Not Maggie May, but muddled May

By Buttonwood

THE Conservative election campaign so far has been duller than an afternoon looking at Jeremy Corbyn’s collection of pictures of manhole covers. Blessed by an extremist opposition and a big opinion poll lead, the government is coasting, muttering platitudes like “strong and stable” and emphasising its newish prime minister, Theresa May, rather than its party name.

The odd thing is that the Conservatives are trying to develop a personality cult based on someone who (to put it politely) does not have a particularly fascinating personality. Perhaps that’s the point; people are looking for someone calm and competent. Labour tried something similar with Gordon Brown—“Not flash, just Gordon” was the slogan—with little success. The Conservative strategy seems to be working for now but one senses a smart opposition leader could easily rattle Mrs May—Yvette Cooper has already shown signs of doing so.

The manifesto launch allows us to ask whether there is a coherent philosophy behind Mrs May’s appeal and the answer is clear; there isn’t. Just as Mrs May lacks the powerful persona of Margaret Thatcher, historians are unlikely to talk of “Mayism” as they do of Thatcherism. This is hardly a surprise from a politician who campaigned for Remain but instantly, on becoming prime minister, became an enthusiastic supporter of hard Brexit (defined as leaving the single market and customs union).

But it also reveals the dichotomy at the heart of the Brexit campaign, between the “free market” leavers on the Tory right who argued that Britain could scrap European Union regulations and become a globalised trading hub, and the nativist tendency led by Nigel Farage of the UK Independence Party (UKIP) and his ilk.

Mrs May has tried to straddle both camps. In her Davos speech, she took a global tack and the theme is still there in the manifesto:

the United Kingdom will be a global champion for an open economy, free trade and the free flow of investment, ideas and information

But in her Conservative party conference speech last October, she took a more nativist line, saying:

But today, too many people in positions of power behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass in the street.

But if you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word “citizenship” means

The clearest way for the Conservatives to indicate that they are heading in the “global Britain” direction is their attitude on immigration. As Home Secretary, Mrs May was nominally in charge of the government’s target of reducing immigration to the “tens of thousands”. She failed to get even the non-EU portion down to this level. But what is the point of the pledge anyway? The Office for Budgetary Responsibility has estimated that tax receipts will be around £6bn lower in 2020/21 if the target is met; that is a huge shortfall for a government that has made much of the need to balance the budget.

The government continues to insist that overseas students are counted in the immigration target, even though such students are a good source of foreign earnings and may prove a great source of skills for the future if they decide to stay. More than half of the unicorns (companies valued at more than $1bn) in Silicon Valley were founded by immigrants. In addition, the government will double the levy, to £2,000, on employers who want to hire skilled workers. Remember that the next time you hear a Conservative minister bang on about “free markets”; the government wants to restrict the ability of companies to hire the workers they need. The “free flow of investment, ideas and information” is good apparently but the free flow of workers is bad.

The aim is clearly political, not economic. With Labour hovering around its poll rating in 2015, the big Tory gains have come from attracting former UKIP voters to their side. But this might have happened anyway. UKIP is a shambles now and Nigel Farage, its former leader, has been reduced to toadying up to Donald Trump and Marine Le Pen in an attempt to keep in the papers.

As for the EU negotiations, the same platitudes about the “best possible” deal are trotted out along with the line that “no deal is better than a bad deal”. But that approach has been undermined by the recent admission that the costs of no deal (which would mean trading under WTO rules, with tariffs) have not been calculated. That’s simply shoddy.

What about the general approach to markets? In running for the leadership, Mrs May talked of an industrial strategy (mainly blocking foreign takeovers), putting workers on company boards and “simplifying” the way bonuses are paid. One of the main policy proposals of the current campaign is to cap energy prices, a policy unveiled by the then Labour leader Ed Miliband in 2015 and roundly condemned by the Conservatives at the time. The new manifesto contains such phrases as:

We do not believe in untrammelled free markets

and:

We reject the cult of selfish individualism

More specifically, the manifesto pledges that:

Workers’ rights conferred on British citizens from our membership of the EU will remain.

An interesting admission in itself (so the EU was good for workers?) but one that suggests the bonfire of regulations promised by some Brexiters will not occur. The offer from Labour to global businesses thinking of staying in Britain is dire. But the offer from the Conservatives is wishy-washy; no membership of the single market, possibly more regulation not less, and restrictions on the ability to hire workers.

A concrete example of policy muddle comes with the problem of long-term care for the elderly. This results in horrendously expensive and arbitrary bills; if you have cancer, the NHS will look after you for nothing but if you have dementia you must pay. Around half of elderly women and a third of men will need nursing care. As Andrew Dilnot, who wrote a report on the issue in 2011, points out this is a classic example of market failure. It is impossible to insure against the cost because of self-selection bias; the sickest people are the most likely to buy policies. He proposed a cap of £35,000 on the nursing costs any individual should bear. But the government has rejected this approach, instead opting for a variation of the current system; people will pay for their own care until their assets fall below a certain level. That level is raised to £100,000 from the previous £23,250 but this means-test will apply to care provided for people living at home, as well as those resident in a nursing home. This may turn out to be extremely unpopular in practice, as many more people will pay fees. A government that believed in remedying market failure would have been more radical.

What is the Conservative Party for? It came into office in 2010 promising to eliminate the budget deficit by 2015; that goal has been put off till 2025. It was a champion of free markets; now not so much. It promoted business but is now willing to sacrifice business interests to pursue its immigration goal. The party that took the country into the EEC under Edward Heath is taking us out again. It looked after the elderly’s pockets but now is taking money away from them. It is trying to remould itself as a “party of the workers” but its leaders are largely drawn from the upper middle classes in the south of England.

The party has survived for 170 years by putting power before principle. But there is a danger in this incoherent approach. If the government can’t deliver a cost-free Brexit, if its words on helping working families turn out to be just words, then its electoral support could melt away again. Unexpected events expose the weaknesses of political leaders who have no clear sense of direction.