What is Boris Johnson’s ‘New Deal’ – and how does it compare with Franklin D Roosevelt’s?

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What's the story?

Britain can no longer continue to be “prisoners” of the coronavirus, the Prime Minister insisted, announcing his “positively Rooseveltian” economic recovery package.

Boris Johnson vowed to spend £5 billion on a programme of accelerated capital spending on hospitals, roads, rail, prisons, courts, schools and high streets to help the country bounce back from the ravages of coronavirus.

He said: “It sounds like a New Deal. All I can say is that if so, then that is how it is meant to sound and to be, because that is what the times demand.

“A Government that is powerful and determined and that puts its arms around people at a time of crisis. It’s time not just for a New Deal but for a fair deal of the British people.”

The Prime Minister pledged £1.5 billion for hospital maintenance, £100 million ring-fenced for 29 projects to improve the road network, and over £1 billion to fund the rebuilding of schools.

But how does the package stack up against that of the 32nd President of the United States?

As a share of the economy, Mr Johnson's spending plan is 200 times less ambitious than the original New Deal.

President Roosevelt’s stimulus package, which supported America through the Great Depression, is estimated by economists to have represented 40 per cent of pre-crash economic output.

Mr Johnson’s plan amounts to just 0.2 per cent of our GDP.

The figure is also dwarfed by the stimulus packages pledged by other world leaders.

Germany’s Chancellor Angela Merkel recently announced a €130 billion stimulus package, which accounts for nearly four per cent of the country’s GDP.

Still, Mr Johnson thought his £5 billion spending package substantial enough to warrant the clarification that he is “not a communist”.

He admitted his plan may sound like “a prodigious amount of Government intervention” but insisted he wanted to “create the conditions” for free market enterprise.

The Prime Minister perhaps struck a cautious tone because he walks a tightrope on the issue of spending, with many of his backbenchers naturally more supportive of tax cuts to stimulate the economy.

But he is also aware of the promise he made to “red wall” voters he won over in last year’s general election.

Tim Bale, a professor of politics at Queen Mary University, summed up the dilemma.

“A ‘Rooseveltian New Deal’ strategy would go down fairly well with a large proportion of the electorate, and even with the Conservative electorate,” he said.

“The problem he has is that this is not what most of his MPs joined the Conservative Party to do.”

Looking back

In the aftermath of the Wall Street Crash of 1929, President Roosevelt launched one of the largest, most expensive US government programmes ever.

During his election campaign the Democratic nominee had promised: “A New Deal for the American people."

It focused on what historians refer to as the "3 Rs": relief for the unemployed and poor, recovery of the economy back to normal levels, and reform of the financial system to prevent another depression.

First, President Roosevelt sought to tackle the huge levels of unemployment, which reached 24.9 per cent in 1933.

He established the Works Progress Administration and the Civilian Conservation Corps to dispense emergency and short-term governmental aid, and to provide temporary jobs and youth work in the national forests.

The Prime Minister announced something markedly similar in his own ‘fair deal’ – a Conservative Rangers scheme to help support those left unemployed by the virus recession.

Among the most best known of President Roosevelt’s measures was the Public Works Administration, designed to reduce unemployment and increase purchasing power through the construction of highways and public buildings.

The later stages of the New Deal established the basis for the US social security system and improved workers' rights.

In the 80 years since the Great Depression was formally declared over in June of 1938, historians and economists have continued to debate the true merits of the New Deal.

Some have argued that it was ultimately the Second World War which finally lowered unemployment and increased GDP as a result of America's weapons production.

However the reforms certainly encouraged the beginning of the labour movement in the United States, which fostered wage growth and sustained the purchasing power of millions of Americans.

Perhaps most importantly, it also restored faith in democracy at a time when many believed the only options left were between communism and fascism.

Anything else I need to know?

Leicester is back in lockdown, virus cases are still far from flatlining and huge swathes of the economy still have no date for which they can reopen. So why now?

The Government’s fight against coronavirus is far from over, however it undoubtedly suits Mr Johnson to change the narrative. While his deep admiration for Winston Churchill is clear, his libertarian instincts mean he is not a natural wartime Prime Minister.

Mr Johnson is at his best when he is able to strike a positive note. Indeed, yesterday he proclaimed he was a “glass half-full” politician.

By grasping the reins and setting the course to recovery, he finds himself on far more comfortable footing.

Recent polling, showing Sir Keir Starmer’s steadily creeping up, is likely to have had an impact in the decision making.

An Opinium poll last week showed that the Labour leader had overtaken Mr Johnson as the British public’s preferred choice for Prime Minister, with 37 per cent to 35 per cent preferring Sir Keir for the top job.

The Government understands that keeping the Labour voters they won over in 2019 is of vital importance.

It’s perhaps why some ministers have begun describing the Government’s approach as “Blue Labour”, taking a “Blair-lite” approach with a Conservative brand.

The Refresher take

While Mr Johnson’s package in no way matches the scope or scale of Mr Roosevelt’s “New Deal”, it is a far cry from traditional Conservative economic policies.

But it’s Mr Johnson’s key voters that look set to be hit hardest by coronavirus.

Research from the Centre for Progressive Policy found that the recession triggered by the crisis will see an average fall of 12 per cent in economic output across the “red wall”.

And the Conservative Party is currently more popular among the nation’s lowest earners than it is with the highest.

The Joseph Rowntree Foundation (JRF) think tank noted that 45 per cent of the poorest Britons voted for Boris Johnson in 2019, while just 30.6 per cent on low salaries backed Labour.

When Mr Johnson won the general election in December he told such supporters he understood they may have "lent us your vote".

He knows that if he does not repay them then the Government’s 80-seat majority could erode very quickly.