A Vision for a New Tory Strategy

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Then and Now

In 2019, the Conservative Party had the opportunity to transform Britain. With a new coalition of working-class and first-time voters, it could have revitalised our industrial base, levelled up left-behind towns, and restored faith in politics.

But no sooner than they were elected, the Conservatives rejected the One Nation policy platform that got them there. There was no industrial strategy, no meaningful increases in investment, and no real progress on devolving powers to local communities. Yes, the last government did have some achievements – notably the Lifetime Skills Guarantee, expansion of metro mayors, and the Levelling-up and Regeneration Act – but nothing of the kind needed to radically transform the country and significantly improve living standards for left-behind communities.

I was, albeit cautiously, optimistic about Labour’s pledges to give power to local communities and at long last establish an industrial strategy, but already cracks have started to appear. Most importantly, the Chancellor’s decision to cancel road and infrastructure projects nationwide will only hurt local connectivity and stifle regional growth. While cost-efficiency is important, these short-sighted cuts betray the very communities that most need investment. Infrastructure projects – supported by consistent capital spending – are proven drivers of economic resilience, offering stable returns, cutting costs, and integrating markets. If the government truly wants to drive growth, slashing infrastructure is the worst way to do it.

While the last government had credible reasons for watering down its manifesto commitments – namely the COVID-19 pandemic and the energy crisis caused by the war in Ukraine – the new Labour government may struggle to solidify their narrative . Despite the claim of having inherited the worst economic situation since the Second World War, by the end of the last government, inflation and unemployment were low, the deficit was stabilising, and the economy was showing small shoots of recovery. Whisper it, but there may be room for some revisionism on Labour’s inheritance.

Certainly, these figures give little succour to communities that have suffered falling living standards for decades, but the new government has no excuse for going back on its commitment to regional growth – once again hanging out left-behind towns to dry. As the custodians of the One Nation tradition, the Conservative Party must return to the 2019 consensus, rebuild trust in the Red Wall, and take the fight to Labour. If the Conservatives pull together instead of engaging in ego-driven infighting and create a policy platform fit for One Nation, the next election is theirs for the taking.

This article does not seek to endorse any one of the Tory leadership contenders, but rather posits that whoever commits to national reindustrialisation, increasing our manufacturing output, and boosting government and private-sector investment will place the Conservatives in the best position to head back towards government.

The Treasury, Devolution and Growth

Achieving these goals is admittedly no easy task. First and foremost, the Conservatives must commit to taking on the Treasury orthodoxy that has held Britain back for too long. So-called ‘bean counters’ in Whitehall have repeatedly refused to give the green light to major and collectively transformative growth projects on the grounds of cost, failing to realise that over time such projects would not only pay for themselves but also boost economic growth, improve living standards, and actually increase Treasury revenues.

Although this battle cry has since been associated with the Truss premiership and the controversial sacking of the then Permanent Secretary of the Treasury Sir Tom Scholar, it has been advocated across the political spectrum for decades. During the interwar years, for example, progressive economist John Maynard Keynes called for greater spending on job creation to boost both growth and tax receipts while reducing the welfare bill. As prime minister, Harold Wilson tried to circumvent Treasury orthodoxy by creating a new Department for Economic Affairs.

The Treasury is a unique beast with powers unmatched in the developed world – powers that it will not cede easily. In Germany, similar to what Wilson had tried to achieve in Britain, economic policy is divided between two government departments with separate responsibilities. While the German Finance Ministry is responsible for taxation and public finances, it is the Ministry for Economic Affairs that oversees industrial strategy, innovation and economic growth. By giving the Treasury responsibility for both areas, it is nearly impossible to spark the growth projects Britain needs. If a project is deemed too expensive, despite long-term growth returns, the Treasury will kill it off.

Now, one important way by which the government can reduce the cost of major projects is to reform the planning system. On this, the Chancellor deserves praise. Our outdated and burdensome planning system wraps developers in years of red tape, causing delays and ever-increasing costs – meaning many infrastructure projects, HS2 and Northern Powerhouse Rail being prime examples, are either wound up or never get off the ground at all. While the last government ducked planning reform, deeming it too politically difficult, Reeves and Rayner have grasped the nettle and pledged to face down anti-growth local authorities. Only time will tell whether their rhetoric bears fruit.  

Reforming both the Treasury and our planning system is crucial to the third element of inclusive and sustainable economic growth – reviving our industrial base. As I outlined in my previous article, deindustrialisation and our obsession with London-centric financial services have led to a decline in manufacturing output and employment, resulting in a loss of skills and expertise in the UK workforce. Because productivity growth – the bedrock of economic growth – is much higher in manufacturing than in services, the erosion of our industrial base has also sent productivity through the floor – behind the US, Germany and France and only marginally ahead of Italy (House of Commons Library, 2024).

Higher productivity is key to wage growth, and what is left of our manufacturing industry is a testament to this. Outside London, wages in manufacturing are much higher than in the wider economy. In 2018, median earners in manufacturing earned 22 per cent more in the North East and 19 per cent more in the North West (Onward, 2021). This means not only higher living standards in left-behind communities across the country but billions more in tax receipts for the Treasury generated by higher growth to spend on our schools, hospitals and other public services.

Manufacturing more of what the world needs also addresses our considerable trade deficit. When we buy more from overseas than we sell, we make up the difference by selling valuable assets to foreign investors and borrowing money from other countries. This means that foreign investors own more of our economy, reducing our ability to control our economic resources, and we become beholden to creditor nations. This makes the economy more vulnerable to changes in global markets, such as financial crises or shifts in investor confidence.

The Conservative Party has suffered a bruising defeat, but it is a problem of its own making. It betrayed the trust of those in the Red Wall who desperately needed a manufacturing revival to reverse the tide of declining living standards. To return to government, the Tories must face down the Treasury orthodoxy and get serious about a long-term, sustainable industrial strategy.

Ethan Dodds is a consultant in the political publishing industry.