05/07/2024. London, United Kingdom. The Prime Minister, Sir Keir Starmer and his wife Victoria arrive at Number 10 Downing Street upon his appointment. Picture by Kirsty O’Connor/ No 10 Downing Street
Sir Keir Starmer, Britain’s Prime Minister, can be summed up in a single word: Focus. He is learning the problems that this characteristic brings. His focus on winning the election on 4th July has made his life much harder now that he has won. Labour has made an awkward start to its term of office.
In government Sir Keir’s focus is on five “missions”. This is an admirable approach compared to the chaos of Conservative governments, especially since 2016. We can quibble about the design of those missions: number one is “kickstart economic growth”. Growth makes a poor target: it’s both a bit like targeting happiness, which is something that happens when your are trying to achieve something else, and a bit like targeting the birth rate, which just isn’t under state control. It is under this heading that housing is being tackled: much better to have targeted housing specifically, surely. Social care doesn’t make it into the five – which cover the energy transition, law and order, education and the NHS (or in fact health) – but which of the others would you drop? Neither does immigration, which would have featured in any Tory big five – but that is more understandable. Focus is integral to achievement,- but it comes at the expense of risk management. A lot of the skill of management is learning how to balance the conflicting requirements of focus and risk management. Sir Keir must not be too relentlessly focused – he needs to have a strategy for dealing with the many other issues that have the potential to derail. He needs to use trusted colleagues for this.
What Sir Keir had clearly hoped was that the sight of a government clearly focused on achieving the nation’s priorities would present such a contrast to the previous government that he would have a prolonged honeymoon – especially as there is no coherent opposition. That has not been so. The summer’s big unforeseen event was the rioting that followed the Southport murders – but these played to Sir Keir’s strengths. A strict no-excuses crackdown was what the public wanted and this was delivered without hesitation. But from this emerged a big problem: neither he nor his most important colleague, his Chancellor of the Exchequer Rachel Reeves, are good communicators. They are wooden in their presentation and in their responses to questions. This has not helped them in their presentation of bad news about the government finances, the need for continuing austerity, and in particular the cancellation of the winter fuel allowance for all but a few state pensioners, just as fuel costs were rising again. They are blaming this on the previous government covering up a black hole in the nation’s finances -but this is coming across as insincere. Not without reason.
The problem is that the “black hole” in government finances is not at all surprising – so acting surprised looks fake. Throughout the election campaign the Institute for Fiscal Studies, a well-respected think tank, complained that all the parties were painting too rosy a picture of the nation’s finances. It really wasn’t hard to see why. The previous government was trying to use inflation to squeeze public sector costs – and noticeably force down the real pay of public sector workers. On this basis they fairly transparently cooked official forecasts that they could make cuts to National Insurance – even after they had tried to raise the tax in 2022. But Labour were silent about all of this, choosing not to challenge the Conservative’s general policy direction. Both parties seem to have been obsessed by the thought that the 2024 election could be a repeat of the one in 1992, where the Tories successfully built a campaign on “Labour’s Tax Bombshell” that turned a seemingly inevitable victory for Labour into defeat. Labour promised not to raise any of the main taxes (Income Tax, National Insurance and VAT), matching a Tory promise and said they would match Tory spending projections except in a few specific places. They were evasive on the clear implication (highlighted by the IFS) that this meant austerity in most aspects of government spending. Sir Keir’s focus was on winning the election with an outright majority, and he wanted to leave nothing to chance. If he was being dishonest, then he was no more so than the Tories, the thinking g seems to have been.
But, as my mother used to say, two wrongs don’t make a right. Labour could have been more honest about the state of the nation’s finances before the election, and they weren’t. The focus on winning the election has made the task of government much harder. Sir Keir has been desperate not to repeat the Tory habit of over-promising and under-delivering, and has been caught out over-promising. He is, of course, trying to pin this on the previous government, in the manner that David Cameron’s coalition government pinned the blame for its austerity policies in 2010 on the previous Labour one. But Mr Cameron, his Chancellor David Osborne, and even his Lib Dem deputy, Nick Clegg, were all much better communicators than Sir Keir of Ms Reeves (not that this did Mr Clegg any good…). Their hopes rest on the fact that with the next election four or more years away, some more positive events may have overtaken this difficulty.
I am disappointed. I had allowed myself a brief moment of hope. The speed with which the government settled the various public sector wage claims seemed to show a degree of imagination. They must have overcome firm Treasury pushback that “we can’t afford it”. But the better country that they want to bring into being features a happier public sector workforce, and better pay for the bottom and middle quartiles, and less dependence of cheap overseas immigrant workers. Squeezing public sector pay, with no plan for when any catchup might happen, is just takes the country further away from this goal. This is the reason I think that Jeremy Hunt, Ms Reeves’s predecessor, was one of the most disastrous Chancellors of recent times. He swallowed the Treasury logic on payrises and then made things worse with tax cuts.
But that flicker of hope has been suffocated. No evidence of such a degree of long-term vision has emerged. Instead the story was that the urge to settle the disputes was because they were unpopular and a distraction, and the previous government could be blamed. I was particularly disappointed that the government allowed the Treasury to defer the previous government’s plan to tackle the growing social care crisis, for the nth time. The government has to stick to its promises on tax, and social care didn’t make it onto the big five priorities. But the long-term consequences are not good, and some kind crisis is in the making. Labour’s focus on the election is making the challenge of decent long-term government harder.
Still, it isn’t all bad news for the government. None of the contenders for the Conservative leadership look capable of leading a revival for that party. The rift on the right, with the success of Reform UK, looks as if it will do for Labour what the rift on the left did for Mrs Thatcher in the 1983 and 1987 elections – enable landslide victories on the basis of lacklustre vote share. And the Lib Dems show some of the same problems as Labour. A relentless focus on doing well at the election at Tory expense leaves them ill-equipped to tackle Labour. The prospect that Sir Keir will get a second term remains good. The mandate that he seeks at that election will be critical to the success of his project overall. He needs to give himself much more room for manoeuvre.
PS Other commitments mean that this will be my last post for at least a couple of weeks. I plan to resume after the Lib Dem conference with my thoughts on what that party should do next.
“Somebody needs to HONEST with the British people about the immigration CRISIS.” Thus begins a recent Matt Goodwin Substack rant (the capitals are his). He has a point: no politician wants to lay out the difficult choices raised by immigration policy. Needless to say, that lack of honesty applies just as much to Mr Goodwin.
Mr Goodwin is an itch I continue to scratch, I’m afraid. He is increasingly unhinged, and now regularly pushes the boundaries of racism, and goes over the boundary of Islamophobia, in my view. I used to read him because his academic training led him to be reasonably factual – but that is increasingly untrue, and anyway with his cherry-picking and lack of context, factual accuracy is pretty useless. His writing is also getting longer and more rambling, making it quite hard to read – though, interestingly, he is putting a greater proportion of it in the public domain (I refuse to be a paid subscriber, because this implies support, and he uses the funds to promote his output). But I still feel I need to know what he’s up to.
Mr Goodwin’s article is an attack on the Labour government’s policies against illegal immigration in particular. It is part of Mr Goodwin’s effort to stir up a frenzy of hate against Labour’s wokism – clearly imitating the way Republicans stir up hatred of Democrats. The difference is that he is also highly critical of the Conservatives – but that is another story. But if you try to discount the ranting, he does make some valid points about gaps in the government policy. Most illegal immigrants claim asylum, and most of the claims are granted. And even where those claims aren’t granted, many are from countries, like Afghanistan and Syria, that we can’t deport people back to. The business model, as Tory politicians like to call it, of the people smugglers is intact, so we can expect the small boat crossings to continue unabated. The tacit assumption seems to be that the government feels that the level of inflow is tolerable. The plan is to process the claims more quickly, so that claimants don’t have to put up at government expense for as long, and start integrating into society more quickly, taking jobs and paying their way. But the government does not say this, giving validity to the accusation that they aren’t being honest.
The question of illegal immigration is one dimension of immigration policy. Legal immigration is no less controversial. Here the new government seems content to continue with the last government’s policies. The policy here seems to be to reduce the immigration statistics through making policies on workers’ and students’ families more restrictive, and hope this, along with a calming down of flows from Ukraine or Hong Kong, will take the sting out of the public criticism. Alas the public don’t respond to statistics, but to concrete developments. From immigration these are pressure on public services and housing, poorly integrated immigrant communities, and public money being spent on housing asylum seekers (especially when these are housed in hotels in poor areas). If asylum seekers are processed more quickly – the Tories at one point deliberately prolonged the process in the hope that it would put people off – the housing at public expense should decrease. But it is far from clear that the other problems will be much affected by current policies. Stretched public finances mean that little is being done to expand capacity – and there are no quick fixes on housing supply. As for integration, the government’s stricter stance on bringing families over means that successful integration is less likely.
The deeper problem with legal immigration, of course, is that there is a high need for immigrants both as workers and as students. This is where much more discussion needs to be. Liberals tend to wave away this question, simply saying it proves that the country needs current immigration levels. But the problems with housing and pressure on public services remains. Conservatives suggest that this is an “addiction”, but do not engage with serious ideas about how the country might break the habit. On the assumption that higher-paid immigrant workers aren’t too much of a problem – they integrate easily and bring valuable skills and entrepreneurship – then we need to think about lower paid workers. Could we encourage more locals out of the workforce to tackle the roles that need filling (typically in healthcare, social care, hospitality and agriculture)? Could we make do with less of these services? Japan is an example of a country that is beset by similar (actually worse) demographic pressures, but insists on keeping immigration to the minimum. There are plenty of problems, but it can be done. I think the first thing is that rates of pay for these roles will have to rise, making it easier to recruit and retain staff already here. A productivity revolution is unlikely in these sorts of services (though Japan is trying to use robots), so it means that they will be more expensive. That means some combination of higher taxes, inflation and service closures (fewer rural pubs for example). This is where conservatives like Mr Goodwin aren’t being honest with people. The Conservative Party, for example, seem obsessed with the idea of lower taxes, and are still saying that the government needs to restrict public sector pay. They probably don’t understand how contradictory this is with their calls for lower migration.A more honest public debate would force them to confront the question.
And what about illegal immigration? Conservatives (including Mr Goodwin) are railing against the international treaties which provide the guiding principles of British policy. They want them gone in the name of sovereignty. So that they can do what? There are two main ideas: push the boats back in the Channel, and return migrants regardless of the dangers they face. These policies work better in pub discussions than they would in practice. The boats used by the smugglers are flimsy: they are practically sinking when the authorities reach them. Pushing them back means letting their passengers drown. This would go down well in some quarters, but it is hard to see that as being sustainable in a civilised country. And sending people home to Syria and Afghanistan? The logistics aren’t promising, and those countries probably wouldn’t want them back. And if they did, there would be plenty of stories of returning refugees being mistreated and even killed. British did something like this after the Second World War, forcing Russian Cossack refugees back to the mercies of Stalin. Standards have changed since then.
The awkward truth is that the best hope for managing refugees is internationally, in close cooperation with our European Union neighbours. That would not reduce the flow – but it would make it more orderly. Refugees could apply for asylum from abroad (France, say), and if granted come across legally. Others would be returned to France, etc. But in order for our neighbours to accept returnees, we would have to agree to a substantial legal flow. It is ironic that Brexit has given Britain less control over its borders – not even the Remain side in the referendum predicted that. National sovereignty is an overrated idea in the modern world. The world is in the middle of a refugee upsurge and Europe in particular can’t avoid it. Britain needs to be part of managing it in stead of pretending that the problem is somebody else’s.
The public is entitled to feel let down by its leaders, who spot an opportunity to stir up trouble, but are unable to implement solutions once in power. Now that they are out of power, the two factions of the right will probably try to outdo each other with tough rhetoric, while not engaging with the deeper issues. Surely the best chance for for the centre and left (Labour and the Liberal Democrats) is to be honest. Instead we get denial. The issue will continue to poison British politics for the foreseeable future.
“What did you expect? Britain’s protests reflect DECADES of elite failure.” Thus starts a Substack post by populist commentator Matt Goodwin. This was in the aftermath of a violent attack on a mosque in Southport which in turn followed an appalling stabbing in that town, when three little girls were murdered, and several others injured.
What we expected, Mr Goodwin, was that the victims would be given due respect, and that their friends and neighbours be given the space to come to terms with the horror of what occurred. And we expected that time would be given for the facts of the incident to be established, and for lessons to be drawn from those facts. We expected common human decency. We did not expect the community’s grief to be hijacked by outsiders to promote their particular frustrations and grievances. At least the riot gave the community a chance to show their real mettle by turning up to help clean up the mess afterwards, and offer the mosque’s congregation messages of support. But, alas, further riots have taken place in other towns, well and truly hijacking a proper response to the tragedy – though at least these are leaving the town of Southport alone.
Mr Goodwin’s diatribe is worth reading for any of those wanting to get a better understanding of the undercurrents in British political life. It’s a powerful polemic and, apart from being too long and a bit repetitive (making it hard to re-read), it is well-written. The idea is to make people angry, and not to put forward a coherent argument in a process of debate. But Mr Goodwin is an academic, and a coherent argument does lie behind it, and, though there is a lot of insinuation, it is reasonably factual (though taking facts out of context is very much his method) – unlike much of what gets written in this space. It is worth trying to understand it, and drawing out where it is right, where it is wrong and where it is hard to know. That’s what I want to do here.
Mr Goodwin’s argument is that the riot stemmed from a protest by “ordinary people” fed up with the effects of mass immigration, which is disrupting society and making it less safe. The critical fact about the murders, so far as Mr Goodwin is concerned, is that the the arrested suspect is the son of a Rwandan immigrant, allowing blame to be put at the door of immigration policy. Mr Goodwin’s ire is directed at policies, including “unrestricted” immigration, being practiced for “decades” by a liberal governing elite, taking in all the main political parties (apart from Reform UK and its predecessor, Ukip), the mainstream media, and government agencies. These liberal policies are excessively indulgent to minorities, he suggests, and do not take account of the impacts on “ordinary people”, who feel they didn’t consent to them, and don’t recognise their country any more, after decades of change. I could go on – Mr Goodwin is especially vitriolic about the Labour Party and left-wing academics, of which he doubtless has a lot of direct personal experience. Notwithstanding the complaint that these voices of complaint are unheard, readers will doubtless be very familiar with what is being said. Indeed these views have been expressed by Conservative politicians, such as Suella Braverman. They are frequently heard, though rarely endorsed, on mainstream media, and especially the BBC. Mr Goodwin does unequivocally say that attacking the police is always wrong, and in a later Substack post, he condemns all the violence as simply damaging the communities in whose name the complaints are being made. But he also complains of double standards over how the police and politicians handle these protests compared to those made on behalf of Palestinians, say – or counter demonstrators, often by Muslim men, which in some cases have been violent too. His critical argument is that the protests should not simply be dismissed as being the work of “far-right” activists, and it isn’t just a matter of misinformation and disinformation. It is a symptom of millions of people being utterly fed up.
So, where do I think Mr Goodwin is right? Firstly, that alongside the violence, is a voice of protest that is a reflection of many people’s views. Mr Goodwin suggests that these are drawn from a majority of “ordinary people”. That’s a stretch – but his alternative characterisation of “millions” is surely on the money. Many people would hear what Mr Goodwin has to say, and thank him for expressing their views faithfully. It’s a lot of people, and they feel ignored or betrayed by the political class. The Conservatives under Boris Johnson courted such people in the 2019 election, and won over many of their votes on the basis of promises to limit migration and “level up” left-behind places. A vision was painted of a high-productivity country, with higher wages, which did not depend on immigrants, especially lower-paid ones (I’m not comfortable with the usual formulation of “lower-skilled”). But this was a have-your-cake and eat it vision, typical of Mr Johnson, that did not acknowledge the difficulties in reaching such a promised land, and the costs. Those costs are skill shortages in industries such as healthcare, social care, agriculture and hospitality, to name only the most obvious. These skill shortages lead to higher wages, which was exactly the intention, of course. But these, initially at least, lead to inflation. It’s not possible to pay for the higher wages through higher productivity in the short-term, and often higher productivity actually occurs in industries that are not directly affected by the skills shortages, meaning that things have to be rebalanced. Inflation is inevitable, even if is part of a temporary process of readjustment in the economy. Higher inflation means higher interest rates and more expensive mortgages. Mr Johnson’s government was not ready for this, and in any case was blown off course by the Covid crisis, followed by the Ukraine war and the rising costs of fossil fuels. After he went, as the chaos and low-level corruption of his government became too much, the Conservatives changed tack. They became passionate opponents of inflation, and obsessed with cutting taxes. That meant taking a hard line on public sector salaries, and letting inflation cut the real cost of public services – which in turn led to an increased dependence on cheap imported labour. The government buckled under the pressure of labour shortages, and other pressures to revive short-term economic growth, and allowed immigration levels to continue at high levels and even to increase. It is not hard to see why so many people feel betrayed and angry. A reaction was to be expected.
The second place where I think Mr Goodwin is right is that immigration is causing real stress. The most important stress point in my view is in housing. The rise in property rents – in the region of 6% per annum since the start of 2022, according to the Office for National Statistics – and significantly higher in places like London -is causing widespread hardship. The country struggles to expand its housing stock fast enough – with dysfunctional planning controls, to say nothing of labour shortages. In this sense, the popular plea that immigration should be stopped because “we are full” has some merit. Claims on immigration’s other effects, on public services and public order, are much harder to substantiate. But the impact on housing is serious enough by itself.
I have a little sympathy with when Mr Goodwin says that a lot of policy at public agencies has been inept, and left-wing fads have been given too much headway. This is especially the case with universities, although a lot of this has been driven by student action, and the “cancelling” of speakers, often on flimsy evidence. The Tavistock Clinic’s life-changing treatments on young people with gender dysphoria leant more on fad than evidence. Looking further back in time, but still very prominent in Mr Goodwin’s list of evils, was the lack of action to combat the grooming of girls by Asian gangs in a number of towns – this had a lot to do with old-fashioned class prejudice, but it was also regarded as politically sensitive. Having observed some of controversies at Liberal Democrats conferences over the years, I get that with some people you are not allowed a proper conversation on sensitive issues.
There are number of grey zones – claims made by Mr Goodwin or his critics that are either hard to establish in fact, or where the evidence is mixed. The narrative that the unrest is all about “far-right” thuggery is pushed hard by the government, and fully supported by media such as the BBC, and criticised by Mr Goodwin. But there is clearly a lot of politically directed thuggery going on, and while I’m not comfortable with the label, I don’t have a better one than “far-right”. But there are a lot of others who come along to watch or cheer the thuggery on, including people local to the areas affected. Still, the thuggery is a serious law and order challenge, and the public expects political leaders to deal with it firmly. Anything that sounds like making excuses for people crosses an important line. This is something that Mr Goodwin seems to be finding out for himself: in his latest message, ironically titled “The British People need to feel safe,” he gives the impression of being under siege, and he appeals for more people to make subscriptions too support the promotion of his message. Here he does say unequivocally that he is against the violence – something he didn’t quite do earlier, except when the violence was directed against the police.
Another part of the grey zone is the claim that certain immigrant communities are making the country less safe. One BBC correspondent has been saying that violent crime has been falling through the period when the number of immigrants is rising. But the quality of British crime statistics is not what it was – and reported crimes depend on other factors than the number of crimes committed. And what if crime is falling because people are going out less? A lot of illegal immigration is linked to organised crime, and I would not be surprised if certain immigrant communities were linked to crime. But a lot of the right-wing tropes about no-go areas and such are nonsense. I used to live in an inner London borough, with large immigrant communities. But the danger posed to a single young woman walking home there came from a white British police officer. If I wanted to develop an idea that there was a national crime wave of violence against women perpetrated by white men, I would find it easy to produce a litany just as horrific as Mr Goodwin’s on immigrant crimes.
I’m also putting Mr Goodwin’s claim about multiculturalism in that grey zone. He promotes the common right-wing trope that multiculturalism has failed. This was not evident where I used to live – including when I was a chair of governors at a multi-ethnic primary school, where white British were in a minority. Local parents, from all communities, simply wanted their children to do well for themselves. The school adapted to the fact that so many children were from homes with English as a second language, and achieved national average performance regardless. But this isn’t always so. There are places where integration has not worked well – for example in some northern towns – and politicians seem short of ideas about how to move on.
There’s a lot more grey: claims made by Mr Goodwin where the evidence is in fact mixed, if it exists. Where do I think he is out and out wrong? One place is pinning the blame for the policies he likes on a tiny elite (sometimes widened to an “elite class”) imposing policies on an unwilling majority. That governing elite has a hinterland of people that largely share their values, even if they disagree with policy specifics, that runs into millions of people. This is after all how the politicians get elected. They include many people like me, who feel just as unable to shape public policy as people throwing bricks at police in Rotherham, and who don’t take well to be called a governing elite. Describing the political class as an elite has its sinister aspects too. Often this language is used by people who want to gain power and plant their own governing elite, which then moves on to practice self-enrichment using the state privileges. This is what happened in Hungary and Poland, for example. It is hard not to see Donald Trump’s entourage in that light. The striking thing about the liberal elites in Britain and elsewhere is how honest they are. It’s a question of being careful what you wish for.
A further place where Mr Goodwin is clearly wrong is blaming public policy on the elite’s “luxury beliefs” though I don’t think he uses that phrase in “What did you expect?”. There is a reason that public policy has taken the direction it has in the last couple of decades or so, including mass migration, and it is not a dilettante governing elite imposing its luxury beliefs. It’s because the country faced serious challenges, and this seemed to be the easiest way to meet them. I have already described how Mr Johnson’s government fell apart because of the impossibility of the vision he promoted. The is not to say that a low-immigration economic model is infeasible for Britain, or even undesirable. It is just a lot harder to get there than the idea’s supporters claim. Brexit is another example of a policy that was promoted without making clear what the full implications were. There was a case for Brexit, but one that involved a difficult transition that was glossed over or disbelieved by its supporters. And now our politicians are trying to promote the idea that the main tax rates can be left unchanged while public services are repaired. And so the government is kicking a response to crisis on social care into the long grass in order to preserve tax rates. It is fair to accuse our politicians of not being honest about the choices the country must make. But, I’m afraid the electing public are deeply complicit with that. If anything the luxury beliefs are the ideas that low immigration and post-Brexit prosperity can be acheived easily.
And finally there is the issue of culture. Mr Goodwin wants to suggest that there is a British culture that is being undermined by mass immigration, and foreign beliefs imposed by the elites. But culture is a moving target. Not so long ago pregnant women would commit suicide rather than endure the disgrace of being a single mother. Even more recently being gay was considered by most to be a disgusting perversion. Pretty much the whole of society has moved on. And our culture has always been part and parcel of a worldwide cultural melange. And it wasn’t all that long ago when British commercial emissaries, armed forces and religious missionaries went out into that wider world to export and impose our culture on the developing world – the era of Empire. Indeed I think Mr Goodwin wants us to be proud of that empire. But that history leaves us very open to importing cultures from elsewhere, through immigration amongst other ways – from our former empire, and from Europe, to which our history is so closely bound. Our country cannot live in isolation – we cannot escape treaties, international conventions and obligations, as there is no such thing as absolute national sovereignty. And by taking a fuller role in the wider world, we can make it a better place, by ensuring European security, or saving the world from global warming, for example. By trying to pretend that things can be otherwise, Mr Goodwin is simply stirring up trouble for no positive end.
There is much that is wrong with Britain. Class prejudice remains – and I think that lies behind much of what Mr Goodwin complains of. So does racism and misogyny. Drug addition and unhealthy lifestyles are rampant. Too many young people are drawn into violent gangs. There is too much sub-standard housing. And too many of these things are not being confronted by the political class – or the public that votes them into office. Mr Goodwin did the country a service after the Brexit referendum, when he tried to illuminate how many of our fellow countrymen felt. But he has gone way beyond that, as he is promotes a destructive political agenda, fuelled by false ideas. By trying to exploit the grief of Southport, or at least excuse those that are, he has sunk to a new low.
Government finances are under water. OK, a weak link but I’m bored of AI images and public domain photos. Bosham in Chichester Harbour this weekend, by my own hand.
Taxation and public spending is very much on the political agenda here in Britain. The Chancellor of the Exchequer, Rachel Reeves, is claiming that there is a £22 billion black hole of unfunded spending commitments in the government finances, left by a Conservative government addicted to brushing problems under the carpet. There is much talk of how her Labour government might raise taxes to plug this hole and meet expectations of improvements to public services and the social safety net.
This makes it a good time to ponder the economics of all this. Public debate encourages us to think of the state’s finances in terms of a household budget: public spending must be covered by taxes, or else the national debt gets out of control, which in due course could mean throwing the country to the mercy of foreign creditors, or burden future generations. This narrative has the merit of being easy to communicate and sounding like common sense. Try telling voters that this is not how things work, and they will immediately become suspicious. The US Republicans, to my knowledge, are the only politicians to have succeeded with a different narrative: the so-called “Laffer curve”, whereby tax cuts pay for themselves through economic growth. Former British Prime Minister Liz Truss tried this out on the British public in 2022, but it went very badly. Her supporters argue that his was actually through bad luck – but most politicians now treat the idea of “unfunded” tax cuts or spending commitments as politically toxic, as well as economically unwise.
The Laffer curve is in fact just one argument against the household budget narrative – but it is not a huge departure from it. Households may borrow to invest, so states should be able to so as well. If a budget deficit leads to a future increase in revenues, or lower costs, then surely it is sustainable? Labour tried to make this case with a proposal for massive investment in clean energy infrastructure – but lost their nerve as the general election loomed. Joe Biden’s administration is actually implementing such a programme in America, but the public there are resolutely sceptical. You have to believe that the future benefits are for real – and the public is generally unbelieving. Not without reason, as the processes of accountability are weak.
A further, and well-established, argument against the household budget narrative might be called the Keynesian critique. This follows the argument originally put forward by the great economist Maynard Keynes, after stringent budgeting by governments during the Great Depression of the 1930s made things worse. If there is spare capacity in the economy – a typical feature of recessions – then it makes sense for the government to run a deficit to raise demand and employ unemployed workers, creating a virtuous circle of growth – and stopping a potential doom-loop of savings leading to reduced demand leading to further savings. Governments should use taxes and spending to help manage overall demand, to ensure that the economy runs at an efficient level of capacity. This idea is very popular on the political left, who generally assume that the economy is always working below capacity – but it is not always easy to tell if there is spare capacity. Many people thought that high unemployment in the 1970s meant that there was spare capacity then – but generous fiscal policy simply seemed to stoke inflation – “stagflation”. In fact the escalating price of oil, amongst other things, meant that the economy was in a period of transition, which caused the high levels of unemployment without a ready supply of potential new jobs. I thought something similar was happening in Britain after the great financial crisis of 2007-2009 – and that this was the justification for the 2010 coalition government’s austerity policies (which were rejected by the left with religious fervour). The pre-crash economy had been too dependent on fake gains in financial services and related business services, meaning that it wasn’t just a case of managing aggregate demand, but allowing for a degree of restructuring, which takes longer. I don’t think anybody else made that argument. Supporters of austerity used versions of the household budget narrative, while most economists said that austerity was the wrong policy because aggregate demand was weak. I still think I was right – though by 2015 the case for further austerity had largely gone, meaning that further cuts made by the Conservative government from that year were excessive.
A final critique of the household budget narrative is made most prominently by advocates of Modern Monetary Theory (MMT). They point out that where countries control their own money supply (which is the case for Britain and America, though not the Eurozone), then they don’t need to worry about the national debt, because they can just create the money to fund it. This, in fact, is exactly what many governments did during the period of Quantitive Easing (QE) in the 2010s. For some reason, MMT is regarded as heterodox economics, and its advocates akin to heretics by conventional economists. I have never entirely understood this – it has always seemed to be a matter of politics rather than substance. Some MMT advocates delight in attacking orthodox economics, not always with secure logic, and this no doubt creates a backlash. Nevertheless MMT economists such as Stephanie Kelton produce well-argued work which is thought-provoking in a good way (this article in the FT gives a flavour). The central proposition is that the limiting factor for fiscal policy is inflation, not debt. While inflation in the developed world appeared dead and buried in the 2010s, MMT became popular on the left, as it suggested that large budget deficits were sustainable, supporting their argument that austerity policies were primarily “ideological”. In the 2020s, with inflation back in the picture, we don’t hear so much about MMT, though their analysis remains just as valid. My personal scepticism of MMT is that its advocates don’t tend to think enough about the difficulties of managing a small open economy, which has to manage its economic relations with other economies (and exchange rate policy in particular) – a situation that fits the British economy more than the American one.
What all these insights point to that there are two important constraints to fiscal policy rather than simply whether there is enough money: inflation and foreign debt (if we accept the MMT argument that domestic debt isn’t a problem if inflation is under control). Low inflation is central to a country’s feeling of economic wellbeing. I would suggest that maintaining the value of the currency is one of the sacred duties of the state – and governments play fast and loose with this at their peril – though most liberal economists are more relaxed about this. And foreign debt can interfere badly with a sense of national sovereignty. The reason that the recent left-wing Mexican president Manuel Lopez Obrador was so keen on limiting government expenditure was exactly that: a fear of foreign debt (and an example of how austerity is not always a matter of right wing ideology). Where governments have dormant inflation and little need for foreign debt (through a current account surplus), then budget deficits can run wild – this is the case with Japan, for example. In Britain things are considerably trickier. The country now has an inflation problem, and a long persistent current account deficit, which complicates managing the national debt. It is hard to know how much of a constraint the latter problem actually is. It hasn’t been tested to destruction since the 1970s (if you discount the Truss episode), when the government called in the IMF, though some suggest this was just political theatre. The country has had no trouble in financing itself from abroad in its own currency. The country’s dependence “on the kindness of strangers” is a popular scare story put up by officials of the Treasury and the Bank of England to keep politicians in their place. And yet, like inflation in the early 2020s, you don’t know if you’ve gone over the limit until it’s too late. It was a debt problem that did for Ms Truss’s bid for freedom, after all. That was a dislocation in the domestic debt market because of some technical issues with pension fund financing. I have oversimplified things by referring to “foreign” debt – but the presence of foreign investors affects the disciplines required across the whole market. That episode showed that management of the national debt has to be strategic – it is not a simple matter of ramping up a budget deficit and seeing what happens.
Meanwhile, I suspect that inflation in Britain remains a serious problem, in spite of the headline rate returning to 2%. In the public sector the government is no longer able to resist above-inflation payrises: you can only defy the market for so long – this is a large part of Ms Reeves’s black hole. That may ripple through to the wider labour market, as the previous government feared. Meanwhile there is enormous political pressure to reduce levels of immigration – and it isn’t just politics: high rental and property prices, in part driven by immigration, is causing serious hardship, and disappointed expectations amongst younger people. Politicians talk of encouraging a high-wage high-productivity economy, not dependent on cheap immigrant labour, and it might be that the country is in transition to just such a destination. But all economic transitions involve bumpy rides, and inflation is often part of that journey. That matters because under the country’s current economic governance, the Bank of England will not reinstitute QE, and make government debt easier to swallow, when there is a threat of inflation. And while reforming economic governance might be a good idea, in the short term it would carry a heavy risk of the destabilisation of financial markets.
So, with a clear menace of inflation, and more difficult markets for government debt, the government is likely to have to raise taxes. And here politics has created a further problem. Easily the most effective taxes are Income Tax, National Insurance and Value Added Tax. These are effective because they have a large base, meaning that small percentage increases have a big impact, and because they have the most direct impact on aggregate demand, helping the management of inflation. And yet Labour has ruled out increasing these taxes (other than through the “stealth tax” of freezing tax-free allowances). There was, in fact, a political consensus on that policy: no party is suggesting that there should be any increases – which is seen to add hardship to those already suffering from higher inflation. That leaves various flavours of capital taxes or wealth taxes. These have the political advantage of primarily affecting the better off, but they help with the national debt rather than inflation – their impact on demand is limited. And they are often evaded by people with tax advisers. That is the big problem with the idea, popular on the left, that increased state spending can be financed just by taxing the rich – such a policy would be inflationary and likely to underperform its targets.
Something has to give. The government will struggle on with continued austerity and increasing some fringe taxes, hoping for a growth bump. But growth is bound to disappoint, inflation will refuse to die, and interest rates will remain uncomfortably high. One commentator has written that it will not be until a second term that Labour will start to seriously address how the country manages the state – through some combination of higher (and doubtless reformed) taxes and reduced state ambition. If the Conservatives remain in a mess, that may become politically feasible. Up until now Sir Keir Starmer’s aim has been to secure an election victory, and to impose a more serious style of political governance. That is a start but it is not enough.
Back in 2021 it had seemed impossible for Donald Trump to return to the White House. Even in 2022 it seemed that his brand was diminished – as candidates he endorsed did badly in Congressional elections. But we should have known better. For the first time in his political career, the man looks unstoppable. We must now think what many of us liberals had thought unthinkable: he will be President again.
Pretty much everybody I know regards the prospect of a repeat Trump presidency with horror, including a handful of Americans. Some Britons do like Trump, but most treat him as a bit of a joke – a caricature of the worst American stereotypes, and transparently narcissistic. This country has had enough of un-serious politicians after the chaotic period of Boris Johnson’s ministry, and his successors’ indulgence in gesture politics. It is one reason that Sir Keir Starmer’s popularity ratings are now high – seriousness is his most demonstrable virtue. You don’t have to be a liberal here in order to dislike Trump.
But it is clearly different in America. The first way that Mr Trump has been able to make a comeback is that he has fired up a supporter base that has enabled him to take over the Republican Party. He has made short work of his rivals, and any Republican law-maker that doesn’t pay homage to him will have their careers quickly terminated. Mr Trump has been able to forge a special bond with this supporters. He plays on their sense of grievance, and the feeling that the political establishment despises them (which they often do…). This seems is intuitive – I have called him a right-brained genius – following the once-fashionable idea that people are a product of a rational left brain and an emotional and instinctive right one. The irony is that this idea was promoted by liberal types to suggest that Western culture was excessively left-brained and destroying the world – and that the world needed more right-brained thinking. Alas this analysis turned out to be too left-brained.
The interesting thing about Mr Trump’s genius is that other conservative politicians have been unable to replicate it. Ultimately they are too calculating and they can’t hide it, and that undermines their authenticity. That fate has befallen Florida Governor Ron De Santis, once billed as being more dangerous, because more rational. We will have to see how Mr Trump’s Vice Presidential pick JD Vance works out. He is clearly a calculating man, but he gets much closer to his boss’s rhetoric than Mr De Santis did – and his empathy with white working class Americans is authentic.
The second reason for Mr Trump’s comeback lies with the current President, Joe Biden. He did well to beat Mr Trump in 2020 – and he has been highly effective in office. Too effective, perhaps. A narrow victory in a campaign that was mainly about the fitness for office of his opponent was not a mandate for many of the radical measures that he brought forward. There were two particular problems. The first was that inflation got out of hand on his watch. Some of the blame may lie with the fiscal generosity of his predecessor, and some arose from international events – but Mr Biden threw in plenty of fiscal generosity of his own. Inflation is now back under control (apparently) but it has left deep scars in its wake, notably with interest rates still high, and petrol prices over 20% higher than in his first year of office. Mr Biden’s supporters like to paint a rosy picture of their man’s economic achievements – but no amount of aggregrate economic statistics can mitigate the pain that many American people have gone through. The second major problem is the chaotic scenes on the border. Now I haven’t been following that particular issue closely, and it is clearly being hyped up by the Republicans – but there does seem to have been a lack of focus by the Biden administration in its attempts to play a number of competing interests.
And then there was the question of Mr Biden’s lack of physical fitness for office. His disastrous debate performance with Mr trump only confirmed what many people had suspected. As I write, he has now thankfully bowed out – but only after an obstinate period of denial. His likely replacement candidate is the Vice President, Kamala Harris. She doesn’t get a very good press (though how justified that is I find hard to assess). My feeling is that she would do a better job than Biden of mobilising the Democrat base, especially younger voters, but will struggle with neutral voters. But the Democrats campaign has lost momentum, and will need to be completely reset.
I don’t think Mr Trump’s survival of the assassination attempt will make more than a marginal difference. It gave him some momentum at a useful time, which doubtless helped bring some donations in. But he and his party reverted to type so quickly afterwards that surely few voters will be swayed.
Mr Trump still has those two big points in his favour: the economy and the border. For some reason many American voters, even those who are otherwise sceptical of Mr Trump, think that he is a better bet for managing both issues than whoever the Democrats throw up. In the case of the economy, that’s a bit bizarre. He plans to raise prices for ordinary Americans by imposing tariffs, while reducing taxes for the better off by adding to the national debt. Reducing immigration, if he succeeds, may make things worse by raising inflation – though it could help lower-paid workers. Still, the idea that a businessman is well-placed to manage the economy a strong one in America. And if Mr Trump’s record as a businessman is a flawed one, years of starring in The Apprentice have clearly impressed many Americans.
And as for the threat Mr Trump poses to American institutions, many Americans clearly don’t think he will be that bad in practice – and perhaps those institutions have been corrupted anyway. The only criminal convictions that Mr Trump has so far suffered were from a distinctly dubious case legally, giving some substance to Mr Trump’s accusations of “lawfare” against him. Other cases may be stronger but the American judiciary has played along with his efforts to kick them into the long grass. Mr Trump has never made himself out to be a saint, even if he sometimes claims to be an instrument of God.
So what are the consequences for us Europeans if Mr Trump succeeds? The most serious is the war in Ukraine. Most European leaders want wear the Russians down, and force them to conclude the war on terms that they cannot paint as victory – and so weakening their threat. They hope that Mr Trump can be manoeuvred into supporting this – but they know it is unlikely. More likely is that he will force Ukraine into a ceasefire. Russia is then likely to regroup and rearm – although it is possible that the enormous cost of the war will start to rebound on Vladimir Putin’s regime. The European powers will have to reorganise their defences, and reduce their dependence on US weaponry.
Economically the main threat is Mr Trump’s proposed tariff regime – but the main economic damage is likely to be wrought on the Americans themselves, and then their neighbours in the Americas and Asia. But it is unlikely to help Europe’s struggling economies – hastening the awkward political choices that permanent low growth will entail.
A difficult four years beckon. It may not come to that, of course. The last month or so have already shown how fast politics can move. Mr Trump seems to have taken his recent successes as as justifying his continued focus on his base – rather than softening his image to appeal to uncommitted votes. If his opponents can succeed in making the threat of a Trump regime look less abstract – by focusing on concrete issues like abortion, rather abstract ones like “democracy” and “the rule of law”, and if their candidate looks properly presidential, more sceptical voters can be persuaded to vote him down. Perhaps, even, he will go too far and look start looking more dangerously deranged, even to some of his erstwhile supporters. We have been hoping for that for eight years, though, and nothing he does seems to faze his base.
Americans will do what Americans will do. We in Europe will just have to live with whatever they choose to do. That’s democracy, I’m afraid.
Postscript: 23 July
The news that Joe Biden was withdrawing broke while I was finishing the article. Anxious to publish, I edited it without changing the overall thrust. But the whole dynamic of the contest seems to have changed. Kamala Harris has launched her campaign built up real momentum – it looks as if she will be chosen without contest. The Trump campaign seems to have been wrong-footed. They have no shortage of attack lines on Ms Harris, whom they despise as much as her boss. But the main ones look weaker than the focus on mr Biden’s capacity, while the Democrats have some attack opportunities of their own: capacity issues can be turned back on Trump, and maybe they will even get a chance to attack some of Mr Trump’s policies – like his disastrous looking economic ideas. Alas Ms Harris’s early attack lines seem to focus on Mr Trump’s criminality and lack of moral fibre. That’s old news and won’t sway many, surely. Matt Goodwin, who had been predicting a Trump landslide, meanwhile rushed out an article suggesting that Ms Harris is an even more hopeless candidate than Mr Biden.
It will be a couple of weeks before we see if Ms Harris is making a serious impact on Mr Tump’s lead. American voters have a way of bringing me down to earth, so my wiser self is saying that the main thrust of my article still stands – even if my optimistic self thinks that the spring in the step that Ms Harris is showing must have some sort of positive effect.
What do British Prime Ministers Sir Keir Starmer and Liz Truss have in common? The Labour leader defines himself as a complete contrast to his disastrous predecessor but one. But both made economic growth central to their political programmes. If that leads to a focus on economic efficiency, then this is doubtless a good thing. But the truth is that we are keen on growth as a way of avoiding hard choices.
Recently, writing in the Financial Times, the Oxford economist Daniel Susskind pointed out that economic growth has become the universal panacea for politicians, but that the political focus on it is comparatively recent. Indeed I think the political focus on growth statistics, including in the BBC news, is overdone. The voting public does not pay much attention to the statistical updates. The balance between income and expenses, the ability of governments to fund public services and welfare, and the state of the job market – these impact much more directly on peoples’ lives. All of these are supposed to be driven by growth, and yet the relationship is complicated. Nevertheless growth drives so much of the conversation amongst political elites that we need to ponder it.
But, as Mr Susskind points out, economic growth is poorly understood. Growth emerges from the actions of millions of individuals all working to their own priorities. Attempts to drive economic development (much the same thing, but with a longer history of political focus) by government fiat has led to some of the worst man-made disasters in history. Mao Zedong’s policy of collectivisation and the “Great Leap Forward” in China in the 1950s led to the biggest mass starvation event in history, followed by utter stagnation. Conversely Deng Xiaoping’s reversal of Mao’s policies in 1978 led to the most astonishing and important period of economic growth and development in world history. The simple act of letting farmers grow what they wanted and sell their produce on the open market boosted food production several times over.
Attempts to understand growth and develop policy have tended to focus on the supply side of the economy. That includes Mr Susskind – who homes in on innovation, which improves productivity. Sir Keir talks of investment doing much the same thing, and also the creation of more houses to allow people to move where the jobs are (or at least I think that’s a large part of why he includes housing in his growth agenda – although in truth he has shown little evidence of a grasp of economic policy). Ms Truss’s idea was to reduce taxes to provide businesses and workers with greater incentives to work harder.
But this misses something: the demand side matters too. There’s no point in producing more products or services if people don’t want to consume them. Mao’s strategy in the Great Leap Forward was to produce more iron in village smelters – but there was little use for the poor-quality metal that resulted. There is an underlying assumption that people will always consume more if they can – they are simply limited by the income they can earn from working. Of course economists know things aren’t as simple as this. People with higher incomes tend to spend a lower proportion of their income (leading to the rather more complicated question about saving, investment and growth). People may choose leisure, such as early retirement, which limits the supply of labour and often restrains demand.
And then, when you think about it, things get more complicated still. Once people have enough money to meet their basic needs, they often want to spend the surplus to signal social status. By and large this is done by buying things that are not made efficiently (hand-stitched bags, etc.) or services that require prodigious amounts of labour (personal trainers rather than fitness classes), reducing economic efficiency.
And then what about sustainability? Intensive farming delights economists because it maximises productivity. But it kills the soil, making it harder and harder to use it to produce anything of worth – and requiring ever more inputs of fertilisers, etc, which in turn create further environmental damage.
A further complicating factor is that the growth of the information economy means that the relationship between demand and supply is more complicated. Demand for information (including such things as music and video entertainment) can be met with little impact on production.
All of this raises two questions. The most obvious is whether growth is actually such a good thing. This is the basis of Green scepticism of growth. People’s basic needs must be met, of course, but beyond this we need to think about quality of life and sustainability. There are plenty of people whose basic needs aren’t being met, even in advanced economies like Britain’s – but dealing with poverty looks to be much more a problem of income distribution than the aggregate income across society. The United States has the largest income per head of any major economy – and yet strikingly high levels of poverty too. But economic efficiency is a good thing, provided proper account is taken of “externalities” (environmental damage, etc.). In principle it gives people more choices over their lives. Inasmuch as growth is simply our society becoming more economically efficient, then it is a good thing. If it destroys the planet or merely speeds up a treadmill of drudgery and pointless competition, then not so much.
The second question is more interesting. What if people, through the revealed preferences of their freely-made choices, don’t actually want growth? Growth is a popular idea, provided somebody else does all the work. But perhaps you would just like a nice place in the country and watch the world go by, rather than set your sights on ever more possessions or a frenetic succession of “experiences”. Growth, or the potential for it, emerges from the zeitgeist. In 1978 China, with so many people on the edge of starvation, it is easy to see why this zeitgeist was massively positive for growth. But in 2020s Britain?
Actually in 2024 Britain there are signs of a positive zeitgeist for growth – as many people complain about the cost of living. Sir Keir’s government may well be fortunate for a year or two. But the zeitgeist could turn – and we’d be back to swimming in treacle. And that would pose awkward questions for the sustainability of public services and the social safety net. Politicians and the public need to be focusing on these hard questions, and not just hoping that the growth genie will make them go away.
It is more than a year since I last posted on the war in Ukraine. That was May 2023, just before the Ukrainian counteroffensive got underway. That post stands the test of time reasonably well. The general mood now in the West is pessimistic and I think the war is heading towards the unstable frozen conflict that I envisaged then.
Since last May the Ukrainian counteroffensive came and went. Some advances were made, but it was a strategic failure. Recriminations continue, but the bigger truth is that the Russian army proved much more adept in defence than attack. Last May I wondered how robust the Russian army would be, given how the scale of its losses earlier in the war had weakened their army. Now we know. Before the offensive, the BBC had made much of the “game-changing” influence of modern tanks, such as the Leopard and Challenger. Alas not so. There was also a big push for F-16 fighter aircraft. These were promised but are still not operational – though they are supposed to be arriving soon. As autumn approached a crisis developed over the next tranche of US aid, which got stuck in the House of Representatives. This did not get resolved until 2024. Meanwhile supplies of ammunition dried up, severely constraining Ukraine’s war effort, and allowing the Russians to take the initiative. They crept forward in Donetsk and then switched to Kharkiv, where Ukraine’s defences were weaker, and they make comparatively rapid advances. But Ukraine rushed in reinforcements and the front stabilised. Russia continues to inch forward in some areas, but Ukraine is now able to push them back on occasion. Meanwhile Russia has intensified its aerial bombardment of Ukrainian infrastructure, including the use of glider bombs, which Ukraine finds hard to counter. Ukraine has had successes too, as it increasingly attacks targets in Russia. Occupied Crimea has come under particular pressure, as has Russia’ oil refining capacity.
What are we learning from this? Russia’s immense losses of personnel, and expenditure of ammunition, continue, but this seems to be sustainable. The economy has been reoriented to supplying munitions, and additional supplies have come from North Korea. China is playing a critical role, albeit without explicitly supplying lethal materials. But Russia still seems unable to deliver a large-scale, coordinated offensive. It makes frequent and costly small-scale attacks, pushing the front back gradually, and placing Ukraine under relentless pressure. It is also making progress in drone tactics and countermeasures, and in its aerial attacks. In many respects the Russian war effort is highly sophisticated – even if it struggles in some basic military tasks. Russia is honing a sophisticated war machine, with a deep knowledge of modern warfare. It would be a formidable opponent to NATO, should it attack the Baltic nations, for example.
The big question is how long Western support for Ukraine will continue. It is now probable that Donald Trump will retake the US presidency in January 2025. He is a Ukraine sceptic – though nobody really knows what he would do in office. European governments are under growing pressure from the populist right, for whom the war does not seem a priority. The Russian strategy seems to be to keep up the gradual pressure on the front line and Ukrainian infrastructure, and to wait for Ukraine’s allies to force it into talks based on territorial concessions.
So it is not hard to see why Western media, and BBC correspondents in particular, seem to be generally gloomy. But they are often wrong. They expected Russia to win easily in February 2022; then they expected the Ukrainian counteroffensive, aided by those tanks, to make substantial gains. More recently, they have exaggerated the threat posed by Russia’s offensive on Kharkiv. The BBC’s senior foreign correspondent Jeremy Bowen, in particular, recently delivered a gloomy report from the Kharkiv front suggesting that the Russian advance was ongoing, well after the front had in fact stabilised. We are seeing the stresses on the Ukrainian side, but we see few of those on the Russian one. Western weaponry is flowing again, and we can expect the pressure on Russia to grow in the coming six months. But it is hard to see that Ukraine will be in a position push the Russians back in any substantial way, although they could provoke crisis for Russia in Crimea by damaging its logistical infrastructure.
Incidentally, I have found the best reporting to come from The Economist. The BBC gives you no more than a flavour of the journalistic zeitgeist along with some eye-catching stories – which seems to be all it seeks to do in all its news reporting (Gaza and the British election are other cases in point). My other source is the regular updates from the American tank tank, the Institute for the Study of War. But this has degenerated into mainly a stilted account of Russia’s “information operations” with little broad perspective.
My guess is that, if Mr Trump wins, there will be a ceasefire early in 2025 based on the front lines as they then stand, followed by peace talks. The latter will go nowhere. Both sides will prepare for a resumption of hostilities, but will be under growing pressure not to do so. If Mr Trump fails to win, then this process will take much longer.
Western strategy to oppose Russia seems to be to “boil the frog”. If you make the water too hot too quickly, the frog jumps out – or in this case resorts to nuclear escalation. But increase the temperature gradually and it will eventually succumb. (Incidentally, I have no idea whether the frog and boiling water metaphor has any basis in fact… A frog did get into our kitchen yesterday, but I released it back into the wild rather than try to investigate that question). The war may become increasingly untenable in Russia, as its impact on daily life grows, and in the absence of tangible benefit. Vladimir Putin’s position might then become untenable, perhaps after part of the front line collapses through a breakdown in military discipline.
Well, maybe. It is more likely that a ceasefire will happen, with Ukraine losing a substantial part of its territory, followed by a frozen conflict that might erupt at a future date. Either way, the prospects are grim.
The changed electoral map. Source: the Liberal Democrats
It was a dull election campaign but an earthquake of a result – not less significant for it having been widely predicted. Above all it shows just how much the country’s electoral system dictates its politics. That is how Labour won, and that is how they will stay in power.
I resisted the temptation to update my electoral predictions last week, as I didn’t have much more to add. If I had I would have talked up the Greens a bit, and also predicted that Jeremy Corbyn would win his seat of Islington North – notwithstanding a very dodgy local poll saying that he was well behind. I sensed that as people became more assured of a substantial Labour victory, with even the Tories saying so, that left-leaning voters, unenthused by the party’s relentless centrism, would vote for alternatives. The Tory tack of talking up Labour, referred to as the “Queensland Strategy”, to try and persuade people to vote Conservative to provide an opposition to Labour, was laughable. The Tories showed much more interest in fighting each other than opposing Labour.
The results proved me broadly correct, including those late predictions I didn’t publish – though I was surprised about how well the pro-Gaza independents did, unseating the prominent Labour front-bencher Jonathan Ashworth, for example, and nearly doing so to Labour big-hitter Wes Streeting. There were two main surprises for me though. The first was just how low was the overall share of the vote that Labour eventually got (about 35%) – much lower than the polling predictions, and with a much lower lead over the Conservatives (10% compared to a consistent 20%, though this dropped a bit in the last polls). This did not have much impact on the result in seats, though; a lot of this dynamic was happening in safe Labour seats, with Labour supporters moving to Greens and Independents, or not showing up to vote. The other surprise was quite how many seats the Liberal Democrats won. My argument had been that weakness on the ground would place an upper limit on the party’s performance of about 50 seats; in the event they won 72 – and nearly won a slew of others. There is an upper bound to Lib Dem performance – but it’s quite a bit higher than I thought it was. In about half the seats the Lib Dems won, pre-election campaigning was weak – but there was enough local council strength for the party to make the case for tactical votes, and there must also have been a bit of help from the national campaign, which managed to increase support for the party overall, over the course of the campaign (though it ended up in vote share more or less where it was in 2019).
Interestingly, the MRP polls, a big feature of this campaign, did not come off as badly as the ordinary ones, though they made similar mistakes with the overall vote shares for Labour and the Conservatives. The Labour victory was at the lower end of the range of these projections, but at least it was within it. They picked up more of a sense of how efficient the Labour and Lib Dem polling was in electoral terms, and inefficient was that for Reform UK and the Greens. They didn’t see the rise of the independents, and the projections for individual seats were often wayward, especially for the distribution of votes between the parties. As I suggested in my comments during the campaign, they exaggerated Labour strength in Lib Dem targets – allowing many a Labour leaflet to suggest that the party was in contention when it was in fact a distant third.
So the Labour victory was big but shallow, with many close results. Indeed, supporters of the previous leader, Jeremy Corbyn, noted that the party won fewer votes than when their man was leading – making the narrative of why Sir Keir Starmer’s stewardship proved so successful much more complicated than the mainstream explanation suggests. Labour did not win, so much as the Tories lost. Sir Keir Starmer did not win over many people to his party (and he lost a good few), but he did not scare as many Tory voters as his predecessor – allowing them to stay at home or vote for Reform.
To be fair on Sir Keir, he seems to understand the thinness of his mandate. He is not using the scale of his victory to suggest that he has public support for radical policies. He is trying to establish a reputation for competence – something the Conservatives lost in the wake of the Brexit referendum. Labour will, of course, relentlessly blame the country’s “14 years of Tory chaos” – never mind that these followed three years of Labour chaos, and that the first six years were not especially chaotic. But whether it was 8 years of chaos or 14 makes no real difference to voters. This is a sensible strategy. The populist right plan a relentless attack on Labour for being “woke” – attending to the “luxury beliefs” of liberals and the identity politics of some ethnic minority politicians. Sir Keir’s best hope of winning the next election is to contrast the wildness of these attacks with the unfussy competence of reality. Good luck with that. He has the discouraging examples of Francois Hollande in France, and Gerhard Schroder in Germany. Two uncharismatic but competent left-of-centre politicians who were/are unable to manage the stresses of modern politics. Still, those leaders were operating in a very different political systems. So long as Labour can keep the right divided, its chances are good.
On the question of the right, I continue to follow the writings of populist promoter Matt Goodwin. I like him because he is reasonably factual, unlike many of his fellow travellers, who trade in conspiracy theories and lies. He did not have a particularly good election. He was elated by the Reform surge after its leader, Nigel Farage, started to seriously engage in the campaign. He went on to breathlessly call an inflection point, with Reform surpassing the Conservatives, backed up his own polling organisation, which proved by some margin to be the least accurate of all those publishing polls. But then Reform flatlined, and Mr Goodwin started to talk about the French elections instead. Looking back on the election, he is now calling the Reform glass half full. It has indeed peeled off the working class/lower middle class part of the Tory 2019 coalition, but it is making little progress beyond that. The Conservatives outpolled them by 10% – and its much stronger ground organisation showed. A pile of second places is no use in the British electoral system – and you need a strong ground operation to turn those second places into wins – just ask the Liberal Democrats. Complaining about the electoral system doesn’t cut it. The chances of Reform doing that on their own in more than a handful of places looks thin.
That leaves a stalemate on the right. Clearly it needs to rebuild the 2019 coalition, across working class and middle class voters, and in the north, south, east and west of England and Wales. Reform can’t do that. The Conservatives have two strategies open to them: the first is to displace Reform from the ground they now hold, and then rope in the middle classes and professionals later. But that will be hard: they have lost trust, and now that Mr Farage is in parliament he is in a strong position to fight them off – unless they can find a way of bringing him on board. The other strategy is to regain the middle ground, and then attack and squeeze Reform nearer to the next election, rather as David Cameron successfully did in 2015 to Ukip, a Reform forerunner. But Tory grassroots seem to have little patience for such a strategy, and they need somebody to lead it who is untainted by the Johnson, Truss and Sunak regimes – their own Keir Starmer. The likelihood is that the party will tear itself apart while trying to decide. This is Labour’s best hope, as they inevitably get bogged down in the mid-term.
What of the Lib Dems? Their large slew of MPs will give them more money, and more clout in parliament. It is a very different party from the ill-disciplined and eclectic group of local activists of the early 2000s, who often opposed Labour from the left. The centre is much stronger – this year’s campaign was notable for the strength of its central campaign, and consistency of its message across the country. They will seek to consolidate their gains, and build up new prospects. Their campaigning will continue with the same voter-led messages (health, care and the environment). But there is a hunger within the party for something more idealistic, defining what the party is all about. There will also be pressure to ramp up messaging around Europe. Perhaps they are shaping up to be part of a coalition with Labour in 2028/29.
But the big message of this campaign, demonstrated by both Labour and the Lib Dems, and in reverse by Reform and the Greens, is that elections are won by constituency-led targeting. The electoral system is shaping politics as completely as ever. Will electoral reform come back onto the political agenda? There are three broad options. The first is the Alternative Vote, which is not much more than a tweak to the existing system, but one which would allow those disenfranchised Reform and Green voters (to say nothing of third-placed Conservatives and Labour ones) more of a say. This would suit the Conservatives best – the Australian experience is that such a system ultimately reinforces the power to the two main established parties. And yet they united in opposing exactly this system when it was put to a referendum in 2011. The more radical alternative is proportional representation, which would suit Reform and the Greens best. This would have Lib Dem support too, though it is unclear that the party would benefit much, and it also has the support of many Labour grassroots.
But such chatter is irrelevant. The Labour leadership is focused on its core “missions”, which do not include political reform – and turkeys don’t vote for Christmas. Until there is a public groundswell to change the system, as there was in New Zealand in the 1990s, there will be no serious move to change things. The British electorate is very conservative, as that 2011 referendum showed. And if such a groundswell was going to happen, I think it would have happened already. Reform and the Greens need to learn from the Lib Dems and embrace local politics.
Electoral efficiency in British elections. From The Economist
Credit MS Image Creator again. Not exactly Ice Cold in Alex, I know, but no problems with copyright
It’s my favourite scene from British cinema, in IceCold in Alex, the classic war film released in the year of my birth, 1958. The film tracks the fortunes a four British soldiers (including a female nurse played by Sylvia Sims) as they escape the German capture of Tobruk in 1942 in an ambulance, heading for Alexandria across the Qattarra depression. Not far from journey’s end, when they are exhausted, they are confronted by a sand slope that the vehicle can’t climb under power. They are able to get it up the hill in using the hand-crank – an incredibly laborious process. Near the top they pause for a rest. The Sylvia Sims character is left to ensure that the crank is held in place. But in a lapse of concentration she lets go, and the vehicle rolls all the way back to the bottom. The Sims character is distraught. “My fault,” says the commander, played by John Mills, “I should have set the hand-brake.” With this he rallies the team and they try again, this time successfully. Disaster is turned to triumph.
It is a classic picture of leadership: pulling a team together by shouldering the blame, even when there is an obvious alternative culprit. The Mills character is a flawed one, with a drink problem, but at the moment of crisis he knows how to lead. What a dismal contrast with modern political leadership. As the Conservatives contemplate turning triumph in 2019 into disaster in 2024, we might reflect on that. Three successive party leaders have been unable to shoulder responsibility for things that have gone wrong. Sometimes, like Boris Johnson, they mouth the words, but they are self-evidently empty, as the excuses come out in practically the same sentence (“it was my responsibility but I made no mistake,” is the line), and there no hint of accepting a personal cost. Liz Truss remains utterly brazen. Rishi Sunak glides over problems as if they were happening to somebody else. I think this is critical to understanding the Tory predicament.
Of course there are big differences between the fictional scene in Ice Cold in Alex, and the rigours of political leadership. The position of the John Mills character is not in doubt: his job is to rally his small team. In political leadership, taking responsibility often means sacrificing your own position, or at least offering to. But somebody acknowledging mistake of their own to take the blame away from others has huge power in any context. It is a dangerous thing for a politician to do, which is why so few do. And yet there is a cost to not doing it. Each time something goes wrong and the leader dodges the blame, his or her authority is diminished. This is what did for Mr Johnson. Each time he seemed to get away with it, but his authority ebbed until his position became untenable.
This is why the current betting scandal (the prime minister’s aides betting on the election date based on inside information) is so damaging. This is a different sort of leadership failure. You cannot point to a particular mistake that Mr Sunak made, though I suppose he could have warned his staff explicitly against betting – he really shouldn’t have needed to. It is, though, reflective of weak ethical standards, which to some extent reflects wider leadership. The bigger problem is what Mr Sunak did, or did not, do when the scandal broke. He immediately fell back on the line that because there is an independent investigation, he shouldn’t comment further – and he would not suspend the election candidates involved, though the staffers do appear to have been put on leave. The problem here is that a lot of the critical facts are directly known by Mr Sunak – the decision to go for a July election was his. He knows what people knew and when they knew it. This is the basis for a much stronger response – such as an immediate suspension (“they were part of my inner team and I feel very let down”), or else a public explanation along the lines of “I did not tell them about the decision, and this is best left to the Gambling Commission”. This may breach the guidelines made by the Gambling Commission about not commenting, but one of the attributes of leadership is knowing when to break the rules. As it is, the episode makes him look like a passenger rather than the driver.
This is especially damaging because it reinforces the apparent refusal of the party to take responsibility for anything that happened in the last 14 years of Conservative-led rule – as pointed out by The Economist‘s Bagehot column. This weakness is obvious to the electorate. At a hustings at the weekend, our local Tory candidate (Mims Davies, a government minister) struggled valiantly with this – on the one hand taking the official line “this is terrible and we will do something about it” when confronted by an awkward issue (sewage, immigration, housing, etc.), and on the other trying to establish a stronger narrative that the government has been in the case throughout (she actually defended the increased levels of immigration) – for which she will have had no help from the central campaign. Tory infighting over that 14 years, and especially since the end of coalition in 2015, has been so deep that the leadership can’t seem to make up its mind as to whether their government was a good thing or not.
To date I have been predicting disaster for the Conservatives, but have said that conditions on the ground will limit the damage, while putting an upper limit on the smaller parties, notably the Liberal Democrats, but also the Greens and Reform. I am seriously starting to have my doubts about this, such is the failure of Mr Sunak’s campaign. The Conservatives are now resorting what the professionals call the “Queensland strategy” (the country’s political tacticians seem to be heavily influenced by Australia), of saying there is a danger in Labour winning big, and the party is needed to form a decent opposition. That is desperate: it still leaves the question of whether voters really want to be represented by the party. Former Tory voters drawn in by Mr Johnson’s pro-Brexit appeal to former Labour voters feel betrayed by the party, especially under its current leadership. Home Counties voters, such as those I live among, many of them anti-Brexit, if only in hindsight, are utterly appalled at the party’s tilt to win these voters back. Tory candidates like Ms Davies seem to think their best hope is to appeal as sturdy local champions, be as polite as possible, and hope that the anti-Tory vote is split. This is by no means hopeless in East Grinstead and Uckfield – where there is no Reform candidate, and a strong independent. At the hustings the Lib Dem, Benedict Dempsey, performed impressively, but so did the Green, Christina Coleman, and that independent, Ian Gibson. But even without a strong ground campaign I am starting wonder whether the competent Lib Dem national campaign is cutting through in areas like this where the Labour ground campaign is weak, and there is little tradition of support for that party. The Tory Queensland Strategy might work to the favour of the Lib Dems. If the hustings reflected the local electorate, I think that would be the case. But although it was well attended, such meetings are notoriously unrepresentative.
What is clear is that that the country is about to experience an electoral earthquake that will be talked about for generations. And all because the party of government forgot how to lead. As the Conservatives survey the wreckage on 5th July, there will be no John Mills there to rally them to climb back up the hill.
More from MS Image Creator. I’m getting bored of the “realistic” style so tried a cartoon instead
So just how wrong have I been about the UK general election? My first prediction was that there would be a limit to the Conservative decline (at about 100 seats), and that there was no chance that the Liberal Democrats would overtake them. The Reform UK insurgents would be unable to replace the Tories. In my second post I suggested that the Conservatives would narrow the gap on Labour by squeezing Reform, limiting the overall size of their loss.
The second prediction is not faring well. I was wrong-footed by Reform’s leader, Nigel Farage, changing his mind about standing himself, and being the formal party leader. His initial declaration got Reform off to a bad start, and offered the Tories an opportunity. But the Tories made a weak start, and Mr Farage is back, attracting media like bees to a honeypot, including the supposedly establishment-biased BBC. The Conservative attempt to squeeze Reform supporters has stalled, at least at the national level, and even gone into reverse. More than one MRP poll now suggests that Reform might even pick up a handful of seats.
But I’m holding fast to my first prediction. There is quite a lot of breathless talk about the Tories being crushed, with well under 100 seats retained. One or two MRP polls suggest that they will indeed by eclipsed by the Lib Dems. Reform cheerleader Matt Goodwin, whose Substack is one of my main sources of information on the populist right, is talking of an inflection point, with Reform overtaking and crushing the Conservatives. Even the Financial Times‘s Stephen Bush finds himself dealing with the speculation that the Lib Dems might overtake the Conservatives in terms of seats won – though he still considers this unlikely.
My logic is rather different from that of other commentators, though. It is that the actual results in many constituencies are determined by the activity of local activists on the ground – canvassing, leaflet delivery, posters and such, often referred to as “the ground war”, as opposed to the “air war” of media. The ground war helps voters decide who is really in contention in their seat, and then to decide on the least-worst option. This is more likely to change minds than anything that happens in the air war, that attracts most of the attention. I am a case in point. I have voted for the Lib Dems or their predecessors in every general election from 1983 (my first vote, in 1979, was for the Conservatives). The only thing that could possibly persuade me otherwise this time is if I thought my local Green candidate was in serious contention in my constituency of East Grinstead and Uckfield – she is my local councillor, and the only one of the candidates I know – and whom I’m quite impressed with. She claims that this is the case based on local election results; but the Lib Dem candidate makes the same claim based on 2019 election results (complicated by the fact it is a new seat); meanwhile the tactical voting recommendation from Best for Britain is for Labour, based on an MRP poll. It’s as clear as mud, though I think the Labour claim to be ridiculous. The Tory candidate (Mims Davies, the MP for the now-defunct Mid-Sussex constituency) has not given up, and has been canvassing in our village, in the extreme south of the constituency. She will surely have quite an easy ride back into parliament, even if she fails to get 40% of the vote, which is likely.
The Conservatives lack opponents with a proper ground-war capability in so many of their well-off rural strongholds. Labour have never been strong in these seats; the Lib Dem infrastructure is only there for some seats (locally to me in Lewes and Tunbridge Wells, for example), and the Greens in even fewer (the non-rural Brighton Pavilion in my area). Reform is not constructed as a grassroots organisation, and will struggle without a charismatic candidate and an experienced local organiser – which applies in a maximum of three or four seats, I suspect. The MRP poll methodology only picks up the ground war factor indirectly and underplays it. This makes its constituency predictions unreliable in each individual case, though more plausible in aggregate, which is how their success is usually judged. My guess is that the unique conditions of this campaign mean that their aggregate conclusions are out too in most cases – and that the Conservatives will do better than forecast. Though to be fair, there is quite a bit of variation in the MRP seat projections. The ground war factor mean that it is unlikely for the Lib Dems to pass the 50 seat mark, or the Greens 3.
Furthermore, I think Mr Goodwin is running well ahead of the evidence in his claims about Reform. So far I think only one poll, by YouGov, has placed them ahead of the Tories, and that was a week ago. Aggregated poll trackers tend to put them several points behind. Mr Farage’s volte-face gave the party a boost but it doesn’t look like sustained momentum. They may pick up a lot votes in areas where the ground war is weak, such as in safe Labour seats, which might lead them to widespread second places, but little impact on the overall result (a bit like the SDP-Liberal Alliance in 1983 and 1987, and the Lib Dems in 1992 – though in their case it was mainly safe Conservative seats where they did well).
Having criticised recent MRP polls, though, the overall result predicted by Ipsos-Mori (Labour 453, Conservatives 115, Lib Dem 38) is not far from where I think things will end up – though the individual constituency projections are wayward – giving Labour far too big a share in Lib Dem target seats, for example). MRPs are a poor way to guide for tactical voting decisions. The Tories may do a bit better than this, and Labour worse. I hope the Lib Dems will do a bit better too, but then my hopes have run ahead of the actuality for every election since 1983, apart from 1997.
So, to answer the question posed by my blog title, I expect the Tory rot to stop soon, with their ground war strengths serving to limit the damage. What happens next is the big question – but let’s wait until after the election to consider that.
Postscript
Just after I posted this, three new MRPs came out – and Matt Goodwin breathlessly reported a new poll showing a spectacular surge in Reform support to 24%, with the Conservatives languishing on 15%. This poll was conducted by Mr Goodwin’s own organisation, People Polling, for GB News, another Reform promoter. This is curious. Mr Goodwin is an academic and I have no reason to doubt his professionalism in conducting polls. But it is an outlier. It is clearly becoming harder to conduct opinion polls, and a lot of the result depends on how adjustments to the raw results are made. There is always a lot of soul-searching after elections amongst pollsters, which then leaves the impression that they are refighting the last war rather trying the win the current one. Mr Goodwin says that the key change is that a lot of the previous “don’t knows” are making up their minds, and that Reform are doing very well here and the Tories very badly. There is other evidence for the second of these contentions (though that suggested Labour doing well) – a disaster for Rishi Sunak, whose whole campaign was based on the idea that he could rally “don’t knows” who had previously voted Tory.
I don’t think the new MRPs add anything to my analysis, though I haven’t looked at them closely. They show the Tories coming in at roughly 50, 100 and 150 seats. My opinion is that the higher end of the range is the most realistic forecast. I think generally that the MRPs are over-reporting Labour strength in seats that the party isn’t targeting – probably to the benefit of the Tories, but maybe the Lib Dems too.
