Is Theresa May the new John Major?

Well if I was ever under the illusion that I had any special insights into Britain’s general election campaign, it is now banished. Last week I described the improvement in Labour’s poll ratings as a “dead cat bounce”. It is clearly much more than that. As the election goes into its last lap, it is going to be a lot more interesting.

So what happened? The truth is that we don’t quite know. After the pause caused by the Manchester outrage, we now have a series of new opinion polls, confirming an improvement in Labour’s position. It has advanced to an average of 35% according to Wikipedia, a remarkable achievement when you consider they started the campaign at 25%. Where has this come from? The Conservative poll share has eased by a couple of points to about 44%, but it is still better than where they started, before they mugged Ukip. The position of both the Lib Dems and the Greens has fallen back, as has the SNP in Scotland, though Ukip has struck bottom now. The headline figures are easy enough to see, but what really lies behind the shifts is much harder to say, as is their impact on individual races for seats.

But confidence in the Conservative campaign has been shaken, and Labour is being given more credit. It is particularly striking that Manchester has not helped Theresa May, as most campaigners from both sides thought it would. Indeed the Labour leader, Jeremy Corbyn, seized the initiative on Friday by pointing to the alleged failure of British foreign policy to make the world safer, and how police cuts have made things worse. Both points are spurious. Jihadi terrorism has struck Germany and Belgium, countries with a notably more pacific foreign policy than Britain’s. Britain’s interventions are an excuse for the terrorists, and not the real reason – which is hatred for the godless western way of life and a liberal attitude to women. And the security services have been lavished with funds – it is friendly neighbourhood policing that has been hammered – and the effect of that on terrorism is unclear. Never mind; Mr Corbyn delivered his speech in a measured, sober fashion (prime ministerial, I am tempted to say), and both arguments resonated with the public, who are not inclined to trust the political establishment. The Tory response was unmemorable.

This points to an important weakness in the Tory campaign. It is completely and utterly centred on the person of Mrs May, who they then proceed to shield from public interaction. While Mr Corbyn was delivering his speech, Mrs May was hobnobbing with world leaders at a couple of world summits. In itself this sort of distraction is considered to be a positive by campaigners, a chance to look like a world leader in power, but she had nobody of stature left on the home front. And the media were not inclined to give her party an easy ride.

That has to do with a second weakness. Mrs May is not a collegiate leader. Her pronouncements emerge from a small cabal of trusted advisers, without the ground being prepared amongst her colleagues and their media contacts. So it doesn’t take much for the grumbling to start, and this makes good copy. And the grumbling is in full flow. One columnist said that Mrs May had the charisma of an Indesit fridge-freezer. More than one has suggested that this is the most dismal Tory election campaign ever.

I wouldn’t say that. To me that record is held by John Major, both in 1992 (which won unexpectedly) and 1997 (the worst Tory defeat in history). The 1992 election is the better comparison to now. Mr Major was an uncharismatic sort, and he tried to make a virtue of it. He was never able to stamp his authority on his party. I remember thinking in the early stages of the 1992 campaign that the Tories did not look as if they even wanted to win. They were saved by events. The first was a triumphalist rally in Sheffield by the Labour leader Neil Kinnock, which was a disastrous misreading of the zeitgeist. And second was combative last minute switch in the Conservative campaign based on “Labour’s tax bombshell”, one of the most effective general election moves I can remember – which stops me rating the campaign as a whole the direst in Tory history (1997 takes that prize).

That gives two clues as to how the Conservatives can pull the campaign back to the massive landslide we expected at the start. First is the public not liking the prospect of Labour as a government rather than as a protest vote. Mr Kinnock was not considered Prime Ministerial. Second, is through a well-designed and aggressive drive by the Conservatives and their media allies against Labour weaknesses, perhaps on economics or perhaps on national security, in the remaining ten days.

We’ll see. Things could go well for Labour if we see a repeat of the anti-establishment mood evident in the Brexit referendum last year, or in Donald Trump’s victory in the US. “Strong and stable” could have been a campaign slogan for Hillary Clinton – but Mr Trump was able to project enough of an aura of competence to persuade enough people to give him a try – based on his supposed success as a businessman, and his success in getting to be the Republican nominee. Mr Corbyn is exceeding expectations in his campaigning skill, and he comes over as the more straightforward and honest politician compared to Mrs May. So you never know…

And what of my party, the Liberal Democrats? There is good an bad news. The good news is that knocking the shine off Mrs May helps in contests against the Conservatives. The bad news is that in the general polling the party has faded, and the gap between it and the Conservatives is as large as ever. The idea that the party is a more credible opposition than Labour has gained no traction. A good election for Jeremy Corbyn may be good for the Lib Dems strategically, but a failure to progress will pose some very challenging questions for the party.

Meanwhile I will be scouring the media for any evidence I can find as to how the election is developing. I have not got a clear picture yet. But if Theresa May fails to get a convincing majority, she will have nowhere to hide, and her authority would be damaged irreparably. And deservedly so.


What is the meaning of Theresa May’s wobble?

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Last night 22 people were killed in Manchester Arena in a terrorist attack. The attack was on people attending a concert popular with young girls, and many children were victims. I am in shock , like most of my countrymen. As ever, we have few facts, but the news media must make these go a long way, as they endlessly recite the same reports, along with vacuous speculation, to the exclusion of all else. Nobody is thinking about the election. For anybody that wants a little relief from the awfulness of the news, and the emptiness of news coverage, I offer the following. I had mostly written this article on yesterday’s political events already, and so I decided to finish it and publish anyway. But I expect most readers will not be very interested, as we cannot stop thinking about those families caught up in last night’s horror.

At first I thought it was a sign of strength. The Conservative manifesto launched last week was everything Labour’s was not. It challenged the party’s supporters, and suggested that the Conservatives had the toughness to take on difficult decisions, where Labour were behaving like Father Christmas. It confronted some of the more difficult questions facing our society with something a bit more substantive than empty slogans and goodies all round. But then yesterday the Tory leader, Theresa May, backtracked. It was a very clear wobble. What are we to make of it?

The proximate cause of the wobble seemed to be a sharp narrowing of the gap between the two big parties in the opinion polls after the Conservative manifesto launch – Labour moved up into the low thirties while the Tories dipped from the upper-forties to the mid-forties. Labour (echoed by the Lib Dems) were trying to make hay from the Conservative manifesto. There were quite a few items they picked up on, including cuts to school lunches, and the softening of the policy on annual increases to the state pensions. But the main fury was devoted to the proposed policy on paying for social care.

The plan was to make people liable for the full cost of nursing care if, for example they suffered from dementia, down to the last £100,000 of personal wealth, and including the value of people’s homes – though the idea is that the home would not have to be sold before death. Two things upset people. The policy wonks in particular were alarmed at the lack of a cap to these costs after which the state would pay (the current policy has a cap set at £72,000). This meant that there was no attempt to spread the risk, which might allow an insurance market to be established. Relatives faced the prospect of massive inheritances disappearing in the event that their loved ones suffer a slow departure rather than sudden death. But the critics mainly focused on forcing people to sell their houses. Suddenly previously leftish politicians discovered the sacred right of people to pass their wealth on to their children. The Lib Dems’ Tim Farron has been spitting fury.

More reflective types, including me, thought that there was something in the government proposal. The money has to be found from somewhere, and assets at death look easily the best place. We might like the idea of spreading the risk (e.g. by increasing inheritance taxes on everybody), but there is little evidence that the public has the stomach for that. This proposal exposes rich people the most, and at least confronts the issue honestly. Never mind. Tories were branded as the nasty party, preying on people’s inheritances.

I think Mrs May night have weathered this storm except that she had not developed the policy in consultation with her own side. The manifesto was imposed on the party by a tiny band of trusted confidantes – Mrs May does not do open consultation. Conservative ranks were visible fraying. So the wobble. Mrs May said that the proposals would be put out to consultation, and that there would be a cap after all. And that means significant costs being picked up by the state, to be paid for in some unspecified way.

What are the implications of this? The central theme of the Conservative campaign has been competence. This has been damaged a bit, but not in a way that enhances the standing of the opposition parties. These are still intent on hoovering up a protest vote, rather than setting out a credible programme for government.

As a Lib Dem I know what this means. My party has made the harvesting protest votes a core skill; the trouble was that support evaporated as soon as people thought they might take a share in power. And it was even worse when the party actually did so in 2010 as it could not meet so many conflcting expectations. Labour might have been testing the same self-destructive dynamic if their attacks on the Tory manifesto had gained traction.

There are, in fact, much more worrying aspects to Conservative policy. First is the drive to reduce immigration. The weapon of choice is to add to the burden of red tape on businesses. Those business people who supported Brexit so that it would reduce bureaucracy are going to get a rude awakening. Second is a refocusing of funding for early years education and support. The neediest families will suffer the most from changes to schools and local authority funding. The longer term consequences of this are likely to be dreadful. Britain’s lower crime rates are in large measure due to a reduction in rates of youth crime. This is surely related to increased levels of early years intervention put in place by the Labour government before 2010, and now being dismantled at an accelerating pace. And then there is a move to increase the number of secondary schools selecting children on an academic basis. When the main challenge to the system is to raise the educational attainment of the less academic, this looks like a costly distraction.

But however harmful these policies look, together with an alarming vagueness from Mrs May on the biggest job her government faces, negotiating exit from the European Union, would we trust a Labour-led government? Though the party has adopted the Blairite slogan “for the many, not the few” their policies nevertheless add up to a massive concentration of power to an elite in central government, whose competence is open to question. It looks distinctly Venezuelan.

But the Manchester attack puts all this on hold. Campaigning will be suspended, perhaps until the weekend, as we all take in the shock of what has just occurred. This will act as a bit of a reset button. When politics resumes, it will not be in the same place as before. But speculation on its impact at the moment serves no useful purpose.


The real questions behind the politics of tax and spend

Warning: this is a longer read for those interested in achieving a deeper understanding of political choices, especially here in Britain. I write it to release some my internal tensions after a tough few weeks helping to organise my party’s general election campaign, while tackling questions posed by tightening school budgets.

The politics of tax and spend is close to the heart of Britain’s general election campaign. And yet the quality of economic commentary is very shallow. Here is my attempt at something deeper.

Running government finances is not like running a household budget. The primary constraint on a household budget is money, which can be treated as a fixed resource, and can be stored for use at a future date (so long as inflation is not a major factor). But looking at an economy as a whole, money is just an economic tool, a means to an end. Hoarding it is pointless. Money is tactics, not strategy.

So to look at matters strategically we need to take money out of the picture, and ask what it is that we are trying to achieve. A higher level of public services? More private consumption? More investment for the future? All of these things are constrained by real resources. By which we mainly mean people. If we want to increase the level of consumption or investment, more people need to be put to work, or the same number of people need to work harder or more productively. The latter may also be a function of capital assets, but capital assets are created by people working in earlier periods and forgoing consumption.

So, if you want to expand public services, the question arises as to where the extra resources are to come from. If you are hiring 10,000 extra policemen, those individuals may be doing nothing now, in which case the economy as whole expands costlessly. Or they may be doing important jobs elsewhere, in which case the recruitment will potentially reduce the production levels of their previous employers. And what if you simply raise the level of pay for the same work? Or increase the level of a cash benefit. That is a way of raising the levels of consumption for those targeted individuals. Who is to produce those extra things they are to consume?

And so we come to a central question of fact, which is discussed surprising little. The left claim that there is plenty of spare capacity in the economy, so if we expand the consumption of the disadvantaged, or the reach of public services, the economy as a whole will respond by utilising those spare resources, and nobody is disadvantaged. This idea goes by the term “Keynesianism”. It is more likely to be true in a recession than at the height of a boom. The right thinks that spare capacity is not so easily manipulated, and such expansion will usually come at the cost of private consumption, whether that is intended or not. And in Britain, when employment is at record levels, and we are still net importers of goods, this is not so easily dismissed. Some on the left counter with the hope that any reduced consumption will be by the rich, of luxury goods.

But many more thoughtful observers think that there is still spare capacity in the economy. They point to low levels of pay and productivity in many places. If there was more pressure from the demand side of the economy, then private sector produces might sharpen up and become more productive. And if the extra public resources were directed well, into investment, then that will help expand future capacity too. The likelihood of these outcomes depends a lot on the tactics.

But before considering the tactics – the details of taxation and monetary policy – we need to reflect that modern, developed economies are quite open. We can import resources from abroad. And we can import workers. For certain advantaged economies, like the USA, a high level of net imports is completely sustainable. And there are economies out there (Germany, for example) that are happy to be net exporters, for their own tactical reasons. But for others a prolonged period of net imports, especially if not used to create productive assets, can lead to a financial crisis and the seizing up of the economy. Where the UK stands between these two poles really is unclear; the country has been a net importer for most of recent history, and financially stable for most of that period too. But there will be a level of net imports that is unsustainable; and a financial crisis can take many years to build, as we found in 2008.

It is worth touching on the issue of immigration. What if the extra workers needed for expanded public services could themselves be imported, either directly or to substitute for home recruits?  These workers will create demands of their own, but it is one way of squaring the circle. Indeed in the mid noughties, when the Labour government undertook a significant expansion of the public sector, this was one of the ways they were able to sustain it, using workers from the new entrants to the EU from central and eastern Europe. That Labour leaders are now saying that this influx was a serious mistake is a piece of hypocrisy; they love to take credit for the expansion of public resources at the same time.

It is worth trying to establish these basic rules on strategy – but it is not hard to see the strategy that public leaders converge on, from left and right. It is to expand public services and benefits (such as pensions and hardship relief) while taking up slack in the country’s productive capacity, or expanding that capacity through higher productivity.  And so we turn to the tactics. If the tactics of expanding the public sector go wrong, there is a more or less disorderly reduction in the levels of consumption by the general public in order to make room.

We need to understand what we mean by this. In the conventional view of economists this about one thing above all: inflation. Most economists like the idea of a little bit of inflation (I don’t agree, but because I think inflation erodes trust in public institutions rather than its effect on short-term incentives, the obsession of most economists). But inflation can quickly become unhealthy, so that an increasing amount of effort is placed in managing money rather than valuable production, and it clogs the process of exchange, which is the foundation of a healthy economy. Inflation occurs when demand outstrips supply. Its effect in this context is either to undermine the attempt to expand the public sector, by eroding real wages or the real value of the benefits, or by reducing public consumption as real incomes are reduced. The so-called neo-Keynesian consensus of the 1990s and early 2000s built an entire edifice on this idea – using a targeted rate of inflation as the primary way of determining whether an economy was in balance. The idea still stalks the conventional wisdom.

But that was dealing with yesterday’s problem. Neo-Keynesianism was built in response to the 1970s phenomenon of stagflation, when the old-fashioned “Keynesian” model broke down (quotation marks because though Maynard Keynes’s fingerprints are on this old conventional wisdom, such a flexible mind would surely have moved on as the facts changed). But what emerged in the 1980s and 1990s was different. It was changed by two things – a shift in the balance of power in the political economy towards employers, and away from employees and unions; and the process of globalisation. Globalisation, we must understand, is a combination of more advanced production and communication technologies, and the opening up of new Asian economies into the global trading system, starting with Japan and moving by way of South Korea and Taiwan to the giants of India and China. This has broken down the previous relationships between demand, supply and price.

First, it has broken the link between prices and pay. It used to be easy to identify a single rate of inflation that, give or take, would apply to both prices and wages. At first this seemed to work in workers’ favour. Cheap imports from Asia held price inflation in check, but workers’ pay kept ahead. But since the crash in 2008 this has flipped. Rises in prices (often from those same Asian imports) are not reflected in pay levels. It makes no sense to talk of a single level of inflation, and to use consumer price inflation as a lone yardstick of economic health. And the second change is that other ways that excess demand can be satisfied have been made easier. It is easier to import goods and services either directly, by buying from foreign firms, or indirectly by domestic firms outsourcing production. We are still trying to understand what the impacts of these changes are. But excess demand is likely to lead to two things: fat profits by businesses as they are able to increase their prices while holding wages down, and an increasing trade deficit. It is also means that the risks of excessive inflation are much lower, as it quickly feeds into lower real incomes and dampening demand.

At this point we need to think about money. This, too, has changed dramatically, as technology has moved us away from physical currency to a much more flexible system of paying for things. The idea of “money supply” as being a physical thing that needs managing as such is increasingly old-hat – another nail in the coffin of neo-Keynesianism. Instead, policymakers need to think about interest rates, exchange rates and controls of the physical transfer of capital (in this case money balances not required for consumption) within economies (banking controls) and between them (exchange controls). If this goes wrong, people lose confidence in the means of exchange, and the economy rapidly melts down – as we can see happening now in Venezuela. This is what spooked so many governments in 2008 and 2009 when they launched into a series of panicky bail-outs of banks.

And so in this brief overview (that is already much longer than my usual posts) we at last come to where most of the political conversation starts: taxation and public debt. Looked at through the eyes of an economist (money is not a thing in itself, remember) the main purpose of tax is the regulate demand so that we have an orderly economy. Not enough tax, and the financial system becomes unstable, with or without inflation. Too much tax and it is a self-inflicted wound – living standards are lower than they need to be. Tax has other important functions too, of course. It is a means of wealth redistribution (and too skewed a distribution of wealth leads to a poorly functioning economy), and managing incentives. Whether an economy needs more or less tax at any given point depends on a wide variety of factors, of which the size of public spending is only one. This has led to a lot of tension between economists and politicians, especially in the austerity years from 2010. Politicians insist on talking as if public accounts were like household accounts; economists (or many of them) say this is self-harm. Actually a lot of the  argument is at cross purposes. What the politicians do, and what they said were different things. Oddly enough, I suspect that politicians were in fact thinking long term, and trying to rebalance the economy, while economists were obsessing about the moment – a reversal of the usual characterisation.

And what of public debt? This again is not all it seems. Many governments, including the US, the UK and most spectacularly, Japan, have asked their central banks to quietly buy up government debt. This acts to in effect cancel it. The world has not ended, as some conservative commentators have suggested it would. What is going on? The central bankers are reacting to an unbalanced financial system. For one reason or another there is too much hoarding of money, by business organisations and rich individuals. This hoarding is sucking demand out of the economy. And it is also creating excess demand for short-term financial instruments. Governments are taking advantage of this by satisfying this excess demand by buying back longer term debt. They hope that in the process they will restore some of the lost demand by encouraging more genuine capital investment, as opposed to a continuing financial merry-go-round. There is little evidence for this working, though.

This makes it an extremely easy time for governments to finance budget deficits and investment – at least tactically. And that is why calls for more public investment at a time of high national debt only outrages conservative politicians and their allies. But the strategic question remains. As real resources are mobilised towards these ends, what will the impact be? There may indeed be spare capacity to be utilised, but that actually be what happens?

To me the key point to arise from this is that managing public finances is a matter of competence and discipline. The left may well be right that in the short term that we can expand the public sector with few real risks, even without raising taxes by much. But that could turn bad very quickly. Do they have the competence to appreciate when that moment arrives, and the discipline to act?

This is where the Labour government of the mid-noughties fell down. They expanded the public sector, while holding, or even cutting, taxes on mainstream income and consumption (as opposed to capital transactions). They secured growth with low inflation (those cheap Asian imports helped a lot), but not based on genuine productivity (supposed advances in productivity were in sectors such as finance where it turned out to be chimerical). Rapid immigration helped sustain this, but it created tensions, especially in working class communities. And they failed to grasp that the extent of the financial boom, which generated a lot of short-term tax revenue, was creating systemic risk. As a result the financial crisis was a rout for the UK, unlike the relative calm of better-managed economies such as Canada or even France.

And yet there is no sign that either wing of the Labour Party has learnt from this. They want to stoke up demand but have no understanding of when enough will be enough. The Conservatives have many faults (and their idea of eliminating the budget deficit is plain nutty), but to my mind they show a greater grasp of the strategic risks, and the need for discipline and competence (as do my own Liberal Democrats, come to that – indeed Vince Cable showed more awareness of the dangers in the mid-noughties than any other leading politician).

But quite apart from party differences, I feel that there is a deeper need to reform the process of governance so that these risks are managed more securely. There is a slo a need to reform the workings of the economy so that extra demand for goods and services does not simply end up in fat profits and foreign jobs. Alas there is little talk from any of the parties of how this is to be done.


Labour’s dead cat bounce

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In my weekly survey of Britain’s general election, it does not look to have been a bad week for Labour. Their poll rating has hardened from the lower twenties to the upper twenties, and the leak of their manifesto moved the election agenda away from “strong and stable”, the Tory slogan, to policy choices.  Can Labour claw back further? I think not.

I hold fast to my predictions of last week that the Tories will achieve about 400 seats to Labour’s 170 or so. The Conservative vote is holding up well; the Lib Dem challenge is in the doldrums; and Tory prospects in Scotland look positive.

Labour in fact have done little to address their fundamental weakness – their lack of credibility. Take the manifesto. The final version is published today, with a lot of the media attention focused on the costings and how spending commitments are to be funded. Unlike the news media, I don’t like to use this medium to speculate, when those speculations can be turned to facts in a very short time. But it is clear is that this manifesto will be unchallenging. The leaks showed a lot of popular policies but very few new ideas. Labour spinners referred to it as “radical”. In only one sense could that said to be true: their idea is to raise levels of public spending substantially, and also taxes on businesses and people with higher incomes (I nearly wrote “the wealthy”, but actually that isn’t true – I am wealthy in the Labour conception, but have little to fear from their ideas of higher taxes). And, indeed, the whole enterprise is a challenge to the public policy consensus that the left likes to refer to as “neoliberalism”.

But this is radicalism by default. What we have heard so far of Labour’s promises is “no lobbyist left behind” policy formation. Every Labour supporting interest group seems to have come forward with their wishes, and these have been granted. When challenged about how this is to be paid for, and the answer comes: “somebody else”. There seems to have no serious question of choosing or prioritising. This is in stark contrast to Tony Blair and Gordon Brown in 1997, before Labour’s greatest ever electoral triumph. They had decided to hold to Conservative spending plans, and had spent most of the previous year or two saying “no”, while confining themselves to a quite limited and focused set of promises.

And that gets to the heart of the matter. Messrs Blair and Brown were not opponents of public spending. Indeed they oversaw a massive expansion of the public sector in their three terms. But they understood the need to appear to be credible managers in order to win public trust first. The public don’t like entrusting politicians with spending decisions if they can’t say “no” to their friends from time to time.

There is, in fact, quite an interesting debate to be had about what scope there is to increase public spending, and what sorts of taxes are needed to support this – and even the extent to which it has to be backed by direct tax funding. And since I believe that public spending must be expanded (if only from the logic of the late, great economist William Baumol who died recently), it is a discussion I really want to engage in. But Labour’s manifesto is not the right place to begin that debate. That would give it too much credit for coherence. Effective management is always about making choices between things that you want to do – Labour’s leadership shows no inclination to confront that truth.

So what explains Labour’s slight bounce? I have not seen much evidence to explain it, so I’m back to speculation. I suspect that it reflects weakness. Labour-inclined voters don’t have any sense that Labour will actually win, so they have little to lose by voting for them. They are open to be swayed by their local candidate, or the general principle of disliking the Tories.

This factor should help the Lib Dems too. The perception that the 2015 election was a close one was a disaster for them, as the Conservative national campaign were able to promote fears that they might let Labour in by the back door. This is still a problem that Lib Dem strategists have done little to address – and I have my doubts whether they will ever have the courage to do so. But that is a problem for another day. And yet Lib Dem poll rating are at best stuck, and may be slipping. The surge of new members when the election was announced has slowed to a trickle. What the party lacks is enough compelling reasons for voters to support it. They have one: an expression of anger at the result of the last year’s referendum on Europe. That plays well here in Wandsworth in London, where I’m expecting the party to do quite well. But only about 20% of the electorate at large now want to reverse the result of the referendum. Other Remainers are trying to move on, and are in the depression stage of grief over the result, or perhaps even acceptance. This leaves too small a pool of voters to fish in and win the seats the party needs to.

The Lib Dems next message that “we are the opposition”, based on the shambles of Jeremy Corbyn’s leadership, has some traction, but it is not enough in itself. It is yet another variation on the theme of “vote for us because we are not one of the other two” which is superficially attractive (and seems to play well in focus groups, given how popular it has been amongst the party’s professionals) but doesn’t get enough people across the line in the end. It may yet gain traction. If Labour do succeed in getting more people to think about Conservative policies (and their manifesto was successful in doing that), and if they are unable to maintain discipline themselves, then who knows? But I fear that the election has come a bit too early in the party’s revival for strong electoral results – though it will be a useful learning experience. I would urge all Lib Dem supporters who want to help to go to one of the small number of target seats.

In my Facebook bubble, I see growing support for anti-Conservative tactical voting. I place little credence in this. It is not clear what all this for. It may limit the Tory majority a bit, but that will change little. There is no credible coalition of anti-Tory parties. If there ever is one, it needs to be put in place long before an election with an agreed platform. Labour show no interest; they observe how the Conservatives have absorbed Ukip voters by crushing the smaller party, and they want to carry out their own version of that manoeuvre. And the critical task is to persuade people who want to vote Conservative to vote for somebody else – and talk of a “progressive alliance” does not help here at all.

And so I conclude that Labour’s relatively good week is what City traders used to call “dead cat bounce” – the sort of bounce you get when you hit rock bottom. There is no game-changing happening.



Must democratically-run political parties be lousy at elections?

Three weeks after Theresa May announced a snap General Election in the UK, the Conservative dominance shows no sign of abating. Mrs May looks as if she will achieve a majority for her party of between 150 to 200, with over 400 seats, compared to about 150 for Labour.  Tory success is primarily a product of Labour failure. That poses some challenging questions for how you run a political party.

That prediction of Conservative success is somewhat higher than many are making. It reflects two things. First the Conservatives have stamped on Ukip and picked up the lion’s share of their votes, taking their overall vote share up to about 45% or more, their best since the 1990s, and presenting all the opposition parties with a formidable challenge. The second thing is an analysis by Alistair Meeks of, which shows particular difficulties for Labour in a swathe of seats that voted Leave in the EU referendum. Meanwhile the Lib Dems have lost some of their early momentum, and my prediction for them of 20 seats counts as optimistic in the current betting market.

Part of the Tory success is the result of ruthless competence in the art of electioneering, led by their strategist Lynton Crosby. A compelling national message, based on Mrs May’s personal brand, is crushing all before it. Labour is chaotic and confused by comparison, and the Lib Dems’ lack of media weight is telling. Rage over Brexit appears to have limited appeal – though an attempt by the Lib Dems to broaden the message into NHS funding is a valiant attempt to broaden out. The Lib Dems’ best hope is to exploit the inevitability of a Tory landslide, concerns about Tory policy and Labour’s hopelessness into a vote for an alternative. That may yet happen.

For now I am interested in something else. Labour is clearly the principal author of its own demise, after they elected a clearly inadequate leader in Jeremy Corbyn. This immediately punctured their chances; the party then fluffed the EU referendum, letting Leave win by a narrow margin. That gave Mrs May her chance to put the boot in. But how did Labour get into this mess? The answer is “democracy”. The party opened up its methods of choosing its leader, and then its policy making processes. This led to record numbers of people joining the party, and taking part in selecting their leader. Contrast this with the Conservatives. Mrs May won selection by systematically destroying each of her opponents before the party’s weak democratic procedures could get involved at all. Meanwhile the process of creating Tory policy is completely dictatorial.

Which leads to a thought: internal party democracy is toxic for political parties’ electoral success. Labour’s troubles started with their selection of Ed Miliband as leader in 2010, in the most open selection process until then. Mr Miliband was responsible for a series of catastrophic misjudgements, including the further opening up of the party’s leadership selection process. Mr Miliband looked inwards for salvation; he thought he could win simply by picking up Lib Dem voters disillusioned with the coalition government, and by stoking up his political base. This had the virtue of avoiding hard choices within Labour’s ranks, and of rallying behind the left’s supposedly superior “values”. These are the sorts of mistakes that leaders make when they think that appealing to their own supporters is more important than challenging political opponents. Mr Corbyn is repeating this strategy in a ghastly death-spiral.

We might also reflect that something similar is happening in France. The two established political parties, the Socialists and the Republicans, opened up their leadership selection processes, and were then both knocked out of the race for president by one party leader who challenged her own party to make it more electorally appealing, and another who simply created a new political party in his own image. Internal party democracy is not real democracy at all. It is about building up appeal amongst the like-minded, and not about appealing to the sceptics. Labour may have involved record numbers of people in its processes, but they are numbered in hundreds of thousands, and not millions.

It is worth casting a glance over to the USA at this point. Their internal party politics is clearly highly democratic, and challengers to the system from outside the established parties fail to get going. But they have a state-sponsored system of primaries not tied to party membership that brings in millions of people who aren’t necessarily loyal to the parties’ core values. Donald Trump succeeded by involving formerly Democratic working class voters.

This poses an interesting challenge to the Liberal Democrats, my political party. Time an again I hear activists praising its democratic processes, and asking for these processes to be given even more say over policy. This, of course, helps draw in new members and keep them. As a member of this political party you aren’t just treated as cannon fodder, as you are in the Tories, but you are given a say. And as the party struggles to build a core vote, it naturally tends to look inward, or at least towards the like-minded.

But to succeed the party has to broaden its appeal to beyond the like-minded to voters who are sceptical of the party, and will never be very loyal to it. As the party tries to hold and win seats in a general election, it is getting a taste of how hard this is. Still, the party is what it is. The members and activists will have to take on the challenge of broadening the party’s appeal themselves, and choose leaders and policies that will fulfil that aim. Since inclusivity is one of the core liberal values that the party treasures, that might help. What the party must avoid is the trap that Labour members have fallen into: the feeling that like-minded people are natural majority, and that elections can be won by motivating this group rather than challenging it.

That’s for the future. Meanwhile the catastrophe that is engulfing the Labour Party should be  warning to all political activists.


Diane Abbott’s troubles show all that is wrong with the British election

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Another week passes in Britain’s election campaign and the Conservative Prime Minister Theresa May’s grip tightens. The more Labour tries to seize the initiative, the better it looks for her. Diane Abbott’s intervention yesterday simply proves the point. And yet she was trying to raise a subject people should be talking about more.

Ms Abbott is Labour’s shadow home secretary, and was the first black woman MP when she was first elected in 1987. But she has also become a bit of a figure of fun on the British political scene; this has racist and misogynist undertones which I deeply dislike. So I want to be very careful in what I say. Yesterday morning she introduced Labour’s topic for today, which was the idea that the party, if elected, would recruit 10,000 more policemen to act as “bobbies on the beat”. This was an attempt to move the debate on to specific issues of policy.

Now the call to have more bobbies on the beat is one of the traditional cries in British politics, and it has been around since bobbies on the beat were invented in the 19th Century. Everybody wants more visible policing from these reassuring community figures; it’s like calling for more nurses. So Labour’s first problem was the sheer banality of the proposal, and the fact that it looked like a silly election pledge and not a thought through policy. It is said that you can’t overestimate the intelligence of the public, but this looked like a valiant attempt. Then the costing fell apart under close examination. Meanwhile Labour promised to raise the money from reversing Conservative plans to reduces taxes on capital gains. This, of course, plays exactly to the Conservative economic narrative that any increase in the level of public service must be paid for by increased taxation – an idea designed to undermine Labour’s complaints about austerity policies.

This last was the initial source of challenge. The Tories quickly claimed that Labour had spent the same money several times over. This was the main focus when Ms Abbott was interviewed on BBC Radio 4’s Today programme. She did not defend herself confidently, but she got through. The whole policy still came through as a bit of election nonsense. Ms Abbott fell apart later in another radio interview, when she got into a complete muddle over the numbers. At this point it did not sound as if she had any grip on what the actual policy was. That became the story. Her party leader, Jeremy Corbyn, then defended her with what amounted to a shrug.

The Conservative election message is a simple one: the election is about competence, pure and simple. It is not about what the government will actually do – which will not stop them claiming public endorsement of a series of policies that will barely get mentioned. Labour’s dismal performance yesterday, from a badly designed policy announcement, to Ms Abbott’s lack of grip, and finally with Mr Corbyn’s apparent unconcern, could not have gone better for the Tories if they had scripted it.

And yet Labour were raising an important question. It seems to a lot of people that government cuts to services and benefits are eroding the very fabric of society. This includes the police, where community policing has been decimated. True, this may not have much immediate impact on crime levels – but community policing is about gathering intelligence, and making sure that the various components of public service join up. It is about solving problems before they become problems. So far it is not clear how much police cuts have impacted on levels of crime (recent rises in reported crime, which Labour used as justification for their intervention, look as if they are more to do with reporting methods). But Londoners have been alarmed about a sharp uptick in knife murders in the last few weeks. This could have been the basis of a much sharper attack on the government.

This is not actually about bobbies on the beat. In London it is not so much the vaunted bobbies being cut, as community support officers. It is also about cuts to youth facilities, mental health services and other interventions to prevent young people drifting into a life of crime (including early years interventions). The government seems unconcerned. They talk about helping “just about managing” citizens, and lifting an elite of poorer children into the middle class through selective schooling. The former idea has merit, but not at the expense of those who aren’t managing at all. The latter idea is trying to solve the wrong problem, and making things worse in the process. Labour is right to move the conversation on to these issues, and to challenge the Conservatives hard. But they are criminally ineffective.

All of which makes me very gloomy. Part of me actually wants Labour to be crushed in this election, following the way they behaved towards Liberal Democrats when they were in coalition. Labour stands for a certain complacent and tribal way of politics that we could all do without. But without them the Conservatives are being offered a blank cheque. And the signs are that they will not use that opportunity wisely.

My main hope is that the Liberal Democrats can grow up fast to fill the vacant space. That seems a better bet than the creation of a new political movement. They will need to broaden out their narrative from anger over Brexit to defending and reforming public services. They also need a way to challenge the Conservative economic narrative. Their leader needs to be less of the energetic campaigner and more a statesman in waiting.

Can Labour pull itself back? It has before, but it seems to lack the quality of politician who can do the job. They are set to replace the incompetent with the mediocre. If a route back could be found for David Miliband or, perhaps, Ed Balls, that would be another matter.

And maybe, as FT columnist Jana Ganesh says, we are paying the price for public indifference to politics, which is leaving the field open to people who are obsessive, but without the vision and grounding from which true leadership must be built. Perhaps things have to get worse before they get better. That is not good outlook for Great Britain.