25 February 2015

Am I right wing?


I believe in an English parliament and leaving the European Union so that Britain can become a self-governing nation once again. I support the expansion of existing grammar schools and the decentralisation of public sector pay. I advocate a greater private sector role in the delivery of healthcare and more privately-run prisons. I think the total tax burden is high enough but I’d spend more on defence. A lot more. I would scrap the Climate Change Act and wait until clean technologies have matured before implementing them. I oppose euthanasia and would cut the time limit for abortions to 12 weeks. I want MPs to meet less often and to legislate less. I hate job quotas and positive discrimination. I prefer the collective known as a free society to the welfare state. It provides better, more personalised and cheaper care. I’d like employers to have the same freedoms to hire and fire as David Cameron and Ed Miliband have with their own frontbenchers. Well – nearly as much. I am what most people would regard as right-of-centre but in recent times I’ve been accused of being a wet. A lefty. A big government conservative.

My friends at the Institute of Economic Affairs even seem to think I’ve become a useful idiot of the Labour party – reinforcing the Left’s false attacks on Conservatives. Apparently it’s a nonsense that Tories are anti-government. The IEA-ites should have a look at their own press release archive. If, 90% of the time (and it’s probably more than 90% of the time), you only talk about cutting taxes, slashing regulations and generally bemoan the ills of government, you shouldn’t be surprised if people start believing that you don’t like the public sector very much or think that government is a bad thing. In a country where 62% believe that government should do more, that’s a dangerous position to hold.

Since Stephan Shakespeare and I launched The Good Right last week, the criticism from some on the right has grown and I can understand why. Our draft 12 point manifesto was definitely intended to be provocative and it included some ideas associated with the Left. Those ideas included a bigger role for the State in building affordable houses; a progressive consumption tax aimed at luxury goods; and inflation-beating increases in the minimum wage. Perhaps you would allow me to answer those criticisms by asking that we all take a step back and look at some bigger picture arguments.

Better to have a nanny state than a big state

Many small statists hate what is popularly referred to as the nanny state. They hate the way that the state seeks to interfere in our lives by discouraging us from smoking or eating too much or drinking to excess. I have to say that I have no principled objection to the nanny state. My only concern is whether nannying works or not. If it works I’m not just in favour of it, I’m enthusiastic about it. I’m all for state interventions that produce more independent and socially-useful citizens. If we can stop marriages breaking down by investing in marriage preparation and relationship counselling programmes, we should have more such programmes. Every single parent household is a lot more expensive to taxpayers than an intact household – we all know some single parents who succeed brilliantly, but against the odds. And if we can stop people eating too much or smoking too much we might be able to keep the NHS budget within sensible limits. Nannying is, of course, the wrong word for this interventionism. It’s a pejorative word chosen by its critics. A fairer, more accurate description for the nanny state is the preventative state. Early, focused, empirically-evaluated interventions should save the taxpayer a lot of money in the long-run. The biggest “nannying” we undertake is, after all, compulsory state education. Nearly all of us believe that education is an essential way of producing citizens who can get a job and provide for themselves and their loved ones. We are right to believe that.

You can’t sustainably cut the supply of government without reducing the demand

Let me try another way of making the case for the nanny or preventative state: the traditional focus of libertarians (and many on the Right) has been on cutting the supply of government. Many conservatives spend a lot of intellectual and political energy trying to find ways of cutting the size of the state without causing political or social pain. This might be possible in times of fiscal crisis – because of economic necessity – but in economic peacetime the public will not usually vote for cuts in state services until they are convinced that those services are no longer needed. Voters may share libertarian and conservative unhappiness at the performance of state welfare but they will support its continuation until there are either fewer needy people or until vulnerable people can call upon superior sources of care.

The only sustainable way of cutting the size of government is to look at the other side of the supply/ demand equation and focus on reducing the calls upon government. Reduce the demand for state services and the supply problem takes care of itself.  Build more independent citizens – by helping them to be nurtured by stronger families; helping them acquire the academic, vocational or hybrid skills necessary to be gainfully employed; helping them to become drug-free – and you find that the big state problem starts to take care of itself. The road to social justice and a smaller state are the same if conservatives move more people into work, reduce family breakdown, tackle addiction and reduce rates of reoffending – as Welfare Secretary, Iain Duncan Smith is doing with the initially expensive Work Programme and the Lord Chancellor Chris Grayling is attempting to do with his prison-based rehabilitation programmes.

Our support for greater state housebuilding stems from this same “reduce the demand for government” thinking. The state is already heavily involved in the housing market but it’s involved downstream – spending more than £20 billion (and rising) to private landlords to house people who can’t afford to pay their own rents or mortgages. If the state intervened upstream and built more houses it could reduce this housing benefit bill in the years to come. It could actually start to make a tidy profit for taxpayers given the increase in the price of land when it is converted from, say, farmland to housing. Government might not need to build houses directly – the model might be Ebbsfleet where taxpayers are underwriting the infrastructure for a new town. What is most important for Right-wing fundamentalists to consider, however, is that the choice isn’t intervention or non-intervention. The real world choice is between wise intervention (build houses now and make a profit from the Right-to-Buy in the years to come) versus everlasting intervention (pay private landlords ever greater sums and fail to address the collapse in housebuilding that is causing the problem in the first place).

We estimate – by the way – that for £2 billion to £3 billion of extra borrowing per year we could build about 500,000 houses. The social benefits of this could be enormous. It will also pay for itself.

Helping industry by investing in infrastructure rather than subsidising poverty pay

Another intervention recommended by The Good Right is a higher minimum wage. This, too, is seen by some of our critics as dangerous State intervention in the labour market. It is intervention and it would be dangerous if it wasn’t overseen by an institution like the Low Pay Commission. The LPC includes business and labour representatives and sets the annual minimum wage at a judicious level each year. This set-up helps explain why the unemployment that some feared would result from a minimum wage, when Labour first promised it in 1997, never materialised. During the recession of recent years the Commission let the minimum wage fall in real terms. Government should now make it clear that it should start to rise above inflation until there is evidence that it is costing jobs. This is the right balance: political direction from ministers to tackle the problem of taxpayers subsidising low pay but the empowerment of the LPC with a brake to reverse policy if it finds clear evidence that the policy is working against the unemployed.

Government is already involved in the labour market – subsidising “poverty pay”. Given that it would be much better if government wasn’t subsidising pay it is worth pushing the private sector towards investing more in their workers. They might find – as Living Wage employers testify – that a better-paid staff is a happier and more reliable staff. They then might have the confidence to invest more in their skills and begin to address Britain’s inadequate productivity levels. Ideally Britain would move towards a much more flexible minimum wage – one that took account of different geographies and sectors. But that’s a topic for another day.

If we could reduce taxpayer subsidy of low pay we could achieve the greater goal: a State focused on spending money on infrastructure, science and long-term research. If we weren’t subsidising already above average income pensioners we could reduce the tax burden on families of working age.

Better to tax £55,000 handbags and £2 million homes than the average person’s income

Bill Gates has made the case for a more progressive consumption tax. He made the case in an online review of Thomas Piketty’s now infamous book on inequality. Do the same people who accuse me of being an anti-capitalist lefty want to say the same of the world’s most admired man, a philanthropic capitalist?  The fact is we can tax ocean-going yachts, £55,000 crocodile handbags, Ferraris and the purchase of expensive homes, or we can tax the person earning the minimum hourly wage of £6.50. Britain can’t afford a higher tax burden overall if it is to remain globally competitive, but given some of the (disputed) trends in inequality, it is vital that Conservatives and capitalists don’t appear more worried about the tax burden on crocodile handbags than on people earning the minimum wage. Higher taxation of luxury goods may not bring in huge amounts of extra revenue but can Conservatives look the woman – who is cleaning offices at 6am in the morning – in the eye and say they’ve done everything they possibly can to minimise her tax burden if they haven’t even explored progressive consumption taxes?

Time to leave the trenches 

The Tories haven’t won a majority in the House of Commons since 1992. They’re unlikely to win the next one either – despite a booming economy and despite the unpopularity of Ed Miliband. The reasons are pretty straightforward. The party has never ditched its “party of the rich” problem that grew up during the “Loadsamoney” era of the 1980s; that worsened when Tory MPs came to be seen as sleazy in the 1990s; and which has only worsened during the last five years (according to new polling.

Tories need to climb out of trenches dug in 1979 – in an era before the internet, before the Berlin Wall came down, before globalisation and before the full collapse of the working class family was apparent. Fighting for inches of the political terrain isn’t enough. The party needs to make bold moves to prove to voters that it believes in home ownership for everyone, fairer taxes and higher pay for the low-waged. For all the reasons I’ve given I think the bold moves proposed by The Good Right are not alien to conservative philosophy but a return to the best of conservatism. Fortunately, the road to greater home ownership, more independent citizens and to social justice is also the road to a smaller state, but that smaller state is the culmination of the process, rather than the initiator of it. Crucially, policymakers have to focus on building homes, rebalancing the tax system and tackling poverty pay first – the smaller state will then follow naturally.

Tim Montgomerie is a columnist for the The Times, a Senior Fellow at Legatum Institute and co-founder of the new website The Good Right.