This the thirteenth year of Conservative-led government. What do we all have to show for it?
There are some achievements – Universal Credit, the Gove education reforms, rapid decarbonisation – but they are fragmentary. You might reply that the times have not been kind: the aftermath of a global financial crash, a pandemic, Vladimir Putin’s invasion of Ukraine. And you would be right. But there is something else going on.
I believe that almost everyone knows about it but that very few people want to discuss it or its consequences. But we feel unhappy with ourselves for not doing so, and our politicians follow where we lead – which intensifies disillusion with our governance, culture, institutions and the way we live now.
It helps to explain why, the last general election aside, no party has won a convincing majority at a general election for almost 20 years – and why, too, Boris Johnson’s goverment failed to make the most of the biggest Conservative-led achievement in modern times: Brexit.
I refer to demographic decline. The number of people aged 85 years and over was estimated to be 1.7 million in 2020 (2.5 per cent of the UK population) and this is projected to almost double to 3.1 million by 2045 (4.3 per cent of the UK population). Britain is roughly mid-table for births amidst a diminishing continent.
There are three ways of responding to demographic drop-off. We can work longer. Up to a point this is a good thing, but Emmanuel Macron’s troubles in France suggest that there are political limits to it. Or we can resort to immigration. Again, this is a good thing up to a point, but immigration is to the economy as oil is to a car – a lubricant, not a fuel, as Peter Lilley puts it.
Or else we can reduce our public services. This is already happening in relative terms, at least if government spending is the measure. In 1980, healthcare spending was 5.1 per cent of the total. Now, it is 12 per cent. Health, social care and pensions consume about a quarter of public spending. Other departments will continue to be squeezed in relative terms.
Liz Truss tried a fourth response to our demography last year: going for growth – and we all discovered the hard way that tax cuts and spending cuts must march in step together. Try the first without the second, and the markets won’t take it – so confirming thay, as Margaret Thatcher put it, you can’t buck the market.
Demographic decline wasn’t so evident in her day – which was pre-mass immigration, globalisation and culture change. This helps to explain why the conservative approach she championed is necessary but not sufficient. For a smaller state, lower taxes and less regulation, we need less supply of government.
And it will be very hard to reduce the supply without first reducing the demand. How can we do so with our projected healthcare and pensions requirements? Does an ageing population mean waving goodbye to tax cuts? These are questions that the centre-right is beginning to have to confront.
Onward’s Future of Conservatism project is one response. So is the conference on National Conservatism that opens today. ConservativeHome isn’t a think tank, but we have a shop window: this website. We use it today to launch a new series on reducing the demand for government.
As David Goodhart of Policy Exchange points out in the opening article on our site today, the demographic obstacles to reducing demand for government are formidable. But there is more to public spending than pensions, social care and healthcare. What about the rising bills of social failure?
Some 15 years ago, Iain Duncan Smith identified a modern “five giants”, the equivalents of Beveridge’s ” idleness, ignorance, disease, squalor and want”. The former Conservative leader’s were family breakdown, educational failure, economic
dependence, indebtedness and addictions. He might now add the housing crisis.
There is no great mystery about how to reduce these. The solution is simple: the golden triangle of strong families, better schools (and education generally) and good jobs. Admittedly, if someone has all of these, they will still need healthcare, social care and pensions (though there may need less of the first two, at least until late retirement).
But their demand for mental health services, youth offending services, drug, debt and alcohol counselling, prisons, probation and benefits will, in all likelihood, be lower. The costs of all these, directly to the taxpayer and indirectly to the economy, are staggering: for example, one estimate is that mental health problems cost the economy £118 billion a year.
Our series on how better to have strong families, better schools and good jobs will run fortnightly for the next twelve weeks, and we expect to have more during the run-up to the Conservative Party in the autumn, and at the conference itself – from outside contributors and our own writers.
For example, there’s much to recommend about how government itself can make its supply more efficient – and better supply may itself be able to help reduce demand. A word of warning: what’s simple isn’t necessarily easy – so for example, there are few items in public life more contentious than families policy.
But politics will ultimately fail if it insists on ducking hard questions – and were, for example, our politicians to determine to make Britain the most family-friendly country in Europe, with a consensus on policies to match, Britain might be able to make a dent in that downward demography.
The hard left will have no interest in reaching such cross-party agreement, since it actively wants more regulation, higher taxes, more immigration – and is hostile to the western project of liberal democracy (broadly) and Britain’s own story over time (specifically).
Parts of the soft left may be in agreement on some points. No sensible person wants more people on benefits, higher costs for youth offending, more crime, unsustainable personal debt, more addiction and worse mental health problems. So it is that the Gove academies programme, for example, followed the Blair government’s: there was a continuum.
But only the right wants less supply of government overall, and so less demand for it too. I concede that all this is a bit upstream from most voters’ day to day concerns – food prices, the condition of the NHS, their wages, immigration (the effects of which are not merely economic).
And I never heard anyone outside the rarefied world of conservative politics talk about a smaller state. However, most people intuitively get the point of a stronger society, and many of them are crying out for lower taxes. But to affect what happens downsteam you have to start upstream – which is where reducing the demand for government comes in.
As matters stand, we are on a long-term pathway both to higher taxes and fewer services. The right could respond by trying to tackle symptoms. Hence Truss’s magical thinking of trying to cut taxes without also reducing spending – a fairy tale that some people want to hear, hence its appeal for the right-wing entertainment industry.
Or else it can try to address the causes, however difficult this may be. Until or unless it does so, many Conservative activists will feel, as they clearly did last summer, that this the thirteenth year of Conservative-led government, but that we have little to show for it – which is where I started.
And after all, levelling up and demographic decline are incompatible.