The entrepreneur plays a vital role in the economy. They identify gaps in the market, find new ways to supply consumer demands, and deliver them competitively. They are the engines of economic progress and of improving productivity. And the reward for successful risk-taking is profit.
The political entrepreneur broadly has the same function. They identify something that the status quo is failing to address and speak to it relentlessly. They are the vital force in a representative democracy, because they ensure that those who govern remain connected to those who are governed. Their reward is paid not in profit, but in the currency of votes.
In both markets and politics, the entrepreneur is the harbinger of creative destruction. No business, and certainly no political party, has a right to a particular level of market share. It must be earned through industry, through innovation, and on merit. Those that innovate and adapt thrive and survive. Those that fail to create are destroyed.
Nigel Farage is clearly one of the most gifted political entrepreneurs of his generation; perhaps the most gifted. And he is beginning to reap the rewards of his close attention to sentiments that have been building amongst the British public for years, but which have inexplicably gone unaddressed by the main parties. His own political vehicle is now winning votes, winning councils, and threatening to win hundreds of parliamentary constituencies whenever the next General Election takes place. As Reform brings new ideas and policy proposals, new products to the public, they also threaten the obliteration of the Conservative Party as the market incumbent on the British right.
How do Conservatives respond?
The next General Election, in all likelihood, will be fought on immigration. The public has been mis-sold policies and proposals about our borders for too long, and their dissatisfaction with the present levels of population churn is too great for it to be otherwise. Companies that fail to listen to their customers are destined for the dustbin; the Conservative Party should not make that mistake again.
Yet competitiveness in this area seems to me a necessary condition for electoral success next time around, rather than a sufficient one. While Reform wins out as the party with the most credibility on this particular issue with voters, there are others where they display considerable vulnerabilities.
If the Conservative Party is to survive, it needs political entrepreneurs who can see that the big gap in the market left by both the Labour Party and Reform is on the economy. None of the Conservatives’ competitors have a coherent answer to why the purchasing power of household incomes is failing to improve, why the Government is having to take an ever-growing proportion of the worker’s salary in tax, or why all the while the quality of services that the state is providing is getting worse and worse.
Reform’s economic policies constitute a patchwork of confusion
Of course, these things intersect with immigration, our dependence on which goes a long way towards explaining the low levels of investment, low productivity growth, and the broader transfer of capital and resource from productive to the unproductive sectors which defines our economic model. But immigration is not the sole driver of our economic inertia — an inertia which voters care deeply about because it affects them in a proximate, tangible way.
Reform’s economic policies constitute a patchwork of confusion. It has shifted its stance in a social-democratic direction, principally because they think their voters are more statist when it comes to the economy. Its core supporters, as Robert Shrimsley points out, are dependent on state-funded social services. It has been highly vocal in arguing for Winter Fuel Payments to be restored and is supportive of wider state ownership in industry.
Yet at the same time, Reform has promised a bung of tax reductions which sum to around £200 billion. One of its biggest cuts involves increasing the personal allowance to £20,000, which will in practice take thousands more people out of paying tax at all. As a package, what it is effectively advocating for is greater fiscal irresponsibility: that more people should get to benefit from state largesse without having to pay into the system. In the long run, narrowing the base will lead inevitably to a greater burden on those that do pay.
Despite the fact that it draws the causal relationships between mass immigration and low productivity, Reform has offered next to no serious thought about how the UK would manage a radical reduction in immigration economically. How would we get businesses to boost investment instead of relying on an abundance of cheap labour? How can we move the public sector off its own addiction to hiring foreign workers with lower wage demands? The answers to these questions are yet to be given but providing them will be essential for any party hoping to actually deliver in government.
Perhaps the most muddled aspect of Reform’s economic offering, however, is its proposals on energy. Back in February to widespread derision, it committed to increasing taxes on energy businesses and farmers, banning new energy infrastructure, and increasing the burden of red tape. With the British public having suffered from high energy prices for years, Reform now wants to block efforts to reduce household bills. Farage might believe that green energy measures are unpopular. But nothing is more unpopular than price inflation.
It is here, on the economy, where the gap in the market exists for a new Conservative offering. One that supports those who generate the income upon which government spending depends, and which believes in greater economic responsibility, not irresponsibility. One with a real plan behind it for how we can ween ourselves off high levels of immigration. And one that provides young people with opportunities to lead prosperous lives independent of the state.
The Conservative Party needs to restore its credibility in a range of areas to regain the trust of the electorate, and it needs to reunify a party with its own ideological schisms. But the best form of defence is attack, and there is much to attack in both Reform and the Government’s economic proposals. Conservative political entrepreneurs need to target these weaknesses, and find innovative ways of doing so.
