Advertisement

In Britain’s chaotic rail system, as elsewhere, we need a clever state to play a full part

Slow train to nowhere: commuters at London’s Waterloo station.
Slow train to nowhere: commuters at London’s Waterloo station. Photograph: Victoria Jones/PA

Who believes in the magic of self-organising, dynamic markets that never make mistakes? The crisis in British conservatism is that it is simultaneously a believer and non-believer. Just as it wants to be both out of Europe but in it, on its own terms, because that means prosperity and influence, so it proclaims undying fealty to markets while being forced to curb and intervene in them in practice. It turns the party into a political pantomime horse unfit to govern – and may ultimately force its break-up as the strains of the lived inconsistencies become intolerable.

For the dramas of Salzburg betray much deeper and profound intellectual conflicts. Theresa May’s ferociously anti-Europe wing of MPs is animated by a passionate belief in the precepts of US free-market libertarianism and sees Europe as the major intellectual and political obstacle. Last week, a group of British and US rightwing thinktanks published a blueprint for a post-Brexit US-UK trade deal.

Britain’s environmental and food standards regulation would be scrapped while our public sector would be opened up to be run by US companies, particularly in the NHS. The immigration system would be redrawn to favour free movement between the US and UK, to promote what they described as a new, free-market gold standard for trade deals. The state would be removed from the economy in an Anglo-American free market condominium, with the UK “regaining control” by becoming the 51st state but without any votes.

The British thinktanks, including the Initiative for Free Trade, whose president is the Eurosceptic Tory MEP Daniel Hannan, are outriders for the Tory Eurosceptic rightwing. The trade secretary, Liam Fox, is a keen advocate of such a deal, but he knows that to advocate scrapping food standards before Brexit would be political death. His colleague and fellow libertarian, the environment secretary, Michael Gove, has ruled it out for just that reason.

For markets, even though neither Gove nor Fox wants openly to concede it, don’t work as the ideology predicts. Market economies need the state, European-style. Privatising the NHS via a US trade deal while allowing the free import of genetically modified US food would create a political backlash to make last May’s reaction to new rail timetables look tame.

On Thursday, hours before Mrs May’s confrontation with reality in Salzburg, the Office of Rail and Road published its assessment of how the railways, organised to simulate a market, were unable to co-ordinate the movement of trains. The result was hundreds of cancellations, huge delays and disruption for millions. Nobody, observed the report, in this botched, unco-ordinated market was in charge.

In response, Eurosceptic, market ideologist and transport secretary, Chris Grayling, had to announce a full-scale review of the rail system. He wanted the review to be minimalist, confining itself to potential tweaks to the franchise system, but he was forced to concede that its terms of reference should include extending public ownership. The rail market needs to have a central organising authority. Otherwise, the self-interest of different actors, supposedly a key driver of market efficiency, means the system collapses into mayhem. The truth is that there is a such an authority, even in the current degraded and dysfunctional system: it is the Department for Transport. Except that Grayling doesn’t want to exercise such public power, except when forced to. Strangely, he keeps being forced.

These truths should be no surprise. They are the cornerstone of Keynesian economics, so derided by the Eurosceptic right but whose virtues have been underscored by, first, the financial crisis and now successive problems in deregulated industries. Markets, including and especially financial markets, need central organising public authorities, otherwise they spin out of control. The policy challenge is not to abandon society to their working or to socialise them, but to harness their power for the common good. That means accepting a role for an activist state and making sure it has the agility, capacity and quality officials to deliver .

Importantly, the British public, at the receiving end of the experiment that has now lasted four decades, is beginning to side with a Keynesian and European world view. There are huge majorities emerging in favour of public ownership and against austerity – last week, for example, the National Centre for Social Research reported that only 4% of both Tory and Labour voters think that the government needs to implement further cuts. Meanwhile, support for more tax-and-spend policies is running at 60%, a figure that has doubled since 2010.

This is – or should be – Labour’s opportunity. The shadow chancellor, John McDonnell, has begun to win intriguing plaudits for some of his ideas (including from Jim O’Neill, the former Treasury minister). These range from new forms of employee participation to reshaping the financial system. But they do not yet sit in a consistent social democratic world view incorporating our relations with Europe and are, above all, compromised by siding with the Eurosceptic right over Brexit.

The choice before the country is brutal. It is between the world heralded by the Anglo-American rightwing thinktanks or European liberal social democracy. Imagining, as Jeremy Corbyn and his circle seem to, that the argument will go away post Brexit, or if there is no second “people’s vote”, is self-deluding moonshine.

Making the argument for, say, a national investment bank, is suddenly easy. Integrating it into an argument for Europe is much tougher, but it’s what the left must do to be consistent, tap the new mood and win any general election. Changing Britain and halting Brexit are two sides of the same coin.

• Will Hutton is an Observer columnist