Theresa May Must Not Forget The Tories’ Fiscal Roots

“We reject the cult of selfish individualism,” declared last week’s Conservative manifesto. “We see rigid dogma and ideology not just as needless but dangerous”. Theresa May styles herself as a “strong and stable” female Prime Minister. Yet during this manifesto launch, she downplayed comparisons with Margaret Thatcher.

“There is no such thing as society,” is one of the best-known aphorisms of the 1980s. “You turn if you want to – the lady is not for turning,” is another of Thatcher’s most quoted quips. The statements at the start of this column – presented as May’s “philosophy” – seem designed to rebut two of Thatcher’s trademark phrases.

“Margaret Thatcher was a Conservative, I am a Conservative,” replied May somewhat testily, when asked if she was Thatcherite. But she made clear her government would not “drift off to the right”.

This manifesto distances May from David Cameron. The previous government’s “triple-lock” on pensions was replaced with a more sensible “double-lock”, while giving the Tories more flexibility on tax. Coded anti-Cameron rhetoric also lauded “efforts and talents” rather than “who your parents are and what schools you attend”.

The main purpose of May’s “offer”, though, was to march the Tories purposefully towards the centre ground, deep into Labour territory. So, May now backs workers’ representatives on company boards and a higher minimum wage. The Tories, it seems, are all for energy price caps and improved employee rights the Trades’ Union Congress describe as “promising”.

Such measures, when chiselled into a limestone plinth for Ed Miliband, were dubbed the “the heaviest suicide note in history”. May’s popularity, and the Tories’ reputation for economic competence, mean near identical policies will deliver an even bigger electoral win.

Almost fifteen years ago, May warned Conservatives they were seen as “the nasty party” – words that still seem to haunt her. As the Tories eye multiple seats across the North West and Wales, the Midlands and Scotland, parts of Britain where “Thatcher” remains a swear word, May is trying desperately to detoxify the Tory brand.

Ahead of June 8th, this fresh raft of Conservative policies, and other party manifestos, will be intensely studied and critiqued. The Tories’ bold move on social care – including the family home in any means-test – and renewed immigration target – still in the “tens of thousands” – will no doubt generate much heated discussion.

Yet while individual policies impact particular people, and plenty of them, it’s “the economy, stupid, that remains of paramount concern. The living standards and well-being of the vast majority of people across the UK over the coming five years depend less on the advent or otherwise of various manifesto pledges than the trajectory of UK growth – which, in turn, hinges on Britain not making a mess of Brexit and avoiding an economic crash.

May called this election to win her own mandate and, given Labour’s disarray, a much bigger Commons majority. But she also needed to strengthen her hand ahead of two years of Brexit talks, both at home and abroad. The Tory manifesto sensibly reasserts that, during the Article 50 talks, the UK wants “fair, orderly negotiations, minimizing disruption and giving as much certainty as possible – so both sides benefit”. It also insists on the need to “agree the terms of our future partnership alongside our withdrawal”, highlighting that the EU is wrong to demand any “divorce bill” upfront.

When it comes to such cash, the Tory are pledging to “determine a fair settlement of the UK’s rights and obligations as a departing member state” – words some claim are a multi-billion pound concession. I’m not so sure. Under the law, the UK owes nothing. And, while I think we will end up making a substantial Brussels payment, the emphasis on “rights and obligations” suggests London’s initial “determination” could be extremely low, or even negative.

Yet the most important Brexit-related words were these: “As we leave the European Union, we will no longer be members of the single market or customs union”. Once the Tories have won a majority with that in their manifesto, Parliamentary convention prevents the determined ultra-Remain lobby in the House of Lords from blocking these central pillars of Brexit. If they try, the Upper House, in its current form, will be writing a suicide note of its own.

In terms of the broader economy, May goes to the polls in reasonable shape. UK GDP grew 2.1pc last year and remains quite buoyant. In April, retail sales surged 4pc year-on-year. Manufacturing just hit a three-year high, amidst an export boom. A weaker pound, though, means inflation is rising – up at 2.7pc last month. Wage growth is sluggish, with UK productivity still far too low.

There are other economic dangers, too, contained in this manifesto. In 2010, a Tory-led coalition pledged to run a budget surplus within five years. By 2015, our annual deficit was still a massive 5.2pc of GDP. The Conservatives then said we’d see a surplus in 2020. This manifesto, with no explanation, extends that to “the middle of the next decade” – so 2025.

The UK last ran a budget surplus in 2001. Our national debt has since ballooned from 27pc to almost 90pc of GDP. Already, the government spends more on debt interest than on schools – and interest rates, currently stuck to the floor with printed money, are only going to rise.

Credibility is extremely hard won. It can be lost in a flash – sparking disaster. May is a smart politician, who knows how to win elections. But when it comes to fiscal policy, while reinventing her party, she mustn’t forget her Tory roots.

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