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The Economist
The Economist
31 May 2023


NextImg:Britain’s new political sorcerer: the Reform Fairy
Britain | Bagehot

Britain’s new political sorcerer: the Reform Fairy

Forget the Magic Money Tree. Another mythical being rules British politics

Theresa May, a former prime minister, was an underappreciated wordsmith. “Brexit means Brexit” was magisterial in its circularity. “No deal is better than a bad deal” stuck around long after she no longer agreed with it. Of all the phrases she popularised, the most potent was: “There isn’t a Magic Money Tree.”

Mrs May’s Magic Money Tree explains why no politician can pledge to spend money without saying exactly where the cash would come from. Rishi Sunak, the Conservative prime minister, has long denied the tree’s existence. When Rachel Reeves became Labour’s shadow chancellor in 2021, she swung an axe at it, too. “I don’t believe there is a Magic Money Tree,” she said in one of her first big interviews after taking the job.

No such rules apply when it comes to reform rather than spending. Both main parties agree that although the British state requires a total overhaul, it does not need much more cash. In its bid to move away from the Magic Money Tree, British politics has fallen under the spell of another mythical being: the Reform Fairy. The Magic Money Tree could generate cash at will; the Reform Fairy can apparently improve public services without spending political or financial capital.

The Reform Fairy flutters over the National Health Service (nhs). Both parties think that the nhs, the biggest chunk of state spending, is glaringly inefficient and that pumping cash into long-term health rather than emergency care would be a fine thing. There is a problem, however. Making fat people thin will help in the long term but it will not reduce A&E demand next year. Plugging the £10bn ($12.4bn) backlog of capital investment has to come from elsewhere in the health budget without extra funding. Training more doctors will lessen the expense of using agency workers to fill gaps in hospital rotas, but medics will not arrive fast. All require money, unless the Reform Fairy flaps its wings.

People believe funny things when they are desperate. Whoever wins the next election will govern against a miserable economic backdrop. The last time Labour entered office from opposition, the economy was flying. Average growth was about 3%. National debt was 37% of gdp. It was in this context that Sir Tony Blair and Gordon Brown tried, with mixed success, to overhaul Britain’s public services. This time the Conservatives are passing on a rotten inheritance. The economy is expected to be crawling along at 1.8%; debt is already at 99% of gdp. In such circumstances, faith in the supernatural becomes almost rational.

“Every time a child says, ‘I don’t believe in fairies,’ there is a fairy somewhere that falls down dead,” wrote J.M. Barrie in “Peter Pan”. Likewise, for some Labour mps, reform is simply a matter of belief. In general Labour hopes good intentions will be enough, whether it be reforming Whitehall or improving the country’s deal with the eu. But each government enters office promising to overhaul the civil service—and each leaves it grumbling that “Yes, Minister”, a 1980s TV comedy about conniving bureaucrats, is still a documentary. When it comes to the eu the Labour Party assumes that not being the Conservatives will be enough to win favours from Brussels. The Reform Fairy speaks fluent French.

One area of reform where at least Labour has been fiscally realistic is on the green transition. Labour has pledged to spend £28bn a year (about 1% of gdp) on capital investment to fund everything from home insulation to tree-planting. Making the national grid carbon-free by 2030 will not come cheap. The £28bn is, however, an area where discipline in the party breaks down. For some it is an untouchable pledge; for others, it is to be cast aside if things look a bit tight. If a Labour-controlled Treasury will not cough up, the Reform Fairy will have to do its thing for the climate.

Not believing in the fairy is, apparently, deadly. “If the NHS doesn’t reform, it will die,” says Wes Streeting, the shadow health secretary. It is as easy to say as it is absurd. In public policy, things do not die—they simply become worse. Not changing things is always an option. Pressure rarely leads to good policy in any case. In 2010 the Tories did have a radical reform agenda but it was just as reliant on magical thinking. At the heart of austerity was the idea that cutting government departments by up to 40% would leave them more efficient, since they would cut waste. It did not work.

Today, although practically every Conservative mp agrees the state needs reform, the government shows little willingness to do much about it. Backbench Tory mps dream of sweeping, painless post-Brexit reforms that would overhaul everything from procurement to financial regulation. Mr Sunak once believed in the Reform Fairy. During his leadership pitch, he promised to shred eu legislation (with reams of paperwork put through a shredder for good measure in one campaign video). Reality intervened. Now the Houses of Parliament are filled with thumb-twiddling mps, waiting for a legislative agenda that will never arrive.

Clap your hands if you believe in structural reforms

If Labour is to have more success, it must learn from a Conservative government that did manage to overhaul Britain. Margaret Thatcher is associated with a supply-side revolution that shook the state and broke Britain’s unions. But it took both strategy and spending. Before Thatcher smashed the miners, she had to pay the police. As one of her first acts in office she handed the police a pay rise of 45%, on the ground that broke cops would not break strikes. While in opposition, Thatcher planned: she picked allies, identified enemies and worked out where the cash would come from.

Believing in the Reform Fairy has served Labour well so far. A cautious approach on fiscal matters means that Labour is now more trusted on the economy than the Conservatives. Promising reform, rather than spending, is a way of appearing sensible. Yet promising reform without admitting that it will cost money and cause political pain is fundamentally unserious. The Magic Money Tree may not exist. Nor does the Reform Fairy.

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