The Conservative Reader

Gove's vision; Young England; Putin's People; responsible tax; growth matters; human connection; economic fragmentation; science superpower; housing crisis; rising inequality; questions about Ofsted

We think conservatives need to talk more and get better at sharing ideas. So here we share the best newspaper columns, policy reports and books that will stimulate thinking and promote new ways of doing things.

The Conservative Reader is published every Friday lunchtime, so please do look out for it. And expect plenty of content about the things we think make conservatism such a compelling body of thought: identity and belonging, community and commitment, market economics, national resilience and good government.

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Towering Columns

William Hague says Britain needs investment, not quick-fix tax cuts:

The world’s largest economies are pouring out subsidies to try to dominate the manufacturing of the key products of the next decades, from semiconductors and batteries to hydrogen and solar power…

… Against that global background, it is not surprising that the chancellor is said to be on the verge of agreeing a £500 million package to save steel production in the UK and help producers switch to green technology. That’s the right thing to do, but it’s another half a billion pounds that’s not available for a tax cut. The government needs to craft a wider British response to the global race for new industries, addressing our core problems in the UK of low investment, inadequate skills and too many people leaving the workforce.

That is bound to involve more spending… But it should also involve using the tax system to incentivise investment — a far higher priority than wider tax cuts and probably the best way to use any financial leeway to help generate growth… keeping some of the “super-deduction” from corporation tax for companies reinvesting, is on the right lines.

Henry Oliver says achieving growth is essential to raise living standards and fund better public services:

Countries with the sort of welfare states admired on the left, like Norway, Sweden and Denmark, have much higher GDP per capita than the UK. Welfare and GDP are strongly correlated: richer countries really are better off in non-monetary terms. According to the OECD, social spending is higher in richer countries. Whilst GDP is not an exact measure of wellbeing in the broadest sense, it is a useful correlation. 

If you want higher wages, you need the productivity growth to pay for it. If you want to repair the streets, you need the money to fund the work. If you want generous welfare provision, it’s going to help to have GDP growing ahead of government debt. As our capital stock comes due for renewal, including in the NHS, we need to be able to afford it.

…Until it is possible for families to buy affordable houses, to get childcare that doesn’t cost more than their mortgage, for business to buy cheaper energy, it’s hard to see how the cost of living will be more affordable.

Danny Finkelstein says the key to happiness is human connection:

Human beings have a natural disposition to a certain level of happiness that differs according to genetic make-up. But something like 40 per cent of the variation in happiness can be explained by environmental factors. The Good Life argues that of all of these, it is the quality and quantity of human connection that makes the biggest impact.

… if [people] manage to maintain strong family bonds, intimate friendships and good work relationships, or even just one of those, they are far likelier to be happy. The political implications of this are interesting. To start with, it suggests the limits of politics and the state… But these limits aren’t the whole story. I certainly found it a challenge to my standard view of economic growth and social mobility, for both of which I have always been a cheerleader. The findings don’t suggest these are bad things but they do pose questions. Economic growth may make governing easier and even individual lives easier but in so far as it makes human connection harder, it may not make us happier.

Similarly, social mobility may not be the unalloyed advantage that we think it is. Supporting it is certainly my default position. Yet class solidarity may nurture connections that are destroyed by greater social fluidity. The study may also, by the way, help explain why the attachment to religion has social value and its decline may be a problem, despite the unscientific basis of much religious belief. It helps provide attachment and connection. There is also an interesting argument within conservatism that the study contributes to. Should the country try to move jobs to people or people to jobs?

Gerard Lyons says we are entering an era of global “fragmentation”:

Fragmentation does not mean we are now entering a period of de-globalisation, but it signifies change. Already, post-pandemic, the focus has shifted. Supply-chain blockages have triggered a greater focus on “onshoring”, especially in sectors deemed strategic. The mantra is that cost control is now being usurped by risk control as a dominant driver in business decisions, while for governments the focus is on increased autonomy. The latter is most clearly seen with the semiconductor sector. Then, following the start of the war in Ukraine, “friends shoring” came to the fore – only it applied to services too. Here the new focus was on distrust of unfriendly regimes, and the desire to be based in locations deemed more friendly. Rightly or wrongly, it was a sign that the rules-based system that has been accepted as the norm was under threat.

Fragmentation, though, is a complex process, so many firms are reluctant to buy fully into this new way of acting… But the world has already changed. The UN vote immediately in the wake of last February’s invasion showed the beginnings of a move to a G3 world: group one, the US and its allies; then a group focused on China; and group three, the non-aligned. This latter group already feels alienated, is calling for more financial assistance to address climate change, and it is a group that includes emerging economic giants such as India.

The next step driven by western economies which we are seeing – and which sounds more like a step into the past, not the future – is subsidies.

Kate Bingham says Britain risks losing its chance to become a science superpower:

The UK has everything it needs to be a 21st century life sciences superpower. But short-term pressures are crowding out long-term solutions, squandering this important opportunity… Our academic sector is world class. The NHS has a unique ability to recruit thousands of diverse patients for clinical trials. But this exciting future is being put at risk by the present. The UK is ideally placed to become a global leader of a new age in precision medicine, but the need to address current pressures of cost of living, debt and soaring inflation is crowding out the long-term measures required to support innovation.

Despite the astonishing successes of our life sciences companies, the sector is still the object of suspicion and incomprehension within parts of government. The recent decision to cut R&D tax credits for small, innovative high-tech companies makes the point perfectly… As a direct result of the tax credits decision, [companies] are now moving jobs abroad and fewer clinical trials are being done in the UK… Big companies are also retrenching. The pharmaceutical giants AbbVie and Eli Lilly have pulled out of the UK’s pricing agreement with the NHS. Bayer’s pharmaceutical arm is reducing its UK footprint and cutting jobs. Our own domestic titans, GSK and AZ, have chosen to build new factories in countries more friendly to business.

Tom McTague insists Britain is not doomed - but asks who will be the Young England radicals of our time?

In Robert Blake’s masterful biography of Benjamin Disraeli, he tells the story of Disraeli’s early radicalism in a group of like-minded Tory ultras known as Young England who opposed free trade and the erosion of the old order. “The history of Young England has all the charm and nostalgia which attend tales of forlorn hopes and lost causes,” Blake writes. “[But] the success of such movements of protest cannot be measured by their immediate political failure. They must, rather, be regarded as symbols and examples that lend an imaginative glow to the dull course of party politics; showing that there are other ways to fame than conformism, diligence and calculation; showing that a gesture, however absurd it may seem to contemporaries, may sometimes live longer.” Is there a more uplifting message? Young England lost — and won. Disraeli became prime minister, created a new Toryism that continues to shape our political world but also accepted defeat in his opposition to free trade.

The search is on for the Young England radicals of today, the forlorn dreamers and romantics who will shape our future, alongside the diligent conformers who will manage it. The eurosceptics were once this band, but are no more — having secured almost complete victory after their years of seemingly hopeless retreat. But who will take their place today? Who will offer the country an imaginative glow to light the journey ahead? Right now, it is hard to see them emerging from either Labour or the Conservatives. But they will come. They always do.

Wonky thinking

Levelling Up Secretary Michael Gove gave a speech at the Convention of the North. He offers a diagnosis of Britain’s present discontents while supporting active government in pursuit of economic and social reform:

Now some have argued, in response to the White Paper, that it is not the role of government to promote growth by acting in this way but by absenting itself.

Well I am certainly no supporter of the State’s undesirable and inevitable and continuing expansion. But I am against ever lengthening welfare rolls, lives spent in dependency, children brought up without the exam passes that translate into jobs, health inequalities that will place growing future demands on the NHS, family breakdown, lawless public spaces, slum housing which makes its inhabitants ill and civic institutions in decay. All of these place greater pressure, sooner or later, on the public purse and they are affronts to the conscience that no government can ignore. Which is why there is both a moral – and economic – imperative to levelling-up.

And the experience of successful economic transformation demonstrates that growth is not secured by absent government but by active government. A government that plays a strategic role, irrigating the soil for growth.

The Centre for Policy Studies published a report, The Case for Housebuilding, which details the UK’s historic failure to build enough homes, and reveals high levels of public support for more affordable housing:

Of course, many of the objections raised by those opposed to new homes are correct. We are often not building to a sufficient quality. The market is overly dominated by a handful of large housebuilders. The infrastructure that should accompany new homes is often not adequate, or fails to materialise completely. There is often too long a gap between the granting of a planning permission and the completion of the project, or even the start of it. Immigration is too high, meaning we are in some respects running to stand still…

This report therefore goes back to basics. It makes a series of points that may seem obvious to many, but need to be restated as firmly as possible. These are that Britain has been building fewer homes than it used to. It has been building fewer homes than it needs to, especially given the growing population. And those homes it has been building have been smaller than almost anywhere else.

This shortage of supply has, it argues, played a significant role in driving up house prices. You can see this in the cost of home ownership, and the cost of renting – which, contrary to the claims of some analysis, has been rising steadily, outpacing both wages and inflation. You can see this in the explosive growth in UK house prices compared to other countries, such as France or the Netherlands. You can see this in the yawning imbalance between house prices in areas of high housing demand and the rest of the country, with the gap between London and the North East having doubled in recent years. And claims that changes in the number of households somehow prove that there is no shortage of housing supply are, we show, completely beside the point.

We also show that, despite the fondest hopes of many MPs, there is no realistic possibility of building the homes we need on brownfield sites alone… Finally, we show that building houses is not just necessary, it is less unpopular than politicians think.

Book of the week

This week we recommend Putin’s People: How the KGB took back Russia and then took on the West in which Catherine Belton details how Vladimir Putin and others used KGB methods to seize control of private companies, take over the Russian economy, create a hybrid between organised crime, political power and international business, and then use their power to shut down political rivals and win influence in the West:

In Russia, the West's willing complicity had helped produce a KGB simulation of a normal market economy. Institutions of power and the market that were meant to be independent were in fact no more than Kremlin fronts. The rulings handed down by Russian courts looked, on paper, as if they could be legitimate. In the Khodorkovsky case, the oil tycoon went through more than two years of court hearings and two sets of criminal charges, the second of which accused him of stealing all the oil Yukos had ever produced, the same oil that he'd previously been charged with evading taxes on. But in reality, the court's rulings were not rulings, but Kremlin directives. The court system was not a court system, it was an arm of the Kremlin. The same went for the parliament, for elections, and for the oligarchy. Putin's KGB men controlled all of them. It was a phantom system of phantom rights, for both individuals and businesses. Anyone who crossed the Kremlin could be jailed at any moment on rigged or trumped up charges. Property rights were conditional on fealty to the Kremlin.

In a system where stealing was pervasive, where property was constantly being divided up on a nod and a bribe to the relevant person in the Kremlin and in law enforcement, Putin’s men had compromising information on everyone: The country had returned to the time of informants. Everyone was taping each other. Everything was known to be bugged. In December 2017 the economic development minister Alexei Ulyukaev, caught on camera receiving a 2 million bribe from Sechin in a sting operation to remove him as a political rival that had been set up by Sechin himself, was sentenced to eight years in prison. The Magomedov brothers, once prominent oligarchs at the top of the strategic port industry, were jailed in March 2018, ostensibly for racketeering and stealing state funds. But their real crime, according to a senior Russian banker, had been outstaying their welcome: They went too far. It's all very simple: when the film ends you need to get out of the cinema hall. You don't stay and wait for the next show.' 'They can make anyone disappear now, said another tycoon. 'Oligarchs, ministers. No one knows what’s happening in the Magomedov brothers' case. They were super oligarchs, and now no one knows where they are.’

Everyone was hostage to the system, including the Yeltsin-era powerbrokers who opened the way for the rise to power of Putin’s security men. Former Kremlin officials like Alexander Voloshin and former prime minister Mikhail Kasyanov would never be free to
speak or act freely. Putin had told them clearly when they stepped down from power that he knew where their money was.’ Putin and his security men were the most tightly locked of all to the system. After everything they'd done to shore up their own power, they couldn't trust anyone, even within their own circle, while Putin, by steadfastly eliminating all political rivals and concentrating power in his own hands, had also boxed himself in to such a degree that there was almost no way out for him…

The KGB were still everywhere in Russia's ruling elite. The idea of lustration - a ban on official posts for anyone who’d worked with the KGB - had been raised by Yeltsin, but had been swiftly set aside by the senior officials in his administration, all of them KGB men of differing experience and rank. ‘They told him this would be impossible,’ said Pugachev. ‘There would be no one left to work. It would have hit 90 per cent of the ruling elite. People who didn't cooperate in some way were very few.’

Russia's revolution had come full circle. The reformers who declared to the world with such great promise nearly thirty years ago that the country was on a new market path towards global integration were either soon compromised, or had been working with the KGB on Russia's transition all along. Those who believed they were working to introduce a free market had underestimated the enduring power of the security men. ‘This is the tragedy of
twentieth-century Russia,’ said Pugachev. ‘The revolution was never complete.’ From the beginning, the security men had been laying down roots for revanche. But from the beginning, it seems, they’d been doomed to repeat the mistakes of the past.

Quick links

Ofsted is downgrading successful schools, and praising schools with poor attainment.

The Conservatives are 26 percentage points behind in the Red Wall.

Kemi Badenoch said she stands for “free and fair trade”.

Ministers are to invest £1 billion in computer chip subsidies.

A report claimed a majority of people live in households receiving more in benefits than the taxes they pay in…

… but it included health and education spending as “benefits” and ignored the growing number of pensioners.

Recorded sexual offences have risen 22 per cent since the pandemic started.

Just 13 per cent of voters think 16 year-olds should be able to change legal gender.

Public sector productivity is down 7 per cent on pre-Covid levels.

The Government is refusing to lift the cap on the number of medical students.

Liz Truss proposed deficit-funded tax cuts four months after her disastrous Budget.