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The five squanderings of the UK's assets - the real losses behind the election everyone lost

The UK election may have disappointed all the party leaders but over the past 40 years the country has recklessly thrown away its advantages. Can they get together for the fresh start that is needed?
Simon Zadek
7 May 2010

And who lost…well, Mr Brown clearly lost, but at least succeeded not to be slaughtered at the polls, a win of sorts compared to what might have happened. Mr Clegg lost in failing to capitalize on the ‘TV Wow’ that he experienced, and Mr Cameron lost, whatever is his next job, in failing to get a strong mandate from the UK electorate. His will be a disabled government at best.

Actually there were more losers than these three gentlemen and their tribal followers. Anthony Barnett must be feeling down that his optimistic ‘call to revolution’ in Our Kingdom as he wrongly predicted a three party race. And advocates of electoral democracy must be cringing at the news that hundreds if not thousands of citizens were not able to vote, which will no doubt amuse Mr Chavez and other masters of disenfranchisement.

But most of all, anyone interested in the future of the UK must be wondering how these electoral games relate to the real challenges facing an over-indebted island. Since entering the European Union in the early 1970s, the UK’s political process has opportunistically squandered the nation’s assets in five, well-grooved steps.

First come the North Sea Oil, which paid for tax cuts and consumer imports, and accelerated the demise of our manufacturing base through neglect and painfully high exchange rates (that made imported consumables a bit cheaper).

Second came the sale of our public-owned assets, privatization, alongside the fire-sale of public housing at cut price (in fact happening around the same time). It certainly powered-up the private sector, and crucially allowed Margaret Thatcher to distribute yet another round of largesse to her loyal voters, who helpfully spent it out quickly on yet more imported products, witnessed by the rapid collapse of savings rates at around the same time.

The third round of asset use was somewhat different in quality, the ballooning world of public-private partnerships. This allowed the public sector to develop a huge and largely undisclosed off-balance sheet contingent liability to the private sector, which had the effect of placing UK Inc in hock to the private sector indefinitely for the supply of its most basic services, and the politically attractive spin off of making the government’s capital account looking a whole lot better.

Fourthly of course was the use of our own homes to mobilize assets and, once again, spent it on all things glitzy and, given that we by that time had no manufacturing base to speak of, imported from other shores. Thanks to our sturdy Chancellor of the time, the relaxation of consumer and mortgage credit made all that possible and so apparently painless at a time of endlessly rising property prices.

And that brings us to the grand finale (to date), the implosion of the financial services sector, bloated by risk, driven by greed, and enabled by our voter-conscious, democratically elected government. With this, unintended, second Big Bang, the underlying weakness of the entire economy has been revealed, hidden by the preceding four magical moments that had moved our national assets from what was a well-stocked balance sheet to the country’s one off profit and loss account.

Now what, you may well ask, has all this to do with the elections. Well in one sense nothing, of course, because it has not been in any party’s interest to reveal what has happened to our underlying asset base in the last 30 years (and that is before we even get into what we have done to our human capital). Our horrendous public sector deficit and rapidly re-growing balance of payments problems would not be so scary if we had not squandered our inherited assets that might have formed the basis for tomorrow’s wealth creation and sustainable economic growth. The fact is, or at least a reasonably melodramatic view would be, that our balance sheet is shot, and our underlying capacities seriously damaged if not permanently destroyed.

So for our leader-to-be, I suggest the following: (a) come clean, quickly, on the real nature of the problem and the dream we have lived across Labour and Tory administrations for three decades, (b) establish a ‘true north’ accounting framework that allows for our assets and debts, natural, human, financial and social, to be tracked and reported on, (c) renounce the fashionable demand for every minister to be visibly innovative, since it only adds to the problem of short-term populism at the cost of long-term change, (d) take advantage of our ‘hung’ situation by creating a government-by-consensus approach that draws in the best from all parties in a ground-level review of what can be done for the UK’ citizens to live healthily in this century, thereby bringing to an end the era of obsession, addiction and denial that have become symptomatic of our post-colonial period.

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