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It's not good enough for Conservative economic policy to be a bit better than Labour's. Without a growth revolution we're in big trouble.

By Tim Montgomerie
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NobodyExpectsGrowth

In yesterday's Times Matthew Parris gently rebuked (£) those of us who are running about producing, for example, growth manifestos or urging the Chancellor to cut taxes (as Boris did last week and Lord Lamont does today). Let's get things into context, he said, and his substantive points are very seductive...

  • Voters don't expect much growth, he wrote. I agree.
  • He argued that Britain was "heading gently downhill in the century ahead" alongside other Western powers. Relative to the rise of the BRIC and other emerging nations, that has to be true.
  • The fortunes of the coalition aren't, he said, tied to economic recovery but to the Conservatives ensuring that they are more trusted on the economy than Labour. Also true and among considerers Cameron and Osborne currently enjoy a big advantage.
  • Economic crisis, he wrote, may benefit the Conservatives if it shows up the perils of Ed Balls' carry-on-as-we-were plan. Also agreed. 1992 (and almost 2010) showed that voters will hold on to nurse for fear of something worse.
Mr Parris' seductive arguments need to be resisted, however. They all miss the big picture. If Britain doesn't substantially improve its underlying growth rate this country will become very difficult to govern. A recent Office of Budget Responsibility report warned that Britain would go bust by 2060 if it didn't raise taxes and cut spending. In truth, Britain will go bust not if it doesn't increase its underlying growth rate. Because of fast increasing pressures on the national purse we've never needed growth more:
  • People are used to rising standards of living. If growth is flattish society becomes very divided as interest groups fight each other for a bigger share of the same cake. This is what happened in the 1970s.
  • We need more wealth to pay for things that are getting a lot more expensive, notably healthcare and pensions. If we don't have some surplus after we've paid for these things we'll suffer the brain drain of young talent feared by Mark Field.
  • Matthew Parris is right to say that we're beginning the payback decade. We've lived beyond our means for far too long but this is a time for national exertion and innovation, not resignation. Paying off private debts which are at least as bad as public debts will be a lot more comfortable if the economy is zipping along. The debts will become an horrendous burden if all of our increased wealth is used to repay yesteryear's borrowings. Currently just over £40 billion, public sector debt repayments will soon rise to £70 billion according to some estimates.

Final word to Ted Heath. This is my favourite Heath quote. In fact it's the only Heath quote I like:

"The alternative to expansion is not, as some occasionally seem to suppose, an England of quiet market towns linked only by steam trains puffing slowly and peacefully through green meadows. The alternative is slums, dangerous roads, old factories, cramped schools, stunted lives.”

It may not be possible to increase Britain's underlying growth rate but let's at least try. And, certainly, let's not rely on Labour weakness and the public's low expectations to excuse inaction.

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