Abandon ‘half-baked’ Thatcherism, says former Tory economic adviser

Tim Pitt said the Government risked returning to the ‘comfort blanket’ of 1980s orthodoxy.

Tim Pitt’s warning came as the Treasury prepares for the Autumn Statement. (PA Wire) (PA Wire)

The Conservatives should abandon “half-baked” Thatcherism and acknowledge that growth will be slower, an adviser to two former chancellors has said.

Ahead of the Autumn Statement on November 17, Tim Pitt warned that the Conservatives risked retreating to the “comfort blanket” of 1980s orthodoxy rather than setting out a new approach geared towards the UK’s present problems.

Mr Pitt, who advised both Philip Hammond and Sajid Javid at the Treasury, said: “The Conservative Party has veered one way then another on economic policy, driven at different moments by political expedience, economic necessity and raw ideology – with Trussonomics simply the latest iteration.

The Chancellor should consign to the history books the Trussonomic nonsense that raising taxes is un-Conservative. The history of Conservative economics over the last 200 years is littered with Tory chancellors willing to raise tax to put the public finances on a sustainable path

Tim Pitt

“The immediate task facing the new Chancellor is to put the public finances back on a sustainable path. More broadly, it is to restore the Conservatives’ shattered economic credibility.

“Yet in seeking to restore that credibility, the risk now for the Conservative Party is that, desperate for stability and some kind of economic narrative after years of uncertainty, it simply reverts to the comfort blanket of Lawsonian orthodoxy.”

Instead, he argued that the Government should be pragmatic and accept change while protecting the most vulnerable.

Mr Pitt made these arguments in a paper published on Monday by centre-right think tank Onward, whose director Will Tanner was named deputy chief of staff at Number 10 at the start of November.

Arguing that an ageing population and greater reliance on services meant lower productivity, Mr Pitt said the Conservatives needed to accept that growth would now be slower than it was before the financial crisis.

He also said the Tories should not set an “arbitrary” limit on the size of the state and stop “obsessing” over the size of the overall tax burden, but instead focus on fairness and providing services and support “across society”.

He said: “The Chancellor should consign to the history books the Trussonomic nonsense that raising taxes is un-Conservative. The history of Conservative economics over the last 200 years is littered with Tory chancellors willing to raise tax to put the public finances on a sustainable path.

“Instead of obsessing about the overall tax burden – which has no link to growth rates – the task facing the Chancellor is to raise revenue in a way that both makes the system more efficient and ensures those most able to bear the burden do so.”

This would include reforming the tax system to raise more from wealth through levies such as capital gains tax, something Chancellor Jeremy Hunt is thought to be considering.