We need to coalesce around a new politics which recaptures the spirit of the post-war consensus
Which current national UK political leader enjoys the healthiest mandate from the electorate? The answer – with a 44% share of the vote in 2011 – is Alex Salmond.
More importantly, why is Salmond so popular? Could it be because his Scottish National Party has generally delivered on its promises, met the wishes of electors, and consciously preserved and protected many of the welfare gains which were bitterly fought for after the Second World War?
Are the policies which the SNP has promoted – such as free prescriptions and the expansion of universal benefits, no university tuition fees, energy security through the generation of 100% renewable energy by 2020, a commitment to progressive taxation and so on – only appealing to those who misguidedly believe in a radical and soon-to-be-unaffordable left-wing utopia?
I would suggest not. In fact, I would go further and argue that these are the kinds of policies which centrist governments – including both Labour and Tory administrations throughout the 1950s, 1960s and 1970s – took for granted as central to ensuring a cohesive, fair and equitable society.
But, as the late Tony Judt lamented in his books Reappraisals and Ill Fares the Land, we are barely aware of the world that we have lost: a world where the state works to ensure that markets and private enterprise operate genuinely freely, and where they fail – or are an inappropriate way of organising the production of public goods – inclusive public provision fills the gap.
So, what kind of centrist policy platform could recapture this kind of world, and engage those who are disaffected on both left and right? I suggest here (amongst, of course, many others) three potentially fruitful areas to think about.
The place to start would surely be to expose and attack the rent-seeking which is currently eating its way directly into Britain’s political economy. This could take many forms: politically, it could see the closing of the revolving door between Whitehall and the corporate world, perhaps even the banning of ministers and senior civil servants from subsequently taking work from firms in sectors with which they have come into regulatory contact.
Economically, it means a genuine commitment to free and unfailing markets. This implies breaking up what John Lanchester, in a pair of recent essays in the London Review of Books (Are we having fun yet? and Let’s consider Kate), describes as a handful of criminally incompetent, corrupt and unstable mega-banks which pose a threat to our very democracy. Something similar can be said for the private oligopolies which reign in food retailing, management consultancy, the press, and so on. Where markets fail completely, and the public alternative is clearly better, as the East Coast Mainline appears to have shown in the case of the railways, a systematic public solution has to be the answer.
A second area surrounds taxation: meaning fair, progressive and assertively collected. If those on the right really are the heirs to Adam Smith, they should be just as disgusted by the abuse of the tax system as those on the left are.
Aggressive tax avoidance should carry just the same – or an even greater – stigma as abuse of the welfare system; as The Guardian’s ‘tax gap’ series showed, it certainly costs tens of billions more every year, enough to go a long way towards closing the deficit. So, we could collect more tax by closing loopholes and havens (most of which are actually UK Overseas Territories), expanding HMRC significantly (which would pay for itself), simplifying taxes in general, and shifting them away from regressive taxes, like VAT, towards a broader spread of progressive taxes on income and even land.
A third area relates to public investment, and in particular stopping the excessively costly practice of getting investment ‘off the books’. Public-private partnerships for major investment have usually failed. From the disastrous part-privatisation of the London Tube, to the fiasco around the Skye Bridge, it is only private rent-seekers and non-risk takers who benefit.
In any case, the state has no need for a middle man; it can borrow directly. As Will Hutton has argued, government borrowing costs are at their lowest levels since the 18th Century, the national debt has been ‘proportionally higher for 200 of the last 250 years’, and future generations will look aghast at the failure to capitalise on this with expansionary policy.
The government can – and should – therefore borrow hundreds of billions at miniscule real long-term interest rates for capital investment: say, £50 billion for housing; £50 billion-plus for transport infrastructure; and £50 billion or more for green technology and R&D.
These sums of money are actually relatively small, particularly in the context of the additional £245 billion that George Osborne will have borrowed over the current parliament to fill the gaps created by underwhelming growth, or the £375 billion printed for Quantitative Easing and given to the banks to disappear into the black holes of their balance sheets (or fund yet more gambling, and bonuses). Yet they would have an enormous stimulatory impact upon long-term growth and help the transition to a new growth model.
To ease fears of those on the right about excessive debt, we could simply set some concrete rules for paying it down again once growth does, indeed, return, and future governments can run surpluses comfortably. This should appeal to those on the left who consider themselves authentic Keynesians too.
As I suggested in Part 1 of this pair of posts, there is a potentially enormous electoral pay-off waiting to be claimed by the British political leader who offers a vision of a different future beyond self-flagellating austerity (a reality which one quarter of sluggish growth does little fundamentally to change).
What is more, such a vision could be entirely reconcilable with a new consensus between the left and the right, firmly anchored on the real centre ground of British politics; a centre ground which rejects rent-seeking, the plunder of the state and the rigging of markets by vested interests in favour of something just a bit better.