The Observer view on how Britain’s crises can be fixed by a shift in political culture | Observer editorial


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Last year will be remembered as the most turbulent for the global economy since the 2008 financial crisis. Russia’s invasion of Ukraine drove an enormous increase in global energy prices, which led to inflation spiking across the world. And 2023 will be tougher still for many Britons; it will be a year of falling real pay at a time when the cost of essentials has never been higher.The government would like us to believe this is purely the product of these global headwinds. But the truth is that a series of long-term structural problems has left the UK more vulnerable to massive global shocks than many other countries. From the dysfunctional housing market to sluggish economic growth to a complete failure to grapple with the consequences of an ageing population, these problems have been neglected by governments of both colours in past years, but have been made progressively worse by 12 years of Conservative rule. If they remain unaddressed they will stymie people’s quality of life for decades.Britain’s growth prospects are poor by international standards. This is because for years economic growth was overpowered by a financial services sector whose flaws were exposed by the 2008 crisis. Reliance on the sector disguised a lack of productive capacity in the rest of the economy and big geographical variations in economic prosperity. The 2010s should have been used to build investment in the public services and skills infrastructure needed to boost productivity across the country. Instead, public spending cuts hit least affluent areas the most and the Conservatives pursued the hardest of Brexits for ideological reasons, which wiped a whopping 5.5% off GDP by mid 2022, according to one estimate. It is lower-income families who will most feel the impact on their standard of living. The government urgently needs to support exporting businesses by realigning trade with the EU, our closest and biggest trading bloc, and introduce policies that allow people to dip in and out of training throughout their working lives to ensure the economy has the skills it needs. And ministers, who have in recent years reneged on commitments to promote investment in green energy, need to prioritise low-carbon technology as a way to boost growth and ensure the UK fulfils its commitments to reduce carbon emissions to net zero by 2050.A series of long-term structural problems has left the UK more vulnerable to massive global shocks than many other countriesThe growing number of young people who will never be able to afford their own home is an indictment of politicians’ failure to address the worsening housing crisis. Britain has some of the most expensive rents in Europe and a housing market in which rising prices deliver windfall gains to homeowners at the expense of those who remain locked out of home ownership. This will increasingly affect many aspects of life: families having to move repeatedly, undermining any sense of stability for their children; people unable to relocate to take advantage of economic opportunities in higher-growth areas of the country; older renters reaching retirement with insufficient pension income to cover their rent. The number of people who lose out will expand until the government gets a grip on the problem, not just by facilitating more housebuilding, but also by properly taxing housing as an investment class, including buy to let, introducing longer-term tenancies and limiting rent increases.After housing, childcare is one of the biggest costs facing families with young children: the UK has the second most costly system in the world, according to the OECD. Worst is the gap between when a parent goes back to work and when the 30 hours’ free entitlement kicks in the term after a child turns three; this leaves parents unable to afford the costs of childcare, and so unable to go back to work, disproportionately affecting women’s career progression and denying children the chance to learn in high-quality nursery settings, which is particularly important for children from less affluent backgrounds. The system urgently needs reform to provide free universal childcare for children under five; this would bring benefits not just for children and parents, but for the wider economy.Like in so many wealthy societies, Britain’s population is ageing as a result of low birthrates. The consequence is that we will collectively need to spend ever greater amounts on healthcare and personal care. Yet the UK invests markedly too little on healthcare – 18% below the average per person than comparable EU countries over the last decade – and the dire levels of underfunding of later life care mean too many older people are left languishing without the support they need to live a dignified life or living for weeks on end in hospital wards. This is unsustainable, with dreadful consequences for people in the last years of life; the NHS cannot do its job without more resources and it is ludicrous that politicians have neglected to fix the glaring problems in social care for two decades.These are the thorny challenges that lie ahead for the UK. They are eminently fixable, but require a generous-spirited politics that is geared towards the long term and able to sustain some of the cross-party consensus that developed around the NHS and the expansion of social housing in the 1960s and 70s. Yet Britain is governed by a Conservative party that has shamelessly embraced populist tactics as a means to drive through Brexit and brought political chaos in 2022. More broadly, our political discourse is gradually becoming tainted with the tribalism, culture wars and identity politics that play out on social media. We must hope 2023 is the year our political leaders take the opportunity to rise above the fray to at last start talking about the social and economic reform Britain so desperately needs.


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