The Conservatives’ approach to the economy is defined by contradictions. While an era of more state intervention now looks inevitable, the deeper question is whose interests this intervention will serve. So far, the Johnson government has deployed the state to preserve existing power relations rather than challenge them. However, the fallout from the cost of living crisis may stretch this approach to its limits.
When evaluating the Conservatives’ political economy, then, the question is not just whether the state is intervening more, but why, how and for whom. To begin with, this means looking at the composition of state spending as well as its size. From the reversal of the £20 Universal Credit uplift to rows over public sector pay, it has long been clear that austerity is continuing for some. Increased NHS spending has been more than offset by the additional strains of the pandemic. There has been little appetite to reverse the deep cuts to welfare and local government made during the coalition years, and many departments still face real-terms budget cuts.
But this frugality stands in stark contrast to the free-handedness with which public money has been channelled to favoured companies, for instance through the much-criticised ‘VIP Lane’ for Covid-related contracts. Similarly, central government has created an array of new funding pots, from the Towns Fund to the Levelling Up Fund – seemingly more to channel funds to Conservative target seats than to tackle genuine disadvantage.
The overall impression is of a clientelist approach to public spending, combining favours for personal friends and business contacts with pork-barrel politics targeting cash at key voters – while continuing the rollback of the state for less-favoured political groups.
