For decades, British Tories knew what it meant to be a Conservative on economics. You supported a growth strategy built on low taxes, a smaller state, deregulation and attracting foreign investment. Now, Tory MPs are wondering if they missed a memo.
One of the party’s smarter young MPs, Bim Afolami, speaks for many: “We need to be clear what and who we are for and show how timeless Conservative principles apply to our new age.”
But what are those timeless principles? All see the need for pragmatism in the teeth of a crisis but the Tories look economically unmoored. Are they for fiscal discipline? Not judging by the howls that followed the floating of Treasury ideas for tax rises. Low taxes and a smaller state, then? Opinion is divided. Boris Johnson, the prime minister, says austerity is over and a large part of his electoral base agrees.
Even state aid and competition policy are uncertain. If the Brexit trade deal founders it will probably be over the prime minister’s insistence on a loose state aid regime that gives him powers to subsidise favoured industries.
The government is willing to cut its access to its largest market but nervous of the compromises necessary to find new ones. That trade-off means a no-deal Brexit and the reduced spending and regulatory standards necessary to be a buccaneering low-tax state that attracts investment and secures a trade deal with the US. It is a course urged on Mr Johnson by many close to him. But here, too, Tories — rightly — fear the economic and political costs.
Mr Johnson has one major idea — a good one: the so-called levelling-up agenda to rebalance the economy through investment in infrastructure and skills. Aside from its political merits, raising prosperity in the country’s poorer parts should aid growth, and end the lumpiness of British productivity.
This leg of the Tory economic agenda is unequivocally right. But even here, those who have worked on the plan say it is far from fleshed out and too piecemeal. “No one really knows what it means. It needs a blueprint and clear definition,” says one.
In any case, it alone cannot drive the level of growth necessary to fund all the government’s imperatives. The UK is not an autarky. The agenda cannot succeed outside a macroeconomic and investment framework in which the newly rebalanced regions can thrive. The worry is that this is not so much one leg of the strategy, but the only one.
From where, then, will the growth come, especially as Brexit delivers an economic hit? When Margaret Thatcher refashioned the UK economy from manufacturing to services, the foundations were lower taxes, deregulation and the trading benefits of EU membership. The pillars of Mr Johnson’s reshaping are less apparent.
Rishi Sunak, the chancellor, is now in the uncomfortable position of defending Tory economic orthodoxy against MPs who, under a “have cake and eat it” leader, have lost their appetite for hard choices. One who knows the Treasury well even wonders if Mr Sunak will be forced to abandon the promised multiyear spending review.
So unless the Tories are suddenly the party of permanently living beyond their means, a broader strategy is essential. Too many cling to the levelling-up agenda as an instant growth miracle that will spare them difficult decisions.
And Mr Johnson travels light, disliking rules and orthodoxies that tie him down. If there is such a thing as Johnsonism, it is his belief in his own instincts.
In his close circle there is a battle for his ear and the lack of clarity reflects his own failure to choose sides. For all its flaws, the Brexit buccaneer strategy may win out by dint of being the only one on the table.
Which is why some Tories are comfortable with pragmatic Johnsonian vaguery. One senior Tory says: “There is no plan on tax, or on trade, and if there is no plan I’d rather they did not invent one just so they can say there is. Better no plan than a crap plan.”
But this is not sustainable. Without a coherent strategy for growth, the economy and the levelling-up agenda will founder and so will the party. It is easier to sell unpopular decisions — tax rises, spending cuts or deregulation — if they fit into a wider hierarchy of good ones.
Brexit junked an entire economic strategy and, even before Covid-19, there was not another to take its place. If, post-crisis, it is not a return to Tory orthodoxy and not quite the buccaneering Brexit, then what is it?
Mr Johnson has a big idea but it is not a magic bullet. The government is pursuing a one-legged economic strategy and there is no political memoir called The Audacity of Hop.