After the crisis: an agenda for Britain?

For the rest of 2020 Boris Johnson’s government has its hands full, grappling with coronavirus and its economic impact, and getting Brexit “done.” It’s not surprising that we hear less about the climate and decarbonising industry or building HS2 when the pandemic has already cost more than 40,000 lives and is not yet over, and when nothing has yet really changed in our involvement with the European Union.

But come the spring of next year, things should look rather different. The Covid-19 infection rate should have dropped well away in the summer of 2020 and even with a resurgence in the autumn and winter should be falling again by, say, May of 2021. The economy should be coming back to life. And we shall finally have left the EU single market and customs union. We may have reached a future agreement on trade and other relations with the EU or we may not, but for better or for worse we shall be out.

What do Johnson’s Conservatives do then? Their temptation might be to sit back, proclaim success and wait for the tigers of free enterprise to spring free from their cages of EU-imposed red tape to capture new markets around the world. Johnson will have time to visit the re-elected President Trump and other world leaders to introduce them to the new Global Britain. And at home his ministers will mop up after the pandemic, and otherwise resume the previous agenda of reducing the deficit, keeping taxes down and limiting immigration. Promises have been made to new Conservative voters, and perhaps the government will launch some shovel-ready projects in the midlands and the north, but experience tells us these are unlikely to amount to much.

The trouble with this is that, long before Brexit and coronavirus, the voters, especially in the midlands and the north, were already angry and frustrated by their lack of opportunity, lack of control over their own lives, the declining public services around them and their despair about leaving a better life for their children. Being able to go on a package holiday or see their friends in the pub again will be a pleasant relief but won’t change those problems. Nor in fact will leaving the European Union, but the people have been led to believe that it will, and now the government is expected to deliver on their expectation.

Furthermore, the economy of Britain and the world has been so damaged by the pandemic that it is illusory to think that it will just bounce back if we all go back to work between now and next spring. With world trade expected to fall by over 30 per cent this year (according to the WTO), the UK economy expected to contract by 11.5 per cent (according to the OECD) and with UK companies weighed down by an estimated £107bn of unsustainable debt (according to TheCityUK), it will take extraordinary determination, patience and wise policy making to avoid catastrophic levels of bankruptcy and unemployment.

So the government needs to start thinking more energetically about what it has to do if it is to be re-elected in 2024. The starting point has to be a realisation that Britain and its place in the world is changing quickly and fundamentally under the twin drivers of Brexit and the pandemic, and the government will need to be active and agile if it is to steer it to a better future. Although the effects of change cannot yet be discerned precisely, the best way forward is to set some goals, explain them to the public and start working towards them as steadily as events will allow.

Here are some key elements:

-The government must return to its promises at the general election to “level up” the disadvantaged regions in the midlands and the north of the United Kingdom. This will require dynamic action across the board of infrastructure, industry, skills and public services. Experience of the last decade also suggests that it calls for devolution of resources and decision-making to regional and local levels if the change is to be “owned” by the people rather than imposed on them.

-We need a new fiscal strategy to manage a high level of public debt and annual deficit over the next five or ten years. Spending may come down somewhat from this year’s crisis levels and taxes may also rise, but neither can be enough to fund the expenditure that is needed and cut the deficit at the same time. Fortunately, this is in tune with the times: the political and academic consensus behind austerity and deficit reduction has already evaporated, and governments around Europe are showing that, in a world of low interest rates, higher spending and borrowing that is spent on productive investment can be both productive and manageable.

-Business must be helped to recuperate. The capital markets will need to bear the brunt of recapitalising companies to deal with their debts and their future business needs, but government will need to help the markets find the necessary mechanisms (the private equity business is said to have £157bn in uncommitted funds, but it would need very different methods and incentives to free them for this purpose). The government will also need to go beyond general incentives for business recovery to help key industries. But to use money wisely the government will need a more active and better resourced industrial strategy to help identify where the economy’s comparative advantages lie in the new world economy and to back the sectors that are most investable. The government will need better ways to “pick winners” than it had in the past. And it must harness both its scientific research strategy, its policy for universities and its strategy for skills to reinforce its industrial strategy.

-The pandemic has shown the need for a government-led strategy to introduce greater resilience into our supply chains, not only in the medical field but also for food and for vital technologies. Britain is too small to aim for self-sufficiency so we must look for other assurances including diversity of sources, reliability of suppliers and early warning triggers for government intervention. Happily, work on this has already started.

-The appalling levels of death in care homes during the pandemic has also shown once again the damage to public health caused by our weak and under-resourced social care system. This has been exhaustively analysed over the years but successive governments have failed to address it. We have to face the fact that without a vaccine coronavirus will not be brought fully under control and future pandemics avoided until we have an effective unified system for both medical and social care.

-Learning and skills have improved greatly over the last 30 years but a new impulse is now urgent if the rising generations are to find sustainable livelihoods. As the Augar Report said, we need lifelong re-training to supplement university degrees. And we need high aspirations in schools for all students, not just for the children of middle-class professionals in the south.

-The pandemic has shown up the mismatch between the great social value of lower paid workers such as nurses, care workers, delivery drivers, supermarket staff and farm workers, and their generally precarious conditions of employment. Flexible hours are valued as much by many employees as by businesses but, as the 2016 Taylor Report concluded, workers need greater rights and predictability in their jobs if this model of employment is to endure. A resilient, stable society must face up to this.

-Brexit obliges the government to put forward a new vision for Britain’s agriculture, food and countryside. Its work so far has concentrated on environmental sustainability but the pandemic has also shown up the importance of food security. The farming industry must be economically as well as ecologically sustainable. And the public are very concerned to maintain our high food quality standards. As with other sectors of the economy, Britain is not going to be self-sufficient for food so we must have trading arrangements, whether with the EU or with others, that ensure that these needs are met.

-Before Brexit and the pandemic, Britain was already committed to challenging targets for emissions reductions and decarbonising the economy. The public has made clear that these changes are important to them, and the government must resume its focus on them as the pandemic fades. To be achieved, our decarbonisation targets must help to direct all aspects of policy for the recovery, especially industrial strategy. Is it time to revisit the proposal of the 2006 Stern Review for a minimum price for carbon throughout the economy, rather than just in power generation as now?

-Finally, Britain needs a foreign policy, not of “Global Britain” boosterism, but in support of the government’s strategic objectives at home. This will put the emphasis on open markets, investment and export promotion and the free exchange of people and ideas. In concert with our allies we need to build a policy towards China that is careful and balanced, open to collaboration but principled in defence of our interests and values. And with the pandemic shifting its attack to the poorer countries of Latin America and Africa, we need to use our considerable development resources to help these countries control coronavirus and keep their people economically secure at home rather than migrating in despair to Europe.

A national strategy built on these objectives would not be revolutionary. It should be dynamic and interlocking, and it should be put in place now so that it can be understood and developed before it needs to be implemented from next year. Johnson could take inspiration in this from his hero Winston Churchill whose wartime national government began to plan as early as 1943 for the post-war world. In the same way, a strategy on these lines could serve to rebuild Britain for its new and very different circumstances after Brexit and the pandemic. It is as appropriate for a modernising Conservative government as for any other, but it will require commitment and sustained strategic leadership over the rest of this decade.