22 June 2017

David Willetts on Thatcher, Brexit and the generational divide


For almost 40 years, David Willetts has been at the heart of British politics and policy-making. As part of Margaret Thatcher’s Downing Street team, and as director of the Centre for Policy Studies (CapX’s parent organisation), he stoked the intellectual furnace of Thatcherism. Later, his book The Pinch popularised the argument that the young had lost out compared to the old – a divide that now dominates British politics.

Under David Cameron, he was in charge of science and universities – bringing in the tuition fees reforms that were so controversial at the recent election. And he now serves as executive chairman of the Resolution Foundation, the think tank that has put low pay at the top of the Westminster agenda.

In other words, the latest edition of our Free Exchange podcast is required listening for anyone with even a fragment of an interest in public policy. While recorded before the election, the topics it discusses could not be more appropriate today – from how to level the generational playing field to the curse of “early-years determinism”. We’ve picked out a few highlights from a wide-ranging conversation below the embedded audio, but it really is worth listening to the whole thing.

David Willetts on… the case for tuition fees (6 mins 30)

“I don’t believe that the growth of university has come to an end. We’ve already got 60 per cent of kids from affluent families going to university. We’ve only got 20 per cent of kids from poor families. If you want to make it possible for more people to go, you had to get rid of those number controls [which set a quota for the number of students on each course] – and the fees and loans model enabled us to do that.

“Higher education was underfunded. It was never a priority for public spending. And one of the ways students lost out is that universities weren’t properly funded to give them a proper education. As a result of the £9,000, the resource behind each student as gone up… I always said the test would be if this is overall in the interests of students. And I think it is. There are more students. There’s more money to educate them. And they’re paying back at a lower rate per month.”

David Willetts on… life under Thatcher (10 mins 30)

Working in the policy unit for Margaret Thatcher, we had a rule initiated by John Redwood – who was a fantastic boss to be working for – that we should spend at least a day a week outside London. I was doing Treasury and DHSS, so you’d go to sit in a benefit office, or visit a hospital, or talk to small businesses. For Thatcher herself, visiting any of those places, she’d get protests on the outside and fresh paint on the inside, and neither was a very good guide to what was going on. She really loved a salty note for her which just described ‘This is what I saw and this is what people were saying to me’”

David Willetts on… Thatcher’s moral compass (18 mins 20)

“I think sometimes people who claim to be supporters of Margaret Thatcher today don’t fully engage with the way her own thinking developed. Of course she was a free marketer, but also because she was a devout Christian she thought all of this market economy had to be set in a wider moral framework. When confronted with these problems – you’re just rewarding consumption and debt, it’s every man for himself and devil take the hindmost – she would immediately talk about the Parable of the Good Samaritan or the Parable of the Talents. For her it was clear that we were citizens with a duty to fellow citizens, which was something she took from the Bible.”

David Willetts on… Brexit and the single market (29 mins)

“In terms of understanding the vote, I think it was a coalition of the excluded – people who’d had a raw deal in the last 10 or 20 years, who even as the economy as a whole was growing, didn’t feel like they were participating in it – and the insulated, older voters who may be coming to the end of their working lives, but who had assets, owned a house with the mortgage paid off, where exactly what they were going do to earn a living over the next 20 years wasn’t a crucial concern.

“I’m pleased Brexit hasn’t played out in the way some of those lurid forecasts from George Osborne and the Treasury implied. But I am long-term concerned about it, yes.

“Remember – I was working for Margaret Thatcher when her great prize was the single market. I think participation in the single market has been one of the reasons the British economy has been transformed in the past 20 years. We’ve become part of the world’s single biggest free trade area, part of integrated supply chains of goods and components moving across the single market. So I think it is very high-risk leaving it, and I hope we can negotiate arrangements that ensure there is as much of a free flow of goods and services as possible.”

David Willetts on… the science/arts divide (31 mins 30)

“It is striking how many people we have to recruit from abroad because of the failings of our education system. I think one of the biggest failings is early specialisation. England is almost unique amongst advanced Western countries in expecting 16-year-olds to take a decision which is often to give up all sciences, or give up everything apart from sciences. No other country would regard that as a good way of educating people.”

David Willetts on… the young and the old (42 mins 30)

“The two main assets that people build up during their lives are housing wealth and pension wealth. And the evidence is overwhelming that the Baby Boomers are building up assets that the younger generation aren’t going to match.

“Then there’s pay and the labour market. We expect that every successive generation will have higher pay than the previous generation. You can draw different graphs of incomes and earnings, and on some of those the youngest generation are about the same as the one before. On other measures, going back 10 or 15 years, they’re actively worse off. But I haven’t seen any evidence that the big improvements that successive cohorts used to have are being repeated.”

David Willetts on… how to help the young (45 mins 30)

“The most fundamental thing to do is get more houses built. I’m an optimist. I think people are susceptible to appeals to the interest of future generations. In 2010, about 28 per cent of people agreed more houses should be built in their local area. By 2015, it had doubled…

“We’re not asking for something absurd. Britain used to be able to produce 300,000 houses a year. It is a national scandal that we’ve now been struggling to produce 150,000.”

David Willetts on… the case for optimism (49 mins 30)

“This is an unfashionable view, but if you think of the low point of the IMF bailout and the Winter of Discontent, I personally think that the trajectory of Britain since 1979 has been one of the more successful examples for a Western democracy. On average, we have delivered more economic growth per head than most – especially thanks to the Thatcher revolution. We’ve also preserved a sense of who we are as a nation, and the values of being a citizen of this country.

“Part of the modern sensibility is to be endlessly dissatisfied, and in many ways it’s admirable – we shouldn’t sit around complacently. But if you try to take a few steps back, and think back to Britain as it was in the 1970s, I think in many ways we have recovered from a situation which the pessimists thought was irretrievable. I remember arriving in the Treasury in 1978, and a very senior official saying to me: “Britain is heading to be like Turkey. We are the sick man of Europe, and we’re not turning it round.”’

You can listen to the full interview here – and please subscribe via iTunes (or any other podcast site) to get the latest episode every week.

You can also catch up with last week’s attempt to digest the election results, or our previous interviews with John Curtice, Andrew Cooper, David OwenSue CameronFrank FieldNick CohenDaniel HannanPeter Oborne and Nigel Lawson.

Robert Colvile is Editor of CapX