Newsletter #74: Reform's new economic platform announced
PLUS: Antonia Romeo appointed Cabinet Secretary, and Andrew Mountbatten-Windsor arrested
Good afternoon,
This week saw Reform’s new shadow cabinet announced, and subsequently the first comprehensive look at the party’s economic platform delivered by Robert Jenrick.
Plus, we take a look at new Cabinet Secretary Antonia Romeo, and break our usual no-royals rule to examine the possibilities brought about by the arrest of Andrew Mountbatten-Windsor.
This newsletter’s agenda: Robert Jenrick lays out Reform’s economic strategy (free); Antonia Romeo appointed Cabinet Secretary (paid); Andrew Mountbatten-Windsor arrested for misconduct in public office (paid)
Robert Jenrick lays out Reform’s economic strategy
On Tuesday, the long-awaited announcement of Reform’s new Shadow Cabinet (or part of it at least) finally came, with Robert Jenrick appointed shadow Chancellor, Zia Yusuf appointed shadow Home Secretary, Richard Tice appointed shadow Secretary of State for Business and Energy, and Suella Braverman appointed shadow Secretary of State for Education (as well as being given the equalities brief with a mandate to abolish the position). We covered these appointments as rumoured last week, so we won’t go over our thoughts again, other than to say they are strong choices which make sense given Reform’s spread of talents. Notably absent from the stage was Nadhim Zahawi, previously rumoured as a potential shadow Foreign Secretary — a pleasing development, and perhaps a result of pushback from supporters over those rumours.
On Wednesday Robert Jenrick gave his first speech in his new role, laying out the broad strokes of the party’s economic approach comprehensively for the first time. Whilst Jenrick is a somewhat capable speaker, his past speeches have had a strange staccato style in which every line is emphasised as though recorded for one of his much-remarked YouTube shorts. This, however, was a more confident performance with far more fluent delivery — perhaps he has found his comfort zone within his newly defined brief.
Tonally, Jenrick’s speech was designed primarily to reassure markets of Reform’s commitment to fiscal discipline — shown not least in the reappearance of his glasses, eschewed in favour of contacts throughout his long contest for the Conservative leadership — whilst still attempting to maintain some suggestion of radicalism to keep voters on side. We discussed this week the unique social positioning of Reform, and Jenrick’s speech reflected the classless dynamic which Farage has long sought to bring to economic policy, uniting employers and employees against welfare and taxes and referencing a unified commitment to the interests of the ‘productive’ classes (or, as Reform like to say, to ‘alarm clock Britain’).
One of the more strangely successful attack lines deployed by the Conservative party against Reform over the past year has been the claim that the party had taken a ‘socialist’ turn — an absurd perception of Farage’s economic views, but one that nonetheless had seemed to stick in the minds of many of those still intending to vote Conservative at the next election. With that in mind, Jenrick made clear that cutting taxes is a priority for Reform, but that specific commitments would not be made until the government had created the necessary fiscal headroom through cuts to spending. In the firing line were many of the classic targets for the right: council housing for migrants, welfare for foreign citizens, foreign aid, and the Motability scheme, as well as pay-outs to failing utilities execs and the bloated civil service.
Jenrick claimed that a Reform government would save $25bn by ending access to Universal Credit for foreign nationals, raising the immigration health surcharge, and capping foreign aid at $1bn. Whilst a complete abolition of the latter might sound attractive to many readers, it is sensible to retain some kind of budget to grease the wheels on diplomatic negotiations (especially as the necessity of returns agreements with historically intransigent countries grows), and this commitment would represent a reduction of more than 90% on current spending. No specific commitments on foreign occupancy of social housing — a cause Pimlico Journal has pushed perhaps more than anywhere else — was offered.
A further $5bn would be saved in wages and pensions as a result of civil service cuts — a fine bonus, but, as we have said previously, civil service reform should not be seen as an exercise in cost-cutting. Beyond these measures, a radical reduction in welfare spending will be achieved by reinstating the two-child benefit cap and by tightening eligibility, especially for mental health claims. Specifically, clinical diagnoses will be required, and in-person assessments will be enforced. These measures are, of course, positive, but a genuine solution to the inadequacy of Britain’s welfare state which goes beyond addressing immediate fiscal challenges will require far more radicalism.
Most readers will be happy to hear Reform commit to a reinstatement of the two-child benefit cap, but the change in policy has not come entirely without criticism, especially in the context of continued fall in birth rates. There is, however, little evidence that financial subsidy — especially one as small as the Universal Credit child element — has any substantial effect on birth rates. Hungary, which spends more than 5% of its GDP on subsidies and tax breaks for mothers, has seen only a marginal increase in their still abysmal birth rates. Of course, the two child cap imposes no disincentive to those who are not on benefits, and who therefore cannot access UC child element in the first place, so its impact on birth rates will be even less significant. It is also grossly unfair for young, productive couples — the very people who should be encouraged to have children most — have their ability to do so constrained by over-taxation to fund the families of those on welfare.
Jenrick’s attempt to reassure markets continued with two further shifts in stance: on the OBR and Bank of England independence, both of which will now be maintained. This is likely to upset some readers, who correctly identify these institutions in the tradition of Blairite depoliticisation as barriers to political control over government. However, whilst a cavalier attitude towards such things is appropriate elsewhere, it must be tempered when confronted with the financial markets. The unfortunate truth, as Liz Truss learned, is that it doesn’t even matter whether the market’s views on economic policy are correct — the price of defying them will be paid regardless. As such, steps which can be taken to give the new government more credit with the markets should be welcomed, and Jenrick’s proposed approach strikes a sensible balance between reform and stability.
He has suggested a radical restructuring of the OBR, bringing in new teams of people under upscaled pay structures (including a deeply Cummings-esque commitment to running ‘competitions’ to admit ‘superforecasters’ to the organisation), which would enable it to run multiple teams providing analysis under different models and approaches. The BoE will have all mandates other than inflation targeting stripped, including duties to support transition to net-zero. It’s easy to suggest that reversing BoE independence — only granted 30 years ago — would be a return to a system which worked perfectly fine, but whilst retaining political control of monetary may have been possible despite the global embrace of independent central banks, returning to it would command a far higher price in the judgement of creditors.
Jenrick restated Reform’s commitment to deregulation on financial services, labour rights, data protection, and environmental regulation to increase competitiveness. He indicated that Reform would reopen North Sea oil permitting, and would implement the Fingleton Review on nuclear deregulation in full. He also committed to substantial liberalisation of planning law, especially in city centres and new ‘industrial zones’, although the specifics of this reform remain unclear. Immediate priorities for a Reform government would be the building out of Cambridge and the densifying of inner East London — both solid initiatives which make use of the party’s un-competitiveness in certain areas to override local concerns, something which both Labour and the Conservatives have seemed bizarrely unwilling to do. That said, planning reform is not an issue on which half measures will do the job. Whilstever local control is retained over planning decisions, NIMBYs will find a way to stop building wherever they can. Adjusting and patching the existing system will be insufficient — instead, it must be redesigned from scratch.
Whilst immigration will not be within Jenrick’s purview, he dedicated a good portion of the speech to that issue and the economic questions surrounding it. Declaring the era of mass immigration at an end, he issued a warning to businesses to begin preparing now for a radical reduction in labour availability under Reform. He suggested that this would be compensated for through welfare reform, which will return a large number of British people to the workforce. Such commitments are no surprise, but it is still good to hear them repeated. Reform must do what they can to maintain the salience of immigration as an issue, especially as numbers begin to fall.
Perhaps more interestingly, Jenrick quoted the recent speech delivered by Mark Carney, in which he said that ‘[we] cannot live within the lie of mutual benefit through integration when integration becomes the source of your subordination’, before stating clearly: ‘we agree’. Unfortunately, this seemingly robust embrace of the need for industrial policy ended up being directed more towards vague posturing against China than any of our more pressing concerns. He suggested that an understanding of the connection between economics and security was crucial, but in listing strategic sectors focused on defence, steelmaking, car making, and other ‘traditional’ industrial sectors. This is all well and good, but Jenrick would do well to take Carney more literally. It is not China that is the principle threat to our sovereignty — it is the United States. Defence of our strategic independence requires that we can process our own transactions just as much as it requires that we can manufacture our own steel.
Moreover, the purpose of an industrial strategy should not just be the maintenance of specific strategic industries. Britain’s labour market is already deeply out of step with labour supply in the country, leading to widespread underemployment and the withering of many people across the country as a result. The purpose of diversifying the economy must be to enable people across the country to develop themselves as much as possible, not just to ensure access to materiel in the event of a hypothetical war. Given that a Reform government in 2029 will have to contend with the most crucial period of all in the development of AI, a serious response to these questions must be developed before Robert Jenrick steps into Number 11.
Perhaps the most problematic commitment Jenrick made came not during his speech, but after, when asked about Reform’s policy on the pensions triple lock. He suggested that, whilst no decisions have yet been made, he has always been personally supportive of the measure — and reinforced that several times after follow-ups. Whilst it is increasingly obvious that the triple lock is unsustainable in the face of our rapidly aging population, it is unfortunately the case that Reform’s support base, unlike right wing parties on the continent, is even older than the Conservatives’ has traditionally been, making any positive development on this front extremely politically challenging.
Overall, the speech represented a welcome clarification of Reform’s economic stance which walked back some of the mistakes made last year, especially on welfare, and laid out a coherent and respectable plan for restoring fiscal stability and, ultimately, reducing the burden of the state. That said, whilst it represents a good basis upon which to build, reducing the burden of the state is unlikely to be sufficient to restore Britain’s economic health in the years to come. The challenges that Reform will face require a degree of radicalism which is not yet evident on the economy, rebuilding sectors which have long since been extinguished. As such, we will watch closely as the party continues to build out its policy team in-house, and thereby continues to flesh out its approach.
