In charts: the legacy of 14 years of Conservative rule
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The next UK government will inherit a country that is more divided and less equipped for future challenges, reeling from austerity and economic stagnation; Brexit; the Covid-19 pandemic; and the war in Ukraine.
The 14-year record of Conservative-led government is not one of simple or singular decline, however, but a series of paradoxes.
Poverty
About a fifth of people live below the relative poverty line — 60 per cent of median income — in line with 2010.
But that disguises a generational divergence. Poverty rates for children in large families are almost three times higher than they are for pensioners, with the gap forecast to widen even further.
These trends reflect policy decisions. While the pensions “triple-lock” ensures the state retirement income of over-65s will not lose value in real terms, large families have received benefits cuts.
Olivier De Schutter, the UN special rapporteur on extreme poverty, pointed to “major deficiencies” in universal credit, the primary benefit payment for low-income households, saying it “should be increased by at least 50 per cent in order to provide a decent standard of living”.
Housing
Average house prices in the UK have come off their 2022 peak of £284,600, according to official data by HM Land Registry, as rising interest rates damp demand. But the cost of property remains an enormous stretch for most Britons, with homes costing more than eight times earnings.
Sky-high prices, high rental costs and low rates of homebuilding have fuelled a housing crisis. UK houses are more cramped than in many comparable countries and the country has Europe’s oldest housing stock, according to the Resolution Foundation think-tank.
That said, there are tentative signs that more younger adults are managing to clamber on to the property ladder. Having dropped steadily from 2000 to 2015, the home ownership rate among those aged 25 to 34 has risen 6 percentage points to 39 per cent, according to the Institute for Fiscal Studies, putting it at the same level as 2010-11.
Possible drivers are lower house prices outside southern England, improved disposable income growth among younger adults, and policy interventions such as reductions in stamp duty for some first-time buyers.
Education
Conservative ministers claim improving school standards are one of their big success stories, driven by Michael Gove’s curriculum reforms and the introduction of independently-run academy chains in 2010.
14 years of Tory rule
This is the first of two articles examining the legacy of 14 years of Conservative-led government. On Thursday: if the Tories lose, what sort of country will they leave behind?
While the UK has held its own in the annual “PISA” international rankings in maths and reading, unions and teachers say the headline numbers conceal a looming crisis in Britain’s schools, where buildings are crumbling and the teaching profession is striking over falling pay and rising workloads.
In higher education, the juggernaut of over-18s going to university rolled on, but funding for adult and vocational education will still be below 2010 levels in 2025. The number of apprenticeships for under-24s halved between 2015 and 2022.
“There has been a lot of resurfacing of the education superhighway of GCSEs, A-levels, and university — and yet the cowpath of vocational education remains still barely paved,” said Mary Curnock Cook, chair of the Dyson Institute of Engineering and Technology and the former chief executive of the university admissions service UCAS.
The economy
David Cameron took office in the wake of the financial crash with a pledge to restore growth, but the period since 2010 has featured a dismal economic performance compared with the pre-crisis period.
Overall GDP would have risen by twice as much if it had stuck with its pre-crisis trend, and average earnings, adjusted for inflation, have barely budged since 2009, the final full year of the Labour government.
Dame DeAnne Julius, a distinguished fellow at the Chatham House think-tank and former Bank of England policymaker, warns the inheritance for the next government may prove even harsher than the one received by Cameron. “Our constraints are worse now, tighter now, than they were in 2010,” she said.
Among the reasons are a frozen planning system and associated housing crisis, weak investment, skills shortages and higher levels of public debt.
Despite George Osborne’s austerity programme, by 2028-29 the state will be larger than before the pandemic, than before the financial crisis, and indeed bigger than the postwar average, according to the IFS.
And while households and the financial sector have cut debt as a share of GDP, the national debt is projected to hit 90 per cent of GDP in the current fiscal year, compared with 70 per cent when the coalition took power.
Brexit
The impact is most obvious in terms of business investment, where there was a big shortfall relative to the post-2010 growth trend at the time of the June 2016 EU referendum.
Until that date, the UK was not markedly underperforming economically relative to peers that were also struggling with the aftermath of the global financial crisis, said Michael Saunders of Oxford Economics.
But then came the protracted period of turmoil unleashed by the vote to leave the EU.
“All long-term thinking was put on hold because firms did not know what Brexit would look like,” Saunders added, referring to the period from 2016 to 2019.
And the reality of Brexit had been deterring trade and reducing openness and investment since then, he said. While the UK had maintained its status as a top exporter of services, it had fallen in rankings of goods exporters.
Health
While the NHS has received more funding and hired more doctors, it was not enough to meet the “complex needs” of a population that is older, fatter and suffering from a growing tide of mental health problems.
Pre-2010 increases in life expectancy have plateaued. Obesity is now estimated to be costing the country £100bn a year and one in eight adults suffer from depression, according to NHS England — more than double the proportion reported a decade ago.
Henry Dimbleby, founder of the Leon restaurant chain who authored a landmark review of England’s food system, said the next government would have no choice but to address the nation’s diet.
“There are 2.8mn economically inactive people of working age. Mental health is one of four major reasons. Musculoskeletal issues, type 2 diabetes and hypertension are the others: three are caused by bad diet and the fourth is exacerbated by bad diet.”
The challenge, said Anita Charlesworth, director of research at The Health Foundation think-tank, is the system is so absorbed “fighting the fires of acute need” that there is no time or money left to invest in the preventive care that all incoming governments promise.
Climate
The “greening” of the UK’s electricity generation network is a clear success, with renewables providing more than half of the UK’s electricity for the first time in 2017, thanks to significant investment in wind power.
But on the more politically difficult, “consumer” side of the net-zero ledger — making houses more energy-efficient, increasing electric vehicle usage, reducing the carbon footprint of farming and industry, there are still huge amounts of work to be done by future governments.
“George Osborne’s levy on bills drove investment in green energy, but removing subsidies as part of austerity caused the home insulations needed to make heat pumps work plummet,” said Chris Stark, former head of the Climate Change Committee, the independent body that advises the government.
Local government
The devolution agenda started by Sir Tony Blair was taken on by Michael Gove as part of the “levelling up” agenda but the services provided by local government have faced savage cuts as a result of austerity policies.
So while the big city mayors of Manchester and Birmingham grew into political figures in their own right, local councils have absorbed real-terms spending cuts of nearly 20 per cent per head since 2010.
The result has been an explosion of potholes, poorly maintained parks, the closure of libraries, youth clubs and public toilets and chronically overstretched housing and children’s mental health services.
Tony Travers, visiting professor at the London School of Economics, said that while the devolution agenda would roll onwards under Labour, decay had become a freestanding national problem.
“What we have seen is the retreat of the local state, which is what most people judge the whole of the state by, all of the time, because it’s just outside their front door.”
Labour market
One positive trend has been a boom in job creation, which has held down unemployment — with the jobless rate now just 4.4 per cent in the UK, around half the highs seen in the early 2010s.
This has brought around 4mn people into work compared with before the coalition took power, with particularly strong growth in the employment of mothers and older workers.
But it has not been enough to raise living standards. Despite the Tories’ decision to push the national living wage to two-thirds of median earnings, average wages have barely grown since the global financial crisis, and successive freezes on benefits have weighed on poorer households’ incomes.
“We have seen more people in work, but that has coincided with a period when real earnings have grown at a slower pace than any comparable period since records began,” said Alfie Stirling, chief economist at the Joseph Rowntree Foundation. “The long-term trend of rising in-work poverty has continued.”
At the same time, growing numbers of people are receiving incapacity or disability benefits for long-term health conditions. Official data suggests the UK’s workforce is now smaller than it was on the eve of the pandemic because ill health is preventing record numbers of people from either working or job hunting.
What the nation worries about
Brexit divided the nation, but the number of people who strongly identify with a political party has declined in the past decade, and on many issues — health, housing, immigration — divisions are greatest between young and old, rich and poor rather than Labour or Tory.
At the same time, political culture has coarsened, driven in part by social media algorithms that reward the stoking of grievance over reasoned debate. And yet, in the real world, surveys show the UK is less divided than the headlines might suggest on identity issues including immigration, abortion and religion.
Alastair Campbell, former spin-doctor to Tony Blair, said the quality of political debate had changed profoundly since Labour took power in 1997 thanks to a toxic combination of economic stagnation and rising populism.
“The reality of most people’s lives and social media are two different things, and one of the drivers of separation has been a change in the media landscape,” he said. “Politics isn’t about solving problems any more, it’s about exploiting them.”
Comments