This article is from the February issue of Total Politics

This year marks the 10th birthday of Policy Exchange – a home for the Conservative modernisation project. With an income of over £2m a year and considerable influence on the government, I wanted to find out what the think tank’s director, Neil O’Brien, thought of David Cameron’s performance as prime minister, the upcoming policy battles in 2012 and his own ambitions. He is, after all, only in his early 30s.

BD: Former No 10 policy wonk James O’Shaughnessy’s article in The Times recently mirrored Michael Gove’s language on education. He talked about “a huge battle in an already long war”. With O’Shaughnessy coming back to Policy Exchange, is that how it has to be? A big battle against the existing schools’ attitude?
NO’B: There are an enormous number of people in the system who don’t want things to change. The Melissa Benns of this world don’t have any positive solution. They just want to carry on. They really do believe in the bog-standard comp.

In Michael Gove have you got a politician who you can use as a driving force, or do you resign yourself to having ‘great ideas’ that may never happen at all because people want to keep the status quo?
So much of what we’re doing now turns on trying to convince officials as well as politicians. To that end, it’s very useful that a lot of our recent senior hires have a lot of civil service experience. They’ve got networks – you can ring up people and say, ‘What is going on with x?’ There’s a real vice with UK think tanks. There’s been this belief that the role of a think tank is to sit on the sidelines and complain about politicians not being brave enough rather than understand the constraints that are on them. That is where we are a bit different.  

How often do you go to No 10?
Intermittently to see particular people.

What does intermittently mean?
I go and see specific people about specific stuff but it’s not… I’m not sure it’s a very good proxy for whether your ideas are having impact. Think tankers who go around boasting about how often they meet people is a bit ‘fingers on the blackboard’. But our stuff definitely gets listened to and generally we’re perceived as reasonably serious and able to intervene in debates in a meaningful way. A lot of think tank output gets pushed aside by officials who just think, ‘Here’s some 21-year-old scribbling away about what George Osborne should do in the next Budget. Give me a break. Why should I listen to this?’ And it doesn’t get beyond ‘let’s cut tax and regulation’ or ‘let’s spend more’. And it’s just like, ‘Thanks for those brilliant suggestions. That’s really useful for government.’

How optimistic are you about economic growth in 2012?
One of the things that worries me is how little sense people have of the size of the deficit. Our polling shows one in seven people understand the difference between the debt and the deficit. We’ve been quite lucky in this recession and this is a puzzle that economists have written about quite a lot. The rise in unemployment in the early 1980s was quite big in relation to the recession. In the early 1990s the recession took about two per cent off GDP. This recession has taken between six and seven per cent off GDP for a much longer period, a much bigger punch to the economy, and yet seemingly unemployment hasn’t risen as much as people thought it might.

There’s basically a lot of suppressed unemployment out there so it’s harder than it looks to get it down. Also, the picture of unemployment is misunderstood in a lot of ways. People should remember the total number of people on out-of-work benefits is the same as it was in 2004.
When Britain was in this incredibly hubristic phase, going around lecturing the rest of Europe on being more like us, we thought we had full employment – or that is what the government was implying and the media would have had you believe. But actually you had about five million people on unemployment benefits all the way through the debt-fuelled years. I would say my main political obsession, and this has been true throughout the last decade, is unemployment because it is the root of all social evil. It screws up everything else you can think of, every other kind of health or well-being indicator. The suicide rate is 10 times higher for people who are unemployed.

Governments always become intellectually exhausted. For a think tank, is it a case of trying to rush in and be as influential as possible as quickly as possible?
This is an unbelievably good time to be doing think tanking because you’ve got a new government that still has a lot of energy. They come in, they implement their first idea that they had in opposition and then they look around for new ideas. And the lack of money is like a gun in the back. They have to think about doing things in a new way.

If you think back 10 years to the people who were doing modernisation and indeed some of the people involved in Policy Exchange, there was this sense that, particularly on the centre-right, there was a bit of a drought of ideas. There was a need to change the conversation, to get interested in lots of issues that had been left just for the left to discuss. The right had become very narrow and just focused on tax cuts, Europe, migration rather than housing, adoption and all these other questions. So that was a particular phase of modernisation.

My reflection 10 years on is that the Tory part of the coalition have done quite a good job, of moving themselves to the centre. Cameron inherited the party in a real mess. He’s done quite a good job of detoxifying them, making them more liberal. This is all very good stuff. I thought it was a very good idea to apologise for Section 28.

Where do they still have to go? The next big challenge for them is probably to go after a more working-class kind of voter. The midlands and the north is where the next election will be decided. The Tories are nowhere in Scotland, and it’s that centre of the country and centre of the electorate where they need to be doing better. We’re doing some opinion research at the moment. Politicians have a weird sort of language – people talk a lot about ‘the strivers’ or ‘aspirational voters’ or ‘squeezed middle’…

So you don’t think the ‘squeezed middle’ theme has traction? Because some people think that Ed Miliband hasn’t pushed it enough.
There are two problems with it. Firstly, the economic data this is based on is a misunderstanding of what has actually happened to income distribution. Secondly, and this is a problem for a politician, I don’t think it works. From the research I’m doing, people don’t identify, particularly swing voters, as being in the ‘squeezed middle’. People in the squeezed middle are not people who like Ed Miliband. So if I were him, I would bin it and use a different phrase. But there’s more to it than just the headline. We have a tremendous anti-politics feeling now in the UK. You can see in focus groups, people just hating politicians in a way they wouldn’t have done in the 1970s. So there is a communication challenge for politicians there as well as a straightforward policy challenge. But there are a lot of opportunities to do this stuff and to have the right policy but also win arguments about fairness at the same time.

Are you happy with the tag that Policy Exchange is the Conservatives’ favourite think tank? Is that accurate?
We speak to all three political parties and we want to be fair to all those people. We do go and see the Labour people. But, as you can probably detect from what I said before, there are some people in the party who have very sensible ideas about where they want to go, and other people have got very daft ideas both in policy terms and in political terms. Mixed emotions overall really, because I do want us to be able to work with everybody, but if the government listens – great.

What about the funding? You have a large number of donors who have been involved with the Conservative Party.
We have a lot of donors who have nothing to do with politics as well. Most of the people involved won’t have a political leaning. But then there are those from different political persuasions who give us dosh.

Just so it’s clear, most of your donors aren’t politically party-based?
Absolutely not. God no.

Is there a percentage that is?
I couldn’t give you a percentage. Our largest donors are quite often people who have given a lot directly into charity activities. There is a guy who has given an incredible amount to people in the care system, young unemployed people and young people in the criminal justice system. He has funded a lot of direct charitable things and people get frustrated that actually a lot turns on what the government’s policy is. So they get involved in policy and Policy Exchange. That’s quite a typical trajectory for people getting involved with us. And quite a bit of money these days comes from trusts and grant-giving foundations as well.

What role does the board of trustees play? You have people like Danny Finkelstein and Rachel Whetstone who are very plugged into the Cameron set, and Simon Wolfson is very influential too. What is your relationship with them?
They are good. They don’t exercise a strong direction of what we in the office will do… They give incredible amounts of their time to help us meet people, give us people who give us information, people who can help fund things. They are very good as a sounding board as well because you have a lot of political expertise around the table and a lot of different points of view. They help us build our network of people out there. We always say that you are never more than two or three jumps away from being able to talk to anyone. One of our trustees will know someone who knows someone.

So in ten years, Policy Exchange has become a bona fide member of the establishment?
[Laughs] Totally stumped…

Do you not see yourself as a member of the political establishment?
‘Establishment’ conjures up all these brilliant images of old buffers in gentlemen’s clubs.

I disagree, it used to...
You have to be very careful because Westminster is an echo chamber… When you think about what Nick Clegg’s real passions are, one of them is clearly social mobility which is a good passion. Good on him. It’s one of the things I’ve heard him speak most passionately about. The actual two words, ‘social mobility’, are not the right words though because nobody in the real world would ever use them. This is a trivial example but what is being said can be a bit ‘echo chambery’ and everyone uses this weird language that doesn’t really connect in the real world.

Do you want to become an MP?
In lots of ways my job is more fun because we have a decent-sized staff of serious experts. We have huge freedom of what to think. You don’t have to toe a party line. So at the moment, I’m very content where I am. I know lots of people who are MPs but I’m not convinced I would enjoy that more than this.

There has been some discussion about whether David Cameron has focused enough on policy issues. Would the government benefit from a PM who was comfortable with detailed policy?
I don’t know about that. I don’t get to see him very much. But my impression of him is of a very quick guy, not someone you need to tell twice. Very smart.

You could say he is decisive and that covers for a lack of intellectual interest in something.
That diagnosis is probably wrong. One thing that has become more apparent after the election is that the pressure on the centre is just incredible. The lighthouse goes round and round, focusing on all the issues that keep coming up and it doesn’t stick on them for very long. The idea that we have presidential government in this country, as people said about Tony Blair, is absolute crap. The centre is an absolutely tiny group of people with all the world’s problems washing up at their door. They made a mistake when this government came in with this SpAd cap to try to get by with a small Downing Street. No 10 was weak even under Blair and certainly didn’t need to be any smaller.

They have started to get a stronger centre, particularly after things like the health reform problems they had. A small centre can only tell you what’s going on. As a PM, you don’t have a very detailed sense of what the real challenges are in different departments. The more you can have someone who really knows the mind of the PM for each of those different departments, you can make little course corrections if ministers aren’t doing what you want them to do.

Do you think the health reforms can be rescued?
They have stabilised the situation. Health has not been in the news for a while and there has been a drip, drip of positive news about health.

That’s the PR side. What about the actual reforms?
There are choices about what kind of healthcare reform you want. Lots of them are not necessarily particularly compatible. GP commissioning is one type of reform. We are broadly in favour, but to make it work, you need to get it down to the smallest possible scale so it looks more like fund holding did rather than just recreating primary care trusts all over again. You want the smart people on the frontline to do the rationing more efficiently for you. And you only get that when you have smaller units. So that’s one type of health reform. A different and incompatible one is to do integrated care so you join up primary and secondary care and hospitals. That’s got clear benefits. It’s a very easy reform to explain and it helps get people out of hospital, which is very expensive, faster.

There are 101 other things you can talk about on health. There is a choice for the government coming up about 'What is our story going to be about NHS reform?' Do they just want to stick where they are and make a success of GP commissioning? Who knows how all that stuff about the role of Monitor will play out now they have the mandate to promote both competition and corporation? Tricky brief that one. One thing that everyone in Westminster started saying after the health argument – it’s a classic hindsight – ‘They could have done so much of this without doing any primary legislation. They could have just quietly got on with it’… They need to decide as well as to what reform they want whether they want to quietly get on with it or whether they want to have a clear argument and say, ‘This is what we’re doing and why.’

If we talk about believability and authenticity, how do you know what the real world wants? You were director of Policy Exchange at just 29, previously director of Open Europe…
When I was growing up in Huddersfield I went to a school that was a totally average-performing comprehensive. And the average school in Britain is not fucking good enough, basically. Things I do now bring me into contact with a lot of these kinds of questions at more of a ground level. I’m a chair of governors for a primary school. So when teachers say, ‘Oh my god, all this crap and bureaucracy falls on us from the centre’, they are completely correct because I see that all the time.

How do you make sure you stay open-minded?
Just being conscious of the problem is a big step toward remedying it. I am struck, if you think about how things have changed since the Thatcher era, how few of those changes are really reflected in discussion about policy. There is just this vast untapped resource intellectually. So all those developments in neuroscience, economics or group psychology – this vast intellectual stock-pile of stuff that has been built up over the last 30 years – has not found its way to public policy at all.

Quick fire

Hobby outside politics?
Trudging around hills in the north or visiting Scottish islands. They are interesting if you are a wonk because there are no police and no crime and you can just leave your door open and everything works.

Action or romance films?
Romance every time. Period drama.

Do you like karaoke?
I would do it in a small setting. I did not take part at our Christmas party...

How much did your haircut cost?
About £9.90

Did you tip the extra 10p?
No, I’m from Yorkshire, my parents are Scottish. Of course I don’t tip.

A fact about you that our readers won’t know?
I was a member of the Socialist Workers Party briefly when I was 17. I tried to sell the paper at school but people didn’t want to buy it.

Tags: David Cameron, In conversation, Issue 44, James O’Shaughnessy, Michael Gove, Neil o'brien, Policy Exchange