Macmillan Lecture 2013: ‘Keep Calm and Carry On Reforming’

 MACMILLAN LECTURE 2013

Keep Calm and Carry On Reforming 

By Rt Hon Damian Green MP

The previous occasion I delivered the Macmillan Lecture was in 2005, just after a disastrous election result for the Conservative Party which saw us make little progress even though Tony Blair’s Government was visibly crumbling.

“Why aren’t we thinking what they’re thinking” was the rather gloomy title, prompted by the thought that the lack of progress made it much more difficult to obtain an overall majority in the subsequent election—a sadly prescient point. One thought I was keen to make then is equally true in the very different world of today; that if the Conservative Party does not like modern Britain it is unlikely that modern Britain will warm to the Conservative Party.

Of course there is much that needs to be changed, and much that is changing because of this Government. As I say in the title of this lecture, we must carry on reforming.  But we should not let the long recovery from recession, or individual horrible incidents such as the Woolwich killing, leave us gloomy or grumpy as a country. It is less than twelve months since the world admired the best Olympics of the modern age. They admired not just our national organisational skills but the character, warmth and openness of the British people. We should not just keep calm, we should cheer up.

I should move from the national to the party.  The same injunction applies.  

Perhaps this is the appropriate moment to fulfil the duty of all who deliver this lecture to quote Harold Macmillan; “It is the duty of Her Majesty’s Government neither to flap nor to falter.” Admirable advice which is both timeless and timely.  For centre-right politicians there are significant reasons to be both calm and cheerful , the most notable of which is the public’s reaction to the financial crisis and subsequent recession. It was the fond hope of those on the left, perhaps particularly those who grew up at the feet of Marxist philosophers, that this would be seen as a crisis of capitalism. The people would throw off the shackles of false consciousness and realise that free markets had failed, and that state spending, borrowing and control was the route out of recession.

Fortunately the British people have more sense than that, and tend to prefer the analysis that state spending and borrowing was precisely the route into recession. There is no spin in this analysis. Successive poll findings have shown  that even when Labour is enjoying a significant lead the Conservative team is markedly ahead on managing the economy. This is true even over the past few weeks, where calmness has not been the prevailing emotion.

The most recent Ipsos Mori poll showed a 14 percent lead for David Cameron on managing the economy. Truly, if it still is the economy, stupid, that sets the political tone we are winning the most important argument.  British Keynesianism failed in the 1970s, and enough people know that to ensure that its modern enthusiasts have little credibility. The world has not gone left since the crisis. Where right wing Governments have been ejected, as in France, the left-wing alternative is already in trouble. The economic facts of life are still Tory.

So keep calm. But also carry on reforming, and more particularly carry on reforming in a Tory way. There is gathering strength to the argument that the reforms we are seeing to, for example, immigration, welfare and education address exactly the issues that people want Government to concentrate on.

These key reforms have three significant features. The first is that they are as important to the success of the Government as the central economic policy. The second is that all of them are dependent on Conservative ideas and energy to drive them through. The third is that they are precisely on the Common Ground originally identified by Keith Joseph as the proper target for successful Government, rather than the centre ground.

So as well as winning the central economic argument we are reforming in the areas where the country needs changing, and we are doing so in a Conservative direction. This message cannot be sent too often or too loudly, particularly to traditional Conservative supporters. They want lower immigration, an end to abuse of the welfare state, and higher standards in schools. Conservative Ministers, drawing on Conservative principles and our Manifesto promises, are delivering this.  

On immigration, the latest figures show that net migration is down by more than a third since June 2010, and is now at its lowest level for a decade. At the same time as seeing this dramatic decline in overall numbers, which is the main requirement, we have continued to support economic growth by welcoming the brightest and best to the UK. Higher numbers of skilled worker visas were issued over the last year, as were university student visas. So we have lower immigration, and more selective immigration: both good Conservative policies.

On welfare, we have introduced the biggest welfare to work programme the UK has ever seen to get people back to work.  We also believe it must always pay to work – which is why we have capped benefits so that no one can get more on benefits than the average person earns in work. We want to help people escape poverty, not trap them in it. This reform is squarely in the tradition of  which Harold Macmillan would have approved.

The same is true with our education policy. We are making sure that every parent has the choice of a good local state school for their child, teachers have the powers they need to keep discipline in the classroom and the exam system is rigorous, respected and on a par with the world’s best.

We have a programme to improve the quality of teaching, including scholarships to attract the best graduates, higher literacy and numeracy requirements for trainee teachers and a network of ‘Teaching Schools’ across the country.  79 Free Schools and more than 2,000 new Academies have been delivered already. Many of them are in areas where most people have not been able, up to now, to gain access to an excellent education for their children. We are restoring discipline to the classroom with new search powers for teachers, an end to the ‘no-touch’ rule, and higher fines for truancy.

All of these essential reforms have been delivered by Conservatives working in a Coalition Government.

Which brings me to a theme which is particularly important for the Tory Reform Group, and all moderate Conservatives.  There may be areas of policy where we agree with Liberal Democrats, but we are not the same.  We believe in change and modernisation , and we recognise that what modernisation means changes over time, but we are first of all Conservatives. We have principles which are not shared even by the most orange of the Orange Bookers. We also do not regard ourselves in any way morally deficient compared to Liberal Democrats.

I get on very well with many of my LibDem Ministerial colleagues, but I am entitled to challenge their thesis that this Government can only be kept compassionate by their presence. There is a long and honourable tradition of decent Conservatives who want to help those who need help, and Macmillan himself was of course a prime example at all stages of his political career.

Macmillan  was alive to the difference. As he put it; “As usual the Liberals offer a mixture of sound and original ideas. Unfortunately none of the sound ideas is original and none of the original ideas is sound.”  We do have practical differences, as I discovered on a regular basis when I was Immigration Minister.

There are similar debates about key issues such as childcare. All of these debates can be, and are, resolved within Government, as they would be whether it was a Coalition or a one-party administration. But they illustrate that the moderate Conservative tradition is a vital part of any Conservative mix, and is distinctive from the instincts and habits that the LibDems bring to politics.

This distinction is key for those who worry that in the Coalition the tail is wagging the dog. We are reforming and we are reforming in a Conservative direction. Every Conservative policy is about promoting opportunity and social mobility.  We know that  making Britain succeed globally and allowing people to achieve their aspirations are the two keys to a successful society. Economic growth and individual growth need to go hand in hand. This is the basis for economic and social policy under this Government and I cannot understand why any Conservative, whichever tradition they adhere to, would object in principle to this approach.

There will always be disagreements about tactics and day-to-day priorities but these must not be allowed to divide the right, when the only beneficiaries will be the left. All  of us who campaigned so hard and so successfully to preserve a first-past-the-post electoral system must accept the consequences. Under first-past-the post a serious party that aspires to Government has to be a broad coalition.  This in turn requires a degree of self-discipline and capacity to compromise. If we Conservatives forget that, our opponents will be the beneficiaries.

This means that the tone of the discourse between Conservatives is important. If we sound as though we dislike each other, others will draw the obvious conclusion. I love Twitter, but its general tone should not be a guide to how Conservatives address each other. Disagreement on an issue, however emotive, does not mean treachery, or not being a proper Conservative. Politics is a team game, and mutual loyalty is vital for a successful team.

The biggest and longest-running cause of Conservative discord is Europe. Every Conservative should have a high regard for the lessons of history, and the party’s history on this issue since the 1990s is terrible. The effect of this has been, ironically and yet predictably, that Britain’s fate in Europe has been in the hands of those who have no sympathy at all for the Eurosceptic viewpoint. Surely we are all able to learn this lesson of history and not repeat it.

I am not just lecturing others. We must all learn lessons. For years pro-Europeans opposed the idea of a referendum. But the strategy of negotiating a new settlement, and then putting that to British people, is clearly the right one for current times. Most British people want it to happen. So much has changed since the 1975 vote that it is time to put the argument again. I hope and expect that the outcome of this process will be to renegotiate, reform, and revalidate Britain’s place in Europe. The Prime Minister has made clear that this plan will be central to Conservative policy up to and beyond the next election. It is time for the whole party to get behind it. And it is possible for those who hold the whole range of views on Europe to do so.

For those of us sympathetic to the European argument this is an opportunity to make our case, and the Prime Minister’s case, that a properly reformed EU will be hugely to Britain’s advantage. For too long only a few lonely voices in the Conservative Party have made the case that we are better off in. Those of us who hold that view cannot wait for the few weeks before a Referendum to argue our corner.  There is a hard-headed Conservative case for Britain’s membership of the EU, for all its imperfections, and it needs to be heard.

The core of the argument is economic. All sectors of industry agree that we are better off in. Let’s start with manufacturing. Five out of every six cars made in this country are exported, and 700,000 jobs depend on the industry.  How many of those firms would invest long-term in Britain outside the EU? No wonder Ford’s European Chief Executive, Stephen Oddell, has said that “Leaving a trading partner where 50% of your exports go… would be devastating for the UK economy.”  

Then there is the City, often seen as the part of the economy most hampered by EU rules. Goldman Sachs are unlikely to be sentimental about the economic effects of leaving, and they have concluded that departure would be a loss/loss scenario, in which the loss would be greater for the UK than the EU.  In particular they argue that “The UK’s ability to conduct business in financial services across the European Union is likely to be severely compromised by a departure from the EU.”

Then there is the argument that we should concentrate on the fast-growing economies in Asia and South America rather than sclerotic old Europe.  I have never understood how you make it easier to export to China by making it more difficult to export to Germany, and indeed the German example is surely one to follow. Last year Germany exported $804bn worth of goods to Europe, and another $519bn to the rest of the world. They are complementary markets, not alternatives.

Finally there is the argument that our businesses have to obey all these petty rules that hinder them. Does anyone imagine that the rules would be less onerous, or indeed less of a hindrance to British business, if they were made without any input from Britain? Since Britain will need to trade with Europe, we would be putting an added burden on our business, not removing one. And we would have to pay a large fee for access to the Single Market, as Norway does. The idea that we can remove all the irritations, but retain all the benefits, is not worthy even of the saloon bar.

Of course there is need for reform, not just for Britain’s sake but for Europe’s. We need a Transatlantic Free Trade deal. We need a single market in a number of new areas, including digital services. Above all, we need a reform deal which will deliver benefits to every country in the EU, so that others will be as keen as we are on reform.  This will show how beneficial it can be when Britain plays a leading role in Europe.

This European reform will be consistent with all the other hard-headed, unsentimental, pragmatic, Conservative reforms which the Government has embarked on. It will fit in with a wider modernising agenda which is nothing to do with party image and everything to do with making Britain (and Europe) fit to compete in the modern world. All these reforms, taken together, will change Britain for the better. So the job of all Conservatives at this point is neither to flap nor falter, but to get on with the job of persuading people that Conservative principles in action give all British people the chance to succeed. We should be proud of our record so far, and we know there is much more to come. We have an important job to do. We should devote all our energy and time to doing it. 

All right-thinking Eurosceptics need to get behind David Cameron’s EU negotiations

James Reekie 9.00am

The European Union’s unresolved constitutional status, and the sticking plaster approach of the Lisbon Treaty means that we need some new thinking in order to resolve our qualms over Europe. The Prime Minister can provide this.

Like most people on the centre-right, I am sceptical of increasing European powers. I don’t believe the UK should be outside of the EU, but I do think that Europe needs to change. That is why I welcomed David Cameron’s pledge to renegotiate our place in Europe and put the results of those negotiations to the British people in a referendum. Mr Cameron is providing important leadership in Europe by examining as part of this exercise those parts of the EU that are fundamentally incompatible with not only British values but also those of other Member States. It means that the European political classes will at least begin the debate by asking ‘What powers and competences need to be returned?’ rather than ’ How much state sovereignty can we take from Member States?’. The former question being the one which the British public have been rightfully asking for years.

The slow creep of European power cannot be simply blamed on the ‘bureaucrats in Brussels’ or on the European institutions, for on every European Treaty we find the tacit endorsement of Prime Ministers, Presidents and Foreign Secretaries in what has become a shameless acquiescence in the diminution of parliamentary sovereignty - if not in a theoretical sense then at least in a practical one.

David Cameron has demonstrated that he is no friend of this approach and finally at last, we have a leader in Europe who is actually willing to provide a robust alternative to the ‘integration will solve it’ mantra of the federalists.

However, simply moaning and groaning about Europe won’t solve the problem for us eurosceptics. We must call for a constitutional settlement that reigns in and defines in clear terms the powers and limitations of the European Union and its institutions. There does exist a reasonable approach to the European Union which satisfies our ambitions for free trade and co-operation that does not rely on full blown integration or withdrawal.

Eurosceptics need to take a much more coherent and holistic approach to the EU constitutional debate.

Firstly, by recognising that from its early conception until now the European Union has in fact developed along a distinctly British constitutional tradition. This type of constitutional evolution has made Britain’s constitution distinctive in its flexibility and contributed to our many successes within a state context but it is no remedy for a supranational entity such as the European Union. Of course in a legal and political order such as the European Union this was always going to lead to a constitutional crisis, especially considering there is the sovereignty of member states constitutional traditions to consider.

Secondly, by recognising that our alternative is the one sought by the vast majority of people. The former treaty establishing a Constitution for Europe contained articles on a European flag, anthem and various other nonsensical provisions in order to attempt to garner some sense of constitutional patriotism from citizens of member states, which was completely out of step with the vast majority of the European public. There is little clamour for a federal Europe. So let’s argue for an abandonment of pie in the sky symbolism and advocate a focus on solid constitutional reform.

We hear far too much nowadays of European human rights legislation or the next nanny-state measure to come through Brussels. This leads us to forget the fundamental reason why the European Union exists.

The common market in principle is good for business and good for trade within Europe and internationally. In fact, it is the principles of this common market that may just save us from the absurdity of minimum pricing for alcohol. The common market is not without its faults but the law makers and political leaders of Europe must appreciate that the fundamental premise of the European Union is a Common Market. It is time we got back to something that looks like one.

Thirdly, we need to recognise the European Union for what it is. It isn’t a state and we don’t want it to become a state. I often hear those across the political spectrum talk of the European democratic deficit. Of course the democratic deficit is still far too large but we must also appreciate that if we do not want Europe to become a state we must stop holding it to standards we expect from nation states. We must see it as a unique order which we are responsible for shaping and not leave the left to determine the future of the European Union.

Therefore, governments must also take some responsibility for constitutional collisions when they arise. Often constitutional compatibility issues can be resolved well beforehand but they often lack the political will or courage by both the EU and national parliaments to be tackled head on.

So what next for our relationship with Europe? Depending on the process followed in determining any future treaty, Mr Cameron must ultimately ensure that he plays his full part in leading and maintaining a coalition of centre-right reformists, but most of all he must also ensure that prominent eurosceptics from across Europe are playing their full part in the debate. There has been some interesting thinking about what the process could look like in order to ensure democratic legitimacy for a European constitution which has been decidedly lacking in any.

So far, David Cameron has led the way admirably. Firstly for promising a referendum and secondly for promising a renegotiated settlement to be put forward in that referendum. It’s time for all right-thinking eurosceptics to get on board and shape a European Union settlement that is democratically and constitutionally legitimate.

James Reekie is the Vice-Chairman of the Scottish Conservative and Unionist party

Robert Buckland states the reformist case for Britain’s being at the heart of Europe

Nik Darlington 4.20pm

TRG vice-president Robert Buckland had an article on ConservativeHome yesterday, in which he argued forcefully for Britain’s role at the head of the European table.

Robert rattled off a list of British achievements in Europe that really ought to be better known and understood: reform of the CFP, for instance, despite coming up against seemingly implacable entrenched interests.

Moreover, Robert claims, it is largely because Britain is so much more influential in Europe than we oft imagine, that David Cameron’s historic Bloomberg speech was received with such seriousness around the EU.

"Chancellor Merkel…has some sympathy with our reformist aims; without her support, the budget cut would not have been achieved. She realises that the EU must be more efficient and competitive. Mark Rutte, Prime Minister of the Netherlands, shares our desire to see some powers repatriated to the Member States… Alexander Stubb, Foreign Minister of Finland, recognises that there has already been a lot of differentiation within the EU. He understands that an identikit EU is not the be-all and end-all to the European project."

Underpinning Mr Cameron’s bold statement last month is, I believe, a profound ambition to recast the European Union in its entirety and for the benefit of all its members - including Britain. European leaders have taken notice.

Finally, Robert sets out a case for remaining at the heart of Europe, and a case we shall hear a lot more of as the date of an in-out referendum approaches.

"History has surely taught us that we must stay at the heart of Europe precisely so that we can reform it. Whether we like it or not, our fortunes are intricately linked with those of the continent. Instead of shouting from the sidelines, Britain is taking its place again at the head of the table, helping the EU to face up to its many problems."

Follow Nik on Twitter @NikDarlington

The transatlantic trade pact is a death knell for euroscepticism

Alexander Pannett 1.15 pm

On Wednesday, the EU and US announced plans to forge a free trade area within two years, that would see tariffs removed and markets liberalised between the two largest economies in the world.

It is estimated that, if the agreement is successful, the free trade area would improve competitiveness, create jobs and generate billions in trade for the two economic areas. This is vital during a time of lagging global economic growth.

Combined together the economies of the US and EU account for over 54% of world GDP in terms of value and 40% in terms of purchasing power. Increased trade would also lead to a greater exchange of both human and intellectual capital. This would re-invigorate the trans-Atlantic ties that underpin that elusive idiom of the “West”.

Domestically, the proposed trade agreement has huge implications for the UK’s relationship with both the EU and US. If successful, the free trade area would mortally wound the eurosceptic movement.

British eurosceptics rue the perceived Byzantine tentacles of EU bureaucracy and instead advocate closer ties with the more economically liberal and culturally similar US.  Whilst ideologically supportive of a European single market, they question the worth of suffering a multitude of EU regulations for the dubious benefits of a free trade area with hemorrhaging European economies.

However, leaving the EU will mean being outside the proposed EU/US trade area. Considering the complexity and length of negotiations, there will be no opportunity for the UK to leave the EU and then enter the EU/US trade area as an equal third party. The EU/US free trade area would be a carrot that should not be given up.

Economics aside, abandoning the EU/US trade pact would be an absolute rejection of British foreign policy over the past 70 years. We have consistently seen ourselves at the main bridge between the US and Europe and our geo-political aims have focused on forging closer trans-Atlantic ties. A US presence in Europe assures both our security and our prosperity. It is the bedrock of the UK’s international relations.

Bizarrely, eurosceptics trumpet the foreign policy goal of closer US relations as the reason to leave the EU. They have ignored what America seeks from the “Special Relationship”. The Obama administration has been quite clear that an assertive UK in a strong Europe is what is most useful to the US. They desire an integrated Europe that can be a useful ally, and the UK’s role inside Europe is vital to achieving this.

The referendum proposed by David Cameron will allow the British public to fully engage with the pros and cons of EU membership. As John Major iterated in his backing of Cameron in a speech at Chatham House yesterday, "It will be healthy to let the electorate re-endorse our membership, or pull us out altogether. At present, we are drifting towards – and possibly through – the European exit.”

This is why the launch this week of European Mainstream, by pro-Euro Conservative MPs such as Robert Buckland and Laura Sandys, is a necessary reminder that there are many in the Conservative party who understand the importance of our relationship with the EU. This group supports the Prime Minister’s position on Europe; that both the UK and the EU are stronger with the UK inside Europe.

The proposed EU/US trade agreement is a timely reminder of the huge opportunities that the EU provides and will continue to provide. We have allowed the eurosceptics in politics and the media to dominate the debate for too long. The EU needs reform. I believe this as sincerely as many eurosceptics. But from the recent EU budget concessions to the enlarging of the EU and liberalising of the single market, the UK’s vision for the EU is bearing fruit.

The world is changing and Britain’s global interests must change with it. We are right to seek out new markets and partners and to review our existing relationships. But we must not be blind to the importance of our relationship with Europe. The British public deserves to know all the facts.  

It is time for pro-Europeans from across the political spectrum to announce themselves.

As Europe sinks we should look to new horizons

Alexander Pannett 12.30pm

This week it became clear that the procrastinated efforts to save the European single currency have failed.

Greece will leave the single currency when it votes for anti-austerity political parties in a month’s time. Possibly even the European Union too if Greek anti-European sentiment continues to grow.

What must be done now is ensure the contagion does not spread to other peripheral countries: Ireland, Portugal, Spain and Italy. This may even be too late, as we receive reports of a bank run in Spain. If the markets lose confidence in these countries’ ability to manage their debts it will precipitate a collapse of the entire European banking system as capital flight prompts liquidity to dry up, as in 2008.

David Cameron has called for fiscal and political union as the only way to shore up confidence in the euro and stop it being seen as less a single currency and more a strict exchange rate union ready to be un-raveled.

The Prime Minister echoes calls from other European leaders for more concerted action to save the euro, notably via the use of 'eurobonds'. I proposed on these pages in November last year that without further political solidarity the euro was doomed.

Political solidarity has not emerged. Instead there is growing acrimony and competing ideas. If anything, the unfolding disaster has exposed the fractious concept of common citizenship behind the entire European project, something Nik alluded to earlier this week.

There is no interest in Europe. There is only a Europe with interests.

It is not too late to salvage the ambition of closer union. But for now this can only be a Franco-German union. Only those nations who will accept being absorbed under the dictates of Paris and Berlin shall join. For the rest, the EU will remain a trading block, and an economically and politically impoverished one at that.

It seems that the great play of world history is about to leave the European stage and transpose itself to the more exciting and economically dynamic scene of Asia. Whether this new Act will be of tragedy or farce is as of yet unknown.

For Britain, we are too old an actor to play outside the limelight. Our pride is too heavy and dress bill too dear. It is time we pursued a new free trade pact with countries in Asia.

We could start with Australia, New Zealand, Korea, Japan, America, Indonesia and Singapore, perhaps with the old Commonwealth as the foundation. This could and should include those European nations that share our interests in global trade.

Such a free trade organization would also be able to promote a more responsible capitalism in global trade that protected the environment, traditional cultures and social values. Far better to promote progressive humanitarian standards by engaging with Asia rather than heckling it behind trade barriers.  

We should mirror America’s re-orientation to Asia by reversing the Suez doctrine and re-establishing naval bases in Asia. Singapore may value such a presence. This does not even have to be a military base but could be a humanitarian crisis response centre, in readiness for when another natural disaster strikes that seismically vulnerable part of the world.

Europe will still remain important to Britain. But it should be seen and supported as a neighbour. Not as our place of work.

For that we will need to travel further afield.

Follow Alexander on Twitter @alpannett