the losing side in the EU referendum, of issuing ever more hysterical denunciations of Boris Johnson, and supposing that these shrieks amount to an adequate position.

Here is Blair in a speech delivered on 15th January, telling Remainers why they must accept Brexit and make a success of it:

“I campaigned so long and so passionately against Brexit because I believed it to be a strategic error not just of policy but of destiny. I haven’t changed my mind about its wisdom. But reality is reality. We have done it. We must live with it. We should make the best of it. And as I have said recently, if a return to Europe is ever to be undertaken by a new generation, Britain should do it as a successful nation Europe is anxious to embrace, not as supplicant with no other options.”

But it is on the pandemic and how to deal with it that Blair is just now most audible. A Blairite apparatchik explained to ConHome why Blair can so often be heard urging swifter and bolder action:

“I think the simple fact is that he sees a vacuum – he doesn’t see Boris Johnson as the chief-executive-type Prime Minister, and sees Matt Hancock as very receptive to some of his stuff. He’s put a lot of the resources of his Institute into this – it’s a do tank as well as a think tank. 

“And he’s prepared to be quite bold publicly – he was the first person to advocate giving the second jab not in four weeks but in 12. He’d done the homework.”

When ConHome remarked to the apparatchik that Blair became more hated by Labour activists than any leader of the party since Ramsay MacDonald, he replied:

“The party felt we need a Clause Four moment to rescind Blairism and apologise for winning three elections in a row. The biggest problem with the Labour Party is it doesn’t like success. The darlings of the Labour Party, Neil Kinnock and Jeremy Corbyn, were complete losers.”

There is an unrepentant quality about Blair which can render him utterly repugnant. Democracies expect, in those who aspire to rule them, a degree of humility.

The Commons, though full of hierarchies, enforces a brutal equality: no one who fights to win in that Chamber “can keep himself out of the reach of a knock-down blow” (as Sir George Otto Trevelyan puts it at the end of The Early History of Charles James Fox).

In 2007, Blair chose to leave that Chamber, where he had enjoyed an almost unbroken series of triumphs. Our democracy is designed to bring politicians back to earth, so they do not get too big for their boots, or at least not for long (see the careers of Peel, Disraeli, Gladstone, Lloyd George, Churchill and many others).

Blair by a fluke of timing was spared the devastating reverses suffered by most of his predecessors. The last election he lost was the Beaconsfield by-election of 1982. The following year, a bad one for Labour, he entered the Commons as MP for Sedgefield.

It is true that Labour continued for some time after that to lose general elections. But Blair himself was on the upward track, at first as apprentice to a gifted and altogether more experienced and better known member of the 1983 intake from Scotland, with whom he shared a windowless Commons office.

When Blair became shadow Home Secretary, his former room-mate, Gordon Brown, drafted an impregnable soundbite for him:

“Tough on crime, and tough on the causes of crime.”

What decent person could object to that? Blair was on his way, and two years later, in 1994, when John Smith died, had the audacity to snatch the Labour leadership from under Brown’s nose.

Whoever became Leader of the Opposition in 1994 was pretty much bound to become Prime Minister, for the Conservatives had already lost the next general election. After Black Wednesday, 16th September 1992, when Britain was ejected from the Exchange Rate Mechanism, the Tory Party’s share in the polls fell to 30 per cent, where it stuck for the next five years.

Blair and his coterie naturally claimed, and came to believe, that Labour’s landslide victory in 1997 reflected their own brilliance. But as William Waldegrave, a minister from 1981-97, remarks in his memoir, A Different Kind of Weather:

“We Conservatives created their, and Blair’s, reputations for electoral genius; and we bequeathed them an economy that let them ride the boom years in populist style. Blair simply had to look like a renewed and more attractive version of us. He was able to do it – if his book is to be believed (and on this subject it should be) – because that was precisely what he was.”

In his early years, Blair possessed a self-deprecating sense of humour which preserved him against the charge of having become too big for his own boots.

Robert Harris – author of The Ghost, the rudest novel about a recent Prime Minister – has described the favourable impression which Blair used to make:

“I think when one knew him first off one of the charms of him was that he seemed, as he said, ‘a regular sort of guy’. I met him first in 1992, I think, and he seemed very much like the sort of man who would live next door to you – a fellow professional, commonsensical, friendly, approachable.

“Well, little did we know. It’s impossible to see the man he is now in the man that I knew. Who knew that he would become a great friend of George Bush and would want to keep bombing people and would become so passionately interested in making money? I mean maybe someone more perceptive than I would have seen it, but I never saw that at the time, nor – knowing a lot of the people who know him very well – did they.

“It’s a cliché to say that most politicians go mad if they’re in office for more than about six or seven years, and they become a member of a club and you become quite disconnected from reality, and I think there were in Tony things we perhaps didn’t realise at the time – of narcissism, a messiah complex, that had merely accelerated this impulse in him.”

For many, the disastrous outcome of the Iraq War in 2003 destroyed their faith in Blair. He had enjoyed an unnaturally prolonged honeymoon as PM, but this was followed by an even longer period in which few people could bear the sound of his voice.

For he sounded so vain, so pleased with himself, so impervious to criticism. Not a word of true regret escaped his lips. Everything he had done had been done in good faith.

This was intolerable. He did not stay in the Commons, where criticism would have been unavoidable, but floated off into the world of the super-rich, with whom he had long enjoyed taking holidays.

Here was a man who stood up for the rich and powerful. Even before he became Prime Minister he had described Pontius Pilate as “the second most interesting character in the New Testament”, and explained:

“The intriguing thing about Pilate is the degree to which he tried to do the good thing rather than the bad. He commands our moral attention not because he was a bad man, but because he was so nearly a good man. One can imagine him agonising, seeing that Jesus had done nothing wrong, and wishing to release him. Just as easily, however, one can envisage Pilate’s advisers telling him of the risks, warning him not to cause a riot or inflame Jewish opinion. It is a timeless parable of political life.”

So it is, but after 2003 Blair’s sympathies were seen, by many of his former Labour supporters, to lie with warmongering plutocrats such as George W, Bush and Rupert Murdoch.

Blair continued to insist on his own highmindedness. His moral vanity became intolerable. When he was right about things – and his biographer, John Rentoul, has the courage to point out that Blair was often right – that only made him more annoying.

Rentoul concedes that Blair’s first office after stepping down as Prime Minister, in Grosvenor Square, “was so obviously just a replica of 10 Downing Street”, while “that place in Great Missenden is a replica of Chequers”.

Here was a man who could not admit to himself that he was no longer in office. He was pretending to himself that he was still a mover and shaker. And in Rentoul’s words,

“He thought that if there was a problem, the way to solve it was for him to roll up his sleeves and apply himself to it. He was restlessly looking for really difficult problems only he could solve.”

The first of these really difficult problems was the Middle East, where from 2007-15 Blair served as Special Envoy for the United Nations, European Union, United States and Russia.

But his efforts are nowadays concentrated on the Tony Blair Institute for Global Change, on whose website we read, in words which might have been drafted by Stephen Potter, President of the LIfemanship Correspondence College at Yeovil:

“Tony Blair is Founder and Executive Chairman of the Institute. The Institute is a not-for-profit organisation. The Executive Chairman plays a hands-on role in the strategic development of the organisation, and actively engages with leaders, organisations and debates that he believes are critical to our mission. Tony Blair and the executive staff run the organisation of over 200 staff based in 14 African nations, the UK, the United States, United Arab Emirates, Serbia and Israel. Tony Blair is the sole owner and Executive Chairman of the Institute, as set out in the Articles of Association, and he receives no remuneration for his work at TBI, to which he devotes at least 80 per cent of his time.”

We are reminded that as Prime Minister, he was already “a central figure on the global stage”, and “a passionate advocate of an interventionist foreign policy”, a claim which might also be made for Genghis Khan.

The word “Iraq” is omitted from this autobiography, which displays the author’s gift for careful drafting. Here he is on an earlier occasion, defending his record in office:

“For prime ministers today, a lot of the job is about getting things done, it’s about delivery… And unless you have a powerful centre, unless the prime minister has the power to do things, things just don’t happen…with things like foot and mouth and so on, these crises that hit you, the fuel protests, if I hadn’t gripped that and run it, never mind Cabinet government, run it myself with the ministers sitting round the table gripping it, salvaging it, it just would not have happened.”

This former Prime Minister knows how to create his own drama.

Blair was keen on the European Union, yet when the chips were down, he sided with the United States.

Disillusioned Remainers observe that as Prime Minister, Blair encouraged business to import as many workers as it liked from the EU, while taking no trouble to train British workers: behaviour which prepared the way for the No vote in 2016.

The Third Way used to be fashionable, but its leading figures – Bill Clinton, Gerhard Schröder, Blair himself – have not aged well.

Yet it is still possible to find oneself listening, as the day begins, to Blair holding forth on Radio 4, giving us the benefit of the latest ideas developed for him by the bright young policy wonks at his Institute.

Blair the Man of Destiny steps forward to save the nation. He has somehow forgotten that if one really wants to save the nation, one must work, as once he worked, with a political party that can win a general election.

John O’Connell: Presiding over the biggest tax burden in 70 years is surely a legacy Johnson must be keen to avoid

2 Feb

John O’Connell is the Chief Executive of the Taxpayers’ Alliance.

Boris Johnson is an admirer of Winston Churchill, to put it mildly. Churchill has a wartime legacy that Johnson knows he can’t match, but it’s hardly a secret the Prime Minister himself wishes to be remembered through the ages. He’s now tackling a once-in-a-generation crisis. But there is a little-known achievement of Churchill’s post-war administration which Johnson should try harder to emulate.

New research from the TaxPayers’ Alliance finds that the tax burden now stands at its highest sustained level – based on a five-year average – since 1951, when the UK was still demilitarising after the second world war. This was a level which Churchill was determined to cut, explaining in his election manifesto of that year that “British taxation is higher than in any country outside the Communist world.”

These are different times, but presiding over the biggest tax burden in 70 years is surely a legacy Johnson must be keen to avoid. The tax burden next year will be an estimated 34.2 per cent as a share of GDP. That will be the highest single year score since 1969-70, when a rise in consumption taxes to discourage imports at a time of foreign exchange difficulties saw a one-off spike during the last full year of the second premiership of Harold Wilson. In the first year free of the European Union, we are paying as much tax as we did in the years just before we joined.

Repairing the public finances after the hammerblow of Covid doesn’t have to mean tax increases. The objective for Johnson – and Rishi Sunak, of course – should be to create the conditions for a boom in growth. That means giving the private sector – currently on its knees – the room to stand tall. With that will come investment, growth and jobs.

But official forecasts say that the Prime Minister will be levying taxes at levels likely to be higher than they have been since Clement Attlee. Any tax rises in the March Budget will put that figure even higher.

Traditionally, increasing taxes is the hallmark of Labour prime ministers and this is then countered by their Tory successors. Churchill’s encore administration shaved off 4.5 percentage points from the tax burden following the Attlee years, before Heath arrived in the shadow of Wilson and reduced taxes by another 3.9 percentage points. Margaret Thatcher sliced off another 0.8.

These assumptions can no longer be taken for granted. Since Thatcher departed, when the tax burden was at left at 30.4 per cent, Tory tax cuts have been negligible and the burden has ratcheted up. During Churchill’s post-war government, taxes were lower than they have been under each of the last three Conservative prime ministers. Gordon Brown cut the tax burden more in his three years than they’ve managed in eleven.

Some might now be thinking that the British public, like the oblivious lobster, is unperturbed by continuous tax increases. But we know that Jeremy Corbyn, with his manifesto delivering an extraordinary estimated tax burden of 37.3 per cent, pushed too hard and was rejected by the electorate – twice. And he wouldn’t be the first Labour leader denied office by the prospect of tax rises. Conservatives have almost always bent over backwards to promise that taxes wouldn’t go up under them.

Is it different this time, because of the Conservatives’ new base of voters? This argument can misunderstand the working class: tax cuts can be popular.

Polling from just before the 2019 election told us the new blue collar Conservatives want to see their taxes go down. A cap on council tax rises was supported by more than three quarters of those polled; around six in 10 C2DE voters strongly favoured cutting the basic rate of income tax down to 15p in the pound. About the same number wanted to see employers’ PAYE taxes reduced to encourage businesses to hire more people, with even more (seven in 10) wanting to abolish the BBC licence fee. All of these were compatible with the 2019 Conservative manifesto, and what’s more, were more popular with C2DE voters than their ABC1 counterparts.

With tax bills at around £24,500 per household, and data from the ONS showing the poorest families pay almost half their income in tax, cuts like this wouldn’t go unnoticed. They will certainly be critical to a post-pandemic Britain trying to restore growth and prosperity, as Churchill noted when he said “for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”. With their commitment to opposing tax rises in March, and a renewed focus on fighting council tax rises, the Labour frontbench now understands that taxpayer value could hold the keys to Number 10.

Very soon, there will be a fork in the road out of the pandemic – which way would Churchill go? Johnson should choose that same route.

Iain Dale: Johnson can say all the right words. But not in a way the public relate to, as Blair and Cameron could.

29 Jan

Iain Dale presents the evening show on LBC Radio and the For the Many podcast with Jacqui Smith.

Sir Desmond Swayne is an adornment to our political life. Politics has always had mavericks and MPs who are outspoken, and he is the latest example.

However, his comments on “manipulated” Coronavirus statistics and interview with anti-vax champions were dangerous and outrageous.

He maintains that things he said in November were correct at the time – an assertion which in itself is questionable.

He then doubled down and claimed that it would be a “thought crime” for him to lose the Conservative Party whip.

Michael Gove has called on him to apologise, but he refuses.

I should make it clear that even though he has appeared with anti-vaxxers, whom he calls “nutty”, he is not one himself and maintains he is “evangelical” in his support for vaccinations.

He says that he didn’t know any of the people he was talking to were anti-vax and that he was purely talking about lockdowns.

For someone who loyally served David Cameron as Parliamentary Private Secretary, he has displayed the political judgement of a shrew on this issue.

– – – – – – – – –

It’s not been an easy week for the Prime Minister.

Quite naturally, when the 100,000 Covid death milestone was reached, he appeared before the press cameras looking very sober, and also somewhat exhausted and dishevelled.

He said all the right words, but was I alone in thinking that it just didn’t quite work?

Tony Blair and Cameron had a unique ability to not only say the right words, but to do so in a way that the public related to.

Not all politicians have that gift. Theresa May didn’t. Gordon Brown didn’t.

Boris Johnson is a politician made for the good times. His naturally sunny optimism is great in many circumstances.

Being sombre and downbeat, however, is not his natural demeanour.

I don’t blame him for that. None of us can change the way we are, merely do our best to say the right thing in the right way.

– – – – – – – – –

The suggestion from Nicola Sturgeon that Johnson shouldn’t have gone to Scotland yesterday is as ridiculous as it is insulting.

Johnson is Prime Minister of Scotland too, and in my view should be going to Scotland as often as possible and trying to build a relationship with Scots, which he doesn’t have at the moment.

She says in times of a pandemic he should not be rampaging across the UK.

He is the Prime Minister, not an ordinary member of the public. He has a duty to visit every part of the UK.

If the UK Prime Minister does not make the case for the union, who will? (And I say this as someone who is not unsympathetic to the notion of Scottish independence.)

Sturgeon sometimes appears drunk on her zealotry for Scottish independence.

She is in many ways an admirable political leader, and yet I wonder if she is about to overreach herself.

– – – – – – – – –

The calls for an immediate public inquiry into Covid have reappeared.

They should be resisted. I cannot see the logic of commencing an inquiry when the pandemic is still ongoing.

I am not saying it shouldn’t start until the last case has been eradicated, but surely its terms of reference cannot be decided until we have the end in sight.

Assuming the vaccine process has the desired effect, I’d have thought launching the inquiry at some point in the second part of the year was achievable and desirable.

Should it be a UK wide inquiry, or should there be four separate inquiries into the conduct of each of the four governments of the UK? These are the questions we need to ask.

Clearly the inquiry will seek to apportion blame for mistakes that were made, but these are mistakes that have been made by representatives of all the main political parties, who run the four different administrations.

Some are questioning the need for any inquiry at all on the basis it will cost a lot of money and will take years to report, by which time all the main political protagonists won’t be in office.

Surely it is absolutely vital to have a proper inquiry, from which everyone can learn the lessons for the next time something like this happens.

Not just the politicians, but the scientific and medical community too.

Henry Hill: ‘Stronger together’ – Ministers put vaccine at the centre of its latest pro-Union push

28 Jan

Government puts pandemic response at centre of latest pro-Union push

Boris Johnson is to put the outstanding success that has been the British vaccine rollout at the centre of his pitch to Scottish voters on an upcoming visit to Scotland, the Daily Telegraph reports. It says:

“UK ministers hope that the nation’s world-leading delivery of coronavirus vaccines, and the development of the Oxford jab in Britain, will finally cut through with Scottish voters by offering a tangible example of the benefits of the Union.”

The First Minister has attacked the visit as ‘non-essential’, a charge dismissed by British ministers.

Matt Hancock also got in on the act this week, repeatedly saying in a press conference that the anti-coronavirus effort showed that the UK was “stronger together” – a likely candidate for the next referendum campaign slogan. The Herald reports that the Health Secretary particularly highlighted the way that the English ambulance service has supported its Scottish counterpart in recent days.

By contrast, Nicola Sturgeon has been accused of ‘failing to provide seven-day vaccination’ after jab figures from Sunday were half that of the previous day. The First Minister blamed a ‘data lag’.

However, research has shown that Scottish voters want to hear about what Scotland offers the Union, not just what the Union gives to Scotland. If he wants to build a case that speaks to that self-respect, the Prime Minister needs to make sure it stresses that the benefits of Britain are a two-way street.

Meanwhile, Douglas Ross has rightly said that unionists would boycott any effort by the Scottish Parliament to throw an illegal or unofficial referendum on Scottish independence. Experts have apparently branded plans for such a vote as ‘deluded and pointless’, but Sturgeon needs the prospect of it to keep her increasingly restive forces in line in the event that the Prime Minister refuses to grant a Section 30 order.

Gove should beware Brown’s guidance on the Union

Meanwhile, Michael Gove has reportedly reached out to Gordon Brown to try and strengthen the Government’s efforts to keep the United Kingdom together. The Chancellor of the Duchy of Lancaster has “compared notes” with the former Prime Minister, according to the Scotsman. Brown has recently warned that the UK risks becoming a ‘failed state’, and the paper says:

“Mr Brown is leading a review of Labour’s policy position on the constitution which could suggest a federal system with new powers for Holyrood and is expected to return its recommendations within 18 months. Such a model – which has been promoted by some within Scottish Labour for years – would see almost all powers apart from foreign policy and defence devolved to the Scottish Parliament. That option could be a third choice in any referendum.”

We can only hope that Gove, whilst polite, gave any such suggestion short shrift. Not only would it be absurd to put the option of an overall overhaul of the entire British constitution on a ballot paper issued to Scots alone, but we are well past the point when ‘more powers’ devolution had any credibility left as a unionist strategy – although it is telling that the Scotsman report undermines Brown’s efforts to pretend that his plans are not simply another tranche of ‘more powers’ thinking.

As I wrote for CapX this week, Brown actually has perhaps the strongest claim of any individual man to be the architect of the current constitutional calamity, and his analysis is very obviously built entirely around locating fault in the bits of the constitution he didn’t touch and directing scrutiny away from his disastrous legacy. Almost a year on from my clash with him in Newcastle last February, his answers are no stronger. A ‘British Isles Diplomatic & Defence Community’ is not what unionists should be fighting for.

Fortunately, we have reached the point where the tide is starting to turn against Brown’s thinking. The UK Internal Market Act was an important re-assertion of the prerogatives of the centre, and William Hague has noted (whilst being impeccably polite) that “constitutional tinkering won’t stop the Scottish nationalist juggernaut”. There’s no clever trick which will ‘solve’ the problem of the SNP. They need to be taken on and defeated.

Davies resigns, Davies returns

In case you missed it, the leader of the Welsh Conservatives stepped down this week after becoming embroiled in a scandal over alleged breaches of the Covid-19 regulations via ‘boozing’ in the Welsh Parliament.

Paul Davies and Darren Millar, a key ally and until recently Chief Whip, both denied wrongdoing but stepped down in the face of opposition attacks, media scrutiny, and a mounting backlash from the Tory grassroots. This was after he received the unanimous support of the Senedd group, apparently before they saw the official report into the incident and allegedly because they saw him as the only bulwark against his likely successor.

If true, that gambit failed and Andrew RT Davies is back in the driving seat in Cardiff Bay. A right-wing Brexiteer who is significantly closer to his activists on constitutional issues, he now has a few months to both take the fight to Labour and stave off a challenge on his unionist flank by Abolish the Welsh Assembly, which according to current polling is on track to enter the Welsh Parliament at the upcoming elections.

Scottish Parliament flexes its muscles in the Salmond scandal

Things continue to hot up in the battle between Sturgeon and Alex Salmond, as MSPs double down on their efforts to extract key evidence and the Scottish Government digs in to resist them.

The First Minister continues to insist that she did not mislead the Scottish Parliament, but Scottish Labour is now saying that her husband Peter Murrell, the SNP’s chief executive, should be investigated for perjury over his evidence to the official inquiry.

Even more significantly, MSPs have invoked legal powers “never before used” to compel Scottish prosecutors to hand over “documents obtained in the criminal investigation into Mr Salmond and passed to his defence” which they believe are key to getting to the truth. The deadline for the handover is tomorrow. Salmond has apparently been warned that he could be prosecuted if he referred to these documents.

Henry Hill: As rumours swirl about the UKIM Bill, unease in Government about an ‘appease the SNP’ mentality

10 Dec

Is there an ‘appease the SNP tendency’ inside the Government?

Yesterday, I wrote about the deal Michael Gove has struck to try to ameliorate the problems caused by Boris Johnson’s capitulation to Brussels over an Irish Sea border between Great Britain and Northern Ireland.

Conservative MPs are also wary about parts of the agreement, with the Daily Telegraph reporting that the role of the European Court of Justice is a source of particular concern. Some are even threatening to try and re-insert the ‘international law-breaking’ clauses of the UK Internal Market Bill when ministers try to take them out.

On the face of it, the removal of those clauses ought to make it easier for the Government to pass the rest of the Bill, with its controversial but important provisions regarding mutual recognition of regulation in the British internal market and allowing Westminster to step in to replace EU regional funding powers.

But Paul Waugh, of the Huffington Post, instead suggests that the Chancellor of the Duchy of Lancaster might be preparing to jettison those provisions too, following the backlash from the devolved administrations and a heavy defeat in the House of Lords.

Coming as it does on top of the unease about his Ulster bargain, these won’t assuage unionists concerned about Gove’s approach. Whilst Waugh says abandoning the provisions would be good for the Union – a position wholly rooted in discredited devolutionary orthodoxy – such a retreat would simply be a re-enactment of the very failures by Theresa May that made the UKIM Bill necessary in the first place.

Fortunately, those I have spoken too so far suggest that such a move is not on the cards and that the Prime Minister recognises the importance of re-connecting Westminster to the day-to-day lives of everyone in the United Kingdom.

However, apparently Waugh’s report does reflect conversations that were taking place at one point, there is unease in some quarters about an “appease-the-SNP” mentality on the part of some of Gove’s advisers – embodied by the leaked Hanbury memo and kites flown for such outré proposals as putting Nicola Sturgeon in the Cabinet, as well as the impression that the ‘CDL’ is trying to develop arguments for a referendum the Government is publicly committed to refusing.

As I wrote elsewhere recently, Boris Johnson should stamp out any talk of conceding a referendum. As the First Minister and her Party’s woes continue to mount (of which more below), the prospect of an imminent re-run of 2014 is the greatest gift he could give them.

Unfortunately, the old retreat-and-pray mentality still dominates outside the Government. Sir Keir Starmer has unveiled Labour’s ‘new offer’ to Scots ahead of next year’s Holyrood elections and it consists of – you guessed it – a promise of ‘more powers’. Nor is that the only Labour intervention. Gordon Brown has joined forces with several Labour mayors to demand the Prime Minister takes urgent action to save the Union. Can you guess what they want? Got it in one: ‘more powers’.

Labour’s stubborn determination to keep having their one idea until the clocks strike thirteen and it finally works makes it all the more important that the Government do what the Opposition won’t: pass the UKIM Bill, and defend British governance through our shared Parliament.

Twist in the Sturgeon tale as First Minister’s husband contradicts her evidence to MSPs

This week, MSPs investigating the Scottish Government’s botch inquiry into sexual misconduct allegations against Alex Salmond – which ended up costing taxpayers’ over half a million pounds – took evidence from Peter Murrell. He is a very important man in Nationalist circles, combining as he does the roles of the SNP’s Chief Executive and the First Minister’s husband.

It did not go well. In fact, Murrell is already facing demands that he be recalled before the committee. Why? Because his evidence seems to directly contradict that offered to MSPs by Sturgeon herself.

At the centre of the current row is the question of what Sturgeon knew and when, and in particular to meetings she had with Salmond in 2018, which were not minuted.

The First Minister claims that the meeting took place in her capacity as leader of the SNP, in which case no official record was required. But that strongly suggests that Murrell ought to have known what the meeting was about. He says he didn’t, because “the issue raised at the time was a Scottish Government matter”.

Opposition MSPs have leapt on the discrepancy. Murdo Fraser, quoted in the Press & Journal, put it starkly: “Peter Murrell’s words indicate that Nicola Sturgeon misled parliament, gave false evidence to the committee, and broke the ministerial code.” They also pressed the Chief Executive on leaked messages which suggest he was trying to put pressure on the authorities to investigate Salmond.

Sturgeon has also been dragged into a ‘secrecy row’, according to the Daily Record, over meetings with her most senior civil servant about the anti-harassment policy which was used in the Salmond investigation.

And on the ‘other problems’ front: the elderly are still dying in Scottish care homes; more public sector bodies are clamouring for the First Minister’s £500 bung to NHS staff; and one of Scotland’s top historians has accused the SNP of placing “arrant propaganda” in schools.

More fence sitting from Starmer as Labour MPs challenge deportation flight

4 Dec

This week, the Home Office’s plan to deport 50 convicted criminals to Jamaica for violent, sexual or drug offences was disrupted after a campaign by Labour MPs.

Two days before the flight was scheduled to take off, Clive Lewis wrote to Priti Patel to demand she “cancel the planned deportation of up to 50 Black British residents” adding that deportations “epitomise the Government’s continued ‘Hostile Environment’ agenda”, and that “[t]ackling institutionalised racism starts one step at a time.”

Nearly 70 mostly Labour MPs signed Lewis’s letter, including Diane Abbott, Jeremy Corbyn, Rebecca Long-Bailey, John McDonnell Lloyd Russell-Moyle, and celebrities such as Naomi Campbell and Thandie Newton wrote to airlines asking them not to carry out the Home Office’s orders. After a series of legal challenges, 30 criminals were taken off the flight, including a rapist and a London murderer.

Where was Keir Starmer in all this? Many noticed that he was not one of the signatories on the letter, nor was his deputy Angela Rayner, suggesting they disapprove of Lewis’s intervention (which, ironically, challenged a policy set by the last Labour government). But he has done nothing to indicate an opinion either way. Perhaps he thinks, like the Covid tiers, he can abstain his way out of the matter.

The incident raises questions about Starmer’s leadership, not least because of the degree of influence opposition backbenchers now have over Home Office policy. It is unusual for them to write these sorts of letters without the backing of shadow cabinet ministers. Notably, 12 other frontbenchers did not sign. So who is in charge?

Labour’s National Executive Committee even appeared to tell Starmer and Rayner off for not signing the letter, writing: “we are alarmed that there has been no comment from you both in response to the deportation flight scheduled for 2nd December… we request that you make a decisive and compassionate intervention.”

In his Labour Party Conference speech, Starmer famously promised “This is a party under new leadership”. He was keen to project the sense that he would bring the various factions of Labour together, though recent events are yet more evidence of how difficult that goal is, with Corbyn and McDonnell calling the shots elsewhere.

The bigger question, of course, is what this means for Starmer’s future policies. Many will remember him promising at his party’s conference “never again will Labour go into an election not being trust on national security”. But his refusal to comment, let alone act, on a matter involving murderers, rapists and violent criminals is hardly going to reassure many voters.

Part of the reason Starmer is reportedly quiet on some issues is down to advice from Joe Biden’s campaign team, which has instructed him not to get involved in “culture war issues”. But this mindset seems to have gradually extended to all manner of political policy. Often people think Starmer is calculated in his political moves, but too much fence sitting does not a Prime Minister make.

Dean Godson: It’s easier for the right to a left on economics than for the left to move right on culture. That’s a plus for Johnson.

21 Nov

Dean Godson is the Director of Policy Exchange.

“You have limited time, limited capacity, and limited choices. Where does your focus lie?” asks Rachel Wolf on this site last week. Well, the Conservative Party has been walking and chewing gum since Disraeli’s 1867 Reform Act — and there is no reason why the “reset” triggered by the departure of Dominic Cummings should change that.

Representing a critical mass of both the prosperous and the “Just About Managing” classes and parts of the country is what all successful political parties do in democracies. Since the Tory party became the party of Brexit and expanded – or maybe one should say rediscovered parts of its working class base – it is certainly true that the heterogenous coalition which it represents has spoken with a somewhat different accent.

Indeed, a case can be made that the part of the political class that ascended to power after December 2019 represents a significant break with all governments since the fall of Margaret Thatcher. The governments of John Major, Tony Blair, Gordon Brown, David Cameron and Theresa May (though less so the latter) tended to put global integration before national sovereignty, the metropolitan before the provincial, higher education before further education, trains and planes before buses, diversity before cohesion, the cognitive classes before the artisanal ones.

Their version of the national interest broadly reflected the priorities of what my colleague David Goodhart, who was interviewed recently by this site, has called the people who see the world from Anywhere. And in his most recent book Head, Hand Heart, he describes a narrowing definition of a successful life, as seen by Anywhere Britain, based around academic success, a university education and entry into high-status professional employment. This is the world of the big cities, the university towns and much of the middle and upper public sector, (and certainly of wide swathes of the senior civil service which were at daggers drawn with Dominic Cummings).

But what of that part of the population that cannot achieve or does not want to achieve this version of success? They still want recognition, and to feel able to contribute to the national story and the Brexit vote provided the opportunity for many of them to say ‘no’ to much of that governing class consensus.

The Vote Leave strand of the Johnson Government sought to represent and appeal to this part of the electorate – summed up in the phrase “Levelling up” – in a way that no government, let alone a Conservative government, has done for decades. That has, unavoidably, created tensions with many powerful interests and beliefs, including inside the Tory Party itself, many of which came to be focused on the pugnacious personality of Dominic Cummings.

A more emollient tone can be struck – but to abandon what was termed “Erdington modernisation” (after Nick Timothy’s Birmingham roots) and return to the necessary but not sufficient Notting Hill modernisation (in which the party made its peace with much of modern liberalism) is now very hard.

This is the case for electoral reasons as much as any other – with both Keir Starmer and Nigel Farage both praying for a return to Cameron-Osborne era Conservatism with its implicit assumption that the common good can be achieved through a kind of trickle-down from the most successful and dynamic parts of our society.

There are other reasons for thinking that it would be foolish to switch back now. Politics for most of the post-war period has been dominated by economics. And, of course, a thriving economy is still a sine qua non for any government. But economics is a means not an end, and the economistic bias of the Anywheres gave us the failed cost-benefit analysis of the Remain campaign.

Today’s much higher profile for the security and identity cultural issues ought to be a boon to the centre-right because, as has been pointed out, it is easier for the right to move a bit to the left on economics (as it certainly has done) than for the left to move right on cultural issues (as Starmer would no doubt like to do, but will find his path blocked).

This does not require an aggressive culture war from the right. The cultural offensive has been coming mainly from the left – as exemplified by the controversies over statues and the decolonisation of museums. The right needs to stand up for common sense, and for the large majority who accept the equalities of modern liberalism but do not want their sensibilities constantly undermined.

Conservatives should be the party of value diversity. Go back to the 1950s and the country was often dominated by a conformist, traditional culture that stunted the lives of many people and often punished those who deviated. Over many decades, much higher levels of choice and freedom for women and minorities of various kinds have been achieved.

Part of the Left now wants to impose a degree of progressive conformity comparable to the traditional conformity of earlier decades. Tolerance and pluralism should be the watchwords in these matters — with a strong bed-rock of rights and anti-discrimination legislation, but also an understanding that rights and values often clash and the ratchet should not only turn in a progressive direction.

That all said, walking and chewing gum is possible, and there is space, post-Cummings, for a new tone and a new stress on policy bridges that seek common ground between Anywhere and Somewhere priorities.

The green industrial revolution is clearly one of those policy areas, and should not be seen as a soft bourgeois indulgence. As the Prime Minister said on Tuesday, it is places like Teesside, Port Talbot and Merseyside that are now centres of green technology and jobs. Ben Houchen, the mayor of Tees Valley, underlined the same point in the introduction to Policy Exchange’s recent report on The Future of the North Sea, and on ConservativeHome earlier this week. Research we will soon be publishing on redesigning the national grid should also generate many good, skilled jobs in areas that are sometimes seen as “left behind”.

The re-set seems more likely to be a milder form of reboot. Without Cummings, some of the urgency will go out of parts of the recent agenda, particularly the machinery of government and data in government focus. But many of the priorities of the new conservatism—Brexit, levelling up, higher spending on the NHS and police, social care, boosting further education, immigration reform, restoring some bustle and pride to Britain’s often unloved towns—are owned by a broad range of the people that matter.

The Red Wall voters are likely to prove more complex beasts than in the Vote Leave or Remain caricatures – and no political strategy can focus too much on just one slice of the population but without producing visible, tangible improvements to the lives of people in places like Stoke and Leigh before the next election the Conservatives will not be returned in 2024.