A Conservative Economy

The United Kingdom’s economy has many strengths. It’s the sixth largest in the world despite being only the 21st most populous nation, has world-leading sectors from financial services to life sciences, and renowned innovation from the ‘Golden Triangle’ of Oxford, Cambridge and London. 

But despite these strengths, we face huge challenges from low household incomes and regional imbalances to poor productivity and a lack of investment. These hurdles demand a different response to the 1970s, 80s or 90s.

Our old economic consensus has run out of road; we can no longer have a laissez-faire approach to industry and trade, prioritise efficiency over resilience and see the impacts of hyperglobalisation as inevitable. A new ‘conservative economics’ focused on reindustrialisation is needed to build a more productive, resilient and fairer economy. 

Onward’s Future of Conservatism Project’s second paper, A Conservative Economy, lays the intellectual basis for a radical shake-up of our country’s economic thinking, putting workers, families and the nation first. 

Co-authors Gavin Rice and Nick Timothy argue that industrial decline and a lack of national savings have left Britain overly reliant on imports and foreign capital. This entrenches inequality between regions as capital flows into London and the South East. 

The paper makes the case for an active industrial strategy to rebuild Britain’s manufacturing base, boost exports and make it less reliant on overseas ownership of its core strategic assets. It calls for an economic policy to prioritise national productivity and security over international rent-seeking or libertarian ideology. 

A Conservative Economy argues a good economy and society must achieve five characteristics: the security and strength of the nation, the welfare of workers and families, the opportunity for talent to thrive, a just balance between regions, and the right conditions for market-driven growth. It also proposes several other radical ideas to change Britain’s economic model including:

• Offering generous tax breaks for parents raising children with a new tax allowance for families.
• Replacing restrictive residential planning rules in inner London, Birmingham, Manchester, Liverpool, Oxford and Cambridge with new development zones to unlock housebuilding.
• Abolishing the shortage occupation list, introducing visa caps, and imposing higher salary thresholds to slash net immigration to the tens of thousands per year.
• Ending taxpayer subsidies for failing university degrees and changing low-quality universities into institutes focused on STEM, technical and vocational education.

In a foreword endorsing the paper, Levelling Up Secretary Michael Gove said: “It calls for the boldness and innovation exemplified by Margaret Thatcher – but repurposed for new challenges. But the diagnosis and solutions to the growth challenge are – rightly – different. The economic challenges ahead are those of the mid-21st Century, not those of 1975.

“Keir Starmer’s Labour Party appears intent on extending nationalisation, raising tax and handing more power to the unions to restrict employment flexibilities. So, we need to make the case against the drift back to socialism and permanently lower growth with renewed vigour. But we also need to renew the case for markets and capitalism, recognising there is more to do to bolster manufacturing, guarantee energy security, incentivise investment in innovation and extend home ownership.

“We must argue for markets properly reformed so they work free of vested interest. Growth from productive investment, and the jobs this creates, are distinct from rentierism or the predatory capitalism of acquisition over production. Conservatives must always be the party of work, home and family – not the speculator, proprietor or rapacious asset manager.”

Project Chair Nick Timothy said: “We must break from our failing economic consensus that we inherited from another era. By taking long-standing principles of conservatism and applying them to the problems of this century, not the last, we can restore growth, prosperity and fairness to our nation. Our focus must be on reindustrialisation, expanding home ownership and radically reducing immigration to restore our national community in a fragmenting world.

Project Director Gavin Rice said: “Conservative economics is about promoting free and fair markets, economic growth arising from innovation and productivity, and advancing the wellbeing of workers and families. It should challenge vested interest wherever it’s found, prioritise our national economic interest and deliver a better deal for the British people.