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

5 Nov

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Payne journeys through the Red Wall seats to discover how Labour lost them and Johnson won

18 Sep

Broken Heartlands: A Journey Through Labour’s Lost England by Sebastian Payne

The first thing Sebastian Payne prompted me to do was to order a copy of English Journey by J. B. Priestley. For Payne starts his book in Gateshead, where he grew up, and is sporting enough to quote what Priestley wrote about it in 1933:

“No true civilisation could have produced such a town, which is nothing better than a huge dingy dormitory.”

Payne is not a second Priestley. He is neither such a good writer, nor so rude. But he is a good investigative journalist, who wants to understand what happened in the Red Wall seats where the Conservatives made such inroads in 2019.

The term “Red Wall” was coined by the pollster James Kanagasooriam to describe seats which had never returned a Tory MP since 1997 (or in some cases since the Second World War); voted on average by 63 per cent for Brexit (compared to the national average of 52 per cent); had a substantial Labour majority during the 1990s; and also had a substantial minority Tory vote.

Four such seats went blue for the first time at the 2017 general election: Mansfield, North East Derbyshire, Middlesbrough South and East Cleveland, and Walsall North.

Thirty four went blue in 2019, and another 14 stayed in Labour hands. Payne quotes a Labour aide who says the 2019 result could have been even worse:

“We looked at the North and Midlands and thought the whole thing could just go, it could have been another Scotland for us.”

But to lose 34 seats is still pretty bad, and Payne sets out to discover what happened, and whether 2019 “was a fluke, or a realignment”.

His method is to visit ten Red Wall seats, each of which gets about 30 pages of text: Blyth Valley, North West Durham, Sedgefield, Wakefield, Don Valley, Great Grimsby, North East Derbyshire, Coventry North West, Heywood and Middleton, and Burnley.

In the course of his researches he interviews 120 people, including many former Labour MPs, often spoken to remotely, in part because of the pandemic. So we hear from Tony Blair, David Blunkett, David Miliband, Alan Johnson and many others.

In Blyth Valley, he meets Ronnie Campbell, former miner, Labour MP there from 1987-2019, when he retired because of a heart complaint; and Ian Levy, former mental health nurse, who proceeded to win the seat by 712 votes for the Conservatives.

Levy told Payne how he came to stand:

“We would often go out for a meal or a drink, me and my wife Maureen. On the wander back, when I’d had a few beers, I would start complaining about the state of the town centre: the state of the bus shelters, the feeling of despondency there was in the town where people feel really, really let down, and that their vote is taken for granted.

“I think she was happy to hear this, once, twice, maybe 30 times. But once it got to 40 or 50, she’d absolutely had enough. I remember this one night in particular she said, ‘Either do something about it or shut up.’ And I said, ‘Right, OK then.'”

The next day he told her he was going to stand for Parliament. His “gut feeling” took him towards the Conservatives, but he found there was no Conservative Association in Blyth Valley, so he wrote to David Cameron, explaining his passion for Blyth, the problems he had identified and how he intended to fix them.

Much to his and Maureen’s surprise, he received a positive reply, and in 2016 was invited to CCHQ for an interview, after which he became the prospective parliamentary candidate.

His first campaign, in the 2017 general election, was run with £500 donated by Matt Ridley, described by Payne as “the aristocratic science writer and libertarian campaigner based in Northumberland”.

Levy’s daughter and her friends distributed leaflets, and the Conservative vote rose to 15,855 (it had been 8,346 in 2015), but the genial Campbell was still well ahead, with 23,770 votes.

Two years later, the Conservative vote increased again, to 17,440, while Campbell’s successor fell back to 16,728. Levy in his second campaign had won a famous victory.

“One of the nuisances of the ballot,” Lord Salisbury once remarked, “is that when the oracle has spoken you never know what it means.”

There is a temptation, when seeking to explain what happened in the Red Wall seats, to pretend to greater knowledge than is actually possible.

It can be difficult enough to know what is going on inside one’s own head, let alone anyone else’s, as one makes up one’s mind how to vote. Here is Payne on his own decision in the EU Referendum of 2016:

“On both sides of my family, almost everyone voted Leave. I was deeply torn: my northern hinterland and instincts pulled me towards Brexit, but after twenty minutes in the polling booth, my head put a tick in the Remain column.”

One rejoices to find such a balanced outlook, such conscious doubt, in a reporter for a newspaper, The Financial Times, which expressed such dogmatic enthusiasm for remaining in the EU.

There is an overwhelming sense, in every place visited by Payne, of having seen better days. Great industries have collapsed,  so has the communal life which they engendered, and handsome town centres are left to rot.

Local pride is wounded at every turn by evidence of neglect, shoddiness and former greatness. The prosperous, of whom there are more than one might think, flee to houses on the periphery.

And as Payne explains, the Labour coalition has broken down:

“From its inception, the party was built on a Hampstead-to-Humberside electoral alliance, bridging metropolitan liberal voters, typified in the north London enclave, to the working-class voters in England’s working-class towns. Brexit annihilated this alliance, but Labour’s shift on other matters set the stage for the demise, according to Blair.”

Blair talks at considerable length to Payne. The ingenuity with which he justifies himself is impressive, and his self-righteousness is insufferable.

Nothing is ever Blair’s fault. Norman Tebbit, speaking from his office in the House of Lords, strikes a different note:

“There were mining communities in rural areas where there was very little other work. Unfortunately we could have run those mines down much more slowly. We could have done more to help to bring jobs to those areas. There was a deep and profound economic and social change that went on, which was adverse to those local people.”

One of the paradoxes of Payne’s account is that he talks to so many politicians, he does not always allow the voices of local people to be heard.

We instead get the generally rather bland language of professional politicians, discussing what to do about the Red Wall seats, what to do about Brexit, and still cut off from the people who in 2016 seized the chance to make their voice heard, administering a most tremendous shock to the metropolitan liberals who had ignored them for so long.

The weakness of Theresa May after the 2017 general election turned out to be a trap for the Remainers. Peter Mandelson tells Payne how Blair assembled a group of like-minded Labour figures and told them they had “a real opportunity” to get Leaver voters to think again.

After they had spent some time trying to persuade Leave voters that leaving was not such a great idea, Mandelson told Blair “We’re not gaining traction here”, but Blair would not accept this.

The People’s Vote campaigners were not thinking straight. As Mandelson says, the question of “what would be on the ballot paper of a second referendum…was insoluble”.

Labour, which in 2017 was still promising to implement the referendum result, ended up in a ridiculous position at the 2019 election, seen by Leave voters as an attempt to wriggle out of getting Brexit done, and Johnson won a thumping victory.

Johnson enters this book at the end, campaigning in May 2021 in the Hartlepool by-election, another famous Tory victory:

“With Jill Mortimer, the Tory candidate, he paced up the seafront in his trademark blue suit – sans coat, despite the weather. He was mobbed. Soon, the traffic piled up as every car stopped to point and shout, ‘Boris!’ He was the Pied Piper in the middle of a hurricane. He asked each voter he stopped to talk to if the party could count on their support. Bar some who were uncertain, every one answered in the affirmative. No one said they were backing Labour. The response was unlike any I have seen to any politician on the campaign trail, in any election: dozens of Hartlepudlians wanted selfies and elbow bumps with the Prime Minister. You cannot imagine David Cameron or Theresa May eliciting such a response.”

Payne later interviews Johnson:

“Recalling the scenes on the beach front, I asked why he felt he was so personally popular with working-class voters, despite his Eton and Oxford background? Was it that he was seen as an unconventional political insurgent? After running his hand through his mop of hair several times, Johnson said, ‘Look, it beats me.’ He appeared to be on the cusp of revealing more, before restraining himself. ‘It’s not about me, this is about this country.'”

Yes, it is about what kind of country we are, what kind of nation. And to cast light on that question, I hope another author, a latter-day Priestley, will make an English journey and spend more time talking to random members of the public, unimportant people.

Adrian Lee: Delays, filth,Traveller’s Fare, Savile, Gary Glitter – and a failed service. Beware of Ministers re-inventing British Rail.

7 Jun

Adrian Lee is a Solicitor-Advocate in London, specialising in criminal defence, and was twice a Conservative Parliamentary Candidate.

With the recent Transport Secretary’s announcement of the creation of a state-run entity called “Great British Railways”, my mind was cast back to the time of railway privatisation. In 1993, I was one of the four National Vice-Chairmen of the Young Conservatives. One evening we met the newly-ennobled Lord Tebbit for an informal drink in a House of Lords to update him on the current health of the Young Conservatives.

Whilst he was perfectly polite, he was nonetheless pre-occupied with the detail of the Railways Bill then passing through Parliament. He was deeply concerned, believing the Bill to be so poorly drafted that it could only lead to long-term chaos, and would ultimately discredit privatisation in principle.

The legislation facilitated the break-up of British Rail into 100 companies, with contracts having to be approved by two separate quangos, the Office of Rail and Road and the Office of Passenger Rail Franchising. With the greatest reluctance, Tebbit stated that he would have to vote for this flawed Bill – because he thought that it was essential to harness private capital and management skills, and end the disaster of the nationalised British Rail.

British Rail was indeed a disaster. In its 49 year existence, all taxpayers (many of whom never used trains) were forced to pay the entire cost of the network. Because no private investment was allowed, it was continually susceptible to spending cuts. The entrepreneurial spirit associated with the pre-war privately-owned railways was replaced by disinterested state bureaucracy.

After 1948, the railways were seen as a “public service” rather than a business, and so customer service deteriorated rapidly. Railway employees had their jobs guaranteed, so they had no reason to inconvenience themselves for the mere commuter. Timetables bore little resemblance to reality, and thousands of trains were late or cancelled every year. Most of the rolling stock was ancient, Waiting Rooms on stations were filthy (frequently vandalised and stinking of urine). And the food served in Traveller’s Fare buffets, particularly the notorious British Rail sandwich, became a national joke on variety shows and sitcoms.

No wonder that British Rail never reached profitability: by 1961, it was losing £300,000 a day. A year later, British Railways recorded an annual loss of £104 million (£2.24 billion in 2019 terms). All of this occurred despite the fact that closures of railway lines started in the late 1940s, and already 3,000 miles of track had been left abandoned.

With public money metaphorically seeping through gaps between the railway sleepers, the Macmillan government had ordered a major organisational shake-up. A new structure was put in place and the first Chairman of the new British Railways Board, Richard Beeching, was appointed.

Beeching thought that he had the solution: even deeper cuts and closures. Being a nationalised industry, and so traditionally unconcerned with such commercial concerns as ticket sales and customer demand, no data existed to show which lines were profitable or essential.

A major traffic census therefore had to be undertaken, but Beeching didn’t waste time carrying it out methodically – and so the entire fate of the railway network came down to a survey that took place over the course of one week during April 1961. Stories abound of researchers turning up at empty railway stations in the mid-morning and marking them off for closure, whilst being oblivious to the fact that the same stations were heavily used in peak hours. The resulting report, The Reshaping of British Railways, was published in 1963 and recommended the closure of a third of all passenger services.

Not all of the suggested cuts were implemented – some were reprieved by dodgy political lobbying in marginal constituencies. However, conversely, many essential services bit the dust, leaving several major towns without rail transport. The whole effort was both rushed and ham-fisted. Labour, in Opposition until 1964, opposed Beeching’s Report, but implemented it in full when they returned to power. The cuts made a saving of around £30 million a year, but overall loses continued to run at over £100 million.

By the 1970s, British Rail was as much controlled by the trades unions as by the civil service. Whenever a modernisation was suggested, it had to be thrashed out first with belligerent union bosses for fear of strike action. The unions loved the nationalised system as it was so much easier holding politicians to ransom than private employers. When commuters cannot get to work for lack of trains, they usually blame the body running the railways. When the state owns the railway, the government is always to blame. Politicians hate unpopularity and, on this basis, pay rises are granted frequently. This continues to be the case for the one major British railway that was never privatised: the London Underground. Few will forget the late Bob Crow in a hurry.

In the final years leading up to privatisation, British Rail turned to public relations to paper over the cracks. First, they employed Jimmy Saville as their salesman heralding “The Age of the Train”. Then, after they dropped Saville when sexual rumours first started circulating, they turned to Gary Glitter to promote the Young Person’s Railcard. The last notable advertising slogan of British Rail was the almost desperate “We’re getting there”.

Privatisation led to the rejuvenation of Britain’s railway network. New rolling stock provided greater passenger comfort and safety, as well as faster services. There is now a better choice in food outlets in stations. Cancellations and delays have been slashed, and journey numbers have risen from 761 million in 1995 to 1.75 billion in 2019.

According to the rail regulator, 59 per cent of current service delays result from the actions of Network Rail, the section that continues to be nationalised, not the private contractors.  Lew Adams, the former General Secretary of ASLEF who went to work for Virgin Rail Group after privatisation, said in 2004: “All the time it was in the public sector, all we got was cuts, cuts, cuts. And today there are more members in the trades union, more train drivers and more trains running. The reality is that it worked, we’ve protected jobs and we got more jobs.”

So what went wrong? Under the 1993 Act, private companies lacked the competitive freedom enjoyed by businesses in other sectors. The state retained control over the tracks and stations, dictated timetables, maintained fare levels and prevented competition between different contractors on the same lines.

Unlike other countries such as Japan, British train operators were forced to operate with one arm tied behind their backs by the government. In 2009, a group called the “Campaign to Bring Back British Rail” was established, and the myth was promoted that British train fare levels were significantly higher than on the continent. The Left seized upon this – believing that the railways gave them the best opportunity to reverse a major privatisation. Sadly, very few Conservatives or right-leaning think tanks fought back against this campaign with the facts.

We have yet to hear the full details of the government’s proposals for the railways, but one thing should be clear from past experience: nationalisation does not work. For over forty years, Conservatives struggled trying to manage Labour’s statist model of operation. It was not ideology that drove the Major Government to railway privatisation, but common sense. It is imperative that we don’t stray accidentally back down the same intellectual cul-de-sac of thinking that government can run business.