Lord Hannan of Kingsclere is a Conservative peer, writer and columnist. He was a Conservative MEP from 1999 to 2020, and is now President of the Initiative for Free Trade.
Consider the counterfactual. Suppose that Michael Gove had stuck with Boris Johnson in July 2016. Imagine that he had become, so to speak, CEO to Johnson’s chairman, bringing his administrative genius to a post-EU reform of government.
Several things, I suspect, would have been different. First, Brexit would have been swifter and softer – probably vaguely à la Suisse, as hinted at by Johnson in his Telegraph article two days after the referendum.
Being Leavers, neither Johnson nor Gove would have needed to prove their credentials. There would have been none of the obsessive digging in over free movement that we had from Theresa May, none of the inflammatory language about “citizens of nowhere”.
Brexit would have been followed by the governmental reforms that Gove and Dominic Cummings had wargamed at the Department for Education. The state machine would have been made more accountable and more efficient. There is even a chance that, by the time Covid hit, some of the worst problems in Public Health England and NHS procurement might have been tackled.
In any event, a Johnson-Gove government would have pummelled Jeremy Corbyn at the polls and embarked on the economic reforms made possible by Brexit, scrapping some of the most egregious of EU directives.
Such things might have happened had it not been for May’s accidental premiership. By the time the glitch in space-time was ironed out, and Johnson and Gove took over, the parliamentary majority had been lost and the terms of Brexit set. Then, within weeks of their winning the 2019 election, the coronavirus hit.
“The time is out of joint: O cursed spite, That ever I was born to set it right.”
Once the lockdown was imposed, as this column loudly lamented, the country was set on an authoritarian path. Frightened voters demanded a bigger state and became intolerant of any dissent. The spending taps that were spun open in 2020 proved hard to screw shut again.
For a while, investors hoped that the government would see the big picture, prioritising growth as the only way out of the crisis.
Yes, as in any democracy, it would have to acknowledge public opinion, going along with spending demands that it might not have accepted at other times. But it would at least (so the markets hoped) quietly get on with the things that make an economy prosper: freer trade, fewer regulations, simpler taxes.
Observers were prepared to cut ministers a lot of slack during the lockdown, and for a few months afterwards as the nation slowly came back to work. But the realisation is beginning to dawn that there is no grand plan. No one – the metaphor seems apt this week – is driving the train.
All that talk of putting wages up with no increases in productivity – it wasn’t just talk. Ministers whacked up the minimum wage while congratulating themselves on the withdrawal of immigrant labour. Figures in government seemed genuinely to believe that we could spend our way into being a high-skills, high-wage economy with taxpayers’ money.
Deregulation was pursued in a fitful, half-hearted way. All talk of a “hard rain” for leftist standing bureaucracies was forgotten. Plans to loosen restrictions – scrapping some of the EU’s more needless employment laws, for example – were dropped for fear of bad headlines.
For all the Prime Minister’s talk of leading the world in free trade, tariffs were retained even on things that Britain doesn’t make.
Indeed, there is a certain grisly aptness in the fact that the Government’s ethics adviser, Lord Geidt, was finally driven to resign over Number 10’s insistence on retaining steel tariffs despite the fact that the Government could find no economic justification for them. But, of course, they polled well.
Across Whitehall, departments stuck to EU regulations and targets, even though these now brought no export advantage. The chance for a more competitive approach was lost and ministers, whether from conviction or simply to rationalise their disappointment at failing to act, began to sneer about “Singapore-on-Thames”.
(Naturally, they never specified what they disliked about the Singaporean economic model, which has delivered much better outcomes than ours, not least for people on low incomes. Indeed, if they really did want a high-wage, high-skills economy, Singapore suggests that the way to get there is through globalisation, tax cuts and minimal regulation.)
Meanwhile, ministers began to celebrate spending – as if higher budgets were of themselves a desirable thing.
When MPs appear on the broadcast media, they are given briefing notes from CCHQ which are often a series of boasts about expenditure: £560 million on adult maths skills! £170 million on apprenticeships! £355 million on street lighting! £628 million on border technology!
Each of these things might be defensible. But imagine rating, say, a heart surgeon on his salary rather than on his record in theatre.
If it were just small sums intended for the headlines, while serious retrenchment were underway elsewhere, that would be one thing. But it isn’t. Ministers keep authorising massive new discretionary spending programmes, whether on levelling up, net zero or social care.
The fact that we lost an extra half a trillion pounds as a result of Covid seems not to enter into their calculations.
Hence the sudden loss of confidence in the British economy, which has left sterling plummeting like a stone. Investors realised, to their surprise, that there was no grand plan. Long-term prudence is sacrificed to short-term popularity, and spending decisions are made with an eye on the printing press rather than the money presses.
(The latest nonsense is the suggestion leaked to the Sun this week that there would be “tax breaks for companies that buy British” – a policy that, as every Cabinet minister must know, would make the country poorer.)
The underlying problem is that no one seems interested in economics. Paying people to stay home for the better part of two years, and covering the difference by creating extra money, was bound to lead to inflation. But no MP will admit it.
Voters are not presented with the reality of the trade-off. On the contrary, they have been encouraged, for two years, to think that almost any problem can be solved by public spending.
So, naturally, they expect government to “do something” about living costs – meaning, to mitigate its effects through handouts. Ministers, watching the polls, then acquiesce, rather than seeking to cut spending and thus tackle the problem at source.
It is theoretically possible to turn these things around. Indeed, there are some signs that the Prime Minister has might use the 12-month reprieve he won in the confidence vote to do some conservative things.
The Northern Ireland Protocol legislation has been published, and looks far more serious than I had feared. There is talk of tax cuts, of the scrapping of EU financial services regulation, even of withdrawal from the ECHR.
But, so far, only talk. Let’s see whether someone is driving the train after all.