With every passing speech, it is becoming clearer that Boris Johnson's famous mission of 'levelling up' will be achieved through state intervention. This should not come as a shock to anyone familiar with the Prime Minister's political career. As Mayor of London, Johnson invested significantly in the city, exceeding his housing target by building over 90,000 new affordable homes. Indeed, Johnson invested heavily in infrastructure, raising use of the Underground to record levels.
Back in July, Johnson's 'levelling up' speech was lacklustre and bereft of innovative new policies. It seemed that Johnson aimed to achieve 'levelling up' by decentralising power and allowing regional mayors and councils to invest in infrastructure by giving them extra funding. This theme has continued since as 'levelling up' seems to have morphed into a synonym for state intervention in the North.
Since 1979, neoliberal economics has dominated British politics. But has its time come to an end? With the Conservative Party supporting a centre-left economic policy similar to that advocated by Starmer and the Labour Party (or at least the moderate part of it), has a new economic consensus swept in under the thick fog of the pandemic?
Towards the end of the Second World War, Clement Attlee and the Labour Party defeated the incumbent Prime Minister, Winston Churchill, in a landslide. In Labour's manifesto Let Us Face the Future, Attlee promised a significant increase in state involvement in social and economic issues, most notably leading to the creation of the NHS. This election significantly altered the path of British economic policy, as successive Conservative and Labour governments continued to support centre-left economics until the election of Thatcher in 1979 following the infamous Winter of Discontent in the final years of the Callaghan premiership.
The economic 'post-war consensus' of 1945-1979 did have its peaks and troughs. Wages and productivity rose. Full employment was reached in 1955 and inflation was somewhat controllable in the first two decades of its existence. Despite this though, it is impossible not to look on the economics of the post-war consensus negatively. I do not need to remind readers of the horrors of the late 1960s and 1970s. The Winter of Discontent, the falling pound, the 3 day working week, the electricity shortages... the list goes on.
Since the October 1974 General Election, no British Prime Minister had been elected on a centre-left, Keynesian economic plan. Until Boris Johnson. Now, with agreement across both parties, a modern interpretation of those same, Keynesian principles will dominate British politics over the coming decade. It is unlikely that we will see a return to the dark days of the 1970s, but the recent energy crisis and the ensuing inflation will have reminded the older generations of days gone by.
Johnson's economic plans do not calm these worries. Unless Johnson's plans for wage rises are matched with increased productivity, inflation will continue to rise. Productivity will be hampered, not aided, by over-regulation and the shelving of planning reforms. Instead of a high wage economy, Johnson will create an illusionary, unsustainable one that is reliant on the state and not the market.
Just like the post-war consensus, the post-COVID consensus may lead to higher wages and an increase in affluence in the first decade. But it is unsustainable and it is possible that in decades to come, we will pay for the short-termist attitude of our political leaders now through higher prices and less disposable income.
For the 'Global Britain' project to take off, this economic policy must work. In the continually advancing digital age, it is imperative that Britain is not left behind in the growing markets of the Far East. History will decide whether it was right.
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