Our final conference event for 2011. We’re still in Manchester with the Conservatives, and this was our Tuesday fringe event: Adapt or Die – Can Britain Compete in a Changing World?
‘But Prime Minister, around here, we are in the business of managing decline.’
According to Andrew Tyrie, the Conservative chair of the Commons Treasury Select Committee, this is what new Prime Minister Margaret Thatcher was told by a senior civil servant shortly after her election win in 1979. Tyrie didn’t fill us in on the specifics of the Prime Minister’s response, but the gist didn’t sound pleasant for the aforementioned mandarin.
Tackling or avoiding Britain’s Relative Economic Decline (‘bread’ in university seminars) is a challenge that’s confronted every leading British politician since the end of the Second World War (or even long before that) and it’s the topic that confronted the panellists at Tuesday’s ACCA/Politeia Conservative conference fringe event.
Joining Tyrie on the panel were new Conservative MP Jacob Rees-Mogg, the WSJ’s Simon Nixon, and ACCA’s head of tax Chas Roy-Chowdhury.
For Rees-Mogg, economic success for Britain would require a complete re-thinking of the role of the state. Businesses create jobs, not the state, he argued.
What government can do are the little things, continued Rees-Mogg, outlining a top-10 list of small changes the Government could make to boost growth and competitiveness in the UK. This list ranged from changes to planning laws (bats, barns, and old buildings all got a mention), changes to business regulation, and ignoring EU directives (not necessarily a ‘small’ change).
But, and it’s a big but, all of these changes wouldn’t help the UK compete with China and India, according to the Somerset MP. These changes still played within the parameters set by New Labour and did not challenge a failed political consensus that had spread across Europe which, he said, had concluded the state could ‘do it all’.
Small reductions of state spending, concluded Rees-Mogg, would only help us manage decline a bit better.
These sentiments were echoed – to a degree – by other panellists.
Simon Nixon acknowledged the growth of the state over the latter half of the twentieth century. The state, said Nixon, had taken on more and more risks in the economy and it was now being put in a position where it was struggling to meet promises it had made.
Moreover, according to Nixon, the UK had pioneered ‘capitalism without capital’.
This would need redress, he said, but at the same time it was important not to ‘destroy’ the City. The City, argued Nixon, was a key national industry whose health was important to make an impact on the deficit. This was backed up by Chas Roy-Chowdhury, who criticised European proposals for a ‘Tobin tax’ on financial transactions, which he said could drive business from Europe unless it was adopted internationally.
Tyrie struck a more upbeat tone, arguing that the world was a ‘dramatically’ better place now than it had ever been before in terms of people’s welfare and financial situations. However, Tyrie also had two points to make on this.
Firstly, he said that the West was backtracking from the ideas about business and the role of the state that had brought it success, while developing nations were adopting those ideas. The ‘lessons learned’ of the 1980s had given way to complacency in British politics about state spending.
Tyrie’s second point was that government spending as a proportion of GDP would have to come down, back towards 40 per cent, deficit or no deficit.
Further policy areas needed looking at too, said Tyrie, if Britain was to adapt to the globalised world economy: labour market reform (the Conservative’s announcements in this area at conference were of ‘great value’); banking reform (normalising lending); financial regulation; competition policy (something Labour got ‘right’ then later wrong with HBOS); planning reform; climate change; and transport.
Roy-Chowdhury also urged reforms in some areas to boost competitiveness, such as the simplification of the tax system, particularly for small businesses.
What we didn’t hear though was any criticism of government policy, despite press interpretations of Tyrie’s pre-conference comments about the Government’s plan for growth.
Both Tyrie and Rees-Mogg gave their full support to the Government’s deficit reduction programme, and both went out of their way to praise the Lib Dems for ‘stepping up to the plate’ (this seemed to be a theme amongst Conservative MPs at other fringe events).
One area of disagreement though: should the Chancellor be cutting faster? For Tyrie, the answer, depending on circumstances, was a ‘no’. For Rees-Mogg though, ‘bringing government spending in line faster’ could be a ‘lifeboat’ if things took a turn for the worst on the continent…