Over the decades the Conservative party has shown an indomitable survival instinct and an endless capacity for reinvention and renewal. Recently, however, it seems to have lost both, leaving it with dire prospects. 

The world economy is headed for a hard landing in 2023

With his ascent to 10 Downing Street, Rishi Sunak has categorically ruled out any new developments on the metropolitan Green Belt — a policy that will condemn millions of young people to living in grotty rented accommodation with little prospect of getting started on the housing ladder.

Meanwhile, newly-appointed Chancellor Jeremy Hunt has increased public spending by £9.45 billion next year — on top of spending increases already announced in September. Clever as he is, Hunt cannot grasp that higher public spending will leave younger Britons needlessly vulnerable to future tax rises. Indeed, younger generations are increasingly paying for the previous generation’s retirement, despite the fact that one in four pensioners is now a millionaire. To a large extent, Britain is less a democracy than a gerontocracy. Millennials are struggling to find well-paid jobs and secure, affordable housing, whilst many in older generations have seen the value of their incomes and assets surge. 

The situation, however, is even more pronounced than this might suggest. Today’s crisis in intergenerational unfairness is taking place against a backdrop of central banks aggressively hiking interest rates to destroy demand and bring down inflation. This approach is backwards-focused and does not properly account for the amount of leverage in the global financial system. Currently, there is about £250 trillion in global debt and quadrillions in notional value of derivatives. We have never entered a tightening cycle with anything close to this level of leverage. Central banks, and the Federal Reserve in particular, are leading the world into a convergence of crises that could culminate in a global financial meltdown. The world economy is headed for a hard landing in 2023, and younger people will be put under pressure like never before.

Consider what happens next. Faced with the worst financial crisis in more than 100 years, Hunt and Sunak will inevitably have to re-think the role of the State. Tax cuts — especially those targeted at income and jobs — will be sorely needed to grow the economy, but can only be made possible by spending restraint. The problem, however, is that the costs of change become politically expensive, even as the necessity for change becomes paramount. Speaking to the Spectator magazine on 3 September, Julian Jessop, a former economic advisor to Liz Truss, admitted that “[there] are some things that are probably too politically difficult to do now, ahead of the next election … [including] meaningful changes on things like planning reform and health finance”. 

By saying this, and perhaps without being fully aware of it, Jessop let the cat out of the bag. Since the 2000s, Tory MPs have come to rely on dispensing patronage to asset-rich pensioners to hold together marginal constituencies. The resulting system of patronage politics has produced leaders more interested in protecting the Green Belt and maintaining a flow of resources for pensioner consumption than in broader economic development. Meanwhile, Tory MPs have consistently raised taxes in a manner that has hit young people hardest, such as the freezing of income tax thresholds and the student loan repayment threshold.

The above analysis raises the question of who, ultimately, is responsible for trying to “lock in” pensioner support whilst saddling the younger generation with a cost-of-government crisis? Seen from within a historical context, the conduct of the Tory party in recent years is baffling. In the 1987 election, Thatcher beat Kinnock by 39-33 per cent among 25-34 year olds. In the 2019 election, however, the Tories trailed massively.

There comes a point of diminishing marginal returns

Much change in the outlook of the Tory party has been recent, following David Cameron’s election to the leadership in 2005 (though there had earlier been a powerful intimation in William Hague). Following the 2009 expenses scandal, Cameron revamped the Tories’ candidate selection rules — final shortlists would now have to be drawn up jointly between local association executives and CCHQ officials. This was to prove a decisive political moment. Those candidates who embodied a traditional conservative rather than a “wet” or “one-nation” worldview were systematically driven out of mainstream political life. In the words of British journalist and broadcaster Peter Oborne: “Intellectuals can flourish at Westminster … only by adopting a stolid conservatism, staying loyal to conventional thinking, and by rigorously eschewing radical thought.” 

The centralised and oligarchical nature of the Tory party meant that this one-nation project was controlled and relatively non-destabilising. Links between one-nation MPs and think tanks were strong, giving the centre a degree of legitimacy. Political candidates and Special Advisors were screened centrally; so for national elites, central approval — not local support — was essential. Key positions were then dispensed at the centre, via CCHQ or No.10 Downing Street.

At the same time, Mr Cameron’s relationship with the over-60s was not one of support combined with discipline, but rather one of patronage. To secure Tory-friendly seats in an ageing society, Cameron committed his government to protecting pensioners’ winter fuel allowances, free TV licences, free bus passes and triple-locked pensions. This strategy became especially clear in the planning system: Tory MPs became increasingly unwilling to confront the entrenched resistance to new development from an older generation of NIMBY activists. 

There were various motives for this, and one of them was impatience. Politically, Mr Cameron’s time horizon favoured immediate office and vote rewards rather than a slower and more sustainable growth strategy. This myopic view persisted under the premierships of Theresa May, Boris Johnson — and persists today under Rishi Sunak. Although this strategy has helped the Conservatives in every election since 2010, there comes a point of diminishing marginal returns, where the very thing that was the energy that propelled the party forward now becomes the dead weight that holds it back.

Too many journalists, I believe, still cling to a Pollyannaish view of the Tory party and its ability to withstand the forces of decay. I, for one, hold a different view: The Conservative party is designed, by its fundraising model, its candidate selection process and everything else about it, as a focus of pensioner power. This electoral strategy is successful only as long as the economy keeps growing so that prosperity trickles down to the working population. By winter 2023, however, these conditions can no longer be assumed.