As ever, the British electorate wants incompatible things – but do not despair

The title of this Telegraph article by Daniel Hannan “Here’s why I’m quitting the Conservative Party” is true, but not for the reason you think. The Reform Party will not be getting its first representative in the House of Lords quite yet. Hannan writes,

Here is the nub of the problem. A majority of the electorate believes that Britain, which has the highest tax rate since the aftermath of the Second World War and whose national debt is about to overtake its annual GDP, is some kind of Hayekian, if not Dickensian, state. The single most unpopular Labour policy since polling day was to seek to remove the winter fuel allowance from better-off pensioners.

Our politician problem, in short, is a manifestation of our electorate problem. Plenty of MPs, including Labour MPs, can see what needs to be done. But they can’t see how to get re-elected if they do it.

For example, almost every politician will privately admit that the pensions triple lock is condemning Britain to penury, yet no party proposes abolition. Why not? Because, by 65 to 11 per cent, voters want to keep it (all figures are from YouGov polls within the last 18 months).

MPs likewise know that the NHS cannot remain a state monopoly. Wes Streeting, Nigel Farage, Kemi Badenoch – all have eyes in their heads. But, having eyes, they are also aware that voters oppose any use of private provision, even within a system free to the user, by 71 to 16 per cent.

Every MP grasps that housebuilding has not kept up with population growth for 40 years. So where are all the new towns that keep being proposed? It turns out that voters (by 49 to 30 per cent) don’t want them.

We are in a vicious circle. As things deteriorate, voters become angry, and blame the political class. MPs lose whatever lingering legitimacy they had, and become even less able to propose unpopular policies.

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Consider, for example, the idea that rent controls reduce the number of available properties and so drive up rents. It is not obvious, but a few minutes’ thought reveals that, if people cannot make a profit by letting out their homes, they will not do it.

Or consider the idea that you become more secure by buying what you need from around the world rather than by manufacturing it at home. Again, it seems counterintuitive, but we apply that principle to our own lives. Indeed, it is precisely the important things – food, clothing, housing – that we purchase from specialists rather than trying to make them ourselves.

Consider, above all, the idea that cutting the tax rate might encourage more economic activity and so generate more tax revenue. This must, if you think about it, be true. A tax rate of 100 per cent would mean zero revenue, since people would not work for nothing, so it is simply a question of finding where the optimum rate is.

At present, though, voters instead favour any tax that they think will fall on other people. For example, a wealth tax – a textbook example of a levy that drives entrepreneurs away and reduces revenue – is backed by an extraordinary 75 per cent of voters, with just 12 per cent opposed. In the current climate, almost no one in public life is prepared to tell 75 per cent that they are wrong.

Yet it is precisely the counter-intuitive truths that can be profitably taught. That was what Ralph Harris did in the 1950s and 1960s; and it is what I shall be doing from 1 June, when I take over as the director of the IEA.