Those that sow the wind shall reap the whirlwind

Part three of austerity and managerialism

This is the final part of a three part series on how some of the mismanagement, missed opportunities and political choices of austerity lead to the managerial politics of today. Links to the other parts are below.

This is part three of this series on austerity, and in total it’s several thousand words. Why have I bothered expending so much thought and effort on it? I think it’s important to consider the legacy of austerity for a few reasons.

 The first is that I think conservatives need to reckon with the mistakes of Conservative governments in order to learn from them; particularly important, in this case, is the need to balance to literally everything else against the interests of your current electorate. As Mike Jones writes: ‘politically, Mr Cameron’s time horizon favoured immediate office and vote rewards rather than a slower and more sustainable growth strategy.’

Those that sow the wind shall reap the whirlwind; there are now reports that Tory MPs are waking up to the fact that under their watch, the ability of young people to live the kind of life conservatives are supposedly in power to promote - ‘homeownership, rewarding hard work, living longer and passing on a better life to your children - is dying after 13 years of power.’ Conservatives have a hard road ahead, but it should serve to remind us that without a stake in the present, people aren’t much interested in the future you’re offering them.

One of the great underpinnings of Thatcherism was the belief that an increase in popular participation in capitalism would create a better society; enabling people to accrue enough wealth for them to stand on their own two feet would, it was hoped, create a society of greater self-respect and dignity. Shirley Letwin described this approach in Anatomy of Thatcherism:

The Thatcherite argues that an ‘owner’ who feels that he is ‘in charge’ and ‘secure’, is more likely to be active, to take risks, to display initiative…. A council tenant living in dilapidated accommodation all too easily ceases to regard improvement of the situation as feasible. But a person owning his own property may quickly set about putting it to rights, and in the course of doing so, discover a spirit of energy and adventure which, so the Thatcherite hopes, may permeate the rest of his life.

To pursue this goal, Thatcher engaged in what can be called ‘a democratisation of capitalism’, enabling a far greater number of people to gain sources of wealth through a combination of privatisation and the creation of a property-owning democracy.

The problem is that the levers to wealth Thatcher placed in people’s hands have remained in the same hands and successive Conservative governments haven’t provided the same route to wealth accrual for future generations. As Sam Freedman writes:

This is where the moral failure of Thatcherism becomes apparent. The very group of people she enriched, by giving them property, increasing the value of it, helping them become shareholders, allowing them to keep more of their income, have not become vigorously self-reliant, leading to a resurgence in entrepreneurial spirit, dynamism, and charity. They have become spectacularly entitled…

The additional funding required to run the state has to come from younger, working, people because pensions, and pensioner benefits are untouchable, and the vast capital gains on property cannot be taxed for fear of electoral rebellion. Yet this is turn pushes young people towards an extremely anti-Thatcherite way of thinking about fairness and aspiration, and further away from ever voting Tory.

For any future conservatism to work, ‘it will need to redress the intergenerational disparity, giving young people a reason to stay by enabling home ownership and redressing their outsize tax burden - at the expense, if necessary, of more happier generations.’

In order to be electable amongst those below retirement age, Conservatives will need to allow the next generations to have the same participatory role in capitalism that their parents enjoyed under Thatcher by enabling wealth accrual amongst today’s workers.

But there are not many assets left to privatise to enable mass share owning, so the government must look to other means. This can start with a reduction of the tax burden on working age people through cuts on universal welfare spending on richer, older generations, redressing the imbalance bought in under Cameron.

But a programme of government-delivered or government-enabled housebuilding will be essential too. Home ownership is not just an economic and political necessity, but a moral imperative; I’ve always seen it as a major step towards responsibility, family and independence, and a physical representation of someone’s stake in society - in the same way Eden did, as ‘a reward, a right and a responsibility that must be shared’.

Planning reform has always been a tricky subject, and Cameron is far from the only Conservative who deserves castigation for failing to build enough. But with a keener focus on the future, he could have portrayed housing benefit spending as paper over the cracks of a market with insufficient affordable homes. That could have allowed the government to present planning reform (or any other measures to increase housebuilding) as a way to protect pension benefits by reducing government spending on housing benefit and as a way to protect the assets of ‘The Bank of Mum and Dad.’ Your children will require less help from you - and less help from Government - if it is making housing more available.

Our failure to deliver enough supply of homes has held up a whole generation on the road to home ownership. This actually strengthens the case against future housebuilding; those who are already on the ladder benefit from skyrocketing prices, who often need the asset value increase to support their children getting a foot on the ladder; meanwhile those able to get a first foot on the ladder become concerned about negative equity. Introducing measures to increase housebuilding is going to be unpopular with these two constituencies as well as the NIMBY crowd; but Conservatives must, as James Vitali puts it ‘build one nation of homeowners, not two nations split along generational lines.’

Secondly, examining austerity is important many of the choices made during are now coming home to roost; politically, that ticking time bomb of intergenerational disparity is about ready to blow, with a whole generation on the losing side refusing to move rightwards as they age (this is raised with existential angst in some conservative circles; what can we do about the woke, young left? Possibly, just possibly, we could consider giving them something to gain, in material terms, by voting Conservative?). Meanwhile, the Government’s role is still so large that day-to-day functions and the management of them means the state is basically incapable of delivering large-scale projects. Meanwhile a lost decade of low-cost infrastructure spending significantly constricted Britain’s growth – at the same time as making bills in the here and now more expensive.

This lost decade of infrastructure growth should be a warning to Conservatives. We have failed to sufficiently build up Britain’s resilience, leaving the country overly vulnerable to the effects of world events - and its’ own green agenda - and ill-equipped to claw back a decade’s worth of low growth.

If we want to a future Conservative government that is prepared to tackle this, we will have to become more used to wielding the state’s power; as I’ve written before, ‘if interventionism is what is required to rebuild our manufacturing base, to reduce our dependence on energy imports and to make sure Britain has a transport infrastructure that can still transport people in 20 years, then an interventionist conservativism it must be.’

That might result in an active agenda that takes difficult decisions to force necessary economic projects through; it might result in planning reform to make vital, large-scale infrastructure projects easier to deliver; it might result in government being prepared to provide support to strategically important industries. Whatever the solution, it should result in a country that is well-equipped to take decisions to deliver economic growth - and a state that is more capable of protecting its’ citizens from world events, not less. As anyone who remembers Gordon’s Brown’s tenure as Prime Minister will recall, leaving the electorate overly vulnerable to world events has potentially disastrous results; the legitimacy of not only Conservative governments but any government relies on the electorate’s belief that politicians will utilise their power to protect their citizens. As Michael Ignatieff writes:

The state cannot protect citizens from their own mistakes, but it must be there to protect them from systemic risk, from those national or global economic storms that threaten their pensions, savings, investments, and employment. What effective sovereignty means for an average citizen is that their state has some real, even if limited, capacity to protect them from economic harms that are not their fault.

Finally, the legacy of austerity is important because one of the fundamental questions Cameron faced is the same one we face now; tax cuts must come to stimulate growth, but how can we deliver those tax without significant reductions in day-to-day spending?

The answer, of course, is that you can’t. It’s important to be clear on this point; I am not criticising austerity from the left. I don’t think a government should – or even can – spend its way out of a crisis; day-to-day government spending had to (and still does have to) come down. I am, in fact, criticising the austerity programme for its’ failure to go far enough. Spending restraint was necessary, but Cameron’s austerity wasn’t philosophically ingrained enough to take the bull by the horns and radically redefine the role of the state.

Cameron’s half-hearted quango reforms had the effect of reclaiming a huge amount of responsibility to government, increasing both spending and the day-to-day load on both ministers and civil servants. But a deeper questioning – and more aggressive attitude to shedding - of government’s responsibilities in some of these areas would have resulted in much lower overheads for government, both financial and cognitive. That would have had the twin advantage of allowing government to focus funding and cognition on priority areas, whilst lowered taxes would enable people to recreate and replace those non-essential government functions they valued by voluntary contribution. This move would have had the potential to result in an increase in personal (and corresponding decrease in government) responsibility by genuine devolution, not by synthetic top-down attempts to induce community via ‘community hubs’ or ‘community workers’.

Given the almost wholesale progressive takeover of institutions it’s important that future Conservatives recognise that the state must do a lot less, but perform that significantly more limited role significantly more capably. I would argue very strongly that the majority of any future Conservative electorate don’t care how much we spend on the Border Force as long as it actually protects our borders - but they do mind how much the Arts Council spends on provocative left-wing art, on point of principle that it’s not something taxpayers should be funding so generously in the first place. But after 13 years in government, Conservatives have found themselves in the ludicrous position of funding artwork that criticises Conservative ministers, funding charities that fight Conservative policies in court and appointing opposition activists to positions in public life.

The vast range of support and services the government still provides means the outsourcing of government (including to non-majoritarian institutions ‘in which powerful policy actors may take major decisions, decoupled from traditional democratic procedures of representation, scrutiny, and accountability’) is almost inevitable, as government does not posses a wide enough variety of talent or understanding to provide the most specialised services. But with the widespread – and specifically progressive- politicisation of the institutions means that to continue the governing strategies of New Labour, what Peter Burnham calls ‘the politics of depoliticization’, will inevitably spell disaster for Conservative governments.

A decade of low growth, bloated government function and an over-weighted welfare state has constricted the choices of today’s politicians – managerialism is about all they are able to deliver.  Cameron had a unique political and economic opportunity to pump-prime Britain for growth by utilising low interest rates to boost capital spending, increasing the capacity of government to do what it should by cutting out what it shouldn’t, and ensuring future generations were equipped to vote Conservative by making sure future burdens wouldn’t be too heavy, or too unfair.  Perhaps the coming political crunch will force Conservatives to once again, in the words of Johanna Möhring:

Address concrete realities, namely what tasks should stay with the state to be financed collectively, and how each national economy can create enough resources to be able to do so.

It may not, of course. But there is wishful thinking in Hell as well as on Earth.