Is Theresa May launching a quiet economic revolution?

In her speech at the Charity Commission annual meeting today, Theresa May recognised that an active government is necessary to enable more people to participate in and benefit from the economy. But deep changes to policy and governance are needed to achieve this.

I’m sure the commentators will argue about it in tomorrow’s papers, but to my mind the most important paragraph in Theresa May’s speech was this one:

“Because people who are just managing, just getting by don’t need a government that will get out of the way, they need a government that will make the system work for them. An active government that will work for them and allow them to share in the growing prosperity of post-Brexit Britain.”

They will pick over the nuances of what she said for the big stories of the day, for Brexit hard or soft or the NHS crisis, but they may miss – they may not, of course – what a shift in economic policy is emerging, quietly in the bowels of the UK government.

May has clearly accepted the basic premise of the argument for inclusive growth – that most poverty exists now among people in work, not out of work, families who are trapped in a succession of badly-paid, badly-contracted jobs from which they can never escape.

This is an important departure. It means that, whether they like it or not, the old guard can no longer quite escape the blurred division of the world into social or economic policy. What is economic has clear social effects which rebound on it for good or ill, and vice versa.

It means that, as she said in her speech to the Charity Commission, that ‘active government’ implies a new kind of industrial policy, which will support UK companies in a more strategic way.

It may not be called that – the term ‘industrial policy’ upsets people in some kinds of old-fashioned thinktank which began in the 1970s – but that is what it will mean.

But there is a problem about this, and this may be the moment to spell it out. Because it could frustrate the prime minister’s purpose, just as it gets in the way for the RSA’s Inclusive Growth Commission.

It is that, even though she has promised action, nearly every assumption, policy, institution and process derives from the old categories – just as the old divisions between social and economic run through Whitehall like a stick of rock. And every category betrays the old assumptions that wealth will trickle down if it is concentrated. We know it doesn’t. Theresa May clear knows it doesn’t. Most people in government know it doesn’t. But the national policy-making machine still assumes that it does.

As part of the team working on the commission, I feel I have been wrestling with the implications of this conundrum for months now. But I am also optimistic that the UK will find a way through to a broader, deeper and richer kind of prosperity.

I think this because I have been researching the companion volume to the Commission’s final report, which will be about inclusive growth in practice. I have been talking to local government officers all over the country – those who are pioneering a series of radical, pragmatic new approaches.

Without exception, they have been open-minded, determined, imaginative, innovative and entrepreneurial. They are the kind of people who have drifted to the surface in local government in its hour of desperation, aware that things have to change. And they provided me with the most hopeful conversations I have had in decades about what might be possible.

So the fact that Whitehall may still be travelling backwards and forwards down the old tramlines may not matter in the short-term.

Because this is the advance guard of a new revolution which Theresa May could find herself facilitating. Which is to get out of the way of the entrepreneurial individuals, from public, private and voluntary sectors, who are making things happen at local level, with little or no resources but with leadership and flair.

They will need help from Whitehall if the resources that get lost because one department’s programmes are busily corroding the next department’s programmes – a major reason why services are so expensive – are to be clawed back.

But they represent a revolution that sits in the mainstream of the direction of travel over the past four decades. Indeed, it is almost a Thatcherite one, or it would be if Margaret Thatcher had understood that public sector people can be innovative and entrepreneurial too, or if she had set UK cities free in the way that she set business free. 

Theresa May could douse the embers of this new entrepreneurial revolution, or she could let it flame. It just awaits some prime ministerial rhetoric to set it alight.

David Boyle is a Research Associate for the RSA Inclusive Growth Commission. You can find him on Twitter @davidboyle1958.