The Observer view on how Britain’s crises can be
fixed by a shift in political culture
Observer editorial
Only generous-spirited, long-term approach can tackle
the catastrophes of poor growth, a crumbling NHS and a dysfunctional housing
market
Sun 1 Jan
2023 06.00 GMT
Last year
will be remembered as the most turbulent for the global economy since the 2008
financial crisis. Russia’s invasion of Ukraine drove an enormous increase in
global energy prices, which led to inflation spiking across the world. And 2023
will be tougher still for many Britons; it will be a year of falling real pay
at a time when the cost of essentials has never been higher.
The
government would like us to believe this is purely the product of these global
headwinds. But the truth is that a series of long-term structural problems has
left the UK more vulnerable to massive global shocks than many other countries.
From the dysfunctional housing market to sluggish economic growth to a complete
failure to grapple with the consequences of an ageing population, these
problems have been neglected by governments of both colours in past years, but
have been made progressively worse by 12 years of Conservative rule. If they
remain unaddressed they will stymie people’s quality of life for decades.
Britain’s
growth prospects are poor by international standards. This is because for years
economic growth was overpowered by a financial services sector whose flaws were
exposed by the 2008 crisis. Reliance on the sector disguised a lack of
productive capacity in the rest of the economy and big geographical variations
in economic prosperity. The 2010s should have been used to build investment in
the public services and skills infrastructure needed to boost productivity
across the country. Instead, public spending cuts hit least affluent areas the
most and the Conservatives pursued the hardest of Brexits for ideological
reasons, which wiped a whopping 5.5% off GDP by mid 2022, according to one
estimate. It is lower-income families who will most feel the impact on their
standard of living. The government urgently needs to support exporting
businesses by realigning trade with the EU, our closest and biggest trading
bloc, and introduce policies that allow people to dip in and out of training
throughout their working lives to ensure the economy has the skills it needs.
And ministers, who have in recent years reneged on commitments to promote
investment in green energy, need to prioritise low-carbon technology as a way
to boost growth and ensure the UK fulfils its commitments to reduce carbon
emissions to net zero by 2050.
A series of
long-term structural problems has left the UK more vulnerable to massive global
shocks than many other countries
The growing
number of young people who will never be able to afford their own home is an
indictment of politicians’ failure to address the worsening housing crisis.
Britain has some of the most expensive rents in Europe and a housing market in
which rising prices deliver windfall gains to homeowners at the expense of
those who remain locked out of home ownership. This will increasingly affect
many aspects of life: families having to move repeatedly, undermining any sense
of stability for their children; people unable to relocate to take advantage of
economic opportunities in higher-growth areas of the country; older renters
reaching retirement with insufficient pension income to cover their rent. The
number of people who lose out will expand until the government gets a grip on
the problem, not just by facilitating more housebuilding, but also by properly
taxing housing as an investment class, including buy to let, introducing
longer-term tenancies and limiting rent increases.
After
housing, childcare is one of the biggest costs facing families with young
children: the UK has the second most costly system in the world, according to
the OECD. Worst is the gap between when a parent goes back to work and when the
30 hours’ free entitlement kicks in the term after a child turns three; this
leaves parents unable to afford the costs of childcare, and so unable to go
back to work, disproportionately affecting women’s career progression and
denying children the chance to learn in high-quality nursery settings, which is
particularly important for children from less affluent backgrounds. The system
urgently needs reform to provide free universal childcare for children under
five; this would bring benefits not just for children and parents, but for the
wider economy.
Like in so
many wealthy societies, Britain’s population is ageing as a result of low
birthrates. The consequence is that we will collectively need to spend ever
greater amounts on healthcare and personal care. Yet the UK invests markedly
too little on healthcare – 18% below the average per person than comparable EU
countries over the last decade – and the dire levels of underfunding of later
life care mean too many older people are left languishing without the support
they need to live a dignified life or living for weeks on end in hospital
wards. This is unsustainable, with dreadful consequences for people in the last
years of life; the NHS cannot do its job without more resources and it is
ludicrous that politicians have neglected to fix the glaring problems in social
care for two decades.
These are
the thorny challenges that lie ahead for the UK. They are eminently fixable,
but require a generous-spirited politics that is geared towards the long term
and able to sustain some of the cross-party consensus that developed around the
NHS and the expansion of social housing in the 1960s and 70s. Yet Britain is
governed by a Conservative party that has shamelessly embraced populist tactics
as a means to drive through Brexit and brought political chaos in 2022. More
broadly, our political discourse is gradually becoming tainted with the
tribalism, culture wars and identity politics that play out on social media. We
must hope 2023 is the year our political leaders take the opportunity to rise
above the fray to at last start talking about the social and economic reform
Britain so desperately needs.
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