10 March 2024

Weekly Briefing: The blueprint for growth


Mervyn King once said that if you look at Britain’s GDP since the Second World War, only two dates really stand out: 1979 and 2008. One where we started to become richer, and one where we suddenly became poorer.

That first great inflection point would not, and could not, have happened without the Centre for Policy Studies – CapX’s parent think tank, which this week held its 50th birthday party.

As Margaret Thatcher said, ‘the Centre for Policy Studies was where our Conservative revolution began’. It was at the CPS that she, Keith Joseph and Alfred Sherman, developed the policies that would become known as Thatcherism – and in the process, transformed this country for the better. 

In choosing examples of policy wins from the CPS’s long history, I was overwhelmed with options. I could have chosen any of those early works by Joseph. Or the famous ‘Stepping Stones’ report by John Hoskyns and Norman Strauss, which convinced Thatcher that the economy could not be restored until the unions were tamed.

I could choose the work of Nigel Vinson, one of those present at the CPS’s creation, on creating a capital-owning democracy – including such revolutionary ideas as letting people have control of their own pension pots, or save into what became ISAs. And it was a particular honour to pay tribute to Nigel at our anniversary celebration on Wednesday, in the presence of the Prime Minister and many other friends of the CPS.

But when I tried to come up with the best example of why the CPS matters, there was an obvious choice.

Just a few short years ago, it was universally agreed by the education establishment that the best way to teach children was via something called the ‘whole-language approach’. 

What we now know as ‘synthetic phonics’ was the obsession of a few crankish weirdos, who wanted to stifle children’s creativity and take teaching back to the 1950s.

There was just one problem: the weirdos were right.

In the early 1990s, a seven-year pilot began in Clackmannanshire, in Scotland. Three hundred children would be taught to read in three different ways – one of the three was synthetic phonics.

That trial started when the children were in Reception – Primary 1, as they call it in Scotland. And at the end of the first year, they stopped the trial.

They stopped the trial because the children who were learning to read via synthetic phonics, many of them from among the most deprived backgrounds in the UK, were already seven months ahead of the other groups in reading, and eight to nine months ahead in spelling. 

They stopped the trial because they could not justify continuing to teach those other 200 children in the traditional way. So they switched all 300 students to learning synthetic phonics.

By the end of Year 7, those children’s word reading was three and a half years ahead of where it would have been, and their spelling was almost two years ahead.

In the years that followed, synthetic phonics became embedded in the English school system. Today, the PISA tests show that children in England are the best in the West at reading. Hundreds of thousands of children have been granted the gift of literacy. 

That wouldn’t have happened without the efforts of many people – Nick Gibb as schools minister in particular. But it certainly wouldn’t have happened without the efforts of Tom Burkard and the Centre for Policy Studies. 

Tom, who passed away in 2019, noticed that his own six-year-old could hardly read a word. So he started studying literacy, and became an evangelist for synthetic phonics. As the reading wars raged, he was simultaneously a general and a commando.

His papers for the CPS – and his ceaseless accumulation of the evidence base – helped bring those reading wars to a decisive conclusion. All of us in this country owe him an enormous debt of gratitude.

That story shows what the CPS is, and what it does at its best. It makes the right arguments. It marshals the evidence. It builds alliances. And it fights for those arguments, no matter how hard it is to get a hearing.

Today, it can feel today like the world is against us. Thanks in large part to the pandemic, the state has grown. Debt has grown. Taxes have grown. 

But we know what it’s like to keep fighting the good fight. 

It took years for politicians to listen to Maurice Saatchi’s arguments for taking the low-paid out of tax. 

Recently, the Chancellor credited the CPS, in his Autumn Statement, with persuading him to introduce full expensing, giving Britain the most attractive regime for capital investment in the Western world.

After which Nigel Vinson showed me a piece in which he’d made the argument for it back in 1966.

We published our first paper on the housing crisis in 1990, and are still beating that drum, very loudly indeed – not least via CapX, which celebrates its own 10th anniversary this year.

And on Monday, we published the first proper modelling since the financial crisis on the impact of stamp duty on shares, showing that abolishing it would leave us all much better off. Sadly, the Chancellor wasn’t persuaded. But we will keep trying.

There’s no doubt that Britain today faces huge structural obstacles to growth. 

Back then, the big problem was – among much else – the power of the unions. Today, the headwinds are not just due to Nimbyism – though I had to get a mention of that in somewhere – but an ageing population.

As our recent essay collection ‘Justice for the Young’ showed, Britain needs to grow at almost 3% a year for the next 50 years, just to meet our commitments to the elderly.

But I am still an optimist. And I am an optimist because in the 1970s they did not have a blueprint for restoring growth and restoring dynamism. Thanks to Margaret Thatcher, Keith Joseph and the Centre for Policy Studies, we now do. 

Thanks to everyone who has supported our work over the years – and here’s to 50 years more.

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Robert Colvile is Director of the Centre for Policy Studies.