When Ed Miliband delivered his Labour conference speech last year, pledging to freeze energy prices if elected, the Conservatives revived their original line of attack against him: that the opposition leader, “Red Ed”, is a dangerous socialist. It proved no more successful then than it did in 2010. This is not just because, nearly 25 years after the fall of Berlin Wall, such scare tactics have lost their political potency, but also because the model of capitalism the Tories defend is no longer working for the majority.
GDP may be rising at its fastest rate since the crisis but median wages are still forecast to be below pre-recession levels in 2018 and no higher than they were in 2003. A broken energy market, in which six companies control 98 per cent of supply, has left 4.5 million people in fuel poverty. Extortionate rents have forced millions to rely on housing benefit. If the Tories are to triumph over Labour in 2015, they will need to offer answers to the failings of the market, rather than, as is so often the case, excuses.
One group that understands this challenge is Renewal, the organisation founded by the former Conservative candidate David Skelton last year with the intention of expanding the party’s appeal among working-class, northern and ethnic-minority voters. When I spoke to him about the organisation’s new project, Renewing Capitalism, he told me: “First the Tories have to accept that it [the market] isn’t working as well as it could for the low-paid, or for people not on the housing ladder, or for people waiting for social housing. Or people living in deindustrialised towns, which still haven’t recovered, or those unemployment black spots, which have been unemployment black spots for decades.”
As a result, Renewal is calling for the building of a million homes over five years, a new secretary of state for consumer protection and a significant increase in the minimum wage. While an increasing number of Tories support the last of these demands, others in the party are still arguing for an alternative direction, the libertarian Free Enterprise Group recently saying small businesses should be exempt from the minimum wage and from parental leave regulations.
In response, Skelton said: “I think Conservatives have to remember that one man’s regulation is someone else’s time to spend with their family. I think we need a different approach to regulation and a different approach to low pay, because Conservatives should care as much about things like community and family. We’re not an economically libertarian party, we’re not an economically reductionist party.”
Rather than the slimmed-down US-style state favoured by Tories such as Douglas Carswell and Daniel Hannan, as well as commentators such as City AM’s Allister Heath and Fraser Nelson of the Spectator, Skelton’s vision seems closer to the social-market economy championed by centre-right parties such as Germany’s Christian Democratic Union.
Having once accused Miliband of living in a “Marxist universe”, George Osborne has more recently echoed his rhetoric, arguing that the state “needs to step in to create the rules of the market”, after announcing that the government would introduce the cap on payday loan charges demanded by Labour.
To ask whether the Tories’ libertarian or interventionist instincts will win out is also to ask whether they will remain relevant in an era when it is the unrestrained market, not the state, that voters fear more.