Callum Price: As in the Seventies, Badenoch needs a fundamental break with the recent Tory past

Callum Price is Director of Communications at the Institute of Economic Affairs

It won’t surprise ConservativeHome readers to hear a voice from the Institute of Economic Affairs argue that the Tories need to embrace free markets again. I have already written about it. Multiple times.

But before they can even try to enact the sort of free market reform needed to return economic dynamism back to Britain as they must do, Conservatives need to actually make the case for freedom, better than ever they have.

In recent history, free market reforms have been sold first and foremost as a transactional benefit to voters. ‘If you vote for us, we will cut your taxes and remove regulations from your business’, or at best, ‘create a growing economy that will improve your standard of living’. This is all true and should be ceaselessly pointed out.

But if these principles are only sold on transactional grounds, the fight will remain on opposition territory; statists will always out-promise with public expenditure. Fighting on this territory has helped cause our current stagnation.

We have reached an inflection point, as we did in the 1970s, where the economic model of the preceding decades has faltered. Hubert Henderson’s critique of Keynesianism in the 1930s – that it ran away “under cover of complex sophistication from the plain moral of the situation… we have no alternative now but to face up to the disagreeable reactionary necessity of cutting costs in industry and cutting expenditure in public affairs” – is as prescient today as it was a century ago.

What needs to be done will be radical, and often painful. Cutting Civil Service away days and misspent foreign aid is good, but won’t scratch the surface if we ignore the big-ticket items: pensions, benefits, and healthcare, which combined make up over forty per cent of total government expenditure. Our greatest expenses are the hardest to cut, but cut they must be. Without radical reform we are on an unsustainable trajectory which will turn a faltering economy into a bankrupt one.

Face these facts, and it becomes clear that transactionalism won’t get very far. As Kemi Badenoch keeps saying, its time to tell the truth.

The truth is that government has a vital role in many things, but not everything. That there are some problems that the state can’t fix and should not try to, for risk of making things worse and diverting resource from where they should be. A well-functioning state should not have more locks on the income of pensioners than the cell doors of criminals.

The truth is that individuals know better than anyone else what is best for them. The market knows far better than central government how to direct resources efficiently – thanks to the price mechanism. Real competition, in markets and trade, is beneficial for consumers, even if some producers lose out. Special and noisy interests do untold damage to the wellbeing of more disparate beneficiaries and must be resisted.

Limiting the freedom of people and markets invariably ends in painful unintended consequences. Opportunities are curtailed, liberty is supressed, and coercion is maintained.

The ideas that were at the route of the enlightenment – of objective truth, empiricism, and primacy of the individual – are moral in and of themselves, as well as the foundation of every successful nation. Free people and free markets are the moral way of running an economy, as well the most effective.

To those already au fait with the works of Hayek and Smith, these arguments are self-evident. But not everyone has read the Bible – we need our preachers to communicate them to the masses.

The job that Badenoch and her colleagues have on their hands is a tough one. Turning the country around will require choices that will be painful in the short term. The parallels with Margaret Thatcher are clear. Given the Conservative Party’s mixed record of delivery in government, they can’t rely on dangling nice things in front of voters to propel them back to power.

Even if they did, it wouldn’t be enough to survive even the first year back in power; the same harsh realities of stagnation, an ever-swelling public sector, and billions in unfunded liabilities will see to that.

Instead, the Conservatives must explain what freedom means, why it matters, and how they will deliver it. They must use the increasing sense of decline in Britain as a canvas, and paint the type of country we could and should be in the mind’s eye of the voters. Do it well enough, and voters will understand and accept the need for difficult decisions in the short term.

Thatcher is well remembered for how she turned the country around, but less well remembered for how she turned her party around. Before going to the voters, she dragged the Tories out of their comfort zone to face up to the same hard truths, and broke with her party’s previous failures of excessive statism. She stopped playing the same broken record, and moved the machine in the right direction so it was ready to make the argument to the public. Badenoch will have to do the same.

We at the Institute of Economic Affairs have been supplying the thinking, arguments, and evidence for free markets and free people for seventy years. We were among the first to point out the failing of the Keynesian consensus, to identify the solutions, and provide the intellectual ammunition for them to be implemented by a radical government. We continue that work today.

Over the coming months this column will flesh out this thinking, these arguments, and this evidence in more detail across a range of policy areas. Asking how our regulatory burden is slowing Britain down and what to do about it, what the tax system does to growth and how we can improve it, how free trade is integral to any economic policy, and much more.

If the Conservatives can grasp these freedoms again and sell them to voters, they might just be the ones to return economic dynamism back to Britain.