5 October 2015

The Tories have a great opportunity to seize the centre ground


Among the many matters up for discussion at this year’s Conservative Party Conference will be what strategic direction the party should take. Should it take up the ideological centre ground vacated by the Labour Party or should it use the opportunity to reassert its own guiding principles? In his speech today, Chancellor George Osborne spoke of a new centre ground in which the Conservatives were “now the party of work, the only true party of labour,” but is there any substance behind this announcement?

In his Summer Budget, Osborne began his assault on Labour’s territory, announcing an Apprenticeship Levy that effectively forces large firms to invest in their workforces, higher taxes on dividends, and a renewed commitment to actively rebalance the economy towards the North. All of these would not have looked out of place in a Labour or Liberal Democrat manifesto and are early indications, along with the Andrew Adonis’ appointment to head a new National Infrastructure Committee – an institution first mooted by Labour, that the party leadership is keen to stake its claim to the centre ground.

The so-called National Living Wage, which is intended to reach £9p/h for the over-25s, is significant not just because it supports the low-paid by raising minimum wages to levels considered high by OECD standards, but because it challenges the idea that the Conservatives are the party of employers in an imagined world in which the interests of capital are pitted mercilessly against labour. The NLW is an appropriation of an essentially socialist policy that has as an aim an economy in which no one is paid less than 60% of median earnings. It enshrines a commitment to essentially abolish relative poverty for any mature adult who works by relegating the concerns of market purists to second place.

For Tory centrists, there is more to be done. There is a housing crisis to the extent that the British economy is too unbalanced. London produces almost a quarter of UK GDP, compared to 9.6% in Paris (for France) and 3.9% in Berlin (for Germany). Much of the support for Jeremy Corbyn is from young professionals living in London or otherwise young people who feel the cards are heavily staked against them. There is an epidemic in mental illness among school children in the UK, and while it would be too simplistic to blame this on any government policy, there is a growing sense that the country is not doing enough to look after the young.

Changes to working tax credits have the potential to be deeply unpopular when they are actually implemented. Three million workers will be at least £1,000 a year worse off. On the Andrew Marr Show on Sunday, David Cameron reaffirmed his Government’s commitment to go ahead with these cuts, but they could easily undermine his pitch to re-position the party as one which supports workers and more than undo the benefits of the national living wage.

Labour MP Frank Field, who served as a ‘poverty czar’ in the Coalition Government, has offered a cost-neutral way out. His proposal protects income support for those working 35-hours per week on the minimum wage, but increases the taper rate to 65% for those earning above £13,100 per year. While this plan would significantly blunt incentives for the low-paid to progress, George Osborne may well decide that this arrangement, short of a full U-turn, is the most expedient way of making the savings.

There were encouraging signs of a policy shift towards the centre at an event celebrating One Nation Conservatism, held last night by the Legatum Institute – an international think tank – and The Good Right, a pressure group. The panel, which included Leader of the Scottish Conservatives Ruth Davidson and Business Secretary Sajid Javid, all agreed that there should be a bias to the poor and vulnerable in public policy. Work & Pensions Secretary Iain Duncan Smith said that the minimum wage was the best poverty-fighting measure introduced by the Labour Party, while Justice Secretary Michael Gove was passionate about the importance of tackling inequality and adapted a Victorian meme to speak of the ‘deserving and undeserving rich.’

There are other interesting developments. Rob Halfon MP has set up the Conservative Workers and Trade Unionists movement for moderate trade unionists, continuing the work of Disraeli, who legalised picketing and of Lord Shaftsbury, who introduced the Factory Acts, and challenging the idea that the Tories are congenitally opposed to the concept of labour representation.

All of these things can be consistent with a party that promotes the private sector as the wealth-creating engine that furnishes high living standards and decent public services. However, there needs to be more concerted effort to make the case for role of properly functioning markets and a capitalism that works for the majority. The impetus for that may actually come from Jeremy Corbyn’s Labour.

Leave aside whether or not you believe Corbyn could ever be Prime Minister. What he is trying to build is an alternative narrative that challenges the post-1979 Thatcherite consensus in the same way that Margaret Thatcher took on the post-war settlement of socialism, welfarism and managed decline. By assembling a coterie of impressive and interesting economists, including Joe Stiglitz, Thomas Piketty, Mariana Mazzucato and Simon Wren-Lewis, and making what appears to be genuine efforts to decentralise policy-making within the Labour Party, Corbyn’s project is designed to outlast Corbyn and aims to present voters with a very different alternative at the next election.

In response to this, there will many Tories who will make the case that changes in the electoral landscape, the coming revisions to constituency boundaries and reductions in the size of the House of Commons bestow a golden ten year opportunity to implement traditional (some might say proper) Tory policies. This means a more robust approach to Europe, a more conventional energy policy that promotes security over sustainability, a commitment to much lower and flatter taxes and a state pruned to a size commensurate with those aims. Beyond London, in many sleepy market towns and little villages furnished with neat privet hedges, ivy-dressed pegolas and quietly patriotic people who are happy with their way of life, many of these policies will resonate.

But for Tories who are less ideologically motivated, or who believe in the principle of compromise guided by conservative values, the opportunity to regain a reputation as the party of government rooted in the centre ground will be too good to miss. Conservatives have a once in a generation chance to own the future.

Zac Tate is Deputy Editor of CapX