Johnson survives again. But what is the purpose of his government?

The Conservatives need an economic policy reset. Just don’t bank on this Prime Minister providing it

‘We need to find ways of managing the inflationary beast that are more compatible with our hopes for growth and productivity’

So Boris survives again. There is, however, not a whole lot of point in the reprieve so divisively won unless there is also a clear and compelling strategy on what to do with it.

For now, it seems that the only purpose of the Johnson government is that of sustaining its leader in power. If there is no bandwidth left for anything else, the now established pattern of drifting aimlessly from one crisis to the next will simply persist.

The Prime Minister is said to be planning a big reset speech on the economy soon. It’s possible he’ll surprise us all, but no one is holding their breath. Boris’s style is that of all things to all men, to say yes to any crowd-pleasing initiative he is presented with and then leave it hanging in the air, like some kind of unanswered question.

The sense among those charged with execution is one of incoherent, often contradictory policy that rarely moves beyond the conceptual stage. Delivery is stillborn. Worse, the PM repeatedly promises one thing and then on reflection does the other.

But that’s just the half of it. Behind it all lies a dismal truth – that after 12 years of Tory-led government, Britain is still a low growth, low productivity, but increasingly highly taxed economy with no apparent plan, or even ambition, for shifting things on to a different level.

Brexit was meant to be a new beginning for the Tory party, but by making trade with Europe more difficult and costly, it has so far only added to the country’s travails.

Instead, Britain’s new-found freedoms busy themselves with apparent trivia, such as a return to imperial measures and the reimposition of the crown on the side of pint glasses. None of these things helps the economy and, by further inflaming Britain’s culture wars, may even be mildly negative.

Whatever happened to the supposed Brexit freedom of abolishing VAT on gas and electricity bills? There could scarcely be a better time to avail ourselves of it, yet that promise too has been left by the wayside.

Rather than looking to a newly invigorated future, we find ourselves drowning in nostalgia, as if returned to the well-meaning but ineffective “back to basics” posturing of John Major’s last administration, where the imagined comforts of warm beer and the gentle sound of leather on willow were shamelessly invoked to deflect from the gruesome reality of political and economic decay.

It should be obvious by now, even to the carelessly optimistic Johnson, that economic policy is failing disastrously. Rather than seeking to address underlying weaknesses and fault lines in the UK economy, on both the monetary and fiscal fronts it only compounds them.

A complete rethink is required that turns conventional thinking on its head. It would be a big move – and one fraught with danger – to abandon the current inflation targeting regime in favour of something more suited to current economic challenges, but it is as plain as a pike staff that this 25-yearold sacred cow of economic convention no longer works as it is supposed to.

The only reason for keeping it going is the potential damage to international confidence and credibility that might result from kicking against it. But you don’t knowingly keep using an unsafe bridge simply because everybody expects you to.

Just how wrong does the Bank of England have to be before someone shouts the emperor has got no clothes? The failure is as much in the framework as the execution. It’s no longer clear that the simplistic targeting of a 2pc inflation rate through a nominally independent central bank – now a global obsession that bizarrely originated from tiny, little New Zealand – makes any sense.

This is not to argue that we no longer need to worry about inflation. Today’s cost of living crisis is a grim reminder of just what happens when inflation is allowed to run away with itself. Rather it is to contend that we need to find different ways of managing the beast that are more compatible with our hopes for growth and productivity.

In the wake of the financial crisis, David Cameron and George Osborne promised a combination of fiscal conservatism and monetary activism. The economically depressing effects of putting the public finances back on track were to be countered with ultra-loose monetary policy. But the effect of the latter was only to load us up afresh with debt while simultaneously putting a socially divisive rocket under house prices.

As for the former, much of the pain was delivered by taking the axe to the politically softest target – investment spending. Even at the time, this looked a questionable approach, and today it needs entirely reversing. What’s required instead is monetary conservatism in combination with fiscal activism.

I don’t mean turning on the taps of current government spending. This has already gone quite far enough and if anything needs seriously reining in, so as to allow for tax cuts aimed at stimulating business investment.

Rather, I’m talking about capital spending, defined in its broadest possible sense to include not just physical infrastructure – which can sometimes prove an unnecessary waste of money – but spending on innovation, development, training, and education, where Britain seriously lags some of its European peers.

Higher business investment – where there is an equally large shortfall against comparable economies – would follow naturally. The £17bn spent on the new Elizabeth line (Crossrail), although horribly over budget, is surely a rather better use of taxpayers’ money than the £37bn squandered on test and trace, the latter gone forever, leaving no visible mark, but the former likely to be a major benefit to the London economy for hundreds of years to come.

Much tighter monetary conditions would be the natural corollary of any fiscal loosening that focused its efforts on cutting business taxation and investing heavily in Britain’s future.

What we have instead is an intellectually bankrupt form of fiscal conservatism that attempts to counter the Prime Minister’s propensity to spend with another heavy-handed smash-and-grab raid on company profits. Running alongside it is a Bank of England fixated on the idea that the only way to prevent the economy from collapsing is ultra-low interest rates and providing the Government with an apparently limitless overdraft facility.

Is Boris capable of rising to the challenge? You wouldn’t bet on it, given the record so far.