Five Prime Ministers And Three Errors
When politics passes into history governments can often be described in a single phrase. The Attlee government erected the welfare state. Eden collapsed at Suez. Macmillan never had it so good. Wilson was the white heat of the industrial revolution. Thatcher was the trade union legislation and Blair was Iraq. To make a case for each of those governments, though, would demand that we range a little wider. The liberal legislation of the Wilson years, Thatcher’s economic liberalisation, Blair and Northern Ireland. The dilemma has never been so acute as with the successive variants of Conservative government that have ruled Britain since 2010. The historical verdict will record “Brexit” and perhaps not much else. There is more than a hint of “apart from that, how did you enjoy the theatre Mrs Lincoln?” about a survey of anything else. Yet it is worth the enterprise, to take the measure, in domestic policy, of this period of government, not least to work out why it is ending, as it most assuredly is, in ignominious failure. We have been through five Prime Ministers in 14 years but to what end?
When the Conservative party emerged as the biggest party in the 2010 election and formed a government with the Liberal Democrats, the first coalition since 1945, what did it hope for? A year earlier, in an indicative speech to a Conservative Party Forum, David Cameron had said that “the age of irresponsibility is giving way to the age of austerity”. He committed to end what he characterised as years of excessive spending and government ministers, meanwhile, would be penalised – or even sacked – for breaking departmental spending limits. In place of the Big State, he promised a “Big Society” where “everyone pulls together, comes together, works together”. Fourteen years on, this all sounds rather forlorn. The verdict on all governments is, to a large extent, a verdict on economic management or – because governments do not in fact control all they take credit or blame for – whether they presided over a time of want or a time of prosperity. Wherever the blame lies, the Conservative years have been lean years and the story of the government is a tale of the consequences of three historic decisions, each one of which, from this vantage point, looks like an error. The story of the Conservative years is the story of austerity, hostility to the European Union and ideological fixation on tax cuts. Osborne and Cameron, May and Johnson and then Truss and Kwarteng, with Rishi Sunak as a footnote.
It has to be said that, politically at least, George Osborne made a lot of his economic inheritance. There can be no doubting the political skill he showed in attaching the blame to a profligate Labour party for what was, as Osborne well knew himself, a global financial crash. The Cameron government’s first big decision was that it would deal with the deficit created by the crash with a huge bias towards spending cuts rather than tax rises. In the midst of a sovereign debt crisis triggered by the implosion of the Greek economy, Osborne raised the spectre, rather melodramatically it has to be said, of the same fate befalling Britain. As an outsider to the Eurozone, Britain was spared the worst of the contagion but Mervyn King, the Governor of the Bank of England, was concerned that the state of the public finances would put a brake on economic growth. Osborne responded by taking money out of circulation. In his June 2010 “emergency budget” speech he named two goals. First, the elimination of the exchequer’s budget deficit. Second, for national debt as a percentage of GDP to be falling. Both objectives would be achieved through sharp reductions in public expenditure. These reductions were especially severe from 2010 - 2012 when public investment was cut 40 per cent in real terms. Between 2010 and 2013, the government reduced public spending by £14.3 billion compared with 2009–10. The rate of unemployment remained high, and growth was a sluggish (though better than expected) 1.6 per cent in 2011 and 0.7 per cent in 2012. By the end of 2010 the economy was back in recession. The question was whether austerity, to use the opposition’s metaphor from the time, had “choked off” growth. Paul Krugman was one of many distinguished economists, Simon Wren-Lewis being another, who argued that it had. There always seemed to be more than mere practical necessity to the cuts. In a 2013 speech, David Cameron said that his government had no intention of restoring spending even when the deficit had been eliminated. Proposed public spending reductions would be made permanent. In his December 2014 Autumn Statement, Osborne said his aim would be to achieve a £21.6 billion budget surplus, achieved by cutting spending to 35 per cent of GDP, the lowest level since 1948. Real spending on public services was cut another 14.1 per cent between 2015-16 and 2019-20. Some departments shouldered cuts of up to a quarter. There is no getting around that this has led to severe consequences for the public fabric of British life, as we shall see.
The case for austerity is that the deficit was, at least, reduced. By 2016 the deficit had been reduced from almost 10 per cent of GDP in 2010 to 2.5 per cent. But the shock treatment has produced a feeble economic decade. Real wages stagnated between 2010 and 2019 when they were still below their 2008 peak. In the period up to the financial crisis, German households could expect to be £500 a year richer than their British counterparts. By 2023, the gap had increased eightfold. The average household in the UK is 9 per cent poorer than its equivalent in France, while low-income households are now 22 per cent poorer. Annual growth rates have more than halved since the crash and, in 2024, according to the IMF, the UK will have the weakest growth in the G7. If you want a single cause for the political troubles, this slowly unfolding economic mess is the answer. Despite the attempts of later Conservative administrations to capitalise on the cultural turn in politics, a decade of poor economics takes its toll in the end.
If austerity was an ideologically conscious strategy, the second significant choice of the Conservative years was made by mistake. To his credit, George Osborne advised against the 2016 referendum on Britain’s membership of the European Union (EU) on the assumption that it could easily be lost by the Remain side, which of course it was. There then followed a series of subsequent moves, under successive Prime Ministers, all of which could have been otherwise. The Conservative party was not compelled to call a referendum. It was not compelled to trigger Article 50 when it did. It was not compelled to vote down Theresa May’s original deal – which would have been better than what we ended up with - nor to leave the EU on the terms it did. John Springford, deputy director for the Centre for European Reform, estimates that uncertainty caused by Brexit had cost the UK economy 5.5 per cent of GDP by the summer of 2022. Brexit was a tiresome shambles and a unique form of self-harm. The best indication that Brexit has been an economic disaster is that its advocates have quietly forgotten about it. Brexit was never the cliff-edge that the Remain side foolishly said it was. It was more like a long slide, a slower but obvious descent. A Labour government will inherit the unresolved question of Britain’s vexatious relations with its principal trading partners.
The twin shocks of austerity and Brexit were bad enough. But just for good measure Liz Truss and Kwasi Kwarteng decided they could probably do even worse. In September 2022, Kwarteng, the newly-appointed Chancellor of the Exchequer, announced – an act of grand hubris as it turned out – that he would conjure up growth of 2.5 per cent with a series of radical tax cuts, including a cut to the top rate of income tax, a reversal of an increase in national insurance contributions, and a reversal of a hike in corporation tax. Warming to his theme, disdaining the advice of the Office for Budget Responsibility and insensitive to the market reaction, Kwarteng insisted there would be “more to come”. The instant rise in gilt yields threatened the stability of funds looking after British pensions. The Bank of England promised to buy up to £65bn of government bonds to save the pension funds from collapse. The pound fell to its lowest level against the dollar since 1985. In the words of the American billionaire investor Ray Dalio, the government was acting like “the government of an emerging country”. It was the single most arrogant act in modern political history and Truss and Kwarteng got what they deserved which was to be out of office within weeks. This was the episode which finished the Conservatives off as an electoral force. There was at least the chance, if not the likelihood, of a recovery before the Kwarteng budget. Afterwards, it was all over. That was the day the election took place, in effect. The best claim the Conservative party can make on the affections of the nation is that it offers more stable stewardship of the national finances than the Labour party, so this Truss-Kwarteng fiasco was a complete disaster. Look up any poll of the Conservative party’s fortunes and you see the party’s ratings drifting down in the wake of Boris Johnson’s grubby premiership but Liz Truss finished the job in spectacular fashion.
The Case For The Defence
So, if the macroeconomic assessment of Conservative rule is, to put it charitably, not exactly overwhelming, can we find redeeming features in other parts of the record? To some extent, we can. Most of the government’s accomplishments derive from the coalition – it has been pretty barren since Brexit crowded out all policy innovation – but there is a case to be made. Education, pensions and welfare, the environment and crime all have items in the credit ledger, some of them surprising. The best place to start is in education policy. In 2010, 69.1 per cent of school pupils attained grades A* to C or equivalent in their GCSEs. In 2022, by contrast, 73.2 per cent of pupils did so. England is now the best of all Western countries when it comes to reading at primary-school age. In 2010, 68 per cent of schools were rated good or outstanding by inspectors. The figure is now 88 per cent.
British pensions policy has had some slow, unheralded, successes. Drawing on the work done by Lord Turner in the latter Labour year and, beginning in 2012, up to 11 million workers were automatically enrolled into a workplace pension. 10.8 million people have been automatically enrolled since, and private pension participation has more than doubled from 42 per cent in 2012 to 86 per cent in 2021. In 2021, employees saved £114.6 billion into their pensions, an increase in real terms of £32.9 billion compared to 2012. The participation of women has increased 50 per cent since the scheme was introduced. There is credit to be noted in welfare too. The implementation of the Universal Credit system in 2018 was beset with administrative failures and the ungenerous rates reduced the promised incentives to work. However, the system proved resilient during the Covid-19 pandemic when the claimant count doubled from 2.7 million to 5.7 million.
The Conservative years have been greener than commonly acknowledged. It now seems a long time since David Cameron pledged to create the “greenest government ever” and the claim is still a bit of a stretch. However, Britain did become, in 2008, the first country in the world to pass legislation committing it to tackle climate change. Per capita CO2 emissions have fallen from 8.2 tonnes per person in 2010 to 5.2 tonnes per person in 2021. Moreover, in 2010, the UK’s net carbon emissions were estimated to be 495.8 million tonnes. In 2021, they were 427 million tonnes, despite population increases.
We can also count regional devolution as something of a success. Since the establishment of the Greater Manchester Agreement in 2014, negotiated by George Osborne and the leaders of the ten boroughs of Great Manchester, new powers and budgets have been devolved to mayoral combined authorities, each one of them headed by a now prominent, locally-elected metro mayor. The mayoral powers are limited and it is still early days for the institution but they do seem to be bedding in.
Apart from the schemes that governments initiate, they are also remembered for how they responded to crises. There is a lot to say about the tendency to panic, the low quality of the cabinets and the relegation of standards in British public life, but there are two responses which deserve praise. The Coronavirus Job Retention Scheme – furlough, as it became known – is Rishi Sunak’s claim to achievement as a politician which he then ruined by becoming Prime Minister. 11.7 million jobs were furloughed between March 2020 and September 2021, at a cost of £70 billion. In April 2020, the Office for Budget Responsibility predicted unemployment would peak at 10 per cent in 2020. In fact, it peaked at 5.2 per cent. To the success of the furlough scheme we should also add the vaccine programme. The UK was the first country in the world to procure, regulate and deploy the Pfizer-BioNTech and Oxford-AstraZeneca vaccines. It also procured, regulated and deployed the Moderna vaccine. These three vaccines became the most widely used in the world. The government also ensured the speedy licensing of the Oxford-AstraZeneca vaccine, which was crucial to the global fight against coronavirus. 2.5 billion doses of this vaccine were distributed to over 170 countries by January 2022. In its first year it is estimated to have saved 6.5 million lives globally – more than any vaccine. In the UK alone vaccines prevented 105,000 deaths by September 2021.
The Decline Of The State
This is the best that can be said, so what of the failures? Sadly, the failures are legion and most of them derive from the unnecessarily large cuts that were imposed early in the Conservative terms. The most egregious damage has been done to local government. With responsibility for bin collection, licensing, council housing and social care, local government is the frontline of the state. Since 2010, it has taken the brunt of the spending cuts: 40 per cent in real terms between 2010 and 2018. While the spending power of the average council fell 17.5 per cent between 2010 and 2019, the poorest councils – unable to raise enough through council tax – had even less cash to spare. The city of Stoke-on-Trent, for instance, endured real-terms cuts to government funding of 26.9 per cent since 2010. In 2021/2022, local authorities spent £26.9 billion on social care, three quarters of their total budget. There is no greater failing of the British state over the last decade than social care, a neglect symbolised by the decision to discharge thousands of Covid-19 positive patients back into care homes during the first lockdown. Thousands died unnecessarily. Today, thousands of people languish unnecessarily in hospitals. In the winter of 2022/23, between 13,000 and 14,000 patients were left in hospitals for want of social care, while one in six over the age of 75 were readmitted within 30 days of discharge.
With social care the priority for councils, other areas of once vital provision have suffered. Since 2010, for instance, 1,416 Sure Start centres have closed (down from a peak of 3,620 in 2010). According to a 2019 report by Children for Action, the number of children using Sure Start in the 30 most deprived authorities was down by 22 per cent, compared with 12 per cent in the 30 least deprived councils. A report by the Institute for Fiscal Studies found these services provide children with stronger immune systems, less risky environments, and improved mental health. By the age of 15, for instance, an extra Sure Start centre per thousand children prevented over 3,200 hospitalisations among boys (the effect among girls was, by contrast, negligible, reflecting boys’ greater sensitivity to disadvantage). The effects of their closure have yet to be measured, but one study found children that grew up under austerity are physically smaller than their European counterparts.
The story is similar when we look at youth services. Since 2010, 4,500 youth work jobs have been cut and 750 youth centres have closed. Cambridgeshire’s youth service budget fell from £3.5 million in 2011 to £0.7 million in 2018. Knife crime rose from 220 incidents in 2014 to 430 in 2018. Meanwhile, one in six libraries have closed, fly-tipping has increased 38 per cent, and a million potholes have gone unfilled. Getting around has become harder too. Since 2008, urban bus services, with the exception of London, have dropped by 48 per cent, worse in rural areas where they have fallen 52 per cent. Now, the crisis in local government is reaching its endgame. In December last year, the Local Government Association warned almost one in five councils in England are likely to issue a section 114 notice this year, the legally required statement that the council cannot balance its budget. A recent survey by the Local Government Information Unit found that nearly one in ten councils will go bust within the next twelve months, half in the next five years.
The major public services have also suffered their deprivations. The National Health Service was shielded from the greater force of the spending cuts but, with an ageing population demanding even more support, performance has deteriorated alarmingly over the past decade. The 62-day waiting time standard for cancer (measured from urgent GP referral to treatment) has not been met since 2014. Waiting lists have increased by more than half in the most deprived areas. The number of qualified general practitioners (GPs) per 1,000 people fell from 0.52 in 2015 to 0.44 in 2023, while the average number of patients per GP increased by 17 per cent. The average wait for an ambulance for a stroke or chest pain is now one hour and thirty minutes, compared to an 18 minute target. Long-term improvements in population health either stalled or went into reverse after 2010, while in 2021 public satisfaction with the NHS fell to its lowest level since 1997.
There has been some success in schools but let’s not be Pollyanna here. A fifth of schools set up a food bank during Covid and a third of teachers say they have become auxiliary social workers. They also have responsibility for managing more safeguarding cases, with a record number of children in care. Teachers are doing more work for less pay. Those in the middle of the salary scale have experienced real terms pay cuts of 9-10 per cent since 2010. Starting salaries have fallen by 5 per cent in real terms. In 2023, only half the government’s target number of secondary teachers commenced training. There are serious problems emerging now in Higher Education. University funding has been falling consistently for the past decade. With no change in course, by 2030 will be at its lowest level for a quarter of a century. The loans system is a mess; the Exchequer predicts only 27 per cent of 2020’s cohort will pay back their loan. In March this year, the total value of outstanding loans was £206 billion and is predicted to rise to £460 billion by the mid-2040.
Justice comes at a price and Britain cannot afford it. The Ministry of Justice had its budget cut 25 per cent in real terms between 2010 and 2019, while between 2010 and 2022, a third of courts in England and Wales were closed. In the crown court, the backlog was 59,700 cases in June 2022, slightly below the peak of over 60,000 in June 2021 but higher than at any point since at least 2000. The backlog has been exacerbated by crumbling court infrastructure. According to the Law Society, two-thirds of solicitors have experienced court delays due to issues such as heating, flooding or a lack of judges. The condition of prisons has worsened, too. Analysis by the Prison Reform Trust found that recorded serious assaults on staff and rates of self-harm increased dramatically between 2015 and 2022. More than a third of prisons are deemed to be insufficiently safe. These problems are exacerbated by overcrowding, with two-thirds of prisons deemed as such, and by a dearth of experienced staff. There are 10 per cent fewer staff than in 2010 and almost half the officers who left the service in 2023 had been in the job for less than three years.
Then there is the problem of declining participation in the workforce. In his March 2024 budget speech, the chancellor Jeremy Hunt said there were 900,000 job vacancies. The rise of economic activity after the pandemic is thought to be one of the leading causes of Britain’s weak economic growth. No other advanced economy has failed to return employment back to its pre-pandemic levels, with Britain an international outlier. Hunt has tried to tackle inactivity with a combination of carrot and stick: a cut to national insurance contributions and tougher rules for benefit claimants. But what if this problem was another of the government’s own making? George Osborne’s 2015 budget promised to give pensioners more flexibility in how they access their savings. Over 55s would be given the freedom to do what they wanted with their pension pots, with the requirement for them to transform it into an annuity scrapped. The amount of annuity purchases fell dramatically, from 90 per cent of savers in 2015 to 12 per cent in 2019. The liberalisation of Britain’s pension may be persuading more people to take early retirement with the unintended consequence of having fewer people contributing to the system through tax receipts.
This has been a period in which it has paid to be an older person. One of George Osborne’s more successful political ruses was the triple lock on pensions. It has been a good era to own assets and a very bad era to start trying to buy them. The most salient generational failure is housing. In 2019 the government promised to build 300,000 houses a year by the mid-2020s. Last year, fewer than 235,000 were built and former housing secretary Robert Jenrick said the target would be missed “by a country mile”. (In 1951, by contrast, the Conservatives met the same target of building 300,000 houses a year within just two years when the UK population was approximately 25 per cent smaller). The burden of this failure is borne by the poorest. Housing costs weigh three and a half times more on the poor as they do the well off. In 2000, the average home cost four times the average salary. In 2021, the average home cost eight times the average. The number of people homeless, for instance, rose 175 per cent between 2010 and 2022. Roughly a quarter of private renters in the UK spend more than 40 per cent of their income on renting, three times as much as in France and Germany.
The blame for this, quite wrongly but sadly all too often, falls on immigration. In a 2013 speech on immigration, David Cameron promised radical cuts down to the “tens of thousands”. By 2015, the number of arrivals was up to 379,000. By 2022, net migration was higher than it had ever been. Brexit had been a cry of frustration against immigration but it made no net difference. Migration to Britain from the EU has fallen since Brexit but, in the year ending June 2023, non-EU nationals account for 82 per cent of a higher total. Britain’s failure to sign a post-Brexit returns agreement with France has led to a huge surge in illegal migration, which is a separate issue. Numbers crossing the Channel increased from 8,400 in 2020 to about 40,000 in 2022. There is also a backlog in the process of asylum applications. While the government has cleared the majority of “legacy” claims made pre-June 2022, the total backlog still stands at close to 100,000, an eleven-fold increase in twelve years.
Decline In Standards
It has not been an edifying time in government and most of the numbers are heading in the wrong direction. But perhaps worse even than that is the decline in something that is harder to measure, which is the standards of probity in public life. Boris Johnson’s poor regard to truth led to him being suspended from the House of Commons and forced from office. His needlessly aggressive government had set out on a war against institutions, notably the judiciary and the rule of law. In the week of preparing this essay Rishi Sunak’s government was declaring through legislation that Rwanda was a safe country for illegal immigrants to be sent to, even though the Supreme Court’s verdict was the opposite.
This has been a period in which the Conservative party lost its discipline. That is not just true personally and politically, it is true intellectually. The centrist Cameron regime gave way to a more blue-collar conservatism of Theresa May which in turn yielded to Boris Johnson’s marriage of nativism and corporatism. Then the Conservative party lurched backwards towards a caricature account of the Thatcher and Lawson years under Liz Truss. Rishi Sunak is the soggy end to all this, a man standing on the deck as the water gushes in. It is not obvious that Sunak knows what he is doing there, or that he has the first idea of what he is doing. The quality of the Cabinets has not survived this fevered change. It is inevitable, into the fifth cycle of favoured MPs, that the quality of the people around the Cabinet table should decline. There has been too little respect for offices such as that of Home Secretary. In the chaos of the stupid party, Grant Shapps was Home Secretary for a week. The Conservative party used to be better than this and it needs to be better again. An electoral system that alternates power cannot afford its official Opposition to spend too long wearing the medals of its defeats. That is what the Conservative party will do, once it repairs to opposition. There will be a sense of indulgence, under a leader who has no hope of being elected Prime Minister. This has been a hollow time in government and it will end with a whimper.
Great article, but can we stop exaggerating regarding vaccines? We did well, but there are caveats:
- We were first but we beat Germany by *ten days*, and only because the Germans ran some extra tests, with the result that they have fewer sufferers from adverse effects;
- HMG were right about rapid rollout, but the uk’s main advantage (again, over Germany), was the NHS - whose staff have not been adequately rewarded for their dedication - by the Conservative government;
- most importantly, we in the uk had 40,000 more deaths than Germany; our vaccine success should never stop us talking about this.