A new narrative is needed to combat inequality and cut the deficitby Will Hutton / March 10, 2015 / Leave a comment
This is a response to Ferdinand Mount’s critical review of Hutton’s latest book
Britain is moving into uncharted economic and political waters. This May’s general election is likely to deliver another result in which again neither of the two main parties command a parliamentary majority—a degree of political stalemate unmatched in modern times. Representation of both in Scotland is likely to be minimal, with its eventual secession from the union all too possible. Britain is at odds with itself and directionless. The future seems threatening rather than full of opportunity. Thatcherite and socialist certainties alike are exploded.
The collapse of socialism is an old story. It was the blind Thatcherite trust in the efficiency of markets and the inability of profit-seeking firms to make mistakes that contributed to the banking crisis seven years ago as bank balance sheets ballooned to an impossible size, only saved from implosion by the state that they so distrust. It is the Thatcherite indifference to the character of ownership—as long as the owner is not the British state—that has legitimised the extraordinary sale of public assets and private companies abroad over the last generation. Britain used to own more of the rest of the world than it owned us. No more—even our international investment position is now in deficit.
The country boasts a comparatively small number of globally significant companies: few of the many fledgling entrepreneurial start-ups scale up to something larger. The growth of inequality, increased social immobility, weakening productivity, over-stressed and inadequate public services cast lengthening shadows. The fall-out from the banking crisis has been the chief cause of wages stagnating for nearly a decade. The reaction to a large public deficit created by the collapse of tax revenues in a recession induced by the disfunctions of the private sector has been to cut public spending by an unprecedented degree. There has been a prohibition on raising taxes to play their part in the necessary adjustment.
Don’t envy Germany
Our standing as a great power has never been more in doubt. Militarily Britain has suffered embarrassing reverses in Iraq and Helmand, partly caused by cuts in our defence capability. The right, too ready to blame…