John Macdonald is the Head of Government Affairs at the Adam Smith Institute.
It’s not just the cities, or the young and aspirational that the Conservatives are losing. Their very political engine is starting to break down, and to make it worse, they appear to be burying their heads in the sand – whilst simultaneously arguing that Labour’s success in London bodes poorly for the next general election.
Losing both Margaret Thatcher’s favoured Wandsworth Council and Westminster too suggests that the Tories are quite content with sacrificing aspirant prosperity for declinist welfarism.
Perhaps this is because voters have traditionally drifted towards the Conservatives as they got older. But rather than being an iron law, this is more simply a product of circumstance. The boomer generation was buoyed on a current of unprecedented economic growth, rising wages and the prospect of home ownership. Without any of these three factors in place, there is little reason for this phenomenon to be reproduced. In reality, there is no evidence to suggest people under 40 are moving right at all.
This was all well and good in the context of the 2019 election. By promising an end to 2017’s ‘Zombie Parliament’, end the Brexit headache and take the country Corbyn-neutral, the Conservatives could assemble a well distributed coalition of disenfranchised Labour-leavers in the North and Midlands, without worrying about losing their southern, prosperous (but often remain leaning) heartlands – on the basis that a vote for anyone other than the Conservatives would bring Jeremy Corbyn one step closer to occupying Downing Street.
But since Brexit is now more about results than bluster, blunder, and blue skies, and the Government is seen to be doing too little to alleviate the cost of living crisis, there is now space for voters to coalesce around anti-Tory sentiment.
It is looking increasingly uncertain whether the Conservatives will be able to hold on to their old, prosperous heartlands in the south while protecting their 2019 marginal seats in the North and Midlands. If voters become more at ease with a Lib/Lab coalition, the Tories’ thumping majority could end up being very short-lived.
In pursuing a political narrative of redistribution, from young to old, from prosperous south to left behind north, the Conservatives have fundamentally misunderstood the underlying challenges facing the country. Productivity and real wages haven’t recovered since 2008. The average house price is 65 times higher than in 1970. But average wages are only 36 times higher. The Government has announced tax rises worth two per cent of GDP over the last two years, the same that the last Labour Government did in ten.
This might not be so bad for those in or approaching retirement, who will be spared paying for the pandemic and will benefit from the rapidly rising value of their homes. But the young have lost formative years of education, early career opportunities and freedoms to a pandemic that they are paying through the nose for.
As it currently stands, the Government is creating a bloc of young voters that attempt to move from their place of their birth to seek prosperity, only to find themselves in cities being paid low wages, taxed at a high marginal rate of 42.2 per cent (if they’re a graduate) and scant chance of getting anywhere near the housing ladder. Quite often, these graduates then return home to non-graduate jobs, embittered by the stark reality that the economy is more oriented towards extracting revenue from them, rather than giving them the opportunity to live, work and start a family where they so choose.
What can be done? The Government could seriously consider treating Covid debt as war debt, hiving it off to be paid back at a much slower rate, and freeing the Treasury from its current, revenue first, growth second tax mentality, a policy being privately pushed by Liz Truss. Rather than exempting young people from income tax entirely, thresholds could be unfrozen, giving them a significant tax cut in real terms.
Adjusting student loan interest via CPI, the Government’s own standard measure of inflation rather than the higher RPI would also ease the pain on graduates reaching the soon to be lowered repayment threshold. Providing maintenance loans on the same terms to apprentices as students could also extend opportunities to those who don’t go to university.
To suggest that the Conservatives face a long-term existential crisis could be hyperbolic. They have succeeded at re-engineering the party time and time again, and the cohort they are targeting with welfare and subsidy is only just reaching its peak electoral salience.
But the Tories’ electoral strategy is jettisoning the fuel behind the prosperity of older generations, allowing them to coast without firing up the engines of growth. But unless the Party reorients itself around value creation, building houses and in offering young people a genuine shot at prosperity, it risks sliding into decline.