I had been holding off writing this short essay as I thought it not helpful at the time – and likely because my readership has already dwindled to a trickle.

However, William Hague’s essay last week about the need for the Tories to embrace values before they embrace new policy directions stimulated me to write. Who knows, maybe even Labour or Reform might also be interested in the discussion of values before policy.

Not having lived in the UK for very long, everything is a mystery. We appear to speak the same language (except here in North Yorkshire where I live) but the conceptual background is very different and things that I might take for granted coming from Canada, seem very foreign to the English.

The three words that you can’t use in the UK?

1. Freedom
2. Productivity
3. Personal responsibility (yes, really four)

Freedom

A few months ago, at the Davos annual waste of time and energy (especially jet fuel) Javier Milei made a passionate call for freedom and capitalism, concluding his speech with ¡Viva la Libertad,carajo! (Long live freedom, dammit!). Now I rack my brains to find a speech from any prominent British politician that had anything to say about freedom. From left to right and up and down, British politicians are very keen to put limits on the freedom of individuals and organized bodies. Obviously, the concepts of property rights which were so highly fought for in England over the centuries have given away to “reasonable restrictions” to protect public interests, ensure fair competition or maintain social order (sic). The concepts of freedom in one’s personal life is also subject to restriction and disdain in the UK. We spend much more time in the UK discussing how limitations to speech and action can be justified by the “public interest” than we do discussing how the state could just get out of our lives. And then there is the constant battle to avoid the dreaded “cancellation” as speech or actions make others uncomfortable and institutions cater to the howls of the “woke” crowd. My god, you can’t even sponsor a book festival without getting into trouble with some group or another. It still does appear, however, that you can vandalize private property (such as happened to HSBC in 2023) and have juries of your peers excuse you on the grounds that they didn’t like the law over private property, when compared to an activist “cause”.

In this country a political group could take a bold stance by declaring itself ready to roll back the infringement on personal freedoms and by extension property rights. It could attack the vast array of legislation and bureaucracy that is designed to limit personal freedoms and the rights to exploit property. However, I do still worry that without a very strong champion here there is a risk that this may not be a vote-getting strategy. I may be wrong, but there seems to me to be a very large swath of the British public that wants the government to interfere in their lives (see my comments on personal responsibility below). There is likely an even larger swath of the British public that wants the government to interfere with your personal freedom if not their own. Where this attraction of statism comes from, I don’t know, after the long global history of statist countries devolving to poverty, chaos or fascism. The British could learn from the Argentinian example.

The UK still ranks above the world average in the rankings for economic freedom published by the Institute of Economic Affairs and Fraser Institute. However, in the last report it had dropped 11 places from 11 to 22 in the world. In the similar Economic Freedom Index published by the Heritage Foundation for 2024 the UK ranked 30^th, well down from its highest score recorded in 2006.

Perhaps a reintroduction of the concept of freedom in political discourse could be timely.

Productivity

An executive acquaintance of mine had a discussion with one of her colleagues in which she brought around the topic of poor British productivity. The response? “Oh, that’s so American!” (she’s not). So, while the topic of poor productivity is on the minds of the economists of non-American countries – it often gets corrupted from “productivity” to “growth.” I believe in Britain it is because of a long-held belief that productivity was “bad” – because of the presumption that improved productivity required working harder rather than working smarter. And this corruption to the focus on “growth” rather than productivity plays into the British psyche of reduced freedom and reduced personal responsibility (more later). Productivity is not my problem, it is because the government has not put enough public money into (insert investment fad of the month here) – especially manufacturing, with “good middle class” (preferably union) jobs. This becomes corrupted even further when “growth” is supposed to come from large government investments in “net-zero” (sic) strategies. How the substitution of all-in higher costs for energy for lower costs is supposed to feed growth and productivity is a subject for a remedial GCSE math course. Lately, we have started to blame immigration for productivity failures as the numerator (GDP) is assumed to be largely fixed, so we must blame the denominator (population). Reduce immigration – productivity problem fixed!

I believe that we can make the question of productivity less of an anathema to the British by focusing on what it is and what it isn’t. Keeping people working at an ancient and dirty blast furnace operation is not productivity. Investing in uneconomic carbon capture is not productivity. Productivity comes from an educated and engaged workforce that is supported by high quality systems and technology, and in the UK, let’s face it, manufacturing outside of a few engineering and technology niches, is not it. It’s services.

We might start (and I think even Labour here could be onside) with improving the output per worker in the overwhelming state apparatus. In September of 2019 16.5% of all paid workers worked for governments in the UK – a huge number in itself. In first quarter of 2022 about 21.9%. This is an astonishing growth rate for a time where there is significant consensus that publicly provided services are in turmoil.

Even worse than the number of employees needing to be paid off the public purse is that these generally intelligent and earnest people feel the need to “do something,” with little understanding that each time they want to “do something” they cost individuals and companies time and money that is likely much better spent elsewhere. A classic example is a concept that I have written about before “Biodiversity Net Gain” (Biodiversity Net Gain A scheme, an “own goal” and daft apeth | LinkedIn. While you have to read the whole article to get a feel for how “daft” this scheme is, it clearly is the product of an over-active bureaucracy with no concept of how this “feel good” scheme might impact the cost and availability of housing, and thus overall economic productivity.

We have to go back to the source and definition of productivity. If productivity is the ratio of the value of the outputs over the value of the inputs, companies and countries have to focus on why either the inputs are too costly or too inefficient and whether the outputs are obtaining a value in the marketplace that justifies the inputs. The huge leaps in productivity sine the Industrial Revolution have come from technological advances and amazingly, it has not much mattered where those advances had been invented, but how they have been most effectively exploited.

In the UK, this obvious focus on how the government can make it cheaper and easier to exploit new technological solutions has been corrupted into a very vague discussion of how much government might spend on “infrastructure” without any real consideration of the value of what expenditure in terms of reducing costs or improving revenues. We all might like better train service, but the connection between nationalizing trains and improving the general cost structure of the country seems to be tenuous. From my personal train stories – getting the crew to show up would be a much better start. Even better, finding a way to replace crew with software would be much better. Who would have thought that in 2024 we would still be using human train drivers!

Part of the productivity dilemma is the apparent belief in the UK (and a wide range of OECD countries) that you can rapidly expand the volume and complexity of regulation and not have an effect on productivity. There is an astonishing lack of appreciation for the cost to economies in general of excess regulation.

Here is but one example. In a report from the Institute of Economic Affairs they estimated that anti-money laundering (“AML”) compliance cost the UK banking system £34 billion annually, approximately twice the total policing budget of the UK at the time of the report. In addition to this massive cost, there appeared to be a startlingly high degree of false positives that came out of the compliance efforts, resulting in hundreds of thousands of people being “de-banked” (the IEA estimated 343,000 at the date of their report). The pure time and effort to become “re-banked” could not be estimated. And the IEA further concluded that the AML regulations did not reduce crime.

So here is one example (amongst hundreds) of the regulatory burden negatively affecting productivity in the UK. There was some expectation that BREXIT would result in the reduction of regulatory burden and cost structure, improving productivity. Hasn’t happened.

So that is why the governments of all stripes deflect from some of the real reasons for poor productivity and instead focus on the shiny ball of increased government spending (they call it “investment”). No one wants to look in the mirror and say: “I have seen the enemy and it is us.” 

I would be remiss in the discussion of productivity without mentioning the uniquely British phrase “skiving Friday.” While people in many countries and cultures look to find ways to reduce the burden of working for a living, this concept was new to me and to be honest not immediately reasonable. I did not think that the British were any lazier than any other culture, but the evidence of skiving Friday seem to have piled up. It is especially apparent in the attendance records of primary and secondary school students in the UK. Not only is school absenteeism substantially higher than before COVID but it seems to be increasingly focused on Fridays – also days that see the fewest employees in the office – where allowed.

Personal Responsibility

Here is a sample of the programs that are available to UK residents coming from general tax revenues (with estimates of the most recent annual cost in billions of pounds for the major programs):

Universal Credit £63

Personal Independence payment £15

Housing benefit (being rolled into Universal Credit)£17

Child benefit £12

Attendance Allowance £6

Employment and Support Allowance £15

Disability Living Allowance £9.6

Youth Offer

Back to Work Plan

UK Shared Prosperity Fund

Carer’s allowance

Council Tax Reductions

Discretionary Housing Payment

Winter Fuel Payment 

This is of course a staggering array of programs and a staggering cost to the taxpayer in the UK. While not an entire explanation for the cost of these programs, three data points are important:

• The number of economically inactive working age people in the UK has risen from 20.8% of the working age population in 2019 to 21.8% (an increase of 600,000) in 2024
• People receiving the Personal Independence Payment or Disability Allowance or the Carer’s Allowance totalled 6 million in the latest estimates (but some people may be entitled to more than one of these benefits). This is up 600,000 people since 2019
• Overall school absenteeism in 2024 is about 7.4% compared to below 5% in 2019. More startingly, the persistently absent (more than 10% of classes) was 19.4% in 2024

There are many, many good and valid reasons for people in the UK to require state support. However, the range and depth of support must raise questions of whether the support is required because of the demand for help, or is the demand for support increasing because of the supply of it. You should expect that the typical UK resident is no more unwilling to work or likely to be disabled than the population of any other OECD country.

I raise these issues not to argue that the UK is a nation of “skivers,” but to question whether the pendulum of personal responsibility versus collective responsibility has swung too far. 

While entirely anecdotal, my reading of the popular press seems to imply that for whatever ill of the day is being examined “the government should do something about it.” Not that people should take individual or collective responsibility for an issue but the taxpayer should pay. And in a country where the top 10% of taxpayers pay 60% of the income tax bill, why not? To call for the government to solve all ills is not costing the vast majority of people very much at all.

This attitude is also reflected in charitable giving in the UK. In the UK annual charitable giving is about 0.54% of GDP. In Canada 0.77% and amazingly, in the US 1.44% of GDP. 

I believe that this is why the concept of personal responsibility gets such short shrift in the UK. Under governments of all stripes, the cultural attitude of having the government responsible for society ills and issues seems pervasive.

These are three sets of values that I believe should have much more discussion in the UK before we start to talk about policy. These are not easy, as they are cultural issues that do not get fixed by a government budget. However, they can be made worse by a government budget and even worse by ignoring that they are issues at all. 

Perhaps the Tories might have a go?