The biggest problem facing the Tories today is their ridiculous subservience to the simplistic theories embodied in the ‘small government, free markets and low taxes’ mantra so often spouted by those on the extreme right. These ideas have made the two candidates for the office of prime minister desperate to avoid the supposed crime of ‘state intervention’ and blind to alternative possibilities.
Before going any further I must make it clear that I’m writing as a lifelong conservative Conservative, but at 87 I’m also a very old one and can remember politics long before Thatcher and the minimalist theories of Friedrich Hayek. They represent what I regard as a temporary aberration, a doctrinaire ideology wholly at odds with true Conservatism which looks for a commonsense middle way.
Recent events have shown that even as a stand-alone philosophy, small government is wholly misguided. While the NHS may have a top-heavy bureaucracy, for example, it has fewer doctors, nurses and beds per head of the population than in other European countries. Then we have a Home Office that can’t deliver passports, a DVLA that can’t issue licences, a grossly understaffed police force and a judicial system staggering from crisi to crisis.
But it is when small government is used to drive free markets that the real trouble begins. How could we have allowed our water companies to pollute our lake and rivers, fail to control leakage and refuse to set up a water grid to link the wet north west with the dry south east? Where were all the building inspectors and district surveyors when the Grenfell Tower was given its cladding?
These problems spring from the bizarre belief that untrammelled free markets are automatically self-correcting and always lead to the greater good. We need only look at the banking crisis of 2007-8 and the recession into which it plunged the whole world to accept the limitations of the concept. Free markets are fine for things like smart phones, cars and groceries, but in some areas work very poorly. In reality markets are seldom really ‘free’ but are sometimes distorted by monopolies, sometimes rigged and occasionally corrupt.
All the administrative and industrial difficulties outlined above are likely to be exacerbated by the final clause of the Hayek mantra, an insistence on low taxes. But instead of regarding small government as a virtue and big government as a sin, we should be debating just how big a humane modern government should be. According to recent World Bank/EU figures France devoted 56.4 per cent of its GDP to government spending, whereas for Denmark it was 51.7 per cent, for Sweden it was 49.7 per cent, but in Britain it was only 41 per cent. Any degree of government expenditure which exceeds 50 per cent of GDP suggests eating one’s own young, but surely it would be no disaster to raise the level in Britain to, say, 46-47 per cent if it allowed the duties of the state to run smoothly?
There is another aspect to all this which is worth considering. The current rise in the cost of living is not due to long-term financial mismanagement – although quantitative easing should have been abandoned long ago – but almost entirely to the Ukraine war. It is one of a succession of one-off extreme events that has hit Britain since 2020 along with the Covid 19 pandemic, and now drought.
Russia, though, is not the only supplier of natural gas, neither is the Ukraine the only producer of grain. (Whatever happened to the American mid-west?) In time – probably quite quickly – alternative supplies will be found and prices will fall.
These are temporary, external shocks and the government is quite right to offer the British public protection against them as far as it can. Moreover, all the excess costs involved could be bundled into long-term ‘war loans’ to be paid off over 20 or more years. In this connection the rescue package endorsed by Sir Keir Starmer seems eminently sensible to me. It would involve freezing bills for two years with the help of of a deficit fund that would be subsidised by loans from banks.
But it seems unlikely that either Rishi Sunak or Liss Truss will have the imagination to grasp these possibilities.
Grumpy Greybeard 