The 10 economic commitments we need from the next Tory leader

The harsh truth is that whatever their aspirations are, they can only be successful if the economy is successful, writes Hamish McRae

They seem somehow disconnected from the practical, everyday problems that people face (Getty)

It’s the economy, stupid. That was the slogan coined by James Carville, strategist to Bill Clinton for his 1992 presidential bid, and as “The economy, stupid”, pinned up on the wall of the campaign headquarters in Little Rock, Arkansas.

It has become a catchphrase that can be adapted to any political pitch: the deficit, stupid, or perhaps now, inflation, stupid. It is a measure of Carville’s genius that there are books with that title, university courses on it, and inevitably attacks on the idea that the economy is the most important shaper of political success.

Apply that to the UK now. Anyone watching the debates of the would-be Tory leaders on British television must wonder why the world that politicians occupy seems so different from that of the rest of us. They talk of the pressures on families, or of the need to cut taxes and boost government spending, but they seem somehow disconnected from the practical, everyday problems that people face. Other things matter too, but the harsh truth is that whatever their aspirations are, they can only be successful if the economy is successful.

So what should people look for from the next Tory leader that will help lift the UK’s economic performance? Here are my top 10 asks.

The first is administrative order. Boris Johnson’s government has been chaotic, with policies announced without thinking through the consequences or simply with the eye to get a headline.

The second is financial discipline. Some aspects of the government’s response to the pandemic have been admirable, especially the vaccine rollout and the furlough scheme, but there was an extraordinary laxity in other areas. Money was handed out to firms with minimal checks on their viability. Indeed, some people registered multiple companies for the sole purpose of getting cheap government loans that will never be repaid. If the pandemic brought out the best in some people, it also brought out the worst in others.

The third must be fiscal reality. It was both reasonable and inevitable that the fiscal deficit should soar. But it has now to be brought under control. The only issue is how fast that should be done. Rishi Sunak is the architect of the present plan, and there is a legitimate case to be made that he is seeking to cut it too swiftly. But anyone who argues that has to have a realistic case for what they are proposing, and an acknowledgement that there are costs in terms of higher debt servicing in the future.

The fourth is to plan for an ageing population. The UK has, in relative terms, some advantages over most other developed countries, in that the structure of our population is getting older more slowly. It is projected to grow through to the 2070s. But as things stand, the growing numbers of elderly people will place a rising burden on people of working age. That is an intolerable prospect for the young.

The Office for Budget Responsibility showed how the national debt would soar to more than double GDP by the 2070s if action was not taken. The present crop of politicians will not be around then, but people starting out in their careers now will be drawing their pensions. The next PM needs to think about how those will be paid.

Number five is to listen to business. Not everything that the business community wants should be handed out, for company leaders can be pretty self-serving. But the director general of the CBI, Tony Danker, wrote an open letter to the leadership candidates last week urging them to focus on long-term growth and not on tax cuts that were “doomed to fail”.

At this stage, it is really a question of the new government as a whole seeking to have a more constructive relationship with businesses, small and large. Actually small and medium-sized enterprises matter just as much as the giants, maybe more so.

The sixth is to rebuild an adequate working relationship with the EU. Whatever views people have about the wisdom of the decision to leave, and whatever views people take of the EU’s negotiating stance, the fact remains that the UK needs adequate trading conditions with what for the next few years at least will be its largest trading partner. Keir Starmer recognised the need for a reset in his speech earlier this month on how to make Brexit work. The Tory leader needs to make it work.

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Number seven is to focus on value-for-money in infrastructure. The government has to work better with the private sector in fixing the country’s infrastructure. We all know that big projects cost huge sums and frequently go over budget. That happens everywhere. But we should be able to do better. The lags are very long. The Elizabeth Line was signed off by Gordon Brown in 2007. Unsurprisingly, it was much delayed and way over budget. The benefits or otherwise of decisions now will not affect the political career of the next prime minister, but the general reputation of politicians matters too.

The eighth is to back education. The UK has a competitive advantage in higher education, with four universities in the top 10 in the world on the QS rankings.

Nine is to back finance. UK finance should serve the whole country, as well as earn revenue from the rest of the world. But those are not in conflict. Financial services are helping fix the pension gap as well as being the UK’s biggest export earner. They need thoughtful regulation and focused promotion.

And finally? Well, my wish would be for a prime minister and a government that pays attention to detail. Grand visions are fine, but what really helps the economy is its competence at every level. That would be my slogan: it’s competence, stupid.