7 March 2017

May is still too cautious about tackling Britain’s biggest problems


One of the most insightful pieces of journalism from last year was Neal Gabler’s cover story for The Atlantic: “The Secret Shame of Middle Class Americans”. “Nearly half of Americans would have trouble finding $400 to pay for an emergency,” said the strapline. “I’m one of them.”

I should have absorbed, rather than simply read, Gabler’s account of how so many Americans are living on the edge – and, consequently, should have been much more prepared for the possibility of a President Trump. It wasn’t just Gabler’s killer fact about the fragility of average household finances, but two thirds of US voters saying their country was going in the wrong direction, and most expecting their children to be poorer than themselves, and the cumulative impact on national self-confidence of the Iraq war, the 2008 crash, the gridlocked Congress, the mass gun shootings and, and, and…

To anyone without blinkers on, these should have been flashing neon lights. They all pointed to why an uber-establishment candidate like Hillary Clinton was so vulnerable to Trump’s take-no-prisoners rhetoric and his magnetic “Make America Great Again” slogan.

And the fact that Gabler is a writer, and not one of the countless blue-collar victims of technological disruption, is perhaps a further warning that the number of people who want to use their vote to put a bomb under the political system may continue to outpace the demographic diversification that the Democrats are expecting will restore them to power.

Yet Gabler’s piece was almost sunshiney when compared to the long, dark read in the latest edition of Commentary magazine by my friend Nicholas Eberstadt.

The article, titled “Our Miserable 21st Century”, notes (among other things) that paid hours of work per adult American civilian have dropped by 12 per cent since 2000; that 11 per cent of the citizens of the bellwether industrial state of Ohio (which swung heavily to Trump) are being prescribed opiates – a dependency that helps to explain last year’s shock drop in average US life expectancy; and that one in eight adult males has a felony conviction on their CVs, severely limiting their job prospects.

Eberstadt argues that tens of millions of Americans find themselves cut off from the rest of their country, through deskilling, drug dependency, criminal pasts and weak community structures. “Coming Apart” is no longer just the title of a book by Nick’s colleague at the American Enterprise Institute, Charles Murray, on the white working class. It’s the biggest issue in the USA – or should be.

So what about the situation here in Britain?

The good news is that things definitely aren’t so dire. To take just one indicator, a YouGov survey for The Times found that 38% of us couldn’t afford a surprise £500 bill. While that percentage rose to 46 per cent among those on lower incomes, it’s a less depressing proportion than the one spotlighted by Gabler, and a larger sum.

There are other big differences. The NHS, thankfully, doesn’t prescribe drugs in the cavalier way that pharma firms have encouraged in the USA – abetted by doctors who are much more likely to give their patient-customers what they want rather than what is medically best for them. Our criminal justice system is also less unforgiving (especially in punishing illegal drug possession) and we don’t have the same historically deep racial inequalities.

Nonetheless, the fact that 38 per cent of people have so little set aside for a rainy day still speaks to a worryingly widespread precariousness. British people, especially on lower pay, aren’t much more optimistic about the future than Americans. That anger, distress and insecurity was a principal reason for the Brexit vote. People wanted change – and in her speech on the steps of Downing Street on becoming prime minister, Theresa May appeared to “get it”.

But to quote a famous American political catchphrase, where’s the beef?

It’s undoubtedly true that the Tory leader is repositioning her party in significant ways. I’ve described what I see as her welcome shift to a more communitarian and less individualistic conservatism.

And it would be wrong to argue that there have been no policy changes from Cameron’s time. The Northern Powerhouse project, for example, is now less focused on affluent Manchester and is more about helping the likes of Brexit-supporting Sunderland. Similarly, Mrs May’s hardline position on freedom of movement is intended to protect low earners from wage-depressing levels of immigration.

Overall, however, Mrs May is much more “continuity Cameron” than a prime minister who is delivering the reset that many people hoped that a vote for Leave might initiate.

Ahead of tomorrow’s Budget, for example, we have been told that £500 million has allocated for new “T-levels”, to improve technical education. While welcome, it’s hardly a game-changer – in fact, George Osborne’s apprenticeship levy made a much bigger contribution to increasing Britain’s budget for technical and vocational education. And even supporters of Mrs May’s funding for new grammar schools would have to concede that only a small number of children from poor backgrounds will benefit from them.

In terms of welfare, Tories were right to worry about the disincentive effects of Gordon Brown’s 50 per cent tax rate on high earners. But the equivalent marginal rate for the low-paid is an eye-watering 63 per cent as they climb, via universal credit, up the first rungs of the income ladder. The Autumn Statement eased this, but only by a paltry 2p in the pound.

Next, while it’s welcome that Philip Hammond is spending a bit more on infrastructure and science, it’s pretty small beer when compared to the £20 billion extra that his fellow Tories Sajid Javid and Stephen Crabb had recommended in their ill-fated joint leadership campaign – to help us build a more balanced nation, and cope with the transition out of the EU (which, I fear, still will be tricky in the short-run).

Of course, given the state of the deficit, Mrs May and Mr Hammond don’t have many easy paths to radicalism. But the gap between the PM’s rhetoric and her Government’s actions is much bigger than it needs to be. Four key observations:

1) Given the still very low cost of debt, the Chancellor’s refusal to spend a lot more on capital investment reeks of Treasury inflexibility rather than of One Nation Mayism – or common sense.

2) The modest scale of the measures taken to help the low-paid do not alter the overall regressive pattern set by George Osborne, which precipitated Iain Duncan Smith’s resignation from Cabinet. Fiscal adjustment is falling unnecessarily heavily on Britain’s poorest.

3) Quantitative easing has primarily benefited those who already have significant assets – and who enjoy above-average disposable incomes. On top of this, the triple lock on the state pension has further distorted the economy. Unfortunately, Mrs May backed off what appeared to be her initial scepticism about QE – partly because of a wobbly thrown by the Bank of England’s Mark Carney.

4) Perhaps worst of all, Mrs May has postponed the so-called “life chances” agenda with which David Cameron had planned to relaunch his premiership – after what he had expected would be a narrow but divisive Remain win. This would have involved a range of interventions aimed at helping the most broken members of society – including those with drug, debt and other addiction problems. (I hope it’s a postponement, and not a more serious retreat.)

Mrs May’s defenders might say at this point that she hasn’t even been PM for 12 months yet – and one or two other quite bulky issues have dropped in her in-tray.

Yet I don’t buy the idea that Mrs May’s caution will pass. Just look at which junior ministers she promoted from her Home Office years and which she did not. Damian Green, Karen Bradley and James Brokenshire are competent and effective, but unlike Mark Harper or Nick Herbert they aren’t great radicals or independent thinkers.

Furthermore, almost the least radical member of her Cabinet – despite his liberal scattering of exclamation marks through his big speeches – is the most important in terms of her domestic policy agenda. So far, Philip Hammond’s opposition to Mrs May’s Christian Democrat approach to government intervention in the economy has effectively blunted the one area where our new PM’s approach might have been strikingly different from the Thatcher settlement.

Tomorrow, the Chancellor will deliver his second set-piece economic statement. If last year’s Autumn Statement is any guide, we can expect his Budget to be dissected, in large measure, for what it says about Brexit – rather than for whether it advances national competitiveness or if it addresses the rise of discontent amongst the forgotten parts of the country.

And this, in turn, reflects something completely deluded and suffocating about the national Brexit debate at the moment.

Yes, it’s vital that the British state prepares for the daunting complexities of what our divorce from Brussels might mean for so many walks of national life. Yet the airwaves and newspapers are dominated by whether we should have a clean, dirty, hard, soft or red, white and blue Brexit. And it’s an almost complete waste of intellectual effort.

The president of the Council of Europe, Donald Tusk, wasn’t spinning when he said last year that it was hard Brexit or no Brexit. And even if he was, that decision is more for the next president of France, chancellor of Germany, PM of the Netherlands and so on than it is for us.

While we’ve been endlessly debating something that is largely out of our control, we’ve done far too little to think about what we might – and probably must – do in terms of tax simplification, housebuilding, infrastructure spending, Civil Service reform and other areas that will maximise our chances of prospering as one nation, whatever our neighbours decide about the kind of neighbour they want us to be.

Given the weaknesses of her opposition, Mrs May probably does not need to fear losing Downing Street because of her insufficiently bold approach on both national competitiveness and on addressing the kind of social insecurities which this article began with.

Yet the cost of such caution might actually be significant. A sense of deepening unfairness – in terms both of policy and lived experience – could give Nicola Sturgeon one more anti-Tory card in a second independence referendum, or Sinn Fein more ammunition for its repeated outfoxing of the DUP.

Worst of all, it would mean that life gets even harder for people who have it tough enough already – and potentially that the gap between us and the US in terms of the underclass’s experience narrows.

It’s not too late for Mrs May to use Brexit as an opportunity to reset policy in a way that the scale of today’s social challenges demands. The clock is ticking, however: replays of that Downing Street speech which sounded so promising at the time are increasingly being greeted with shakes of the head. Things move faster and faster in politics now – which is why Mrs May should think about stepping on the gas.

Tim Montgomerie is a Conservative commentator