With friends like these, who needs enemies…

With friends like these, who needs enemies…

From:  
Alex Massie, columnist for the Times and Spectator, discusses whether the Conservatives are still the party of business?

A total bloody mess.” Only a very few people are privy to Theresa May’s thoughts – the Prime Minister is as reticent in private as she is uncomfortable in public – but that’s how one person, who knows May well, recently described the overall situation in which the Prime Minister finds herself.

And with good reason. Two years on from the Brexit referendum and the waters, far from clearing, seem as murky as ever. The doctrine of collective responsibility, hitherto considered crucial to any government’s ability to function, has broken down completely. Ministers have always briefed against their rivals in private, but the new fashion for openly criticising colleagues in public is as startling as it is corrosive.

Brexit, meanwhile, threatens the Conservative party’s core strengths. For most of the past century the Tories have built their fortunes on a reputation for economic competence. You might not love the Conservative party, indeed you might not even like it, but you could respect it and know the country was, more or less, in reliable hands. There would be no reckless adventuring while the Tories were at the helm.

That, in the age of Brexit, can no longer be said with any great certainty and it is only the presence of Jeremy Corbyn as the leader of the opposition that is keeping the party afloat at all. Even so, if you thought you would see the day when a former Conservative foreign secretary would respond to business’s concerns by saying, “*** business” then I congratulate you on your powerful imagination.

To the extent the Tory party remains the party of business, both small and large, it is only because there is no alternative party petitioning business for support. The days when George Osborne promised to lead a ‘march of the makers’ seem to belong to some dusty, ancient era.

Perhaps the rot set in when David Cameron, prizing the unity of the Conservative party above all else, allowed ministers to campaign against the government’s position on the Brexit referendum while remaining in post. True, Cameron was only following the example set by Harold Wilson in 1975, but it was a decision which seemed bold at the time and now seems ruinous.

Ministers who voted remain look across the cabinet table at their colleagues who campaigned for leave and blame them for the predicament in which the government finds itself. Those who sought a leave vote suspect the cabinet’s remainers – whether ardent or reluctant – are doing their utmost to sabotage a clean, fast and clear Brexit.

In these circumstances, the government’s inability to form a view on its preferred outcome, let alone on how to achieve it, becomes easier to understand if no less easy to forgive. Where there should be leadership, there is confusion; where there should be vision there is only fog.

Every treasury analysis of the economic impact of Brexit chimes with the analysis of independent bodies such as the Institute for Fiscal Studies: it is going to hurt. Just as the public finances are restored to something like order after a decade of retrenchment, Brexit will reduce the prospects for future growth.

At the same time, a public weary of austerity demands a different, more optimistic vision for the future. The Prime Minister is not, by temperament, well placed to offer that kind of sun-splashed cheerfulness.

But this, and the need to claim some kind of ‘Brexit dividend’, has already forced the government to commit to increased spending on the NHS. A £20 billion boost for the health service, however, only goes some way towards matching historic levels of real-terms spending increases. It will not be enough, on its own, to ease the pain endured by a creaking, even arthritic system.

Sauce for the NHS goose is sauce for ganders in other departments too. Already Gavin Williamson, the remarkable defence secretary, is demanding increased spending for his department. This too may be justified, at least in terms of repairing Britain’s declining defence capabilities. But, again, the money must come from somewhere.

Meanwhile, the country’s transport infrastructure is overdue major overhaul. Add this to the cost of a rapidly ageing population and you swiftly reach a situation in which Brexit becomes a short-term crisis overshadowing long-term challenges that will be wincingly difficult to solve.

There are already, for the first time, more pensioners in Britain than there are teenagers. The implications for the NHS, for pensions, and the public purse more generally are both obvious and dramatic.

All this, then, in a period of economic growth that is sluggish at best. No wonder the Brexit ‘dividend’ comes with the weighty caveat that it will be supplemented by increased borrowing and taxation.

That in turn means long-standing treasury ploys that have previously been shelved for reasons of political expediency will be taken out of storage and given a fresh airing.

Philip Hammond’s attempt to increase National Insurance Contributions for the self-employed failed last time – partly because it was met with strong resistance from IPSE and some further resistance from political commentators, many of whom, coincidentally, are self-employed freelancers – but it has not, I am afraid, gone away. It will, indeed, be back.

Similarly, the treasury has its covetous eye on pension tax relief. And with good reason, since this is now worth more than £50 billion a year and two thirds of that sum goes to people earning more than £45,000 a year.

Additionally, much of the benefit is enjoyed by workers fortunate enough to be enrolled in generous final-salary schemes. Pension relief on this scale has only survived so long because so few people are truly aware of its generosity and the manner in which it is loaded in favour of the salaried affluent. A Labour government will want to change this; a Conservative one might have to.

Difficult and unpleasant choices are unavoidable, then. Brexit may compound many of these issues but it is neither the sole cause of, nor any kind of solution for, them. In the absence of vigorous growth, tax increases are unavoidable. A decade of grinding austerity may be coming to an end; that merely means a new kind of pain is on the way.

Lobby