13 June 2017

What should be in the next Conservative manifesto?


In any other circumstances, five days after an election campaign would be a strange time to start thinking about the next one.

But given the machine-gunning that the voters have just given the Conservative Party, one of the best ways to evaluate what went wrong is to consider what might have come instead – and can be done next time round to patch up the wounds.

I wrote in the CapX briefing on Saturday (please sign up here if you’re not already getting our emails) that fans of the free market needed to do some serious thinking. A country where 40 per cent of the voters can actively choose to support a party led by Jeremy Corbyn is one in which something has clearly gone very wrong with the Tory message and brand. In particular, the idea has taken hold that the party are a ruthless, heartless, Brexit-obsessed bunch with nothing to offer the young or the poor, or even (judging by the electoral autopsies) the middle-aged.

For all the ordure being poured over his head, Nick Timothy actually understood this. His mission was to extend the Tories’ appeal down the social scale, to the “just about managings”.

There were, however, two problems with this. First, the party thereby forfeited the support (as these charts from the Financial Times make clear) of upscale, metropolitan voters already bruised by Brexit. Second, the manifesto – crafted personally by Timothy – was long on grand statements of intent and short on retail offers. Yes, there were policies in there. But much of it seemed to have more to do with settling an argument within the Tory party than giving candidates something to boast about on the doorstep.

All this meant that the Tory campaign was fatally reliant on May’s own image. Labour’s manifesto, by contrast, actually had policies people liked. Of course, the manifesto was galactically expensive and represented, collectively, a staggering extension of the state into the economy. (One of the most annoying aspects of the election was hearing Labour supporters chant the words “fully costed”, as if John McDonnell just saying it somehow made it true.) But it did its job on the doorstep.

The Conservatives can never win a game of giveaway vs giveaway – not least because the central truth of British politics is still that there is no more money left. And there are precious few policies sitting on the shelf that are simultaneously credible, cheap and popular. If there were, they’d be in the manifestos already. But at the same time, they have to have policies to rebut Labour’s – policies that say something about who they are and what they believe in, but which also speak to voters’ most pressing concerns.

Which is why it’s worth thinking: at the next election, whenever it comes, what will supporters of the market have to offer? When the election was called, we at CapX asked Britain’s leading centre-Right think tanks what it should contain. Many, indeed most, of the suggestions were perfectly sound. But most, again, lacked that sense of doorstep appeal. Fixing the energy market and ditching the triple lock are ideas that would improve Britain – and like Tim Worstall, I’m rather partial to a land value tax, too. But it’s hard to see any of them on a pledge card.

So what can the market offer people that will obviously make their lives better – without bankrupting the nation in the process? What are the kind of policies that could be sold to the voters who abandoned the Conservatives this time round?

For me, the central rubric has to be “human problems, market solutions”. Yes, we need the big-picture structural reforms. But we also need to offer policies that respond to life as the voters live it.

Here, then, are just a few suggestions. They’re largely off the top of my head, and about as costed as John McDonnell’s, but I hope they give an idea of what an attractive market-based pitch might look like.

– All savings from the Brexit bill, however much they will be, to be channelled to the NHS and social care. It won’t be £350 million, but it’ll be a start.

– The immediate post-Brexit abolition of tariffs on any agricultural products that can’t be grown and aren’t being processed in the UK – a Brexit dividend on bananas, coffee, oranges etc, claimed with every trip to the supermarket.

– Potentially, the same for any class of products not made or processed here. (The ultimate goal obviously is to move towards complete freedom of trade, but this would avoid particular interest groups kicking up a fuss.)

– Unilateral guarantees of rights for EU citizens here, assuming that hasn’t already been done

– Free movement for EU (and potentially Commonwealth) workers with a job on or above the average salary. Free movement for workers from anywhere for jobs at double the average salary. Firms wanting to hire low-paid foreign workers have to pay the doubled Immigration Skills Charge, with the money going towards training – or perhaps have to adhere to some sort of quota system, eg at least half of staff have to be British-born

– Free movement for workers in vital public industries, eg the NHS

– Foreign students to be exempted from the immigration statistics

– Tax to be reduced, year on year, as a percentage of GDP. This provides room for spending to grow, but makes a clear commitment to putting money back in people’s pockets

– Give local government the power to issue bonds to fund new transport infrastructure, as per Sam Bowman’s suggestion

–  Give local government freedom to borrow to build housing in areas of high need, which would be sold at a profit later with its occupiers having first refusal – the same policy as the Tory manifesto, in fact, but with actual money behind it

– Give local authorities genuine tax freedom, as per the winning entry in the IEA’s new Breakthrough Prize. You want to compete with London? We’ll let you

– Or give councils the power to declare their own enterprise zones, with planning restrictions lifted and taxes lowered

– To promote house-building, abolish green belt restrictions within 15 minutes’ walk of commuter train stations – as proposed by Prof Paul Cheshire (the ASI calculates that chipping off 3.7 per cent of the London green belt would be enough for a million new homes)

– Alternatively, review status of all green belts, promising to keep the total area the same but freeing up undistinguished land for house-building

– Promise to build a new garden city on every motorway leading out of London (maybe not so politically possible, but a powerful statement of intent)

Free ports

– New restrictions on the proportion of its own shares a company can buy back in any given year (pitched as an end to “cannibal capitalism”)

– All policies to be subject not only to an impact assessment but an intergenerational impact assessment (as proposed by Michael Johnson of the CPS back in 2015, along with various other ideas for limiting the liabilities passed on by older generations)

– Taxes on income and taxes on dividends/shares to be equalised. (Yes, it’s a tax hike, but it addresses the criticism that the Tories are the party of capital not labour)

– A Royal Commission on the NHS, as proposed by Lord Saatchi (chairman of the CPS, which owns CapX) – and on social care too. The remit would guarantee that state funding would not fall in real terms, but would ask the commissioners to consider other potential revenue sources as well. It’s obvious to all that things here need to change, and equally obvious that neither big party has the political capital to do it on its own

– More generally, commit to pilot new policy ideas and test them against each other. (“We’re not arrogant enough to believe we know better than the facts”)

– An end to the public sector pay squeeze – but an abolition of national pay bargaining

– Reduce staffing ratios for childcare to the European average. Create the equivalent of a “free schools” policy for childcare: whether it is existing chains expanding or parents clubbing together, new childcare centres should be encouraged via tax breaks on business rates, NICs etc. Also, lower the eligibility threshold for tax-free childcare from income of £100,000 to £80,000 (John McDonnell’s figure for “the rich”) and spend the money saved on those from disadvantaged backgrounds

– End pensions tax relief for higher rate taxpayers – which currently costs the Treasury £10 billion a year, as the CPS points out – and use the proceeds to fund a lowering and combining of National Insurance and income tax, weighted towards the low end of the income scale

– More broadly, put any spare money towards reducing income tax/NICs/marginal tax rates for the lowest-paid, up to those on the National Living Wage

– Embrace the kind of microfinance initiatives for the poor proposed by Syed Kamall – with tax breaks for those up the income scale who put in money

– Turn HS2 into a slow-speed freight line, using the savings to electrify and upgrade commuter lines

– More generally, prioritise infrastructure spending according to rigorous bang-for-buck calculations (“An end to white elephants”)

Open up rail competition so that franchises stop being cartels

– Guarantee no real-terms cuts to per pupil school budgets – but give parents complete control of the cash. You pick the school, or start your own, and the government will give you the money. You could even extend this to private schools, and in particular James Tooley’s proposed low-cost chain, although that would be politically tricky to say the least. (Removing such schools’ VAT-free status could be a quid pro quo, but I haven’t crunched the numbers)

– Force energy companies to break down the components of your bill, including any commission to the price comparison site you used. Or force them to include the equivalent tariffs from their main competitors on your bill, with one-click price-switching online

– The current Tory manifesto promises no employer NICs will be paid for one year by those employing care leavers, the disabled, those with chronic mental health problems, ex-convicts, the long-term unemployed and veterans. Why not expand this to five years? Or include employee NICs as well? Or even income tax?

– Waive postgraduate tuition fees for teachers, doctors, nurses etc

– Bring in new protections for company pension schemes, as per the current Tory manifesto

– Expand tax reliefs on R&D and capital investment

– Introduce tax reliefs on investment that reward long-term shareholding

– Force all bonus schemes within listed companies to operate over a rolling five-year time horizon

– Review and simplify the tax code, as per David Martin’s report for the CPS

– Guarantee the minimum wage, or even National Living Wage, for those working in the gig economy (but otherwise preserve the freedoms that economic model offers)

– Ban strikes on key national transport infrastructure – or impose turnout thresholds

– Break up BT’s broadband monopoly

– Say absolutely nothing about fox-hunting

This is, as I said above, a hasty and improvised list. But it’s intended to get things started – to show that it’s not impossible to have a Tory manifesto, and a Tory party, that embraces both Joe Bloggs and Adam Smith.

If you’ve got any thoughts on what else could be on offer, or want to tell me I’ve got things hopelessly wrong, please let me know on Twitter or using the form on our site.

Robert Colvile is Editor of CapX