Just over five weeks to the Chancellor’s autumn Budget and already speculation and rumour about its contents, its importance, even who will deliver it, is running high. A kind of late summer madness has descended on the parliamentary Conservative party, exacerbated by the unseasonably warm weather. On social media, the airwaves and in print, Conservative MPs lay into each other and brief against one another with an abandon and lack of restraint that is both perplexing and unwelcome from the party of government. This behaviour is especially perplexing and unwelcome at a time when the government has an unusually onerous and significant programme to deliver. The Manchester conference should have been the moment when the Tory government asserted itself over party and the country. It was not. The Budget is now the last chance this year for it to do this.
The Budget, the second this year, will be delivered against a difficult backdrop. Realism about the situation needs to be at the heart of it, if the Budget is to have integrity and credibility. The Chancellor is confronted with the record total of national debt, stagnating productivity, falling levels of foreign investment, poor levels of growth, the mysterious phenomenon of record levels of employment (which is welcome) without any apparent increase in output (which means we are employing more people to produce the same or less than we used to) and the ongoing lack of uncertainty around what happens when Brexit occurs.
Realism should not mean pessimism, negativity, or general Eeyoreishness. What it does mean for a Conservative Chancellor and a Conservative party serious about addressing the domestic issues confronting the country, delivering a successful and sensible Brexit, and winning the next General Election, is the application of enduring Conservative values and principles, and the re-assertion of some discipline in the parliamentary party. Discipline should come up from within the parliamentary party, and MPs should not always need the Chief Whip’s sharpened carrot, as he described it recently, in the ribs to behave sensibly.
Most importantly, the Budget provides an opportunity for some serious reform and initiative. The energy market needs wholesale reform, not simply capping. This means shaking up the market. The housing market needs wholesale reform. This means shaking up the market. Older workers need to be encouraged to save and make provision for their old age, without worrying that they will be penalised. Tax and other incentives to encourage parents, grandparents and other relatives to help their young relations to buy a house, start a pension and other ways to pass on accumulated wealth should be created and introduced. Similarly greater incentives need to be provided to invest in parts of the country outside of London. In other words, innovative and enterprising public policy needs to be built on the strong foundation of the Conservative principles of supporting innovation and enterprise in business.
The Conservatives will damage the increasingly fragile economy and lose ground to Labour if they try and use the heavy hand of the state to replace markets and redistribute wealth.
They will win no new fans among the young, and will further alienate older voters who they unwisely and needlessly upset at the last general election. Market reform, correcting failures and inadequacies, is what is needed. Incentivising the sharing of wealth between generations, not snatching it from one group and then try handing it to another in the hope of winning some political credit.
Sign up for the Week in Review Email
Every Sunday: Read the week’s most read articles, watch Iain Martin’s Authors in Conversation series, listen to The Reaction podcast & receive new offers and invites.
At root, Conservatives need to be confident in explaining that markets are a force for driving growth, renewal and innovation, and they need to rediscover confidence in market reform. The Autumn Budget provides a very important chance to undertake some radical, important and creative reforms. The danger is that the Chancellor ends up offering a series of short term measures to try and win some instant support. The former could set the scene for a post Brexit economic renaissance, the latter a slow and ignominious haemorrhaging of Tory support. That support has held up rather well despite the setbacks of the last six months, but it will not stay that way forever if the Tories are too timid in making serious reforms on housing, energy and the economy.