Tax and spend could fracture Johnson’s Red Tory coalition

As a small boy, Boris Johnson confided to his sister that his ambition in life was to be “world king”. Global domination may still be a distant prospect for the UK Prime Minister, but, at home, at least, he is indeed master of all he surveys.

For the last decade, British governments have had slim or non-existent majorities, a recipe for weak administrations unable to satisfy their supporters and vulnerable to parliamentary rebellions, as was seen so starkly over the Brexit withdrawal Bill, where small groups of pro- and anti-EU diehards were able to frustrate Theresa May’s plans for a softish Brexit.

None of that applies to the Johnson regime. He has a Commons majority of 80, the biggest Conservative one since Margaret Thatcher’s 1987 triumph. He has the numbers to force through his own version of Brexit, notably harder than the May version. He is no longer vulnerable to the parliamentary ambushes that so discredited the May administration and brought the Conservatives to their electoral nadir of under 9 per cent of the vote in the European elections of 2019.

More than that, he has succeeded where Thatcher, David Cameron and May all failed – uniting the Tories around a European policy that commands the support of the general public. For 60 years, the Conservatives have been deeply divided over the EU and British membership of the European club. Thatcher, Cameron and May were all destroyed by internal divisions over the issue. Now, after every Conservative candidate was required to sign up to Brexit in their party’s manifesto, Johnson can justifiably claim to have put the issue to bed.

This is all the more remarkable given that the rebellion that brought down May – and propelled Johnson to Downing Street – was only six months ago.

Meanwhile, his political opponents have been put to flight. Labour has been reduced to just over 200 seats – its worst result since 1935 – and the centrist, pro-EU Liberal Democrats have been totally marginalised. It is hard to spot a cloud on the Prime Minister’s blue horizon. It could be 10 years before Labour stands a chance of again taking power in the UK.

Yet the fruits of every victory contain the seeds of later defeat. Nowhere is that more true than in the realm of economics.

Johnson won the election because he was able to stitch together a new coalition of voters. Southerners who voted Leave in the 2016 referendum flocked to his standard as did many others who voted Remain, partly because they thought the will of the people, as represented by the 17.4 million votes of Leave had to be respected and partly because they were petrified by the prospect of a neo-Marxist government under Jeremy Corbyn, committed to widespread nationalisation of industry and a spending spree that some calculated at over £1 trillion a year.

This group was bolstered by Labour Leavers in the North and the Midlands who were swayed by Johnson’s promise to Get Brexit Done.

So the Prime Minister finds himself presiding over an unusual and potentially unstable group of voters – some 44 per cent of the electorate. They are united over Brexit – at least in broad terms – but not economics.

Southern Tories, who cut their teeth on the small state, low tax, tight spending policies of the Thatcher era of the 1980s, find themselves in bed with working class Labour voters from gritty provincial towns who pay relatively little in taxes and favour a bigger, higher spending state. Johnson’s challenge is to keep this Red Tory alliance of voters together.

Under Thatcher, taxes were cut, and spending squeezed to under 35 per cent of gross UK national output. Today that figure is in the high 30s and set to go even higher under Johnson’s Tory manifesto, which pledges an extra £35 billion for the National Health Service, many more police and a big boost to infrastructure spending (railways, roads, bridges, new hospitals, regional development grants, and so on). His spending plans (which commit the Government to balancing the budget for day to day spending by the mid-2020s) are nothing like the reckless promises made by Corbyn, but they still involve big increases and limit the scope for another Tory favourite – tax cuts. Already, Johnson has cancelled a promised corporation tax reduction.

The question is obvious – can the Prime Minister reconcile pressure for spending increases in the north with demands for low taxes in the south? And if he presses ahead with his ‘grand projects’, such as HS2 or the proposed MIT of the North to boost research and development – will that jeopardise his support in the south, where productivity is so much higher and much of the country’s wealth is created?

Thatcherites, and there are still some left, are sceptical of big state-funded projects, believing that an expanding state crowds out the private sector, where genuine wealth and employment are created. Individuals, families and firms are far better at spending money wisely and productively than the State, whose track record in the economic sphere is lamentable – just think of the 1970s. If Britain wants healthy economic growth in the 2020s, raising employment and living standards, it is better advised to adopt a low tax, low spend economic model rather than the EU model where spending as a percentage of GDP averages 46 per cent, rising to 50 per cent and more in Sweden, Denmark, Belgium, Finland and France, where it tops out at 56 per cent.

Mention of the EU model brings us back to Brexit. As talks about a free trade deal between the EU and the UK get under way this year, a key bone of contention is whether the UK aligns itself with expensive and job- destroying EU regulation or insists upon its right to diverge and set its own rules for business.

Johnson has insisted on the right to diverge. But will his Red Tory coalition of voters allow him?

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