Theresa May Pledges Activist Government as Britain Adjusts to Brexit

(Bloomberg) -

U.K. Prime Minister Theresa May broke with her predecessor David Cameron to make the case for an activist government while attacking “elites” and business leaders who fail to pay their taxes and look after their staff.

While Cameron said government should “get out of the way,” May said on Wednesday it has a role in improving people’s lives and supporting business as she charted a course for Britain after its vote to leave the European Union. Support for financial services has been too dominant in the past, and it’s not the only industry that needs government help, she said.

“Where many just see government as the problem, I want to show it can be part of the solution too,” May, 60, said in a speech to her Conservative Party’s annual conference in Birmingham, central England. “It’s about doing something, not being someone, about identifying injustices, finding solutions, driving change. Taking, not shirking, the big decisions. Having the courage to see things through.”

May used her speech to pitch her 84-day old government as the champion of the struggling working classes and portrayed the June 23 vote to quit the EU as a cry for change in the way the country and its companies work. She revealed no more about her strategy for Brexit, preferring to concentrate on her domestic agenda, using the word “change” 28 times in the 58-minute speech.

“Today too many people in positions of power behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass on the streets,” May said. “A change has got to come and this party is going to make it.”

May made a pitch for those who have traditionally supported the opposition Labour Party, siding with them against company bosses who pay themselves too much and dodge taxes. She also promised to improve their opportunities by offering reforms to education and housing.

“If you’re a boss who earns a fortune but doesn’t look after your staff; an international company that treats tax laws as an optional extra; a household name that refuses to work with the authorities even to fight terrorism; a director who takes out massive dividends while knowing that the company pension is about to go bust, I’m putting you on warning: this can’t go on anymore,” May said.

The pound has fallen 1.9 percent to a 31-year low against the dollar since the start of the Tory conference amid investor concern that Britain could be heading for a “hard Brexit,” with little accommodation for the finance industry. Banks warned Tuesday that 70,000 jobs and 10 billion pounds ($13 billion) in tax revenue are at risk, while the International Monetary Fund cut its forecast for U.K. economic growth next year.

But May devoted little of her speech to the looming Brexit negotiations, focusing instead on domestic matters and the grievances that led Britons to end more than four decades of EU membership. She didn’t name any of the ministers who will be responsible for the complex negotiations over the next two years apart from a jocular reference to Foreign Secretary Boris Johnson at the start.

“Just listen to the way a lot of politicians and commentators talk about the public,” she said. “They find your patriotism distasteful, your concerns about immigration parochial, your views about crime illiberal, your attachment to their job security inconvenient. They find the fact that more than 17 million people voted to leave the European Union simply bewildering.”

May said her government will support industries that are crucial for Britain’s economy, emphasizing that financial services should not be singled out for special treatment, echoing officials who have downplayed the sector’s importance in negotiations with the EU.

“We will identify the sectors of the economy — financial services, yes, but life sciences, tech, aerospace, car manufacturing, the creative industries and many others — that are of strategic importance to our economy, and do everything we can to encourage, develop and support them,” she said.

May repeated Chancellor of the Exchequer Philip Hammond’s commitment to government investment in infrastructure, including a high-speed rail line from London to northern England, saying it would help address “weaknesses” in the economy while improving productivity and boosting economic growth.

“While monetary policy, with super-low interest rates and quantitative easing, provided the necessary emergency medicine after the financial crash, we have to acknowledge there have been some bad side effects,” May said. “People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer.”

May, who became prime minister in July without the need for a party-leadership election, used the speech to outline her vision for government for the first time. It was dominated by her sense of personal mission and a grab for the middle ground of British politics.

Her government offers “a new modern conservatism that understands the good government can do, that will never hesitate to face down the powerful when they abuse their positions of privilege and will always act in the interests of ordinary, working-class people,” May said. “Come with me and together let’s seize the day.”

May’s revival of interventionism met with criticism from activists on the right of the party. The Thatcherite Institute of Economic Affairs described it as “economically undesirable.”

“This was an alarming attack on free markets and the prime minister’s pledge for more state intervention in business completely disregards the evidence that competition, deregulation and a light-touch approach breeds the best results,” IEA Director General Mark Littlewood said in an e-mailed statement. “If the prime minister wants to pave the way for a more vibrant and dynamic economy that benefits workers and consumers alike, she would do well to embrace enterprise and competition, leaving more state intervention at home.”