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12 October 2017

Mrs May’s Speech

A look at the substance.

By John Watson

“I am no orator, as Brutus is.”  So spake Shakespeare’s Mark Anthony, before proving, of course, that he was a very good orator indeed.  Mrs May could use the same words with more justification.  She is no natural on the podium and her speeches owe more to hard work than to flair.  Witness the irritating repetition of the statement “That is what I am in this for”, a trick straight out of “do it yourself speech-writing” and not the sort of gambit on which Boris Johnson or Winston Churchill would have relied.

Nevertheless, on the whole it was a good speech, carrying a great deal of personal commitment and identifying accurately a number of domestic issues which need to be dealt with.  It is true that the delivery had snags but those who put that forward as an argument for changing leader only do so because they are intellectually incapable of criticising the Government’s political position.  Well, we all know that some Tory backbenchers are a bit thick.

Perhaps the most striking thing about the speech is the extent to which Mrs May’s concerns overlap with those of the Labour Party.  Both she and Mr Corbyn are concerned about the shortage of housing for young families.  Both of them too are concerned about University fees and both believe that the energy market is leaving some vulnerable consumers paying too much.  Where they differ is in the remedies, with Mr Corbyn taking the bold approach which is the prerogative of those in opposition; Mrs May, as you might expect from the head of a party which calls itself “conservative”, takes a far more cautious and step by step approach.

On these central issues of domestic policy the question has to be whether the measures announced by Mrs May will do the trick.  In relation to housing, she has promised an extra £2 billion for public sector provision which should enable councils to increase their building programmes.  Much, however, will depend on the extent to which new private housing can be provided alongside this.  Private newbuild is, after all, a way of increasing supply in the market, and thus making it more affordable, without the injection of government funds.  Will Mrs May’s determination to take charge of this program herself ram through the acceleration needed or will it turn out to be something but not quite enough?

In relation to University fees, everyone knows that something has gone badly wrong.  This can be demonstrated by looking at nursing.  We all know that there is a shortage of nurses and yet consideration is being given to charging them tuition fees.  That is a barkingly silly proposal and hopefully will go nowhere, but if you ask why it is silly you are quickly swept into a much more general point.

Let’s look for a moment at the thinking behind charging fees.  Yes, I know, the main reason was to get money to finance universities without recourse to the public purse, but I mean the thinking used to justify the move socially.  The first step in the argument is that a degree is a privilege which will enrich the life of the recipient either by enabling them to earn more or in ways less tangible than that.  Why, then, the argument goes on, should this privilege be paid for by those who do not receive degrees at all?  That is what happens when universities are paid for by the state.

The trouble with this is that it misses the important point.  In the case of the nurses, fees have not been charged historically because of the importance of a supply of well-qualified nurses to public wellbeing.  We need the nurses, so we must pay to train them.  That, however, is surely the case with degrees generally.  If Britain is to flourish as a trading nation, our citizens need to be better educated than (or at least as well educated as) those of our competitors.  That doesn’t mean that they all have to read finance.  More traditional subjects train and strengthen the mind and we need people with well developed minds if we are to prosper.  For a bright student to go to university is in the public interest as well as his or her own.

Once upon a time that was recognised by the fact that the student paid no fees and, to the extent necessary, received a grant.  That has now gone and, given the current state of public finances, it would be difficult to get back there.  Also the fact that the students pay something has its advantages.  It has made them far more critical of what they get in return, and university teaching has probably increased in quality as a result.  The real question is to what extent should the training be funded by the students and to what extent by the state?  A contribution which leaves students with unpayable debt is clearly unsatisfactory.  It has to come down and, as Frank O’Nomics mentioned last week, the interest rate on the debt has to come down too.  That may mean an increase in taxes but they are taxes we need to pay.

Mrs May acknowledged in her speech that this area needs to be looked at again and presumably contemplates going further than the current proposal of capping fees at £9,250 and increasing the salary level at which debt begins to be repaid.  She needs to.  That people should be in debt for 30 years sticks in the craw even if the debt is then waived.  To be indebted to the government is not what most of us regard as being free.

Another big issue addressed by Mrs May is the capping of energy prices and here too the issues run deep.  The problem is that although there is a market and people can fix their energy price, many of them do not do so but stay on the expensive standard variable tariff.  Inevitably these are the least savvy, often the most vulnerable, and the effect of their inactivity is that they pay more for energy than do others.  This goes to the usefulness of relying on consumer choice generally.  If the mechanisms are at all complicated, giving the public a choice simply doesn’t work.  Those at the bottom will always end up paying more and you see this just as much with railway fares as you see it with fuel.  Clever multiple pricing is generally a mess and beyond the wit or energies of large sections of the public to operate.

There can, I think, be little doubt that Mrs May understands all these issues and that the leaders of the other parties do so too.  Her risk is that she will be too timid in her solutions, either giving too much weight to the Treasury on student loans or failing to push through meaningful reforms on housing and fuel prices.  If they believe that she will fail here, her backbenchers are right to call for a new leader.  If, on the other hand, she has the determination to tackle these areas they should not ditch her over the relatively minor mishaps which affected the delivery of her speech.

 

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