Dr Jamie Whyte is a Research Associate at the Institute of Economic Affairs. He was the leader of ACT New Zealand.
Things have not gone well in the UK since 2008. With the Conservatives in government since 2010, it is fair to ask what they got wrong.
On this website last week, Miles Bassett, former Chair of the Wandsworth and Merton Young Conservatives, blamed the party’s almost religious commitment to free markets.
It is a familiar claim, not only from the political left, but from the growing ranks of communitarians or “post-liberals” within the Tory ranks – the likes of Michael Gove, Nick Timothy, Theresa May, Danny Krueger, and Neil O’Brien.
Alas, familiarity is its only source of credibility. It cannot bear the slightest examination what the Conservative government has actually done over the last 13 years. No government since 1979 has been less committed to free markets.
The state now collects more tax (in pounds and as a percentage GDP) than it did in 2010. Indeed, the tax burden is now higher than it has been in 70 years.
And that doesn’t capture the full increase, because the Government has borrowed to fund spending in excess of its tax revenues. In 2010, government debt was 70 per cent of GDP. Today it is 100 per cent.
State regulation of commerce has also increased over the last 13 years. For example, banking was already heavily regulated when the financial crisis occurred in 2008. The Basel II accord, aimed at ensuring banks’ solvency, had come into force in 2007. All the banks that failed had capital far in excess of the quantity that, according to Basel II, sufficed for their solvency.
Yet the Conservatives have not concluded that banking regulation is counterproductive. On the contrary, banking regulation has exploded since 2008. You may approve of this, but it certainly isn’t what you would expect of fanatic free marketeers.
The Conservatives’ zeal for banking regulation is not an exception. They have tightened building regulations, imposed bizarrely intrusive regulations of auditing firms, and fixed the price of retail energy, among many more extensions of regulation.
The Competition and Markets Authority is a government agency that decides whether to permit voluntary transactions between people spending their own money and selling their own possessions. In 2014 it employed 555 people; today it employs 830.
Similarly, the workforce of the Financial Conduct Authority, through which government tells banks how operate, has grown from 3,506 people in 2013 to 4,289 today.
The Conservatives have even returned to industrial policy, using the Levelling Up agenda to direct capital not to where investors risking their own money think it will generate the greatest returns, but to where politicians spending other people’s money think it should go, which will usually be where it buys the most valuable votes. No amount of waste will get them to abandon the HS2 fiasco.
Or consider state ownership. The Post Office was privatised in 2013. I’ll concede that to Bassett and the rest of the “one nation” Tories. But that’s all. The Conservatives have renationalised rail companies and otherwise done nothing.
We still have state schools and the NHS. Indeed, they took NHS worship to a new height during the covid pandemic, claiming that our liberty should be sacrificed for the sake of saving “Our NHS”. Again, you may approve of all this. But it surely isn’t what you would expect from free market fanatics.
Even the £3.5 billion bung to the BBC, funded by a tax on anyone who watches any TV or live-streaming, BBC or not, has survived these supposed free-market fanatics.
Then there is the nannying. George Osborne introduced a sugar tax because he wanted people to be thinner. Boris Johnson, apparently wanting himself to be thinner, introduced a ban (not yet imposed) on advertising junk food online and on TV before 9pm. We have taxes on tobacco and alcohol well in excess of the cost their consumption imposes on the NHS.
Recreational drugs remain illegal. And we are about to get the Online Safety Act, which will give the Government control over the content moderation policies of social media platforms, such as Twitter and Facebook. Censorship for safety!
Was A caused by B? That is often a difficult question to answer. But sometimes it is easy. When B didn’t happen, the answer is always no.
Bassett, Gove, Timothy and the rest may be right to seek more governmental control of our lives. But their authoritarianism gets no support from the ill-effects of the Government’s religious commitment to free markets over the last 13 years. No such commitment has existed.