I have recently been undertaking some research into the trend in government outlays under the Howard Government and in other OECD countries and I hope that the results of this analysis will be published in the near future ie. before the May Budget.

In the course of this research my attention was drawn to "thinking" in the UK by each of the major political parties and to the two articles set out below. I (sort of) commend them to you.

The first by Mathew Parris reminds us that so-called Liberal/Conservative Ministries (Aust or Brit), for the most part, lose sight of what their parties are supposed to stand for and become, as apparatchiks, almost indistinguishable from their political opponents in government.

The second illustrates some of the consequences of doing so and has an interesting comparison between the US and UK budgets. Since these articles were published, the Conservative Party Leader (the other Mr Howard) has dismissed the party’s deputy chairman for telling a private (sic) meeting of supporters that, once in government, they would make more cuts than had been revealed — so that they could then "actually get on with what needs to be done". But don’t tell anyone publicly!

Des Moore
3rd April 2005

 

You Don't Have to be
Barking to Agree with
the Old Tory Dog

The Times
March 19th 2005

by Matthew Parris

Five days ago on this page my fellow columnist Tim Hames was kind enough to say he loved me. He went on to disagree sharply with my view of Conservative prospects and priorities. So never mind our feelings for each other: let us cut to the chase and ask where the Tories should be going. With this Parliament’s final Budget behind us and a general election imminent, it is time to consider what the Tory party is for.

As a columnist Tim speaks for a collection of people and attitudes that I suppose you could call modernist. He was a keen supporter of Michael Portillo’s bid for the party leadership. His natural allies among leading Tories today would be MPs like Oliver Letwin, the Shadow Chancellor, George Osborne, the Tory Treasury spokesman, or David Cameron, the policy co-ordinator.

Such politicians are talked about as part of a loose group rather grandly dubbed the "Notting Hill" set. They are the sort of Tory you would be happy for your daughter to invite for the weekend: young, moderate, rather metropolitan, nicely presented and eminently sane. They are smooth rather than inflammatory: the Classic FM of the music of politics. They adore the word "mainstream". They love metaphors about "common ground". They refer to Tony Blair ’s former communications chief as Alastair. They know all about polling and the science of psephology but they would never be boring about it at dinner. They are hugely caring and compassionate. They do not cut themselves when shaving, as other men do. They are, in short, delightful and clever young men. And they talk a load of balls.

So soothing is the mood-music which Tim and the modernisers seem to be confusing with a tune, that it is hard to record a Tory moderniser saying anything with which it is possible to disagree; but keep your wits about you and you may catch them out. They are betrayed more by their fears than their enthusiasms, because their tongues are governed by a keener sense of what they don’t want to come across as, than any focused sense of what they do. Here is an example.

This week, I was half-listening to George Osborne being interviewed about Gordon Brown’s Budget. Mr Osborne’s interviewer invited him to confirm that Conservatives believe in smaller government. This was when my jaw dropped.

Mr Osborne declined to confirm it. He hesitated, then changed the subject, heading off in a different direction. The phrase "smaller government" scared him.

Now do not misunderstand him or me. Given time for reflection there is no doubt that Mr Osborne can find the words to say how he does believe in smaller government – bolting tightly on to any such sentence a qualifying clause about the smaller government being better government too, etc. But what was revealing about that radio moment was his instinctive fear of the whole territory.

Tory modernisers like him will have been quite needlessly worried by TV pictures of Thursday’s riverside farce in London when the separate lives of Tony Blair and Gordon Brown intersected for an edgy moment in front of a facile yellow and black poster screaming "35 billion Tory Cuts" – or somesuch. It will not have occurred to a Tory moderniser or a new Labour ad man that many voters might warm to the idea that a Conservative government would spend less.

Another key panic-raiser among modernisers is the word "ideological".

In his recent and beautifully composed Keith Joseph Memorial Lecture at the Centre for Policy Studies, David Cameron railed against "ideological" politics and in favour of "pragmatic" Conservatism. Well, sure. We’re all for that – hooray! Pragmatism is what works. But show me any ideologue who has ever argued that his ideology would not work. An "ideology" in politics is a theory about the unseen levers in human affairs and human natures. An ideology instils in those who embrace it a confidence that certain arrangements will have certain results, whether or not this is immediate or obvious.

It is ideology which tells us that if you have two shops competing side by side you can expect from them better service and lower prices (though you are duplicating costs and labour) than from a single, merged business enjoying economies of scale.

The ruling ideology of any era, however, tends to be mistaken for common sense or "pragmatism", so thanks to the courage of ideologues like the late Keith Joseph Mr Cameron is able to imagine that all a modern Tory needs for his economic policy is "pragmatism". In social questions, however, it is now "pragmatic" to put public services at the centre of the Tory message.

But Tory modernisers are latching on to a new idea just as it begins to droop, just as the philosophy of big promises to "deliver" public services, and big government spending to pay for it, is beginning to be questioned.

Like new Labour itself, Tory moderates are looking dreadfully 20th-century. How clearly I remember Michael Portillo’s leadership campaign launch at a fashionably cool restaurant in St James’s called Avenue, with an @ sign hanging on a flag outside, and plates of nano-hamburgers and Buck’s Fizz within. It all seems so dated now.

But I can hear Tim Hames grinding his teeth. His hope (he expresses it in the latest Prospect magazine) is for a Tory party which sees its role as "offering constructive criticism of the manner in which a Labour Government had sought economic efficiency with social reform, and offering . . . an alternative based on more and better of both . . .".

Tim’s fear (he expressed it on this page) is that a strong Tory result in the general election, bringing Labour limping back with a brutally reduced majority, will encourage people like me to declare that "modernising" the Conservatives was a blind alley.

But fear not, Tim, I shall never do that. The Tories need their modernisers. I would go further: we need them at the helm. I hope that one day one of them may even become leader. We have a habit of choosing people who are not proper Tories as our leaders and they serve us well. Cleverer and nicer than most of the party’s neanderthals, Letwin, Cameron, Osborne and co are useful idiots, putting a caring and optimistic face on the old Tory dog – and coming up with excellent wheezes for saving money and squeezing more from what is spent.

Meanwhile the old Tory dog must grind on in pursuit of its timeless destiny, as "modern" today as it was in 1951 or 1979 – growing, indeed, more modern as new Labour’s hopes of 1997 burn out in the ashes of 2005.

The old Tory dog is eternally sceptical of government schemes for the improvement of humanity. The old dog thinks the apparatus of state will absorb as much gold as you throw at it, and still cry for more. The old dog thinks people do not like to pay taxes. The old dog thinks politics is not only about renaissance and reform, but also about the clash of interests, and that you can’t please everybody. The old dog distrusts whiz-bang politics.

Are you thinking what the old dog’s thinking? The Tories’ latest slogan – "are you thinking what we’re thinking?" – is a piece of inspired dog-whistling, for Tim is right in his judgment that a 21st-century electorate is not quite reconciled to the old dog within, not quite ready to applaud politicians who acknowledge the old dog too shamelessly. But the old dog is there; sensed beneath every argument I hear; waiting for a political party which knows the secret frequency on which to whistle: and which can establish a private line to the old dog in each of us.

Britain is no longer looking for politicians who promise more. We are looking for politicians who cost less. Out there in the suburbs, Tim, the old dog’s growling, and you are missing it.

 

Brown's Third Way Won't
Beat the American Model

The Sunday Times - Business

March 20th 2005

Irwin Steltzer

NOW that the Soviet Union is no more, there are two economic models on offer in the world – three, if you count Cuba and North Korea, but there is no reason to because few imitators are lining up to follow their short-cut to poverty.

The American model can broadly be described as one that emphasises individual initiative, flexible labour markets, low taxes, and minimal regulation. The European model, which sees itself as an alternative to the red-in-tooth-and-claw capitalism of America, emphasises collective responsibility, regulated labour and product markets, and high taxes to fund a generous social safety net.

Gordon Brown is much taken with the energy and innovative drive that results from the American economic system, and appalled at the stagnation caused by the unworkable fiscal and regulatory policies of the European alternative. But, as his latest budget shows, he is nevertheless taking Britain in the direction of sclerotic Old Europe.

I have nothing to add to the work of the experts who have pored over the details of Brown’s latest programme to take from moderately well-off Peter to give to poorer Paul.

This redistribution, I assume, is an attempt to relieve the unhappiness that Richard Layard, in his new book, Happiness, attributes to inequality of income that can be relieved by a tax system that takes so much from the rich to give to the poor that envy is no longer a scourge on the human psyche.

I shall confine myself to a few comparisons with the United States. Brown admires our work ethic, social mobility, relative lack of class antagonisms, and the optimism that allows Americans to see as opportunities what Europeans see as problems. But he cannot grasp the relation of those virtues to the incentives provided by low taxes. And he feels that our safety net is too porous; that our government is too reluctant to intervene in labour markets; and that our healthcare system is too costly.

It is a game Brown likes to play – comparing Britain with America to show the superiority of what we might call his "third way". But it is a game he cannot win.

Let’s start with prudence, a virtue the chancellor is fond of contrasting with American profligacy. Brown is projecting red ink equal to about 2.6% of GDP in fiscal year 2005-6, almost exactly what the independent Congressional Budget Office projects for America. By the end of the decade Brown says his deficit will be down to 1.5% of GDP. By that time, the American figure is projected to be the same. If tax-raising Gordon Brown is prudent, so is tax-cutting George W Bush.

Unlike Bush, Brown has engineered a huge shift of resources from the private to the public sector. When he moved into the Treasury, the government was taking 37.1% of the nation’s income. Brown projects that this will rise to 40.5% of GDP by the end of the decade. This is about twice what the American federal government takes. Throw in another 10 percentage points for state and local taxes, and Brown is still appropriating about one-third more of what his nation produces than are American governments.

So the chancellor has done what no other major government has done – raise taxes, and then raise them again, shrinking Britain’s competitive advantage.

Meanwhile, the Bush administration cuts taxes, setting the stage for protracted, rapid economic growth.

The chancellor’s policy might be defensible if it moved Britain ahead of America in important indicators. But it hasn’t. What the Treasury itself calls "a significant gap" between American and British productivity remains – no surprise, since Brown has expanded the least efficient sector of the British economy, its public sector. Essentially all the net new jobs in Britain in the past year were accounted for by the public sector, whereas 2.2m of the 2.4m jobs created in America were in the private sector.

There’s worse. Brown’s "third way" model has not produced greater welfare, broadly defined. Consider healthcare, the principal beneficiary of the chancellor’s largesse.

World Health Organisation figures show that mortality rates from cancer and from circulatory diseases have indeed declined in the UK since 1997 – by 19.9% in the case of circulatory diseases, and by 7.1% in the case of cancers.

But in both cases the decline started long before Labour came to power, and was arguably more rapid in pre-Labour days. Moreover, despite the huge amounts of money being pumped into the NHS, Britain’s rank among the 25 EU countries is unchanged since 1997.

Let’s compare Britain and America. Survival rates for cancer sufferers are considerably higher in America than in Britain. In America, only 5% of patients wait more than four months for non-emergency surgery; in Britain 36% of patients suffer such waits, according to data reported by James Bartholomew and presented in his book, The Welfare State We’re In.

Brown is fond of pointing out that America spends a larger portion of its GDP on healthcare than does Britain. True. But it seems to be money well spent – primarily because patient choice, opposed by the chancellor, drives the quality of care to higher levels than the monopoly NHS is under compulsion to provide.

That Brown has been a good manager of the British economy, given the constraints created by his political objectives, is undeniable. But one cannot help wondering how much healthier and wealthier Britons might be if only he had looked more favourably on the American model, flaws and all, for clues to optimal policies.

Irwin Stelzer is a business adviser and director of economic policy studies at the Hudson Institute