Do political parties concur because they agree about their goals or their fears? Phil Tinline argues in his book The Death of Consensus that it is shared nightmares, not aspirations, that create unanimity in politics. This might explain why a new consensus seemed to form earlier this year – personified in the Economist by the character of Ms Heeves, a portmanteau of the Conservative chancellor, Jeremy Hunt, and his Labour shadow, Rachel Reeves.
Both politicians were temperamentally unsuited to the radical policy experimentation of their parties under populist leadership. Neither would accept the characterisation that they agreed on much. But faced with an inflationary shock, both Mr Hunt and Ms Reeves retreated to a cosy consensus of sound money, pro-business policies. With an election likely next year, that period of agreement is ending. This is no bad thing.
Ms Reeves this week laid out her political dividing lines in a speech and policy paper in Washington. She accurately pinpointed the original sin of austerity. Labour is right to argue that only an activist state can green the economy and dilute harmful corporate concentration. Creating an independent industrial strategy council – disbanded by the Tory government – on a statutory footing is a good idea incubated by the Institute for Public Policy Research. Stronger “collective bargaining rights” to deal with economic insecurity and low pay are also welcome. This is territory that the Tories can only occupy with empty rhetoric.
Mr Hunt, by contrast, laid out a Panglossian vision of the UK’s economic success in the pages of the Telegraph last Friday. It is true that Britain, according to the Bank of England, will avoid a recession this year and that the country’s growth prospects have improved. But the Telegraph’s online readers appeared less than impressed – with many seeing Mr Hunt as much a high tax and interventionist politician as his shadow. The chancellor’s sunny take is an attempt to shift that view.
Tory voters tell pollsters that the economy is the most important issue facing the country, followed by immigration and then inflation. They seem more convinced than the rest of the country that the prime minister will keep his promise to cut inflation by half. Though it is coming down, the cost of living crisis remains persistent, with grocery prices jumping 19%. But this may not trouble the wealthy Tory base. Owning their homes outright means they are also insulated from the painful medicine of higher interest rates prescribed by the Bank of England, and endorsed by Mr Hunt, to bring the rate of price increases down. A core Conservative vote sees a prize in lower inflation: fiscal space for Mr Hunt to offer them a pre-election giveaway – such as cutting inheritance tax.
The Tories and Labour now have different nightmares. The latter’s voters worry that the challenge of inequality remains unspoken. The gains from globalisation-enabled growth were not broadly shared. Not only did regions lose out, but so did lower income groups. No other major European country is as unequal as Britain. The Resolution Foundation calculates that, by one measure of income inequality, the Gini coefficient, Britain in 2027 would be more unequal than the US today. Under Ms Reeves’s fiscal rules, that dismal future could be avoided by levying wealth taxes – and using the money raised to repair public services. Unfortunately, the parameters of political debate remain firmly set to avoid saying this out loud. That must change.
