This is the most interesting of the big three conferences, not least because the Tories lead the government. It is interesting also because there is now open debate about the government’s growth strategy. The Tory Chairman of the important Treasury Select Commitee, Andrew Tyrie MP, thinks it doesn’t have one.
Before we explore what might be done, or is being done, we need to question the whole idea of growth. It should be possible to live within your means, save money and keep your budget balanced without growth in your income. If you can grow your income as well, your standard of living will rise. If, however you are in the position of having enjoyed an elevated living standard on borrowed money to the point where you are heading for bust, borrowing more to keep up the spree will make bust certain. Cutting back your lifestyle to the point where it is below your earnings so that you can begin to reduce your debts is a mandatory requirement of financial survival. From that point you may be able to grow your income on a sound footing.
Because so much activity in the Western economies was on borrowed money, the net position of economic growth is a good deal lower than the headline figure. Making the correction and keeping economic activity broadly stable is an achievement which should not be overlooked. In the UK the overall money owed by the economy, including personal debt, is the highest in the whole world except for the U.S. There is absolutely no other route open except for cuts, cuts and more cuts.
Mr Tyrie was right to question increasing overseas aid, engaging the military in (or over) Libya and fancy projects like the Big Society, local-ism and so on at such a time of financial crisis. He was right to do so, even if distraught party managers have made him row back somewhat. The fact is that the Tories lead a Government of National Emergency and at such a time ideological fancies, however laudable, are only worth doing if they save money. The NHS Reforms and Welfare Reform are supposed to do that (will they?). Reforming educational practice and examination structures can greatly enhance educational quality; free schools and loads of conversions of LEA schools to academies may not do any good, beyond pleasing a certain type of pushy Tory voter.
This Tory lead Coalition must remain utterly single minded upon its purpose of financial salvation and it cannot borrow any more money to fund some aspiration of growth. What it can do, and appears to be starting to do, is to clear the decks of restrictions upon business and employment which will both save money and help the private sector to create jobs and wealth. Planning Laws, excessive Health and Safety regulations, corporation tax, the abuse of the Human Rights Act, having to pay absent workers while they have long periods of parental leave; most of these things and many more would cost nothing to modify, but will save a good deal. Above all it will make it easier to start or expand a business. If the economy is set free it will start to grow with more confidence.
It is expected that the Bank of England will soon favour more Quantitative Easing. If it does this and once again the money goes into the dealing rooms of the banks to boost their proprietary trading power, it will make matters worse in the long run and tax public patience to breaking point. The demos in New York, getting bigger all the time, are a serious wake up call. If by Credit Easing the Chancellor means the next round of QE will go direct to small and medium sized businesses to reboot economic growth, he could be onto a very good idea. The cash rich big corporations will then be more likely to release funds for investment.
Finally, if Thatcher had built a new council house for every one she sold, not only would we have no housing shortage today, but the house price bubble and its accompanying world record breaking debt mountain would never have happened. Cameron’s plan to sell and build may be his best idea yet. By far.