In 1979, a Conservative government was elected on a transformative policy platform. Margaret Thatcher promised to cut taxes, shrink the state and create a nation of homeowners. The Conservative government elected after the 2008 financial crisis had similarly radical plans. David Cameron and George Osborne aimed to cut government spending, slash taxes and reduce the budget deficit.
Both had highly ideological platforms, reinforced by powerful and emotionally charged political narratives. The competitive spirit of capitalism, Thatcher said, had to be released from the shackles of the overbearing, bureaucratic state. The state, Cameron claimed, is like a household – it has to balance its budget. Income, wealth and regional inequality soared under Thatcher, while Cameron oversaw the beginnings of what would become the longest stagnation in earnings since the Napoleonic Wars.
Whatever one thinks about these politicians, no one could deny they had a vision – and the tenacity to make it a reality. The latest crop of Conservative leadership candidates seems derivative by comparison.
Boris Johnson is, in effect, a Thatcherite. As mayor of post-crisis London, he argued that the only path to recovery was to unleash the very spirits of financial capitalism that caused the crisis in the first place. The greed of the “Gordon Gekkos of London”, he said in 2013, would yield rewards that would trickle down to everyone else.
His recent focus on tax cuts for those earning £50,000 or more is couched in similar terms. High-earners are depicted as “wealth creators” constrained by the paternalistic state. That many of the wealthiest people in the UK have made their money by extracting economic rents from their ownership of scarce resources, such as property, is largely ignored.
Johnson’s Thatcherism is echoed by Jeremy Hunt, who is considered one of the more moderate contenders. Hunt wants to cut corporation tax from 19 per cent – already the lowest rate in the G20 – to 12.5 per cent, putting the UK on a par with tax havens such as Ireland and Liechtenstein.
Almost all the contenders have plans to cut taxes in one form or another. Dominic Raab called for the top rate of income tax to be reduced from 45 to 35 per cent. Sajid Javid, a devotee of libertarian heroine Ayn Rand, wants to scrap the additional rate tax band on incomes over £150,000.
While Chancellor Philip Hammond pleads with the candidates not to increase the deficit, most are prioritising giveaways to their wealthy backers over the austerity economics of “spreadsheet Phil”. Rory Stewart, favoured by the liberal establishment, is one exception. Stewart has declared that his main priority will be to “secure the long-term sustainability of the British finances”: he plans to introduce a new fiscal rule focused on national debt reduction, rather than deficit elimination.
Ultimately, none of the candidates has original views on economic policy, or a coherent analysis of the problems with the British economy – stagnant wages and productivity, low levels of investment and extremely high debt levels. The economy is only analysed through the lens of Brexit, yet most people are unaware that leaving the EU without a deal will impact the British economy by exacerbating the structural weaknesses created by decades of free-market policy.
The Conservatives have, over centuries, developed a reputation as the sensible party, the default party of government. But they are sacrificing this reputation through their overarching commitment to the free economy and the strong state – as Andrew Gamble described Thatcherism – with the former evident in candidates’ remarks on economic policy, and the latter in the Brexit debate’s focus on British sovereignty.
The Labour leadership is showing a clearer grasp of Britain’s economic malaise by developing innovative policies. From the desire to create a National Investment Bank to mandatory sectoral collective bargaining to boost wages, to worker ownership funds to alleviate wealth inequality, the Labour Party is responding to the profound discontent evident since the 2008 crash.
If a general election is fought on economic terrain, then the next Tory prime minister – likely to be Boris Johnson – will surely flounder. Margaret Thatcher memorably described the creation of New Labour as her greatest achievement. By contrast, her descendants should fear Corbynism as their greatest threat.
This article appears in the 19 Jun 2019 issue of the New Statesman, Bad news