Nick Faith is Director of Communications at Policy Exchange. Follow Nick on Twitter.
Expect to hear about living standards – stagnant pay packets, zero hours contracts, a lack of affordable housing, rising energy and water bills – from Ed Miliband in Brighton next week. The Labour leader knows that his party’s greatest electoral advantage is painting the Conservatives as looking out for their wealthy friends, not hard-pressed families struggling to get by even when the national economy is seemingly on the road to recovery.
Osborne knew he had to pre-empt Labour’s attack. Last week, he delivered an important speech. He signalled that while the economy was showing positive signs of life, much more needed to be done to ensure that everyone in the country could benefit from the proceeds of growth. The real challenge for the Chancellor is to show the British public that he can deliver on his promises. To do that he will need to announce a coherent set of economically sensible policies that cuts through to people already deeply disillusioned with politicians and distrustful of big shiny policies.
That brings me to the announcement made on Monday afternoon that the government was looking to return one of our nationalised banks, Lloyds, to private hands. The initial sale amounting to 6 per cent will be to institutional investors. That leaves approximately 33 per cent up for grabs, worth around £18.5 billion. If I were a betting man, I would hazard a guess that taxpayers might get the opportunity to acquire some, if not all, of that remaining stake. The question is what process would give Osborne economic credibility as well as a notable political ‘win’.My colleague, James Barty, formerly of Deutsche Bank, has come up with such a solution. He thinks that the government should give away the remaining shares to anyone in the country who is on the electoral roll and has a National Insurance number. Unlike Thatcher’s privatisations of the 1980s, people would not have to pay a penny to receive their allocation of shares. The government would, instead, allocate a floor price so that the taxpayer benefits from any rise in the share price but would be immune from loss if the price falls under the floor. If, as some analysts are predicting, the price of Lloyds rises to 100 pence and we assume that 25 million people apply for their free shares in the bank, then every individual could expect to pocket at least £230 in the not so distant future.
Of course, giving away shares in Lloyds is only one of many solutions the government should consider to tackle the living standards questions but if. But if the Chancellor is looking to demonstrate that he really does want to help hard-pressed people up and down the country, then putting an extra couple of hundred pounds in people’s pockets is not to be sniffed at.
George Osborne capitalised on some good economic news in his speech yesterday. He argued that the economy has turned a corner, though he emphasised that risks remain.
If we are turning the corner, however, we are turning it slowly. After the Great Depression, the UK economy shot back to growth, and a little more than five years after the Great Depression ended the economy was back to where it would have been if there had been no depression at all.
Contrast that performance with the Great Recession. Not only have we not made up for the lost growth since 2008, we are actually producing less today than we did before the crisis. Arguably, it is the worst recovery from peacetime recession in British industrial history. In past recoveries, the economy has grown rapidly out of recession. Similarly, we should have had growth rates of over 2.5 per cent in the last two or three years.
What has happened? Firstly, there has been a banking crisis: recessions caused by banking crises are often worse than recessions caused by other factors. However, unlike in the 1930s, when we had a balanced budget, a small public sector and a liberally regulated economy, the current government presides over a very different policy background.
In research published by the IEA today - Will Flat-lining Become Normal? - a group of leading economists argue that there has been a significant fall in Britain’s sustainable growth rate. The long-run growth rate has fallen, they argue, to about one per cent. In any given year, the economy might grow more or less rapidly and, in the next few years, we might expect growth above one per cent because we have so much catching up to do. However, we will not experience the sort of growth we should see post-recession because the long-term growth potential of the economy has declined dramatically. The main cause in the fall in the sustainable growth rate is a slump in productivity growth. The reasons for this are varied. Some are within the Government’s control and others are not. The authors of our research, however, identify the following as important factors:It is less easy for the government to do anything about other factors causing the fall in productivity growth, such as the depletion of North Sea Oil or the demographic pressures from an ageing population.
All this points to the UK economy turning the corner slowly. But things could get better. If the government succeeds in its plan to reduce government spending to 40 per cent of national income, this will help raise the long-term growth rate back towards a reasonable long-term average of 2.25-2.5 per cent by around 2017. Credit should naturally expand again as banks get used to tighter regulation – though a reappraisal of regulation would help significantly. Finally, if the government liberated the energy sector, including allowing fracking, this would help offset the effect of the depletion of North Sea Oil. A more coherent environmental policy would also help in this area.
So, Osborne is right in the short run – we are turning a corner. However, things are not nearly as bright as they could have been, partly due to his inheritance and partly because of decisions this Government has taken. Nevertheless, if he sticks to his deficit reduction and spending consolidation plans, the long-term outlook for the UK economy will look rosier within four or five years – not as rosy as it would look with a radical plan for deregulation and reduction in government spending, but at least we should get back to respectable growth rates again. However, we will not regain much of the ground that we have lost since 2008: that output is lost forever unless we have some really radical policy changes.
The level of Britain’s sustainable growth rate might sound like a technical and arcane concept in the context of the day-to-day news releases relating to actual economic growth. However, it does matter. At the current sustainable growth rate, we double our income every 70 years. If we get back to the rates of the pre-Brown years, we will double our income every 25 years.
By Mark Wallace
Follow Mark on Twitter.
As reported by Guido, a range of think tanks and campaign groups have this afternoon written to the Government expressing concerns about the impact of the Lobbying Bill on their work:
We wish to highlight our grave concern about the Government’s Lobbying Bill, a piece of legislation that poses a significant threat to legitimate campaigning freedom of speech, political activism and informed public debate.
Part II of the bill threatens the ability of charities, research and campaigning organisations to inform the public debate, fulfil their missions and raise awareness of important issues. The current drafting would capture a huge number of organisations who would not presently be considered as relevant to electoral law and who do not receive any state funding. It also threatens to dramatically expand the range of activity regulated far beyond any common sense understanding of commercial lobbying.
We do not regard the Cabinet Office’s assurances as sufficient given the widespread legal doubts expressed from across the political spectrum. It cannot be a prudent approach to legislate on the basis of assurances that enforcement will not be to the full extent of the law. The exceptions offered are unclear and unconvincing.
The lack of clarity in the legislation further exacerbates its complexity, while granting a remarkably broad discretion to the Electoral Commission. The potential tidal wave of bureaucracy could cripple even well-established organisations, while forcing groups to reconsider activity if there is a perceived risk of falling foul of the law. This self-censorship is an inevitable consequence of the bill as it stands.
We urge the Government to reconsider its approach and to urgently address the fundamental failings in this legislation.
Yours Sincerely,
Mark Littlewood, Director General, Institute for Economic Affairs, Simon Richards, Director, The Freedom Association, Tim Knox, Director, Centre for Policy Studies, Matthew Sinclair, Chief Executive, Taxpayers’ Alliance, Jo Glanville, Director, English PEN, Emma Carr, Deputy Director, Big Brother Watch, Eamonn Butler, Director, the Adam Smith Institute
Jonathan Lindsell is EU research fellow at Civitas. He tweets and blogs personally here.
Fog and mirrors. That seems to be Government policy on the EU. Was the Bloomberg speech a sign that Cameron is Europhile, or a smiling assassin who’ll praise Brussels while he sticks the knife in? Is the ‘Review of Competences’ a useless vanity exercise, a placebo to muffle the Liberal Democrats, or a veiled attempt to write a ‘shopping list’? Does Hague’s support for the Fresh Start Group illustrate tacit Cabinet approval of their demands?
More importantly: is ‘renegotiation’ a ploy to stay in, as the government waves token concessions in the public’s face? It could equally be a plot to justify exit, if Number 10 purposefully sets renegotiation hurdles higher than Europe can feasibly jump.
It’s understandable that the government shies away from clarifying its EU position – last time they tried, it backfired with Mark Harper’s disastrous ‘GO HOME’ ad campaign. Much better to be vague and (relatively) popular than specific and ‘#racist’.
Recent Civitas publications have sought to put substance behind the renegotiation smogscreen, to hold Whitehall to account in the future and spur Dave to action at present. February’s publication summarised different EU yearly costs, from regulation (£20bn) to CAP (£10bn) to migrant benefits (£55.2m). David Green, Civitas director, wrote What Have We Done? on the importance of true parliamentary sovereignty. He traced our history to demonstrate the British people’s hard-won ability to dismiss ineffective governments – an ability we no longer hold, and must regain.
Now Fighting for a Flexible Union establishes specific negotiation goals, if negotiate we must before the 2017 referendum. Glyn Gaskarth examines each aspect of the EU’s acquis communautaire, from trade to agriculture to foreign policy. Having highlighted problems, his study recommends what powers should be repatriated, and how.As suggested by the title and Civitas’ broader position, individual states’ preferences form the backbone of recommendations. Gaskarth advocates, for example, that whenever a member state wins a treaty ‘opt out’, it should retain that option forever, even if a future government later opts in. Such a safeguard would appeal to Denmark just as to Britain – Copenhagen is full of voices calling for a plebiscite on Danish exemptions.
Gaskarth’s recommendations go further. The Common Agricultural Policy, he suggests, should be reformed into annual payments which member states spend as they like. This would neither solve the cost issue (Britain would remain a net contributor) – nor would it undo the EU’s Cold-War protectionism, which hamstrings development spending. However, it would allow progressive nations to modernise farming technology and withdraw payments from non-producing landowners. This should improve supermarket prices. Best of all, such a policy should not be opposed by CAP’s traditional champion, France, since their volume of payments won’t drop.
As one of the largest member states, with a trade deficit to EU-26 and a net budget contribution, parliament has ‘considerable diplomatic assets’ to make its voice heard. Gaskarth suggests that, in extreme circumstances, Britain could even withhold contributions to bailout and structural funds (e.g. to Spain or Greece) until consensus is reached. More pragmatically, he considers conceding certain demands (full repatriation of UK fishing waters) for those more vital to UK commercial interests (a Westminster veto to protect the City).
An unapologetic free-market thinker, Gaskarth envisions an effective end to the Common External Tariff, with pioneering states empowered to club together in new trade deals with Brazil, India or China while more protectionist members keep their barriers up. This may alarm Brussels, but precisely this kind of visionary is thinking needed to provoke serious debate about what a future Europe should look like.
Gaskarth’s Britain has greater control of immigration, the labour market, and foreign/security policy. Whilst personally he advocates limiting migration from accession states and withholding welfare payments from migrants who have no tax contribution history, the study makes clear that the proposed reforms are attractive to left and right alike. The principle is domestic control –parliament, not Brussels, should be able to decide how easy it is to fire people, parliament should decide who comes in and who ‘goes home’, parliament should keep command of its military and diplomatic corps.
It follows that the study has a second function. David Green’s note concludes that, if negotiation in good faith fails, ‘proposals serve as useful reminder of the vast powers that we have given up’.
Sam Bowman is Policy Director at the Adam Smith Institute. Follow Sam on Twitter.
Britain is in the grip of a housing crisis. House prices may have fallen a bit since 2008, but so have incomes. In many parts of the country prices are rising steadily, particularly in London, where house prices have risen by 3.5% over the past year. And over the past fifty years house prices have risen well above inflation: Shelter has pointed out that if grocery prices had risen at the same rate, the price of a whole chicken at Tesco would now be £51.
To address this, the government has launched the 'Help to Buy' scheme. This consists of an 'equity loan' for home buyers, where the taxpayer will lend up to 20 per cent of the value of a newly-built home interest-free for five years, and a mortgage guarantee scheme, which offers banks insurance on mortgages they make with loan-to-value ratios of 80 per cent or above – in other words, where buyers have made a deposit of less than 20 per cent of the value of the house.
While the scheme is well-meant, it is not likely to do any good overall, and may do significant damage to the British housing market. As we argue in a new paper released today, Burning Down the House, Help to Buy is likely to drive house prices upward without creating new demand, aggravating the housing crisis, it risks taxpayer money with no guarantee of a return, and recreates some of the perverse incentives that led to the US subprime mortgage crisis in 2008.Help to Buy is fundamentally a demand-side solution to a supply-side problem. Britain's housing has risen in price so significantly because of planning restrictions that prevent supply from rising to meet demand. Since Help to Buy does nothing to make it easier to build new houses, it will have a negligible impact on the availability of houses. The extra money made available by the scheme will just drive overall house prices upwards.
It is well-established that central government grants to local government, such as in educational spending, transport infrastructure, and rent assistance programs “capitalize fully into house prices, irrespective of whether the local government would use them to provide additional/better local public services or cut taxes.”
Any house buyer who does not qualify for or avail of the Help to Buy scheme will be a net loser in this, as will renters, who skew poorer than the overall population already. Poor people (who are typically landless) are the biggest losers from the UK's current planning system as it stands, and, of the problems with Help to Buy, offering taxpayer-backed loans to buyers of homes worth as much as £600,000 has to stand out as one of the most bizarre. The scheme is redistributive in any case, but supporting the purchase of houses worth this much means that it could end up being a transfer of wealth to the middle classes, from both the rich and the poor.
The government's loans risk taxpayer money on terms that no private financial institution would agree to. At best, the scheme is a gamble on the property market that ministers have no place risking taxpayers' money on. At worst, there is a very real danger that the scheme may prove to be loss-making for taxpayers.
The mortgage guarantee aspect of Help to Buy has echoes of Fannie Mae and Freddie Mac, the government-backed mortgage securitisers which helped the emergence of a boom in borrowing by 'subprime' lenders who could not be relied upon to pay their mortgages. By guaranteeing up to £130bn worth of borrowing, Help to Buy's mortgage guarantee socialises the risk between bank and borrower, with the taxpayer on the hook if something goes wrong.
The most frustrating thing about Help to Buy is that it is a non-solution to a very real problem. House prices must fall for the cost of living to return to a tolerable point. That cannot happen unless more houses are built, and the most sensible way to do that is to liberalise planning laws to allow the private sector to meet demand for housing. There is no shortage of land in Britain – less than 5 per cent of the country is built on – but there is significant political opposition to relaxing planning laws and allowing house prices to fall. Eventually, the government will have to choose between protecting the value of homeowners' assets and making housing affordable for renters and house buyers.
The Secretary of State for Planning, Nick Boles, appears to recognise the importance of planning reform, but other ministers speak privately of having 'done planning' with the National Planning Policy Framework last year, which streamlined legislation but did very little to make construction easier. If Help to Buy and similar policies are implemented so the governmentcan avoid the hard choices around planning reform, then taxpayers, renters and house buyers alike all have a turbulent couple of years ahead.
Ben Walker is a researcher at the Centre for Social Justice
The guiding principle of the Government’s welfare reform agenda is that work is the surest route out of poverty. We champion this principle at the Centre for Social Justice (CSJ), and that is why we designed Universal Credit to make sure that work always pays. It is vital that people get the help they need when making that journey from welfare into work.
However, if we want people to make that transition, it is essential that government provides the right support. In our latest report, Up to the Job? we question whether Jobcentre Plus (JCP) is providing the service that claimants, businesses and taxpayers need.
One of the key problems with JCP is that it only measures how quickly a claim for benefits is closed. On the face of it, this seems sensible, but what this measure fails to grasp is whether people move into work, claim another benefit or just stop claiming benefits altogether. Based on this measure, the JCP does perform well (75 per cent stop claiming within six months and 90 per cent within a year) but it ignores the high levels of churn in the system with many claimants constantly cycling in and out of work.
Some 40 per of people who leave Jobseeker’s Allowance (JSA) will reclaim benefits within six months and 60 per cent will reclaim benefits within two years. Put simply, JCP fails to monitor how many people they are actually helping into work and it is also not particularly successful in finding people sustainable employment. This urgently needs to be reformed because it is bad for taxpayers (estimates show that £520m could be saved) and even worse for claimants.JCP needs to work with businesses and charities effectively so that they find as many vacancies as possible in their local area and match jobseekers with the right skills. Disappointingly, this was not what we saw. Small businesses are the lifeblood of the British economy and make up 80 per cent of UK employers.
According to the Federation of Small Businesses, however, only 20 per cent use JCP and only one in six rate the service as effective or very effective. It is crucial that JCP is fully engaged with local businesses and that it is providing training for unemployed people who with the right help, could move into work. Only 6 per cent of all JCP staff are tasked with engaging businesses and that needs to change.
The recommendations we have made to reform JCP would improve the service significantly. By adopting the internationally recognised Australian model, we believe Britain can reap the rewards in a similar way. In a major study, the OECD said that this system was one of the main factors in explaining why Australia has had the highest annual employment rate in the G7 and G20 since 2009.
It also has a lower unemployment rate than the UK, Germany and US. From day one of your claim in Australia, you are fully assessed to work out what support is required to get you back to work and then you receive assistance from the best providers in the private and voluntary sector. Providers are only paid on the results they achieve but the evidence is quite clear, these providers are delivering and helping people back to work. By implementing what we have proposed, the UK can help many more people find meaningful and sustainable work. That, surely, would be good for everyone.
Professor Richard Wyn Jones is Director of the Wales Governance Centre at Cardiff University. He is an expert on devolved politics and is one of the co-authors of the newly published IPPR report England’s Two Union: And Anatomy of a Nation and its Discontents. He is happy to confirm the suspicion that he is, indeed, Welsh.
Conservatives may have enjoyed the obvious discomfort of the BBC when it was forced to admit last week that it had failed to give due prominence to concerns about very high levels immigration into the UK because public attitudes were not consistent with the “liberal bias” of corporation programme makers.
But it is not only liberals, or socialists for that matter, that can find some public attitudes so challenging to their own biases and preconceptions that they find it easier to ignore them. Perhaps the most glaring example in contemporary British politics is attitudes to the anomalous – and, in English eyes, iniquitous – position of England within the post-devolution United Kingdom. When it comes to England, with very few exceptions, the British political class as a whole seem to find denial or displacement much easier than serious engagement.
That this is in an issue about which the English feel strongly is confirmed by findings from the 2012 Future of England Survey undertaken by Cardiff and Edinburgh Universities and IPPR. When a representative sample of 3600 English electors was questioned in November 2012, 81 per cent felt that it is no longer appropriate that Scottish (and by inference Welsh and Northern Irish) MPs should be allowed to vote on English laws. 79 per cent felt that public services in Scotland should be funded by taxes raised in that country. 62 per cent felt that the British Government does not stand up for English interests. The fact of the matter is that the English feel that they are getting a raw deal in the post-devolution UK. It is a view that is very widely and deeply felt right across the country.An indication of the importance accorded to the issue among the public is that, when asked which constitutional issues should be prioritised, the “way that England should be governed now that Scotland has a parliament and Wales an Assembly” emerged in a very clear second place. Behind Europe, to be sure, but well ahead of such “Westminster bubble” issues as House of Lords reform, reform of local government, or even the referendum on Scottish independence.
Even on Europe, there is an English dimension that is simply not reflected in current political rhetoric – even among those Eurosceptics who pride themselves in reflecting the view from the street or saloon bar. Europe we are repeatedly told is a threat to British traditions and values. Yet counter-intuitive as it may seem to many, our survey makes clear that, in England, the more exclusively British a person’s sense of national identity, the more pro-European that person’s attitudes tend to be. Those who feel “British not English” or ‘”More British than English” say they would vote to stay in Europe. By contrast those who feel “English not British” or ‘More English than British’ say they would vote in overwhelmingly numbers for British withdrawal. Euroscepticism is an English and not British phenomenon.
Euroscepticism in England is also closely associated with a sense that England is getting a raw deal within the UK. It’s largely the same people who feel most strongly about the two issues. As such, it makes sense to view Euroscepticism and what we might term “Devoanxiety” as two sides of the same coin. Both reflect a widespread sense among the English that they are not being well served by either of the Unions of which they are a part.
When confronted by these sentiments, there is widespread tendency among the British political class to reach for the non sequitur. The answer to English discontent, we are repeatedly told, is “localism”. As if changing the arrangements for local government within England (however worthwhile such a development may be) could ever address the issue of how England qua England is recognised in our constitutional arrangements.
Beyond this kind of displacement there has been little serious thought or engagement, even in a Conservative party that has fought successive general elections on a platform that has included support for some form of “English votes for English laws.”
The McKay Commission reported in late March and the UK government’s response is awaited at some point before the summer recess. That response represents something of a litmus test of the British political class’s willingness to take England seriously.
The McKay scheme – essentially a non-binding form of English votes for English laws – seems purposively designed to be as inoffensive and respectful of vested interests as possible. If even this proves too much to swallow for the current political class then it appears that only a fully blown crisis will force movement. The question is, of course, who or what could possibly create such a crisis? A potential answer also emerges from our survey data: UKIP.
UKIP support is strongly concentrated among those with a strong sense of English national identity. UKIP supporters are also strongly supportive of giving England much more explicit recognition within the UK. De facto, it is the English National Party. If UKIP were able to harness English concerns about both of the Unions of which their country is a part, this would place the party in a potentially very powerful position. At the BBC, failure has given rise to little more than a self-administered slap on the wrist. For the British political class the potentially costs of ignoring England and English concerns are considerably higher.
Tim Knox is Director of the Centre for Policy Studies which today publishes Double up on Heathrow: a simple, privately funded, affordable and achievable solution. Follow the CPS on Twitter.
One of the moments of great joy in the think tank world is when you come across a brilliant idea that is both eminently practical and ideologically attractive.
The pamphlet published by the Centre for Policy Studies today, Double up on Heathrow certainly meets both these goals. It is, firstly, a fatastically simple proposal which would almost immediately double capcacity at Heathrow while also alleviating many of the environmental and noise concerns of current residents. This can be achieved by extending both of the existing runways up to a total length of about 7,000 metres and then cutting them in half so that each runway becomes two full-length, runways, allowing simultaneous take-offs and landings. The number of available slots at Heathrow would almost double, thereby reducing delays and improving the airport’s resilience and efficiency. Importantly, this would also allow some runway alternation throughout the day.
Such a scheme would – in infrastructure terms – be remarkably quick to develop: significant new runway capacity could be completed within five years. For local residents, it would also be quiet – the extra capacity could allow the airport to open later in the morning and could enable innovative noise reduction techniques. Very few, if any, new areas would be brought into the airport’s noise footprint. In addition, early morning arrivals could land more than two miles further west, reducing noise over London.
So far, so good in practical terms. But its attractions go further: the increase in capacity would also be a significant boost to economic growth in the UK which at the moment is being held back by the shortage of airport capacity in the South East (Heathrow itself is operating at 99 per cent capacity). To take just one example of how the UK is in danger of missing out: there are far fewer flights between the rapidly growing Chinese provincial capitals and the UK as there are between the same cities and other European countries such as France or Germany. This is clearly bad both for our exports (remember that the Thames Valley hosts the European HQ of ten of the top 30 global brands) and for inward Chinese tourism.Development costs are estimated at around £10 billion, a fraction of the cost of any of the estuarial schemes (which start at about £65 billion and quickly rise from there). The plan could also be developed in stages, being able (again unike any of the other competing schemes) to be flexible in meeting real (as opposed to projected) demand. Most importantly of all, it would also be entirely privately funded. So this is no grand project which the taxpayer will have to subsidise for years ahead. As Dominic Lawson rightly said of these in the Sunday Times:
“Transport infrastructure projects motivated more by political vanity than any rational business plan are hardly peculiar to this country. Voters in California were assured that a Los Angeles to San Francisco high-speed train system would come in at $33bn (£22bn), but it gradually escalated to $117bn. The best account of this worldwide tendency was published by California Management Review, in 2009. The paper was titled Delusion and Deception in Large Infrastructure Projects and begins: “There are some phenomena that have no cultural bounds, such as maternal love and a healthy fear of large predators. We can add to this list the fact that, across the globe, large infrastructure projects almost invariably arrive late, over-budget and fail to perform up to expectations.”
So a choice will soon have to be made: a simple, quick, effective and private sector solution to a real infrastructure problem? Or a grandiose, expensive, taxpayer-funded grand projet which will take decades to build. The choice that will be taken will be revealing.
The TaxPayers' Alliance
Matthew Sinclair, Chief Executive of the TaxPayers' Alliance, said:
"The Chancellor has announced some welcome savings which will ease the pressure on taxpayers now and in the future, including some sensible changes to the welfare system and an attempt to end the absurdity of pensioners on the Costa del Sol getting the Winter Fuel Payment. Tens of billions of pounds are still being wasted by bloated bureaucracies each year, so there is plenty of room for further cuts. Unfortunately Mr Osborne is still boasting about squandering enormous amounts on foreign aid and vanity projects in the energy sector, while other developed economies are showing more restraint.
"The best news was on public sector pay. At the moment public sector staff get more generous pay than their counterparts in the private sector and gold-plated pensions. Mr Osborne has taken an important step towards delivering a fairer deal, although he is still planning to increase the pay of bureaucrats already receiving more than the private sector workers who pick up the bill.”
Institute of Directors
Commenting on the Spending Review, Graeme Leach, Chief Economist at the Institute of Directors, said:
“The Spending Review leaves business feeling like Oliver Twist. More please, Chancellor. Please could you go further and faster with spending restraint? Please could you shift even more expenditure from current spending towards infrastructure? Please could you widen the welfare cap to include pensions? But please could you also do less ring-fencing of spending in departments such as the NHS.”
“The Chancellor made many welcome announcements in the Spending Review, including the 1% limit to public sector pay growth and the intention to curtail automatic pay progression - regardless of performance - within the public sector. This, combined with previous policies aimed at decentralising public sector pay, is creating a quiet revolution in public services. Taken together with the commitment to accelerate the free schools programme, the Spending Review had a radical supply-side dash.”
Confederation of British Industry
John Cridland, CBI Director-General, said:
"The Chancellor has carefully walked a tightrope of protecting growth, while making sizeable savings to pay down the debt. Infrastructure is rightly singled out as the most effective engine for growth, as we urged. While the Government talks a good game on infrastructure we’ve seen too little delivery on the ground so far. It is critical we see a real pipeline of projects announced tomorrow, so investors know what schemes are going ahead, where and when."
“Other pro-growth areas including science, innovation, skills and exports have also been shielded from cuts. The £185 million boost for the Technology Strategy Board - a crucial anchor for innovation - is particularly welcome. With stretched government finances it is tough but necessary to target automatic progression pay in the public sector. It is encouraging to see that Government will have greater control of the welfare budget through the new cap."
“The next big challenge to address is the issue of ring-fencing to ensure that efficiency flows across all parts of the public sector.”
Nathan Gamester is a Programme Director at the Legatum Institute.
Today, in partnership with the Legatum Institute, Andrew Mitchell has published a pamplet, A safer and more prosperous world, laying out his vision for British international development. The pamphlet marks Mitchell’s return to the political stage; his first major intervention since resigning as Chief Whip last October.
Opposition to the Government’s development policy – especially among Conservatives – is well documented. At a time of slow economic recovery and budget cuts right across Whitehall, the commitment to increase spending on overseas aid has never been more controversial.
Many who question this policy ask whether it can be justified when so many Britons are suffering at home. There is often talk of aid cash “sloshing” around the international system only to end up in the pockets of corrupt government officials instead of going to those who actually need it.
To those sceptics, Andrew Mitchell’s message is clear. Firstly, we have a moral duty to help those who cannot help themselves. Secondly, this old view of how aid works is wrong. Aid does work, argues Mitchell. It is not simply about “soft-hearted altruism”. Rather it is about protecting our own national interests and ensuring our own security. And aid gets results.
Mitchell’s pamphlet is a timely reminder of an area of government policy in which British people should take pride. If you are a British taxpayer, then right across the developing world are children who have been vaccinated against a multitude of deadly diseases because of you. Today millions of children are going to school for the first time – because of you. Fewer women are dying in childbirth – because of you. More AIDS sufferers than ever before have access to antiretroviral therapy and are thus living with, rather than dying from, their disease – because of you. British people should be proud of this.
And to those who believe the government spends too much on foreign aid when it should focus on domestic priorities, Mitchell’s pamphlet contains a welcome message: the future of British aid lies not with DFID but in the private sector:
“In my view it is not an unreasonable proposition to suggest that in 50 years’ time CDC [the Government-owned Development Finance Institution] will be seen as the principal British development structure, rather than DFID. Nothing would more eloquently demonstrate the success of development policy as countries graduate from aid with their own equity and debt markets funding their future development.”
On the issue of international development, there is no doubting Mitchell’s expertise. For most of the last decade he has been the chief architect of this area of Conservative policy. He spent five years as shadow development secretary followed by more than two years as Secretary of State until the Prime Minister decided he wanted Mitchell permanently in Westminster as his Chief Whip.
News of his departure from DFID came as a surprise to many (although today’s pamphlet suggests that he has unfinished business with this area of policy). In Government, it can be rare to find senior ministers who feel a strong sense of both calling and enthusiasm for the portfolios to which they have been assigned. Andrew Mitchell, however, seemed well suited to International Development.
It was back in 2009 that the Conservative Party published its comprehensive Green Paper, One World Conservatism in which much of what is now government policy was set out: the focus on wealth creation as the most important driver of development; the recognition that peacekeeping and conflict prevention are fundamental to development; the need to ensure value for money and accountability for every penny spent; and perhaps most controversially, the commitment to increase the UK aid budget to 0.7% of national income.
It is to the Government’s credit that it has stuck to these principles despite the very challenging economic situation and the very real political opposition. This commitment has recently earned praise from Bill Gates who hailed the UK for “displaying moral leadership in front of the world.”
Many people who have served in government can take credit for ensuring Britain keeps its promise to the developing world. But perhaps the most significant of those is Andrew Mitchell. Mitchell has been called many things over the last six months, many of these it now appears were untrue. However, his lasting legacy – and perhaps one of this government’s most significant legacies – will be the commitment that is being shown to the world’s very poorest people.
Nathan Gamester is a Programme Director at the Legatum Institute. Follow Nathan on Twitter.