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Westlake Legal Group > Trade Unions

Rob Colvile: Here’s how to show that the Left doesn’t have a monopoly on compassion

Robert Colvile is Director of the Centre for Policy Studies. His new report ‘Popular Capitalism’ is published today and available at cps.org.uk.

“Like most of the rest of the Left, much of Labour seeks to delegitimise the Conservatives altogether – in other words, rob them of their right to be heard by suggesting that they are beyond the ethical pale.”

I was struck when I read those words by Paul Goodman on ConservativeHome this week – because they were almost identical to ones I had just written:

“Many on the Left appear to believe – and are eager to tell the world – that they have a monopoly not just on compassion, but basic humanity. To be a conservative, in their view, is simultaneously illegitimate and inhumane. It is to hate the poor and love the rich, to put profits above people, to be wrong not just on the facts, but in your heart. And the same is true of being a capitalist.”

That section comes from the introduction to a new essay, published today by the Centre for Policy Studies, called Popular Capitalism. It is my attempt to explain why support for the free market is not just pragmatic, on the grounds that it is the best tool we have yet found to create and share prosperity, but deeply moral – because it trusts people enough to give them more control of their own lives.

Thinking about this, it struck me that arguably the best path to convincing people of the merits of capitalism is to extent Vote Leave’s famous slogan – “Take Back Control” – to the domestic agenda. For politicians to make it clear that their priority is to promote ownership and opportunity, enterprise and aspiration.

The essay, of course, suggests concrete ways of doing this, based on our policy programme at the Centre for Policy Studies. We suggest raising the National Insurance threshold so that everyone gets the first £1,000 a month they earn tax-free; addressing public concerns over the fairness of the welfare system by ensuring that it treats you more kindly if you have proved worthy of trust; addressing the ownership crisis that scars our society by incentivising landlords to sell to tenants, and providing those tenants with the core of a deposit; and freeing small businesses from the burden of tax and administration by offering them the chance of paying a simple levy on turnover.

All of these policies are fully developed, fully tested and – according to our research – extremely popular. But they also say something very profound: that the politicians adopting them really are concerned about the many rather than the few.

One of the most alarming things about the current Labour leadership – aside from its attempt to elevate “Never kissed a Tory” into a principle of moral supremacy – is how adroitly it has stolen its enemies’ clothes. Popular capitalism, in its original form, was a brilliant Thatcher-era coinage, reflecting both the desire to widen participation in the economy (by giving people homes to own and shares to buy), and to make capitalism popular by proving that people could benefit from it.

Today, Labour talk relentlessly about ownership. But where Thatcher told people (rightly) that militant trade unions were preventing them from having the freedom to live good lives, John McDonnell tells people (wrongly) that “the Tories” and “the bosses” are doing the same.

Labour is selling its renationalisation plans, for example, as being about taking from “the shareholders” and giving to the people. To the many, from the few.

Of course, the devil is very firmly in the detail. Labour’s plans for employee ownership of companies, for example, turn out to involve a massive tax grab by the state – and a blocking vote for trade unions on corporate boards.

Or take the nationalised industries. These, Labour argue, should be run by a harmonious alliance of customers, workers (represented via their union leaders), the community (represented via council placemen or Left-wing activists), and the wise hand of government.

But what happens when these interests collide? What happens when the unions want a pay rise that is against the interests of the customers?

And what happens when the customer is dissatisfied? Under a nationalised system, they cannot take their money elsewhere. They have lost control in a fundamental way.

The moral of this story is that competition – in both public and private services – is not just good, but essential. Example after example shows that the key to driving up performance is to put power in the hands of customers and consumers. Because no matter how much you venerate doctors and nurses and teachers, the brutal fact is that any organisation run by human beings will – without a corrective mechanism – come to be run for the convenience of those self-same human beings.

In the two years since I took over the Centre for Policy Studies – the think tank founded by Keith Joseph and Margaret Thatcher – I keep coming back to those original speeches and pamphlets that set the Thatcherite agenda. And one of the most striking things is the moral streak that runs through them – especially through the speeches of Thatcher herself.

So often, she grounds her remarks in a point of moral principle, proceeding outwards to apply that principle to the political environment.

It is a style of rhetoric that sounds utterly alien to modern ears. But one of its main effects was that people very certainly knew who and what she was for. As she told her first party conference as leader: ““Policies and programmes should not be just a list of unrelated items. They are part of a total vision of the kind of life we want for our country.”

It is impossible to overstate the difficulties faced by Thatcher and those around her as they wrested the British economy on to a better course in the 1980s. The fact that Britain has a private sector that basically works, that it has millions more people in employment, that inflation has been tamed, that our lives are not disrupted by strike after strike, that we can afford to pay for our public services – all of these are ultimately down to the reforms she pioneered.

Yet in retrospect, it is clear that the reformers of those days had one under- appreciated advantage. If they wanted to show why they were right, they could simply say: “Look around you.” Their radical diagnosis of Britain’s problems could only be implemented because voters had lost all patience with the alternative.

Today, a free-marketeer invoking that phrase might seem, to harsher critics, more like Ozymandias, inviting those admiring his statue to survey what amounts to ruins. Or, to put it more prosaically, if people today see our society as capitalist, then they see the problems with it as the product of capitalism.

This is why defenders of capitalism cannot be satisfied with the status quo. They need to show how they can make people’s lives better – to accept that their problems are real, rather than telling them that they may not own a home, but at least they have an iPhone.

Arthur Brooks, the outgoing president of the American Enterprise Institute, has a beautiful way of challenging his fellow conservatives on this issue. Why, he asks, do you get up in the morning? Is it to entrench the power and wealth of those who already have power and wealth? Or is it to expand the power and wealth of those who do not have them?

If it is the former, he says, you are doing evil. If it is the latter, you are doing good.

All conservatives, in other words, need to dedicate themselves to giving people opportunity. To giving them ownership. To giving them control.

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

Neil O’Brien: Corbynomics – and why it means that your house, business and savings don’t really belong to you,

Neil O’Brien is MP for Market Harborough.

What is Corbynomics? It goes without saying that it’s a much more extreme economic programme than Labour have ever had before. And that government will spend, tax and borrow more. But Labour have a lot more damaging, half-baked and dangerous ideas.

No-one is thinking about them at the moment, but the scary thing is that within weeks these ideas could be affecting your house, your pension and your job.

For me, the most frustrating thing is that Labour have identified various important issues, but their proposed “solutions” would make matters worse. Let’s look at a couple of examples.

Seizing 10 per cent of all large companies’ shares

Lots of people, including me, worry that current corporate structures create pressures that make managers behave in a short-termist way, squeezing investment to hit short term profit targets and dragging down productivity growth. I’m concerned that publicly quoted firms are beholden to increasingly transient shareholders, interested in immediate returns. They certainly invest far less than privately owned firms who can take a longer-term view.

But my answer to this would be to change the tax treatment of investment, and increase capital allowances so that there’s no disincentive to invest.

Labour’s answer, in contrast, is to forcibly transfer 10 per cent of all companies shares to create a sort of employee-ownership-at-gunpoint.

This is a terrible idea, which would make investment into the UK dry up overnight. After all, if government can steal ten per cent of your shares, what’s to stop them coming back for the rest? Labour protest that the shares are not being stolen – just given to the workers. But that’s a lie, as they also propose that a Labour-run Treasury would take the great majority of the dividends that those shares attract. At the moment, these are owned by savings and pension funds – so the money is ultimately coming out of your pocket.

The total value of the shares stolen by government would be around £300 billion, according to the Financial Times. For comparison, raising the basic rate of tax by one per cent raises £4.5 billion a year, so you can see what a vast tax grab this would be.

Forcing people to sell their properties at a price set by government, and control rents

There are major issues about the balance of rented and owner-occupied property in Britain. We had a long period when the number of properties being moved into the rent-to-buy sector was outstripping the number built, meaning owner occupation fell dramatically. Between 1996 and 2016, the home ownership rate among middle income people aged 25-34 fell from 65 per cent to 27 per cent.

However, in 2015 the Conservative Government reformed the tax treatment of rent to buy and second homes, and in the years since we have seen homeownership rebounding upwards, with both ownership and the rented sector growing in a more balanced way. There are lots more things we could do to grow home ownership.

Corbynista Labour doesn’t really believe in home ownership. They are nostalgic for the world of the 1970s, where around two thirds of households in places like Islington lived in social housing. But they know ownership is popular.
So they have announced the “private sector right to buy”. This will give private tenants the right to make their landlords sell their properties to them at a discount.

In an interview last week, John McDonnell made it clear that government would set the price: “You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy,” he said. “You (the government) set the criteria. I don’t think it’s complicated.”

It’s not complicated. But it is deeply unfair. It would be a retrospective raid on people’s assets. People, including some who are not so rich, have invested in property under certain rules, and would have their savings ripped off them, while other people who invested their money in other things would not. This is arbitrary and unreasonable and would I’m sure be challenged in the courts.

Labour would also set rental prices, promising in a recent document that “There should be a cap on annual permissible rent increases, at no more than the rate of wage inflation or consumer price inflation (whichever is lower).”

This is unworkable or will lead to under investment in rented properties. Why spend lots doing up a flat if you can’t charge more for an improved property? We would quickly be heading back to the 1970s, when there wasn’t enough rented accommodation to go round, and conditions were squalid because of rent controls.

Sectoral wage bargaining

With the National Living Wage, the Conservatives have introduced one of the highest minimum wages in the world. For the lowest paid, the National Living Wage plus the cuts in taxes for lower paid people mean that they take home £4,500 more than they did under the last Labour Government – while employment has soared to a record high. We should be really proud of our record.

However, the National Living Wage is still set by an independent body, and as percentage of average pay in the market, so there is a sensible link to what businesses can afford without sacking people.

In contrast, under Labour politicians would just set rates directly. Labour have also pledged to “roll out sectoral collective bargaining”. Labour said it would “fix the going rate” in each industry and “set fair conditions” for the sector. This would represent an end to the system whereby unions negotiate company by company and, instead, give them power effectively to set national standards on pay and conditions. A new government unit would work with unions to bring firms into line.

This means that if politicians or trade unions decide your business is part of a particular “sector” (a pretty subjective question) then you would be in line for a change in wages which your business might simply be unable to afford. The scope for union bullying and endless court cases and demarcation disputes is obvious. In the car industry, wages are high, so a sectoral wage would be high. If I make plastic bits for the car industry but also other industries, is my business in or out of the automotive sector?

Rebecca Long Bailey has also said that “Labour will also legislate to reduce pay inequality by introducing an Excessive Pay Levy on companies with staff on very high pay.” There is no detail on what the rules will be, but the idea of having wages directly controlled by Jeremy Corbyn is likely to deter inward investment.

What do these ideas have in common?

When New Labour left office, a million people had been thrown on the dole, we’d had the deepest recession since the second world war and government was borrowing more than at any time in our whole peacetime history. In the final year alone, they borrowed £7,900 for every family in Britain.

And that was New Labour. Imaging what the country would look like after Corbyn and McDonnell.

Where Corbyn’s ideas really differ from previous Labour leaders is that he doesn’t really believe in the rule of law. Your house, your business, your savings: all these things don’t really belong to you, in Corbyn’s eyes: you have them only as long as the government suffers you to have them, and they can be retrospectively taken away if he sees fit. In the week Robert Mugabe died, we’ve seen underlined just how important the rule of law is. But under Corbynomics, it would be the first casualty.

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

Alan Mak: Conservatism 4.0 – We must ensure that no-one is left behind by the Fourth Industrial Revolution

Alan Mak is MP for Havant and Founding Chairman of the All-Party Parliamentary Group on the Fourth Industrial Revolution.

Stanley Baldwin said the Conservative Party stood for “real England” – a Party defined by voluntary organisations and Christian patriotism, little platoons and big national causes.

His Conservative Party of the 1920s faced an upstart opposition in a Labour Party that had usurped the Liberals to become the second party of British politics. Outlining the growing threat from Labour, Baldwin described them as being for a nation of class divisions and over-mighty trade unions.

Under Jeremy Corbyn, Labour has come full circle and is once again challenging the success and legitimacy of our free-market economy.

A century on from Baldwin, and despite being the natural party of government, our Party has often struggled to break out from its vote base of shire counties and market towns. It’s over 30 years since we won a majority of over 21 at a general election.

But there are signs of change. Our electoral success in recent years has been driven by securing more votes in Labour’s industrial heartlands. Dudley, Mansfield, Copeland and Teesside have all elected Conservatives in recent years, whilst the West Midlands and Tees Valley have elected Conservative Mayors on a region-wide basis.

This Conservative momentum in areas once dominated by trade unions and the Old Left shows that our message of hope, personal freedom and low taxation can re-define our path to a majority.

Yet our progress in these Labour heartlands is not concrete and shouldn’t be taken for granted. A pro-Leave electorate that has trusted another party for so long will be looking to the Conservatives to not only deliver Brexit, but ensure they are not left behind by the next big technological revolution either. As I said in yesterday’s article, this commitment must be a central tenant of Conservatism 4.0 – Conservative ideology for the Fourth Industrial Revolution [4IR].

The last time our country went through a technological revolution we had a strong leader with a firm ideology. The computing revolution of the 1980s powered Britain to economic success – and political success for Thatcherism. Through deregulation and an unwavering belief in the free market, the City of London prospered from the Big Bang, and our economy was transformed into a services-based powerhouse. From the stuttering, strike-crippled, state-dominated closed market that Thatcher inherited, the foundations were laid for rapid economic growth and the business-friendly, pro-innovation environment we enjoy today.

Our next Leader will also find themselves at an inflection point. They will have to harness the Fourth Industrial Revolution (4IR) as artificial intelligence, big data and automation change our economy and society beyond recognition – and ensure that every community and region benefits from the wealth that it creates. Whilst Margaret Thatcher’s transformation of Britain’s economy for the better is undeniable, there are mining and industrial communities who felt they were left behind as other parts of the country raced ahead. To win a majority at future elections, today’s Conservatives need to attract working class and northern votes, so we cannot allow the positive impact of the 4IR to be absent from any region or for its benefits to be inaccessible to any social group.

The 4IR will radically change how we work, regardless of sector or industry. Instead of dockers and miners being at risk of automation, in the near future it will be call centre operators, lorry drivers and factory workers. With a path to electoral victory that increasingly runs through industrial towns, every factory closure or job lost to robots without alternatives emerging, will make a majority harder to achieve for our next leader.

That’s the reason why, whilst we still have an opportunity to shape the 4IR, our policies must be focussed on creating an Opportunity Society centred around social mobility powered by lifelong learning, high-quality education and skills training for everyone at every stage of their lives. Our Opportunity Society must be more than just a short-term policy objective. It has to be an integral part of the future of capitalism and a key part of Conservatism 4.0.

As robots slowly replace human workers, many on the radical-left are arguing for a Universal Basic Income (UBI), a minimum wage paid by the Government to every citizen regardless of their productive capacity. Every single country that has trialled UBI – from Kenya to Finland – has found it expensive and ineffective. Research by the International Labour Office has estimated that average costs would be equivalent to 20-30 per cent of GDP in most countries. In Britain, this would be more than double the annual budget of the NHS, yet John McDonell says a Corbyn-led Labour Govnement would trial it. These are just two of the reasons why we Conservatives should reject UBI as the solution to growing automation in the 4IR.

The truth is work has always paid, and work for humans will always exist. Work drives our economy, multiplies and makes the world richer. It takes people out of poverty and gives them purpose, and this will continue to be the case in the 4IR. In fact, many more new jobs are likely to be created than are lost to robots because the technology of the 4IR will drive economic growth, which in turn will create new and more interesting jobs, especially in new tech sectors such as advanced manufacturing, 3D printing, precision medicines and AI-powered creative industries.

Not enough is made of our job creation miracle since 2010, which has seen our economy put on three million new jobs. As we enjoy the lowest unemployment rates since the 1970s, we need to re-emphasise the value of work and the benefits to be derived from a good job. A UBI would be defeatist, signifying that humans had ceased to be useful in a world of machines, and be the antithesis of social mobility – there would be no need to work hard to move upwards on the income and living standards scale if we are all paid to stay at the same level. A UBI would also stall our economy through either crippling debt on the public purse or new taxes imposed on innovation. Similarly, Jeremy Corbyn’s proposed Robot Tax would simply mean a left behind country – a nation that fails to attract foreign investment and which becomes known for its anti-innovation approach to technology.

Instead, true devolution must be at the heart of delivering an Opportunity Society and making sure no community or individual is left behind. Our next Prime Minister must invest in the Northern Powerhouse and Midlands Engine so regional economic growth is put in the hands of regional leaders. The benefits of the 4IR, from new start-ups to overseas investment, must be enjoyed beyond the “Golden Triangle” of London, Oxford and Cambridge. As Juergen Maier who led the Government’s Made Smarter Review, argued, it’s about creating an “innovation climate” in regions such as the North.

We cannot expect the heavy industries of the past to return, but instead our focus should be on ensuring the new technologies of the future are exploited in every area of the country to create new jobs and rising skills levels in every community. The Liverpool City Region understand this, and have already taken the initiative. They have launched LCR 4.0, an ambitious plan to support manufacturing and advanced engineering organisations in the region by funding practical support to transform businesses through digital innovation. By helping traditional manufacturers upgrade their technology, they enable firms to stay in business and keep their workers employed by becoming more productive. Conservatism 4.0 should support more initiatives like this.

Moving towards a system of local business rates retention will also encourage further investment in skills and business support from local authorities as they reap the rewards of encouraging local growth. There should also be more scope for local taxation and decentralisation as a central tenet of Conservatism 4.0 to empower local areas to evaluate their workforces and set-up true long-term strategies for delivering local economic growth, building on the work of existing Local Enterprise Partnerships and new Local Industrial Strategies.

Conservatism has always evolved and must do so again as we enter a new technological age by putting social mobility and reginal devolution centre stage. They are the two key building blocks to ensuring that every community and region can benefit from technology-driven economic growth. While Thatcherism delivered for the Third Industrial Revolution, we need a new brand of Conservatism to build an Opportunity Society for the Fourth. My final article in this series, published tomorrow, will set out the four principles that should guide us as we re-calibrate Conservatism in the Fourth Industrial Revolution.

This article is the second in a three-part series explaining why adapting to a society and economy shaped by technology is key.

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