Featured, Features | 28th April 2015

Election 2015: Would Ukip know how to run the economy?

Four million people are set to vote Ukip in ten days. They don’t want to be seen as a one-issue party, but would their leaders know how to run the British economy?

Photo: Getty

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Patrick O’Flynn is a reasonable guy. Ukip’s economic spokesman – their alternative Chancellor – is thoughtful and well-liked. He is a former journalist and is referred to respectfully by current ones, whether on the left or right.

He is a counter-weight to those who still think Ukip is simply a party of “fruitcakes, loonies and closest racists” (as David Cameron labelled them in 2006). Many people, especially Londoners and Scots, think the purple party have had a disastrous effect on British politics, dragging debate to the right and blaming eastern Europeans for the failings of global capitalism.

But it is hard to be so belligerent towards Ukip when O’Flynn, or ‘Paddy’, tries to explain their beliefs. The “European unity has massively undue decision making power”, he begins, when I ask him for three reasons Ukip are so anti-EU. He describes himself as a “firm believer” in social solidarity, but any body has to reflect “where that social solidarity is felt”.

“If the British people were more generally like Peter Mandelson, and their hearts were stirred by the sight of the circle of stars…”, then he might see a reason for our membership of Europe, but, he thinks, “There just is no strong European identity”. Apart from maybe during the Ryder Cup once every two years.

“If the British people were more generally like Peter Mandelson…”

He argues that this is the “fundamental, overriding problem”. He mentions Greece, and the way Germans are now having to sacrifice for them. It’s a cause Mark Reckless and Douglas Carswell also attached themselves too when I met them recently in Canvey Island. They talked of Podemos and Syriza in admiring terms; a Eurozone collapse is in Ukip’s interests.

O’Flynn calls the currency union, “Just one of the worst ideas the political class has had. [It] will fall apart, and I’m staking my entire political career on… hammering that message home.”

Ukip see no danger to isolationism. “I suppose you could say the EU has had a marginal role in post-war peace”, O’Flynn admits, but he thinks Nato binds the Western world. He sees no real benefits to European membership. “You walk through the passport queue a little bit quicker, don’t you?”

Faith and science

I consider mentioning the various studies that suggest being part of the EU fuels the British economy. Access to the Common Market incentivises big business to invest billions in heavy industry, power-plants and food factories. Membership creates jobs. And, as a group, immigrants contribute to the British economy. The caricatures created by the Mail are myths: immigrants are less likely to claim benefits than the UK’s white British majority.

But O’Flynn isn’t going to have an epiphany if I throw a few facts at him. As he says, his whole political career is based on opposing the EU. Reasoned research reports aren’t going to remake his beliefs. I wonder whether anything could. The difference between a faith and a science is that scientific belief is meant to be changed by fact, whereas no amount of evidence can overturn a faith.

When I suggest to O’Flynn that Ukip’s attitude towards the EU is a faith not a science, he answers a slightly different question, telling me “There’s no science and there is no faith” behind our membership.

I ask what it would take for him to want to remain within the EU. He returns to the idea of a European identity. If the British had one he implies he could be persuaded, but that’s a subjective marker. No Europhile could ever prove that to him. No amount of data will do. You can’t fact-check Ukip out of existence.

The 2000s

Besides, O’Flynn doesn’t accept European immigration has helped the UK. He agrees that immigrants have created a “very marginal uptick in GDP per head”, but thinks that’s unsurprising given how many are of working age and in good health. More importantly, he thinks any economic benefit has been outweighed by the pressure immigrants have put on working class wages.

Youth unemployment rose far more dramatically in 2008 than in 2005.

By allowing EU citizens to move here without restriction from 2004, New Labour “created an imbalance in the supply of unskilled and semi-skilled labour”. For O’Flynn, it’s a “huge factor” in why wages fell. For someone like Owen Jones, whom we’ll shortly be releasing our recent interview with, this argument is absurd. A few Lithuanian fruit-pickers didn’t crush this country’s wages – the power of global capitalists and weakness of trade unions did.

This is a decade-long argument. When I suggest to O’Flynn that the 2007-08 financial crisis caused most of the problems which he attributes to immigration, he pushes back. Before the crash, “The economic system has stopped producing gains – albeit modest gains – for most people.” He points to youth unemployment, which started rising in 2005, and the way wages stagnated in the early 2000s.

Paddy is right that youth unemployment rose slightly between 2005 and 2007 –from 11 to 12 per cent. But it rose far more dramatically in 2008, when the global crisis hit, through to 2011, when the recession bit.

Youth unemployment rose to 17-18 per cent in 2009 and peaked at 20 per cent in 2011. If immigration was the cause why does the rate correlate so closely with the financial crash?

Ukip’s objection to unrestrained European immigration is not, of course, just about the economy. It’s cultural. O’Flynn’s theory is simple, and it’s one most people on the left would disagree with: “The more diverse a society, the more strain placed on social solidarity.”

Immigration is “bound to place the bonds of community under strain”, and “if you place social solidarity under that degree of strain, you will start to lose consensus for, say, some of our most valued aspects of the welfare state – I think the left is very complacent on that.”

So Ukip won’t privatise the NHS? O’Flynn is adamant.

O’Flynn recognises the UK is full of beloved state institutions and principles – from the NHS to a safety net for those in need – and Ukip will go nowhere trying to shred them. He says any economic plan must start with “the extensive benefits and public service offer that this country believes in and wants to sustain”.

So Ukip won’t privatise the NHS? He is adamant. “The party won’t do that. There are libertarians in Ukip, but the debate has been convincingly won by those backing the NHS.” (People like him, he could have added.)

His answer highlights Ukip’s great challenge. At the moment they are a party of libertarian ex-Tories, disgruntled protest voters and culturally conservative Labour defectors. There is both a blue and red Ukip, and in many ways they disagree, or have very different priorities. Can that kind of coalition hold?

*

You might disagree with Paddy, and think he’s latched onto a false bogeyman, but you can’t dismiss his party’s views in the way that many – not least the future PM – once did. But while Ukip have become more mainstream, or the mainstream has become more Ukippy, they are still a makeshift outfit.

When I ask a friend what I should ask Ukip’s potential Chancellor, he replies quickly: “Well, I’m not convinced Ukip know that much about economics.”

I ask Paddy whether he’s fit to be Chancellor. “Well yes, by modern standards. If I look at history graduate George Osborne…”, he replies, and goes off on a long attack. The gist: Osborne doesn’t understand incentives. (O’Flynn studied economics at Cambridge.) [1] But Osborne’s incompetence doesn’t make O’Flynn more competent.

I ask him to explain quantitative easing – or ‘QE’ – a notoriously tricky aspect of monetary policy that everyone from Charlie Brooker to Newsnight spent most of 2009 explaining. O’Flynn’s answer is curt.

“The basic principle of QE is to create more money chasing the same amount of goods and services. Which means, you know, you get inflation.”

So is QE something that Ukip generally support? This answer is longer and less direct.

“I think economics is… what’s the term? The dismal science. I can’t remember who called it that. Because, you know, it’s not a natural science, it’s by no means an exact science, you’ve got all kinds of factors – such as Keynes and his animal spirits in there – so we’re all looking through the murk, stretching through the fog. And I think we should see QE policies in that light. There’s no way of saying ‘Is it right for the particular circumstances we’re in?’

“I think in retrospect, actually, the QE that the government has done – the coalition has done – would seem to me, to have been worthwhile. And that actually, you know, there were legitimate concerns about it robbing savers, and maybe, you know, rewarding some people by creating some asset price bubbles all over again.

“But in terms of stopping cardiac arrest inflation and, you know, keeping employment levels ticking over, it…it…it’s likely that it’s been beneficial. I mean, there were some very, very stringent critics at the outset, and it did look – didn’t it? – like inflation was creeping up.”

I found this answer vague. Maybe it reads more convincing than it sounded. To me, it didn’t suggest a depth of understanding or grasp of the detail.

But perhaps this criticism is unfounded. Depth of knowledge, details – these things are for the civil service. A Chancellor should just set a vague direction. Their job is politics, not policy. But this seems like dangerous reasoning if Nicholas Macpherson or his successor eventually has to take orders from the Chancellor.

I’m unconvinced that we’d let Ed Balls or George Osborne offer this simplified account of the global economy, so do we let Ukip launch grenades at the main parties without offering alternatives in detail?

Four million people are set to vote for O’Flynn’s party in May. These people shouldn’t be ignored (read our features from seats where Ukip are doing well – Thurrock, Boston & Skegness, Great Grimsby, Castle Point, Rochester – and our interview with Douglas Carswell), but, in turn, their party should surely be quizzed on more than just their flagship issue.

When I press O’Flynn on finance, he directs me to a spokesman, but understanding and controlling the financial sector is arguably the most important – and toughest – job any Chancellor faces.

Ukip’s basis for bringing back grammar schools seems similarly threadbare. When I ask why Ukip want to reintroduce them rather than improve academies, which now make up more than 60 per cent of secondary schools, O’Flynn’s reply is simple. Or simplistic.

“Well look no one’s saying go back to the old 80:20 split at 11 and that’s your lot, clearly—”

“So what are you saying? How do you prevent that if you have a grammar school system?”

“Well I think you have more grammar schools don’t you? And there’s no reason you can’t have a grammar school ethos that embraces, you know, 40-50 per cent of the cohort. It doesn’t have to be a very rigidly exclusive 15-20 per cent, ‘sheep and goats’ exercise.”

What about the other 50 per cent? We moved on. I was disarmed by Paddy’s one-liner. He’s full of them – as his recent quip to a Telegraph’s sketch writer question about St George proved – but great lines aren’t substitutes for proper policies.

Lots of people are trying to come up with solutions to complex issues. Ukip aren’t.

Lots of people – in think tanks, on papers, at universities – are trying to come up with solutions to complex issues. Ukip offer easy and simple answers. But their ideas are illusory. In the same way that the Greens’ manifesto plucked promises out of thin air, Ukip act like difficulties – from immigration to long term unemployment – can easily disappear.

Both parties have forced the main parties to think anew and work harder. But neither are serious. They’re both pressure groups in the same way that the Lib Dems were in 2010. The coalition has taught us what happens to pressure groups when they get into government: they have to tackle complicated issues and make unpopular decisions. And they lose most of their support.

But power is a distant dream, and peril, for Ukip. For now they can continue to win over the disconsolate and disaffected. In ten days they are likely to come second to Labour in hundreds of seats across England. And it will up to senior figures like O’Flynn to keep the fragile, possibly Farage-less, coalition that remains in tact.

This interview took place in February.

[1] An earlier version of this piece wrongly accused O’Flynn of studying PPE at Oxford.