The popularity contest

I had the pleasure today of participating in a roundtable discussion on the subject of (yes, you guessed it) Brexit. In the course of chatting with some of the attendees, I happened across a senior and very well-connected businessman who told me that in the past he had dealings with Theresa May and her department in her capacity as Home Secretary. What was shocking was the story he told of how he had tried to make certain policy suggestions in order to improve business operations, only to be told to get them in the Daily Mail first and then government would listen (I am not making this up).

His reaction was the same as mine: How on earth can a government whose job it is to manage the country in the interests of its people possibly think that policy can best be served by courting the tabloid press? All politicians know that you can’t please all the people all the time but sometimes you have to take unpopular decisions in order to do the right thing. I am reminded of the great quote from the BBC satire The Thick of It (here), which I must confess to having used before but it is so accurate in this instance, which states that many political decisions are taken by “a political class, which has given up on morality and simply pursues popularity at all costs.”

With this little snippet of information in mind, many aspects of government policy now become a lot clearer. It explains, for example, why Theresa May has suddenly gone from being a nominal supporter of the Remain campaign to one of the most ardent advocates of a hard Brexit. And it certainly explains today’s decision by Chancellor Philip Hammond to reverse the increase in National Insurance Contributions for the self-employed. As I noted a few days ago (here), the economic rationale for raising NICs was sound enough. Indeed, the Chancellor reiterated that “the government continues to believe that addressing this unfairness is the right approach … However, since the budget, parliamentary colleagues and others have questioned whether the increase in class 4 contributions is compatible with the tax lock commitments made in our 2015 manifesto."

But if the rationale for implementing the policy was correct, then it logically follows that he has made an economic mistake by reversing the decision. Quite clearly, the decision has been made on political grounds, with the manifesto commitment used as justification. That in itself raises a question of whether the government – and don’t forget that the decision to raise NICs in the budget would have been approved by the prime minister – recalls what it promised in the 2015 election campaign? Or did they just think that no one would notice? Having caved in to populism on this issue, what is to stop the tabloid press making life even more difficult for the government in future? Flip-flops on policy issues like this do not bode well for the government’s policy credibility and should be avoided at all costs.

It also raises a bigger question, which one of the participants raised at today’s event. If in, say, 2019 or 2020 the UK economy has been severely damaged by the prospect of Brexit and the electorate is restive, would the government be tempted to backtrack on its Brexit promise? My answer to that question was, given what we have heard on the issue so far, it would be most unlikely to do so. But knowing what I know now, if the Daily Mail were to change its mind, you would not bet on a change of heart from the government either. Or as Carole King put it, in the song Change in Mind, Change of Heart, “The things that once held meaning / We're no longer sure about.”