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Nicholas Boys Smith: The housing mission that Scruton and I pursued is inspired by a quest for beauty

Nicholas Boys Smith is director of Create Streets, a Commissioner of Historic England and chairs the Government’s Building Better Building Beautiful Commission which will be reporting soon.

Housing was secondary to Brexit in the general election, but is of fundamental importance to improving local prosperity, generational and regional opportunity, sustainability and quality of life.

In a famous essay, the philosopher Isiah Berlin cited the Greek poet Archilochus: “a fox knows many things, but a hedgehog knows one important thing”. Our political debate on housing has been a housing hedgehog; focused on the crucial issues of supply of different types of housing (for sale, rental or social), but neglecting the wider role that houses, towns and places play in our individual lives, in generational opportunity and in local and regional prosperity. Our debate should become a housing fox. It should consider how the wider role of what we build and where affects wellbeing and prosperity.

Take the example of our personal health and wellbeing. Where we live has a measurable and increasingly predictable effect on our physical and mental health: on how much we walk, on how many neighbours we know or on how tense we feel on the quotidian journey to work or school. Design affects us from the air we breathe to our ultimate sense of purpose and wellbeing. The presence of such heterogenous variables as street trees, clear block patterns, a legible street network and facades that most people find attractive with colour, some level of symmetry, complexity and composure can all be associated with more walking and less crime, with better health and more support for development. And it’s a question of social justice too. Rich people experience more beauty than poorer people. And benefit from it.

Take a second example – very pertinent after the general election: the economic prosperity of our towns and the regional distribution of jobs and towns. Successful towns are first and last a place where people wish to come to meet, to converse, to buy, to sell and to be amused in the process.

But too few of England’s town centres are places where anyone would choose to be. They have lost their purpose. And they need to find it again. This is categorically not just a tale of former industrial towns. Take Maidenhead in Berkshire. It should be humming. In England’s self-proclaimed ‘silicon corridor’, it is only 20 miles from London and down the road from Windsor with Eton College and, well, the Queen. Where could be richer? Jobs abound.

And yet the centre is not humming – certainly not with people. The train station is cut off from the town by a furious dual carriageway, by acres of parking and by lumpen office blocks. Fight your way through to something that passes for a town centre and you immediately find empty shops, failing shops and strip bars. Up the road, the high street is assertively deserted for such a large town, has units to let and a meagre collection of chain stores. It ends abruptly in (yet another) dual carriageway. Amidst such neighbouring wealth, Maidenhead town centre is not a place to be or meet but a place to drive through – and fast. Prosperous neighbours from surrounding villages or suburbs meet elsewhere.

Hundreds of other towns would tell similar tales, many with the added savagery of industrial decline and the lack of secure jobs. Working for Amazon may be cleaner than working down a mine, but it is a lot easier to get fired. Not all towns are deprived. But nearly all are less prosperous then they could be. Visits to town centres have fallen by 17 per cent over the last decade. And more than one in 10 shops have stood empty for over a year. Meanwhile their populations are ageing. In the 30 years up to 2011, British small towns and villages lost over a million under 25s and gained twp million over 65s. Large cities gained over 300,000 under 25s and lost around 200,000 over 65s. Towns are for baby boomers. And cities are for millennials it seems. The town centres of many large cities (above all London) have flourished over the last generation. Small town Britain has, largely, aged and withered.

If we want to help some towns revive, everyone understands that local education is critical. Good education correlates with job-creation ten years later. Connectivity (rail, bus and road) is also crucial. (And busses are normally the best bang for your buck.) However, soft infrastructure is always critical. Successful towns need to be clean, pleasant places in which people want to live, work, spend time, set up businesses, raise children. Some of this is inconvertibly the role of the state which, after all, owns the public realm. This is true regional policy not naïve ‘regional development policies’ to ‘pick winners’ or subsidising employment where it would not otherwise go (the jobs tend to end when the subsidy evaporates).

This is why the interim report of the Government’s Building Better Building Beautiful Commission which I have been chairing alongside the hugely missed Roger Scruton argued that the aim of Government policy should be supporting place-making across all tenures and places. This will mean moving from the assumption that beauty is a property just of old buildings to the assumption that everyday beauty is a controlling aim in all that we do, and that new buildings, places and settlements can, indeed should, be beautiful.

To achieve this, we identified several priorities for the framework that government sets via buildings regulations, planning policy and fiscal policy. Among these were:

  • Beauty first. Beauty and place making should be a collective ambition of the planning system. Great weight should be placed on securing them in the urban and natural environments.
  • A level playing field. We urgently need to reduce planning risk to permit a greater range of small firms, self-build, custom-build, community land trusts and other market entrants and innovators to act as developers within a more predictable planning framework. More predictable design policy and standards should remove a degree of speculation on negotiating down planning requirements to increase land values.
  • Places, not just houses. In striving to meet our housing targets we should be building real settlements and walkable ‘mixed-use’ places for all our daily needs. This might require changes in legal and tax regimes that could better support a long-term stewardship model of land and infrastructure investment and moving more of the democracy upstream from development control to plan making.
  • Regenerative development. Developments should make existing places better, not just minimise harm. Local policy should encourage the redevelopment of retail parks and large format supermarkets into mixed ‘finely-grained’ developments of homes, retail and commercial uses which can support and benefit from public transport.
  • Early collaboration, not confrontation. There is enormous scope to encourage the use of deliberative engagement, and design processes, to support wider community engagement in design solutions. Digital technology can really help here.

The polling, pricing and focus group data consistently shows that the sorts of places we’ve been making for the last 70 years are normally less popular and less valuable than most of our historic towns. A toxic cocktail of technology (we can build huge ugly sheds very cheaply), confusion about the role of the motor car in the city (for three generations we thought town centres were places for cars – they aren’t), increasing labour costs (making detail and ornament expensive) and modernist fashion (eradicating the past and the human scale rather than working with it) have all combined to ruin old places and build news ones that most people reject if they can afford to. Mapping selection effects in cities does not make pretty reading for fans of suburban cul-de-sacs or modernist anti-street planning.

It is time to fix this now and help set a framework in which society can create more homes in better and more beautiful places that are popular and good for us. This is, ultimately, the only politically viable way to build the homes that the young generation so desperately needs. It would also support the rebalancing of our nation’s prosperity by encouraging fewer go-getters to flee to the big cites and hot spots.

The dog that didn’t bark in the last election was housing. There are obvious reasons for this. (Brexit). But our undersupply of housing is not going away. Any government that wants to be re-elected will need to fix it. But doing so is a complex problem not just of numbers but of quality, place and wellbeing. We need to be a housing fox not a housing hedgehog.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ben Brittain: Get Brexit Done and innovate like Israel

Ben Brittain is a Policy and Data Analyst for a regional economic institute. 

The Conservatives were gifted their ‘stonking majority’ by deprived constituencies that are far removed from the growth and economic power of London. The UK is a tale of two economic nations – a wealthy and highly productive London and South-East, and everywhere else, where gross value added more resembles former communist states. It was in these former mining and industrial heartlands of the Midlands and the North where working-class people lent their vote to the Conservatives to ‘get Brexit done’.

The challenge for this new government is to make the economy one whole, bridging the productivity and wage gap between London and the periphery towns of city-regions. The government will want to reward the North and Midlands for their support at the polls. But getting Brexit done is only one step. The next is to embark on a long process of economic revival in these regions, drive agglomeration within cities through transport infrastructure and skills investment.

The Government has the opportunity to level-up productivity right across the whole UK. For that, we must not look not to Silicon Valley and seek to replicate it on the Tyne – but instead look to Israel.

Today, Israel is considered an innovation superpower, with more companies listed on the NASDAQ than any other country except the United States. The Israeli success in innovative industries, such as ICT, is based on an R&D-intensive, novel-product-based, export-oriented business model. One that the UK should adopt to create a post-Brexit, R&D-heavy, exporting economy.

Israel is a hot-bed of ground-breaking technology companies such as Waze and the autonomous driving company, Mobileye, which has been snapped up by Intel for $15.3 billion. These large dominant companies are an exporting successes, but large innovative companies have to start somewhere.

Israel’s success is driven by its impressive start-up culture, and this start-up friendly ecosystem is actively fuelling an innovation economy. Israel started more than 10,000 companies between 1999 and 2014, with 2.6 per cent of these start-ups creating revenues of more than $100 million. Their success is down to reform-oriented policy makers driving change in the public sector, embedding innovation, unafraid of the role of the state as a friend to free-markets and individuals that want to start an enterprise.

The UK needs to embed five elements within its future growth framework to drive innovation. These are: support for start-ups; a substantial growth in the training of scientists and engineers; empower research-oriented civic universities and drive commercialisation within universities, expand access to venture capital, and utilise the strength of government and big-data in regional industrial strategies. All of these interact with each other to drive the process from invention to innovation.

The UK has an unrivalled higher education system that is ready to plug-in to regional economies and drive sector specialisations. To achieve this, BEIS should restart the work of the Smart Specialisation Hub and bring it in-house, to further understand how productivity is evolving in regional firms. Businesses are best placed to lead in the identification of new opportunities for growth, and many regions are already developing highly-productive sector clusters, which should not be hindered by central government imposing their own industry preferences. Instead, local industrial strategies should identify current productivity strengths and seek to implement necessary supportive interventions and create the correct ecosystem for their growth.

A culture of people, business and universities fully attuned to research and development is required, as is leveraging long-term private sector commitment. Regions should focus on what they are good at – such as the automotive industry in the West Midlands – prioritise research and innovation investment in a competitive environment, and implement policies that are strategic, based on a shared vision for regional innovation and development (such as the development of UK’s first Tesla-style battery gigafactory in the West Midlands which will build on current agglomeration).

Creating dynamic and innovative clusters in regions previously neglected and cut-off from London’s success will ensure the success of Brexit is the success of Wales, the North and the Midlands. If there are greater opportunities for high-skilled, well-paying work in innovative companies, focused on exporting, catalysed and fuelled by free-ports across the region, in industries such as space, AI, life-sciences, health and clean energy, then London will no longer suck the life out of those regions. More local residents will have better paid jobs, with more disposable income to spend in local high-streets, meaning the physicality of neglected towns in places such as Darlington and Walsall can be overcome.

The nation could be one economic success story; a real One Nation Toryism. To do that the Government will need to get Brexit done and Innovate like Israel.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

David Davis: How to keep the new working class voters we won last Thursday – and win even more

David Davis is MP for Haltemprice and Howden, and is a former Secretary of State for Exiting the European Union.

The Conservative victory last Thursday was not just a landslide win: it marked the beginning of the transformation of our political landscape and our country.

The new MP for Blyth Valley, Ian Levy, won a mining constituency never previously held by the Conservatives . As a former NHS worker he is, like many of his new colleagues, anything but a toff, and signals a coming transformation in the complexion of the Party both in Parliament and the country.  A number of the new 109 MPs are Tory working class heroes.

The question on everybody’s mind, from the Prime Minister to the newest arrival, is: “now that we have won them can we hang on to them?”   If we are any good at our job, the answer to that question should be a resounding “yes”.  Many Labour MPs – not just the left-wing apologists for Jeremy Corbyn -are consoling themselves that these Labour constituencies will return to type at the next election.

But they should look at Scotland, where the SNP swept aside a previously dominant Labour Party riddled with complacency and corruption – and it still has not come back.   The same could happen in England and Wales if they are not careful.

It was clear on the doorstep during these last six weeks that the electoral base of the Conservative Party has changed dramatically. Our voters are more working class and more urban. They are more provincial and less metropolitan.  They have a no-nonsense common-sense, and are certainly not politically correct. They have a quiet unassuming patriotism – proud of their country but respectful of foreigners.  They are careful with money, and know it has to be earned.   They want tougher policing but also have a strong sense of justice.  They depend more on public services, and are the first to get hurt when these fail.  Many of them would be classified as “working poor” and dependent on welfare payments, although they themselves may not see it that way.

So what should we do in order more fully to win their trust? Obviously we should deliver on our manifesto: get Brexit done, and provide more money for the health service, for education, for the police, and for more infrastructure – not least new broadband.   But this is nowhere near enough.   A manifesto should be a lower limit on delivery, not an upper limit on aspiration.

This should be no surprise. The Thatcher manifesto of 1979 was fairly slim. It certainly did not detail the actions of most radical and eventually most successful government of the twentieth century.

What Thatcher achieved was a revolution in expectations: about our country, about ourselves, about what was possible.  We have to do the same.

And our target should be unlimited.   We should be planning to prove to our new base that we care about improving their lives, but we should also be targeting the votes of younger people, too.   There should be no no-go areas for the new Conservatives.   Fortunately, the necessary policies are similar, and they require Boris Johnson’s hallmark characteristic – boldness.

There should be a revolution in expectations in public service provision, from health care to education. This is about imagination more than money. There are massive technological opportunities opening up, from genetics to big data to diagnostic technology, and we should be enabling the NHS to make better use of it.

On the education front, the international comparisons have not shown much progress since the turn of the century, despite the best efforts of successive Education Secretaries,  Other countries from China to Belgium have seized on new technology to completely reengineer the classroom. We should be doing the same.

And we should now work to further social mobility.   None of my doorstep conversationalists mentioned this phrase, but many talked about the opportunities (or lack of) for themselves and their children, which is the same thing.   We used to be a world leader in social mobility; now we are at the back of the class.   Every government since Thatcher has paid lip service to the problem, but none has done anything about it.   Indeed, they have made it worse.

Take for example the disastrous university tuition fees and loans system introduced by Tony Blair and made worse by David Cameron.   It has delivered poor educational outcomes, high costs, enormous debt burdens and widespread disappointment, as well as distorting the national accounts.

The heaviest burden of this failure falls on young people from the poorest areas. The Augar Report gave strong hints about how to fix it, even though its terms of reference forbade it from providing an answer.   The new policy aim should be simple.  Allow children of all backgrounds a worthwhile education to get good enough qualifications to start a decent career without crushing lifetime loans. It should be an early priority of this government.  It would be the single most targeted way of helping a generation that deserves our support.

One of Thatcher’s great contributions to social mobility was to encourage home ownership: 65 per cent of young people either owned or were buying their own homes then.  Today, that number is 25 per cent.   The reason is simple.   We are just not building enough homes.  In the last 15 years the population has grown by just shy of seven million people.

We have built nowhere near enough houses to cope with that.   The current incremental strategy is not up to the job, and we need to adopt a wholesale programme of garden towns and villages around the country, and a new process to drive much of the planning gain to reducing house prices and improving housing and service quality.   We should also look very closely at reform of the Housing Association sector, to deliver more homes for both rent and sale.   We were once a proud homeowning democracy, and a return to that would not be a bad aim for a modern Conservative Party.

This would be just a start.   But it has to be paid for.   This has always been the Conservative Party’s trump card: the ability to run the economy and deliver the funding for good public services.   Brexit opens up the possibility of a new economic renaissance, which the Prime Minister believes in, and is capable of seizing with both hands.

But we will need to rediscover the Lawson lessons: that simpler, lower taxes deliver more growth, more jobs, more wealth, and eventually more tax revenue.   Our tax system is now littered with irrational anomalies – most recently demonstrated by senior doctors refusing to do extra work because they were effectively being taxed at 100 per cent as a result of covert Treasury pension taxes.

It is time we swept much of this structure away, and liberated people to gain from their own efforts without excessive state burdens.   It should also not be too hard for us to do it in a way that helps the North as well as the South.  And this does not just apply at the top: the working poor face similar anomalies under the tax credit system.

Which brings us back to the ‘new’ Conservative working classes.   We should not imagine that an appeal to them is a novel gambit bu the Conservative Party.* The most successful political organisation in the world for two centuries has been just that because for most of that time it has relied on the working class for at least half of its vote.

From Disraeli’s reforming government to Shaftesbury’s great social and industrial chang, to Lord Derby’s legalisation of trades unions, we have a long and deep commitment to caring about the welfare of the working classes.   If this were not true, one of Johnson’s old Etonian predecessors as Prime Minister, Harold MacMillan, would never have won the impoverished North Eastern constituency of Stockton – and held it throughout the great depression.   And of course in modern times Margaret Thatcher inspired Essex man and held many seats in the North – not least Darlington, which we won back last week.

So we have been here before. Blue collar Conservatism has a proven track record – one we should resurrect.  In this new political battle, the greatest tension will not be left versus right or even fiscal and monetary doves versus economic hawks.   It will be a battle between creativity and convention.   I have always thought that the Prime Minister subscribes to Nelson’s maxi  that “Boldness is the safest course,” so I suspect that this will be a battle that he will relish.   If he does, these will not be the last seats we win in the Midlands Wales and the North.

A few years ago I presented a BBC Radio 4 programme which showed that the Conservative Party has been heavily dependent on working class votes for most of its 200 year lifespan.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

By Ted Christie-Miller and Richard Howard: How to deliver net zero emissions by 2050 without damaging the economy

Ted Christie-Miller is a researcher at Onward. Richard is currently the Research Director at Aurora Energy Research. He was formerly the Director of Development and Head of the Energy and Environment Unit at Policy Exchange, prior to which he was the Chief Economist at the Crown Estate.

If Extinction Rebellion have anything to do with it, the final fortnight of this general election will be dominated by a single issue: climate change. From Sunday, activists will embark on twelve days of Christmas disruption to highlight the climate emergency before polling day – but they will be silent about what is required and how much it will cost.

This is because their central demand, to reach net zero emissions by 2025, sounds much better as protest than it does in practice. Research by the think tank Onward published this week reveals it would cost an absolute minimum of £200 billion a year to decarbonise the UK economy by 2025 – one and a half times the cost of the NHS – and £100 billion a year to get there by 2030.

Even if people were willing to pay higher taxes and prices, a 2025 target would be practically impossible to achieve. We would have to hire 270,000 extra plumbers, for example, to replace 22.8 million boilers in five years, and the global manufacturing capacity of electric vehicles would need to increase three-fold just to replace all the petrol and diesel cars on British roads (let alone those in other countries).

This is the uncomfortable truth facing the party leaders as they prepare for the Leaders’ Climate Debate on Channel 4 this evening. Parliament has rightly legislated to decarbonise the UK by 2050, but no political party has yet set out a practical plan to get there. Without it, the climate catastrophes that have punctuated this election- the flooding in venice, bushfires in Australia and floods in Yorkshire closer to home – will continue.

Thankfully, there are steps that we can take right now that will deliver net zero by 2050 without sacrificing the UK’s competitiveness, our fiscal balance or the budgets of low-income households in the process.

First, ministers should use market and behavioural incentives to drive lasting change. By abolishing VAT on domestic electricity and increasing it to 20 per cent on highly-emitting gas, whilst also removing the cost of renewable subsidies from consumer bills altogether, ministers could create market based incentives for people to switch to low carbon heating options such as electric heat pumps.

The £2 billion a year that taxpayers currently spend on Winter Fuel Payments is targeted at the age group now least likely to be in fuel poverty, the over-65s. Why not turn it into a capital grant of up to £4,400 per household, to upgrade the insulation and boilers of fuel poor households?

Second, we should be much more ambitious in our plans for the natural environment, to offset carbon emissions whilst boosting health and wellbeing. The Conservative manifesto pledged 30 million trees a year over a five year term, which although welcome, falls short of setting long term target. The Conservative pledged 30 million trees a year over a five year term, which although welcome, falls well short of what could be achieved. We should plant 1.4 billion trees by 2050, 20 times the current rate, by redirecting agricultural subsidies and encouraging low-cost forms of planting like wild-seeding.

Third, for too long the UK has lagged behind its competitors in Research and Development investment. It is such a vital tool for spurring innovation in the energy tech sector and we must therefore align our R&D spending to at least with the OECD average. This will allow technologies that are crucial to the UK’s zero-carbon mission such as hydrogen and carbon capture (usage) and storage to accelerate at the fast pace that we need.

Fourth, the UK has often struggled with competing government priorities, meaning the chips do not always fall in favour of decarbonisation. Often other departments win the battle, as we saw with the scrapping of zero carbon homes policy in 2015 after effective lobbying by the Ministry for Housing, Communities and Local Government. We need a Net Zero Secretariat, set up like the National Security Secretariat, which would support the newly announced Climate Change cabinet committee in research, coordination and implementation. This would align departmental objectives around the core goal of decarbonisation, factoring it in to all decision making.

Fifth, because the UK is responsible for just two per cent of global emissions we need to drive serious international action – as Britain has done in the past. Next year’s COP26 summit, hosted in the UK, should agree a global commitment on the phase-out of coal, as well as an agreement to introduce Border Carbon Adjustments to ensure decarbonisation does not damage competition in international markets.

That said, the UK is not blameless. Between 2013-2018, 96 per cent – £2.5 billion – of UK Export Finance’s energy budget was spent on fossil fuel projects. There is no point keeping the house tidy if you are making the world a mess, so we should once and for all end taxpayers money being used for fossil fuel projects abroad.

The UK has always blazed an international trail on decarbonisation, cutting emissions faster than any other developed country (by 44 per cent between 1990 and 2018) and brokering international agreements at the Gleneagles Summit and the Kyoto Treaty. It can do so again, but we must stick to a sensible target and devise a practical plan, so we set the best possible example on the world stage of how to go about decarbonisation our economy.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ryan Bourne: Thatcher and Cameron made us happier

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Perhaps David Cameron had better foresight than he’s given credit for. At a Google conference in 2006, the then leader of the opposition declared “It’s time we admitted that there’s more to life than money, and it’s time we focused not just on GDP, but on GWB – general well-being.” With the financial crash ravaging the public finances through 2010 and conventional economic indicators in the doldrums, he risked opprobrium by tasking the Office for National Statistics (ONS) to measure wellbeing for the first time.

Well, his desire to be judged on such metrics now looks incredibly prescient. Never mind sluggish GDP growth throughout and after his premiership. Forget the polarisation of Brexit. The ONS’s latest wellbeing stats, released last week, show that the British people are significantly happier and more satisfied than back in 2011.

It really is remarkable. Every self-reported measure of wellbeing has improved near continuously in the past eight years. Asked on a 1-10 scale whether they are satisfied with their lives (0 being “not at all” to 10 “completely”), the public’s mean score has risen from 7.11 to 7.42, with the proportion answering 7 or above rising from 76 percent to 82 percent. This isn’t some anomaly either. How worthwhile we perceive our lives and self-reported happiness have been ever rising too, on average. Anxiety, meanwhile, has fallen, albeit having levelled out recently. If Cameron had convinced us of wellbeing’s central importance, we’d now be celebrating his wonderful legacy.

As it happens, of course, this “good news” got about as much coverage last week as a positive Brexit business story. Remainer demands for a new Brexit impact assessment show that pounds and pence are still king in UK politics (at least until there’s an EU regulation the same Remainers want us to follow). We free-marketeers were fearful, when subjective happiness metrics were introduced, that they’d become active targets of policy. We needn’t have worried. Political leftists’ attachment to them proved skin deep, falling away as soon as they suggested Britain was not hell on earth under the Tories.

But was classical liberals’ fear of such metrics misguided? Perhaps. Consider a new paper from researchers at the University of Warwick. Reviewing eight million publications digitized through Google Books, the study aims to construct longer-run indices of wellbeing from 1820 through to 2009. Its findings are even more jarring than the ONS stats.

Here’s how their index is put together. Use of positive words in published books, such as “cheerful,” “happy,” and “joyful,” are considered proxies for better subjective wellbeing. Negative words such as “sad” or “miserable,” are tallied up as measuring worse wellbeing. In short, the academics assume that in a happier world, more “happy words” would be written in published tomes.

Now, I was sceptical of that methodology. But they check their results against life satisfaction data over recent decades from Eurobarometer and the UN, finding strong correlations in the numbers. Emotive positive/negative language does appear to proxy well for self-reported wellbeing since the 1970s, when both sets of data are available. Having satisfied themselves of the methodology, the retrospective application to earlier periods produces fascinating results.

Wellbeing was consistently high in the UK in the 19th century, fell around the time of World War One, before then recovering. Unsurprisingly, it plunged again during World War Two, before rebounding to a lower peak. But the post-war phase is most striking, splitting clear into two obvious periods. From the 1950s to 1980 there was a sustained fall in wellbeing. After 1980, there was a dramatic rebound, fitting with Eurobarometer data showing a sustained improvement in life satisfaction in the UK over the past 40 years. Britain’s life satisfaction index since 1950 is therefore distinctly V-shaped.

What might explain this dramatic inflection circa 1980? Social trends would surely be a slower burner. People had been getting better off between 1950 and 1980 too, so this is about more than rising wealth. No, there’s one rather obvious explanation fitting the time trend: the UK’s abandonment of its quasi-socialist economic model and embrace of Thatcherism.

Such a thesis is supported by the fact the US experienced a near identical V-trend in its index centred around the launch of Reaganism. Germany, in contrast, saw wellbeing completely flatline from the 1950s onwards. Neoliberalism’s birth, it seems, facilitated sustained rises in wellbeing.

These findings dunk all over accepted truths. Claims from the Spirit Levellers that inequality and marketisation made us miserable are dismissed. If anything, the exact opposite appears true: the post-war period saw socialist equality beget misery. Life satisfaction rose with inequality through the 1980s and continued to rise once inequality settled at a higher level.

Nor can GDP or the labour market adequately explain the trends. Rising GDP per capita, other things given, would be expected to improve life satisfaction, and Britain’s economy did perform well relative to other countries after 1980. But growth was stronger in previous decades, when life satisfaction was falling. Wellbeing does not appear to have fallen after the financial crash either. Sure, tightening labour markets might explain some of the rise in wellbeing since 2011, but Britain had very high unemployment in the 1980s, just as life satisfaction took off.

No, the absence of clear outcomes-based economic explanations suggests that my friend Terence Kealey may be right. What might explain the reversal from 1980 is simply that we Anglo-Saxons value our economic freedom, above and beyond its GDP or employment impact. Economic liberty makes us happier.

The post-war period saw high tax rates, capital controls, Keynesian demand management, nationalisations, price and income controls, and high inflation. Afterwards we shifted towards freer trade and migration, lower taxes, lighter touch regulation, and free movements of capital. Of course, we’re not near libertopia; if anything the Thatcher and Reagan revolutions proved a brake on a longer-term government juggernaut. But there was a paradigm shift on economic freedom. We Brits, and our American cousins, found it deeply satisfying.

For a libertarian, this isn’t surprising. Our worldview is centred on the belief that individuals know best how to live their lives to improve wellbeing. Thatcher, of course, claimed her economic liberalisation agenda was in tune with the true instincts of the British people. All this suggests she may well have been right.

David Cameron had no such ideological inclinations. In fact, he probably advocated happiness metrics, in part, to distance himself from the supposed economics-obsessed “libertarian” wing of his party. How ironic then that the sorts of wellbeing measures he championed took off when classical liberals turned the tide on socialism, and strengthened through the “age of austerity.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ryan Bourne: Beware the push by Hammond and others to make Britain an EU rule-taker

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Perhaps torture works. The collective waterboarding that is the impending Brexit deadline is forcing confessions, anyway.

Philip Hammond was in a government whose stated policy was a desire for new post-Brexit trade deals once it could exit the Northern Irish “backstop” of a single UK-EU customs territory. Now, with Boris Johnson tunneling for just that, the former Chancellor’s official position has shifted. Economic sense, he says, actually means Britain should stay in the Single Market for goods anyway, abide by “level playing field” commitments with the EU, and junk dreams of an independent free trade agenda. Buccaneering Britain, Hammond thinks, is an illusion.

Brexiteers who foresaw May’s backstop as an excuse by her to bounce us into Brussels’ permanent trade and regulatory orbit have seemingly been vindicated. But the danger has not passed. Alongside The UK in a Changing Europe’s new report, Hammond’s intervention pressures wavering Labour MPs and former Conservatives to reject Boris’s proposed “Canada Plus” destination as “too hard a Brexit” for Great Britain. At stake here is whether Britain ultimately repatriates meaningful economy policy, or becomes a rule-taker that’s only ever one small step away from EU re-entry.

Hammond couches his argument in economic terms. Everyone acknowledges trade-offs exist between policy freedom and EU trade frictions, with the latter more easily quantifiable, and the former dependent on active choices. But Hammond’s preferred modelling by the Treasury and others is based on assumptions. Results that suggest a free trade agreement Brexit must reduce GDP by 4 to 7 percent by 2030 relative to Remain, while new free trade agreements and regulatory freedoms could only possibly compensate by 0.2 to 0.5 percent of GDP, do not pass the smell test.

Pre-referendum, such results came from “gravity models,” built around observed relationships showing trade volumes rise in proportion to the size of economies and fall with distance between them. Treasury analysis back then had estimated EU membership raised trade volumes for members, on average, by 115 per cent beyond these factors, suggesting leaving full membership for an FTA would produce a large, long-term 6.2 pe rcent loss of GDP. Importantly, liberalising trade elsewhere could only weakly compensate, because of longer distances to new export markets.

Those results were challenged extensively. The model risked chalking up gains from general deregulations over recent decades (which wouldn’t be lost after exit) as EU membership benefits. Cambridge economists pointed out that the model itself overpredicted UK exports to the EU compared to real trade flows, suggesting a UK-specific trade uplift of a much smaller 20-25 per cent. Global evidence suggests services trade is much less influenced by distance anyway. Treasury results then looked biased towards big negative effects.

Since then, Hammond’s Treasury has changed model but not conclusions. Their November 2018 publication estimated a permanent net loss of 4.9 percent of GDP from a simple FTA Brexit, rising to 6.7 percent if net EU migration ceases. This is much higher than the more static estimates of trade expert and Nobel Laureate Paul Krugman, who estimates first-order net costs of about two per cent of GDP (before any compensatory trade liberalisation). When you hear much larger results, the findings are usually based on “black box” assumptions about large effects of trade on productivity (analysis where economists agree on the direction but disagree on magnitudes).

Four large assumptions that we can assess drove the Treasury’s results:

  1. That significant “non-tariff barriers” to UK-EU trade will arise if we leave the customs union and single market for an FTA
  2. That repatriated regulatory powers bring practically zero upside
  3. That customs procedures at the border will prove significantly costly
  4. That an independent UK free trade agenda would produce little upside.

Do these stack up? At the point of exit, UK exporters will be fully compliant with EU product standards after decades of integration. Assuming then that we’d face the same non-tariff barriers (NTBs) as existing FTA partners looks like a significant overestimate of initial new frictions. Yes, there would be economic costs associated with rules of origin requirements (though the WTO thinks these are small), and a loss of some mutual standards recognition outside the EU legal system. But bigger NTBs arise if regulations deviate. One would hope that sensible governments, Jeremy Corbyn notwithstanding, would only pursue regulatory change if it perceived net economic benefits anyway.

Indeed, it’s baffling to presume both that there will be no upside to repatriating regulation (the Treasury assumes a GDP gain of just 0.1 per cent) but that standards will significantly deviate. Current political moods might be non-conducive to widespread deregulation, but Open Europe once estimated politically feasible changes worth 0.7 per cent of GDP; let alone the potential benefits long-term of avoiding further EU labour market harmonisation, financial sector regulation, and shirking the EU’s precautionary principle in agriculture, health innovation, AI, and robotics.

Customs costs at the border look exaggerated too. Swiss estimates suggest these could be as small as 0.1 per cent. The UK’s would be higher outside the single market, of course, but Paul Krugman thinks the UK would adopt new systems relatively quickly, unilaterally lowering standards if necessary. Previous meta-analysis has found that extensive FTAs have a bigger trade boosting impact than customs unions, suggesting customs costs aren’t really prohibitive to trade flows. NAFTA, for example, is not a customs union.

But it’s really on external trade where the analysis was most slanted. Not only did Hammond’s government say the UK would not unilaterally liberalise tariffs or meaningfully reduce EU non-tariff barriers on the rest of the world; it suggested signing free trade agreements with the US, Australia, New Zealand and TPP countries would only raise GDP by 0.1 to 0.2 per cent. Closer inspection shows why: it assumes only half of the non-tariff barriers on goods and a third on services are “actionable” through these deals, and then only a quarter of these get eliminated in new FTAs. Overall then, given the countries examined for FTAs, the model assumes that the upper-limit for NTB liberalisation is eliminating 6.25 per cent of the very high level of NTBs we are assumed to want to keep.

If anything has become clear recently, it’s that Conservatives have an appetite for a far more expansive free trade agenda. Economists agree free trade boosts growth. Australia’s government estimated it has increased GDP by over five per cent over 20 years through manufactured goods trade liberalisation alone; the government’s own analysis suggests a UK FTA with the EU would life GDP by three per cent relative to WTO terms. So the conclusion that free trade policies don’t matter, especially in regards an FTA with the US, is baffling, even accounting for trade distance. Of course, the gains from a UK-US deal are bigger still when it and the EU look set for a trade war. And the UK is arguably much more likely than the EU to pursue service sector-heavy FTAs as the world becomes richer, to our own benefit.

Now I’m not arguing here that there’s no risk and uncertainty to “breaking free.” It’s difficult to ascertain precise GDP effects from trade negotiations that haven’t happened, regulations that haven’t yet been avoided, and new customs procedures that haven’t been tested. But it’s important to remember Hammond’s favoured analysis largely assumes no upsides to Brexit by construction and calculates downsides based on evidence for policies that the UK shouldn’t want to pursue, or relationships elsewhere that we wouldn’t replicate.

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David Gauke: Whatever briefings from Downing Street may claim, an election fought on a No Deal platform would be disastrous

David Gauke is a former Lord Chancellor and Justice Secretary, and is MP for South West Hertfordshire.

How much has the Conservative Party changed? To what extent has it moved from being a mainstream, centre-right party containing a broad range of views to being a party overwhelmingly focused on delivering an uncompromising Brexit?

It is a question I have asked myself a lot in recent months. Having fought off a deselection attempt because I opposed a No Deal Brexit, and having lost the Conservative whip because I continued to oppose a No Deal Brexit, it is hard to escape the conclusion that quite a lot of Conservatives disapprove of people who oppose a No Deal Brexit. Has the debate become so rancorous and intolerant that there is no longer a place for the likes of me in the Conservative Party?

The answer to that question is uncertain, but I took some encouragement from the Manchester Party conference.
I admit to attending with some trepidation. My position on Brexit is evidently a minority one within the Party. I have not sought to hide my criticisms of the substance and tone of the Government’s approach to Brexit. And I have not ruled out standing in my constituency as an independent if the whip is not returned. If ever I was going to get a hard time from Party activists, now would be the time.

And yet, at fringe event after fringe event, Party members were courteous and polite. Andrew Gimson generously wrote up my appearance at the ConservativeHome event, but a similar report could have been written for those I did with the Daily Telegraph and the Spectator. Don’t get me wrong: I am not claiming that I won the audiences over to my position – the occasional eye-roll, sigh and shake of the head was detectable – but nor was there anything like the hostility one might expect if, for example, you ever read the comments below one of my ConHome articles.

In truth, the Conservative Party felt – in those fringe meetings, at least – very similar to the party of which I have been a member for 29 years. Sensible, practical, well-meaning and decent.

I also take some encouragement from the apparent, new-found enthusiasm within the Government to reach a deal on Brexit. In previous columns, I have argued that seeking a deal and being willing to compromise is the right approach. That view would appear to be in the ascendant at the time of writing.

Until recently, an alternative approach appeared to be prevailing which seemed determined to crash us out on  October 31 at any cost. I have previously acknowledged the electoral case for this strategy, but in terms of the outcome for the country, it is thoroughly irresponsible. As such, it is also a huge departure from the modern traditions of the Conservative Party.

Let me give seven examples of principles that most Conservatives would support. I would happily sign up to each and every one of them but I struggle to reconcile them with those pursuing a No Deal Brexit at any cost.

  • We believe that living standards can only be raised and public services properly funded if you have a strong economy.

It is the argument that we have to fight at every election when our opponents make great promises but we respond by pointing out that we have to create the wealth in the first place if we properly want to fund the NHS, for example. Yet the overwhelming economic consensus is that No Deal Brexit would result in a sharp contraction in GDP. And before anyone rushes to claim that this is all a re-run of 2016’s ‘Project Fear’, remember our economy is 2.5-3 per cent smaller than it would have been had Remain won.

  • We believe in free trade.

Open markets benefit both our exporters but also our consumers. This has not always been the Conservative position but, thankfully, it has been for some time. And I know that there are plenty of Brexiteers who are sincere free traders and think that Brexit provides great new opportunities for bringing down trade barriers.

Unfortunately, it is simply not true. The Government’s analysis shows the benefit of getting trade deals with all the English-speaking nations and the major emerging economies will be just 0.2 to 0.6 per cent of GDP whereas the loss of access to European markets of a Canada-style free trade agreement (let alone a no deal Brexit) will be 4 to 7 per cent of GDP. The net effect of a No Deal Brexit or even a Canada style FTA will be to make our economy less open and more protectionist.

  • We believe in fiscal responsibility.

This was the battleground of British politics from 2009 to 2015 when we made the case for getting the deficit down. The contraction of the British economy will inevitably result in deteriorating public finances. Add to that a political strategy which focuses on winning the support of traditional Labour voters which has meant that we are almost certainly already breaking our fiscal rules.  Remember when we criticised Labour for more borrowing and more debt?

  • We don’t believe that the Government should bail-out unviable industries or businesses.

As a statement, this sounds like a bit of a throw-back to the 1980s when Margaret Thatcher weaned the country off supporting lame-duck businesses. But what do we think would happen when businesses no longer became viable because of the impact of No Deal? The pressure to provide support ‘in order to deal with the temporary disruption’ will be immense. The Government has already prepared for this with Operation Kingfisher but removing that support will be very difficult politically. There is a risk that our economy will become much more corporatist than any time since the 1970s.

  • We believe in our national institutions – Parliament, the monarchy and the independent judiciary.

This should go without saying but when Number Ten briefs that the next election will be people versus Parliament, that the Prime Minister will ‘dare the Queen to sack him’, that the judiciary is biased and that the Government will not comply with the law, we don’t sound very conservative (to put it mildly).

  • We believe in national security and ensuring that we do all we can to protect our citizens from terrorism.

And yet a ‘source in No 10’ says we will withhold security co-operation from those countries that fail to block an extension. Meanwhile, the former head of MI6 says that our security depends upon co-operation with the EU and that leaving without a deal means we will have to ‘start again with a blank sheet of paper’. In addition, it is hard to see how any ‘no deal’ outcome doesn’t destabilise the Good Friday Agreement one way or another. The Prime Minister, it is reported, is increasingly concerned about the risk of an upsurge in terrorist activities by dissident republican groups.

  • We believe in the United Kingdom.

It is obvious that Brexit is placing a strain on the union. A No Deal Brexit would be likely to result in a border poll in Northern Ireland, especially with Stormont not sitting and some form of direct rule being necessary. As for Scotland, the chaos of a No Deal Brexit provides plenty of ammunition for the separatists.

Not every Conservative voter will agree with every single one of those principles, or my criticisms of a No Deal Brexit. But a Conservative Party that fights a general election with No Deal at its heart must know that it will be pursuing an approach that is such a radical departure from the traditions of the Conservative Party and that it is vulnerable to losing the support of millions of our longstanding supporters.

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Ryan Bourne: Greta Thunberg and Prince Harry are wrong. Our ingenuity is the earth’s ultimate resource.

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Spare a thought for Prince Harry. By all accounts he is finding it difficult to get out of bed in the mornings, due to “eco-anxiety.” The Sun reports from Botswana that he believes “everything is good in the world except for us humans.” He’s not the only one struggling. At the UN recently, Greta Thunberg was visibly shaken as she denounced the people who had stolen her dreams of a cooler world with “fairytales of eternal economic growth.”

In case it wasn’t clear before, more radical parts of the “green movement” hold a consistent preconception: that human beings and our innate desire for betterment are the problem where environmental issues are concerned. We are destroying the planet, devouring its finite resources through selfish fertility and consumption decisions, while pumping greenhouse gases into its atmosphere. “A plague on the earth,” is how David Attenborough once kindly described us.

The high priest of this worldview was Paul Ehrlich, who coined the oft-repeated assertion that “you can’t go on growing forever on a finite planet.” Prince Charles agrees. Earth simply can’t sustain us if more and more people aspire to Western consumption levels, he says. To save the planet therefore requires curbing population growth, rowing back substantially on consumption (so-called degrowth), or both. Little surprise then that contemporary climate change “solutions” from radical environmentalists include economically destructive, rapid carbon mitigation (“Bring on the recession!” as George Monbiot once said) or curbing global population growth.

Yet there’s a big problem here: Ehrlich and Prince Charles’ analysis was and is wrong. Population growth doesn’t “use up” the earth’s finite resources and economic growth possibilities are not finite. That’s because technologies and human ideas are not fixed. Resource constraint worriers ignore that humans adapt, dream up efficiencies, and change behaviours. As countries become much richer, they become better placed, and more willing to, care for the environment. Even on climate change, a classic “externality” problem, it is the same innovative spirit that drives economic progress that will deliver any transition or adaptation to a lower carbon economy and warmer world.

Consider the evidence. If growth in population or consumption were simply about running down scarce resources, we’d expect commodity prices to continuously rise with population or economic growth. Yet from 1980 to 2017, when the world’s population shot up by nearly 70 per cent, prices of a basket of 50 important commodities actually fell by an average of 36 per cent (or 65 per cent, if instead you consider the reduction in time an average human had to work to purchase them).

Population and consumption growth might put pressure on resource availability for any given level of technology or set of demands. But human innovation means, over time, we devise better ideas and forms of technology to access or convert those resources, or shift to other alternatives when prices rise. In the race between the human brain and resource scarcity, we are winning. As my colleague Marian Tupy has said: “the Earth’s atoms may be fixed, but the possible combinations of those atoms are infinite.”

As counterintuitive as it sounds, that same innovation means economic growth doesn’t necessitate more and more resource use either. Greens think of growth as about consuming “stuff.” And for good reason: during and after the industrial revolution, GDP growth really did go hand in hand with energy use growth. But in a service and high productivity world, production and value clearly arises from doing more with less too. The iPhone in your pocket has replaced a clock, diaries, calendars, letters, calculators, photo albums, large telephones, trips to the bank, compasses, a contact book, and much else. Think of all the resources saved! No wonder Ronald Reagan once said “there are no such things as limits to growth, because there are no limits to the human capacity for intelligence, imagination and wonder.”

Again, the distinction between a static and dynamic world is crucial when considering the environmental impact of this. As Tim Harford explains, if we were all suddenly a fair bit poorer, we’d probably substitute a hat and coat for heating in our homes. But this doesn’t mean that if our incomes trebled over the next five decades, we’d crank up the heating and boil ourselves in our homes. In fact, as we’ve got richer over the last quarter of a century, total energy use per person has actually been falling in countries such as the US and UK, even beyond that accounted for by offshoring of manufacturing.

This is one good example of how economic growth helps shift us up the hierarchy of needs. As advanced countries have solved problems of food, warmth, and shelter, people can afford to worry more about the natural world around them more broadly too. Recent global growth has gone hand-in-hand with the forested area of the planet increasing since 1982 and a continuous fall in fertility, in part because wealthier people want to invest more in the “quality” of their children.

In this light, Prince Harry and Greta’s eco-anxiety is a clear sign of privilege. Neither is having to scramble to illegally chop trees for money to survive, overhunt wild animals as a source of a nutritious diet, or spend half their adult lives pregnant to ensure at least a couple of their kids survive. Many around the world aren’t so lucky, or comfortable enough to put the environment first. A UN poll of 10 million people around the globe showed far more worry about their educational opportunities or whether their kids are starving or dying from disease.

Once you understand this: what growth is, how it is driven by human innovation, and what consequences it has, you see how futile and damaging an “anti-human” approach to global climate change would be. Drastic mitigation would condemn much of humanity to poorer lives, making us worse environmental stewards in other regards and facing much worse consequences of any warming that occurs. Authoritarian population controls would backfire too, reducing the potential market and payoffs for innovators developing climate change remedies in everything from electric cars to solar panels.

No, the only sustainable, credible route to reducing carbon emissions and adapting to warming will come precisely from the sorts of innovation driving the “fairytales” Thunberg bemoans. Acknowledging this does not preclude modest, economically reasonable policies, such as R&D investments, or even a degree of carbon pricing, to speed up and incentivise innovation and entrepreneurship on low carbon climate solutions. What it does rule out is drastically rowing back on our activities, freedoms, or desires for children.

If Prince Harry is to regain his morning sprightliness, he’ll have to find more faith in economic growth and innovation to the challenges that face us. Human ingenuity, far from being a burden, is the world’s most important resource.

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Ryan Bourne: To help grow prosperity, let’s focus on people and not places – such as towns

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Stian Westlake describes it as the “Strange Death of Tory Economic Thinking”. Conservatives have ceased telling an economic story about why they should govern, and how. Sure, there’s still the odd infrastructure announcement, or tax change. But, since Theresa May became leader, the governing party has shirked articulating a grand economic narrative for its actions.

This is striking and problematic. From Macmillan to Thatcherism to deficit reduction, the party’s success has coincided with having clear economic agendas, gaining credibility for taking tough decisions in delivering a shared goal. But, arguably, deficit reduction masked a secular decline in interest in economics. David Cameron and George Osborne, remember, wanted to move on to social and environmental issues until the financial crisis and its aftermath slapped them in the face.

Now, with the deficit down, economics is in the back seat. Fiscal events are low key and economic advisors back room. To the extent the dismal science is discussed, it’s as a means to other ends, or a genuflect to “Karaoke Thatcherism.”

In short, I think Westlake is right: the Tories do not have an economic story and, post-Brexit, it would be desirable if they did. So we should thank both him and Sam Bowman (formerly of the Adam Smith Institute), who have attempted to fill the vacuum. In a rich and interesting new paper, the pair set out to diagnose our key economic ailments and develop a Conservative-friendly narrative and policy platform to ameliorate them, even suggesting reform of the Right’s institutions and think-tanks in pursuit of the goals.

Such an effort deserves to be taken seriously, though not everyone will agree with their starting premises. It is assumed, for example, that Conservatives believe in markets and want to maintain fiscal discipline, which bridles against recent musings from Onward or thinkers such as David Skelton.

But, again, the key economic problem they identify is incontrovertible: poor economic growth. Weak productivity improvements since the crash have been both politically and economically toxic, lowering wages, investment returns, and necessitating more austerity to get the public finances in structural order. And the nature of modern innovation, arising from clusters and intangible assets, means that growth that is experienced isn’t always broadly shared.

Their agenda’s aim then is to achieve both concurrently: maximize the potential of the economy by taking policy steps on planning, tax policy, infrastructure, and devolution, to increase investment levels, allow successful cities and towns to grow, and to connect “left behind” places to local growth spots through good infrastructure. None of their ideas are crazy. Indeed, I would support the vast majority of them.

And yet, something bothered me about their narrative. In line with the current zeitgeist, they too discuss “places” and their potential, as if towns and cities are autonomous beings. My fear is this focus – shared by those who want to regenerate “left behind” areas – creates unrealistic expectations about what policies can achieve in a way that undermines a pro-market agenda. Importantly, it warps what we should really care about: “left behind” people, not left behind places.

A people-centred narrative recognises that just as firms fail in the face of changing consumer demands and global trends, so high streets, towns, cities, and even regions will shrink too. As Tim Leunig once said, coastal
and river cities that developed and thrived in a heavy manufacturing, maritime nineteenth century world might not be best placed to flourish in a service sector era of air and rail.

A true pro-market policy agenda would admit -and that’s ok. Or at least, it should be, provided we understand that raising growth and sharing prosperity requires adaptation, not regeneration. That means removing barriers for people either to move to new opportunities or have control to adapt their situations to ever-changing circumstances. This might sound Tebbit-like (“get on your bike”), but really it’s just saying policy must work with market signals, not against them.

Today though, interventions actively work in a sort of one-two-three punch against inclusive growth and adjustment. First, we constrain the growth of flourishing cities. Tight land use planning laws around London, Oxford, and Cambridge contribute to very high rents and house prices, and prevent these places benefiting from growing to obtain thicker agglomeration effects.

This contributes to the “left behind” scandal, but not in the way people imagine. When rents and house prices are higher in London and the South East and we subsidse home ownership or council housing elsewhere, it’s low productivity workers from poor regions that find it most difficult to move given housing cost differentials. As a result, they get locked into poorer cities and towns that would otherwise shrink further. That’s why Burnley, Hull and Stoke are the most egalitarian cities in the country, whereas prosperous London, Cambridge and Oxford are the most unequal, even as inequality between regions has intensified.

Having restricted people’s mobility through bad housing policy, we then impose one-size-fits-all solutions and subsidies which dampen market signals further. National minimum wages, fiscal transfers, national pay bargaining, and more, might be designed to alleviate hardship, but they deter poorer regions from attracting new businesses and industries by trading on their market cost advantages. Then, to top that off, we compound the problem further by centralising tax and spending powers, preventing localities from prioritising their spending and revenue streams to their own economic needs.

Now, as it happens, Bowman and Westlake’s policy agenda is perfectly compatible with assisting  “people” rather than “places,” precisely because it’s market-based. They advocate planning liberalisation, a flexible right to buy, and stamp duty, all of which would improve labour mobility. They prioritise infrastructure spending based on benefit-cost ratios, making investments more profitable with sensible tax changes, and devolving more transport power to regions and localities. All, again, will help facilitate areas adapting to changed economic conditions, rather than reviving Labour’s failed top-down regeneration attempts.

But pitching this as a city and town agenda still risks creating the false impression that the net gains from “creative destruction” nevertheless can be achieved without the destruction, and that all places can thrive in the right policy environment.

One can understand why they framed it in this way. Their aim is to persuade the party and its MPs of their platform. Anti-market commentators would call them fatalistic and “abandoning” places if they acknowledged the downside, as if facilitating more free choice amounts to design.

Successful past Tory economic narratives, though, willingly acknowledged hard truths. Deficit reduction entailed tough choices to curb spending. Thatcherism entailed making the case for letting inefficient industries fail. If a new Tory vision is serious about raising productivity growth and spreading opportunity for people, it will have to confront the inevitable market-based adaptation for some places.

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Ryan Bourne: In America, public spending conservatism is being lost. It could happen in Britain.

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Austerity is over. Theresa May told us so after the 2017 election, and again at the Conservative Party Conference last year. Philip Hammond tried restraining her from a blitz of high-profile spending announcements. Yet Team Johnson has now picked up the baton anyway. Today’s spending review from Sajid Javid will reportedly confirm significant money injections for schools, hospitals and the police. The Prime Minister said Monday it will be “the most ambitious spending round for more than a decade.”

Restraining government spending was always said to be a temporary deficit repair tool, of course. Those “tough choices,” added to net tax hikes, have helped bring down the budget deficit to just 1.3 per cent of GDP, from a gargantuan 9.9 per cent in 2010. Once near-balance, a spending squeeze was never envisaged to continue year after year. Despite Nick Timothy’s fear of libertarians under the bed, no recent Conservative leader has been ideologically committed to shrink the size and scope of government. Absent “thinking the unthinkable,” one eventually must release the spending grip given voter demands for high-quality services.

And yet…the zeal with which the Tories have turned heel on their spending narrative is surprising. Whatever one’s view on the efficacy or composition of “cuts”, they were central to the party’s offer through 2016, including the 2015 election win. Balancing the books was said to be about unburdening the next generation from dumping more debt on top of the iceberg associated with an ageing population. Any intergenerational justice message has now gone the way of the Titanic.

For the Government is not promising gradual targeted spending increases in these areas – a natural uplift from a reset baseline after years of restraint. No, proposed hikes in education funding would virtually reverse any real schools’ spending cuts over the past decade. May’s extra money for the NHS is a big step-change too. The spending review is celebrated as the “biggest, most generous spending review since the height of Tony Blair’s New Labour,” no less – a far cry from denouncing that era’s profligacy. In one swoop, the Treasury has undercut its long-held opposition to raising borrowing and junked the idea that public service reform trumps showering public services with money.

Javid attempts to thread the needle by arguing that more spending is still consistent with keeping the debt-to-GDP ratio on a shallow downward path. That maybe true. But a stated goal of policy was always to balance the books overall, even if George Osborne and David Cameron continually pushed back the deadline. A former Treasury fiscal policy director now says that borrowing will in fact start rising again, and soon be above two per cent of GDP. Manageable, yes – but a clear change in direction.

The public discourse effects of this reversal should worry fiscal conservatives. Cameron and Osborne’s consistent messaging helped entrench two crucial contours in discussions about government spending. First, that there was no free lunch (every Labour proposal for years was met with the question “how will you pay for it?”) Second, that what you did with the money (the organisation of public services) was as important as spending levels. After years of Tony Blair’s money throwing, the public were receptive to such apparently grown-up thinking. Now, both those claims-cum-restraints that ensnared Labour have been removed.

If large, real increases in education funding are synonymous with better schools, as Tories imply, Labour can coherently ask “why did you cut real funding beforehand?” Such corrective spending hikes look an admission of a past mistake. Doubly so if funded through borrowing that was previously considered intolerable.

Couching this as “an end to austerity” brings similar peril. These particular decisions don’t imply “we are going to return to affordable spending increases consistent with a low deficit.” If large spending hikes for education are seen as reversing austerity, then obvious questions arise: what about local authority funding? Prisons? Criminal justice? Have these not suffered more from the pain you admit was damaging?

Of course, Brexit is the important context here. It is sucking oxygen from normal economic debates – one reason why the logjam needs to be broken. A slowing economy, induced in part by uncertainty, means an obsessive near-term public finance focus is probably unwise. The very process of extrication requires budget flexibility, not least because the underlying public finances could look very different when future trade relations crystallise.

But all this would be a case for relaxing or suspending fiscal targets through the choppy Brexit seas, not bold new announcements.

No, it’s difficult not to conclude there’s not something bigger happening here. Much of the party has embraced a simplistic “left behind” narrative of the Brexit vote – that it was a cry for investment in public services. They are egged on by former government advisors, armed with polling, who see an opportunity to steer the party towards a “bigger government” vision for the party they’ve always spoiled for.

Academic evidence in fact shows new Brexit voters affiliating with the Tories quickly adopt traditional Tory views on other issues. There’s no need to pander. Yet when you see John Redwood railing against austerity, you realise how strong this view about the changing party voter base has set.

Whether Johnson shares that interpretation is less clear. Perhaps he sees funding boosts now in three major non-Brexit policy areas as short-term deck clearing before an election. Polling strength from these “good news stories” might even firm up pressure on the EU and rebel MPs on his central task. If it helps finally deliver Brexit, many of us will accept fiscal jam tomorrow.

I want to believe this, but the noises aren’t encouraging. And living in the US, where Republicans have gone from a Tea Party anti-spending force to delivering unprecedented deficits for peacetime, in just a decade, I’ve observed just how easily spending conservatism is lost.

Here, it started with big spending increases on priorities too. Republicans cut taxes, yes, but huge cash increases for defence were delivered, greased by money for some Democrat priorities. Once that dam opened though, the money poured. July’s budget deal threw off the last vestiges of spending caps delivered by the Tea Party Congress. Promises of Republican spending restraint in Donald Trump’s potential second term ring as hollow as claims he’s using tariffs as a path to freer trade.

Here’s the worrying consequence. As US conservatives have learned to love deficits, or at least use them, the left’s spending demands have only gotten more extreme. With constraints stripped away, Democratic Presidential candidates feel liberated to propose mammoth programmes and spending hikes – the Green New Deal, a jobs guarantee, universal childcare and more. When asked how the country can afford this, they point out to the red ink spilled for Republican priorities. There is no answer.

UK Conservatives are far from the Republican point of no return on spending, as yet. But the mood music has changed dramatically. America shows that when conservatives abandon spending constraint, they legitimise the left’s spending wild demands, to taxpayers’ detriment.

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