SHORTLY after Boris Johnson became Prime Minister, and especially during the pandemic, it became clear to me that he was not a conventional Conservative. Indeed, he isn’t really a Conservative at all. Many took issue with me insisting that he’s a far-right, neo-imperialist Brexiter. Twitter said I was a Tory apologist. But I don’t apologise – I just observe.
And last week it became clear to anyone with eyes to see that Boris Johnson has turned traditional Conservative economic policy on its head. We might even have to start talking about “Borisonomics”.
Failure to understand this left Labour MPs open-mouthed last week after his latest exercise in social spending.
Johnson not only adopted Labour’s proposal for a windfall tax on the energy companies – we’d been expecting that – but he went far beyond anything Keir Starmer had called for in grants to families to help pay their energy bills. Labour called for a £200 grant. He doubled it.
Labour wanted £400 for people on low incomes but Johnson upped it to £650. Plus more for pensioners and the disabled. Mr Johnson had told his Chancellor, Rishi Sunak, that he wanted “a big bazooka”. He got it.
The cost-of-living gurus, Paul Johnson of the Institute for Fiscal Studies and Torsten Bell of the Resolution Foundation, were gobsmacked. Johnson called the statement “extremely redistributive” and said it would make folk on means-tested benefits better off despite inflation. MoneySavingExpert founder Martin Lewis was lost for words. The Tories had done exactly what he said they should do.
BBC interviewers, who normally scold Tory MPs for failing to help the poor, resorted to accusing them of being irresponsible with the nation’s finances and risking an inflationary backlash. In fact, the energy payments should reduce headline inflation next year.
The Chancellor gave away more than under Labour’s policy of uprating benefits, something Opposition spokespeople evidently failed to notice or chose to ignore.
Labour left-wingers like the columnist Owen Jones were incandescent. How had Sir Keir Starmer allowed the Tories to outflank Labour on spending? He demanded that the Labour leader come up with something bigger to show clear red water with the Tories. Sir Keir did not comply.
Instead he complained about the Tories “putting up taxes 15 times” and said the Chancellor had broken his promises “that people should keep more of the rewards of their efforts”.
He seemed unaware of the irony of a nominally socialist party leader accusing the Tories of being the party of high taxation. This is all very puzzling for people whose minds are stuck in the 1980s, when left was left and right was right.
Boris Johnson’s latest spending splurge comes on top of his increasing government spending to heights unseen since the 1970s – indeed, since the Second World War. UK taxes have already been raised to levels last seen in the 1950s. Government borrowing has gone through the roof. Britain now owes £2.4 trillion, 103 per cent of GDP, more than twice what it was under the Labour Chancellor Gordon Brown. Interest payments on this Tory debt pile have risen to over £70 billion a year, more than defence and housing combined.
This is not normal. The traditional Conservative approach to a cost-of-living crisis is to allow the market to regulate prices. This might mean short-term pain, but in the longer term it would mean greater efficiency. People would be helped at the bottom, but not through cash giveaways. The Tory way of helping people is to cut taxes and offer them better jobs, which Conservatives insist are generated by unfettered capitalism.
Government intervention, Tories believed, distorts the economy and prevents market forces operating. It leads to inflation, debt, investment strikes, and industrial unrest. That was their account of the hyper inflation that led to Britain’s near-economic collapse in the 1970s. Many of them privately think history is repeating itself.
What Johnson has done is precisely the reverse of Thatcherism. He has made a virtue of state intervention in the economy through levelling up, the environmental agenda, and by positive redistribution of wealth.
Incredible though that may seem, the Tories really are now the party of tax and spend.
You can tell by the howls of anguish from columnists in The Daily Telegraph and The Spectator that the right are not entirely happy with this. Tory MPs have kept quiet for now because they know that voters like free money. But they worry intensely about the longer term.
They worry, too, about net zero and Johnson’s promise to have electricity generation 90% carbon free by 2030. Johnson’s economic policy is essentially that of the original climate campaigner
Al Gore’s “green industrial revolution”: using state investment to co-opt capitalism into carbon neutrality by letting them make money out of it. Populist Nigel Farage is calling for a referendum on net zero.
Johnson still uses free market rhetoric when it suits him, in Tory conference speeches, but his actions belie his words. It is hard to imagine that even Jeremy Corbyn, had he won the 2019 election, would have expanded the state as much as Johnson has.
All of this is, of course, underpinned by near-zero interest rates, courtesy of the Bank of England. Nominally independent, the Bank is as much a Government poodle as any central bank has ever been.
Its governor Andrew Bailey has allowed the inflation to rise to 1970s levels without making any attempt to suppress it by the traditional Tory recourse of increasing interest rates.
Reckless money printing used to be regarded by thinking conservatives as the economics of Weimar, yet the Bank has printed nearly £1 trillion in quantitative easing since 2010. Most conservative economists regard money supply as, if not the only cause of inflation, the major cause and one that can only be countered by making it more expensive to borrow money. This cools the economy, especially the housing market, and reins in bank lending. Not any more.
It’s almost as if the Tories have adopted Modern Monetary Theory. This is the idea, favoured by the SNP left and the Green Party, that governments can spend as much as they want without going bust because they can always print the money to pay for it.
But it is a mystery how Boris Johnson managed so easily to turn the Tory party against its basic instincts, abandoning any pretence of fiscal prudence.
Johnson has been helped by the way in which his Government’s image has been fashioned by Labour, social media, and stand-up comedians. They invariably portray the Tories as the “nasty party”, using Brexit to line the pockets of “disaster capitalists” at the expense of the working poor.
The former Labour chancellor John McDonnell insisted that Boris Johnson was “the most right-wing politician ever seen in British politics”. This is obviously nonsense, but it has helped this hyper-interventionist PM to cover his tracks – in the same way that he’s got away with actually increasing immigration since Brexit.
It can’t go on, of course. Chickens will come home to roost. The debts will have to be paid in the long run. But as John Maynard Keynes, an economist Johnson appears now to be following, famously said: “In the long run we are all dead.”
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