Boris Johnson is learning the wrong lessons from Mrs Thatcher

Fiscal responsibility. Warnings about public debt. Supply-side reform. Attacks on trade union power. Promises of tax cuts. A plan to revive the Right to Buy for housing association tenants. In Boris Johnson’s big release speech last week, there was no mistaking his attempt to raise the spirit of Margaret Thatcher.

For the man who called himself “a Brexity Hezza”, and who boasted about ending austerity, it was a surprise to hear Johnson argue that “sometimes the best way that government can help is simply to get out of the way,” and refute the suggestion that “the answer to every problem is more state spending.”

Yet this inconsistency – glaring enough – was not the greatest problem with the argument Johnson made in his speech. We are, after all, used to a confused dissonance with this Government. It puts up taxes while talking about cutting them. It scrapped its industrial strategy while still promising to intervene. It boasts of immigration control, while issuing record numbers of visas. It says its priority is to help with the cost of living, but its energy policies mean higher bills.

Neither was the problem the inadequacy of the solutions Johnson set out. It was bizarre to choose to make a speech focused on housing policy, when quite clearly the housing policies he announced will not fix the shortage of homes. Changing the ratios of staff to children at nurseries and ending outdated working practices on the railways are sensible enough, but neither will do very much for families grappling with steepling inflation.

No, the most jarring thing about the speech, and the very deliberate invocation of Mrs Thatcher, was the failure to truly understand the lessons of her success.

It is now common to compare the challenges we face today with those of the 1970s, and there is indeed more than a passing resemblance to that benighted time. We face inflation, perhaps even stagflation. We face the threat of strike action, and union militancy. We face the consequences of international economic shocks that more than match the 1973 oil crisis: a global pandemic and war in Ukraine.

But there are differences with the 1970s too. Then, the unions had defeated the Heath government. The country had gone through the three-day week. The Callaghan government had had to go to the International Monetary Fund for a bailout. The top rate of income tax was 83 per cent and the top rate of tax on investment income was 98 per cent. The labor market was a mess, the nationalized industries were struggling, and industry was internationally uncompetitive.

Mrs Thatcher did not smash the post-war consensus through strength of personality, political strength, or memorable speeches and phrases. She had a serious plan. She followed the ideas of intellectuals like Hayek and Friedman. She had allies around her, like Keith Joseph and Geoffrey Howe in Parliament, and John Hoskyns on her staff. She had a political soulmate across the Atlantic in Ronald Reagan. She had a clear diagnosis of what was wrong and a prescription to put it right.

Although her plan had clear intellectual grounding, it was, especially early on, tempered by pragmatism and practicality. In 1981 her government levied a windfall tax on bankers, and in 1982 it imposed a special tax on profits from companies extracting oil and gas in the North Sea. Thes provided to Nissan to build its incentive factory in Sunderland and the development corporation that established Canary Wharf were examples of how she was willing to use the state strategically to attract investment.

The challenges we face today are, despite some similarities, still different to those of the 1970s. Indeed, some of our difficulties are the result of decisions made in thatcher years: most notably, the sharp decline in manufacturing and domestic production through the 1980s.

While Britain has done well over the past decade to keep unemployment down, in real terms British workers are earning no more than they did before the financial crash. Personal debt has grown and grown and now stands at 133 per cent of household income. We are addicted to ultra-loose monetary policy, with incredibly low interest rates and quantitative easing increasing asset prices.

We have too many low-skill, low-paid jobs. We have too many people too poor to consume without credit. And we make and do too little of what the world wants and needs to buy. We post enormous trade deficits every year, which cause perverse outcomes in policy as governments are forced to do all they can to attract foreign capital to protect the currency. During peak globalisation, we were able to survive thanks to our high-value but limited exports in services and the cheap price of imports. Now globalisation is at retreat and commodity prices are high, we risk finding ourselves horribly exposed.

As Phil Tinline details in his excellent new book, The Death of Consensus, we are reaching a turning point. The mainstream political parties seem blissfully unaware, but our entire economic model – which has largely been a matter of consensus through successive governments over the past 40 years or more – is coming under pressure as its limits and failures become more apparent. Unaffordable housing, low productivity, insufficient investment, huge geographic inequality, poor skills, low pay and social disaffection are all consequences of the failure. The changes in the world economy we are experiencing will only make things more pronounced.

So if the Tories want to take inspiration from Margaret Thatcher, they are right to do so. They should not copy her policies, for the challenges of today are different to those of 40 years ago. And neither should they be tempted to live by the ideological folk memories of her premiership. But in tumultuous times, when a consensus needs to give way to a new vision of the future, they can learn from how she succeeded: a clear, intellectually coherent understanding of where we are going wrong, a vision of a different and more dynamic economy , and a plan and a team to deliver it.

It may be too much to expect of Boris Johnson, but it is the task before each of the candidates vying to replace him.