As the Conservatives gather for their annual conference in Manchester this weekend, the ideological divide in British politics looks wider than ever. David Cameron’s Tories proclaim themselves to be the only major party committed to free market liberalism, with an agenda based on low taxes and a leaner state. Labour, under its leader Jeremy Corbyn, has lurched to the left, advocating renationalisation and considerable infrastructure spending. For Tories seeking “clear blue water” between the parties, the landscape has never seemed brighter.
Yet the contrast is not as sharp it appears. Chancellor George Osborne has no truck with Corbyn-style nationalisation and price caps. But under him, the Tories have not been shy about intervening in the workings of the economy, introducing the living wage and pressing ahead with big infrastructure projects such as the HS2 high-speed railway. Even more surprising is their willingness to cosy up to corporate champions and established business interests. This is at odds with the traditional Conservative enthusiasm for competition and laissez-faire.
Three examples of this trend come to mind. This week, Ed Vaizey, the minister overseeing the broadband sector, weighed in on the regulatory inquiry that is considering whether to break up BT, the UK telecoms incumbent. He declared himself a “sceptic” about the idea. Mr Vaizey’s intervention came months after Mr Osborne rejigged a special tax that had proved particularly unpopular with some of Britain’s largest international banks, HSBC and Standard Chartered. And in the past few days, Boris Johnson, the Tory mayor of London, has proposed to bring in new and stiffer rules to curb the growth of Uber, the US taxi-hailing app, rather than reducing cab regulation in the capital.
These politicians could justify their intervention on the grounds that partnership with businesses is needed to meet wider industrial and social goals. But in each case, they are open to the charge of defending established interests at the expense of consumers.
Mr Vaizey’s enthusiasm for leaving BT as it is may reflect the government’s decision to join the business in rolling out superfast broadband across rural Britain. But he is uncritically backing a company whose quality of service has attracted widespread customer complaint. He is ignoring BT’s potential conflict of interest because it owns the UK’s national broadband network while being a competitor in the provision of telecom services.
On the banks, Mr Osborne has cut the levy because he did not want HSBC and Standard Chartered to move their headquarters overseas. There was a case for saying he had squeezed the sector too hard by turning the levy into a permanent (and ever increasing) tax. But he has only been able to help out the biggest banks by shifting more of the burden on to smaller “challenger” institutions, potentially reducing competition in the sector.
As for Uber, Conservative policy looks bizarre. Two weeks ago, Mr Johnson labelled opponents of new cab-hailing technology as “luddites.” Now he is imposing regulations that protect London’s black cabs and make it harder for new companies to provide services Londoners want.
In Manchester, the Conservatives will have much to celebrate on the economy. But their penchant for protecting corporate interests is not healthy. With productivity still the UK’s biggest economic challenge, their instinct should be to promote competition. Politicians of the Thatcher generation must be astonished that the lesson still needs to be learnt.
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