JESSE NORMAN MP MARTIN LEWIS on responsible capitalism has money on his mind Centre Write

Capitalism in crisis?

Summer 2016 | 1 paul goodman | the rt hon ed vaizey mp | flick drummond | the rt hon lord maude Contents

EDITORIAL Kamile Stankute 14 Editor’s letter Unlocking potential Laura Round 4 Pamela Dow 15 Director’s note Skype session with... Ryan Shorthouse 5 Martin Lewis 17

MARKETS THAT WORK THE RISE OF THE STATE? FOR EVERYONE Should politicians nudge Mending markets human behaviour? Scott Corfe 7 Professor Robert Metcalfe 18 Can we make capitalism healthy? Theresa May: free-marketeer? Dolly Theis 8 Mark Littlewood 19 Back to work Fixing the broken energy Flick Drummond 10 market Making the consumer king John Penrose MP 20 James Plunkett 12 A property-owning Britain Does business do enough? Alex Morton 22

Bright Blue is an independent think tank and pressure group for liberal conservatism.

Director: Ryan Shorthouse Page 28 The Centre Write Chair: Matthew d’Ancona interview: Jesse Norman MP

Board of Directors: Rachel Evening Standard Johnson, Alexandra Jezeph, Diane Banks, Phil Clarke & Richard Mabey

Editor: Laura Round www.brightblue.org.uk

Printers: Aquatint, www.aquatint.co.uk Page 17 Martin Lewis Cover and typesetting: discusses mental health and money Eleanor Hyland-Stanbrook Capitalism is core to conservatism Energising the industrial strategy Michelle Hubert 40 The Rt Hon Lord Maude 23 Sam Hall 34 Prosperity through productivity The conservative state: small, Antoinette Sandbach MP 42 strong and strategic IS DEVOLUTION THE Be prepared Paul Goodman 26 SOLUTION? Chris Green MP 43 Government for the people Apprenticeship nation THE INTERVIEW and for the regions The Rt Hon Robert Halfon MP 44 The Centre Write interview: 28 Stephen Clarke 35 Creative prosperity Jesse Norman MP Two decades of devolution The Rt Hon Ed Vaizey MP 46 Paul Masterton MP 36 BRIGHT BLUE POLITICS Reviving the North BOOKS & ARTS Why I’m a Bright Blue MP Jonathan Moore 38 Exhibition: Giacometti Neil Parish MP 32 Eamonn Ives 49 Bright Blue research update INDUSTRIAL STRATEGY Film: Dunkirk James Dobson 33 Spades in the ground Fiona Smith 50

Page 26 Paul Goodman on Page 23 The Rt creating a smarter state Hon Lord Maude on pro-enterprise conservatism picapital.co.uk

Page 46 The Rt Hon Ed Vaizey MP on the importance of the UK’s fastest growing sector

Page 10 Flick Drummond outlines how to support women returners EDITORIAL

laura round is the Editor’s letter Editor of Centre Write and Communications Manager at Bright Blue

One of the most striking lessons from the last general towards a more interventionist agenda, Mark Littlewood election is the collapse in the proportion of those aged from the Institute of Economic Affairs (p.19) argues under 40 voting Conservative. As Ruth Davidson - the that in order to win the next election and to ensure a Scottish Conservative leader - has written, unstable successful Brexit, the Conservatives needs to passionately employment and wage stagnation - coupled with high rental advocate for freer markets. Indeed, one of the original and transport costs, as well as increasing barriers to home Tory modernisers, the Rt Hon Lord Francis Maude ownership - go some way to explaining why many young (p.23) says that a Conservative Party that doesn’t appear adults don’t think the current system is working for them. to be passionately in favour of free enterprise and Capitalism has delivered demonstrable economic successes, wealth creation lacks credibility and authenticity. The yet people seem to be losing faith in its ability to make editor of ConservativeHome, Paul Goodman (p.26) their lives better. This is a huge challenge and has triggered argues for a streamlined state. And former Number significant debate on the centre-right of British politics. 10 adviser, Alex Morton (p.22), outlines what the The Prime Minister spent her first year in office setting Government should do to boost home-ownership. out a narrative for a larger role for the state, centred around Earlier this year, Theresa May launched the “the good that government can do”. This narrative was Government’s new modern industrial strategy. One aim lost in the general election campaign. As was hard-won of this to reduce inequalities between different regional successes on the economy by Conservative Governments economies in the UK. The second part of the magazine since 2010. Nor did the party hammer home positive, explores whether devolution really is the solution to compassionate, liberal and pro-enterprise values – many fixing this imbalance. Stephen Clarke (p.35) from the of which, I suspect, are shared by younger generations. Resolution Foundation looks at how the industrial With the advancement of the hard-left under Jeremy strategy can ensure growth is spread evenly across the Corbyn, the Conservative Party really must learn from country. Newly elected Scottish Tory Paul Masterton its mistakes to ensure it wins the next election. Part of this MP (p.36) explains why Conservatives should continue challenge lies in defending and reforming free markets. This to champion Scottish devolution within the UK. is a topic covered in my interview with brainy Transport One of the main aims of the industrial strategy is to Minister, Jesse Norman MP (p. 28), who says the challenge boost productivity. Antoinette Sandbach MP (p.42) for conservatives is to mend broken markets and not throw points to the importance of innovative education and its “hands up and run for a certain kind of crypto-Marxism”. close ties with Europe to improve it. Former Minister The Government is clearly keen to ensure markets for Culture and Digital, the Rt Hon Ed Vaizey MP are fairer and that consumers get a better deal. Scott (p.46), urges the encouragement of creativity to untap Corfe, chief economist for the Social Market Foundation talent and explains why the creative industries are an (p.7), argues that better consumer engagement and integral part of the industrial strategy. The new chair of bargaining power are necessary for markets to be fair. In the Education Select Committee, the Rt Hon Robert my Skype session with Money Saving Expert Martin Halfon MP (p.44), argues that Conservatives should be Lewis (p.17), he explains the link between money and loudly celebrating the apprenticeship revolution. I hope mental health. And James Plunkett (p.12), Director of this edition of Centre Write helps you navigate through Policy at Citizens Advice, discusses why non-choices the broad debate around responsible capitalism and, are damaging the proper functioning of markets. specifically, demonstrate the role the state can and should With the latest Conservative Party manifesto shifting play in achieving good economic and social outcomes.•

4 | Centre Write EDITORIAL

Director’s note eliminating the structural deficit. on the ordoliberalism of post-war Anyway, this theory, among others, Germany, which advocates that a Ryan Shorthouse distracts from the unfortunate market-based society needs strong and brutal truth: the public were morals and rules – even government increasingly exposed to the poor intervention - if is to work equitably leadership and communication and efficiently. Hence the Prime ryan shorthouse is the skills of Theresa May during the Minister’s welcome targeting of Director of Bright Blue campaign. The manifesto, though vested interests and corporate rich on philosophy and principles, greed, with calls for workers’ voices lacked clear and concrete policies, in on company boards and greater So, what went wrong? This contrast to Corbyn’s. The manifesto transparency around the recruitment summer, there has been much soul- was emblematic, in fact, of May’s first and pay of different social groups. searching from Conservatives on year in charge: rousing rhetoric in set why they recently failed to win the speeches, but a lack of any substantial If conservatives are unable decisive parliamentary majority policies to truly tackle ‘burning to argue that capitalism almost everyone predicted. injustices’ and support those ‘just benefits most people, then Two clear points stand out. about managing’. Well, people are not they might as well pack their First, the substantial polling lead daft: actions speak louder than words. bags now and go home. the Conservatives initially had The flagship policy in the manifesto Of course it has and does over Labour narrowed during the on social care – to lift the guaranteed election campaign. Second, there amount someone could pass on If capitalism is to remain popular was a considerable shift in voting to their children to £100,000, but and effective, then individuals and intention to the Labour Party after to include within the means-test corporates do need to behave more the launch of the manifestos. calculation for domiciliary care responsibly. Markets are motored by the value of the family home, as is - and have consequences for – human Cabinet Ministers have not currently the case for residential beings, not just profit; that needs to been allowed the freedom care – was sensible, but was received be appreciated and acted upon by and profile to develop particularly badly. The closed clique more people. Conservatives should distinctive policy agendas, controlling government failed to build not abandon May’s ‘responsible in marked contrast to those a significant network of individuals capitalism’ agenda, therefore. under Cameron’s premiership and organisations who could shape Equally, though, Conservatives and support this policy – and, in need to be much more responsible Some Tories now claim that it fact, May’s programme in general. in how they talk about capitalism. is because the public are tiring of Cabinet Ministers, for example, have Some on the Left, especially under austerity. This is no doubt true not been allowed the freedom and Corbyn, have pushed a simple, among a small proportion of voters, profile to develop distinctive policy spellbinding narrative about Britain’s particularly among some public- agendas, in marked contrast to those economic model in recent years: that sector workers who have experienced under Cameron’s premiership. free-market fundamentalism has been pay constraint over a number of What May and her coterie did do, pursued by the Tory Government, years. But it is, frankly, absurd to right, however, was to emphasise and only an elite – the so-called 1% - think there was such a shift in public that conservatism prioritises have benefitted from this. Too many opinion against fiscal discipline in the responsibility not just freedom - of on the Right are now swallowing space of six weeks. And it is perfectly both individuals and businesses. and adopting this story. You can possible to better support those on This is a social market rather than find it in the words of Theresa modest incomes at the same time as free market vision, based originally May and her previous advisers.

Autumn 2017 | 5 EDITORIAL

>> It is simply untrue that Tory pack their bags now and go home. the Tory trump cards: economic administrations before the current one Of course it has and does. There is competence and fiscal stewardship. only offered the public free-market unprecedented access to travel and This is a call for a sense of fundamentalism. Under Cameron, technology. Rates of education, perspective, not complacency. There for example, the Conservatives employment and entrepreneurship are still too many people, as the increased the minimum wage; are at record levels. According to Prime Minister has passionately committed to real-terms increases the Office for National Statistics articulated, who are struggling in in NHS spending; introduced a survey of personal well-being, our capitalist society. And all of us, cap on the cost of payday loans; most the British public – even in to differing degrees, face day-to- and announced a sugar tax on fizzy less affluent areas – are generally day challenges where a little more drinks from 2018: these are not the satisfied with their lives. help from government would be policies of a libertarian government. Conservatives should reject, not welcome. This is what the Tories indulge, the attacks on liberal and should focus on now: not petty The Party’s leadership democratic capitalism. The Party’s philosophical debate, but on devising needs to be confident and leadership needs to be confident and delivering sensible policies to compelling champions of and compelling champions of liberal improve lives. Practical help from liberal values and economics, values and economics, especially if the Conservative Party - not a new especially if they are to they are to inspire younger people, name, vision or philosophy – is what inspire younger people, who just voted decisively against the will win them the next election. who just voted decisively Tories. Indeed, the recent election The Conservative Party needs to against the Tories campaign and manifesto did not do argue for - and build - a responsible enough to celebrate some of the real capitalism. But it also need to And if conservatives are unable to economic successes achieved under be more responsible in how it argue that capitalism benefits most the Conservative Governments describes the reality of living people, then they might as well since 2010. It was foolish not to play in this capitalist country. •

LATEST REPORT Britain breaking barriers James Dobson and Ryan Shorthouse

Britain is the home of human rights and a global force for Britain breaking good. After Brexit, Britain should not just be a global leader barriers in free trade, but in human rights too. In this country, as a Strengthening human rights and tackling discrimination result of discrimination, too many people are still held back — especially in education and employment — because of who they are rather than what they do. After a year-long inquiry led by a commission of high-profile decision makers and opinion formers, this report provides a comprehensive and compelling set of policies which can be used by the current Government for its social reform

agenda to strengthen human rights and tackle all forms of James Dobson and discrimination. Ryan Shorthouse

6 | Centre Write MARKETS THAT WORK FOR EVERYONE

Mending markets Scott Corfe claims that to save free markets, we need fairer markets

scott corfe is chief value telecommunication, banking The case for tackling this is economist at the Social and energy companies. In some compelling, not least because Market Foundation markets such as the private rental the existence of unfair markets sector, businesses also appear to undermines broader faith in markets, Many have interpreted the outcomes be taking advantage of the weak full stop. Unless we make markets of the EU referendum and the 2017 bargaining position of households. fairer, there is a risk of this paving general election as a rejection of a The consequences of this are the way for a raft of anti-business market-based economic settlement clear to see. Customer satisfaction measures or even the outright that is not working for a significant levels are relatively low in abolition of markets – through portion of the population – both concentrated industries such as nationalisation of industries such in terms of providing good work energy and telecommunications. as transport and energy. This and value for consumers. The most vulnerable, least would almost certainly lead to At their best, free and functioning engaged consumers often face worse outcomes for households markets are a driving force of job the highest prices. Research by and the economy more widely. creation, innovation and prosperity. Ofcom, for example, found that They also increase value for money. landline-only customers – who are The most vulnerable, least The recent retail price war, which disproportionately likely to be poor engaged consumers often saw the ‘big four’ supermarkets and old – had seen rental charges face the highest prices slashing prices in the face of increased increase by up to 49% in real terms competition from Aldi and Lidl, over the past decade. At the same The will within government to highlights how competitive forces time, wholesale costs of providing a make markets fairer, with better can lead to better outcomes for landline service had fallen by 26%. outcomes for consumers, is there. consumers. Mortgage rates have Despite low costs for credit checks For example, the Conservative also been pushed down in recent and producing a standardised manifesto for the 2017 general years as lenders have had to compete contract, tenants in the private election emphasised a need to hard to win over customers. rental sector have seen a substantial tackle inequality of outcomes increase in letting agent fees in in the energy market – where Free and functioning recent years. Tenants, who are disengaged consumers find markets are a driving force often desperate for a roof over their themselves on poor value deals. of job creation, innovation head lack the bargaining power So what’s the best route to fairer and prosperity. They also needed to rebuff excessive prices. markets? Social Market Foundation increase value for money Ultimately, when consumers are research provides several insights. disengaged and lack bargaining We think there’s a case for re- All too often, however, consumer power, and when barriers to examining the relationship between markets are dominated by a lack competition are high, households buyers and sellers, particularly of choice and barriers to switching get a raw deal. In these cases, a in markets where consumers are supplier. Inertia among households ‘free’ market can easily become disengaged or have little bargaining does not help either – with unengaged what many people would power. The ban on charging letting consumers often sticking with poor consider an ‘unfair’ market. agent fees is an example of this.

Autumn 2017 | 7 MARKETS THAT WORK FOR EVERYONE

>>But we believe that reforms should those on the best and worst deals techniques to discourage cancellation. be considered elsewhere. Reverse offered by a company. One approach In particular, this can trap vulnerable auction schemes in energy, where may be to curb use of rolling consumers in poor deals. suppliers bid for consumers’ business, contracts, forcing companies to Fairer markets lead to more could lead to a much more active and inform consumers about better innovation, better customer service price competitive energy market. deals at the end of a contract term. and lower prices for consumers. There is also a case for regulators But they do not always come about It should be as easy to to do more to make markets more naturally. In our view, consumer cancel a subscription as symmetrical – it should be as easy engagement and bargaining power it is to sign up for one to cancel a subscription as it is to are necessary for a market to be sign up for one. A service that can fair – having choice of supplier It is also worth reconsidering the be signed up for online, should is not sufficient. Government role and remit of regulators, with a be cancellable online. Forcing needs to recognise this with a new, greater emphasis on tackling issues individuals to phone to cancel creates radical approach to regulation. around price transparency and barriers to switching, especially The costs of not doing so are the inequality of outcomes between if phone calls involve hard selling potentially substantial. •

Can we make capitalism healthy? The food and drink industry should do more to reduce the burden of obesity on society, argues Dolly Theis

dolly theis is a going bust, the Government and most vulnerable children who researcher at the Centre published a plan in August 2016 to are worst affected. By aged five, a for Social Justice “significantly reduce” childhood child in poverty is twice as likely to obesity rates in England over be obese than their least deprived Capitalism is making the wealthy the next ten years. Despite valid peers, and by aged 11 this increases healthy, but the majority of us fatter. criticisms of its weakness in relying to three times more likely. In Britain is now the most obese on mainly voluntary actions by the fact, according to National Child country in Europe. Sixty-eight food and drinks industry, medical Measurement Programme (NCMP) percent of men, 50% of women and professions and schools, it did mark figures, the obesity gap between a third of children leaving primary an important ideological shift for the the least and most disadvantaged school are obese or overweight. Government, away from viewing children in England is growing, This is not only leading to around childhood obesity as an issue of meaning inequality in this health 70,000 premature deaths each year, poor personal choice, towards outcome is getting worse. it is also estimated to cost our understanding that our environment, economy a staggering £27 billion socioeconomic circumstances, Capitalism is making the annually, which in the absence education, and influence put on us by wealthy healthy, but the of concerted effort, is expected the food and drinks industry dictate majority of us fatter to rise to £50 billion by 2050. the choices we are presented with. In a landmark attempt to address Although obesity is evident in To help the government, industry the issue and save our NHS from all communities, it is our poorest and public sector address

8 | Centre Write MARKETS THAT WORK FOR EVERYONE

>> this inexcusable inequality, the Centre for Social Justice launched a formal review into childhood obesity, physical inactivity and deprivation last year. A key part of the review will look at how industry can be challenged to take responsible capitalism one bold step further, by making capitalism healthy. For too long the food and drinks industry has got away with its role in the obesity crisis. Mainly because the causes of obesity are so complex and multifaceted. Unlike the link between smoking and cancer, there is no one thing that leads to obesity. For years, scientists, nutritionists and medical experts have failed to reach a consensus. One minute it’s about vilifying fat, the next it’s all about sugar. This has allowed the food and drink industry to dodge their responsibilities and continue cleverly marketing a warning to industry that, should industry and health professionals to food and drink accordingly. it fail to address the obesogenic make informed and healthy choices environment it has helped create and for their children. Government must Only when capitalism take the necessary steps to remove set a fair but firm framework for becomes healthy and the advertising and availability industry, putting reducing health being healthy becomes of calorie-dense, addictive and inequality and easing the burden of the norm, will we witness unhealthy food and drink, it may obesity on society first. Ultimately, a significant reduction in face a future like the tobacco and the food and drinks industry childhood obesity rates alcohol industry, including: plain must make capitalism healthy. packaging on unhealthy products, The Government’s Childhood potent health warnings, duties Although obesity is evident Obesity Plan placed a spotlight comparable to alcohol, and blanket in all communities, it is on the food and drinks industry advertising bans severely restricting our poorest and most by announcing a sugar levy on how junk food and drink is sold. vulnerable children who fizzy drinks and igniting the If industry is to avoid this nanny are worst affected reformulation of numerous state, serious change must happen unhealthy products, particularly soft immediately. Choice in children’s Only when capitalism becomes drinks. This confirms the important diets must be protected from the healthy and being healthy becomes role taxation, regulation and targets undue influence of the food and the norm, will we witness a should play in creating a less drinks industry. Parents must be significant reduction in childhood obesogenic environment. It was also empowered and supported by obesity rates by 2026. •

Autumn 2017 | 9 MARKETS THAT WORK FOR EVERYONE

Back to work Greater support should be provided to women returning to work after caring, argues Flick Drummond

flick drummond was MP most important tasks as a society More important are the management for Portsmouth South and is not currently given enough skills of negotiation that dealing and chair of the Women recognition. Jess Phillips, on the other with children or elderly parents and Work APPG hand, went straight back to work brings — skills I see again and again after six weeks, because she couldn’t sorely lacking in some businesses. During my short time in Parliament, afford not to and had a husband who one of the issues I am most proud could take on the childcare. Many For many women having of raising is the recognition that women are in the same position and children is a defining women (and increasingly men) who many go back to work before they moment in their lives, not have been out of paid employment want to because they are worried a blank space on their CV are a huge pot of talent which is that they will not find a job again. being wasted by our country. Surveys show there is a huge However, after taking a break from reluctance for employers to hire a career, something that is lost is Many women need or someone with a gap in their CV. To confidence, and research shows that want to return to work, end this, we need to have a change women are particularly prone to but don’t know where to in values. What if, as a society, we this. Looking at a job specification start and face significant recognised that gaps in our CVs for and seeing the criteria often leads challenges trying to do so caring responsibilities are valuable women to believe that they are only rather than dismissing them? qualified to do half of them so there Many women need or want to Whilst job hunting, it’s is no point in applying. Men don’t return to work, but don’t know recommended that there are no gaps appear to have the same attitude. where to start and face significant in employment history, and marital Encouragingly, there are increasing challenges trying to do so. This status or children should not be numbers of organisations and dilemma became the first inquiry included. Why not? Surely, they make employers helping women through and published report from the All up part of you and for many women the system. But how do we get Party Parliamentary Group for having children is a defining moment around to telling people who want Women and Work that I set up and in their lives, not a blank space to return that they are valued and co-chaired with Jess Phillips MP. on their CV. You don’t lose skills can also pick up skills quickly? The inquiry came out of a comment whilst at home caring for children Most returners are keen to go that during the Women and Equalities or elderly parents: you gain skills. extra mile to equip themselves with Select Committee’s gender pay gap extra training when it is provided. report, which found that women who You don’t lose skills whilst One of the ways many companies had been out of the workplace for at home caring for children or can do this is by providing short more than six months found it difficult elderly parents: you gain skills apprenticeships or by advertising to find a job. This is a cause close to the job with additional training my heart. I was lucky: I took five years Any expertise lost in the workplace provided. These ideas give the off to have four children and loved is most likely to be in either confidence to people that they won’t being at home with them. Bringing technological or legal changes, but fall down at the first hurdle but up the next generation is one of our both are easily picked up with training. will be looked after. Mentors and

10 | Centre Write MARKETS THAT WORK FOR EVERYONE

>> peers should be provided by given women the opportunity to do for family responsibilities, they employers to support the returner. both. But there is a truth to the cliché will not feel they are able to. There Flexibility is another issue affecting that when people reflect back on their are examples of companies taking parents and carers. Taking time off life from their deathbed, they tend to this on and far-sighted managers to go to parents’ meetings at school wish they had spent more time with tackling the issue by example. should be a right, as should taking their family and less time at work. The Government should publicly elderly parents for hospital visits recognise these companies to share without using holiday leave to do so. After taking a break from a good practice around the country. Employers need to be more family- career, something that is lost I was very pleased the Chancellor oriented and understand flexibility is confidence, and research recognised returners and the barriers leads to a more loyal workforce. I shows that women are they face in the budget this year. guarantee productivity would increase. particularly prone to this £5million has been put forward A happier society is a productive to help returners back to the one, and there are green shoots that So how do we change social workplace. I hope it will recognise show we are beginning to understand attitudes? I believe it has to start that companies can lead the way. It this. I recently chaired an education from the top. Some simply assume does not need legislation to change conference where a Professor stood that the next generation will find a the workplace. It needs leadership up and apologised for her generation more reasonable work-life balance, to show how it can be done. getting it wrong. She said the balance but by the time that people get to In the meantime, it will be had swung too much towards their 30s and 40s with mortgages and interesting to see whether the so- pushing parents back to work and not commitments, it becomes harder. called ‘gaps’ in my own CV are a enough towards a work-life balance. If they see their managers working hindrance or a help, as I look for I disagreed as her generation have long hours and not taking time off work after being an MP. •

Autumn 2017 | 11 MARKETS THAT WORK FOR EVERYONE

Making the consumer king James Plunkett explains how non-choices are making markets unfair and inefficient

james plunkett is the a letting agent, consumers are hit to predict how they might use a Director of Policy with massive fees - £337 on average service. They charge high prices and Advocacy at - when they rent a property. The at the point where consumers Citizens Advice fees themselves vary wildly between have little choice - you can’t get providers, with letting agents an overdraft from another bank. Well-functioning consumer charging anywhere from £6 to £300 Another way companies profit markets run on choice. When to check a reference and from £15 from non-choices is by selling people proactively choose to £300 to renew a tenancy. People services with complex contractual products and services they drive don’t choose their letting agent on terms: interest-free credit cards fierce competition between firms price, so the market is inefficient. which become interest-bearing if bringing innovation, efficiency, and More common is where companies someone goes over their limit, or car lower prices - and they’re more take advantage of consumer finance deals with punitive charges likely to get a good deal too. behaviour when people are unlikely for breaking certain terms and Too many essential service markets to choose or choices are difficult. conditions. Consumers do not break take advantage of ‘non-choices’. In the broadband market loyal down that complexity when making Non-choices are where a consumer customers - those who stay with their choice - the product many pays, or pays more, for a product their supplier after their initial people end up with is fundamentally or service without making an contract has come to an end pay different to the one they chose. active, informed decision to do so, £113 a year more than those who Those non-choices make markets or where they have no option but choose a tariff. That is not unique. less fair as vulnerable consumers to take a service from a particular In the energy, mortgage, and are less likely to actively engage in provider. Too often, non-choices savings markets, where people markets. Nearly 80% of Britain’s aren’t just unfair, they’re inefficient. don’t make an active choice they elderly, disabled and low-income pay a high price. Intuitively we households say they haven’t switched Intuitively we expect loyalty expect loyalty to be rewarded. But their energy bill for three years. to be rewarded, but in in essential service markets too But markets that are built on non- essential service markets many companies exploit people’s choices are not just unfair, they’re too many companies exploit behaviour. Companies know people inefficient too. If companies can people’s behaviour. Companies lead busy lives and are unlikely to profit from a lack of choice they are know people lead busy lives switch providers so up their prices. less likely to be competitive. That and are unlikely to switch Inertia is a clear example of non- means higher costs and higher prices. providers so up their prices choice, but it isn’t the only one. These challenges, because they’re so Essential service providers often closely linked with inherent human At the extremes, the nature of charge high prices when consumers behaviour, often feel insurmountable some essential service markets use services in an unpredictable - the solutions aren’t always means consumers have little or no way. In 2014 consumers paid £1.2 straightforward and intervention opportunity to choose at all. In billion in unarranged overdraft will always involve trade-offs. But the private rented sector, where fees. Companies know consumers there are ways policymakers can tenants choose a house rather than are optimistic and find it difficult limit the impact of non-choices

12 | Centre Write MARKETS THAT WORK FOR EVERYONE

>> on consumers and markets. banned and the upfront costs should would cut energy bills for 2.6 million Policymakers and regulators should be met by landlords who are more people who are most likely to be require information about contracts able to choose their provider. vulnerable and least likely to switch. to be clear and comparable. In the More generally, consumer broadband and energy markets for behaviour means better information Markets that are built on instance, even if a consumer wanted is a blunt tool. Consumers, non-choices are not just to choose a contract based on the particularly vulnerable consumers, unfair, they’re inefficient too best long-term deal, they’d find it are still unlikely to take long-term difficult. Information about out-of- decisions which carefully factor in Efficient and fair consumer markets contact tariffs is rarely advertised. future behaviour. Targeted price caps are driven by choice. Where they Clearer information only goes should be used to protect vulnerable can policymakers should strive so far. Where consumers have consumers from expensive default to encourage engagement and little to no choice - such as over tariffs or from high prices when they active choices. Where they can’t, their letting agent - the price use a service more than they expect. they should step in to limit the mechanism should be shifted to The Government should cap energy negative impact of non-choice where the choice is. Letting agent prices for people eligible for the both to protect consumers and fees charged to renters should be Warm Home Discount: a step that make markets more efficient. •

Autumn 2017 | 13 MARKETS THAT WORK FOR EVERYONE

Does business do enough? Kamile Stankute on the role of businesses in creating a fairer capitalism

kamile stankute is the Parliamentary Affairs Officer at the Institute of Directors

“It is economic success which will provide the surest guarantee of help for those who need it most,” wrote Margaret Thatcher in 1983. Her view is, after all, shared by most economists – that, simply put, capitalism works better for lower earners. Nevertheless, many feel that There is of course no easy answer except for all the others” – the same the current system is not working to how the challenges could could be said about capitalism. and that markets are failing people. be overcome, but the business It is fair to say businesses recognise Last month’s general election was community has a role to play. the problems with the current a clear expression of this growing Businesses should not wait for the situation. Asked what they think feeling in Britain. With Jeremy government to regulate. They should the biggest threats to public trust in Corbyn as leader of the Labour get out in front and show that they business are, Institute of Directors’ Party, it was hardly surprising play a responsible role in society. members outlined “anger over that their manifesto would offer levels of senior executive pay”, an interventionist programme. The fact that Tories have “unsympathetic media portrayal of However, the fact that Tories have shifted towards an increasingly business” and “mistrust of products” shifted towards an increasingly interventionist agenda as the top three. These views aren’t interventionist agenda shows that the shows that the ‘big state’ is too dissimilar from the public at large. ‘big state’ is becoming popular again. becoming popular again This perhaps explains why only 2% The benefits of capitalism should be of Institute of Directors members say self-evident – it empowers individuals It is crucial to remember just how executives should take bonuses in a to progress, gives them freedom to bad the situation got in the 1970s, year in which a company’s financial choose and much more. Yet, the when industry strikes were the norm performance is worse than the previous current climate of stagnant real wages and Leicester Square was piled with years, regardless of the reasons for makes it easy to forget the advantages. stinking rubbish. The dangers of going declining performance. The Institute of On top of that, news stories about the other way, to the system where Directors, of course, mainly represents business figures like Mike Ashley there is no reason to invest in the small and medium size firms. The views vomiting in a pub fireplace and photos economy, must be highlighted. The of big corporates - that tend to be the of Sir Philip Green holidaying on solution is not allowing corporatism, ones to dole out excessive bonuses his £100million yacht after putting but talking about the benefits of - may differ. Nevertheless, the fact the BHS pension fund into jeopardy capitalism. Winston Churchill once that the problem has been recognised do not help capitalism’s image. said democracy is “the worst system by the business community on

14 | Centre Write MARKETS THAT WORK FOR EVERYONE

>> the whole is in itself promising. why those firms for whom it works industry, thereby benefiting both should not get ahead and begin the their business and workers who There is no reason why those process of empowering workers’ are in danger of being left behind firms for whom it works should voices on boards. The appetite for by transforming industries. not get ahead and begin that is growing and the benefits for Business groups like the Institute the process of empowering companies are becoming increasingly of Directors also have a role to play workers’ voices on boards recognised, both in regards to in restoring the public’s confidence reputation and productivity. in capitalism and free markets. It There are nevertheless more things Training is another area where the is for this reason that the Institute that the private sector can do to - business community can show that of Directors has been championing by tackling excesses of capitalism, it’s a force for good in the society. As the need to improve corporate business leaders can help to improve we get reminded every other day, the governance and calling for tax its image. The Conservative manifesto skills gap is a significant problem in reforms for the self-employed. featured pledges to introduce the UK. The crisis is only likely to Between 1990 and 2010 the number legislation that would guarantee grow, as the challenge of automation of people living in extreme poverty workers’ representation on company will make Brexit negotiations look in developing countries fell from boards. Following the unexpected like a walk in a park. Through 43% to 21%. Global poverty and election outcome, the commitment providing better training for their inequality are at their lowest recorded did not feature in the Queen’s staff, private companies can help levels. The benefits of capitalism Speech. However, there is no reason to build a pipeline of skills in their are clearly worth extolling. •

Unlocking potential After Brexit, we need more wealth creators. Pamela Dow urges us to look to ex-offenders

pamela dow is in prison don’t read or write to the 69% of prisoners reoffend on the Chief Reform standard expected of 11-year-olds. release, costing £7-10billion a year). Officer at Catch 22 People are less likely to commit In these tribal times it is further crimes if they have the In these tribal times it is pleasing pleasing to find a public dignity, responsibilities, stability to find a public policy for which policy for which a compelling and wage that a good job provides. a compelling case can be made case can be made within You can also argue for it as a within every political tradition. every political tradition social justice warrior. Prisons are Judging the success of prisons and disproportionality packed with probation by how well they educate You can make a capitalist argument people from poor backgrounds, who and train people into a decent job for future employment as a core have been in care (23% of total, rising has universal appeal. Seventy-five element of a prison sentence, based to 50% of those under 25), and who thousand people leave prison each on efficiency and minimising the are from a minority ethnic group year, of which 75% are unemployed. tax burden. The criminal justice (26%). Education and a good job No wonder: nearly half of those system's failure is expensive (46- helps break cycles of disadvantage.

Autumn 2017 | 15 MARKETS THAT WORK FOR EVERYONE

>> You can even mount a libertarian and mental health, and on the outside using digital mentors from tech to defence of a Ministry of Justice whether they have a place to live teach code, lining up jobs at Siemens education and employment strategy: and supportive family and friends. on release. Bounceback, Switchback, if every other institution has failed The current prison reform agenda Working Chance, Prosper 4, Offploy to equip someone with the tools is – slowly – trying to tackle these and Tempus Novo all act as effective for self-sufficiency, prisons and problems, with the most important brokers, within the walls and probation must do this at least (and change being a devolution of budgets, outside. Longstanding champions most). A Marxist argument is easily decisions, expectations and ambition like James Timpson, continuing found in the prize of the withering to frontline leaders and managers. the wonderful legacy of his father, state, by reducing the coerced recruits 10% of his Timpsons, and incarcerated population. You can make a capitalist Snappy Snaps and Max Spielman Given this ideological convergence, argument for future staff direct from prison. Halfords why is the status quo so bleak? There employment as a core have opened a training academy for are both supply- and demand- side element of a prison sentence, the women in HMP Drake Hall. problems. Every prison governor based on efficiency and Restaurateur Iqbal Wahhab not only wants to run a rehabilitative minimising the tax burden employs ex-offenders but makes regime and offer a full timetable of the case to others for doing so as purposeful activity linked to job On the demand-side, the a rational business strategy, not a prospects, supplying a job-ready constraints are similarly huge. Even cosmetic PR or CSR exercise. As he pipeline to eager employers. The when chief executives and boards argues, while those who have served barriers to doing so are huge. They sign up to do more to support time may need extra practical and include the rigidity of national rehabilitation, making changes in pastoral support from their bosses contracts which prevent local their organisations can be like wading at first, they become the most loyal, partnerships with FE colleges and through molasses. The perception reliable and resilient team members, small businesses who understand the that ex-prisoners pose a reputation or often rising quickly to senior posts. market and can build the personal safety threat to staff and customers DHL, Virgin, Greggs, First Direct, knowledge and relationships we is enough for a risk-averse HR Marks and Spencer and The Co-op all know are necessary. ‘Release on department to block progress. Large also deserve recognition for their Temporary Licence’ (ROTL), used employers may sign up in principle efforts to overcome barriers. to be an essential and successful but lose patience with the paperwork part of preparing prisoners for and inflexible regulation, for example Longstanding champions like release but since the notorious blunt Disclosure and Barring Service James Timpson, continuing ‘Skull Cracker’ case in 2014 it is (DBS) checks or punitive insurance the wonderful legacy of barely in use. (A good example premiums. Others would love to his father, recruits 10% of why political leadership and talk to their local prison but don’t of his Timpsons, Snappy courage is so important in defending know how to initiate contact. And Snaps and Max Spielman professional practice during the centrally commanded hierarchy staff directly from prison sensational outlier incidents.) and constantly rotating managers Staffing and violence levels also of the prison service, and fractured After Brexit it won’t be constrain local flexibility. For many probation system, don’t help. possible for the UK to ignore prisoners there are also more barriers There are many trailblazers 75,000 potential wealth creators than just opportunity between them working to train prisoners in the leaving prison every year. The and a vocational qualification. Part skills needed for their workforce first, second and third sectors of their progress towards a job offer pipeline. Code 4000, about to launch will all have to work together needs to address substance addiction in East Riding, is an exciting pilot to unlock potential. •

16 | Centre Write MARKETS THAT WORK FOR EVERYONE

Skype session with... Martin Lewis martin lewis is the founder of MoneySavingExpert.com Laura Round speaks to Martin Lewis about mental and the charity Money health, debt and student loans and Mental Health

LR Do businesses have to behave more responsibly if market economies are going to work properly and fairly, and if so, how should they?

In some ways I think the push towards corporate social responsibility and responsibility in general is a rather damaging move, because it blurs the line. A business’s job is primarily to make money for its owners or its shareholders. If we want them to look after people and try to push them into some warm fuzzy responsibility feeling, which isn’t their job, we need proper regulation and policies. It is nice if some companies behave responsibly and often they will give good service to the function of profitability. ML But to try and have it as an innate part of business and to have that as your leverage to have them behave better is futile and I prefer to rely on decent regulations and policies.

LR Do you think market-based economies make society more miserable?

I don’t know because I’ve never lived in one that isn’t. But I would say, the innate problem with market-based economies is that billions of pounds are spent on advertising and marketing and we have systematically failed to provide any training. If you want a market to work, then you need decent behaviour on both sides of the equation. And we don’t have good consumer behaviour. Unfortunately, with the academisation of the education system not all schools have to provide financial education. The ML Government has not provided enough resources nor encouragement on this subject and it has been done incredibly poorly. I think that’s irresponsible and short-sighted. A market economy works well when you have consumers and businesses who understand the nature of it. It doesn’t when one side is blindsided, and unfortunately that is how we’ve set up our market economy.

LR What do you think the impact of student debt is?

I don’t believe it is debt, but we call it debt when they go to university and yet we have never educated them about it, which is a huge problem. Because no one has educated about the difference between what is in fact a graduate contribution system and getting a payday loan. I believe it is largely a disastrous social policy, partly due to misnaming it. Calling it a student loan is incredibly damaging. We’ve framed it wrong, and that framing has been worse than the underlying mechanics which aren’t ML particularly bad. The way it’s being portrayed politically, by both sides and the way it’s being misnamed and used as political football has been abominable and I think politicians, whether they wear red or blue or yellow, for the last twenty years should hang their heads in shame about it.

LR Would you say students going to universities are consumers? Do they get a good deal?

No, I think the whole thing is completely mucked up. I think the idea of making universities competitive hasn’t worked, full stop. All universities charge the same fee. There is no value for money equation. All we’ve done is set up a graduate tax that closes once you’ve paid it off. It should be called a graduate contribution system, it shouldn’t called a student loan. Whether it’s value ML for money depends on the individual and what they put into it. I don’t like the consumerisation of universities. I think it risks some dangerous consequences.

LR Do you think mental health problems are on the rise and why?

It’s very difficult to say. I think that we’ve certainly got an increasing awareness of mental health issues. The diminishing of stigma means it is something that is talked about more, which is good. I think the fast pace and interconnectedness of modern life and the ML increased stress that people tend to be under are a driver towards a potential increase in mental health conditions.

People with mental health problems are three times as likely to be in problem debt. I imagine in many cases it’s the other way LR around - being in debt might lead to mental health problems?

I call it a marriage made in hell. Mental health problems can certainly lead to severe financial stress and financial mismanagement. Debt problems could lead up to mental health breakdowns. The two feed off each other in an incredibly devastating way. The research we’ve done shows that it isn’t just the lack of income: this is about the ability to manage. A mental health condition is about impaired decision making. A perfect market is one where there’s perfect ML information and perfect decisions being made on both sides. But when one in four in the community has a mental health issue every year and are therefore potentially making poor decisions, you don’t have a perfect market.

Autumn 2017 | 17 THE RISE OF THE STATE?

Should politicians nudge human behaviour? The opportunities and risks that ‘nudging’ presents to policymakers are assessed by Professor Robert Metcalfe

professor robert metcalfe that our team recently completed worse, one that backfires. We need specialises in Markets, with Virgin Atlantic. We conducted more experiments by governmental, Public Policy & Law an experiment to motivate airline public and private organisations at Boston University captains to be more fuel efficient in order to not only understand by randomising different nudges whether and how nudges change Politicians and governments often that we suspected would change behaviour, but importantly how they try to build a better society by captains’ in-flight behaviours. We can be used to improve welfare. introducing rules, regulations and found that by simply informing the Let’s look at a different type of yes, even taxes. Examples include captains about their exact behaviours nudge: that of fear-inducing pictures speed limits, auto exhaust emission that were causing excess fuel waste, on cigarette packets (a scary image standards, and sin taxes. Within the accompanied with a target for of a deceased smoker’s lung, for last decade, policymakers have also reduction of those behaviours, we instance). The fear induced by the become interested in using ‘nudges’ consistently reduced the amount of image is assumed to reduce cigarette to change behaviour. A ‘nudge’ is a fuel wasted per flight. The cost of demand. Yet, information on the relatively small change in the way the intervention was close to zero. health risks associated with smoking that information or incentives are The benefit of the intervention have not changed, nor has the price presented, ostensibly resulting in a was reduced fuel use and cost, of cigarettes. Smokers may not notable change in citizen behaviours. a reduction in carbon dioxide want to be shown graphic images What’s really appealing about emissions, and higher captain job of dead lungs, and therefore are nudges is that they can sometimes satisfaction. This nudge passes the worse off from the images. Similarly, change behaviour dramatically at very cost-benefit test, and demonstrates overweight people might not want low cost. So, for example, many more one way that nudges can be a force to hear that they are obese. To refer people save for retirement when they for both private and social good. to earlier examples, people using a are defaulted into the programme lot of electricity at home might not versus having to elect an actual What’s really appealing want to be told that they consume retirement plan. To offer another about nudges is that they more than the average household, illustration, we know that people can sometimes change or people might not want to be reduce their home energy use by when behaviour dramatically defaulted in a retirement savings plan they view their energy consumption at very low cost where there is presumed consent. as compared to their neighbours. In many cases, these nudges are While the calculated application Should policymakers be using successful in changing behaviour, but of nudges is relatively new, they such nudges? In the case above, the they are not always easy free lunches can be evaluated on the same nudges buy us a lot. Few would and they are not a substitute to the terms as traditional policy tools. argue against their use to improve traditional ways for politicians to For instance, we may appraise overall human welfare. But in other govern countries. Politicians should a nudge by conducting cost- cases, the cost-benefit test is not so be aware of these two facts before benefit tests. Do the benefits of clear. We have a lot more to learn trying to nudge a behaviour and the nudge outweigh the costs? about what differentiates an effective attempt to understand whether they Let’s take an example from work nudge from one that is impotent – or actually make people better off. •

18 | Centre Write THE RISE OF THE STATE?

Theresa May: free-marketeer? Mark Littlewood argues that passionate advocacy for free markets is the route to electoral success for the Conservative Party

mark littlewood is to put workers on boards and hours a week) to reading the entirety the Director General further government intervention of the UK tax code, it would take of the Institute of in pay bargaining, not to mention you two years to read the whole Economic Affairs further retreat from sensible fiscal thing. During the same amount of consolidation, made the manifesto one time, you could alternatively read From the beginning of her of the most anti-market Conservative the five longest novels ever written premiership, Theresa May has been policy offerings in decades. – or War and Peace twenty times. compared to Margaret Thatcher, But worse than the actual policies that last great female Prime Minister. was the rhetoric of the document. The UK tax code is one of the Both came to power after a period Quotes like “We do not believe in longest and most confusing of national turmoil – Thatcher untrammelled free markets” and in the world, clocking in at following the Winter of Discontent promises that the government would ten million words in length and May after the painful and “act in specific markets” litter the divisive Brexit referendum. manifesto. While few – even at the No government in the past IEA – would argue for “untrammelled 25 years has maintained much The most recent Conservative free markets” without any regulatory of a hands-off approach to the Party manifesto further check, the clear implication is that economy or society. In that time entrenched the move Prime Minister May (or perhaps 34,000 new Acts of Parliament or away from free markets Nick Timothy) believe that the statutory instruments have been and classical liberalism current British economy is too free at introduced, while the regulating of present, rather than too constrained. industries such as financial services However, similarities can be This is extraordinary. Despite the has increased so rapidly that, on deceptive. While Thatcher saw Cameron Government having a current trajectory, the number of Friedrich Hayek as her ideological number of liberally good points, regulators will soon outnumber the mentor (according to urban legend it would be difficult to complain it number of financiers. It is clear that slamming down a copy of his was too taken with free markets. we live in no libertarian paradise. Constitution of Liberty on the The Government now presides So, it is saddening as well as Cabinet table to show what she over an economy that pays more concerning that when framing her believed), Theresa May instead looked as a proportion of GDP in tax than vision of the future of Britain, Theresa back to the work of interventionist under any previous Conservative May looked not to policies that Joseph Chamberlain, even attacking Government since World War Two. would break down the entrenched the ‘libertarian right’ in her first Meanwhile, the UK tax code is one elites and give individuals and conference speech as party leader. of the longest and most confusing in local areas more control over their Unfortunately, the most recent the world, clocking in at ten million own lives and money. That rather Conservative Party manifesto further words in length with half this word than defend the successes that free entrenched the move away from free count added during George Osborne’s market liberalism have brought markets and classical liberalism. tenure as Chancellor. To give you a to both Britain and the world, the Increased employment regulation, sense of what this means, if you were Conservatives effectively yielded including plans to force companies to dedicate yourself full-time (40 the intellectual and moral debate to

Autumn 2017 | 19 THE RISE OF THE STATE?

>> the Labour Party by agreeing that have liberalised their economies Britain stands at a crossroads the market was not the answer, but and lifted the dead hand of the state during the next two years. The that their brand of state control was from industry. Countries like New choices that this Government slightly better than that of Labour. Zealand have freed their farmers (for as long as it lasts) makes will It is worth remembering why this from addiction to subsidies, and determine the success of Brexit retreat matters. There has never seen the productivity and wealth and the economic opportunities been a more successful poverty- creation from doing so. A health available to the next generation. reduction policy than free trade care system more open to market If the Conservatives want to hold and liberal economics. Hundreds of provision has saved thousands in back the socialist tide, then the millions of people across the world countries like the Netherlands leadership must once again defend have been brought out of poverty as and Germany that would have the free market and the good it countries such as India and China died under the care of the NHS. does. Be bold, Prime Minister! •

Fixing the broken energy market John Penrose MP encourages the Conservative Party to continue being bold in reforming the energy sector

john penrose is the MP for Weston-Super-Mare and former Minister for the Cabinet Office

Whatever you think of the Conservative election campaign, we got one policy offering absolutely right: the energy price cap. We promised a cap that would end the rip-off for 17 million consumers and it was, unsurprisingly, very popular on the doorstep. But some people feel that if some customers are too disengaged to pay attention, or can’t be bothered to switch, they deserve to be ripped off. They’re grown-ups, after all; why shouldn’t we treat them like adults? It’s their own fault if they’re to stop blaming customers for not isn’t delivering what consumers too stupid or inattentive to notice. exhibiting what economists think want and why. Because, at the They should be left to suffer. ought to be ‘correct behaviours’ moment, contrary to all economic This simply won’t wash. We need and start asking why the sector theories, the amount of switching

20 | Centre Write THE RISE OF THE STATE?

>> does not increase as the size of that would make it less stressful and many tariffs as they wanted, so the potential cost savings rise. not so scary. If you could change there would be plenty of customer This shows this market is your energy supplier, or your choice, and competition would be completely broken. So broken that contract, in a few seconds, with a red hot. Crucially, it would be a even the basic laws of supply and click of a mouse or a tick of a box, lot better than an absolute price demand aren’t functioning properly. the number of people switching cap or freeze, which is what Ed Clearly, we must reform the sector would go through the roof. Miliband originally proposed, so it behaves like a normal industry But persuading us all to behave because each energy firm could still where the customer is king – not differently and to switch more adjust prices whenever it wanted, the regulator, or the politicians. will take time, probably years. if the wholesale price of gas or Markets aren’t natural creations, And we can’t leave 17 million electricity went up or down. like the laws of physics. They’re households to carry on being man-made. If we get the rules ripped off while it happens. Let’s be bold. We have to right, consumers and citizens All parties, including Labour and ignore the Big Six and deliver are top dogs. But if we get the SNP, agreed in their manifestos on our manifesto promises them wrong, then prices go up, that we need an energy price cap to quality goes down, and either the stop this sort of behaviour. The 30 To their credit, Ofgem realise shareholders or the bosses make or so challenger energy companies there’s a problem and they’re trying out like bandits at our expense. that are snapping at the Big Six to fix it. But their proposals are agree, and have been clamouring for timid, shrivelled, pathetic things We need to stop blaming a relative price cap for some time. which only help two million customers for not exhibiting I think we should listen to them. customers, not the 17 million what economists think ought Simply put, the relative price cap customers who are being ripped off to be ‘correct behaviours’ is a maximum mark-up between to the tune of £1.4 billion each year. and start asking why the each energy firm’s best deal, and Let’s be bold. We have to sector isn’t delivering what their default tariff. It would mean ignore the Big Six and deliver consumers want and why that, once your existing deal on our manifesto promises. The comes to an end, if you forget prize would be an industry that First, we need to make switching to switch to a new one then you is fair. That isn’t hated by its simple, quick, easy and safe. There won’t be ripped off too badly. customers. And that can hold are some detailed, but vital, steps Energy firms could still have as its head up high at last. •

Autumn 2017 | 21 THE RISE OF THE STATE?

A property-owning Britain Conservatives must act now to reverse the fall in home ownership, argues Alex Morton

alex morton is Director at Field Consulting, and was formerly David Cameron’s adviser on DCLG matters

One of the greatest advances since World War Two was the rise and rise of home ownership. Whereas in 1953 just 32% owned their home, this had risen to 71% in 2003. But home ownership fell from 71% in 2003 to just 62% in 2016. In the past two decades for those aged 25, the number owning their home fell from 46% to 20%. Yet over 85% of people still want to own their home and falling ownership is a massive source of frustration. Additionally, even some owners are trapped in a smaller flat than they need as they cannot councils have been told that they in a simple way, the infrastructure afford a family sized home. have to deliver a local plan and needed, the design of new homes, ensure that enough homes are and measures to make sure that One of the greatest advances built in their area to keep up with local people see the benefit of new since WWII was the rise and population growth and the desire homes (for example, low-cost home rise of home ownership for more space. Very few councils ownership for local people). have done so. Even worse, the The key in the long run is greater government until 2015 did not even It is important to note housing supply. It is important to monitor in a systematic way housing that, despite some very note that, despite some very lazy numbers delivered in each area and lazy commentary to the commentary to the contrary, the UK cross reference this with local need contrary, the UK does not does not have an undersupply of to make sure this goal was met. have an undersupply of social or council housing. We actually The Government has now social or council housing have the fourth highest level of sub- announced a ‘delivery test’, with market rent in the European Union councils having to build enough Unfortunately, few believe these – we are miles ahead on that front. homes to meet 95% of any action plans will follow, and most Instead, the failure has been on the requirement in their area or face an think councils will get away with not system to deliver enough private action plan on how to get the level meeting housing need. Government homes – a failure that is much worse of homes up to the level required. talks big about housing but it needs than other countries. For decades, These action plans need to set out, to think small and intervene

22 | Centre Write THE RISE OF THE STATE?

>> intelligently if it is to actually an increase in retirement housing, There are already four million get housing numbers to 250,000. which is sold to a totally different sub-market rent properties versus market to the normal housebuilders, just 200,000 shared ownership The failure has been on would bring the UK more in line homes. The Conservatives urgently the system to deliver with other countries, where the need to offer something now in enough private homes – numbers living in retirement homes the short term to younger people a failure that is much are much greater. For every year that – and expanding shared ownership worse than other countries people delay moving to full time must be part of the mix. Private residential care this saves around investment into shared ownership To deliver sufficient homes £30,000 in health and social care. So can link up pension funds to helping will require a diversification of retirement housing is about both people become owners, rather housing supply away from the housing supply and fixing social care. than trapping them into renting. big housebuilders. The major Another example is shared housebuilders build out sites slowly ownership, where a home is purchased Retirement housing is to ensure that they can sell them – at jointly, with a share taken up by about both housing supply a rate of around one property a week. another investor. It is often cheaper and fixing social care They also tend to build a fairly similar than renting or owning outright. After product across the country. They are 2015 the Government had started to The Conservative Party should a key part of the mix, but they will switch funding to help build shared not give up on home ownership – not get us to 250,000 homes a year. ownership. The grant required for the British people have not. The Such diversification in housing can each shared ownership home was Conservatives just need a narrative also help achieve other objectives around half that of social housing so and a clear action plan to turn as well as just supply. For example, this meant more affordable homes. people’s aspirations into reality. •

Capitalism is core to conservatism Brexit presents an opportunity for Conservatives to champion free enterprise, argues The Rt Hon Lord Maude

the rt hon lord maude a Labour leadership overtly hostile an especially severe failure because is the former Minister to capitalism and globalisation, in the unprecedented numbers of younger of State for Trade and recent election no one was making people are – even if they don’t think of Investment and a the case for open markets and private themselves in this way – entrepreneurs. member of Bright Blue’s enterprise. The Chancellor, who is The so-called gig economy thrives on Advisory Council an articulate advocate for the market people having chosen to work outside economy, was seemingly locked in the formal structures of conventional A Conservative Party that doesn’t a cupboard for the duration of the employment. A Conservative Party appear to be passionately in favour campaign; and with no frontline seeking to re-engage successfully of free enterprise and wealth creation economic spokesman on the airwaves with younger people needs to be lacks credibility and authenticity. With the case went by default. This was able to connect the way many of

Autumn 2017 | 23 THE RISE OF THE STATE?

the business environment. We know that excessive and disproportionate regulation stifles innovation, deters investment and destroys jobs. Disasters like the Grenfell Tower horror inevitably make us anxious about deregulation – but we best honour the suffering of those families by finding the right answer, which is not necessarily the most regulatory answer.

A Conservative Party that doesn’t appear to be >> them live their lives and make Britain will be a uniquely advantageous passionately in favour of free their livings with what Conservatives destination for investment and enterprise and wealth creation believe and Labour hates. job creation. Yes we have lots of lacks credibility and authenticity I took no part in the EU referendum advantages: brilliant universities and campaign last year. I thought both science; the language; the time zone; Most current explorations of sides were wildly exaggerating their and much else. But we need to show the future for the Conservatives case and that the arguments were that we will be ready to make changes talk about the need for ‘reform of quite finely balanced. I thought a vote that give Britain decisive advantages capitalism’. We need to be careful for Brexit meant some certain short- over our competitors: advantages about this. This notion can easily term downside – and the short-term that will outweigh the disadvantage find expression in rhetoric that is by no means over yet; but that it wrought by Brexit uncertainties. sounds quite simply anti-business. would open up some longer-term This is lethal to us, and serves only upside opportunity. I stress the word Unprecedented numbers of to feed our opponents. Of course ‘opportunity’. It is by no means a younger people are – even if there are abuses and failures; but the given. Yes we have to negotiate free they don’t think of themselves capitalist system is unequivocally the trade agreements – neither the walk in this way – entrepreneurs best motor for social progress and in the park Brexiteers boast nor the wealth creation. So we can reform eight year nightmare claimed by So I worry when I read headlines capitalism piecemeal and pragmatically, Remainers. But if we are ‘taking back like “We won’t be a tax haven after addressing specific issues as and when control’ then we need to use it to make Brexit”. Well, I certainly don’t want us they arise. But for Conservatives Britain unequivocally the best place in to be a jurisdiction where businesses to believe that their political revival the world for people and businesses to can avoid tax; but I emphatically depends on the contention that current put to work their money, ideas, talent want us to be somewhere people and capitalism and globalisation are and energy. We’ve been pretty good businesses don’t mind paying tax. deeply flawed is both wrong and daft. at that – among major economies the And I do emphatically want us to have Free enterprise, based on a capitalist best at attracting inward investment. a regulatory regime that is simple, system, is at the core of conservatism, But part of that has been the certainty sensible, pragmatic and proportionate. and without it as our backbone we that locating an activity in the UK No one wants the approach that the slump. And for the twenty- and gives certain access to the European European Commission offensively thirty-something generation, for many Single Market. I think that is likely to call ‘social dumping’ – but there is of whom doing their own thing is continue but the inevitable uncertainty little point in having ‘taken back the new normal, this is how we can means we need urgently to signal that control’ if we don’t use it to optimise reconnect them with our party. •

24 | Centre Write Tackling social mobility is the key to driving productivity

Rachel Hopcroft Head of Corporate Affairs KPMG

A person’s background can have a A failure to bridge this gap hinders the local business community. huge impact on their ability to reach our ability to be competitive on a I am delighted that we are one their full potential, and disadvantage global stage. of 40 employers to sign up. too often passes from generation to The Government has recognised We were thrilled to achieve second generation. Britain has a deep social that promoting social mobility is place as a leading employer in the mobility problem, with a child living an economic necessity, and when inaugural Social Mobility Employer in England’s most disadvantaged the Department for Education Index, but the job is far from areas 27 times more likely to go to announced 12 Opportunity Areas, complete. It is unacceptable that an inadequate school than a child drawn from coldspots identified by in today’s Britain, only one in eight living in one of England’s most the Social Mobility Commission, children from low-income families advantaged areas. we were eager to support it. is likely to become a high-income Addressing the geography of earner, so it is vital that business, KPMG joined forces with The disadvantage has the potential to Government and the third sector Careers & Enterprise Company increase economic productivity take sustained and collaborative and signed up to be a ‘cornerstone nationwide. Today, 23 out of the action to drive this agenda forward. employer’ in two Opportunity 32 London Boroughs are in the Areas, Norwich and Fenland & You can find out more about our top 10 per cent of areas for social East Cambridgeshire. Through social mobility work at: mobility, and output per person in this pledge, we are committed to www.kpmg.com/uk London is more than £43,000 a year, supporting young people to prepare compared with less than £19,000 in for the world of work, and convening the North-East.

© 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. THE RISE OF THE STATE?

The conservative state: small, strong and strategic Paul Goodman says that if the Conservative Party is to attract younger voters, it must get better at making the case for a more streamlined state

paul goodman is held that a big state, and one into the historical differences and the Editor of that seeks to impose equality of linkages between conservatives ConservativeHome outcome, is dangerous not only to and liberals. These might be individual freedom but to social summarised roughly as follows. Election day polling by Michael cohesion. A glance at the chaos in Ashcroft showed a Britain divided not one of Corbyn’s favourite countries, Most voters want government so much by class or region as age. The Venezuela, should be enough to to be out of their hair yet 45-54 age group split almost evenly prove the point. Conservatives will there when they need it between the two main parties. Older always believe in a smaller state than voters went for the Conservatives; socialists - or, as Theresa May once First, capitalism is not producing younger ones for Labour. Among put it, think that the state should well-paid, secure, blue and white 18-24 year olds, only 18% voted be “small, strong and strategic”. collar jobs in western Europe on the Tory, while 67% supported Labour. It does not follow, however, scale that it did even 25 years ago. Among 24-35 year olds, that first that because we think the state Voters thus expect the state to step in: figure rose to only 22%, and the should shrink that we believe it to help support lower paid workers second dropped to only 58%. should all but vanish altogether. through the National Living Wage There are solid political as well as or tax credits; to improve schools, It does not follow that because electoral reasons for rejecting the so that younger people are better we think the state should view that the nightwatchman state prepared for work; to help ensure shrink that we believe it should is enough, even before delving that there are houses in places where all but vanish altogether

It is inevitable in the aftermath of these findings and June’s result that the Conservatives should mull younger voters’ embrace of Jeremy Corbyn; think that the latter have little grasp, because they have no memory, of why socialism doesn’t work; and conclude that Tories need not so much to ‘Change to Win’, as David Cameron once put it, as ‘Educate to Win’. The case for conservatism must be put to younger voters as it hasn’t been for the best part of 50 years. An integral part of that case is the belief in a smaller state. Tories in modern times have consistently

26 | Centre Write THE RISE OF THE STATE?

>> workers need them; to provide is a need, as people live longer, for word, as an enabler - championing, transport and digital infrastructure. new savings vehicles to supplement regulating, setting a tax and legal Second, changes in our lives at work the state pension. But government framework, sometimes funding. mirror those at home. More people must set the overall framework. And Finally, a plea to see ourselves are coping on their own, as families that state pension must be there in as others see us. I’ve never heard change, with debt, or substance some form - at least, if a party is to anyone who wasn’t politically abuse problems, or the inability to win elections. The manifesto social active talk of a small or big state. read and write, or the lack of the care fiasco is testimony to what Most voters want government to ‘soft skills’ that underpin regular can happen when governments be out of their hair yet there when work. The traditional free market propose sudden change. they need it. They respect, even if nostrums do little to help them. May put it baldly when she praised they don’t always like, politicians If a man has an alcohol problem, “the good that government can who deliver stable economic cutting taxes won’t help him. If he do”. Cameron’s vision of the Big management and a competitive tax can’t read, nor will slashing red tape. Society, with its enhanced role for framework - which in turn raises If he lacks soft skills, privatisation the independent sector, charities and the revenue to fund higher spending won’t create a job that he can do. voluntary groups, was closer to the on schools, hospitals and other Third, the state isn’t necessarily mark. But it needs the state to still be public services. Which is what the provider who meets all these there after it has stood back: to act, Margaret Thatcher, free market requirements. For example, there in that clunking but indispensable heroine, delivered in her time. •

Join Bright Blue

Becoming a member of Bright Blue enables you to support and partake in the championing of liberal conservatism.

You will be an official part of Bright Blue's network – invited to all our events and conferences, with the opportunity to meet a wide range of people who share Bright Blue's positive and open-minded view of politics. You will also have the opportunity to contribute ideas on policies and strategy in various ways – in debates, on our blog, and in our magazine. Join today and receive: • A special members pass for the annual Bright Blue Conference • An exclusive members-only reception each year with high-profile speakers • Hard copies of all our books and magazines

brightblue.org.uk

Autumn 2017 | 27 BRIGHT BLUE POLITICS THE CENTRE WRITE INTERVIEW

Evening Standard

The Centre Write interview: Jesse Norman MP

Laura Round discusses the industrial strategy, compassionate economics, Edmund Burke and the general election with the Transport Minister

Capitalism has delivered demonstrable successes, includes corporate misbehaviour: for example, CEOs yet people seem to be losing the faith in the ability of paying themselves egregiously large amounts of capitalism to make their lives better. Why do you think money unrelated to stock market performance or to this is the case, and how should conservatives respond? profitability, while the average working man and woman has stagnant real wages. I don’t see any reason at all Capitalism is really a combination of two things. It’s why the centre-right and Conservatives shouldn’t be a combination of free markets, or more or less free really strong in calling out that kind of behaviour. markets, and the activity of private corporations and Another strand of critique is about globalisation, companies. We had markets before we had corporations, where it seems there have been great gains in and so capitalism only properly starts getting going economic value through international trade, yet towards the middle and end of the nineteenth century. they have been shared out in disproportionate ways. If you look at a lot of the problems that people This is largely a political problem. Especially in have with capitalism now you get several different the Blair years, politicians did little to prepare for strands of critique. One is ‘crony capitalism’, which globalisation or understand its likely consequences,

28 | Centre Write THE CENTRE WRITE INTERVIEW BRIGHT BLUE POLITICS THE CENTRE WRITE INTERVIEW

>> or support those who were negatively affected. Well, that’s a very interesting question. My point The third strand is the feeling that markets are was really about compassion as fellow-feeling, dominating our culture, a sense that corporate not compassion as pity. It’s about the kind of values have taken over, and a cultural or moral economics you get if you take Adam Smith seriously, panic about what that means. The problem here rather than just through the usual caricatures. is that we aren’t having a genuine discussion The point I was making about tax credits was that about what we really care about, and therefore the way in which they were introduced by the Brown there’s a danger that the values of big business government didn’t take account of an absolutely become absorbed and normalised by default. basic fact of behavioural economics called ‘loss Those are three strands of public concern. I think all aversion’, which is that - very broadly speaking - of them can addressed; the challenge for politicians people are twice as angry about having something of all stripes is to continue to bear down on them. that they have taken away from them than they are pleased to be given something they don’t have. Many regions outside London lack adequate physical So, if you have a tax credit system which overpays and digital infrastructure. Theresa May has launched the people, and then reclaims the overpayments, this is a modern industrial strategy to tackle regional economic guaranteed recipe for social anger and discord. And imbalances. How will this Government improve Britain’s that was the result. In the Brown case, it was also a infrastructure? catastrophic waste of public money, which cost us two or three billion pounds in the first year alone. There is an enormous amount being spent to improve There is some evidence that government is getting our infrastructure within my own department. And smarter about these decisions. When I first arrived at that’s not just on motorways. More investment is going the Department for Transport, the first thing I did – into roads of every kind than we’ve ever had, certainly albeit a bit wonkish – was to ask for a detailed brief on in living memory. There’s also a lot of investment in investment appraisal. The Department for Transport has railways, HS2, and soon on Heathrow and greater some of the best economists in government and it sets international interconnectivity as well. Certainly, much the benchmark for investment appraisal. I wanted to see more could be done about broadband, but there an exactly how they did it and whether or not I was happy awful lot of the slack comes from underperforming with it. It’s a much more sophisticated process than just corporates, in particular BT. When I was chair of looking at benefit-cost ratios you might expect from the Culture, Media and Sport Committee two years a traditional ‘rigor mortis’ economics point of view. ago we commissioned a big expert study which concluded that BT was structurally underinvesting At the time of your book, you argued that the Labour in broadband, potentially by hundreds of millions government was in the grip of an outdated 1970s textbook of pounds a year, to the detriment of customers and of economics. What are your current views, considering shareholders, and of course the UK as a whole. the Labour Party seems to have moved even farther to the left since then? Your book Compassionate Economics urged policymakers to put compassion back into economics by recognising Well, the Labour Party has massively benefited from the wider social context in which people operate, and to the fact that, if I may put it that way, no one took move away from what you call “rigour mortis economics”. the leadership seriously enough to interrogate their An example you provided where policy had gone wrong policies particularly closely. If they had, then they was tax credits. Do you believe government has become would have asked more searching questions before the better at taking into account that people aren’t perfectly general election about the Labour Party than they did. rational utility maximisers? And would you say that A lot of ink has been spilled on the election and I don’t Universal Credit, for example, has taken this on board? propose to revisit that. However, it is generally agreed

Autumn 2017 | 29 BRIGHT BLUE POLITICS THE CENTRE WRITE INTERVIEW

that we should have pressed harder and for more detail Often the first question is to check whether they have on the issues ourselves. For example, my voters would actually read the strategy. My general rule is that if have discovered that one of the proposals that was being you think you haven’t got an industrial strategy or offered by my local Labour candidate was over and it’s a bad idea, then you have an industrial strategy above all the nationalisations that the Labour leadership without knowing it. We have always had some form was proposing, that they should nationalise BT. of tacit or explicit industrial strategy in this country, Now, whatever you feel about BT, and I’ve just been and this is an attempt to be more self-aware of what quite tough on them, to nationalise BT would cost £40 that strategy is, what the different trade-offs are, and billion, and would replace a set of managers with a set what we’re trying to achieve, and then try to build of officials. Now, it is by no means clear that would be some consensus around that. I think that’s a thoroughly an improvement, to put it mildly. And it would cost worthwhile thing. What I don’t think it means is £40 billion, which is very roughly the amount of money throwing the baby out with the bathwater. It’s not we spend on defence every year. So it just felt that none about saying we’re retreating from the benefits of free of those economic policies, if taken at all seriously, markets, but rather that in some cases these markets could stand up to public scrutiny for a second. And aren’t working very well at the moment, that great we’re discovering this because as it starts to become markets and companies need great infrastructure, and framed by voters as a potential party of government, that we need to think harder about how the world the Labour Party is now beginning to come under more is changing, where this country has competitive scrutiny. You’re seeing the effect, for example, in the advantages, and how we can make the most of them. roll-back on tuition fees that we’ve just seen by Labour. Their bigger problem, I think, is compounded of During the election, the Conservative Party didn’t really two things, really. One is that the leadership of the play to its strength: the economy. And the Labour Party Labour Party is in the grip of a set of economic ideas was very successful in playing towards its values. Do you that are potentially catastrophic, which they are one think this was a mistake? successful general election away from being able to put into place. The second is that I think there is a kind of What many people forget and what we need to state unwillingness there, generally, to understand that we and keep restating, is that conservatism is a philosophy are in the world of markets, whether we like it or not. of social value. To put the matter at its most general, We can’t duck that, we can’t pretend to step out of it conservatism is about keeping what is of value, by nationalising industries or setting prices and income and getting rid of what is not. So, it can never be a policies in the way they would have done in the 1970s. view that tolerates serious social injustice, and great The challenge for us is to understand that we’re in a conservatives from Burke to Disraeli to the modern world of markets and make those markets work better day have always fought injustice. But conservatism is for us, and be really intelligent about interrogating also about taking what is of value, acting as trustees, them: what they are, how they work, and what they are nurturing it, building it up, and passing it on to for. Rather than, as it were, throwing our hands up and the next generation. That’s the conserving part of running away to a certain kind of crypto-Marxism. conservatism. And that doesn’t mean saying no to the new, because the new is often about ways of improving Many Conservatives are instinctively sceptical of what we have and what we care about. But it does an industrial strategy, and I suppose many of them mean being very reluctant to throw away things that remember the lessons of the 1970s, when governments work. Which is where its pragmatism comes from. tried to essentially plan the country’s economy to support ‘winners’. Can you reassure Conservatives that the Prime But the Conservative Party hasn’t been talking about that Minister’s new industrial strategy is different and in line much. with conservative principles?

30 | Centre Write THE CENTRE WRITE INTERVIEW BRIGHT BLUE POLITICS THE CENTRE WRITE INTERVIEW

Jesse Norman MP speaks at the Northern Transport Summit

>> We do, but maybe not enough, and maybe not social value, and about crony capitalism, as we enough about some of the aspects of social value have already discussed. These are very Burkean that people care most about. An example is the arts, themes. So, I think that’s a very worthwhile thing, which are all about understanding a tradition which and that aspect of it has to be applauded are all about understanding a tradition, a practice, a discipline, immersing oneself in it and achieving How can the Conservative Party get back on track and excellence and self-fulfilment through it. I think about reach out to the under-40s that it appears to be losing? places like the Roundhouse in London, which my father created. People know the Roundhouse for the I think that the lessons for the future of all our iTunes festival and the Electric Proms, but its main campaigns is you have to go back and start from key purpose is a world-class centre for young people in the conservative ideas about social value, responsible performing arts. The idea of allowing a young person stewardship of the public finances, a strong nation- to find what it is of value in their lives and pursue state and strong defence. Those are core conservative it with aspiration and energy and entrepreneurship, principles. The Party also has to be willing to look hard and share the love and the joy, that’s a very beautiful at how to tackle injustice. And it needs to be willing to thing, and a rather conservative one. You know, it’s talk about areas that people don’t regard as traditionally entirely something that we should be welcoming and conservative, such as healthcare, the environment and promoting. That’s also why I really support all of the the arts, on which conservatism in fact has some very work on civil society and independent institutions useful things to say. There are no areas of policy and that has been done by the Conservative Party. of public discussion that lie outside a strong, warm and intelligent conservatism, if it’s properly focused. Was Nick Timothy right to describe the manifesto as consciously Burkean? Will another Etonian ever be Prime Minister?

Many people have had a field day in analysing the I think Jacob Rees-Mogg would be an manifesto. What I think was Burkean about it was outstanding candidate. I can only admire the that it made a real attempt to say something about Moggmentum that’s already underway! •

Autumn 2017 | 31 BRIGHT BLUE POLITICS

Why I’m a Bright Blue MP The Conservative Party should put conserving the environment at its heart, writes Neil Parish MP

neil parish mp is the name – Conservatives care deeply payments to better promote our Chair of the Environment, about ‘conserving’ our natural natural environment, or boosting Food and Rural Affairs environment and passing it on in good animal welfare standards, the Select Committee condition to future generations. Government should always be looking to do more on environmental matters. The Conservative Party does The tag sticks that Over the past year, I have been proud not talk enough about its strong Conservatives don’t care to campaign with Bright Blue on the record on the environment. about the environment. It’s issue of air pollution. This is a problem As Chair of the Environment, Food infuriating and something I am linked to over 40,000 premature deaths and Rural Affairs Select Committee, passionate about changing per year, with 40% of local authorities you might expect me to say that. breaking air pollution limits. Working But I find it consistently frustrating That’s why I am a Bright Blue with Bright Blue, I have called for that this Conservative Government supporter. The think tank does additional funding and powers for does not shout from the rooftops fantastic work highlighting the positive councils to tackle toxic air, as well as about how much progress we’ve steps we have already taken on the a diesel scrappage scheme to replace made on environmental issues environment and keeps pressing some of the dirtiest diesel vehicles over the past seven years. the Government to go further. on our roads with electric ones. Just look at the facts. Since 2010, In April, Bright Blue published The Government has now published the UK’s greenhouse gas emissions an excellent report on Conservative its new air quality plan to tackle the are down 18% and our carbon voters’ views on the environment. problem. I look forward to holding emissions down 19%. In the last Written by Sam Hall, a real rising star the Government to account on year, over a quarter of our electricity in modern conservative thought, the their promises and ensuring toxic came from renewable sources, report surveyed Conservative voters emissions are reduced in inner cities keeping the UK ahead of target on and showed they are just as passionate as quickly as possible. I’m sure our renewable energy directives. as any other voters on environmental Bright Blue will continue their strong Meanwhile, we’ve introduced a issues. Very large majorities of Tories campaigning record in this area. five pence charge on plastic bags, want to maintain or strengthen This is the most important decreasing their use by 83% in environmental protections after Parliament in decades for our just two years, started phasing out Brexit in areas like water quality and environmental legislation. As we leave unabated coal-fired power stations, beach cleanliness (96%), air pollution the EU and create our own domestic ratified the Paris Agreement on climate targets (92%) and recycling (90%). environmental regulations, I want to change and will soon introduce laws This is great ammunition to remind make the Government commit to the to ban the sale and manufacture of the Government to keep up the highest possible standards. We need to microbeads. A strong record of action. progress on environmental issues. press the Government to continue its But still, the tag sticks that Moreover, as we leave the EU, I want good environmental work and remind Conservatives don’t care about Ministers to look to maintain, and Ministers how deeply Conservative the environment. It’s infuriating enhance where possible, the UK’s voters care about environmental and something I am passionate environmental standards. Whether protections. In that task, I know I’ll about changing. The clue is in the that means reforming farm support have a strong ally in Bright Blue. •

32 | Centre Write BRIGHT BLUE POLITICS

Bright Blue research update James Dobson updates us on Bright Blue’s research programme

james dobson is a a commission of high-profile the responsibilities citizens have to Senior Researcher decision-makers and opinion- each other. To build on this concept, at Bright Blue formers that included three Bright Blue will soon be launching former cabinet ministers. a new report from an independent Since our last magazine, it has This publication formed part of expert on the future of civic society. been yet another turbulent period Bright Blue's Conservatism and Elsewhere, our energy and of British politics. In April, the human rights project. This project environment team have recently Prime Minister hastily called will publish more reports over launched a project which will be an early election to ostensibly the summer. This month we will developing new ideas for a cross- prevent opposition parties from release a paper by an independent departmental approach to promoting sabotaging Brexit. But despite the expert on the future human rights conservation, both domestically optimism of early polls, which legal framework in the UK and, in and across the world. The first forecast a Conservative Party September, we will present a new publication from this project will landslide, the final result was report on Conservative voters’ be an essay collection of leading bitterly disappointing for the Tories attitudes to human rights. opinion formers in early 2018. We as the Party relinquished 14 seats will also publish a new paper on the and with them its overall majority There were no shortage of natural environment after Brexit. in the House of Commons. policies to tackle ‘burning As part of our immigration and Following the election, the injustices’ in Bright Blue’s integration theme, our research into Prime Minister struck a more latest publication Britain the effects immigration has on social conciliatory tone. She has asked Breaking Barriers integration continues, and we will opposition parties to work with publish our findings in Spring 2018. her and present policies which can In July, we hosted our Social We have a number of smaller demand a majority in the Commons. Reform Conference 2017. The projects to look out for too. These Theresa May has also reaffirmed her conference included a keynote include two essay collections. desire to create a truly ‘one nation’ speech from The Rt Hon Damian One examining the future of government that fosters real social Green MP (First Secretary of workplace pensions and, the other, reform by tackling the ‘burning State), and break-out sessions with presenting a cross-party approach injustices’ which prevent individuals the centre-right's most influential to the ‘burning injustices’ the achieving their full potential. politicians and thinkers. Areas of Prime Minister has identified. There were no shortage of policies discussion included education, Finally, this autumn we will begin to tackle ‘burning injustices’ in Bright housing, prison reform, international a project that will scrutinise the Blue‘s latest publication. In Britain development, social integration, experiences of Universal Credit Breaking Barriers, we presented and the future of work. claimants during the initial roll out. 70 policy recommendations Part of Theresa May's social reform In this period of political to strengthen human rights agenda is the concept of a ‘shared uncertainty, we hope you will see and tackle discrimination. The society’. According to the PM, such that Bright Blue’s research continues recommendations were the result a society is one that doesn’t just to be a passionate and reliable of a year-long inquiry led by value individual rights but focuses on advocate for liberal conservatism. •

Autumn 2017 | 33 BRIGHT BLUE POLITICS

Energising the industrial strategy Clean energy is now also affordable energy, argues Sam Hall

sam hall is a last year that new solar projects are now fossil fuel plant. This would guarantee Senior Researcher cheaper than coal in his country. Here in there would be no subsidies. At the same at Bright Blue the UK, the Government says onshore time, the Government should be wary of wind and solar will be as cheap as, and committing to subsidising technologies, Clean and affordable energy is one of in some cases cheaper than, gas for new like large-scale nuclear and tidal lagoons, the ten pillars of the Government’s projects being commissioned in 2020. without setting a clear and swift trajectory new industrial strategy, and rightly The Conservatives should be careful for them becoming subsidy-free. so. Energy fuels a country’s economic not to see fracking as the solution. Unlike The second priority should be growth. For heavy industry, energy in the US, our shale gas revolution to incentivise energy efficiency costs can be the difference between has not come in time to displace more improvements. The cheapest energy is keeping open or closing a factory. For polluting coal, which last year generated the energy you don’t use. The reason businesses in the service sector, high just 9% of UK electricity. Further, as the that average household fuel bills have energy bills can mean less productive much larger European market largely actually fallen since the Climate Change investment in things like workforce sets UK gas prices, fracking won’t Act was passed in 2008 is because the expansion or new digital infrastructure. significantly cut business energy costs. savings from greater energy efficiency Contrary to what the fringe climate Clean energy isn’t just the fuel for has been worth more than double sceptics argue, the ‘clean’ part of this industry: it’s an industry itself. The the cost of clean energy subsidies. prescription isn’t just a nice-to-have, UK’s low-carbon economy, according To make further progress on efficiency, but hard-headed economic self-interest. to the latest figures, turns over around the Government should establish a Unconstrained climate change would £43 billion annually and supports the successor to the failed Coalition-era present huge risks to the economy, like equivalent of 234,000 full-time jobs. programme, the Green Deal, that allowed expensive infrastructure damage from There are some real British success homeowners to borrow for energy increased flooding and worse public stories, too. The UK has the biggest upgrades and pay back the loan through health from higher average temperatures. installed offshore wind capacity in the their bill savings. The financing mechanism And this is just the direct UK impact world, a fact that led to Siemens recently should be made more attractive, through of failing to cut emissions. The adverse opening a new turbine factory in Hull. loan guarantees and through integrating effects of increased conflict abroad, And the Nissan factory in Sunderland small-scale renewables tariffs, and targeted mass migration, and weaker trade manufacturers one in every five battery regulation should be introduced when would all be felt in Britain. No strategy electric vehicles sold in Europe. homes are sold and when properties are worth the name should fail to deal with So how can this potential be being renovated to ensure there is a base such serious long-term challenges. unlocked? The top priority should be level of demand for the scheme. Post- Happily, the list of energy sources to encourage more onshore wind and Brexit, our EU-derived regulations about that are both ‘clean’ and ‘affordable’ solar, the cheapest forms of energy. The energy efficient appliances, which polling increasingly overlap. In over 30 countries, Government hasn’t held an auction for shows are popular among Conservative clean energy is now cost-competitive with mature renewable technologies since voters, should be maintained. fossil fuels and is starting to undercut the days of the Coalition. They should Energy is fundamental to our them. The cost of solar, for instance, has announce a new one, with the proviso industrial strategy. But to power the plummeted by 62% since 2009, leading that no contract will be awarded if the economy forward into the future, the Indian Energy Minister to remark lifetime cost is greater than an equivalent more bold action is needed. •

34 | Centre Write IS DEVOLUTION THE SOLUTION?

Government for the people and for the regions Stephen Clarke evaluates the successes and blindspots of the UK’s industrial strategy on different people and regions

stephen clarke is a and professional and business them. But to what extent did the Research and Policy services) to support. Given this, last expansion of these sectors help Analyst at the Resolution month’s announcement by Greg share prosperity and opportunity? Foundation Clark that the Government would continue to support key sectors in Promising a break with the Recent electoral surprises, an attempt to raise productivity past - particularly in terms of particularly the EU referendum last and living standards, should be seen economics - is nothing new summer and last month’s general as a continuation of an approach election, have been described as that has been in place for almost Our analysis shows that these reactions against the economic status a decade now. The real question sectors, where they flourish, create quo. The shocks have been greeted is: how successful has it been? significant numbers of jobs in the by politicians promising no more For the first time we have wider economy. Our estimates business as usual. Theresa May has comprehensive evidence that suggest that for each ten jobs created said that her government will create provides an answer. The Resolution in advanced sectors over the period, “a country in which prosperity and Foundation, working with Dr a further six jobs are created in the opportunity are shared right across Neil Lee at the London School wider service sector economy, and this United Kingdom”, while Jeremy of Economics, has estimated the four of these jobs are filled by people Corbyn has repeatedly promised impact that advanced sectors – many with fewer qualifications. In terms of to “build a society where no one supported by government – have job creation there is strong evidence and no community is left behind”. had on living standards across the that policies that help advanced country. In terms of the sectors sectors can also raise the living It is concerning that where themselves, government support standards of the least well-off. This advanced industries are appears to have helped them expand. is the good news. The bad news is flourishing the benefits Between 2009 and 2015, 140,000 that many people and places aren’t aren’t always spreading additional jobs were created in the benefitting as much as they could through the local area digital sector (computer hardware, be. London accounted for three- software and telecommunications), quarters of the growth in high-tech, However, promising a break alongside 120,000 more jobs digital economy, tradeable finance with the past – particularly in in the creative (advertising, and creative industries between 2009 terms of economics – is nothing architecture, fashion) and tech and 2015, and currently a quarter of new. Following the onset of sectors (aerospace, pharmaceuticals, all jobs in these advanced sectors are the financial crisis, the Labour advanced manufacturing). found in the capital. Although there Government promised to rebalance Such jobs form an important are pockets of excellence across the the economy away from finance. – although relatively small – country – Manchester, Newcastle In 2011, George Osborne called proportion of the two million or so and particularly Leeds have made for a “Britain carried aloft by the jobs created over this period and progress recently – the majority march of the makers”. The Coalition clearly many of them – particularly of areas that have seen the greatest Government identified 11 key sectors those that are high-paying – were growth in advanced industries (including aerospace, life sciences a boon to the people who filled since 2009 are in the south-east.

Autumn 2017 | 35 IS DEVOLUTION THE SOLUTION?

>> It is also concerning that where opportunities currently being grasped the industrial strategy. Although advanced industries are flourishing by a handful of large city regions. governments have rightly grasped the benefits aren’t always spreading that some sectors should be through the local area: 5,500 more When sectors such as supported, and that local as well as jobs in advanced sectors were created retail, hospitality and national actors should be involved, in Oxford over the period, but almost accommodation are described lower paying, big employing sectors no additional service sector jobs as ‘strategic’ we’ll know we have been ignored. This has always were created as a result. The same have an industrial strategy been a problem given that the vast is true of Portsmouth, Poole and really working for everyone majority of people work in these High Wycombe. By contrast, for sectors and productivity in these each ten additional advanced sector Finally, some sectors have far less industries is lower than in their jobs created in Cambridge a further of an impact on pay. The evidence counterparts in other developed 28 jobs were created in the wider is that when an aerospace plant countries. However, it is something economy. This speaks to the fact – or pharmaceutical firm expands it that now needs to change as many noted by successive governments but marginally increases pay for mid- of these sectors will be particularly not always acted upon – that place skilled workers in the wider economy, affected by an increasingly generous does matter. Devolution – although but it does little for the lowest paid. minimum wage, expanding auto- perhaps (sadly) less of a priority now In fact pay falls slightly for workers enrolment and a reduction in inward than it was before the referendum at the bottom of the labour market migration. When sectors such as – has the potential to give places as more low-paid people enter retail, hospitality and accommodation greater control over economic growth work, dragging down the average. are described as ‘strategic’ we’ll and living standards, but for this A lack of focus on low-paying know we have an industrial strategy to happen all areas must have the sectors is the biggest omission of really working for everyone. •

Two decades of devolution Conservatives should continue to champion Scottish devolution within the UK, argues Paul Masterton MP

paul masterton is the MP However, the referendum that wanted tax raising powers. for East Renfrewshire awoke Scotland’s political clout is In 1997, the Scottish Conservatives often forgotten. In almost a mirror were the only major party against image of what would come on devolution, and found themselves on In Scotland, we are no strangers IndyRef results night 2014, in 1997 the wrong side of the argument. The to constitutional referenda. Clackmannanshire was the first area party misread the political climate; Two in as many years, with the to declare if Scotland should have to many it seemed that the Tories threat of a third still lingering, a parliament, and if that parliament had no faith in their own country, albeit much more weakly of should have tax raising powers. and were rightly punished for it. late. This has made Scotland one Seventy-five percent of Scots The Scottish Conservatives of that of the most politically engaged backed the creation of a Scottish era are far cry from today’s party, societies in the world. Parliament. Sixty-three percent travelling on a journey from

36 | Centre Write IS DEVOLUTION THE SOLUTION?

>> devo-sceptics to devo-champions. Immediately after the 1997 result the Party set about pushing forward with the will of the Scottish people, but remained cautious. Ruth Davidson stated in her leadership bid in 2011 that the transfer of more powers to Holyrood was “a line in the sand”. Why? Because Davidson recognised that Holyrood elections had become a battle over how to spend the same edinburgh.org pool of money, and that was a battle Tories could never win. By giving the parliament more teeth in the transport, the environment and then asked for their transfer to be form of revenue-raising powers, housing, new powers over social delayed. Rather than maximising the Party could provide a unique security, income tax and VAT receipts Holyrood’s powers to improve centre-right offer to the electorate. were added to Holyrood’s remit. and reform public services, they It is no coincidence that the Scottish are left to stagnate and wither, As the UK Government Conservatives’ positioning as the as the SNP focuses on its only works to get the best Brexit champions of devolution, and for a priority – independence. As the deal for the nation, the strong settlement for Scotland within UK Government works to get the Scottish Government seeks the UK, coincided with an elevation best Brexit deal for the nation, to twist it into an excuse for to the official opposition in Holyrood. the Scottish Government seeks another divisive referendum By embracing devolution, the to twist it into an excuse for Scottish Conservatives gained room another divisive referendum. A year later, the independence to make different decisions. The While the SNP not only referendum was the ultimate test party has a standalone policy unit in doesn’t want to use the powers of our belief in more powers for Edinburgh, and election campaigns it already has, it wants to hand Scotland. In stark contrast to 1997, are run entirely from north of the back all the powers it will gain we stood on a cross-party platform, border. On issues ranging from straight back to Brussels. that would not only keep Scotland in grammar schools, to prescription The problem which Scotland the United Kingdom but also devolve charges to social care, Scottish faces is not how many powers huge swathes of powers to Edinburgh. Conservatism treads a distinctive path. Holyrood has, but how they are The Smith Commission, set up How ironic that, after 20 used. It is not a new settlement that following the ‘No’ vote to fulfil the years, the roles of the SNP is needed, but a government that is famous ‘Vow’, adopted the Scottish and the Scottish Conservatives willing to maximise the potential Conservatives’ proposals for further on devolution have reversed. of the current one in the best devolution set out in the Strathclyde The Scottish Conservatives, interests of the Scottish people. Commission. And, importantly, championing devolution from the In 2021, Scotland will have the it would be the Conservative UK and from Brussels, wanted opportunity to elect a Scottish Government in Westminster that to create the most powerful Conservative Government, led by would legislate for these new devolved assembly in the world. Ruth Davidson, championing a powers in the 2016 Scotland Act. But the Scottish Government, modern, inclusive, open, dynamic Already responsible for areas such after arguing for more social programme of One Nation as health and social care, education, security powers, was granted them, Conservatism to do just that. •

Autumn 2017 | 37 IS DEVOLUTION THE SOLUTION?

Reviving the North The next steps for energising the Northern Powerhouse, by Jonathan Moore

jonathan moore is the Partnership ‘(NPP)’, launched the the country’s first sub-national Chief Executive of idea itself. His influential speech transport body with its work to Manchester Arcadis and in Manchester’s industrial and deliver Northern Powerhouse a Board Member of the science museum presented a critical Rail, including Manchester to Northern Powerhouse economic imperative, to agglomerate Leeds in under thirty minutes. Partnership (NPP) Northern city economies to Planning for this Crossrail for the create an economy equivalent to North is underway, and awaiting There has been an election in the a Chinese mega city, but without approval in this autumn’s Budget. last few months, though there was losing the individual character one just before that which has, it of cities like Leeds or Liverpool, The North has some of the seems, almost been forgotten. and most importantly what makes world’s best universities, yet The mayoral elections this year their people so proud of them. has struggled to retain the saw four of six Conservative wins. There is much that is already being graduates they have taught The West Midlands has a Mayor delivered. The rail franchises agreed in Andy Street of the calibre to for the North will see dramatic Transport is a vital prerequisite any global city would aspire – a improvements alongside new roads. for creating a virtual city of the serious business person by any Underlying the much greater change North by 2050 – but it is not the yardstick. A Conservative Mayor still needed, Transport for the North only necessary mechanism for of Tees Valley, a result no one had will by the end of this year become transformative change. After its predicted before the election began. The general election saw the North as its primary battleground on which the Prime Minister chose to focus her fire. In the Yorkshire town of Halifax the manifesto was launched, yet this and so many other seats, did not change hands. Despite the election result, the Northern Powerhouse has been reconfirmed in recent months as an economically essential project, led by the civic and business leaders of the North. A recognition that UK plc is weaker for the North not fulfilling its huge potential. George Osborne, former Chancellor and who remains committed to the North as Chair of the Northern Powerhouse

38 | Centre Write IS DEVOLUTION THE SOLUTION?

visitmanchester.com

>> first report earlier this year, on education and skills. As a particularly those with science the NPP has gone on to do work fellow business leader from the and technology skills to support on the four prime capabilities North, I have also joined the group growth in the prime capabilities. of the Northern Powerhouse: working on it with her along with Finally, we are committed to advanced manufacturing, energy, Lord Jim O’Neill and respected ensure employers can access the health innovation, and digital. educationalists from across the skills they need to grow, and that One key next step for the North. The report will provide local people can see the way to Northern Powerhouse is to think solutions to eliminate the gap with develop adaptable skills for the about the problems which are less the rest of the UK in the percentage future to achieve their potential. easy to see, but just as important to of good and outstanding secondary the long-term economic and social schools – building on the approach Whilst London has after prospects of the North. The most of the Wilshaw report, whose author past decades taken some notable example being education and has also agreed to join us to help. of the worst schools in skills. Whilst London has after past The report will have aspirations the country, and emerged decades taken some of the worst such as to raise attainment at age 16 after the London Challenge schools in the country, and emerged in English and Maths in the North with some of the best, after the London Challenge with to at least the national average, underachievement in some some of the best, underachievement and to be regarded as a leading parts of the North still in some parts of the North still European region in digital skills at stubbornly can’t be shifted stubbornly can’t be shifted. age 16. The North has some of the With Collette Roche, MD of world’s best universities, yet has The Northern Powerhouse is just Manchester Airport leading it, the struggled to retain the graduates getting started; and investing in Northern Powerhouse Partnership they have taught. Instead, we must infrastructure, industrial base and has begun work on a major report become a net importer of graduates, skills of the North is essential. •

Autumn 2017 | 39 INDUSTRIAL STRATEGY

Spades in the ground Michelle Hubert outlines a five-point infrastructure plan for the new Government

michelle hubert is Head of of productivity growth, and so operational by 2030. But it is equally Energy and Infrastructure our chance to really boost living important that we see a national at the Confederation standards, in the UK. The good news strategy to ensure all our airports of British Industry is that the Government understands can thrive. Developing a successful that infrastructure matters. And aviation strategy for all parts of Industrial strategy is back with a we’ve seen positive progress, with the country has never been more bang. Brexit may be on the tip of commitments on major projects like important, connecting people and everyone’s tongue at the moment, but Heathrow, Hinkley and HS2. But businesses to more regions and cities setting a long-term strategy to make commitments are one thing. Seeing across the UK and around the world British industry more competitive – spades in the ground is another. – the practical face of global Britain. and to see communities thriving with Infrastructure delivery also people enjoying a more prosperous means much more than decisions Commitments are one life – is, once again, firmly in the on high-profile projects. It thing. Seeing spades in foreground of British politics. means the government keeping the ground is another The economic rationale for its foot on the accelerator across industrial strategy is sound – four the whole of our infrastructure Second, we must deliver the road in every ten pounds spent in the pipeline. Now is the time to step and rail improvements that will UK is spent by the government. up a gear – we need action, not better connect the UK. One of the So it’s all the more crucial that words, and delivery, not delay. surest ways to boost productivity business and the Government The CBI’s infrastructure survey, and achieve real regional growth is work together on a shared vision conducted with AECOM, last year to invest in the networks that link for our future economy at this showed that almost half (46%) our towns and cities. We are due to crucial stage in the UK’s history. of firms were dissatisfied with break ground on HS2 shortly, which the infrastructure in their region, is good news, with legislation also in Four in every ten pounds and two thirds thought the UK is the pipeline to build a connection to spent in the UK is spent unlikely to be more internationally Crewe. But firms are already itching by the government competitive in 2050 than it is now. for more progress on projects like This demonstrates that we need to Northern Powerhouse Rail. It’s vital That shared vision should at step up the pace, and that progress that projects in different parts of the least partly be about unlocking is needed, in five key areas. country are not seen as ‘either or’. regional growth. The UK has one First, we need to stay focused Improving the North of England’s of the most uneven regional income on delivering a third runway at infrastructure should come at the distributions anywhere in the Heathrow. Now that the Government same time as enhancements in the western world. Industrial strategy have made the right call on South, like Crossrail 2. A determined must be the antidote for this - committing to building a new runway focus on delivery will ensure the raising productivity and spreading at Heathrow, we need to make sure widest possible benefits are spread prosperity across the whole UK. progress stays on track. That means right across the United Kingdom. Having excellent quality diggers in the ground by 2020 and Third, the Government must set infrastructure lies at the heart seeing the runway up, running and out a ‘future fit’ energy policy

40 | Centre Write INDUSTRIAL STRATEGY

>> framework. The case for the quality of its digital networks, facing Britain’s housing. There is investment in the low-carbon but to stay ahead of the international no question that we need to build economy has already been won, competition we need to do a much far more affordable and good now the challenge is to get on with better job of connecting towns, quality homes each year, and see the the job. But whether or not Britain cities and, especially, rural areas. construction of 250,000 new homes has a clean, smart, efficient energy a year as an infrastructure priority. system in 2030 depends on choices If we don’t get spades So, with these areas high on the taken today, so decisions to give in the ground on existing priority list, it’s time to get to investors certainty beyond 2020 plans, it’s clear we could work. If we don’t get spades in the now means there are huge, and put a major dent in the ground on existing plans, it’s clear exciting, opportunities for businesses competitiveness of British we could put a major dent in the and households in the future. business – and the UK itself competitiveness of British business – Fourth, we need to see a long-term and the UK itself. This is something strategy for digital communications. Finally, we must deliver a diverse we cannot afford do, especially Digital infrastructure is simply going housing market which works for during this period of uncertainty to be absolutely fundamental in people and firms. The incident as the UK leaves the EU. Firms are connecting businesses and households at Grenfell Tower has tragically, ready and willing to work with the to the economy of the future. The and entirely rightly, prompted a Government to develop the skills UK has already made big strides in national debate about the challenges and capacity to deliver on plans. •

Autumn 2017 | 41 INDUSTRIAL STRATEGY

Prosperity through productivity Antoinette Sandbach MP points to the importance of innovative education and close ties with Europe in improving UK productivity

antoinette sandbach Deloitte states that since 1850, GDP the imminent electric car boom. mp was a member of per head in the UK has risen 20-fold. This points to the underlying the Business, Energy Had productivity remained flat during principle of productivity growth: and Industrial Strategy that period, GDP per head would investment in innovation and new Select Committee, 2017 only have doubled. Productivity technologies. It is clear that the is key to delivering higher living recession, then the impending EU With life outside of the European standards, stronger economic growth referendum and the subsequent Union looming, economic prosperity and higher tax revenues to fund result, have caused uncertainty for must be at the heart of our approach public services. UK productivity was business. It is for this reason that when shaping our country’s future. typically strengthening at a rate of we should seek the closest possible As well as promoting an outward- around 2% annually until the 2007-08 relationship with the EU and an open looking and open trade regime recession. In recent years, progress has trade policy. Firms need confidence with the EU, as well as the rest stagnated and economic growth has to invest and there needs to be clearer of the world, it is imperative that relied on sharp falls in unemployment. rhetoric on our ambitions to prioritise the UK economy is as resilient British workers are 19 percentage trade in the Article 50 negotiations. as possible and supported by points less productive than the average A protectionist and isolationist successful businesses. Improving for the rest of the G7, languishing approach would be catastrophic productivity is a major factor in behind countries such as France, the for productivity and prosperity. determining our economic success, US and Germany. All three of those To boost investment, not only or failure, in the coming years. nations have had higher productivity should the Government upgrade This is recognised by government, than the UK since the 1970s, but it infrastructure and add to the National industry bodies, academics and is the stagnation in the last decade Productivity Investment Fund (worth anyone else with at least a little that is particularly concerning and £23billion) announced last year, knowledge of the UK economy. that must be reversed with urgency. serious consideration should be put to Indeed, the Government’s industrial Closing the skills gap is an our ability to attract Foreign Direct strategy green paper, published in obvious place to start to improve Investment (FDI). Strikingly, 45% of January, mentions productivity no the quality and efficiency of our our stock of FDI originates from the fewer than 87 times. The Prime domestic workforce, made all the EU. This is yet more evidence of the Minister’s foreword said that: “If more important due to uncertainty need to develop the UK’s brand as a we want to increase our overall around the exact make-up of the powerful and amenable trade partner, prosperity, if we want more people immigration system post-Brexit. not least with European counterparts. to share in that prosperity, if we Allowing for greater diversity in our We face potentially turbulent want higher real wages, and if education system, such as a major times, to say the least, beyond we want more opportunities for overhaul of technical education, March 2019. However, we can young people to get on – we have should help align business needs with mitigate against calamitous to raise our productivity”. So, the pipeline of talent. In addition, economic circumstances if we why is productivity so important, the UK needs to embrace significant prioritise the resilience of the UK how chronic is the problem and changes in industry, whether the economy. Boosting productivity is how should we address it? Fourth Industrial Revolution or central to achieving that aim. •

42 | Centre Write INDUSTRIAL STRATEGY

Be prepared Chris Green MP preparing young people for the new world of work

chris green mp is Vice- this is now starting to change. of the North of England. Chair of the APPG on Jo Johnson MP, the Higher L. S. Lowry’s vision of a bleak Youth Employment Education Minister, has said that he industrial landscape still resonates would not mind if his children did not but could not be further from What next? It used to be so go to university and that “the days of the truth of so much of Britain’s much easier for school leavers degree or bust are long gone.” This modern industry. I worked in the to answer “what next?” and for is a welcome attitudinal change but mass-spectrometry industry for parents and teachers to offer the filtering through society of this nearly twenty years before entering guidance. But we now have a view is going to take a long time. politics and South Manchester is confusing wealth of options. We know that there is less career one of its global centres – but few For many, university was the certainty than there was but we are would know it. Mass spectrometers obvious next step but, with the also less clear about what the options combine precision engineering, expense and value of a degree are or, at least, what they will deliver. advanced electronics and the most increasingly in question, it is not In a recent essay, Ruth Davidson sophisticated software but it all goes as easy a choice as it once was. MSP, set out a powerful case for a on behind the anonymous façade Towns are no longer dominated reinvigorated vision of capitalism. of buildings that, from the outside, by a single major employer and First, defending its dazzling could be housing a large legal firm. the simplicity of knowing your achievement of routing extreme future employer is also gone. poverty and creating a healthier Unemployment is at its wealthier world. Second, to set the lowest since the early There needs to be a far better challenge for where capitalism needs 1970s, manufacturing is understanding in schools of to take us and what we as a nation at its highest since 1988 the advances in the nature and a government need to do. and the IMF is predicting of work and the rewards of Ruth describes the radical changes continued UK growth. working in modern Britain that happen in the shipping industry and, as a lad from Liverpool, I grew There needs to be a far better Apprenticeship starts have been up with stories about the poor understanding in schools of the on the rise under this Government conditions that the dockers faced and advances in the nature of work but there is relatively little the decline of our ports. Inflexible and the rewards of working in understanding of what they entail work practices and containerisation modern Britain. We need far better and the opportunities they present. meant the end of a once great but engagement between our industrial Culturally, society still looks to low-skill industry. Young people and educational sectors to inspire university as the stepping stone to would hardly want to work in that and enable children to have a vision a good career and too often schools environment now, but the new £400 of what’s possible rather than being are narrowly recognised for the million Liverpool2 deep water port mired in the past. This is set to numbers of their children who attend couldn’t be more different. Many become even more important in the university rather than their ability of the jobs on offer are far more future since, as Alan Mak MP recently to deliver a broader education that skilled and productive and will highlighted in the last edition of this prepares children for life. Thankfully help enable the re-industrialisation magazine, we are now entering

Autumn 2017 | 43 INDUSTRIAL STRATEGY

>> the Fourth Industrial Revolution our white collar industries such ask is, are our school, college and where artificial intelligence and as retail, accountancy and law. university leavers equipped for a machine learning will set the The gig economy has rightfully fully globalised and digitalised world scene for a wealth of yet-to-be- received a great deal of attention where the pace of change continues conceived disruptive technology. recently, especially with the to accelerate? The answer is complex publication of Matthew Taylor’s and we will always be playing catch L. S. Lowry’s vision of a government-commissioned report up as new and disruptive technologies bleak industrial landscape on modern working practices, but emerge. Fundamentally our ability still resonates but could not it would be wrong for the media to prosper in an increasingly be further from the truth to continue to wilfully characterise competitive world depends upon of so much of Britain’s the future of employment as being government setting the right modern industry in low-paid, zero-hour contract foundations for business to invest work with ever decreasing rights. and prosper in the UK, attracting the Just as the textile, shipping, Unemployment is at its lowest since right talent from overseas but, most mining and many other blue collar the early 1970s, manufacturing is at of all, for this increasingly well- industries have radically reformed its highest since 1988 and the IMF is educated and motivated generation or disappeared, the same is now predicting continued UK growth. to engage with, and adapt to, an going to happen to our aspects of Ultimately, the question we must ever-changing world of work. •

Apprenticeship nation The Rt Hon Robert Halfon MP on the message that Conservatives should be sending to young voters

it was a powerful message. This was of the ladder of opportunity. the rt hon robert not just about money, but saying to Conservatives’ job in Government halfon mp is the Chair students, ‘we are on your side, we will is to give every young person an of the Education Select Committee be with you through your studies and equal chance — whatever their look after your economic security’. background — to climb that ladder Imagine thousands of young people Our response was feeble, to say and help them up, step by step, cheering Prime Minister Theresa the least. We looked like the hard- to get the skills and training they May in a similar manner to those nosed businessmen from those old need so they can get jobs, security singing songs about Jeremy Corbyn. Virgin Train adverts, which made and prosperity for their future. Unthinkable, yes, but not impossible. everyone who could not afford a And, as the late Sir Nicholas train - stuck in a car on the motorway With the right narrative, Winton said, “If it is not impossible, - look weak and insensible. message and campaign, there must be a way to do it”. This was all the more astonishing Conservatives did actually At the General Election, we missed because, with the right narrative, have something to offer a significant opportunity. The Labour message and campaign, Conservatives to younger voters Party was galvanising young voters did actually have something by offering to get rid of tuition fees to offer to younger voters. Furthermore, whilst it is great that and ‘deal with’ past debt. Whatever It could have shown that the more students from disadvantaged back-tracking they are doing now, Conservatives are the party

44 | Centre Write INDUSTRIAL STRATEGY

>> backgrounds are going to in almost every field of work from funds to also train apprentices. universities than ever before, I am business administration to coding, We also believe that the wealthiest concerned about both the level from engineering to healthcare, must make a bigger contribution of interest rates for students and from nursing to policing. And in to our society. That is why we whether they are getting value for all the traditional crafts too. introduced the Apprenticeship Levy. money. Some universities are charging Degree apprenticeships are We should look at raising the high fees, some are paying their being offered by more and more Apprenticeship Levy if needed senior management huge salaries, universities with prestigious and to see how more of the job destinations for students post- companies like Jaguar and Accenture. funds raised can help those from university are often very poor. Young people have a chance to disadvantaged backgrounds climb We can’t get rid of all tuition get a degree, an apprenticeship, the apprenticeship ladder. fees however, not just because of be paid without any loan, and our difficult economic finances, are virtually guaranteed job at Just because we missed this but due to the need to share the the end of your training. opportunity at the election, we burden of the cost of universities, For those who might be concerned really do still have the policy fairly with students and the about the parity of esteem between architecture for this ladder taxpayer - especially those from apprenticeships and higher education, of opportunity. All that the working class backgrounds who it is worth noting that apprenticeship Conservative Government may not have gone to university. qualifications are highly prestigious. has to do is to communicate The new Apprenticeship Standards properly what is possible We looked like the hard-nosed coming through are designed and help people climb it businessmen from those old by employers and the new Virgin Train adverts, which Institute for Apprenticeships. Between 2010 and 2015, there made everyone who could Apprentices from level two onwards were over two million apprentices. not afford a train - stuck end up earning much more over a We currently have an additional in a car on the motorway - lifetime than the average employee. 900,000 apprentices, the highest look weak and insensible Ninety percent of apprentices in our in Britain’s history. either get jobs after their training If you are a young person and We should not just say no to - usually in the companies, where want something real, to climb that abolishing tuition fees and leave it at their apprenticeships took place, or ladder of opportunity, to get that that. We should have a different and they go on to additional education. apprenticeship, so that you can special offer to every young person All this is paid by the get the job, security, prosperity from the age of 16 and beyond. Apprenticeship Levy on big business, you need, join the Conservatives. We should give every young person which will see £2.5 billion spent in Become part of the apprenticeship who wants it the chance to take up England by 2020, double what it revolution and help us build an apprenticeship from level two was in 2010. The Apprenticeship an ‘Apprenticeship Nation’. right up to degree level. Not only Levy is about ensuring that those Not a bad offering for our will there be no loan or debt after, with the broadest shoulders - young people? Just because we but apprentices will be paid at least the larger companies with wage missed this opportunity at the the apprentice minimum wage. The bills over £3million - help pay election, we really do still have higher the level of training, the higher for government’s apprenticeship the policy architecture for this the apprentice salary. At present, revolution. It will change behaviours ladder of opportunity. All that the over 80% of apprentices are paid in the way that companies train Conservative Government has to do over the adult minimum wage. their workforce and will mean that is to communicate properly what is An apprenticeship can be taken up smaller companies will have the possible and help people climb it. •

Autumn 2017 | 45 INDUSTRIAL STRATEGY

Creative prosperity The Rt Hon Ed Vaizey MP on the vital importance of the UK’s fastest growing sector

the rt hon ed vaizey mp taken into consideration. Figures creative industries are as important was formerly Minister published last year indicate that as more traditional sectors to the of State for Culture, the creative industries are now future economy is an important first Communications and worth £84.1 billion per year to the step. This is particularly pertinent Creative Industries UK economy, generating nearly when we consider the role of £9.6 million per hour. That is automation and artificial intelligence From Shakespeare to Skepta, more than both car manufacturing in the future job market – an area the UK has a proud history and aerospace. The sector is also I covered in depth during my time of cultural leadership. growing at almost twice the rate of as Culture and Digital Minister. 2017 is already proving to be another the wider UK economy – quicker A study by Nesta, the innovation fantastic year for this dynamic sector. than any other sector – and now research body, found that 87% of June saw the world’s greatest accounts for almost one in 11 jobs. the UK’s creative jobs were at low music festival, Glastonbury, or no risk of being automated. The watched by a record 21 million Glasgow and Liverpool have sector’s high-profile recognition in people. Mesmerising headline undergone huge economic the Industrial Strategy Green Paper performances from two brilliant transformations since represents an acknowledgement British artists: Radiohead and the being selected as European of how business continues to other Ed (Sheeran). The grime Capitals of Culture in 1990 evolve in the 21st century. scene continues to make waves and 2008 respectively on both sides of the Atlantic. Ensuring the continued Spend on film production in the Ensuring the continued growth growth of these industries UK reached the highest level on of these industries is therefore of is of utmost importance record. David Hockney’s Tate utmost importance for the country’s for the country’s future Britain show became the most future economic success. I am economic success popular exhibition in the gallery’s pleased that this was recognised in history. The list goes on. the Industrial Strategy Green Paper Developing our country’s released earlier this year, in which creativity is therefore paramount. Encouraging creativity the creative sector is identified as During my time as Culture and from people of all ages one of the Government’s five key Digital Minister, we outlined how and backgrounds is vitally priorities for post-Brexit Britain. we intended to achieve this through important and will prove The paper quite rightly underlines the Culture White Paper – the first imperative in helping the sector’s high productivity, in more than 50 years and only the us discover untapped competitive global advantages and second ever published. Within its talent that could become growth potential. I am encouraged pages, we set out our commitment Britain’s future stars that an independent review by Sir to improving creative education, Peter Bazalgette is also underway increasing cultural participation and These achievements are clearly a to address how these industries can enhancing access to funding and cause for celebration, even more help underpin our future prosperity. export markets across the sector. so when their economic impact is Highlighting the fact that the Encouraging creativity from

46 | Centre Write INDUSTRIAL STRATEGY

>> people of all ages and in securing the UK’s position as a hosting a plethora of arts events, backgrounds is vitally important creative leader in the digital era. including the 2017 Turner Prize. and will prove imperative in helping The impact of culture is not limited us discover untapped talent that From Shakespeare to Skepta, to metropolitan areas either - many could become Britain’s future stars. the UK has a proud history of the country’s smaller towns are More recently, the Government of cultural leadership beginning to benefit from the ever- launched a new ‘Culture is growing rural creative economy. Digital’ project to develop the Culture has also proven a driving British musicians, artists, fashion relationship between the worlds force in the changing face and brands and films have long been of culture and tech. The aim is to fortunes of many of the UK’s cities recognised in nations across the build on the commitments of the and towns. Glasgow and Liverpool world. Nurturing our country’s Culture White Paper and build have undergone huge economic creativity and fully integrating the on the natural synergy between transformations since being selected sector into our industrial strategy these two complementary sectors. as European Capitals of Culture will be key moving forward. As Projects such as these reaffirm the in 1990 and 2008 respectively. This the UK’s fastest growing sector, Government’s commitment to the year, Hull will hope to follow it is already proving to be an creative industries and will, I’m in their transformative footsteps increasingly vital component to sure, prove to be a positive step as the new UK City of Culture, our long-term economic future. •

Autumn 2017 | 47 Building the world’s largest offshore wind farms Developing a world-class UK supply chain

DONG Energy is the world leader in offshore wind farm development and operation. As our largest market, the UK is at the heart of our success. Off the Yorkshire and Cumbria coasts, we are building the world’s largest offshore wind farms. We’re doing this using the specialist skills and products of leading UK companies, helping them grow and export.

www.dongenergy.co.uk BOOKS AND ARTS

BOOKS & ARTS

Exhibition: Giacometti Tate Modern, London

eamonn ives is a Researcher at Bright Blue

The Tate Modern truly is a cathedral to creativity. The gargantuan extension, recently opened, hums with eerie and enticing piped sounds, amidst the expected chatter of excitable tourists who have flocked to their destination of pilgrimage. A surprisingly pleasant restaurant, Archives of the Giacometti Foundation and the best viewing platform in London, complete the venue. But I am not here to eyeball the people certainly a little out of proportion, In the final room, one is met by below from ten floors up – art, whet the appetite for what one a series of figures – the tallest and believe it or not, is my agenda for knows lies around the corner. most robust of the entire exhibition. the morning. The exhibition in Eventually, of course, one Towering over me, the sense of question is that of the Swiss painter- encounters what Giacometti is insignificance conjured up by the sculptor, Alberto Giacometti. most famed for – the distinctive, unseeing busts of the first room The door is pulled open and one is stalagmitic silhouettes of figures, cast returns. In the surreal world of immediately met by a collection of in bronze or wrought crudely from Giacometti’s creations, normality twenty or so sculpted heads. Most plaster and clay. The juxtaposition is nothing worthy of interaction. look straight past me, giving one a of different qualities which the Though the presentation of objects feeling of absence, of irrelevance. A sculptures possess is striking. Heavy was, at times, uncalculated and little unnerved, I progress into the distorted feet anchor the brittle unimaginatively lit, the chilling next room, displaying Giacometti’s fragility of the subjects’ elongated sensation of seeing the troubled earliest work – decorative objects arms and bodies. Nor are the statues artist’s work first hand was produced largely to earn a living. particularly statuesque – for their remarkable. Sculpture is an art form All the while, one notices the two-dimensionality sees some of which demands to be appreciated in nascent beginnings of the creations them seemingly evaporate away as person, and Giacometti’s harrowing for which he will go on to acquire one attempts to view them from effigies are no exception to that rule.• such acclaim. Sculptures of women, a different angle. The illusion Giacometti runs until 10th September 2017 at by no means overtly unusual, but of the effect is captivating. the Tate Modern, London.

Autumn 2017 | 49 BOOKS AND ARTS

Film: Dunkirk Directed by Christopher Nolan

fiona smith is Events and Administration Officer at Bright Blue

Given the trend for ‘historic’ films covering more and more contemporary issues, it’s testimony to the Second World War’s place in public consciousness that there is room for yet another film on the subject. Dunkirk’s minimal narrative assumes its audience knows the subject, and the film relies more on atmospherics, managing to conjure claustrophobia, palpable fear and unbearable tension within minutes of opening.

Dunkirk’s minimal narrative © Warner Bros assumes its audience knows the subject, and the film like fish in a barrel”, we flit back to that starts with brevity and builds relies more on atmospherics three Spitfire pilots racing across the the viewer up to patriotic fare, that Channel to support the evacuation slips in so seamlessly and subtly. Director Christopher Nolan effort, and one of the little boats illustrates the apparent hopelessness plotting its course towards Dunkirk. I The result is a score that starts on the beaches contrasted with hope can’t resist a broad smile as the captain with brevity and builds the burning bright in the captains of the quips, as Spitfires pass overhead, viewer up to patriotic fare now legendary little boats that rallied “Rolls-Royce Merlin engines- the to the call. Scenes of soldiers in orderly best sound in the world”. I think By the closing scenes, the sight of a lines evoke abject terror as enemy any aviation enthusiast would agree: Spitfire gracefully force-landing on the aircraft strafe the coast, and in event the sound of a Spitfire is certainly beach as a Nimrod-esque piece plays is after event, it is apparent no one is evocative - and to the troops waiting too much for me. I go from misty-eyed safe even on board the waiting ships. on the beach, it is the sound of hope. to weeping. It might be something So much is obscured from view as Nolan’s past collaborator Hans about being ex-military and an aviator. boats are compromised and capsize, Zimmer provides an evocative, It could be “an English thing”. I’d that the audience is left to fill in the atmospheric soundtrack, using synth happily stake it is more to do with the gaps – and the result is terrifying. The style in the vein of Chariots of Fire, makings of a hallmark war film – free confusion, muffled sounds and cries, or Tron Legacy, and blending it with from judgement, capturing the spirit make for an uncomfortable viewing. orchestral tradition familiar to lovers of the hour. Dunkirk turns defeat into As troops wait to be “picked off of war cinema. The result is a score triumph. •

50 | Centre Write OUR PARLIAMENTARY SUPPORTERS

Bim Afolami MP Tony Devenish AM Simon Hoare MP Sarah Newton MP Lucy Allan MP Jonathan Djanogly MP Lord Robin Hodgson Baroness Emma Nicholson Peter Aldous MP Tobias Ellwood MP George Hollingbery MP Caroline Nokes MP Stuart Andrew MP Charlie Elphicke MP Kevin Hollinrake MP Mark Pawsey MP Heidi Allen MP Lord Rodney Elton Phillip Hollobone MP John Penrose MP Edward Argar MP George Eustice MP John Howell MP Claire Perry MP Victoria Atkins MP Suella Fernandes MP Nigel Huddleston MP Rebecca Pow MP Harriett Baldwin MP The Rt Hon Mark Field MP The Rt Hon Jeremy Hunt MP Mark Prisk MP Lord Richard Balfe Lord Daniel Finkelstein Nick Hurd MP Dominic Raab MP The Rt Hon Lord Greg Barker Vicky Ford MP The Rt Hon Sajid Javid MP The Lord Risby Sir Henry Bellingham MP Murdo Fraser MSP Margot James MP Lord Colin Renfrew Richard Benyon MP George Freeman MP Robert Jenrick MP Lord James Sassoon Bob Blackman MP Mike Freer MP Dr. Syed Kamall MEP Baroness Jane Scott Nicola Blackwood MP Mark Garnier MP Daniel Kawczynski MP Alok Sharma MP Nicholas Boles MP Nusrat Ghani MP Seema Kennedy MP Chloe Smith MP Sir Peter Bottomley MP Nick Gibb MP Dr. Phillip Lee MP The Rt Hon Anna Soubry MP Graham Brady MP The Lord Glentoran Jeremy Lefroy MP John Stevenson MP Miles Briggs MSP Zac Goldsmith MP Brandon Lewis MP Rory Stewart MP Steve Brine MP Maurice Golden MSP The Rt Hon David Lidington MP Graham Stuart MP Robert Buckland MP The Rt Hon Michael Gove MP Lord Ian Livingston Lord Ranbir Suri Anglea Burns AM Luke Graham MP Jonathan Lord MP Dr. Charles Tannock MEP The Rt Hon Alistair Burt MP Richard Graham MP The Rt Hon Lord Ralph Lucas Adam Tomkins MSP Finlay Carson MSP James Gray MP Rachel MacLean MP Viscount Hugh Trenchard Lord Hugh Cavendish The Rt Hon Damian Green MP Alan Mak MP Anne-Marie Trevelyan MP Alex Chalk MP The Rt Hon Dominic Paul Masterton MP Lord Christopher Tugendhat Jo Churchill MP Grieve QC MP The Rt Hon Lord Francis Maude Tom Tugendhat MP Simon Clarke MP Sam Gyimah MP Paul Maynard MP Baroness Charlotte Vere Geoffrey Clifton-Brown MP The Rt Hon Robert Halfon MP Stephen McPartland MP Robin Walker MP Damian Collins MP Stephen Hammond MP David Melding AM The Rt Hon Baroness Oliver Colvile MP The Rt Hon Matthew Stephen Metcalfe MP Sayeeda Warsi Lord Andrew Cooper Hancock MP Johnny Mercer MP Annie Wells MSP The Lord Cormack Richard Harrington MP The Rt Hon Andrew Mitchell MP Helen Whately MP The Rt Hon Stephen Crabb MP Peter Heaton-Jones MP The Rt Hon Maria Miller MP The Rt Hon Lord David Willetts Glyn Davies MP James Heappey MP The Rt Hon Nicky Morgan MP Lord Deben Damian Hinds MP Oliver Mundell MSP

If you sit in the House of Commons, the House of Lords or the European Parliament and would like to become a supporter, please email: [email protected]

Our Parliamentary Supporters endorse Bright Blue and its aim of strengthening and advancing liberal conservatism. They do not necessarily agree with all the policies and opinions we advocate.

Autumn 2017 | 51 Industrial Strategy? We’ve spent the past 5 years preparing one...

“There are few other energy sectors where the UK can realistically aspire to have such a significant supply chain, where the skills already exist for a ‘pathfinder’ project or where there is such commitment to large scale manufacturing in the UK from the world’s largest firms in this sector”. Rt Hon Charles Hendry Independent Review of Tidal Lagoons

A single pathfinder project – Swansea Bay Tidal Lagoon – buys the UK this opportunity with a blueprint for the manufacture, construction and financing of tidal lagoons at full-scale:  Requires lower strike price than any offshore wind farm ever built in the UK.  Spends 84p in every £1 on British industry and expertise.  Adds £0.18p to consumer bills annually, as compared to £15.00 for Hinkley Point C*.  Allows the UK to pursue full-scale tidal lagoons to address the power deficit, secure supplies, drive down bills, drive down carbon and win industrial contracts worth more than £70 billion.

*Source: National Audit Office ‘Hinkley Point C’ report & Hendry Review of tidal lagoons

Find out more at tidallagoonpower.com/ours-to-own Y @TidalLagoon