Broken Britain or broken politics?

Alexander Pannett 10.30am 

At the conference there were a variety of interesting fringe events but one that particularly caught my eye was a panel debate run by Respublica exploring post-liberalism.

The panel discussed whether “Broken Britain”, characterised by the recent 2008 financial crisis and 2011 riots, is suffering from a malaise brought on by the damaging consequences of social and economic liberalism.

As old traditions and social mores were challenged in the later half of the twentieth century, the social cohesion forged during the Second World War was torn apart by the rise of individualism.

Advances in society, such as improved gender and race relations, coupled with the economic unraveling of the post-war economic consensus initiated a revolutionary change as both society and economy were re-ordered around the individual.  This led to deep divisions between liberalism and conservatism that has had un-intended consequences.

Phillip Blond, director of the think tank Respublica, made the case that liberalism has destroyed the traditions of both Left and Right. Liberalism has caused the elite to become self-serving, absent of virtue. As an ideology, it does not engage with the values that matter to communities.

Certainly political parties have adopted contradictory policies as they have tilted their axis towards the individual. The Tories adopted economic liberalism but social conservatism whilst Labour favoured economic conservatism and social liberalism. Both sides failed to foresee the true revolutionary impact of liberalism on existing British communities and how it contrasted with conservative concepts of society.

For Jesse Norman, MP for Hereford and South Herefordshire, freedom is the absence of fetter to the individual will. Liberalism therefore focuses on the present and the person.

Conservatism focuses not on the individual. The individual is subordinate to society. The social construct comes first. It is not for individuals or a particular generation to undermine society for their own gain.

Norman proposes a post-liberalist revival of conservatism through markets that are based on trust, custom and internal rules. The fusion of social capitalism and market theory is the future of conservatism.

David Goodhart, director of the think tank Demos, suggested that post-liberalism focuses socially on a return to strong morale intuition and patriotism, with skepticism towards large-scale immigration, integration and globalisation.

I agree with Goodhart that political parties have been dominated by a post-secular, mobile elite, which have interests that diverge from the rest of society. An example being when New Labour neglected the education of the lower half of the population due to their obsession with increasing the numbers attending higher education. A large part of the population is immobile and the cosmopolitan elite does not serve their needs.

But how should political parties tackle the ravages of liberalism, which has left the British feeling alienated and disconnected from each other?

Phillip Blond contends that a post-liberalist response should mean further economic support for the family to buffet against the radical challenge that liberalism poses. He sees the family as one of society’s most progressive social units, teaching humans the importance of social bonds and unconditional support at an early age. He also advocates the increased use of mutuals and other economic structures that promote a wider participation in the equity of community assets by the disadvantaged.

However, Goodhart does not believe that post-liberalism has a credible economic policy yet. In this Goodhart is unfortunately correct.

The insidious force behind liberalism is the unfettered movement of global capital. The ebb and flow of jobs and capital to the cheapest global locations of production has destabilised existing social and economic structures. It will take more than a hardening of divorce laws and a John Lewis economic model to roll back the malign effects of globalisation.

Whilst post-liberalism does identify causes of “Broken Britain”, a remedy will take more than post-liberal promises of “One Nation” politics from the leading parties.  The turbulence and banality of liberalism is too pathologically fixating to be addressed by such empty noblesse oblige.

Follow Alexander on Twitter @alpannett

George Osborne’s credit is running out

David Cowan 2.00pm

The Osborne brand has been heavily devalued since George Osborne’s politically disastrous budget. It initiated the ‘omnishambles’ of the past few months which was then followed by a ridiculously long set of U-turns over taxes on pasties, caravans, charities, heritage, and petrol. After weeks of government ministers loyally defending the budget these policies were swiftly and unceremoniously ditched with little or no notice. Often these announcements came within days of each other with the consequence that loyal ministers and MPs had been made to look incredibly foolish.

Just think of Chloe Smith on Newsnight after George Osborne announced that the autumn increase in fuel duty would not go ahead. Even the Secretary of State for Transport, Justine Greening – a loyal Osbornite by all accounts – was kept in the dark about the change of policy. The U-turn over fuel duty was perhaps the most misjudged as it still managed to backfire on George Osborne as that very same morning Ed Balls had called for such a change of direction in The Sun. As a result it looked more like a victory for Ed Balls and another wobble from George Osborne. Many in the Conservative party now see him as “too damaged” to be a credible successor to David Cameron.

Last week Osborne made his bid to regain some of his credibility as de facto Chief Strategist of the Conservative party with a provocative interview in The Spectator where he claimed that Labour aides were “clearly involved” in the Libor scandal, but without mentioning names. When it resulted in a clash in the House of Commons debate that very same day Ed Balls exclaimed “He has impugned my integrity in The Spectator!” It was a very partisan performance delivered in order to boost Conservative MPs’ confidence in him. George Osborne may appear to have done this by securing a parliamentary inquiry into the banking industry, instead of a judicial one, which will undoubtedly question Ed Balls and the other architects of the faulty regulatory system which helped precipitate the financial crisis in 2008.

But to many Conservatives the parliamentary exchange between George Osborne and Ed Balls looked like a sordid display of petty politics- not statesmanship. While it is of course important that Ed Balls et al are made accountable for their disastrous policies, there is still a feeling that George Osborne is far too focused on playing politics instead of doing his job. If this perception dominates how the electorate see him at a time when Britain has gone into a double-dip recession, the Eurozone crisis is engulfing the continent, 2.61 million people still unemployed, and the Bank of England printing money like there is no tomorrow, then the Osborne brand will continue to decline in value.

Within the wider context of the various deficiencies in George Osborne’s economic and financial policies, this run on his credibility is only going to continue. His plan for growth is far too heavily dependent on a policy of cheap credit from the Bank of England and fiscal stimulus from the Treasury (see my article on last year’s Autumn Statement) and clearly is not working. Another problem is that his deficit reduction plan has so far been implemented through tax rises while spending cuts will not actually start to bite until the eve of the next general election and will continue into the next parliament. It is now very likely that on polling day in 2015 the electorate will still be feeling the pinch of meagre growth, rising cost of living, and harsher spending cuts.

A wealth of radical policies for growth has come from across centre-right politics. Conservative MPs have set up groups like the Free Enterprise Group, 2020 Conservatives and The Growth Factory in order to formulate new policies to liberalise the economy. Numerous think tanks have delivered fascinating reports on boosting growth, like the Institute of Economic Affairs’ ‘Sharper Axes, Lower Taxes’, the Centre for Policy Studies’ ‘Small is Best’ publication and helpful infotoon, and the TaxPayers’ Alliance’s 2020 Tax Commission Report. They are all calling for the same spirit of Tory radicalism which has been advanced by Michael Gove and Iain Duncan-Smith, with a clear economic plan based on larger spending cuts, lower taxes, deregulation and sound money.

It is of course difficult for Osborne to recalibrate his economic and financial policies more firmly in this direction because of the Liberal Democrats. But this then begs the question of what happened to ‘Orange Book liberalism’ which was so superbly articulated by David Laws? The coalition seems to baulk at every opportunity of providing a more robust plan for growth. Instead we have seen streams of micro-initiatives put forward while radical policies, like the Beecroft Report’s proposal for making it easier for employers to hire and fire employees, get side-lined. Policy making has become a zero-sum game in which decisions are prevented from happening whilst civil servants are left to their own devices with disastrous consequences, like in this year’s budget. The coalition simply cannot function without an effective policy machine with both parties contributing to new economic radicalism.

George Osborne is undeniably a political animal. He has had numerous political coups like in 2007 when his inheritance tax cut pledge helped spook Brown into bottling the election, but there is a serious job to be done. If we are going to see an effective plan for growth based on spending cuts, lower taxes, deregulation and sound money which has the support of both coalition parties then George Osborne has to focus, otherwise the blood of electoral failure in 2015 will be on his hands.

Follow David on Twitter @david_cowan

PMQs review: Score draw but the Prime Minister’s arsenal is worryingly bare

Jack Blackburn 2.08pm

The Government’s fortunes and the composure of its ministers have crumbled over recent months, though it is worth noting that the Leader of the Opposition’s polling numbers have still not managed to match his party’s.

So as we arrived at the first PMQs since April we found a leadership vacuum, created by a Government in disarray, a Prime Minister under pressure from all sides, and a Labour party leader seemingly unable to act like a leader.

This PMQs also took place in a very different context to the last. Disastrous local election results (London’s Mayor aside) for the Coalition parties still sting. The national economy seems to have tumbled into a double-dip recession. We are being badly buffeted by continuing turmoil in the Eurozone, where an anti-austerity Frenchman has just taken up residence in the Élysée palace and Greece is crippled by political upheaval.

To use a recent (and for me painful) sporting illustration, the leaders were level on points going into today’s match, with Mr Miliband ahead on goal difference. This was a mid-term fixture rather than an end-of-season cliff-hanger, but it as was scrappy, messy and confused as the Premier League’s climax, if nowhere near as exciting too.

Mr Miliband has plenty of arsenal at his disposal at the moment. Dreadful growth figures, unhappy nurses, protesting police officers, the controversial Leveson Inquiry, electoral reverses and the seemingly changing political breeze in Europe should have meant that Mr Cameron was in for a torrid time at the Despatch Box. Nevertheless, there was a crumb of comfort for the Prime Minister today in the form of falling unemployment.

Mr Cameron began by using this to his advantage, welcoming a question from his own backbenches, but stressing (as all the Cabinet has done this morning) that the Government is not complacent. There is more to be done. Etcetera. And for once, Mr Miliband also welcomed good economic news, but was quick to try to press home some advantage by questioning what discussions the PM had taken part in with President Hollande about growth plans for France and Europe.

The answer could have simply been, “Well, haven’t really spoken to him since he was elected.” So Edward suggested a text message with “LOL” in it would probably be sufficient. Uncharacteristically funny, and well delivered.

In fact, Mr Miliband’s entire style of performance has improved immensely. He is calm, considered and no longer whiny. Nonetheless, Mr Cameron remains an adept performer himself, and responded strongly: “I may well have used my mobile phone too much, but at least as Prime Minister I know how to use one rather than just throw it at those who work with me”. The Rt Hon Member for Kirkcaldy was, as usual, nowhere to be seen.

Mr Miliband was indeed more impressive today, though still blew it by failing once again to capitalise effectively on the Prime Minister’s all-too-evident woes. He left the economy debate too quickly, so eager was he to cram in questions on policing and nurses, while also failing to pose a question on his sixth time of coming. The eyes were bigger than his abilities.

Yet Mr Cameron also fumbled the ball today, particularly with his final response to his opponent, when he attempted to criticise Labour’s new policy supremo John Cruddas as someone too close to the trades unions. At moments such as those, one realises just how little ammunition the Prime Minister has at his disposal.

A Shared Resolve

Rt Hon Danny Alexander MP 10.55am

This Coalition Government is delivering on its founding purpose – returning this country to a path of prosperity that is sustainable for the long term. Both the Liberal Democrats and the Conservatives should be proud of the decision we made to put the national interest before party politics. It wasn’t easy, but it was the right thing to do.

With massive market turbulence across Europe the backdrop to the election, both parties knew that economic stability could not be achieved without political stability too.

This historic decision and our shared resolve to tackle the deficit have resulted in interest rates staying low – keeping families in their home and workers in their jobs. Getting ahead of the curve on dealing with the deficit means that despite having a deficit larger than Portugal, UK government-backed bonds still attract interest rates that are as low as Germany’s. We have established financial discipline, motivated not by ideology, but because it is a vital precondition for effective government.

But recovering from the catastrophic legacy left by Labour cannot simply be achieved by tackling the deficit. Not only was the way of life they promised unaffordable, it relied disproportionately on the square mile of the city of London and an unsustainable house price bubble. Gordon Brown vowed to end boom and bust, but in the end presided over both.

We must ensure the lessons of Labour’s failure are learnt for good. Which means rebalancing the economy as well as tackling the deficit, and being straight with people about how long this will take, how hard it will be and what we will do to get it right.

Laying strong foundations for prosperity requires an economic strategy that invests in the future to deliver growth that is sustainable, balanced, competitive and fair. This strategy must seek to unlock our economy’s potential in every sector of the economy and in every part of the UK.

As a government that means prioritising infrastructure investment, as we already have in the Spending Review. The projects getting the go ahead have been assessed and selected on the basis of the economic benefit they will bring. As a result, we are spending more on transport infrastructure over these four years than Labour managed in their last four, which will help support businesses and growth across the entire country.

But we also realise that it is not possible just to impose growth from the centre. This government must also help local businesses and communities drive economic growth too. To this end, at the Liberal Democrat conference, I announced the launch of a £500 million Growing Places Fund. This money will go towards helping kick start developments that have been identified locally that are currently stalled by tough market conditions, difficult cash flow and a lack of confidence.

 Of course, our focus on supporting growth isn’t just about spending money – government must break down the barriers that regulation puts in the way too. The Red Tape Challenge is proving effective at identifying unhelpful and expensive regulations, but the government is tackling more controversial barriers too. That is why we must press ahead with our planning reforms. The current system means it can take years for development to get off the ground. A presumption in favour of sustainable development will ensure local protections are in place, but will help deliver much needed local homes and jobs.

Delivering growth also means looking beyond local and national horizons. Trade is vital too. In the 1980s, Britain led the agenda in developing the European Single Market, helping to create hundreds of thousands of new jobs. The Eurozone crisis means it’s now more important than ever that they deepen their integration, and for our own sakes it’s important we support them, to ensure we can continue to progress ensuring all areas of the European economy are open to British Business.

Finally, investment in the future also means investing in people – giving them the best opportunity possible to prosper. Raising the income tax threshold makes work pay better for millions in jobs on low incomes. Investment in apprenticeships and work experience placements is helping young people get started in a tough labour market. And even at the youngest age, the Pupil Premium is helping children from the poorest backgrounds get the best start in life.

We are putting this country on the path to prosperity for the long term, as well as introducing immediate incentives for growth. The years ahead will not be easy, and the economic storms surrounding us are still raging, but this government will not be distracted from its goal – a more prosperous future for us all.

Rt Hon Danny Alexander MP is Chief Secretary to the Treasury. This article first appeared in the most recent publication of Reformer, the journal of the Tory Reform Group.

 Share this article on Twitter

Has the Euro reached a point of no return?

Alexander Pannett 6.45am

On Wednesday, the German government shocked markets by failing to sell all its 10-year bonds.  The failed auction heightened fears that the Eurozone debt crisis was starting to spread to the previously safe haven of Germany.

If Germany itself cannot attract investors to its bonds then this surely must signal the end of the Euro?  It would appear that investors have started to doubt Germany’s capacity to cover the debts of other Eurozone states.  This is reflected in the fact that the Euro dropped almost 2 cents against the dollar on Wednesday.

However, there are some signs that it is not the apocalypse – yet.  The German government still managed to find buyers for €3.6 billion of Bunds and at the lowest yield ever offered.  Short-term German bonds remain highly popular, with yields actually negative. 

This suggests that investors are wary that German bonds will in the long term be merged with other more risky Eurozone bonds to form a single Eurobond that will potentially nullify the much criticised discrepancies that underpin the Euro.  Whilst this should stabilise the Eurozone financial system, it will cause current holders of German bonds to take on more risk as their German bonds are replaced with “stability bonds”.  The low yield of the German bonds may also have dissuaded investors who have heavily bought up German bonds in recent weeks as they have diversified out of peripheral Eurozone debt.

But time is desperately running out.  Unless action is taken by Eurozone governments to coordinate their activities, markets will continue to lose confidence.

The Eurozone crisis is already starting to seriously affect demand in the wider economy.  Eurozone industry saw the biggest one month fall in orders in almost three years in September.

Jose Manuel Barrosa, the European Commission President, has warned that the Euro would be impossible or difficult to sustain without tighter economic integration and tougher tax and spending rules in the Eurozone.  But there seems little political inclination amongst European leaders for such fiscal union.

The failure of the German bond auction yesterday could be the final tipping point for the Euro as the wider European economy edges closer to recession.  If this occurs, the UK economy will likely follow into recession and at a time when the UK government has few options to stimulate growth whilst simultaneously reducing the debt burden. 

It will be a cold winter.

Does Compassionate Conservatism still have a place in a poorer Britain?

Alexander Pannett 6.45am

The worsening economic forecasts have suggested that the age of austerity could be a much longer period than first envisaged.  The UK economy has grown by only 0.1 per cent in the second quarter and unemployment has risen to its highest level in 17 years.

Outside the UK, the erratic movement of unfettered global capital continues, as no state appears to be safe from the jitters of speculation.  Even China, up to now the main hope of global economic revival, has seen its CDS spreads widen to an unprecedented amount.

With this economic gloom acting as the backdrop to the recent Conservative party conference in Manchester, David Cameron was at pains to remind his party and the country at large of his original project to “de-toxify” the Tory brand by emphasising the Conservative party’s compassionate side.

But with such little money at its disposal and the severest public expenditure cuts since 1945, can the Tories truly convince the electorate that it is no longer the ‘nasty party’?

The reality is that the terms that have defined Compassionate Conservatism must change to fit the needs of the people it attempts to help.  Right now, people do not want concern for their plight.  They want the security of employment.  Minor policy initiatives that might put a little extra money in people’s pocket are admirable but they are no substitute for the salvation that a job brings.  Mr Cameron should demonstrate his compassion by doing all he can to bring jobs to deprived areas. The Government’s Enterprise Zones initiative in economically disadvantaged areas is a strong step in the right direction.

David Cameron must not make the economist’s mistake of seeing GDP growth rates as indicative of increased employment or of a rejuvenated society.  This recession has exacerbated the widening gap between rich and poor.  Mr Cameron should take no comfort in strong economic growth in already affluent regions of the UK, which acts as a mirage of economic and social wellbeing.  For him truly to govern as a Compassionate Conservative he must bring opportunity to those areas that are economically and socially disadvantaged.

The Government should invest in infrastructure in those areas in order to inject direct capital expenditure, which will lead to jobs.  In a recession this is an effective way of supporting a region, while Enterprise Zones encourage private companies to invest locally.  The Government could spin-off parts of Lloyds and RBS into a national bank that lends directly to small and medium sized companies and encourage growth in disadvantaged areas.

The Government should cut regulation that dissuades companies from setting up in disadvantaged areas.  Ministers should also do more to move civil servants from economically buoyant regions such as the South East to more deprived regions, such as the North East.  Planning laws in disadvantaged areas should be made as flexible as possible, without taking unnecessary risks with the environment, to prevent hindrances to economic development.

Lastly, the Government could do more to reverse the ‘brain drain’ out of deprived areas towards the South East of England.  As well as using Enterprise Zones to offer tax incentives to companies, it should also consider lowering income taxes for individuals in regions with long-term unemployment. Or even income tax holidays.

Compassion must bring real opportunity to those in socio-economically disadvantaged areas.  Empathy without action will not fill stomachs nor will it fill hearts with hope of a better tomorrow.

 Share article on Twitter