Why our new Prime Minister is ignoring multiple crises, and proposing policies that helped generate these crises.

 

Many people have commented on the complete disconnect between the issues being debated as part of the Conservative leadership campaign and the many acute crises faced by the people of the UK who this leader will shortly govern. It’s easy to dismiss this disconnect as a peculiarity caused by the atypical composition of the Conservative party membership, and for the same reasons discount all the pledges the candidates are making as just more lies told to gain votes.

There are three reasons why such a dismissal would be a mistake. The first is that a majority of Conservative MPs (including likely cabinet ministers) hold similar views to party members. The differences between the two groups are important, but those differences only make things worse. Conservative MPs tend to be more right wing than the membership on economic issues, so they too believe tax cuts are what the Conservative party is all about, and that regulations are generally evil. In contrast these MPs in private are much more socially liberal than their party’s membership, but not in public because they see winning the socially conservative vote as their means to power.

The second reason not to dismiss what is happening in the leadership contest is the similarity between that contest and what you will find in the pages of the right wing press (The Mail, Sun, Express, Telegraph and Times). This is no coincidence of course. To believe that tax cuts are the answer, Brexit is a success and some of the biggest problems this country faces are due to a woke establishment, it greatly helps if what you read (in print or online) backs you up. In addition if you are Truss or Sunak, it greatly helps if what you say is selected by editors to appear in the pages of newspapers because it is congruent with the stories those papers regularly produce. The leadership contest may (eventually) end, but these newspapers will continue to influence the public debate.

The third reason is that the views of Conservative members and right wing newspapers are not very different to the views of those who finance the party. Not only does the Conservative party rely on these donors to heavily outspend its opponents in elections, it has under Johnson in particular given these individuals unprecedented access to and influence over policy. That situation is unlikely to change if either candidate wins, and these donors will still be there once the leadership contest ends.

Instead of being a short term irrelevance in policy terms, the leadership contest gives us in an unusually concentrated form a window on what the future Prime Minister will come under considerable pressure to actually do, or more probably what they actually want to do. The disconnect between the crises the country faces and what the candidates are talking about is both real and it matters, because it will play itself out from September until the next election. There is a simple reason for the disconnect: while the policies the leadership candidates espouse do nothing to help most people get through the coming crises, they have and will continue to benefit a small minority that controls the Conservative party.

Both candidates believe in tax cuts, and only differ on timing and perhaps which taxes are best to cut. As tax cuts are central to their leadership campaigns, and because they are also seen as essential to Conservative MPs, right wing newspapers and donors, tax cuts of some form will happen. Yet at a time when the NHS is in crisis during the summer, ambulance waiting times are horrendous, we are seeing excess deaths because conditions are going untreated, and our economy is suffering more than most because of growing long term sickness, tax cuts are an abomination.

The likely winner of the contest, Truss, will try and square this circle by both cutting taxes and spending more money. The combination, implying considerable fiscal largess, will be justified by the forthcoming recession. But the political reality that the leadership contest shows us is that the additional spending will be as little as the Prime Minister thinks they can get away with and so - like Johnson’s NHS cash boost - solves little while also constraining any successor government (if there is one) in what they can do.

We will be told constantly that tax cuts are what we need to get the economy moving again, because the myth that tax cuts help economic growth is deeply embedded on the right. Never mind that this was the policy Osborne implemented during the austerity period, where both income and corporation taxes were cut, and we got the weakest recovery from a recession this country has ever had. As Will Hutton reminds us: “The key propellant of investment is not the corporation tax rate but the confidence that any investment will pay back, and in strategy-free Britain in the grip of rightwing ideology, cut off from its major market, there is little or no long-term confidence.” Evidence like this just doesn’t matter to politicians whose success depends on them ignoring it. As a result, we can expect little that will actually reverse the 10/15 year decline in the UK’s relative macroeconomic performance, and plenty that will just make things worse.

Anyone wanting to do something to reverse this decade or more of income stagnation would begin to reverse Brexit. Yet for both candidates it is Brexit escalation that is their way forward. There is a good chance that Truss in particular will see confrontation with the EU over the Irish protocol as something they need to pursue to satisfy the MPs that supported her, and also something that can be used to fly the patriotic flag before an election. In economic terms that would be a disaster. In addition, to the extent that a ‘bonfire of EU regulations’ leads to greater divergence with the EU, it could make the already considerable problems businesses have in trading with the EU even greater.

I’m often asked why the last twelve years when the Conservatives have been in power have seen such a dramatic macroeconomic decline in UK growth compared to most other major economies. Austerity and Brexit explain a large part of that, but I think there is something more intangible as well. A period where the government becomes so open to lobbying and, under Johnson at least, corruption incentivises rent-seeking (increasing your income by decreasing someone else’s, where someone else often includes public money) rather than innovation. This government’s constant attacks on universities and culture because they do not share the Brexit faith does nothing to help either innovation or sectors where we actually are world leaders.

The biggest short term crisis many UK citizens face is rising energy prices. This is one area where Truss’s rhetoric will not survive her coronation, but just as with public spending her desire for tax cuts will mean the most vulnerable in particular will not get the size or speed of help they need. In the longer term both Truss and Sunak have appealed to member’s scepticism about renewable energy, which in turn partly comes from right wing newspapers. This is the exact opposite of what the UK needs not only to fight climate change, but also to get cheaper energy. All parts of the Conservative party seem stuck in a time when economists talked about the costs of reducing our dependence on carbon. Today, thanks to a combination of state action and private sector enterprise, renewable energy is much cheaper than carbon based energy, yet the policy of the next Prime Minister will be to ‘cut the green crap’, much as her predecessors did. As with tax cuts and a smaller state, Conservative policies are actively making our current problems worse.

The second biggest crisis (more accurately, far bigger for an unfortunate minority) is the state of both the NHS and social care, yet here too Conservative policies work against solutions. One of these policies is privatisation of provision, which generally either increases long run costs or reduces quality and/or access. Another is Covid: Truss’s remark that in any future pandemic she would not introduce lockdowns shows that she shares the party’s denial of science about pandemics, which will make any future problems the virus may cause worse. Of course tax cuts are not going to attract new doctors and nurses to stem growing staff shortages. Instead they will do the opposite by making it less likely that we will train more doctors and nurses, or that the pay of doctors and nurses will rise sufficiently to keep those we have.

To go on is both easy (there is so much, including lack of water, farming, public sector strikes, levelling-down, schools, child poverty, crime and more) and depressing. I hope I have done enough so far to allow me to make the following generalisations. What the leadership contest has shown us is that The Conservative party’s key ideas are their old ideas, ideas that the current multiple crises that the country faces have helped create. For the structural reasons mentioned at the start of this post, whoever wins the leadership contest will continue with those failed ideas. As a result the immediate future looks as grim as it did in December 2019. Our only hope is that more people understand this than they did nearly three years ago, and don’t get fooled again. Whoever becomes our next Prime Minister, the new boss will be the same as the old boss.