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Conservatism and the radical centre

31 August 2018

3:45 PM

31 August 2018

3:45 PM

Every so often, usually on Twitter, you hear calls for a new centrist party. The Tories have gone Brexit bonkers, runs the argument, and Labour hard-left – surely most people are in the middle? And look at Emmanuel Macron: by sheer self-belief he won the presidency and leads a majority parliamentary party that did not exist three years ago. So don’t we need a new centrist force in Britain? I’m not sure that we do, and I explain why in my Daily Telegraph column today.

Let’s look at Macron, and what he’s trying to do. Reject high taxes for the rich, on the pragmatic grounds that they don’t raise revenue. Trim the size of the state (up to 10,000 civil service job losses a year), cap payments given in unfair tribunals to make employers less hesitant about hiring. All carried out in the UK by David Cameron. His second year will be even tougher: cutting pensions and unemployment benefits. All necessary reforms and (as he perhaps unwisely said in Denmark earlier this week) ones opposed by the French who are ‘resistant to change’ (his approval rating, now at 36 per cent, has fallen faster than any modern president). But his reforms are badly needed.

Macron is seen as the uber-centrist because he describes himself as ‘neither left nor right’ and this language got him elected. He likes saying he’ll bring about ‘transformation’ without defining what it means. His catchphrase is ‘en même temps’ – ‘at the same time’, a phrase he uses to string together contradictory ideas to carry along the idea that he can be both left and right. Like Cameron, he has a coalition government of environmentalists and free marketeers. Nicolas Hulot, his popular environment minister, resigned on Tuesday live on radio, saying you had to judge Macron by what he did – and the green edicts he promised are not forthcoming. And quite right too, because Macron is serious about tackling unemployment and raising prosperity, so he’ll go easy on environmental regulation.

There was an open letter written by ten environmental groups (text here) taunting Macron with the words of the radical Pierre Mendès-France: ‘to govern is to choose’. He’s quite right: Macron has been choosing, and by and large he chooses conservative reforms. The French have noticed. A poll a while ago found that Macron is seen to be ‘on the right’ by 69 per cent of French. Strip away the ‘en même temps’ and we have a conservative – whose agenda looks rather like David Cameron’s in 2011. Is this hypocrisy? Not at all. Macron is doing what I always thought the Tories should do: use the language of the progressive left to point out the success of conservative reforms. He can keep quiet about the means, and shout about the ends.

And if he’s lucky, he’ll repeat the success of the Conservatives. A difficult phrase to swallow when the party is doing its best to resemble a squabbling, suicidal mess so obsessed with Brexit that it struggles to remember what it has been up to for the last six years. But look at what Macron’s ‘radical centrism’ offers France, and it’s very similar to the Cameron reforms.  When Macron faces opposition from the increasingly hard left, and is teased for being the ‘president of the rich,’ he responds with pragmatism. ‘My predecessor taxed wealthy, successful people at a higher rate than ever before. And what happened? They left. And did unemployment drop? No.’ Cameron found the same: he cut the top rate of tax which squeezed the richest harder than any other PM. So the top 1% now pay 28% of income tax collected, a figure that ought to warm the heart of the most ardent redistributionist.

Macron’s reforms are being blamed for job losses,  allowing carmakers to sack hundreds of workers they might otherwise have had to keep on. But his pro-business mood is encouraging more investment and job creation: overall, unemployment is falling. Cameron found this too. Seven years ago, he acted to stop vexatious appeals in employment tribunals, as Macron is doing now. This weakens workers’ rights. But as Blair told the European socialist conference in 1999, the most important right of a worker is to work and protectionism policies that destroy jobs are anti-worker. Britain found that UK employers responded faster than anyone imagined to the Cameron reforms. Every time forecasts were made for unemployment, the real figures kept beating them.

Britain’s experience (and that of the Borg tax credit reforms in Sweden) ought to suggest to Macron that the 21st century economy is far more responsive to labour market reforms that current economic models suggest. Here’s Britain’s experience: forecasts, vs actual.

Macron’s public sector job cuts are relatively mild: 4,500 last year and 10,000 a year by 2020. Cameron started a process that saw 400,000 public sector jobs go – but he argued that his reforms would offset these with more jobs created elsewhere. In the end, the UK economy created eight jobs for every one shed by government.

Most of the jobs were full-time (I’ll spare you the graph on that). And tax cuts aimed at the low-paid mean that income inequality is kept at or around a 30-year low. The post-2010 years have been ones of flat incomes. But Cameron’s reforms did shape the distribution, especially the LibDem-enforced raising of the income tax threshold. So the lowest-paid saw incomes rise fastest, and the top-paid saw incomes fall fastest. Better if everyone had seen income rise by a lot more, but the shape of the below graph is progressive.

So Macron is on the right path, albeit one beaten by David Cameron. Britain has demonstrated that, even when cash is tight and salaries are flat, government reforms can fuel job creation and improve the income distribution and alleviate poverty.

This can be the hardest message for any conservative to get across: that the tough love of government cuts and measures making life easier for employers can benefit society more broadly. The idea of lower tax rates bringing more tax revenue sounds daft: how to sell it? JFK spoke of ‘paradoxical truth’, Macron says ‘en même temps’ – and he may well be vindicated by his 2022 re-election, as Cameron was by 2015. But let’s not pretend that, when it comes to policy, Macron is a pioneer. He’s doing a better job of storytelling: conveying urgency and progressive intent. But on policy, Macron is seven years behind Britain and moving at a slower pace. All told, we’re pretty sorted for centrist parties and have a decent record of tough policies leading to progressive results with the aim of a stronger and fairer society. Much more needs to be done. When Brexit is over, and the Conservatives can think straight again, they ought to return to this theme.

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