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Westlake Legal Group > Public Spending

Richard Short: Corbyn rails against the super-rich, but it’s ordinary workers who would bear the cost of his ideas

Richard Short is the Deputy Director of the Conservative Workers and Trade Unionists and Parliamentary Candidate for St Helens South and Whiston.

Venezuela’s socialist regime swept into power on a populist vote promising a land of milk and honey, but ended with people eating their own pets to survive. The regime was heralded by the very top of the Labour leadership as proof that socialism can work.

Labour’s socialist General Election pitch is clear – an unrelenting attack on billionaires – but, just like Venezuela, it is the ordinary workers who will pay in the end.

Jeremy Corbyn says that the 150 billionaires in the UK need to fear a Labour Government, avoiding criticism of millionaires on account of the fact he is one. The UK’s billionaires certainly won’t be in fear. They have resources to more than match any civil service department to mitigate the increased costs brought to them by a Labour Government up to and including leaving the country altogether. Those that need to be in genuine fear of a Corbyn-led Government are the ordinary workers up and down the country. The workers on average wages, the workers who work hard every day to make ends meet, the workers who simply cannot afford a Labour government.

At the 2017 election, John McDonnell, defined ‘the rich’ as those earning £80,000 or more a year. This is a nice salary for anyone but it’s not a fat cat wage. £80,000 is your local school’s head teacher, your local police superintendent and your own GP. It remains to be seen if this will be repeated in the 2019 election and there have been no indications that this will change but this is largely immaterial. What the ordinary workers need to fear is that whatever their proposals on taxation this will only be the starting point. A shallow minded and lazy tax and spend policy can only go so far on tax taken from the highest earners. Previous Labour Governments have punitively targeted tax hikes to their definition of “the rich” to cover their spending plans, only to discover that two things happen.

Firstly, despite the top one per cent of earners paying 28 per cent of income tax, the higher rate tax base is tiny and dwarfed by the basic rate tax base. There is little to be gained and everything to lose by targeting such a small section of society for even more tax and we can see the results of when they try. The last Labour Government attempted to tax their way out of economic crisis in 2008/09 and brought forward a raising of the 45 per cent rate for the highest earners to 50 per cent. They forecast an increased tax take of £2.5 billion from this, but behavioural changes of those being taxed, such as bringing forward income so it was paid before the rate came into effect, reduced this so much that it actually reduced the tax take for these high earners by £1.8 billion.

The long-term effect of this will always be speculative as the Conservatives were returned to power in coalition and the 50 per cent rate was reduced back to 45 per cent. Although this move was attacked ferociously by Labour it resulted in a tax revenue increase of £8 billion. Based on previous form, had Labour remained in power after 2010 they will likely have increased the tax rate ever higher. We know this because that’s exactly what they did in the 1970’s. On gaining power in 1974, the returning Labour Government hiked the top rate of tax from an already eye-watering 75 per cent to a stifling 83 per cent. Rock stars, celebrities, the rich and famous fled overseas taking their taxable income with them leaving the ordinary worker beleaguered and completely exposed to increasing tax hikes.

This brings me on to the second consequence and one which all reasonable hard-working average earners need to know. Even the most economically incompetent Labour Government can be made to understand that there is only so much which can be extracted from the high earners before they are incentivised enough to take their money and wealth away from taxation. Whether this is by fair means or foul the result is the same, less tax paid into the Exchequer and fewer resources for public services. Denis Healey always denied saying he’ll “Squeeze the rich until the pips squeak” and there could be some truth to his denial but after his squeeze on the highest earners and failing to raise enough tax revenue, his 1970’s Labour Government turned on the ordinary workers. With a far larger tax base the increase from 30 per cent to 33 per cent and then to an astonishing 35 per cent basic rate brought some of the revenue they needed. Running out of people to tax, he notoriously turned to the International Monetary Fund for an emergency bail out loan.

No matter how loud the rhetoric about going after the corporations, the rich, the elite, Labour Governments always attack the very people they purport to represent. Even in recent history, in 2008 the Labour Government attacked the very lowest earners by scrapping the lower rate of ten per cent. The ones with most to fear most from a Corbyn Labour Government are the hard-working average earners. Gestures like increases in minimum wage will be evaporated in the heat of a tax hike on those least able to afford it.

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Warwick Lightfoot and Will Heaven: How to unleash the power of the Union 1) Red, White and Blue-branded projects and funding

Warwick Lightfoot is Policy Exchange’s Head of Economics, and Will Heaven is Policy Exchange’s Director of Policy.

“It is time we unleashed the productive power, not just of London and the South East but of every corner of England, Scotland, Wales and Northern Ireland.” So said Boris Johnson in one of his first speeches as Prime Minister. A great ambition – but how to make it a reality? What are the practical steps that the Government can take? This piece, the first of a three-part series on the Union for Conservative Home by Policy Exchange, will offer some of the answers. They may be useful to a new Department of the Union, should such a body be created after Brexit.

Today’s political context adds urgency to the debate around the Union’s future. There can be no denying that Brexit has opened it up to a new nationalist and separatist agenda. The UK is under significant stress. In Scotland – which, of the four nations of the UK, was most strongly pro-remain in 2016 – the SNP’s stock is riding high. In Wales, there is a growing minority of support for independence. There is also evidence that some English Conservatives are so fed up about Brexit not being delivered that they are willing, in theory, to sacrifice the Union to the cause. On the other side, in Northern Ireland, the DUP are asking how much ministers care about the Union.

Yet the case for the Union remains strong and unionists should not be reluctant to make it. The best way to do this and strengthen the Union is to ensure that its economic, cultural and social value is not hidden from all of the UK’s citizens. Above all, as Policy Exchange’s recent paper, Modernising the United Kingdom argues, ministers should focus on two areas: greater capital spending to better connect each nation and cross-Union representation in Westminster.

On capital spending, notwithstanding the true legal and constitutional position, the UK Government has been encouraged to limit its capacity to spend in the devolved nations to national programmes, i.e., in the jargon, “reserved” areas: defence and immigration, for example. But there is nothing constitutionally preventing the UK Government from providing extra funds and expertise to deliver projects in devolved policy areas like health, education, transport, sports and the arts. The Treasury, in particular, has been too timid, saying that to spend more in devolved areas would undermine devolution itself. This simply isn’t true.

As the UK takes full responsibility for the social and economic development functions and spending that went with the EU’s social and structural funds, these self-imposed restrictions must be scrapped. The Conservative Government’s 2017 manifesto pledge to set up a ‘UK Shared Prosperity Fund’ should be strengthened. If projects have local support, and are subjected to rigorous auditing, the Government should be more ambitious in its pursuit of spreading the benefits of the Union. These could include upgrades to transport, broadband, ports and giving places support to promote foreign direct investment in their area. Most importantly, these should be badged as UK projects as a condition of accepting funds and used to promote UK unity, just as the EU uses structural funds to promote EU cohesion.

Thankfully, the costs of this are affordable. The public finances are in a good place. There is scope to increase borrowing, the stock of public debt to national income is manageable and the cost of servicing public debt is historically low. There is both financial and economic scope for a more ambitious public programme of capital investment, which should be secured through a UK modernisation spending plan as soon as Brexit is settled.

How to demonstrate that it is the Union that is delivering these sorts of projects? To begin with, the UK brand must be visible. As Andrew Bowie, Conservative MP for West Aberdeenshire and Kincardine, said at a Policy Exchange fringe event in Manchester a few weeks ago, “Every single thing the Scottish government does in Scotland has a saltire on the side of it, and it says ‘paid for and delivered by the Scottish government’. Where’s our UK flag? Where’s ‘paid for and delivered by Her Majesty’s government’, or ‘the UK government in Scotland’?”

At the same event, an anecdote by Lord Caine, formerly a long-time adviser at the Northern Ireland Office, demonstrated how timid the UK Government can be on this issue. He recounted how “officials once tried to persuade us that before we published a Treasury document in Northern Ireland, we had to carry out an equality impact assessment because it had a tiny Union flag in the corner”.

Some civil servants may scoff at this, but it’s this branding – for want of a better word – that helps to demonstrate to the public the value of belonging to the United Kingdom. It was great to see, for example, British embassy staff in Union flag-emblazoned high-vis jackets during the operation to return Thomas Cook’s stranded passengers back to the UK. More of this is needed at home, too.

The Government should increase its physical presence in devolved nations. It should draw up an initial plan of relocating or establishing capacity of central government departments in places of the country where their work is most relevant, and in particular, in the case of departments with reserved functions. For example, the Department for Environment, Food and Rural Affairs could expand its operation in places like Peterhead.

Politically, cross-Union representation will also be a vital tool. With all the four nations in mind, there is a strong case for the UK Government establishing a Council of UK Civic Leaders – chaired by the Prime Minister, who is also the Minister for the Union – which should meet regularly with ministers and officials. This should include empowered English civic leaders, such as metro-mayors, and leaders of city councils in devolved nations. The Mayor of the West Midlands and Lord Mayor of Belfast City Council, for example, should have this forum to speak directly to central government about what extra resources would be useful to them. Devolution should also involve and require empowering communities at the subnational level (hence this English civic representation) which will help build connections across the Union.

Finally, after Brexit, as the UK resumes competence for various areas of policy previously held by the EU – such as competition, product standards and science policy – it must ensure statutory and regulatory bodies have representation from Scotland, Wales and Northern Ireland. The UK Government must recognise that Brexit doesn’t just mean taking back control for Parliament, important though that is, but taking back control for all the nations and peoples of the United Kingdom.

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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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WATCH: McDonnell – Labour will tackle ‘national scandal’ of social care

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‘We probably didn’t cut enough’ may be the most important revelation from Cameron’s book

Understandably, most of the headlines about David Cameron’s new book have been dominated by other angles – be it his views on the EU referendum, on Boris Johnson and Michael Gove, or, thanks to the Guardian, the question of whether ‘privilege’ dulls the pain of loss – but it strikes me that when the current news agenda has subsided, some of the most lasting elements of the book are likely to be his reflections on public spending and austerity.

Here’s the crucial passage (with my emphasis):

‘Looking back over our first few months at the helm of Britain’s economy in 2010, what do I think? Did we cut too much?

My assessment now is that we probably didn’t cut enough. We could have done more, even more quickly, as smaller countries like Ireland had done successfully, to get Britain back in the black and then get the economy moving.

Those who were opposed to austerity were going to be opposed — and pretty hysterically — to whatever we did. Given all the hype and hostility, and yes, sometimes hatred, we might as well have ripped the plaster off with more cuts early on. We were taking the flak for them anyway. We should have taken advantage of the window of public support for cuts when it was open.’

It’s 2019, so the immediate reaction from various people has been to fire up the Outrage Bus about the very idea, which incidentally rather demonstrates his point about hysterical opposition regardless of the facts of an argument.

But ignore the ranters and consider the implications of Cameron’s conclusion. This was a live and controversial debate throughout his time as Leader of the Opposition, and well into the Coalition years. As Campaign Director of the TaxPayers’ Alliance between 2007 and 2010 I saw some of it first-hand.

Remember that despite the retrospective demonisation he has since been subjected to, Cameron was never desperate to reduce public spending. He didn’t see it as inherently wise or responsible to balance the books – or, at least, not sufficiently so to make it a priority.

In his 2019 account of events he writes that:

‘It doesn’t require a degree in economics to appreciate that if you keep spending faster than the economy grows, and faster than tax revenue grows, eventually you will be in trouble. Which Britain had been doing…’

but back in the first few years of his leadership he did not seem to appreciate this truth.

In 2007, George Osborne committed the Conservatives to matching Labour’s spending plans, whatever they might be, in Government. That could never have happened without Cameron’s consent, and the thinking was quite clear: they saw fiscal discipline as a reputational risk, and were keen to square it away by reusing the tactic Blair used a decade earlier to square away concerns about Labour’s fiscal irresponsibility. To reiterated: they felt that pledging to mimic Gordon Brown’s approach to fiscal policy was safer electorally than espousing the more traditional conservative view that Cameron now says was obvious.

If you doubt that, consider that it took until the second half of November 2008 before the Conservative leadership was finally willing to abandon that pledge. Then, Cameron argued that

‘The world has moved on. People are not fools… after 11 years of waste and broken promises from Labour, [voters] can see that spending more and more alone does not guarantee that things get better.’

What had ‘moved on’ most fundamentally was the start of the financial crisis, of course. By the time Cameron and Osborne changed policy, banks had started collapsing, the economy had been shrinking for months, and the crisis was well underway. Just as they had ignored the urgings of fiscal conservatives before pledging to match Labour’s spending plans, so they had resisted the growing pressure to abandon the pledge. They did so in the end, but it took months before the inherent truth of a conservative position became obvious to the point of being irresistible.

After that battle came a new disagreement about the scale and pace of fiscal restraint if and when the Conservatives got into power. Given the context above, it isn’t hard to imagine that there was still heavy reluctance to be radical in the scale or the pace of spending reductions. And yet there was a strong case to do so – in September 2009 the Institute of Directors and the TaxPayers’ Alliance produced a report proposing savings of £50 billion and explicitly arguing that the UK ought to follow the example of Canada in achieving a ‘rapid and durable fiscal consolidation’.

The political argument was precisely that which Cameron now espouses: that it is harder to go slow than to go quickly on such measures. Just as the original spending policy appeared to assume that voters and conditions would not change between 1997 and 2010, Cameron’s recognition in 2008 that ‘the world has moved on’ seemed to neglect the possibility that people might start to change their minds yet again once an austerity programme had been underway for some years.

He is correct now that there was a ‘window of public support for cuts’ that was not inevitably going to stay open forever. But there were voices telling him this at the time; they just weren’t listened to. It reflects well on him that he is willing and able to recognise – on this topic, at least – that error. (It’s notable, by the way, that George Osborne does not seem to have done so.)

The change in the former Prime Minister’s opinion has consequences today, beyond some people now having the right to say ‘I told you so’.

For a start, it’s a simple reminder that fundamental fiscal conservative principles exist for a reason, and are wise to follow. Imagine the political impact had Cameron already been arguing before the financial crisis that Brown was living beyond his means, rather than promising to do the same.

More specifically, it’s a lesson in the practical politics of doing what voters often call on the Conservatives to do: take the tough decisions after Labour mess things up. Such permission is powerful, but it can also be temporary. Fail to recognise that there is a ticking clock, and you risk failing to deliver on the mission you have been given.

Finally, it throws into relief the fact that there currently isn’t much discussion of fiscal policy in any direction on the centre right. What is the current fiscal policy, and what are the alternatives? Stian Westlake and Sam Bowman’s recent pamphlet on ‘Reviving Economic Thinking on the Right‘ is a rare example of people engaging in the necessary thought and debate which is required to answer those questions, but more should follow their lead and get stuck in. That’s the best way to avoid repeating the errors of a decade ago.

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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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Gareth Streeter: An intelligent spending review could halt the Liberal Democrats in their tracks in the South West

Gareth Streeter is a Councillor in Croydon and a former Parliamentary Candidate.  He grew up in the West Country, where he has campaigned extensively for 20 years.

As another spending review – fuelled by talk of a Brexit dividend and a renewed commitment to public spending – draws near, the usual pleas for pet projects and priorities are again entering the public arena.

A number of exciting pledges around education, the NHS, and policing have already been announced over the summer, and it’s clear that the direction of travel is centring around a renewal of One-Nation conservatism and a commitment to providing opportunities for Britain’s most vulnerable inhabitants.

Almost inevitably, resulting conversation starts to drift toward the Conservative Party’s offer to the North of England. This is both welcoming and encouraging – from the Northern Powerhouse to a revolution in school standards, a genuine commitment to broadening our UK-wide appeal has been one of the most inspiring strands of Conservative Government since our return to power in 2010.

However, as we approach the spending review and the surrounding political narrative it will shape, it is vital that another often-neglected part of England receives its fair share of attention and investment. Namely, the South West.

Often lumped together in discussions on the ‘South’, the South West does not share the wealth, infrastructure, or connectivity of its Eastern counterpart.  While many picture the region as the backdrop to their idyllic childhood holidays (which it still supplies a-plenty) those of us who live there or grew up there know that this it is not the full story.

Rural and coastal poverty is every bit as biting as urban poverty, and research suggests that 600,000 working age people across the region find themselves subject to it.

But there is also an acute political motive for ensuring our Western-most region receives its share of attention. We’ve all enjoyed recent polls which suggest that the much needed ‘Boris bounce’ is steering us toward a Conservative majority at the next election – but thanks to an unwelcome rise in support for the Liberal Democrats, there is a real danger that this could come at the expense of some of our MPs across Dorset, Devon, and Cornwall.

What Liberal Democrat campaigns lack in integrity, they often make up for in precision and effectiveness. Buoyed by their recovery in the polls and success in recent local elections, Lib Dem strategists will be setting a strong collection of South West seats in their sites.

However, with the forthcoming spending review, we have a real opportunity to show and strengthen our commitment to the Westcountry, and halt the Liberal revival before it has truly begun.  Here are just 5 suggestions that the Government should consider:

Introduce a rural bus route guarantee – Even without pressures on local authority budgets, rural bus services were always likely to decline in usage.  However, for those that do rely on them they are an absolute lifeline. While the DfT has already provided important funding to keep services running, there is now scope for a modest increase which can be packaged as a pledge to ensure every community is served by a bus at least twice a day.

Continue to invest in high-speed broadband – While the words ‘gig-economy’ are not always music to the ears of policy makers, the South West has an opportunity to play host to the sector’s bright side. I regularly come across self-employed marketers, website designers, journalists, and PR consultants who would love to make their home in the South West, but would struggle with a patchy and slow broadband service. Recent surveys have shown that the South-West has the worst broadband service in England but that people in Dorset, Devon, and Somerset would value an improvement the most. Government investment in high-speed broadband is already revolutionising the local economy – but the spending review present a great opportunity to hammer home our commitment.

Turbo-charge tourism – While some claim that Brexit has already damaged Britain’s tourism sector, there is little evidence to support this. The opportunity, however, is huge. In Government, the Conservatives have already done much to revive coastal communities with targeted funding – but now it’s time to announce a new headline figure for the Coastal Communities Fund. Not only will this make a tangible difference to the communities that need the boost – it will send a clear message to tourists everywhere that Brexit Britain is open for business.

Ensure a West Country voice in fisheries policy – The Common Fisheries Policy has been one of the most controversial aspects of EU membership for decades, and almost everyone accepts that returning control of policy making to the UK is essential once we Brexit. However, in the run up to our departure, most of the debate has focused around protecting the needs of Scottish fishers – a community which has an entire devolved administration to fight their corner. The needs of South-West fishing communities also need to have a voice in the setting of future policy, and Defra should formalise the process of securing one.  There would be real merit in the Government appointing a representative – perhaps a West Country MP – to advocate the needs of South West fishers in the setting of future policy.

Create a long-term road map for agriculture – The Government has played a blinder by guaranteeing agricultural subsidies until 2022.  However, as we constantly hear, business needs certainty in order to plan effectively and in this respect, farmers are businesspeople like any others.  If the event of a no-deal Brexit, a road map on the future of agriculture beyond the next three years must be top of the agenda.

The South West of England, like every other part of the UK, does better with the Conservatives.  But in the same way that the Liberal Democrats have chosen to champion project fear in their national narrative, we should expect an onslaught of highly localised scaremongering campaigns to be unleashed in the West Country as an election draws near.

By highlighting our excellent record, ensuring a fair slice of the pie in the spending review, and intentionally crafting a narrative for the South West of England, we can ensure that a future Conservative majority Government does not have to come at the expense of hard-working and effective MPs in Cornwall, Devon, and Dorset.

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

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.

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

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.

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

How long will the snap ‘one-year’ Spending Round really last?

The speech on fiscal priorities which the Chancellor was due to deliver today was cancelled at 2.36pm yesterday. In its place, a ‘fast-tracked Spending Round’ on 4th September was announced by press release at the, ahem, unusual time of 10.42pm.

The round takes the place of the planned full Spending Review – on the basis that, as Sajid Javid’s Telegraph article (published at almost exactly the same time) explains, ‘it would be a distraction to start debating every line of government funding’ at this crucial Brexit juncture.

That can be true in a number of possible ways: it could be distracting to the Treasury in the midst of complex negotiations, and labour-intensive preparations for deal or No Deal scenarios; it could be distracting for ministers to force them to fight one another for money just when Downing Street needs them to be completely disciplined and obedient; or it could be distracting for voters when the Prime Minister wants and needs to communicate a very clear message to them, not least for the election which is inevitably on its way. Or all of the above.

In a way, this is a compromise – or at least a hiatus – in a fiscal dispute. One reason a lot of ministers in the fag-end days of Theresa May’s administration were concerned and annoyed about her attempts to make financial commitments in the search for a legacy was that they felt it was pre-empting the necessary and imminent full Spending Review planned for the Autumn.

Postponing that review restricts the new Government’s freedom of action by effectively continuing Philip Hammond’s top-line rules for fiscal policy, but, as ever, such ‘rules’ are often in practice mere guidelines. Hammond’s successor writes himself new space: ‘Thanks to the hard work of the British people over the last decade, we can afford to spend more on the people’s priorities – without breaking the rules around what the government should spend.’

That might sound a little uncomfortable, but ministers will likely be able to live with it for the good reason that it won’t last very long. Officially this Spending Round ‘will give Whitehall departments certainty over their budgets for next year’, but will it really last that long?

Consider the possible scenarios. Either the Conservatives deliver Brexit, then win an election. In which case they’d have a new mandate, potentially a real majority, and Javid would have a good basis to introduce a proper, wide-ranging Spending Review and full new Budget, setting a new agenda for himself and Boris Johnson, finally free of May and Hammond’s hangover. Neither man is likely to want to wait until next year’s official Budget date – some time in mid-to-late Autumn 2020 to do things their own way/

Or the Government collapses, and is replaced by the mish-mash of separatist/unionist/socialist/liberal/conservatives we saw yesterday parading their fragile agreement on not liking Brexit. They’d want to try to do things differently, whether they were able to reach agreement or not.

Or the Conservatives lose an election, in which case some variant of Labour, in majority or in a coalition of some sort with the Lib Dems and/or the SNP, come in – and they’d certainly want to crack on sharpish with fulfilling whatever exciting form of job-destruction and asset-seizure that John McDonnell was dreaming of for all those backbench years. Again, bye-bye one-year Spending Round.

So in practice, this change may be frustrating or restrictive to some degree, but it isn’t likely to be something ministers have to suffer for very long. For good or ill.

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