Cutting the state: Dr Fox’s prescription

liam-fox-credit-paul-toeman A small government will free up citizens and help the UK adjust to a changing world, according to Liam Fox. The right-wing Conservative discusses his model for the economy with Peter Cheney.

A state-educated Scot from a working class background, Liam Fox defies some of the usual Tory stereotypes. Politics first caught his attention when the Callaghan Government was “falling apart” in the 1970s. The trade unions were “holding us to ransom,” unemployment was rising and inflation was high.

“And it seemed to me that Margaret Thatcher had the answers and that she believed that a much smaller state and a much more empowered citizen was the answer,” Fox remarks. “I found that Conservative meritocratic approach very attractive. That’s what took me in and, of course, I remain an unreconstructed free market, Thatcherite, unionist Euro-sceptic.”

The former Defence Secretary’s core political beliefs are that people should “stand on their own two feet where they can” and “we should look after those who can’t look after themselves.”

Fox’s view on reducing the state’s size, is strongly influenced by his pro-American outlook: “Let’s be very frank about it: the cost of it is just simply too great.” For example, last year the UK’s national debt interest stood at £47 billion and it is likely to overtake the £51.4 billion education budget this year. “In other words, we’ll be spending more servicing our debt than educating our children,” Fox states.

His specific proposals, outlined in a speech on 11 March, include freezing all public spending over three years and reducing or temporarily abolishing capital gains tax. He would also make housing benefit for under-25s the exception rather than the rule and abolish stamp duty for buyers aged under 30, to help them enter the housing market.

He enjoys comparing big government to a dinosaur: “It’s got a large footprint, a small brain and very little fine motor control.”

While the Coalition Government has cut the deficit by a third, he wants it to go much further and faster: “Debt is simply deferred tax. At the moment, we’re deferring tax on to the next generation and I don’t think that’s acceptable.”

Taking people out of income tax creates a “gap” which gives people an incentive to work. Cutting corporation tax and employers’ national insurance, in turn, helps to create new jobs.

“We’ve already created 1¼ million new jobs and everyone said that would be impossible but it happened,” he comments. Many of those are part-time posts but he emphasises that any job is important for getting people into the world of work.

This takes him back to his basic argument: “The concept of a welfare state that is willing to tolerate people going through their lives without working is bad for society and demeaning for the individual, as well as being economically unproductive.” When people say that they have never worked, and neither did their father or grandfather, Fox finds that an “appalling indictment on previous governments.”

Fox also questions the rationale for paying benefits to people earning £60,000 per year. This, he claims, was a “wilful expansion” of the welfare state by Gordon Brown to make people dependent on the state. He adds: “Fortunately, the essential character of the British people doesn’t go along with that and that’s why I think the welfare reforms get such a high level of support.”

Global shift

liam-fox-chatham-house The Conservatives, in his view, need to remind the public that the UK is not going through a “short cyclical correction” but this is instead a “long structural adjustment” to adapt to a changing global economy.

“We are no longer the centre of the economic world. That has moved and we need to try to understand that,” he states.

The global economy is growing, Fox notes, but Europe is not benefiting from the growth: “Our taxes are too high, our regulation is too great and our debts are too high.” OECD figures, though, indicate that low taxes have not delivered the faster growth that was promised in the USA.

“The Americans have got the same problem,” Fox responds, “that they’ve got this huge debt round their neck and it’s beginning to dawn on some people on Capitol Hill that debt is a strategic issue.” The US is cutting its defence budget by $500 billion over the next 10 years “to pay its debt interest to Beijing and Moscow.”

Fox strikes a serious tone through most of the interview but also describes himself as an optimist: “If we do set our people free, they will do wonderful things. I think if people are given space to use their natural creativity and energy, they will generate the wealth for the country that we need.”

He has his eye on a Conservative majority at the next general election but David Cameron’s backing for same-sex marriage has resulted in many grassroots members leaving the party. Fox, who voted against the proposal, describes the debate as an “unnecessary row”. The party has to be “very careful” and he adds: “If people wanted social democratic government, they would vote for it but they vote Conservative for a different reason.”

agendaNi is meeting Fox during a regional visit to support the Northern Ireland Conservatives. The party’s pact with the UUP is a distant memory and it will be standing candidates in next year’s local and European elections. Northern Ireland is “short-changed” as its MPs cannot join the UK Government and the choice of national parties is smaller as Labour does not stand candidates.

“It’s time that that sort of politics was given much more support here and I’d love to see the day that politics in Northern Ireland was operated on the same basis [as politics] across the rest of the United Kingdom.”

Having resigned from the Cabinet, he is now working on a book about global risk “and I can’t see anything beyond that at the moment.” Fox adds: “I’ve also enjoyed the ability to speak my mind, freed from the collective responsibility that I had for 17 years.” He would consider a ministerial position, if it were offered, but concludes: “I’m not exactly lacking things to do.”

Profile: Liam Fox

Liam Fox was born and raised in East Kilbride and studied medicine at Glasgow University. After working as a GP, he was elected MP for Woodspring (now North Somerset) in 1992 and became Michael Howard’s parliamentary private secretary in the following year. He was then a whip (1994-1996) and briefly served as a junior Foreign Office Minister (1996-1997). Liam covered defence, foreign affairs, health and the constitution on the opposition front bench and was Defence Secretary from May 2010 to October 2011. He is married to Jesme Baird, who is also a doctor.

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