Margot James is Under Secretary of State at the Department for Business, Energy and Industrial Strategy, and is MP for Stourbridge.
I was as shocked as anyone else by the BBC’s exit poll on Thursday night. But I was not surprised that Jeremy Corbyn fought a good campaign: campaigning is all he has done in 40 years so he has it down to a fine art. The Prime Minister, on the other hand, is better at governing than she is at campaigning for office.
The Labour manifesto was uncompromisingly left-wing. According to the Institute for Fiscal Studies, taxes would have had to rise to the highest levels ever seen in peacetime to fund the largesse promised. Billions would have been spent compensating shareholders for the nationalisation of various industries. “Taken in to public ownership” sounds quite good to people who never experienced the basket case Britain’s economy became, during the 1960s and 1970s, when policies of nationalisation and high taxes were tested to destruction. Even the financial crash is ten years ago.
Since 2010, Conservative-led governments have restored the public finances. The private sector has been encouraged, and more than two million jobs have been created. Youth unemployment has halved in my constituency since Labour left office. The deficit is down from over ten per cent to three per cent, and last year the UK was the fastest growing economy in Europe. Although it has taken a long time for wages to recover, inflation and interest rates have been at historically low levels. The introduction of the National Living Wage has resulted in the biggest pay rise for people on low pay since the minimum wage was introduced in the nineties. And millions of low paid people have been taken out of paying tax altogether by the increases in the personal tax allowance.
Apart from a level of debt which is unsustainable over the long term, the economy is now in good shape. We have brought sanity to the public finances, as we promised we would. Consequently, the economy has not been to the fore when people have been deciding how to vote. Labour have been able to latch on to this relative economic security by peddling a message that the state should provide more at every turn.
The election descended into a profligate binge over how much taxpayers’ money Labour proposed to give away: keeping the triple lock for pension increases, maintaining winter fuel payments for older people as a universal benefit, thousands more police officers (regardless whether or not they are needed, given the changing nature of crime), more money for schools, health, and social care…all this was added to the billions needed for the nationalisation of the railways and the Royal Mail. And finally, the game-changer: an end to tuition fees for higher education.
The moment I heard Labour’s policy of free university education I knew young people would turn out to vote in unprecedented numbers. This was a policy that would deliver votes in the same way that the sale of council houses did for us during the 1980s.
At a radio hustings I took part in, we were asked what we would do for young people. Labour was all about handouts: free higher education with no regard for how universities were to be funded, the reintroduction of housing benefit for 20 olds and an equal minimum wage. I was a lone voice calling for improving opportunities for young people to gain skills, start businesses, and access better jobs brought about by encouraging investment.
Labour’s high taxes would kill investment, just at a time when Brexit means that we need to work harder than ever to attract foreign investment in to this country. Unemployment is twice as high for under 24 year olds as it is for the general population, so equalisation of the minimum wage would result in fewer jobs for young people.
Abandoning tuition fees, apart from being a highly regressive policy, puts the funding responsibility 100 per cent back with the taxpayer. The same goes for social care, which is means-tested currently, Labour proposes that it should all be paid for out of general taxation. The much-maligned Conservative manifesto tried to face up to the facts that given the demand for these services, there has to be a balance of funding between the taxpayer and the service user.
The deception at the heart of the Labour manifesto was that all this largesse could be funded by increases to corporation tax and the personal taxation of people earning more than £80,000. As if these proposed increases would not be damaging enough to incentives, taxes would inevitably have to increase further down the income scale – either that or borrowing would go through the roof, which would force up interest rates.
All these consequences seem a long way off, especially from the perspective of the relatively secure economy achieved under seven years of Conservative-led government. So Labour’s magic money tree was a great temptation and this, as much as any mistakes made by our own campaign, accounted for the surge in the Labour vote that swept away some excellent colleagues, several of whom saw increases in their vote since 2015.
As well as uniting round the Prime Minister and the Brexit Secretary as they commence negotiations with the EU in just over a week’s time, we need get back to exposing the fallacies of Labour’s left-wing economic policies. We need to promote polices that are all about creating wealth, rather than spending limitless amounts of money that we haven’t got.
And it was all there in the manifesto, sections of which never saw the light of day during the campaign itself: “A strong economy built on sound public finances, low taxes, better regulation and free trade deals with markets around the world…implementing a modern industrial strategy that facilitates investment in infrastructure, skills, research and development…and forging a new culture of exporting among UK businesses, equipping them with the tools they need to succeed in the global marketplace.”
It is the responsibility of government to set a policy framework which enables those good things to take root and create wealth. We need to inspire young people with the opportunities for attaining skills and qualifications so they can aspire to better employment or self-employment. And expose the Labour alternative of limitless free handouts for being the self-defeating deception that it is, and the dangers to their future of what happens when, as Liam Byrne put it in 2010, “there’s no money left”.