Every new economic statistic is now seized on by supporters or opponents of Brexit, either as a boost for their cause or a setback for their enemy as they continue their neverendum campaign.
They miss the big picture: the Brexit vote and the June election were both rejections of the economic status quo. No wonder: a decade of wage stagnation means the crisis that began in 2007 is not over for millions.
Yet the political class has been remarkably slow to realise it, as epitomised by Theresa May’s disastrous decision to call the election and then barely mention the economy during the campaign. She should have known better; she recognised after last year’s referendum that the vote was not just about the EU, but also the “left behind” and “just about managing.”
At the election, Jeremy Corbyn’s anti-austerity message caught the public mood; not only have people’s incomes and benefits been squeezed, but their public services have deteriorated. Above all, the fruits of the so-called recovery since the financial crisis have not been shared fairly. Young people are poorer than their parents; many have little hope of getting a toe on the housing ladder. The London-centric political class kept the economy unbalanced; the North is still fighting for its fair share of investment. No region outside London and the South East has seen output per person return to its peak before the crisis. The economy isn’t working. Corbyn departed from the Tory-Labour consensus on the economy that has existed since the Margaret Thatcher era. But Labour’s manifesto, inevitably thrown together for the snap election, did not offer fundamental reform. Reversing Tory privatisations was hardly a new idea. Indeed, since the 1980s, Labour has been more interested in social rather than economic change. To meet the huge challenges of Brexit, an ageing population and automation, the country needs a new economic policy that turns into reality our politicians’ rhetoric about “an economy that works for all” (Tories) and one “for the many, not the few” (Labour). Radical reforms after the Second World War and then under Thatcher did last but the failure to achieve prosperity and fairness since the crisis shows that another rethink is needed. Thankfully some fresh ideas will be offered early next month in an interim report by a Commission on Economic Justice set up by the IPPR think tank. It will contain a powerful analysis of the failings of the British economy and will set out a new vision for it. The commission includes the Archbishop of Canterbury; the bosses of John Lewis, Siemens and McKinsey; City of London representatives; entrepreneurs; academics and trade unionists. That its impressive 24-strong cast list all recognise the need to rewrite the economic rules is quite a comment on the state we’re in. It will produce its final report next year, and aims to be the most significant review of economic policy outside of government this decade. Although the IPPR has always been close to Labour, there was a time when Theresa May looked more likely to pick up and run with the commission’s ideas. Her guru Nick Timothy, who resigned after the election disaster, had been taking a close interest in the commission’s work. It dovetailed with his striking language in the Tory manifesto, which declared: “We do not believe in untrammelled free markets. We reject the cult of selfish individualism. We abhor social division, injustice, unfairness and inequality.”
Timothy’s departure, May’s fight for her very survival, the all-consuming Brexit process and her lack of a Commons majority mean that such words will not be turned into action. A promised cap on energy prices has been dropped and next week May is expected to dilute proposals to force company boards to hold binding votes of shareholders on executive pay. A progressive social care funding plan was abandoned after it was appallingly presented. May’s brief tack to the left seems over; the Tory right is in the ascendancy again, declaring that capitalism is working and demanding yet more tax cuts – even though the £9bn frittered away in corporation tax cuts would have been better spent on the NHS, social care and education.
Perhaps May’s successor as Tory leader will be more interested in the commission’s blueprint. The younger generation of Tory MPs are more open to radical thinking than their elders and know the party must appeal to younger voters. In the short term, the field will be open for Labour to harvest the commission’s work. It might just provide the first draft of the new economic settlement we need.
Published in Daily Times, August 28th 2017.