Steve Richards: Theresa May needs to come clean on the size of the state

Written by Steve Richards on 2 November 2016 in Opinion

The PM should break away from George Osborne’s pursuit of a much smaller state.

For a leader not known as an orator Theresa May delivers some remarkable speeches, ones that challenge orthodoxies and point in new directions. Whether they will lead in new directions we will know when her Chancellor delivers his autumn statement later this month, the most important political event in the UK since the referendum in June.

The best speech from a leading political figure I have heard in recent years was the one May delivered to the Police Federation in the early summer of 2014. Her words were surprising, brave and yet reasonable. She was Home Secretary then and gave her audience a forbidding message about the need to deliver their service more efficiently.

I recall listening to the speech in a car and not wanting the journey to end before May had finished speaking. I remember also reflecting at the time that her speech was a more substantial political act than any from David Cameron a self- proclaimed moderniser who did not challenge his party’s orthodox views on the role of the state and the provision of public services. In a single speech May had done both. As any leading member of the Police Federation would confirm, she also meant what she had said.

I have listened carefully to May’s speeches ever since and regard her address to the Conservative party conference last month, the one she gave that closed the conference, as one that competes, at least in terms of provocative substance, to the one she delivered to the Police Federation. May was doing what Cameron and leaders from the New Labour era never did. She put the case for government. In a country used to hearing only how government stifles and wastes our money the following sentence is close to revolutionary: “Its time to remember the good that government can do.”  

Tony Blair and Gordon Brown would not have dared to utter such a sentence, fearing that the media and middle England would accuse them of returning to the 1970s. Cameron and George Osborne would not have done so because they did not believe it. Cameron famously stated on becoming leader in 2005 “There is such a thing as society. Its just not the same as the state”, a phrase that appeared to move on from Thatcherism when it was a precise endorsement. Margaret Thatcher had made exactly the same argument.

As Chancellor, George Osborne was more ideologically committed to a smaller state than Thatcher ever was. In his final budget delivered earlier this year his aim was to reduce government spending to 37 per cent of GDP by 2020, a shrinking of the state that would bring the UK closer to levels in the US and Japan. In his excellent recently published book even Nick Clegg acknowledges, albeit retrospectively, that Osborne’s deficit strategy was partly ideological, driven by a desire for a significantly smaller state.

As I have written here before many Conservative MPs and most of the media support public spending cuts in theory and then oppose the precise cuts that follow. Currently the chair of the Health Committee, Sarah Wollaston, warns about the financial crisis in the NHS, pointing out accurately that the government has been nowhere near as generous as it claims. A significant proportion of Conservative MPs opposed the cuts to welfare benefits proposed in Osborne’s final budget, so many of them that the then Chancellor was forced to announce the speediest u turn in budget history.

The new Justice Secretary, Liz Truss, seeks more cash with the strong support of her predecessor, Michael Gove, in order to implement important and radical prison reforms. Evidently the Business Secretary, Greg Clarke, has informed Nissan that it can expect government help with training and investment amidst the turbulent unpredictability of Brexit. Clarke will have to make assurances to others too.  In her opening and also interesting speech as Prime Minister outside Number Ten, May spoke of a “housing deficit” , a revealing term that showed an understanding that economic policy must extend beyond an obsession with one form of deficit. But addressing the housing shortage will cost money too.

Before he was sacked Osborne had already announced that his absurd target to wipe out the deficit in this parliament would be scrapped, as he ditched the same target in the last parliament. Suddenly “the deficit” is not the issue it was. With something close to genius Osborne mesmerised the media into sharing his misplaced obsession with “the deficit” from 2008 until this summer. Similarly after he announced he was dropping the target for the second time the media followed suit and lost interest. I cannot remember an interview this autumn where “the deficit” took centre stage. Nonetheless Osborne's target to shrink the state at an historically spedy pace is still in place.

If May is to make sense of what I take to be a genuine reframing of the debate about the role of government she and her Chancellor, Philip Hammond, must address also the projected size of the state. If they agree with Osborne’s small state target they will fail to show the “good government can do”. Instead they will be moving from one crisis to another as the current NHS sags demonstrates. May’s speech to the Police Federation shows she is determined to ensure services are delivered efficiently whatever the resistance from self-interested groups. That is an important part of proving government can work. But is she also willing to invest so that public services are as good as those in other equivalent countries?

For different reasons a debate about the size of the state has been taboo across the political spectrum for decades. Chancellors have acted stealthily to increase its size or to radically reduce it. May needs to break away from Osborne’s quietly ideological pursuit of a much smaller state. Whether she does or not will determine the degree to which May can make a distinctive mark and move her party on from outdated orthodoxies formed in 1979.

Brexit apart, the Prime Minister could prove to be a modern nation one Tory in a way that Cameron and Osborne never were or sought to be. By triggering a debate about the role of government she has made a start.

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