British politicians have historically prided themselves on their lack of introspection. Unlike their European counterparts, they have mostly eschewed the language of economic planning and abstract models. However, Brexit is forcing a re-evaluation of national economic and political purpose. Theresa May and the Chancellor, Philip Hammond, who delivered his first Budget on 8 March, have threatened to change the UK’s “economic model” if the EU denies it the post-Brexit trade agreement that it desires. Rather than slinking off “like a wounded animal”, Mr Hammond has said, Britain would “fight back” by cutting taxes and regulation.
But what is the model that the UK would abandon? To characterise it as “liberal” is simplistic. Though Britain has one of Europe’s most flexible labour markets, it also has one of its most redistributive tax and benefit systems. It combines light economic regulation with a restrictive planning regime, and it maintains the social-democratic jewels of the NHS and the triple-locked state pension. Mrs May and Mr Hammond have stated that their aim is not a radical break with this approach. Indeed, the Prime Minister’s support for state interventionism, an industrial strategy and workers’ rights encourages the thought that the threat of it is merely a negotiating tactic. Yet if Britain is to remain what Mr Hammond described as a “mainstream” European economy, reform will be required.
After almost seven years of austerity, the public sector – most notably the NHS and local government – is under ever greater strain. Health spending has officially been protected since 2010, yet the service is struggling as a result of an ageing and growing population, rising technology costs and cuts in social care. Real spending per person is expected to fall over the next two years. All but seven of England’s 138 hospital trusts are in deficit. In view of this, the government’s decision to launch a review of social care funding is welcome. For too long, successive administrations have avoided the long-term solution that is required.
The UK’s stubbornly high Budget deficit and fragile tax base necessitate new sources of revenue. Unlike David Cameron, who rejected a “mansion tax” on the grounds that his “donors will never put up with it”, Mrs May should consider taxing static assets and seek to harness Britain’s property wealth (not least for the purpose of housebuilding).
For decades, the companies that shape the UK’s economy have been remarkably open to foreign capture (Kraft’s failed bid for Unilever being a rare and welcome exception). Only five of the world’s largest 100 firms are British-owned. As the government “takes back control” from Brussels, it should also adopt a more restrictive and strategic takeover policy.
As both Tony Blair and John Major noted in recent speeches, there is little popular support for a ruthlessly free market approach. Mrs May has rejected the ideological entreaties of the libertarian right. As the government prepares for a post-Brexit world, it must not neglect what voters most value about living in Britain: our instinct for fairness and our sense of responsibility to the weakest and most vulnerable.
Assad and the Islamists
When the Syrian people rose up against the tyranny of President Bashar al-Assad in 2011, the reviled dictator tried and failed to convince the West that the revolt was led by Islamist terrorists. In an attempt to turn fiction into reality, he released hundreds of extremists from prison. This act strengthened the Isis terror group, which established a base in the northern city of Raqqa, from where it planned attacks across the world. The prisoner release also bolstered al-Qaeda-linked groups, whose influence has grown the longer the “siege, starve and bomb” strategy of Mr Assad and his Russian and Iranian allies has gone on.
As Shiraz Maher writes on page 24, the regime’s brutal campaign to retake the city of Aleppo late last year has further weakened the moderate rebels and pushed the jihadis to the heart of the armed opposition. The new rebel alliance announced in January, Hayat Tahrir al-Sham, is led by a former prisoner freed by Assad and has at its core al-Qaeda’s main affiliate in Syria. The fall of Aleppo may have been a turning point in the Syrian tragedy, but not one that will bring peace to this blighted land. The consequence is the consolidation of a more draconian and fanatical opposition.
This article appears in the 08 Mar 2017 issue of the New Statesman, The return of al-Qaeda