Edward Leigh MP: What a Conservative government must achieve
Introduction: A sorry state of affairs
Recently I was day-dreaming about what I might write on the subject of the first ten years of a Conservative government, if it happens, of course, and if I’m still around in 2020. So here goes, but just in case some eager Labour party researcher spots this, these are mine and no one else’s musings and they are only that!
Taking power for the first time in 13 years, the Conservative government had its work cut out. First of all we had the attitude that we wanted a society built on freedom, responsibility and aspiration. Our aim, our commitment was nothing less than balancing the budget during our mandate. With Public Sector Borrowing Requirement at £175 billion and the deficit running to £848.5bn as of January 2010, the financial outlook was bleak. Our deficit was equivalent to 59.9% of total national output and we were determined to undo the damage New Labour had inflicted on our economy and our communities. The main task facing our new government was how to neutralise the risk of both the IMF and Moody’s downgrading our AAA credit rating and the associated devaluation of sterling. Alistair Darling ignored the demands to cut more, and faster, and so it was up to the new chancellor to grab the bull by horns. It was never going to be easy, but with swift and decisive implementation of the right policies in the right places, we were confident that we could bring about a fundamental change in the way we spent taxpayers’ hard earned cash, and the way this country was governed for the better.
Cutting back the public sector – the battle for Britain’s soul
The first thing the new Conservative government had to do was come clean with voters and publicly acknowledge that the public sector had become a great, greedy and financially unsustainable monster. Basic economics dictates that you cannot have less and less people in the private sector labouring under a huge financial burden to pay for the sky-high salaries, gold plated pensions and bloated administrations across the public sector from Whitehall to Town Halls. Therefore we held an emergency Budget within 50 days of taking office to set out a credible plan to eliminate in large part the structural current budget deficit over a Parliament. This led to the first step we took towards taming the public sector which was a progressive reduction in the deficit by freezing and reducing budgets. This was only implemented in 2011/12 so as to make sure that the economic recovery was cemented before spending was cut back. We insisted that Permanent Secretaries delivered the same level of frontline services whilst dramatically reducing costs by an overriding insistence on efficiency savings. IT projects were scaled back and projects piloted properly, back office functions shared and above all, complexity, particularly in benefits, reduced. As complexity reduced error and fraud was contained.
The public sector pay freeze for all those earning over £25,000, excluding those in the armed services engaged in active duty, caused great consternation and, as predicted, all sorts of threats and promises were made by wealthier public sector workers who’d had it too good for too long. Local authority Chief Executives were particularly vocal in their opposition. One of our greatest achievements was that we stood strong in the face of huge pressure from the unions and were able to deliver consistent reductions in the cost of the public sector to taxpayers, which also contributed a large amount to cutting public sector debt. Everyone agreed that executive pay in the public sector was out of control when we came into power, and so we took the step of guaranteeing that no public sector employee could earn more than the Prime Minister – their job may be demanding and important, but no one has more responsibility than the person running the country, and the public and frontline staff alike wanted to see an end to public sector managers earning far more than they were worth simply because they had become adept at exploiting a disorganised and bloated system.
A fierce battleground in the war to tame the cost of the public sector was public sector pensions. Early 2010 figures put council pensions liability alone at £53 billion, and with so many private sector companies seeing their profits exploded by the demographic time bomb, the Government had to drag the public sector kicking and screaming towards realistic, fixed contribution schemes and away from their unjust fantasy land of final salary pensions which had been gobbling up budgets and overburdening taxpayers. This was immediately implemented on all new public sector contracts whilst existing contributors were protected.
Another area that was overdue for the axe was the ever expanding quango state. 12 years of Labour government had created an inconceivably large number of these faceless, unaccountable and expensive bodies. The cost of these bodies to the British taxpayer was estimated to be £2.7 billion and rising towards the end of Labour’s reign, and it was considered that there were some amongst their ranks who were more interested in protecting their jobs than they were in performing any useful public service. Our long promised “bonfire of the quangos” took time to deliver. David Cameron stayed true to his pledge to make every single Semi-Autonomous Public Body justify their existence and earn their keep, and many were found wanting during the evaluation process and so were immediately disbanded.
Changes at home and abroad
The NHS was one of the biggest issues in the run up to the 2010 election. It had been an open secret across the medical world that the NHS was failing badly by trying to do too much, and therefore not doing certain things properly. All political parties had pledged to ring fence both NHS spending and the UK’s aid budget. Both policies were honoured. However, in the face of economic reality in the months after the election the Government ordered a Royal Commission on NHS productivity and the cost neediness of its aid budget.
Andrew Lansley’s team quickly came to realise that whether they froze the budget or not, the NHS had to become a lot more efficient in the way it spent taxpayers’ money. Thanks to New Labour targets, the number of non-frontline staff working in hospitals and surgeries across Britain had risen sharply in recent years, and up to 40% of NHS staff were managers, bureaucrats and pen pushers. The Tories realised that what taxpayers wanted, and what they thought they were paying for, were more doctors and nurses. When we started delivering more health professionals and cutting back on administrators, patient satisfaction increased, infection rates decreased and there was room to maintain the overall NHS budget and still deliver better quality frontline healthcare.
As for Aid, numerous reports had shown that the UK government’s distribution of aid was often not only ineffective in ameliorating conditions on the ground in some of the most deprived regions of the world, but could also be detrimental in that they did not employ the maxim that with donations come responsibility, and DfID funds were used for lobbying, advertising and sometimes downright dodgy administrations. The Conservatives took a more grassroots approach to aid, and only extended financial help to those schemes which could prove that they were making a real difference to people’s lives, had only minimal overheads and did not waste taxpayers’ money on swanky advertising campaigns in the UK when they should have been channelling funds into underprivileged communities on the other side of the world.
One area we felt it our duty to maintain was defence. After years of under investment in the armed services, we put our focus on getting our priorities straight instead of simply cutting the overall budget. In the run up to the 2010 election there were many stories of soldiers falling in battle due to insufficient equipment and a failure to invest in the correct technology to win the war and keep our boys safe. Even worse, while serving military personnel were moonlighting during their leave to buy proper body armour, Ministry of Defence bureaucrats were enjoying record bonuses. Like all other budgets the defence budget was frozen, but Dr Liam Fox wasted no time in re-orientating the Government’s priorities towards better equipment and protection for our troops and away from Whitehall.
The very specific situation in Afghanistan was causing an enormous drain on the defence budget. In order to remedy this on entering office we placed great emphasis on improving the political situation in the country and the diplomatic relationships between Pakistan and India by initiating talks between the relevant parties. These included some of the warring factions. Eventually this led to improved security within the country which in due course enabled us to reduce troop numbers, therefore saving money, whilst still maintaining our necessary presence with Special Forces.
Benefits – for families and communities
When the Tories took power, they found themselves with the unhappy inheritance of a number of nationalised and part-nationalised banks. The Labour government had felt the need to bail out a number of banks, but had been all too lax in ensuring that the banks kept their end of the bargain and extended loans and credit to hard-pressed families and the small and medium sized businesses that are the backbone of the British economy. The Conservatives turned this around, got tough with the banks and used them as a tool to put the town centre back at the heart of the economy. In 2010 it was estimated that three-quarters of the groceries bought in the UK in 2006 were purchased in one of the “Big 4” supermarkets, i.e. Tesco, Asda, Sainsbury’s and Morrisons. To try and change this and encourage free and fair competition for smaller, local producers, we introduced a number of policies. We encouraged local councils to create free parking on the high street, toughened restrictions in the planning act on the building of new supermarkets and also passed a Bill which required large supermarkets to source a percentage of their produce from the local area. Another key step was when we gave local authorities a new discretionary power to levy business rate discounts, allowing them to help local shops and services, such as rural pubs and post offices. This empowered local communities to decide what's best for their area, rather than being dictated to by a central government administration which could never fully grasp local needs and issues to the same extent.
Under Labour the size and scope of the welfare state had ballooned. Politicians of all stripes agreed that something had to be done to reduce the benefits bill, but most lacked the imagination or political will to implement the radical changes that our system so badly needed. The Conservatives had been saying for years that they wanted to get away from making people dependent on the state and encourage a far more self-sufficient, family oriented society in which people with the right work ethic could thrive and yet the vulnerable were still well looked after. Luckily, we were well prepared on this front. Building on the excellent work carried out by Iain Duncan Smith’s Centre for Social Justice, we integrated the Department for Work and Pensions far more closely with the Treasury and the Department of Health so that we could get to the crux of why we as a nation were spending so much, and yet improving so little. We froze all benefits except the state pension for 5 years, and targeted middle-class benefits for cuts. Too many people who could afford to live off their own income with no help from the state were receiving handouts which were adding billions to our annual expenditure. We knew this had to change, and started by making sure it was only the vulnerable and needy in society who received any benefits. We made work pay again by scrapping effective marginal tax rates for the poor of 96 per cent and we ended the couple penalty that left families worse off if the parents lived apart. Housing benefit was overhauled to give local authorities more autonomy to make sure they are getting the best value for money, and each claim for incapacity benefit was evaluated on medical grounds by independent doctors. These savings, along with providing tax breaks for married couples and encouraging a strong familial unit helped to reduce the effects of many of the social problems Britain was facing. We feel we have made a real difference to so many communities who found themselves in the quagmire of social disorder and apathy, and that taxpayers are getting better value for money, the vulnerable are receiving the attention they need and every child, regardless of background, now has a better chance of making a success of their life in today’s Britain.
A Taxing Issue
One of our key pledges in the run up to the election was to increase economic competitiveness. It was of great regret to all right minded people that so many businesses of all sizes were relocating to places where they felt they would get a fairer deal and would be allowed to hang on to more of their hard won profits.
We scrapped Labour’s proposal to implement a 50% income tax rate on high earners, after examining the evidence and realising that it would raise no meaningful revenue, would result in the flight of entrepreneurial talent that we so badly needed, and was more about political posturing than practical help.
There was a great desire in the Conservative party to make it easier to start and do business in our country. Even France, not a country known for its rampant capitalist spirit, had managed to create an environment in which it was quicker to start a business than we had. We turned this around and now enjoy one of the most efficient and entrepreneurial environments in the world. How did we do it? By cutting red tape and regulation, saying no to Brussels regulating our every economic decision, and encouraging those in our society with a get up and go attitude by not only extending preferential loans through our state owned banks as mentioned above, but also by giving businesses started between 2010 and 2015 a 5 year corporation tax holiday. We lowered corporation tax, lowered National Insurance contributions and made sure that no one in Britain would pay more than 40% income tax, no matter what their salary or pay structure.
We upheld our pledge on inheritance tax, raising the bar so that it only kicked in once you had amassed an estate worth in excess of £1 million, and then lowering the rate to a maximum of 15% on any estate regardless of its value. We believe that by taking these steps we were sending a message to the British people that we would in no way unfairly punish those who sought to do right by their children by putting money aside so that they can improve their lot and achieve their dreams.
Conclusion: Nothing worthwhile is easy
Every administration has its critics, and there’s no doubt that not everyone was convinced we would have the courage of our convictions once we gained office, or even that those convictions were the right ones in the first place. As a party, however, I believe we can feel vindicated by the fact that we have turned around an economy on the brink of collapse, and made Britain a place in which people can thrive again. We have empowered individuals to change their lives, built communities, cut red tape, got the public sector under control and rebooted our flagging economy. With every bold step comes risk but as we look back over 10 years of Conservative government I am confident that we can say we delivered real change that has vastly improved the lives of Britons every day, and that is something of which we should all be proud.