Rishinomics means centralisation like we've scarcely seen before
So this is Rishinomics. The Tory party might well wonder, what is this cuckoo in our nest? It means colossal public spending, stupefying debt, subsidies doled out on all sides, and a private sector strangled by whimsical regulation. Perhaps a truth is emerging. Old-fashioned Toryism was always the free market’s fair-weather friend. At the first sign of trouble, it runs pleading to the state.
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The chancellor, Rishi Sunak, was quick on Wednesday to stress he was “unencumbered by dogma”. The crippling of Britain’s economic growth by 20% in just two months was to be temporary. The job retention package, now well over £100bn, will continue in a modified form until January. Three months ago, he said it would end in August. When next?
More than a third of Britain’s private sector workforce and a million firms are receiving some state subsidy. Pressure is mounting to continue furloughing into 2021. Queues are stretching from steelmakers, car companies, chemical manufacturers and others seeking money from the 1970s-style Project Birch. The chancellor is offering to hire, train and pay hundreds of thousands of young people, and donate their labour cheap to businesses, a scheme identical to Gordon Brown’s 2009 Future Jobs Fund. Yet the government shows no sign of ending social distancing, the real killer of demand for labour in services.
All this help will come at a price. The government adviser Jim O’Neill says grants must come “with conditions attached”. The Tory thinktank Onward says this should mean state shareholdings, as when the state rescued banks during the 2008 financial crisis. All this is before the “second spike” that Sunak never mentioned, the prospect of a no-deal Brexit in the new year. Johnson has promised to “look after” farmers choked of their European markets – and fishermen too. Goodness knows who else will need to be rescued.
This is not traditional nationalisation. But nationalisation is not just an issue of ownership, it is one of control. The last intervention on this scale was in the second world war, and it took the Tories – with the acquiescence of Labour – 40 years to row back from it. Even then Thatcher initially resisted. She balked at selling British Telecom and Britoil, “my oil”, and was only persuaded when Nicholas Ridley argued she could control an industry far better if she didn’t own it.
Thatcher refused to privatise the railways. Even when John Major did so, they remained effectively under government control, and are now being renationalised. Likewise, the power companies were this week ordered by Ofgem to cut their bills and invest more. Steel, motors and aviation are beating on the Treasury’s door, happy to swap power for money. No, it is not like the old days – but the commanding heights of the economy are becoming what in Latin America is called “parastatal”. That is Rishinomics.
If nationalisation is about control, it is also about centralisation. As Sunak extends his grip over the private sector, his colleagues are planning a no less drastic extension of power over the public one, the final delocalisation of Britain.
It is barely noticed in Westminster that, while across Europe millions of local officials were mobilised to care for, police, test and trace the Covid-19 pandemic, in Britain, some 2 million local government staff were simply ignored. I know of many who were left sitting on their hands while the shambles ensued in London. Their services and their knowledge of local communities were not called on. As the BBC’s Panoroma disclosed on Monday, private clinics and laboratories that came forward to help were disregarded. Rather than go local, Boris Johnson set out to recruit 250,000 untrained “volunteers” and build Nightingale hospitals. Both of these initiatives went largely unused. I am convinced the anti-local prejudice that rages in Whitehall is the major cause of Britain’s catastrophic Covid-19 response.
Undaunted, Johnson is now to take his pathological centralism a step further. His aide Dominic Cummings reportedly wants to dismantle the last three public sector functions still subject to local democracy. They are town planning, social care of the sick and elderly and policing. Planning offices are to be replaced by regional “zoning” commissions and inspectors, committed to development and emanating from London. Under such a scheme, local control over the character and appearance of urban and rural Britain would end.
Meanwhile care of the elderly is allegedly to be coordinated by a national agency to run alongside the NHS. In the case of the police, the chief inspector, Sir Tom Winsor, calls Britain’s local policing “disjointed” and is demanding a “single and seamless system” for setting priorities and policies from London. This renders elected police commissioners and local accountability pointless.
While Sunak takes responsibility for a large chunk of the private sector, however “temporarily”, his colleagues are seeking the final dismantling of devolved government, at least in England. This was begun by Thatcher’s rate-capping in the 1980s and continued by the stripping out of education and transport in the 1990s. Services that in every other world democracy are subject to the pride and participation of local community leadership, are in Britain to be run from London. The prime minister wants to be mayor of England.
Centralisation is not an ideology of left or right, which is why it dodges controversy. It is a function of power. Out of office all politicians deplore it. In office they crave it. As Britain staggers back to life over the coming year, its people will see a public sector emerge that is more centralised than ever in its history. It will be run, in its entirety, by the same people who gave it the worst coronavirus death rate of any major nation on Earth.
• Simon Jenkins is a Guardian columnist
