Speech to Policy Exchange
"Changing the Conservative Party to meet the challenges of the 21st Century"
"Policy Exchange was established after the 2001 election defeat to promote change in politics. Certainly, the Conservative Party must change. I am therefore very grateful to be invited to address Policy Exchange today, to answer the question: what is it exactly that we Conservatives need to change?
The Conservative debate so far
Much constructive thought has been contributed to the Conservative debate since the election, but despite these efforts, we are in danger being distracted by differences over style rather than substance. In particular, the supposed divide between modernisers and traditionalists is superficial. This divide may entertain Westminster villagers, but it alienates real voters, because neither position says much about how we will actually govern.
The idea that we must choose either to widen our appeal or to return to Conservative core values is of course ludicrous. Most of us are both modernisers and traditionalists.
I was one of the first Conservative MPs to vote to equalise the homosexual age of consent at 16, long before such views become a political fashion statement, but I also believe the Conservatives need a distinctive philosophy - a commitment to freedom and personal responsibility; to free enterprise, family, community, nationhood; and to care for the vulnerable - a philosophy that draws on Thatcher, Churchill, Disraeli and Burke. Those great figures personify a synthesis of the modern and the traditional; of the old and the new; of continuity and change; of radicalism informed by a genuine sense of our history.
Many contributions to the present Conservative debate have seemed vacuous and clichéd, not just because they are positioned around a futile division between so-called mods and rockers, but also because people are avoiding the real question about what the Conservative Party is for.
Our recent election campaign hardly addressed any of the long-term challenges of our time: pensions, energy, the environment, or international development. Above all, the failure to address the European question means we failed to address fundamental questions about Britain's place in the world or how politics is failing voters. It is this denial of the real issues that leaves us disconnected and dysfunctional.
To be Conservative, this must change before people will feel we stand for something of value again.
The banality of much of today's political discourse underlines my central contention that neither the British political system of government nor the Conservative Party is prepared for what faces the British people at the start of the 21st Century. The time is long overdue for a reappraisal and renewal of our democratic institutions and politics. This in turn requires the Conservative Party to undertake a re-evaluation of our history, of Conservative principle and of how we will best serve the national interest. Today, I set out three great challenges our nation must meet and three essential Conservative truths to help us meet them.
The rise of the new Asia
The first challenge is the rise of the new Asian super-economies, which might equally be described as the sinking of old Europe. My proposition is that unless the UK is to accept a protracted period of economic and political decline, including a decline in our ability to sway our key allies, particularly the United States, there must be a complete re-evaluation of Britain's place in the world and how we are to maintain our trade, our competitiveness and our international and military influence.
Global economic power is shifting away from what we used to call the G7 towards the new emerging economic superpowers. China will become the largest economy in the world, measured by GDP, by 2050, with India not far behind. Asia represents a massive low-cost challenge to 20th Century Western economic hegemony. Together China and India will out-produce the entirety of the G8. Asia is educating their workforce. 300,000 engineers graduate in China and India every year, five times as many as in the United States.
The pace of technological change is endlessly increasing, but the new economies are catching us up. They are moving into high added value activities such as software development, financial services, pharmaceuticals and design. Just imagine what opportunities could be created if the great British establishment devoted as much diplomatic energy and effort to relations with these countries, as is currently devoted to the introverted obsession with the EU.
While Asia is on the rise, Europe is in decline. The European Commission itself projects that the EU's share of global trade will halve by 2050 . This in part reflects significant demographic decline, but also a failure to liberalise markets effectively. The so-called European social model locks in high regulation and rigid labour markets.
There are 19 million unemployed in the EU. The Lisbon Agenda was launched in 2000 with the express intention of making the EU the most competitive developed economy by 2010, but five years on, there is no prospect that this will be achieved.
As the EU nations decline in economic importance, so will their diplomatic and military influence. The US is determined to remain the world's pre-eminent power, but there is no intrinsic reason why the EU or its members will remain important. China and India both have nuclear weapons and are increasing their military spending on advanced weapons systems, but European military spending is declining.
Both China and India are beginning to take a more active role in international diplomacy. There is also increasing talk now of a further Asian country being made a permanent member of the UN Security Council - Japan and India are both supporting each other for membership. The idea that the EU could become a global force is a fantasy.
The UK managed to reverse economic decline during the 1980s, but now the trends are all bad. The World Economic Forum's measure of global competitiveness shows that Britain has fallen from 4th to 11th between 1998 and 2004.
British business complains that the EU is damaging the British economy by raising costs, by adding more regulation. And despite strong UK economic growth, the OECD forecasts UK government spending will exceed 45.2 per cent of GDP next year, up a staggering 8 per cent in just five years. It is astonishing that such a rapid deterioration was not a central issue at the recent election. The UK is deserting the lower tax-and-spend policies of its other English-speaking competitors (such as Ireland, Australia and America). We are converging with EU un-competitiveness.
The shredding of the social fabric
The second challenge is not from the world changing outside. It is the shredding of the social fabric of our nation from within. Despite the inherent resilience of the British people and our present prosperity, there is a decline in our self-confidence as a nation. Our society seems to be characterised by a fatalism about lawlessness and contempt for private property, failing schools, long waits for NHS treatment, state dependency enforced by means tested benefits and tax credits, illegal immigration, bureaucracy and waste. Decent people, above all in the inner cities, feel their aspirations crushed by failed government initiatives and family and societal breakdown. They are powerless to uphold their values, while the police seem resigned to drugs and the yob culture.
We Conservatives presented some limited proposals at the last election, but gave no impression that we wanted to change the basis upon which politics is conducted. In fact, much of the present debate in the Conservative Party reflects the political culture that is afraid of breaking free from a post-Thatcherite, Blairite consensus. A real reduction in the burden of tax and regulation, real choice in education and health for all, zero tolerance policing, the restoration of respect for authority in schools, on the streets, and in the family, seem as far away as ever.
People know that the real challenges facing our country are not being addressed by government and politicians and so are becoming alienated from the democratic political process. There is also an increasing sense of defiance, manifested by the decline of the main parties and the rise of extreme interest and campaign groups, like the BNP, who purport to offer solutions to challenges that the politicians are avoiding. An increasing number of voters simply despair of the established political elite and our politics. There is a breakdown in the relationship between the people and the power exercised by politicians in their name.
The thinning of the Constitution
This is the third challenge, which Ferdinand Mount once described as "the thinning of our constitutional texture" - the steady accretion of power by the executive, and by supranational bodies, at the expense of Parliament and local government.
The traditional understanding of our constitution is that Parliament, in public debate, makes statute law, the judiciary are responsible for interpreting it, and the executive is bound by both. Overall, Parliament is sovereign. However, the British constitution no longer functions in this way. Parliament is less independent of the executive than at any time since the Civil War. The government today has complete control of the parliamentary timetable in the Commons and plans to take control in the Lords. Even the appointments to select committees are controlled by the whips.
Both main parties control more tightly than ever those who are chosen as parliamentary candidates and the whips are able to threaten MPs with deselection to help enforce discipline amongst the parliamentary parties. Burke wrote in his famous letter to the electors of Bristol that an MP must be a "representative" not a "delegate", but he can never have imagined that we would become puppies of party apparatchiks.
There has been a huge growth in delegated legislation that is barely scrutinised by Parliament at all. This leaves huge areas of law to the discretion of ministers. Moreover, with the ratification of successive European treaties, the executive has increasingly become a legislator in its own right, since ministers attend the EU Council of Ministers to enact EU legislation which is binding upon national parliaments. Parliament has lost control of the law and of the courts in matters vital to our national interest, including employment law, human rights, immigration, asylum and visas, and, of course, trade, which amounts to some 80 per cent of our foreign policy.
The present government have further unbalanced the UK constitution. They have not only increased the pace of centralisation in England through endless target setting, initiatives and controls, but their programme of constitutional reform has been piecemeal and disjointed. The different schemes for devolution to Scotland and Wales have entrenched unfairness in the constitution against the English, whose MPs cannot vote on education or health in Scotland, while Scots MPs have forced through student top up fees and foundation hospitals in England.
The so-called Human Rights Act encourages the British courts to challenge Parliamentary supremacy, without any acknowledgement that this will promote the politicisation of the judiciary, or undermine national laws considered indispensable to the national interest, like anti-terrorist legislation. The Lord Chancellorship, as the guarantor of judicial impartiality for centuries has been replaced by a government quango. The hereditary peerage is to be abolished by statute forced through by the government's Commons majority, before considering what might be put in their place to maintain the independence of the upper house, or even what the proper role of the House of Lords should be. The government was at one stage embarked on consideration of an alternative electoral system for the House of Commons, as though the matter were isolated from all these other questions.
The gradual ascendancy of the executive over Parliament has been mirrored by the centralisation of power in Whitehall over the past century or more. This process was dramatically accelerated by the consolidation of the post-war social democratic consensus established by the Attlee government of 1945, which placed the central state as the great equaliser at the heart of everything; the master not the servant; preoccupied with equality, at the cost of efficiency and local diversity.
This was the era in which Douglas Jay coined the phrase, "the gentleman in Whitehall really does know better" . Paradoxically, though Margaret Thatcher's government deregulated much of the economy, she strengthened the central state to achieve her ends, particularly over local government, which has been virtually nationalised. Aspects of our daily politics remain stuck in a 1940s time warp.
Our system of government today has become a dead hand. The Westminster based elite of politicians, journalists and commentators has a blinkered view of what constitutes political debate. Politics itself has become a closed system, hostile to creative solutions and new ideas.
The rise of the new Asian powers, the shredding of the social fabric, and the thinning of our constitution together present the great test for our generation. How shall we meet it?
Strength from Conservative history
The strength of the Conservative Party lies in our history, from which we can draw three essential Conservative truths: about the relationship between people and institutions; about principle and national interest; and about adapting to change. This is what it is, to be a Conservative.
Disraeli set out the relationship between people and institutions in his Crystal Palace Speech when he described how the 1867 Reform Act "was founded on a confidence that the great body of the people of this country were 'Conservative'". He continued -
"When I say 'Conservative', I use the word in its purest and loftiest sense. I mean that the people of England, and especially the working classes of England, are proud of belonging to a great country, and wish to maintain its greatness… that they believe, on the whole, that the greatness… to be attributed to the ancient institutions of the land."
While Disraeli also argued for the "elevation of the condition of the people" and I see no lack of commitment to social justice in today's Conservative Party, Disraeli was not just a social reformer, and Conservatism is about more than freedom and social justice. The essence of Conservatism is expressed most fundamentally through our institutions and politics.
Why is it that we find that so many people subscribe to Conservative values, but refuse to vote Conservative?
This is because we have made little attempt to address the breakdown between the people and their institutions, or that we believe, on the whole, that the source of our greatness is - or should be - our institutions, which guarantee our freedoms. The first essential truth is this: to be a Conservative is to appreciate that the restoration and maintenance of our constitution is absolutely fundamental.
Second, Edmund Burke defined the Conservative Party as "a body of men united by a common principle that is in the national interest upon which we are all agreed" . Without agreement on principle, there is no reason for the Conservative Party to exist. Those who cite the second half of the 20th Century as a vindication of pragmatic Conservatism are missing the wood for the trees. Certainly, a strong tradition of Lockean empiricism underpins what Butler termed 'the art of the possible' , but so-called 'practical Conservatism' cannot provide the motive force for national leadership, and this period was no triumph for pragmatism over principle.
When Winston Churchill warned, at Fulton, Missouri in 1946 , of the division of Europe by the 'iron curtain', he set out post-War Conservative principle with ringing clarity - in what he called a "strategic concept" for the whole of the free world:
"nothing less than the safety and welfare, the freedom and progress, of all the homes and families of all the men and women in all the lands…".
He cited "freedom and the rights of man" as the "title deeds of freedom which should lie in every cottage home". This was a restatement of Burke's 'common principle' in a form relevant to the challenge of the new Soviet threat. In the struggle to protect Western freedoms, Conservative governments were rightly prepared to make any sacrifice, even if it meant using nuclear weapons. Such a definition of the cause of freedom remains as relevant today, as we consider the threats from rogue states, weapons proliferation and international terrorism. The second essential truth is this: to be a Conservative is to commit to principle rather than pragmatism.
The third is again expressed by Disraeli, who warned how "Party has a tendency to warp the intelligence" and no politician "does not find some difficulty in emancipating himself from the traditionary prejudice on which he has long acted." To be a Conservative is to grasp the truth that principle might never change but national interests certainly change and therefore policies have to change too.
Events have frequently shown that whenever policies owe more to past habits than to the national interest, Conservatives become divided and incapable of sustaining coherent government. Peel rightly turned against his own policy of agricultural protection in 1845, but his conversion was too late to save the Conservative Party, which clung to the outdated policy of protection and was out for most of the next generation.
150 years later, the end of the Cold War saw the collapse of Communism abroad and the rise of New Labour at home, but, as in the 1840s, too many Conservatives failed to emancipate themselves from the traditionary prejudice upon which they have long acted. The reason why we still look like a 1980s relic to so many of our voters is down to a great issue which goes to the heart of our democracy and how we are governed. Having roused such passions in our party, it hardly dare speak its name in some Conservative circles.
Conservatism, the national interest and Europe
"The issue is Europe", declared Michael Heseltine, when he announced his intention to challenge Margaret Thatcher in 1990.
Two years earlier, while working in the City, I had lunch with a friend, Oliver Letwin, who was then working in the privatisation unit at Rothchilds. The Conservative Party and Margaret Thatcher appeared to be at a zenith of success and power, yet he despaired of our future. He told me that there was to be an intergovernmental conference to draw up a new European Treaty in 1991 and that Geoffrey Howe and Margaret Thatcher were irreconcilably divided about the issue. This, he said, would lead Geoffrey Howe to resign, the party would split and the result would be years in the wilderness of opposition. Oh! How right he proved to be!
Later that year, Margaret Thatcher, with the same prescience which Churchill demonstrated in 1946, saw that the tide of history was on the turn. The cold war was virtually over. Perestroika in Soviet Russia was transforming both Russian society and Russian relations with the rest of the world. The British national interest demanded a change of policy.
Speaking at the College of Europe in Bruges in September that year, having supported the Yes campaign in 1975 and having pushed through the Single European Act, Mrs Thatcher turned upon the policy of her own Party, just as Peel had done in 1845.
She set collision course with her EC counterparts and with her some of her most senior ministers when she argued that Europe should preserve "the different traditions, Parliamentary powers and sense of national pride in one's own country; for these have been the source of Europe's vitality through the centuries." Like Peel, she was deposed by her own Party. This fatally delayed a proper revision of our policy which the national interest demanded and even now, we remain shackled to our past.
Long after the end of the Cold War, some Conservatives are still too afraid to address this issue. The party's European policy has certainly progressed, but the rejection of the EU Constitution by the peoples of France and Holland presents us with both an opportunity and a duty finally to shake off the shackles of our past.
The national interest demands a relationship with our EU partners based on trade and cooperation between democratic sovereign states, instead of supranationalism. We cannot therefore avoid a fundamental reform of the existing treaties. If necessary, the Conservative Party must be prepared to assert Parliament's supremacy to break the deadlock. We should also make it clear to our EU partners that any revised terms of membership will be subject to a referendum.
If we cannot now frame a genuinely Conservative policy for Britain in the EU, then we will never be able to secure the freedom for our nation to address the three great challenges I set out earlier (and anyone who describes this as 'anti-Europe' has failed to understand that the EU needs to change too).
21st Century Conservatism: the free nation
So Burke's 'common principle' for the Conservative Party at the start of the 21st Century must address freedom, democracy and our position in the world. People want more freedom, not more government. Our nation needs its freedom to trade and to secure her position in the world. We must agree that strengthening our institutions to secure the freedom of the nation and the people is the principle at the heart 21st Century Conservatism.
For we must not only restore the freedom of schools, hospitals, businesses and charities. We must give back real freedom and power to local communities to control their own affairs. In England, this means nothing less than the restoration of genuine shire and city self-government. Above all, we must restore the freedom and independence of Parliament from domination by the executive, and the freedom of the British judiciary to interpret the law without interference from external jurisdictions.
We must restore the freedom of the British people to make our own laws and to determine our own place in the world.
We want to preserve our prosperity and environment, to strengthen society, to improve schools and the police, but the only sustainable means of achieving this is more freedom. Industry and commerce need more freedom to innovate and compete. Freedom opens up opportunity and breaks down the bastions of privilege. Freedom promotes personal and family independence, as a means of creating the stronger communities and a strong society which will care for the less fortunate and build up the common good. Free enterprise and risk-taking fosters charitable and voluntary action as well as wealth creation.
Younger generations, sometimes referred to as 'Thatcher's children', are more committed personal and national freedom than the post-war generation. They also want our country to play a full and positive role in the world. All we need is confidence that a Conservative government will best realise their ideals and ambitions.
We have stronger historic ties with India and China than any of our EU partners; our economy is more open; our trade and overseas investments more global, our military capability more portable, and our influence throughout the English speaking world is greater. It is clearly contrary to the national interest to continue to allow the EU to supplant our direct relationships with the US and with the rest of the world, particularly in matters of trade.
Stepping Stones to a real Conservative revival
Today, I have not attempted to set out detailed policy. First, we must convince people that we are a party of principle again. We need to demonstrate that there has been a genuine change in the direction and purpose of the Conservative Party. There is no point in launching policies until people will accept that we are devoted to Conservative principle and to the national interest, rather than to our personal and party ambition.
It has become one of the Conservatives' clichés that people like our policies, but not when they come from us. Cynicism of our motives is hard-wired into the imagination of the voters. We should have learned by now that policies cannot be founded on sound bites mined from focus groups and that unity cannot be bought by blurring differences of opinion. Indeed, such opportunism breeds disunity.
Before the 1979 election, Conservative policy was developed around a coherent strategy set out by Sir John Hoskyns and Norman Strauss, in a seminal paper, called The Stepping Stones Programme . This described remarkably succinctly the problems, the solutions, the barriers to success and the strategy to succeed. It not only helped achieve victory, but led directly to the watershed 1981 budget and to the reform of industrial relations. We need a similar project now, to develop a British strategy for the 21st Century. Today we are fortunate to have a profusion of new think tanks like Policy Exchange to assist with the task.
To be a Conservative is to lead an intellectual debate about our future as well as to campaign about where the Government is failing. To be a Conservative is to address the long term challenges of today with coherent policy based on principle that is in the national interest. To be a Conservative is to understand that the future of our nation rests on the strength of our institutions. If we can demonstrate that all this reflects renewed principle and purpose in our party, then you may once again begin to say proudly: my first avowed intent is to be a Conservative."