The “trickle-down economics” espoused by Margaret Thatcher has not worked out as planned and failed large parts of the country, Michael Gove has admitted.
In a speech on Tuesday Michael Gove told an audience in Liverpool that the “traditional view” of the free market espoused by the Tories had turned out to be false.
The former prime minister Ms Thatcher famously argued in the 1980s that a “rising tide lifts all boats” to justify her economic policies – which exacerbated regional imbalances and inequality.
“There’s been a traditional economic view, not just on the right but generally on the right, which says that the market will find its own level,” Mr Gove said.
He added that people had believed that if one part of the country, such as London was overheating, higher rental costs and congestion would send jobs to other regions.
“But actually all our experience is that that is not the case,” the communities secretary conceded.
“Unless government takes a lead then what we see is an agglomeration effect. What people have called the Matthew effect: ‘to them that have more shall be given’. And that is why government has to act.”
Mr Gove conceded it might seem “odd” for a politician from the right wing of politics to admit “trickle down economics” had failed the country.
But he said that “what government needs to do is make sure the economic soil is irrigated, it needs to make sure that the climate as far as possible is conditioned for growth”.
His comments are likely to enrage other Tories, who are strongly in favour of a more purely laissez-faire approach to managing the economy with a much more limited role for the state.
Some right-wingers, like former minister Steve Baker, have previously described some government policies as “socialist”.
Mr Gove last week released a white paper spelling out his objectives for “levelling up” left-behind areas of the country. The plan lays out 12 missions to achieve by 2030 such as increased pay, improved public transport, and narrowing gaps in life expectancy.
But critics pointed out that there was little in the way of cash or solid policy to match its ambitions.
