Conservatism will wither without modernisation

The Conservative Party must delve deeper into Conservative philosophy to provide compelling and meaningful policies for contemporary society.

Give them real Conservatism. Raw right-wing meat. Lower taxes on our wealth creators, cut the NHS, bemoan Europe. Throw in the tweed, while you’re at it. At the moment, you see, they just don’t think we’re right-wing enough.

This argument is repeatedly rehearsed by Tory malcontents, who think we’re letting UKIP fill a vacuum on the right of British politics as modernisation gets us lost in mushy centrist liberalism. Post-Eastleigh, the complaining loudens. Hugo Rifkind exposes the absurdity of this "lurch to the right" fetishism rather neatly: “What planet are you on, when you think Cameron’s big problem is that he isn’t enough of a traditional Conservative? Are you drunk? For most of the country, it’s a constant surprise not to see him with a shotgun under his arm”.

Quite. The rise of UKIP hides something of more significance: yes, those gay-loving, immigrant-embracing, wishy-washy Lib Dems won the by-election. Conservatives are seen as more right-wing than the politics of a typical voter; to be a party that wins an overall majority, surely it must transcend these simplistic political labels? Appeal to a broader range of people on the basis of values which are more universal: competency and compassion, first and foremost.

Philosophers have joined politicos in condemning the Tory modernising strategy. In this month’s edition of Prospect Magazine, the eminent Professor Roger Scruton reviews Bright Blue’s latest book, Tory modernisation 2.0: the future of the Conservative Party. He lambasts modernisers for abandoning conviction to solve the Tories image problem. This strikes me as odd. The primary purpose of a political party, after all, is to win an election: becoming more popular among voters is inescapable.

But this is not the book's only objective despite Scruton’s belittling in absence of detailed scrutiny. More fundamentally, modernisers in this book are inviting deeper discussion about Conservative values that should guide our thinking and policymaking today. Scruton, though, professes we lack understanding of true Conservatism. The reality, of course, is that British Conservatism derives from several philosophies. In his essay, Scruton narrowly emphasises preservation. Here, he allies with those who seek refuge from the contemporary in UKIP, grumbling about same-sex marriage, immigration and house-building in villages. The past reveals the good life: the nuclear family surrounded by green and pleasant land. Tolkein’s Shire, really.

But the world around them has changed. Still, they try and impose the past on a quite different present: ironically then, they pursue social engineering, rightly resisted by Conservatives who are nervous of demands, from the state in particular, that people change the way they live here and now. Such romantics, nostalgic or progressive, ought to be judged sceptically by wise Conservatives.

We need not be mere reactionaries. No, Conservatism is much richer than this. Professor Jonathan Haidt, a moral psychologist, offers a more compelling way. Drawing on an impressive range of studies into the development of human morality, he finds six moral sentiments that Conservatives share: care for others; a belief in proportionality, where reward is linked to effort; desire for liberty against oppression; loyalty for members of a group you associate with; respect for authority; and a belief in sanctity and purity. These sentiments can unite British Conservatives from differing philosophical backgrounds, albeit when some stressed more than others.

The authors of Tory modernisation 2.0 attempt to apply these values to a world where social composition and norms have changed, to ensure Conservatism remains relevant and inspiring. For example, credible solutions are offered to help parents with the cost of childcare. This is because two-earners families are increasingly and necessarily the norm. Instead of yearning for the male breadwinner family model, the book offers fresh thinking on how to tackle the poor affordability of childcare for parents who choose to work: because, for the sake of proportionality, it is right those who are doing the right thing to improve their financial circumstances are supported.

Proposals to catalyse house-building may offend reactionaries fearful of modest housing developments in their villages, but this is again about proportionality: ensuring home ownership is affordable to those who have worked and saved, palpably not the case for many at the moment, rather than simply those who have inherited wealth from their parents.

The book talks of the need to tackle rising loneliness in our society, caused predominantly by an ageing population, the cultural glorification of autonomy, and a degree of pornification of sexual relations. Legalising same-sex marriage is a fightback against this, albeit small, for the sake of loyalty and sanctity that emerge from loving relationships.

Elsewhere, the book describes a new approach to international development, asserting that the UK should look beyond its borders, to support the world’s poor, stemming from a belief in care for others and freedom from oppression. There is an action plan to support renewable energy for the sake of sustainable growth and preservation of our environment against climate change; again, this is about care for others, our future generations, and an instinct for sanctity. There is even a desire for preservation, so Scruton need not fear: ideas are proposed to maintain our world-class universities, for example.

The Conservative Party cannot be simplistically nostalgic and unbending, persistently stomping on the brake pedal. It needs to delve deeper into Conservative philosophy to provide compelling and meaningful policies for contemporary society: this is the paramount purpose of modernisation. If not, and Scruton’s UKIPness prevails, Conservatism will wither.

Ryan Shorthouse is the Director of Bright Blue

Jonathan Haidt speaking on the "moral roots of liberals and conservatives".

Ryan Shorthouse is the Director of Bright Blue, a think tank for liberal conservativism 

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation