Conservative ministers are united on one issue if on no other: they think Jeremy Corbyn was right. Britain’s economy isn’t working.
It’s hard to disagree. Jobs abound, but real wages are falling. Many who work are becoming poorer for their efforts. Little wonder trust in the businesses that employ us and sell us ever-more costly products is falling fast. Household savings rates have fallen faster still. Home ownership is out of the question for many.
In the face of such economic experience, it takes a very special understanding of public opinion to think that the answer is simply to bellow a bit louder about the wonders of capitalism and the evils of socialism — especially when many of your audience weren’t even born in the 1970s, let alone remember the three-day week. Hence all but the most dogmatic Tories now accept, if only in private, that Mr Corbyn asked the right questions about markets and economics. This shouldn’t be a surprise. In 2013, Ed Miliband sparked discreet Tory soul-searching by promising an energy price cap that many of them realised had tapped into public unease about the way supposedly wealth-creating free markets left people feeling ripped off.
Some Tory thinkers had spotted this issue even before that. It is almost six years ago to the day that Charles Moore wrote a critique of the modern economy entitled “I’m starting to think that the left might actually be right”. Margaret Thatcher’s official biographer
argued that the free market meant “the many simply have to work harder, in conditions that grow ever more insecure, to enrich the few”.
This history made Tory reactions to Theresa May’s election manifesto rather curious. The manifesto rejected “untrammelled free markets” and said the state should do more to make markets fair. That struck me as uncontroversial, a reasonable acknowledgment of economic and political reality.
But Tory noises-off lamented its deviation from a (largely imagined) standard of Thatcherite free-market purity; one minister described its principal author, Nick Timothy, as a “bearded socialist”. Now, after a real bearded socialist wrecked the Tory majority by getting 40 per cent of the vote, there is a quiet acceptance in the party that Mr Timothy had a point. That to stay in business and in power, the Conservatives need to offer something on the economy beyond a grumpy defence of the status quo.
But what? This is where the Tory unity ends. Some cabinet ministers have identified relaxing public-sector pay constraints as the best way to show that the party gets it. Less widely understood is that the Tories defending austerity also accept, in terms, that Mr Corbyn was right that the economy isn’t working properly.
For Tory hawks such as Liz Truss and Sajid Javid, the problem with the free market is that it isn’t free enough, so the answer is more competition and less regulation, especially when it comes to planning and building houses. That might not have immediate appeal to Corbyn-inclined voters, but the free-marketeers’ talk of the Tories reinventing themselves as radicals taking on “vested interests” might just resonate. This week, a dry-as-dust cabinet minister told me he wanted to disrupt “collusive” corporations and “privileged” professions such as medicine and the Bar in terms that, if uttered by a Labour frontbencher, would be branded wild revolutionary talk. The Conservatives should trump Mr Corbyn by becoming “the real anti-establishment party”, I was told.
As a non-aligned observer, I found much to like in Mr Timothy’s manifesto, and I sympathise with those Tories who think the state should now be doing more, not less. I hope Greg Clark’s fair markets green paper and original thinking about a new role for economic regulators get proper support across the government and beyond.
But I’m not sure that the anti-austerity Tories are yet thinking big enough. Bluntly, a few more pounds on a nurse’s payslip, though needed and deserved, isn’t an adequate answer to the questions raised about the economy by the election and the EU referendum. Here’s one of those questions: can you really blame people for rejecting an economic settlement in which they literally have no stake?
Everyone lost the general election and there is still a prize to be claimed by the party with a convincing plan to help more people own more things — and not just houses. It should be easier and cheaper for people to buy shares, especially in the companies they work for. An asset-owning democracy should be the aim of any sensible party. The Social Market Foundation, the think tank I run, will soon publish research showing how government could help all young Britons start adult life with a decent nest-egg of cash and other investments.
There may be a new role for the state in owning things on our behalf too. In Whitehall public ownership of some rail franchises is now widely discussed, and municipal power companies such as Robin Hood Energy, created and owned by Nottingham city council, are attracting much interest. There are many ways to give people a stake in their country.
Twenty years ago the notion of a stakeholder economy helped Tony Blair capture and colonise the centre ground of politics where most voters still live. Similar ideas and rewards are now up for grabs. The Tories should seize them before Mr Corbyn does.