There has been a conflict in Conservative Party economic policy for the last thirty years - between conservative values of frugality and the rise of personal debt.
Mitya Pearson is studying for a Masters in Politics & Contemporary History at King’s College London.
Recent figures from the Bank of England show the most rapid annual increase in consumer credit in four-and-a-half years (3.5%), as shoppers turn to loans and credit card overdrafts to fund their spending. This serves to highlight an internal conflict inherent in Conservative Party economic policy for at least thirty years. Ever since Margaret Thatcher decreed that Hayekian free market theory would inform their economic policy, the attempt to retain traditional conservative values of cautious frugality and careful budgeting alongside this has been uncomfortable.
John Campbell notes in his excellent biography of Thatcher that:
“The central paradox of Thatcherism is that Mrs. Thatcher presided over and celebrated a culture of rampant materialism – ‘fun, greed and money’ – fundamentally at odds with her own values which were essentially conservative, old-fashioned and puritanical.”
She ‘believed in thrift’ and yet her liberal economic policies encouraged an era of ‘record indebtedness’.
In Michael Meacher’s attack on the notion that Thatcher ‘saved the country’ he highlights how in the two decades following the mid-1980s ‘private household debt rose to the level of total national income (£1.5 trillion)’, and ‘financial debt following her deregulation of the banks rose to 5 times total national income (a total of £7 trillion)’. The banking crisis itself can be seen to reflect the conflict between traditional careful money management and casino-style investment banking but, confusingly, the Conservatives wished to promote both.
This paradox continues to shroud the current conservative government who retain a penchant for extolling the virtues of thrift while encouraging people to take on debt.
Arguably, the government’s raison d’etre has been addressing ‘the most pressing issue facing Britain today’: reducing the UK’s deficit. David Cameron has consistently reiterated the need for us to ‘live within our means’ as a country; criticising Labour for its ‘reckless’ spending in government. George Osborne likes to talk of the ‘nation’s credit card’ and imposing a sober, conservative limit on Labour’s spending binge. However, as Duncan Weldon has shown, although the policies which Osborne introduced in his 2011 budget would reduce public debt by around £43bn but increase private household debt by around £245bn. Forecasters are also suggesting that his 2013 plan to help Britons onto the housing ladder will merely result in the creation of another housing/mortgage lending bubble.
Surely, such sticklers for careful budgeting should be more concerned by the mountain of debt being taken on by ordinary British people?
This paradox was also apparent in the internal party opposition to the increase in tuition fees. David Davis voted against the government because of his concern over ‘the huge level of debt we are encouraging young people to take on’. Increasing tuition fees fits the liberal economic mould; taking higher education funding further out of the hands of the state to make it the responsibility of private individuals. However, it clearly offends traditional conservative values, creating a system where any individual who wishes to go to university must take on a debt of nearly forty thousand pounds. It is a policy which normalises extreme personal debt.
The Conservative Party still strongly identifies itself with traditional, ‘small c’ conservative party ideas of careful spending and living within one’s means, however, their economic policies continue to encourage large scale personal debt.
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5 Responses to “The Thatcherite legacy is a paradoxical Conservative Party”
Richie Nimmo
This is interesting. The paradox dissolves though if you realise that the Conservative party is now dedicated neither to the ideology of economic liberalism nor to traditional conservativism, but simply to whatever ad-hoc combination of different elements of these best serves at any given moment to legitimise a project of upward (i.e. regressive) redistribution.
janlog
the Tory party is one of expedience and corporate brown-nosing. The people of the country – the ones that actually work – are the drivers of the economy, and paying them so little that they end up in debt simply to live is not a problem for them.
As for their supporters – they are either the same with identical interests, or poor fools who really do believe all the unemployed or disabled are scamming the system and driving around in Motability financed Mercs and Beamers.
Mitya Pearson
Thank you. However, while I am very much opposed to what the Conservative Party stands for, I’m not sure I share your view of the nature of the party. I think it’s a bit simplistic and frankly slightly misguided to suggest that the two conflicting economic ideas (new right/frugality) outlined in my piece remain referenced and appealed to simply as a cover for their desire for upward (i.e. regressive) redistribution.
For example, I don’t think the David Davis quotes I put about tuition fees are based on anything other than a genuine belief that debt is a problem for society. More generally, I don’t think you can dismiss all talk of ‘the market’ by party members as a way to legitimise taking money from poor people. Many people believe in right wing economic theory and I don’t think it is all that useful a line of attack to suggest they’re latched onto it to cover a desire to feather their own nest.
Finally, I’m curious as to when the party changed from having genuinely believed in ideology to where it is ‘now’ where ideology is just used dishonestly?
swatnan
The legacy is failure and has shown that a free market does not work. At every stage Govts have to intervene to support a failing mechanism, and its the taxpayer that pys up in the end for freemarket failure. There is no such thing as a free lunch or loads of profit in you pocket.
Richie Nimmo
I don’t think it’s simplistic – if you look at what elements of frugal conservatism and what elements of new right ideology are adopted and when, then the only consistent through-line is a social one; i.e. broadly the same socio-economic groups benefit and the same groups suffer every time. What I’m suggesting is that the underling truth of the Tory party is a sociological one rather than a political/economic ideological one.
I would be very cautious about ascribing ‘genuine belief’ to any Tory politician, frankly, but even if David Davis’ remark was sincere rather than calculated and opportunistic, it’s worth noting of course that he (the former state school pupil) did not become leader, and David Cameron (the old Etonian) did; it is the Conservative Party we are talking about, after all, not individual members who are not even in the cabinet and do not set policy.
As for when the change happened, I think the Tories have always been primarily about gaining power at any cost, hence pragmatic to that extent, but I would say there was a shift of sorts in the days immediately after the last election, when it became clear that Cameron and Lord Ashcroft together with the vast majority of the media had not won their desired majority, and so a deal was done – a coup really – enabling them to govern (by the nominal consent of all the Lib Dem voters) on the most radical right-wing agenda ever seen. This was in complete contrast to the centrist way in which they had campaigned and the ‘new Conservative’ tenor of their manifesto. The tripling of tuition fees, the de-facto privatisation of the NHS, the dismantling of the welfare state, the slashing of the public sector, the relentless targeting of the disabled, the removal of legal aid, the bedroom tax, the ramping up of workfare – none of this had any democratic mandate whatsoever, least of all from all the Lib Dem votes lumped in with the Tory numbers to manufacture a fantasy majority. Ideology is about legitimation, but when a coup like this is so openly and visibly illegitimate ideology hardly even comes into it – it’s simply about who can seize power.
Also, the Tories have always been more than prepared to lie through their teeth, but the systematic distortion of the circumstances leading to the 2008 financial crash – such that it became rewritten not as a systemic crisis of deregulated finance capitalism in which the state bankrupted itself bailing out the financial sector, but a crisis of overspending caused by Gordon Brown – was the most comprehensive campaign of public brainwashing that I have seen in this country. For me that was a qualitatively new level of knowing and calculated dishonesty even for the Tory party, and from that point forwards, for me, all their ideology has appeared as just so many smokescreens for an otherwise naked campaign of class war.