26 June 2017

The DUP deal will give Britain a poorer future


]In May 2010, the Tories signed a deal with the Liberal Democrats that stiffened their fiscal spine. In June 2017, they signed one with the DUP that surgically removed it.

Perhaps I am being unfair. But it is impossible to read the confidence and supply agreement without a heavy heart.

Ahead of the deal, the DUP had pitched themselves to the public as the enemies of austerity – both in Northern Ireland and across Britain. “We are keen to defend the rights and welfare of the vulnerable across the UK”, they told the Guardian.

To that end, in addition to the laundry list of goodies scattered across the Province, there will also be benefits for those on the mainland. The triple lock on pensions will remain. So will universal winter fuel payments. Cue hosannas from a choir of silver-haired pensioners, clad in robes of the brightest orange.

Now, I should admit here that I am not exactly in tune with the nation on this. Indeed, while the general election left plenty of commentators with egg on their faces, in my case, it was more like the full omelette.

In the wake of the Tory manifesto launch, I wrote that Theresa May’s decision to stand up to pensioner power was both brave and necessary. True, I acknowledged that the issue of social care in particular was electorally toxic. But I felt that, given her astonishing lead in the polls, May was right to confront the issue of generational unfairness head-on rather than continuing with the traditional Tory approach of making everyone share the pain except for the elderly.

It is safe to say that the voting public did not agree. Instead, they turned towards a Labour Party which promised to double down on the Tories’ error, by bribing the young with their own money as well as the old.

The election result is therefore being hailed, and not just within the Labour Party, as representing a rejection of austerity. Public sector pay must be unfrozen. Education funding must be guaranteed. Philip Hammond must put off the elimination of the deficit for just another few years.

But the thing is – I wasn’t wrong. The elderly have enjoyed a level of state protection that’s both unjust and unsustainable, when compared to a younger generation for whom property ownership is a distant dream. And the defining truth of British politics is still that there’s no money left.

That means we have to think really carefully about how we spend what we spend. And that, in turn, is why the deal with the DUP is so dispiriting.

Ahead of the election, we at CapX asked the main free-market think tanks for their manifesto suggestions. They were unanimous that the triple lock had to go – perhaps their only point of agreement with Mrs May and her team.

I’m not going to rehearse the arguments again – you can find them here and here if you’re interested – but what’s so pernicious about the triple lock is that it rewards those who have already been rewarded. Pensioners, whose vast housing wealth and savings have left them sitting prettier than any generation before or since, have been collectively guaranteed that their benefits will increase even as others have had theirs slashed.

Yes, there are many poor pensioners who need protecting. But protecting all pensioners is a staggeringly wasteful way of doing it. It’s the same with winter fuel payments – why should other taxpayers chip in so that Richard Branson or Paul McCartney can warm a room or two in their mansions?

It’s the same, too, with tuition fees, whose abolition was the mega-bribe at the heart of Labour’s manifesto. David Willetts, the architect of the policy, gave a spirited defence of it on the most recent CapX podcast. But a simpler one is this: why should other taxpayers chip in so that Branson and McCartney’s children and grandchildren can go to university? Or so that middle-class kids from affluent families can be groomed into the bankers of tomorrow?

What the DUP and the Labour Party have in common, in other words, is a definition of the “vulnerable” that includes everyone in society. It represents a commitment to universalism that goes beyond the idealistic and into the ideological – not to mention the fiscally deranged.

In the wake of the Grenfell Tower calamity, as the calls mounted for austerity to be abandoned, I spoke to one Tory who pointed out that people were learning precisely the wrong lesson. It was not, he said, that the state should spend more. It was that the state should spend more on the things that really mattered.

His point was that if government has limited resources – as it always does – it makes moral and financial sense for them to be concentrated on the genuinely needy. But instead, we continue to offer bribes and bungs to those who don’t need them – not least those wealthy pensioners I mentioned earlier.

In terms of the DUP deal, the actual sums involved are not huge. In fact, it is arguable they have sold themselves cheaply (though they will doubtless be back for more). And yes, the triple lock may be revisited in a couple of years’ time.

But what matters is the direction of travel. In the Coalition years, the Liberal Democrats and Conservatives acted (at least for the first few years) to reinforce each other’s better instincts on public spending. But now, the DUP will act to chip away at the Tories’ resolve – already weak in the face of a Labour Party which has made electoral gains by promising voters not just the moon but the stars too. There is no countervailing voice to make the case for fiscal discipline.

Much of this, of course, was unavoidable: faced with an impossible position, Mrs May has to make impossible choices. And politicians always have to put their own survival first.

But at the same time, this is still a deeply depressing moment. British governments, of all stripes, have spent decades robbing the future to pay the present. Mrs May’s pledges to axe the triple lock and means-test winter fuel payments represented one small step back in the right direction. Because abandoning them is not generosity – it is increasing the bill that will be paid by younger generations for the gold-plated comfort of those with more wealth than they can ever hope to acquire.

The DUP deal, in short, is not a victory for “the vulnerable”. It is a resounding defeat.

Robert Colvile is Editor of CapX