More striking than any specific policy is the philosophical shift the manifesto signals about the role of state intervention in the modern economy. The repeated emphasis on the “good that government can do” will make many liberal Conservatives, past and present, feel uneasy. Yet whilst details remain thin on the ground Demos broadly welcomes the recognition that Government has a responsibility to promote effective corporate governance, strong consumer protections and economic rebalancing. Ideology should always be less important than individual empowerment and social justice.
Fiscally, what has not been said is more significant that what has – other than corporation tax and VAT the Government has not set out its long-term tax intentions. More disappointingly, the manifesto defers questions about how to reorganise our labour market, employment legislation and tax system around the 21st century experience of work until after the election. These number amongst some of the biggest challenges facing the modern economy – leaving them unanswered is bad for democratic accountability.
On investment we support the Government’s long-term ambition to raise R&D to above the average of other OECD countries but would encourage it to aim higher. Investment in scientific and technological innovation is absolutely critical for the long-term competitiveness of the modern economy – Britain should aspire to leading the pack. Meanwhile, On infrastructure, we welcome the commitment to target investment on boosting productivity. However, we would also like to see an explicit recognition that both the UK Shared Prosperity Fund and the National Productivity Investment fund should be used to promote regional economic rebalancing.
Modern Industrial Strategy
For this reason we also support the plan to move government agencies and departments out of London and the South East; and the acknowledgement that combined and local authorities must play a crucial role in developing a modern industrial strategy, through local industrial strategies. An ‘economy that works for all’ is a noble aim but public policies that ‘work for all’ will naturally vary across an economically diverse country – what might work for all in London, is not necessarily what works for all in the North East.
Finally, we are broadly supportive of moves to create British sovereign wealth funds. However, we believe this also represents a clear opportunity to involve citizens and communities in shaping the fund’s objectives – putting both democratic and economic power in the hands of ordinary people.