Lord Willetts is President of the Resolution Foundation. He is a former Minister for Universities and Science, and his book a University Education is published by Oxford University Press.
The British economy has under-performed ever since the global financial crisis. That has meant 15 years of low growth. This means lower living standards, of course, but also diminished life chances, less resilience in the face of crises such as Covid, growing pessimism about the prospects of the younger generation and the deepening frustration with the political class revealed in the Brexit vote.
The Government is right to want to get growth going. So the newly elected Prime Minister comes to office with the right objective. But since then it has all been going wrong. Why is that? The new charm offensive from Liz Truss suggests she realises she needs to do more to win people over. Here are ten points suggesting how the project could be got back on track.
- There is no sense of a shared national endeavour. There needs to be a sense we are all in this together. That means shared sacrifice and also shared benefits if it works.
- There is no willingness to recognise that Conservatives might themselves have to make sacrifices. Conservatives have been reshaping the state for the past decade so it is above all a state for older Tory voters with rapidly rising budgets for health care and pensions. Are affluent older people, in many ways the most advantaged group in our society, to be expected to make sacrifices or are they to be exempt with the burdens born by everyone else? Should they for example make a bigger contribution to their social care costs – perhaps as a charge on their estates? Can we justify a triple lock for pensioners and cutting benefits for working age families? I believe older people do care about the younger generation and would respond to any appeal to join a shared effort but there is no sign of this.
- Raising the growth rate has been tried by successive Governments. We have had several growth plans since 2010. But they talk as if nobody tried it before. It means there is no sense of lessons being learned from previous attempts. And it weakens credibility because it does not engage with the question why progress will be better this time.
- Previous attempts have not had much success because raising the growth rate of a mature Western democracy is very difficult. Interest groups are dug in and loss aversion is strong. The most successful attempt was under Margaret Thatcher. Many people in the Conservative Party underestimated the challenge recently because they believed the EU was the problem so Brexit would be the answer. But virtually none of the constraints on growth were simply imposed by Brussels. Ironically there is a point here on which a post-Brexit coalition could be based – the removal of the Brussels alibi enables us to confront our domestic problems with no excuses.
- There is surprisingly little prominence for science and technology. It is where Britain is genuinely world-class and where smart policy really can help boost growth. Nadhim Zahawi saw close up how our excellence in life sciences was key to the battle with Covid – why not ask him to apply the lessons from that across Whitehall?
- There is also little on the Green opportunity. We have a natural national advantage with wind and tidal power together with some distinctive strengths in nuclear power notably small modular reactors and nuclear fusion. Instead the Government wants to return to fracking which is a massive diversion with little economic gain at high political cost.
- Going Green also broadens the Coalition of supporters. They should be allies. There will also be some enemies. Margaret Thatcher had a clear sense of who her opponents were – left wing councils, trade unions and Brussels. But be careful about identifying these. If you are too indiscriminate and paint a picture of a big coalition against you that turns people into opponents unnecessarily and give the sense you are on your own battling everyone.
- You can’t do everything at the same time. Margaret Thatcher came to office in some departments several years after her 1979 Election victory. She made tactical withdrawals – not taking on the Welsh miners in 1981 but building up coal stocks for later. Sequencing matters.
- There is little so far on what a better future looks like. Just talking about a 2.5 per cent target for growth is no substitute for a picture of a better Britain. Ministers say that helps us fund public services which is true, but just a start on a much stronger narrative. How will a higher growth Britain be better for younger generations. Will it be better for the environment? Will poor people be better off or do the gains all have to go to the affluent? Most other countries which are richer than us also manage to provide much better for poor people – will we be doing that too?
- Finally there is no coherent document setting any of this out. The Treasury Growth Plan is a very limited list of specific measures. I understand Ministers’ impatience to get on with things. They do not want to go to the opposite end of scale with the absurdly long Levelling Up White Paper already consigned to history. But there is not yet even a single coherent thoughtful speech about what the problem is and what to do about it. That would be a great start.