Osbornomics.

Author:Reed, Howard
Position::George Osborne's economic policy
 
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One of the Conservatives' key campaign slogans in the run up to the 2010 election has been 'we can't go on like this'--the subtext being that Labour's current approach to economic policy is bankrupt. But how would the Tories differ from Labour, exactly? While governments never end up doing quite what they say beforehand once they get into office, nonetheless there is enough accumulated evidence from George Osborne's four-and-a-half year tenure as Shadow Chancellor to establish a rough outline of what sort of economic policy he will pursue if he makes it into 11 Downing Street this spring.

This article begins by looking at the strands of Conservative thought that feed into 'Osbornomics', and then looks at what that means for four broad areas: macroeconomic policy, the size and role of the public sector, the tax and benefit system and industrial policy (and financial sector regulation in particular). The arguments here are informed by a seminar on this topic which took place in the House of Commons on 1 March 2010, chaired by the Labour MP Jon Cruddas, and featuring Professor Andrew Gamble of the University of Cambridge, journalists Polly Toynbee and Larry Elliott of The Guardian, and myself.

Strands of contemporary Conservatism

It is important to realise that the Conservative Party has never been an ideologically monolithic organisation but has always encompassed a variety of strains of political thought including the protectionism of the 1930s, the 'One Nation' Toryism of the post-war consensus, and the neo-liberalism of the 1980s and 1990s. Accordingly, current Conservative ideology encompasses at least five broad traditions of thought.

In no particular order of their significance or appeal to the party leadership, the first of these is a centre-right 'post-Blairite' tradition which sees itself as taking forward the public service reforms which (adherents would argue) Tony Blair tried to implement as Prime Minister, but was unable to fully realise due to interference from Gordon Brown, whom the Tories like to portray as an Old Labour dinosaur wedded to the old-style public sector bureaucracy. (This is by no means an accurate portrayal of the difference between Blair and Brown in my view, but that is not the main issue here).

Second, there is a strain of 'progressive' or 'red' Tories--exemplified in the work of the political philosopher (and director of the think-tank ResPublica) Philip Blond. This tradition is opposed to both overreaching state power and impersonal market forces, and recommends devolution of political and economic power via mutual ownership and the redistribution of wealth.

Third, the 'blue-greens' or 'green Tories': most obviously represented by Richmond Tory PPC and ex-Ecologist editor Zac Goldsmith, this group recommends converting the UK to a low-carbon economy and making a much harder push on environmental policy than anything we have seen so far from any of the main parties.

Fourth, the Christian right--as represented by the work of Iain Duncan Smith's Centre for Social Justice, this group promotes policies such as tax breaks for married couples as a solution to 'broken Britain'.

Finally, the 'neo-Thatcherite' strand--familiar from the Tories' 1980s heyday, and committed to small government, lower taxation and deregulation (1).

While David Cameron's precise ideology is difficult to pin down--at various times since 2005 he has made policy statements which encompass all five ideological positions--George Osborne is a more straightforward case; it is safe to say that Osborne adheres firmly to neo-Thatcherism. Thus, while there will be pressure to incorporate a stronger commitment to environmentalism or policies to promote mutual ownership into economic policies under a Conservative government, to the extent that Chancellor Osborne has control of economic policy independently of his Prime Minister (not always the case under previous Conservative Governments (2)), it seems safe to say that the neo-liberal agenda will win most, if not all, of the economic arguments.

The fact that surveys of incoming Tory PPCs reveal that on average, their economic views are rooted in the neo-liberal camp rather than progressive Toryism or environmentalism (3), reinforces the idea that the Conservatives are likely to try to continue the Thatcher revolution--which was only partially rolled back by Labour in any case between 1997 and 2010. This has fundamental implications for the kind of economy Britain is likely to become after a full term of Conservative government. In the rest of this article I explore what this neo-Thatcherite approach is likely to mean in several key policy areas.

Macroeconomic policy

First, consider macroeconomic policy under the Conservatives. Much has been...

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