The looming economic disaster will only get worse
if those leading us stick to dogma
Will Hutton
Conservatives must understand that the country they
rule is not exceptional
Sun 17 May
2020 08.30 BSTLast modified on Sun 17 May 2020 09.13 BST
The
emerging economic forecasts involve such outlandish numbers that they numb as
much as shock. The worst recession for 300 years? A worst-case budget deficit
this year of £516bn? The greater shock, of course, is that we are living
through a pandemic that has already claimed such a vast number of deaths. All
else necessarily pales into insignificance.
But those
economic numbers will steadily grow in salience – not least because the
consequences have to be wrestled with by a government led by second-rate
free-market Brexiters. Their ideological mindset – that government and public
borrowing are bad, that Britain is an exceptional country for which normal
rules do not apply, that robust individualism and free markets are the best
default position – is obviously wrong and out of time. Coronavirus is becoming
the trigger for a paradigmatic shift in thinking: only thus will Britain be
restored not just to medical but to economic and social health.
Economically,
the new common sense is that Keynes is back. The government is having to spend,
borrow, print money and extend its reach in ways unparalleled in peacetime in
order to prevent mayhem. But Keynesianism is more than this – it is an entire
body of thought about the way a capitalist economy functions. It goes far
beyond doing all that it takes to head off a slump.
Yes, the
state must actively manage the economy, keep it afloat to stop it from
capsizing. But the state also has to design and adjust the capitalist craft
continually so it is as seaworthy, resilient and high performing as possible.
It is the opposite perspective to free-market Brexitism.
It is also
what the majority of the electorate believe in. Of course, we were readier to
accept the constraints of lockdown for the greater good and for our own safety
than the Brexiter cabinet ever thought. Of course we clap the NHS and laud
essential workers. Of course we want to trust government. And, although it is
beyond the Brexiter ken, we are readier to pay taxes for the public good.
There is only one way to get the country
moving again in all ways – economic, social and cultural
There is
even the first recognition that Britain, for all its past glories, is not now
exceptional – that VE Day was 75 years ago and it’s time to move on. Britain
now needs activist, smart government. The current leadership of the Tory party
does not know its own country.
For a start
there is only one way to get the country moving again in all ways – economic,
social and cultural. People must trust that where they work, shop, teach,
study, eat and drink is safe. They need surefooted government that seeks active
involvement of workers and citizens in decision-making to ensure the right
calls are made and are widely owned.
Everything
from social distancing rules, regular temperature checks, access to testing,
and availability of PPE should be discussed and rules co-created. In particular
it means taking on board trade union concerns. What was wrong with Johnson’s
decision to begin a careful exit from lockdown is not the judgment call itself,
which on balance is right. It is that it was made disregarding employee
involvement; workers cannot be bludgeoned. Witness the concerns of teachers at
going to work if they consider there is a risk of death.
The
government needs to establish best practice on social distancing, sector by
sector, and disseminate it. Clear guidance needs to be provided on who should
work from home and for how long, how we look after essential workers. It is a
degree of micro-management and union involvement that is anathema to
libertarian Tories.
Worse, as
the Treasury warns, Britain soon confronts a potential sovereign debt crisis
given the scale of its deficits, made worse, although officials are too politic
to acknowledge this truth even in confidential papers, by the prospect of a
no-deal Brexit. This in a 2021 world in which the World Trade Organization has
ceased to function. How is Britain to trade itself back to solvency in a
protectionist globe but outside the EU?
Coronavirus is becoming the trigger for a
paradigmatic shift in thinking
There needs
to be a pre-emptive response. The government has to start funding its deficit
with “perpetual” bonds, never to be repaid but which carry a higher interest
rate, so recognising the abnormality of its plight. It has to signal a
readiness to raise taxes as a necessity, even to breaking its manifesto
commitments, across the board: the country is in no mood for more austerity.
And it has to exclude a no-deal Brexit, signalling a readiness to extend talks
if necessary, to get life-giving access to EU markets. Again, all are anathema.
The
government’s emergency loan programmes for business are vital, but many
companies are becoming overloaded with debt. Of necessity the debt will have to
be converted into shares, in turn converting the government from lender to part
owner – in effect creating a kind of sovereign wealth fund.
But with
what rules of engagement? What are our expectations of companies that would not
be alive without government support? A partial answer must be a new and
permanently enshrined role for workplace engagement, workers now obviously as
much key stakeholders as those who provide capital. Nor can the noxious
societal inequalities be allowed to persist, so that the peril of dying in our
society is so much higher depending on where you live.
In short,
our free-market Brexit government has to abandon its beliefs if Britain is to
get to the other side in relatively good order. Because it can’t – these are
mulish men and women resistant to reality – expect an escalating crisis of
political authority on top of everything else. The good news is that the ideas
and people who have laid this country low are dead men walking. British
exceptionalism is finally being laid to rest.
•Will
Hutton is an Observer columnist
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