Michael Howard can’t help saying it’s ‘early days’. True, he’s only been shadow chancellor since September last year, appointed by the newly-elected party leader Iain Duncan Smith, but he has already made some proposals public. It’s just that for the big stuff – for example what he would do with tax, how he would achieve value for money and where the Treasury’s thinking is overall – everything is at ‘an early stage’.
It’s a position that comes with pros and cons. Commentators understand, more or less, that you haven’t had time to formulate a plan. But on the downside you cannot tell journalists what your policies are when clearly that’s what they want to hear.
Still, Howard, once a front-bench MP in John Major’s government, resists the idea that his speeches so far hark back to the past instead of working on future ideas. ‘Oh no, I don’t think that’s fair. We are only ten months into this parliament and at a relatively early stage in our thinking.’ He adds strenuously that recent speeches put forward ‘significant suggestions for change’.
But if Howard wants to see himself, Duncan Smith and the rest of the party elected to power he will have to come up with strong ideas for how they would improve the management of the economy.
Notorious Newsnight episode
This might be an unexpected chance for Howard. After serving under Major he didn’t find favour with William Hague – indeed Anne Widdecombe’s famous ‘something of the night’ description of him seemed to have put paid to his career in high office. Add to that the notorious Newsnight episode when Jeremy Paxman asked him the same question 14 times, and his cards seem to have been marked.
But he is back, and potentially in a position to grab one of the most influential posts in government. That is if the Tories can dent Labour’s popularity and start to overturn their parliamentary majority – easier said than done.
While Duncan Smith began his bid for high office by touring abroad investigating alternative ways of running a health service, Howard has also been laying important groundwork while hardly grabbing the headlines.
Indeed, it’s essential that the ground be prepared. Gordon Brown has attracted much praise for his stewardship of the economy and if Howard and the Tories are to make any headway they will need some serious arguments and some serious alternatives that they can sell to the public.
That is providing, of course, they want to fight the next election on the economy. Even if they don’t they still can’t afford to look weak on running UK plc.
So Howard has kicked off his tenure with a set of two landmark speeches.
The first cleared the decks on monetary policy and addressed the inescapable – that Gordon Brown did the right thing when he handed over control of interest rates to the Monetary Policy Committee, depoliticising the issue at one stroke.
Howard concedes emphatically, that a consensus has emerged. Though he does say MPC members don’t get enough time on the committee and that their appointment should be more transparent.
The second speech addressed fiscal policy and was more aggressive. Here Howard says that ‘low tax economies are best. They are in general, the most dynamic economies, the most innovative economies and the economies which do most to enhance the material welfare of the people who live and work in them.’
But he also says that there are times when other things take precedence and ‘the present crisis in our public services’ is ‘one such moment’.
So should he agree with the chancellor’s move to raise tax to fund the health service?
‘No, because money alone won’t do, money alone isn’t enough,’ he says, citing the examples of Scotland, where spending has increased 28% and waiting times by 25%, and Wales where similar results have been obtained.
‘What the government has said but hasn’t done is ensure that the money be accompanied by change because without change we won’t see any difference.’
Then comes the first of his ‘early days’ comments. Though opposing the rise in national insurance, he can’t say whether a Conservative government would reverse it. ‘The time for talking about precisely the tax changes we make is just before the election when we know exactly what the situation is,’ he insists.
Even though he can’t promise a reversal, Howard remains strident that the competitiveness of UK business is being harmed by the ‘tax burden’.
Howard’s fiscal speech, given to the Centre for Policy Studies at the beginning of April, makes some proposals for changing the approach to policy.
He suggests a new parliamentary body, modelled on the US Congressional Budget office, which would offer ‘analysis of spending, borrowing and taxation’. This body would establish the economic ‘facts’ on which ‘policy’ is based. He also agrees in principle that the tax system is in need of an overhaul to bring in simplification.
But while these might be areas in which professionals have a strong interest, they’ll be difficult to sell to the public as election winners. In conversation, the theme he returns to frequently is that old Tory bugbear – ‘regulation’.
If it’s still early days for a fuller policy, his constant reference to regulation seems to indicate a line of attack which could be grasped by the public.
‘It’s terribly important that the public understand that if we are to prosper as a country we have to have a business sector that’s going to win orders and create jobs.
‘Many business decisions are taken on the margin, so just a marginal advantage in price, or delivery date or quality, or whatever, is the thing that tips the judgement of the person making the order and decides whether they will place the order in this country or elsewhere. And everything depends on the success and prosperity of business, the wealth of the country, the state of the public services, everything, so it’s absolutely critical.’
On the subject of financial regulation and Enron Howard has an ‘open mind’, though it is clear that he prefers self regulation, saying that statutory regulation impedes ‘flexibility’ and would inhibit the ability of business to respond to the market.
It seems that he might react strongly if the government decided it should legislate as a result of the Enron/Andersen saga. And he has clearly taken advice that no major changes are needed in the UK.
‘The question is whether they (Enron type problems) would have been spotted earlier in the United Kingdom?
‘A lot of people think they would, so it doesn’t make a cast-iron case for change on its own.’ He adds: ‘I didn’t say it was impossible but there are a lot of people, and I don’t pretend to be an expert on this, who think that the arrangement that we have in the UK would make it much more difficult than in the United States.’
When it comes to business Howard believes the Tory party is the only one that truly understands the free enterprise system. And Gordon Brown?
‘I think in many ways he’s a very formidable man, but I think many of the judgements he makes are very wrong and not in the interests of British business or Britain as a whole.’
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