One of the many whoppers to emerge from the recent Conservative party conference was Rishi Sunak’s claim that “our Brexit freedoms make us ever more competitive”.
When I was at school, “freedom” was used in the singular; but these days, as Cole Porter wrote, anything goes. There are promises of “freedoms” all over the place.
What the economy, and indeed civilised life in this country, really requires is not the entirely illusory “freedoms” of Brexit but, quite simply, freedom (singular) from Brexit.
However, Sunak did not stop there. He was on top distortion form. Having leaked for days that he was going to put a stop to the extension of HS2, he then told us that the reason he was doing this was because “the facts have changed”. I have to say there were times when we were being told, in advance of his speech, that the rest of the HS2 project would be cancelled when I wondered whether he was indulging in that old trick of leading press and public up the garden path before making a surprise announcement that it would go ahead after all.
There was a classic example of such tactics way back in the autumn of 1978, when Labour prime minister James Callaghan went on television to surprise everyone by announcing that he would not, after all, call the election people had been led to expect. This proved to be a disastrous decision for Labour: along came the winter of discontent and in came Margaret Thatcher.
But back to Sunak: he is keen to improve mathematical and English standards in schools, but he could do worse than work on his own linguistic and logical ones. Facts are facts: they do not change. New facts and new information may come along.
Now, I did not get where I am today by being too involved in the HS2 controversy, but it seems to have been already well established that costs had soared way beyond budget, not least on account of the complexities of tunnelling under the Chilterns.
Sunak has made a laughing stock of this country with his decision to cancel the rest of the project. HS2 should have been seen as an investment, an addition to the nation’s capital stock for generations, and not subject to the constraints of current budgets. It was not just about speed. It was about capacity and connecting the country for the future – dare one say it, “levelling up”. Few people now question the decision to build HS1 – the line from St Pancras to the Channel tunnel – or the tunnel itself.
These are long-term assets. I was struck recently by the remark of a Treasury friend who was against HS2 to start with – the Treasury is like that – but who said that, having gone so far, “they should just get on with it”. As the economist Andy Haldane, chief executive of the Royal Society of Arts, recently wrote in the Financial Times, it was “a false trade-off” to see HS2 as an alternative to better local connections. Both were needed.
Which brings us to one of the dominant themes of last week’s Labour party conference: investment, investment, investment – seen as the key to getting the economy growing again, but under strict fiscal rules. The shadow chancellor, Rachel Reeves, promised: “As chancellor, I will put forward a charter for budget responsibility, with a new fiscal lock.”
Labour wants public and private sector investment in harness, and recalls the great Keynesian message that additional public sector investment can have multiplier effects on the spending power of the wider economy.
Reeves’s fiscal rules would ban borrowing to “fund day-to-day spending” or Truss-style tax cuts. But borrowing for long-term investment is altogether different from Truss-style tax cuts, and the financial markets know the difference.
Yet for financing much-needed increases in current, or day-to-day, spending on social services, health generally and education, Labour, if elected, will face the heavy blow to the nation’s tax revenues of Brexit.
The only reference to Brexit in the shadow chancellor’s speech was that “Brexit without a plan” was superimposed on austerity in causing the “mayhem” of recent Conservative years. The “plan” should, of course, have been no referendum and no Brexit.
In Chaucer’s Canterbury Tales, The Reeve’s Tale concludes: “I heard this proverb when I was a kid: do evil and be done by as you did.” Evil may be too strong a word to describe the damage this succession of Tory governments has wreaked, but Reeves is right to proclaim: “You cannot trust the Tories with our economy.”
However, if she and Starmer are serious about investment and growth, they need to repair the Brexit damage. This does not mean “making Brexit work”, but acknowledging the mistake and rejoining our principal market.
