Is the UK economy at a new moment of sea-change?

May 16, 2019
Image copyright PA
Image caption Mrs Thatcher outside Downing Street in May 1979

Forty years ago this week Margaret Thatcher came to power. At that time there was a sense of broken economy, broken politics, over-powerful trade unions and politicians who seemed only capable of managing decline.

Fast forward to now and we again see chaotic politics and widespread sense of economic disaffection. So are we facing another sea-change moment for the UK and its economy?

During the 1984 miners’ strike the colliers of Shirebrook in Derbyshire were divided over the industrial dispute with Mrs Thatcher’s government. The colliery’s long gone and it’s now the site of a Sport Direct warehouse.

Of course, Sports Direct has brought thousands of jobs to the town but the testimony from one warehouse employee, Sam – it’s not his real name – shows just how little power some UK workers have.

Image caption The old colliery site in Shirebrook is now the site of Sports Direct’s warehouse

He describes toiling alongside colleagues who don’t have a permanent contract despite 10 years of continuous service: “We’re asking to be treated like humans, like good workers, with respect.”

Sports Direct did not respond to BBC requests to comment.

Sixty miles across the Peak District is Oldham, named by the Office for National Statistics not long ago as the most deprived town in England.

Its textile industry fell into decline in the mid-20th Century with the last mill closing in 1998. The end of textile processing has seriously depressed the local economy.

Gillian Holt, who has run a beauty parlour in Oldham since 1980, tells me how things have changed: “When I first came here it was thriving – we had a florist, baker, jeweller, lovely clothes shops.

“We have none of those now. We have a lot more charity and bargain shops. It really has changed quite dramatically,” she says.

Image caption When I first came to Oldham “it was thriving” says Gillian Holt

Some say that change is now coming for Sam, Gillian – and for millions of workers, students, families and pensioners across the UK coming.

“No one is advocating the neoliberal economic policies that they were nine years ago. Even this government has gone quiet on it,” says Labour’s shadow Chancellor John McDonnell.

“Tax cuts for corporations and the rich, trickle-down economics, privatisation, outsourcing, the market will always know best – all of those elements are now being questioned. Why? Because people know the system hasn’t worked for them.”

Opposition politicians always say it’s time for a change, but a surprising number of people across the political spectrum agree.

“It looks to me the message from the British public is: enough,” says Jim O’Neill, who was a Conservative Treasury minister between 2015 and 2016.

Image caption “Now as in 1979 the conditions are ripe for quite significant change,” says Diane Coyle

“The ideas are changing,” says the economist Diane Coyle of Cambridge University. “That Thatcherite sense of people making choices as individuals, the private sector being dominant – the character of the economy has changed making that much less valid an assumption.”

Even some government ministers agree radical change is in the air.

“I do think there something is happening, something big,” says the Chief Secretary to the Treasury Liz Truss. “We went through a few years – the Blair years, the Cameron years – where it was all about managerial politics.

“Now we are having a more fundamental debate about our economy.”

Perhaps you could call it the 40-year itch, as it is now four decades since Margaret Thatcher led the Conservatives to that general election victory in May 1979..

At the time, the defeated Labour leader James Callaghan summed it up thus: “There are times… when there is a sea-change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of.

There was a popular yearning for a radical break and even Mrs Thatcher’s opponents felt it.

Image copyright Reuters
Image caption “We’ve got to transform society”, says Labour’s John McDonnell

“I was a young trade union official. On the doorstep you knew that people wanted some form of change,” recalls Mr McDonnell.

That election victory has gone down in history as a fundamental rupture of the post-war consensus. Out went “incomes policies” for workers, central planning and full employment goals. In came deregulation, free markets, tax cuts and privatisation.

Fast forward to the present days and we again find chaotic politics and a widespread sense of economic disaffection. So is this another pivotal moment for the UK?

Is Britain working?

“People have got used to the idea that wages rise year by year but for a 10-year period following the crash of 2008 they saw no increase in their living standards,” says Lord Heseltine, a minister in Mrs Thatcher’s government in 1979.

“That created a deep sense of frustration, particularly outside the honey pot of London and the South East.”

Image copyright PA
Image caption For 10 years after the 2008 crash, people saw “no increase in their living standards,” says Lord Heseltine

That frustration has driven support for an array of radical policy ideas, from a Universal Basic Income, a four-day week, to a jobs guarantee.

Some see the future as major expansion of the co-operative movement, where an enterprise is owned not by shareholders but its workers. “The conventional workplace, it’s not very fulfilling,” says Kayleigh Walsh, part of the Outlandish tech co-operative in London.

Frances O’Grady of the Trade Union Congress advocates a restoration of trade unions’ power and influence to deal with the exploitation of the rapidly expanding gig economy: “Young workers are telling us that they want the right to guaranteed hours. It’s a basic right that you should be able to build a life on a decent steady job.”

But Liz Truss sees a danger in over-regulation of businesses and insists rising self-employment and the gig economy should be regarded as a liberation, not a prison.

“We’ve never had a more capable, more informed, group of citizens in this country. What people want is to make the decisions themselves – they don’t want someone in Whitehall telling them what to do.”

Image copyright Reuters
Image caption “What people want is to make the decisions themselves”, says Liz Truss

What all seem to agree on is that the future of work in the 21st Century could and should involve much more autonomy for individual workers.

“The flexible nature of work is a big plus and we should embrace it,” says former governor of the Bank of England Mervyn King, who adds that he now regards himself as part of the gig economy.

One nation?

If there’s a new consensus on regional policy it’s that there should be a radical devolution of power to help “left behind” cities and towns across the UK catch up – places like Oldham, where Gillian Holt lives and works.

“Whatever the qualities and talents of people making decisions at the centre, very often what motivates them is political considerations, or their own career, which have nothing to do with the local areas about which they are making decisions,” says Lord King.

“I do think we are a overly centralised country. I think the ultimate devolution is to people themselves. I always believe that people make the best decisions about their own lives,” agrees Liz Truss.

Image caption The UK needs to devolve power to help “left behind” towns like Oldham, argue many

If this comes to pass, it will mean more decisions on education, skills training and transport being taken by local politicians rather than those in Westminster.

Tax and spend

After almost a decade of public sector austerity, it’s widely felt that our public services need more funding.

“It’s got to be the first time in 20 years we’ve seen more than one opinion poll showing the British appetite to pay taxes seems to be changing,” says Lord O’Neill.

“It looks to me than sensible governments should consider higher taxes, especially to prioritise public service investment.”

And it’s not just taxation but the broader role of the state where attitudes seem to have shifted.

Extensive polling for the Legatum Institute in 2017 found strong UK public support for statements such as “the pay of execs should be capped” and “government needs to do more to regulate how businesses behave”.

Image copyright Getty Images
Image caption Will the UK embrace free-market fundamentalism or a much more equal society, wonders Frances O’Grady

It found strongly negative connotations in the public mind with “capitalism” and a more positive impression of “socialism”.

At a crossroads

But though Frances O’Grady of the TUC thinks the right way forward for the country is clear, she admits she is not sure which way the country will actually break.

“Is it going to be that slash-and-burn vision that some backbenchers on the right of the Tory party would like to see? Free market fundamentalism, remove the last remaining rights of trade unions and workers? Or is it going to be a positive vision, where we’re looking for a much more equal Britain?”

“It will be a revolution,” says a confident Mr McDonnell. “We’ve got to transform society. What we’re talking about is a new economy that we want to create – much more democratic at every level”.

Labour promises higher taxes on the wealthy, an expansion of public investment, the re-nationalisation of certain utilities and moves to give workers a stake in their firms.

But does this add up to a genuine new philosophy of how our increasingly digital economy should work? For some that remains the missing piece of the jigsaw.

“Now as in 1979 the conditions are ripe for quite significant change,” says Diane Coyle. “The difference is that at that time there was a coalescing of certain ideas which gave Thatcher and her government a clear idea of what they wanted to do.

“No one in politics now has the vision of what that ‘post post-industrial’, very unequal, economy does now to deliver lasting prosperity for everyone around the country.”

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Read more: https://www.bbc.co.uk/news/business-48069016