29 December 2018

Best of 2018: Britain doesn’t need a centrist party, it needs a liberal one


This week CapX is republishing some of our favourite articles of the year. This piece first appeared on June 21.

A lot has been written about Britain’s alleged need for a new centrist party. Britain needs no such thing. Most of what passes for “centrism” these days is not a political position, but simply the belief that equivocating, and using phrases like “I think you’ll find it’s a bit more complicated than that”, are signals of supreme cleverness.

Forget centrism. The irony is that Britain, which was once the motherland of classical liberalism, and a magnet for liberal-minded thinkers from around the world, does not have a liberal party today. For a while, Thatcherism was a close-enough substitute, but for the Conservatives, Thatcherism was just a brief aberration, which they have long ditched. The party now stands for a mix of micro-interventionism à la Ed Miliband, industrial policy à la Mariana Mazzucato, anti-big-business communitarianism à la Nick Timothy or Tim Montgomerie, and NIMBYism à la Campaign to Protect Rural England.

Labour, meanwhile, have ditched the Third Way, a form of social democracy which makes its peace with the market economy, and now embraces full-on Chavista socialism. The Liberal Democrats are, at best, “liberal” in the American sense, and while UKIP briefly called itself a libertarian party, they have long given up any such pretences. And the Greens… well, the Greens are the Greens.

In short: all major British parties are now not just non-liberal, but actively anti-liberal. And yet – there still is a liberal constituency in Britain. Two years ago, the Social Market Foundation
(SMF) and Opinium published an analysis in which they split the British electorate into eight clusters or political tribes, defined by their core values and the key policies they support.

Two of those groups (dubbed the “Free Liberals” and “New Britain”) clearly had a free-market liberal outlook, with some differences in emphasis and cultural outlook. Taken together, they account for about 13 per cent of the electorate, with some of their ideas potentially appealing to other tribes as well. These 13 per cent are currently politically homeless.

Note, I am not asking for a party of libertarian purism. A rough equivalent of Germany’s Free Democratic Party (FDP) would suffice. The FDP is not radical; if a party like that existed here, I would probably be the first to slag them off as unprincipled wets, compromisers and sell-outs. But at least the FDP has recognisable liberal principles that it can betray, distort, water down and trample on. That is more than can be said for any British party at the moment.

What could a “British FDP”, a Liberal Party of Great Britain, stand for?

On housing, it could advocate a radical liberalisation of the land use planning system, which, as plenty of solid empirical evidence shows, is the root cause of Britain’s housing crisis. It would
advocate rolling back greenbelt protection, or, better still, abolishing the very concept of the green belt and replacing it with a smarter, more selective system of land conservation. It would also advocate a relaxation of height and density restrictions.

It would stand for political decentralisation, local and regional autonomy, policy variation and policy experimentation. The UK is one of the most centralised countries in the world, with about 95 per cent of tax revenue accruing to central government, compared to 70 per cent or less in the USA, Canada, Germany and Switzerland. Local and devolved governments in the UK do not raise much of their own money.

They mainly spend money that is allocated to them by Whitehall. Thus, they are not accountable to their local taxpayers, but to the national government departments they get their money from.  There can be no meaningful local autonomy in such a system. A proper Liberal Party would stand for a major transfer of tax-raising powers to the local and regional level, accompanied by a decentralisation of political power.

Brexit could be a tricky issue for such a party, because the SMF/Opinium data shows the liberal tribes are split when it comes to Europe. However, in my experience, pragmatic Remainers and liberal Leavers are not that far apart in practice. Pragmatic Remainers are fond of the Single Market, but they are not wedded to the EU per se, and quite critical of the Customs Union.

Liberal Leavers, meanwhile, are not particularly bothered about free movement. For them, Brexit is about liberalising the British economy, and freer trade with the rest of the world. So they probably could agree on a form of Brexit which seeks to keep the UK in or close to the Single Market – perhaps via EFTA membership and a Norway- or Swiss-style trade agreement – whilst leaving the Customs Union.

They would also seek to replace the Common Agricultural Policy and the Common Fisheries Policy with more market-based alternatives. A Liberal Party of Great Britain would seek to simplify the tax system and the welfare system. For example, all property-related taxes – Council Tax, Stamp Duty, Capital Gains Tax and Inheritance Tax on housing – could be replaced with a Land Value Tax (LVT). Income Tax and National Insurance could be merged.

Universal Credit could be replaced with a Negative Income Tax (NIT) in order to minimise “fiscal churn”, which is what happens when people receive income transfers whilst also paying direct taxes. With a NIT, you would do one or the other, never both at the same time. The party would be relaxed about the profit motive in education and healthcare, allowing for-profit free schools and completing the NHS’s internal market.

It would not be an open borders party, but it would oppose the most economically illiterate restrictions on immigration. It would advocate an abolition of visa caps for skilled workers, as well as a ditching of the net migration target. It would roll out the red carpet for overseas students.

In the campus culture wars, the party would stand firmly on the free speech side, but otherwise it would avoid taking sides on cultural matters. It would stand for a general live-and-let-live attitude, rather than promoting particular cultural values. It would oppose nanny state intrusions into personal lifestyle choices, such as the sugar tax.

Whether such a party could cut through existing tribal political allegiances, and navigate the perils of a First Past The Post system, I have no idea. The Real World, and especially the grubby world of party politics, is not for me; I prefer the world of abstract ideas, and the think tank ivory tower. But there can be no doubt that there is a liberalism-shaped gap in the political market.

Read Liberal Reform board member Andy Briggs’ response to Kristian’s piece here.

Kristian Niemietz is Head of Health and Welfare at the IEA.