The Shit State Tories
Not small state, nor big state, but a third, worse thing.
In both his failed leadership campaign and his somewhat unexpected premiership, Rishi Sunak has routinely been attacked from the right of the Conservative Party for failing to shrink the state. His budget was criticised for not reducing taxes, instead maintaining them at close to record levels of GDP. It is perhaps his biggest point of departure from his immediate predecessor. Yet the party is in far more danger from lurching to being the party of the shit state – where everything is expensive and nothing quite works.
For much of the latter twentieth century, the Tories have made the small state one of their touchstones. It marked them out from the controlled market of the socialists - that the housewife knew how to spend her money better that the man in Whitehall. It perhaps found its apotheosis under Thatcher, with the government divesting itself from a range of nationalised industries and slashing government spending as a proportion of GDP. It is something the party continues to talk about, yet fails to find coherence on.
In the years of austerity, the government was largely focused on spending less rather than doing less. There are few things that the state identifiably stopped doing under Cameron and Osborne, but lots of things it did less and less well. Indeed, Osborne himself was a surprising fan of nannying, leading the push towards the sugar tax and other lifestyle interventions.
Brexit too has made Westminster expansionist rather than leaner. In the midst of repatriating powers, the government’s instincts have largely been not to roll back regulation, but to extend it. It was Tory MPs who seized on the opportunity to try to ban foie gras and fur (although the proposal was subsequently dropped) and they also led the way on the banning of hunting trophies. Regardless of the merits of these bills, they are not the actions of the laissez-faire.
In the last 13 years, the party has pressed ahead with all manner of regulations and bodies planned to address various presumed ills. The Online Safety Bill is just one example – a gargantuan piece of legislation which has snowballed through the terms of three Tory Prime Ministers. The government has also pledged to introduce a football regulator, a level of government intervention in the beautiful game the party once mocked in a singing satire of Labour government. Its failure to reform the planning system has entrenched regulatory burdens, while the freedom-loving firebrand, Liz Truss, wanted to be able to tell farmers what to do with their fields.
Beneath this lies an awkward truth for the classically liberal wing of the Conservatives – most people like state action. In British politics, there are very few issues that aren’t met by a call for the government to do more. Libertarianism is a niche position, almost unheard of beyond a few think tanks. Popular campaigns are usually statist, whether it is new laws and sentencing powers or increased regulation. The lockdown laws, perhaps the biggest extension of state power in peacetime, were both hugely popular at the time and remain so in hindsight.
This is often the position within the Tory Party too. Despite the subsequent attacks on him, Rishi Sunak’s spending splurge at the start of the pandemic was loved by rank-and-file party members. When he was splashing the cash on furlough and support loans, the then Chancellor almost broke the scale on Con Home’s cabinet league table: he was more popular than any minister ever. In the face of a crisis, the ordinary members loved expanded government and vast amounts of spending.
Indeed, the only time most MPs or members speak out about these things is when it comes to paying for them. The party opposes tax rises, but cannot bring itself to oppose much of what it is spent on. The result is the degradation of everything the state is expected to cover. This has now become particularly acute following a decade of economic stagnation.
Around 15 years of wage stagnation has left the average UK worker around £11,000 a year worse off. For the state that means, at a rough estimation, a lost potential tax revenue of over £130 billion, or about 2/3s of an NHS. At the same time, even with government spending, the cost of providing government services has risen. If managed badly, stagnant growth and a swelling state can only mean a shortfall - and the rise of the shit state.
The shit state is not arrived at on purpose, but accidentally. A mixture of cuts and land grabs, of rising responsibilities and falling coffers. Instead of shrinking and reducing costs, the government becomes responsible for much but unable to deliver it. The result is ailing public services – measured in trains that don’t run, doctors that can’t be seen and crimes that aren’t solved. Each of these is the result partly of the pandemic, but also a gradual erosion as costs have accelerated faster than spending.
This problem becomes worse when the default solution to these day-to-day challenges becomes to cancel the sorts of government investment which may bring in more revenue in the long term. The political temptation here is obvious – in the voting booth, few people think of the train they might catch in 2033 but do worry about their local services and the impact of building works. Yet a state that shovels money into short-term spending without making major investments for the future is only likely to deteriorate.
The shit state thus becomes sprawling and inefficient. The government does much but little of it well. Departments and initiatives are grafted on without sufficient resources to deliver. Rather than restraining the impulse to add another duty to government, it is indulged, creating some department or team with the attendant cost and potential for mission creep. Government is determined by headlines and launches, rather than outcomes or successes, layering more on without seeing if any of it works.
Institutions decay, unable to carry on their core duties effectively despite continuing to incur huge costs. While this happens, the peripheral services become even more frayed. Already in many places the public realm seems dilapidated and dirty, a victim of cuts to “non-essential” services which gradually erode quality of life. A certain grubbiness that smacks of neglect and an impoverished state. Everything is done on the cheap, and looks it.
At the same time, interactions with the state become less pleasant. While public services have taken to calling us “customers”, their customer service has grown worse and worse. Almost anyone who interacts as an ordinary person with government services finds them rife with delays, conflicting information, and inaccessible contact centres. Sometimes this feels like a deliberate way of chipping away at entitlements, around immigration, or benefits, for example. Often, however, it seems like the desire and resources to make it good have gone.
The shit state is now evident for all to see. Our services feel stretched, despite a record share of GDP being taken in taxation. There are daily stories of public services falling short, and frightening long-term examples of the state failing - from the ongoing post office scandal to the grooming gangs. These are not simply failures of funding, but of leadership and organisation too.
The horizon looks little better. The future state will be impacted by significant demographic challenges. During the next few decades, the number of older people dependent on the state will increase as the number of workers declines. More will need to be spent on pensions, social care and expensive health treatments while there are fewer workers to pay into the system. Absent significant economic growth, that will mean some combination of higher taxes, more borrowing, and less spending on other aspects of the state.
If the Conservative Party truly wants to be the party of limited government, it needs to start limiting government. There is a case to be made that government should do less and do it well. The party cannot simply lean into expansionist populism and then complain when the bill arrives. If the Conservatives are to believe in a nimble, cheaper state, they must be honest about how to provide it – what it means not doing, and what doing more may cost.
More broadly, the party needs an honest conversation about what the government ought to do and how it ought to be funded. Small government means something very different now from seventy or thirty years ago. The Labour Party no longer intends to bring productive industries under the control of government – Clause IV is now more and is unlikely ever to return. Equally, tax rates will never hit the levels of the 1970s, when unearned income could be taxed at levels reaching 90%. Either it must accept the state doing all it does now, and find innovative ways to fund it, or it must consider what it cuts away.
The risk for the Tories is that they offer neither. Cleaving to the idea of lower taxation whilst encouraging the government to get involved in more things. That simply leads to the degradation of public services and the rise of a Labour Party which is trusted to run and deliver them. The party must instead look at the cost and the value of where the state acts, and concentrate its power to do things that matter well.
If the Tories become nothing more than the party of the shit state – expensive, badly run, fraying at the seams and run with a sort of stingy reactionary feeling that nothing can get better, they cease to appeal to any real quarter. There is an intellectual and political case to be made for a small state, that the less a government does, the better it can do it, and the more money it can leave in punters’ pockets at the end of the day. It’s hard to see a successful right-of-centre party that doesn’t make the case in some way. Even the Johnsonian focus on public services was framed alongside the liberalisation of trade and economics after leaving the EU. Finding the right formula, however, requires discipline and determination, vision and execution. It’s more than pennywise, pound foolish spending decisions and perpetual tax cuts without real thought about where the money goes.