Victorious party must empower the people to build the recovery

IN UK politics, much has changed since the Labour landslide of 1997 and certainly since the Tory triumph in 1979. But as striking is how little has changed by way of dominant voter concerns. While these elections were historic for their defining change of national mood, the state of the economy dominated both. And it does so again now.

David Cameron, the Conservative leader, has made much of "Britain's broken society". This critique has defied definition as to nature and scale. It has been variously invoked to embrace violent crime, town-centre drinking, "feral youth", the decline of marriage and the loss of deference. It is imbued with nostalgia for a past that was no less troubled with social problems than today, and a wistful sorrow for the passage of time.

In truth, the Britain we lived in during the 1970s and 1980s was not some soft-focus Merchant-Ivory country house. It was, as this week's poster wars have reminded us, the country of Gene Hunt and a set of attitudes we now regard as primeval. There are certainly many social problems in need of attention. But Britain is not a "broken society". The country is, on almost every measure, remarkably law-abiding and peaceful.

Society is not "broken". But our economy most certainly is. And the manifest social problems that we do face have their roots in an economic model so burdened with tax and regulatory costs and constraints that it is unable to create the new surge of enterprise and growth we desperately need to generate new jobs and lift us clear of recession.

Over the past two years, Keynesian economics – or its politicised version – has roared back to fashion. The state played a major role in intervening, correctly so, to halt a banking collapse. It intervened, correctly so, with stimulus measures to prevent recession turning into Depression. It avoided, correctly so, the massive errors of the past in clinging to exchange rate targets and balanced budgets.

The price, of course, has been colossal. The record debt and deficits now have to be paid down, but it is here that politicised Keynesianism hits its limits. Its apologists have little to say about generating an economic recovery. It is a school that has no place for the vital roles of enterprise and the entrepreneur. We are now at a critical juncture where policy has to swing behind wealth creation and enterprise, because it is these forces that will lead us – as they historically have always led us – into recovery.

Big government, with its ever-rising numbers of civil servants, swelling bureaucracy and quangos has to be contained and the imposts on business kept to a minimum if the business cycle is to turn and the economy to have a fighting chance in an ever more competitive world. We cannot count on inward investment or state-backed winners, but on our own efforts. And government now has to empower the people and allow the space for the cycle to turn and recovery to build. This is the central defining issue that the main parties have to address in the weeks ahead.