Conservatives – Page 12 – thinking liberal

So: who will lead the Con-Lab Grand Coalition that will be formed in May 2015?

Things aren’t going well for the Westminster political machine. Their short-term, focus-group and opinion poll led campaigning has missed or ignored the changing mood of voters. Things were bad enough with the rise of Ukip; they got a lot worse with the Yes-surge among former Labour supporters in Scotland. At this week’s Labour conference the party is desperately trying to get the political agenda back to familiar territory. It is failing, and in doing so it is losing the political initiative. In this unfamiliar political territory I want to indulge in a bit a bit of political fantasy. But ask yourself: just how unrealistic is it?

Roll forward to May 8, 2015, the day after Britain’s General Election. The Westminster parties lost control of the election agenda. In England Ukip have surged forward to take 30 seats, taking votes from all sides. In Scotland, angry and unreconciled Yes voters have moved in behind the SNP, who take another 30 seats. The Lib Dems, through a lot of hard local campaigning, luck with voter splits, and a dead-cat bounce, are relieved to end up with another 30 seats (a bit over half their 2010 tally). The Greens do well in national polling, though only pick up a small handful of seats. The Tories are the main victim of the changed situation in England, losing seats directly to Ukip, but also to Labour. They fall back by 40 seats to between 260 and 270. But Labour’s gains in England are partly neutralised by the advance of the SNP in Scotland. They end up with a very similar number of teats to the Conservatives, with a net 15-20 gains.

Both main parties are badly bruised: their share of votes has fallen; they are not in control of the political agenda. Only the inherent electoral bias towards incumbency has left them with so many seats. Both feel as if they have lost. And the parliamentary arithmetic is horrid. To form any kind of stable coalition government with smaller parties they will need to round up two of the Lib Dems, Ukip and SNP. For different reasons none of these parties want to play ball. For the Lib Dems it is a moment of reckoning, with open revolt against the party leadership, and a desperate feeling amongst the membership that they need to rebuild in opposition. Ukip are too toxic for the main parties, and their terms of engagement are too high. The SNP have no interest in the governance of the UK as a whole. If there is no natural governing majority, there is a comfortable and motivated opposition majority against any government led by one of the two main parties.

Meanwhile the fiscal deficit and the national debt remain large. The financial markets are jittery, which puts the financing of the deficit in question. The pound takes a tumble. With its yawning current account deficit Britain needs foreign financing. But this in turn requires a strong government able to keep the fiscal deficit in hand. The fragile recovery is in jeopardy, as investment is drying up, and property prices start to fall, as foreign investors take fright. The Treasury civil servants are worried and quickly set to work on their political contacts.

There is an obvious solution. One that has been tried in Germany, Austria and Greece. A Grand Coalition between the Conservatives and Labour. It slowly dawns on the senior figures in these parties that this is the only way out.

What would be the organising principle of the new Coalition? As Labour realises that it is no longer practical to use its Scottish MPs to ram through reforms of English public services, they are at last able to contemplate some form of new federal settlement for the UK. They also accept that the UK’s relationship with the European Union needs to be reset. Both sides agree to a Constitutional Convention. The idea is that this will come up with one or more referendum propositions in Autumn 2017, after which the country will move towards a new General Election. All this will secure the Conservative participation in the government. In return Labour will insist on a choice selection of its core policies: halting “privatisation” of the NHS (though not wholesale unpicking of the previous coalition’s reforms); perhaps the freeze on energy prices and reform of energy markets; maybe further rises tot he minimum wage; surely the reinstatement, in some form, of the 50p top tax rate and termination of the “bedroom tax”. Their proposed Mansion Tax is unlikely to make it though – such a significant change to the tax system hardly seems appropriate in a time of constitutional transition. Both sides will agree to something tokenistic on immigration.

But who will lead this government? Both Party leaders will face revolts from their own side. Mr Cameron will surely find his position untenable. Mr Miliband may even have lost his seat to the surging Ukip. The natural thing would be for the Prime Minister to come from whichever party is a nose in front in parliamentary seats. The popular vote can be used as a tie-breaker. The other party will no doubt insist on the Treasury.

On the Tory side, the obvious choice would have been William Hague. But he is stepping down at the next election. Other senior figures are: Theresa May, George Osborne or Boris Johnson. Ms May stands the best chance of these, though she does not come across as a particularly gifted politician. The other two are surely too blatantly political to be trusted enough by Labour. Another idea is to summon up a former senior figure from the back benches; Malcolm Rifkind would be an obvious candidate.

It is even harder to think of Labour candidates with the appropriate stature. Harriet Harman has the seniority, but I can’t see her as having enough clout. I’m not even sure if Margaret Beckett will be standing, and she is a bit old at 71 – though since this is something of a caretaker role, that is less of an obstacle than it might be. The existing front bench all seem to be lacking to some degree. Gordon Brown’s reputation may have been enhanced by his intervention in the referendum campaign, but there is no way that he can lead a coalition. Meanwhile Alistair Darling’s reputation has been diminished.

Is there a serious point to this fantastical speculation? Yes. As we see the rise of anti-politics, of political parties who are only interested in causing trouble, and not solving problems, then we must get used to the idea that previously bitter opponents will have to cooperate in government. The current coalition between the Conservatives and the Liberal Democrats may be foreshadowing the future of politics in ways that the current political chattering classes don’t yet understand.

#indyref – now is the time for more democracy, not political manoeuvres

So Scotland voted No to independence, and by a margin of nearly 11%. That’s a big relief. A Yes vote would have ushered in three or more years of hard negotiation and uncertainty that would have served no very useful purpose. But what next? There are signs that the political elites both sides of the border are on manoeuvres. But I am backing the Electoral Reform Society’s call for a Constitution Convention. There is a link where you can sign up here – though this is confused by a focus on just Wales; I hope they get their act together o this.

The story so far. Though Scotland voted No, this was only after the main Westminster party leaders, and the hero of the No campaign, former UK Prime Minister Gordon Brown, all promised to deliver Scotland further devolution and protect their funding settlement. Some refer to this off as Devo Max – but others say it falls short of this ideal, whereby the Scottish parliament would be responsible for everything but defence and foreign relations. This promise has to be delivered – but it destabilises the constitution of the UK as a whole.

In particular the Prime Minister, David Cameron, has said that reforms must take account of English government. By this he means the problem that Scottish (and Welsh and Northern Irish) MPs vote on domestic English matters, while having no equivalent powers for their own regions. The Conservatives spy an opportunity to embarrass the Labour Party, who may depend on Scottish and Welsh MPs to deliver their party programme in England. Many Tory MPs are talking a lot of sense (for example John Redwood in the FT) – and this not something I say lightly. But opportunism is not a solid basis for a robust constitutional settlement. Most thinking is half-baked, because we have not had a proper period of deliberation on the matter.

It is right that MPs are asking about the wider constitutional settlement. But it is wrong to neglect the process of democracy. One of the energising aspects of the Scottish vote was that it involved voters in an important decision. The turnout was very high (85%) by our normal standards – securing a level of political engagement that has been most unusual. Any constitutional settlement for the UK needs to similarly democratic, even if it cannot hope to reach such heights. There needs to be a deliberative process that draws people in, a Constitutional Convention, followed by one or more referendums across all of the UK. The Westminster elite don’t seem to want this; the Edinburgh elite seem no better. They don’t want a process that they can’t control. They want a platform for point scoring, not a process of consensus building.

But these are hard questions, which are not susceptible to quick political fixes. If we don’t opt for a proper deliberative and democratic process we are in danger of lurching from one constitutional crisis to the next.

Would a Miliband victory be good for the Lib Dems?

Here’s a paradox. Britain’s political party leaders are the most mediocre, as a set, that I can remember. At least in 2010 we had Gordon Brown: a disastrous prime minister, but one who at least had the moral authority to help lead the world from economic disaster in 2009. But next year’s General Election looks to be the most interesting contest for a very long time. The shame for Liberal Democrats like myself is that we are bit part players, hoping to hang on to most of our parliamentary seats, but without playing much part in the national debate. But the rise of Ukip means that three-party dynamics remains potent. But perhaps the Lib Dems longer term prospects are better?

To start with, we have an unknown effect from the Scottish referendum later this month. Whatever the result, this will surely change dynamics north of the border in ways that it is difficult to predict. The Westminster elite hardly dare confront the possibility of a Yes vote, though the race is tightening and this is a real possibility. They have contented themselves with promising extra devolution for the Scots, without addressing the implications for England. If the Yes result comes, the Westminster politicians will have nobody but themselves to blame.

The constitution of the UK (note this not a “Scots question” – it affects us all) remains the most important issue hanging over our politics, including next year’s election. But for a moment I want to join the Westminster chatterers and put this to one side (the chatteres’ favourite website politicalbetting.com seems to think that the forthcoming Clacton by-election is more important than the referendum), and consider other dynamics.

Over the summer the Conservatives had looked quietly confident, and I shared that confidence on their behalf. They faced a strong challenge from Ukip, whose message appeals to many of their activists, but they seemed ready for that. David Cameron’s promise of a referendum on the EU is highly credible, and it is good bone to throw to potential Ukip defectors. Meanwhile they can promote scare stories about letting Labour in, and also blame the government’s more unpopular policies (to the right) on their coalition partners, the Lib Dems. The Euro election results in May seemed to support this confidence; Ukip were rampant, but Labour’s performance outside London looked lacklustre. Ukip were as much a problem for Labour as the Tories, and Labour’s message to Ukip supporters was (and remains) confused, unlike the Tory one.

Alas for the Conservatives their plan seems to be falling apart. The Tory MP for Clacton, Douglas Carswell, defected to Ukip, resigned his seat, and has caused a by election which he intends to contest under his new party’s banner. Clacton is a stronghold of the disaffected, white, aging, excluded working classes that is Ukip’s core constituency; a victory for Ukip looks certain. This gives Ukip real momentum. But, worse, it emphasises the divisions within Tory ranks between the more sensible moderate types represented by David Cameron, and what liberals regard as a lunatic fringe, whose strength has grown. This will encourage Tory voters to defect to Ukip, and discipline within the party to break down. That could scare off donors. Add this to the fact that the electoral system is weighted against the Conservatives, and they party’s challenge is looking steep indeed.

Which shifts the focus to Labour. That party has a clear hope that it will win the 2015 election by default. They have swept up a lot of former Lib Dem voters, and it seems certain that they will hang on to them. If the Tory vote sags because it is undermined by Ukip it looks good for the party. Labour faces its own challenge against Ukip, but generally in areas where they have very large majorities. There is an excellent article in today’s FT by Matthew Goodwin, who has been following Ukip’s rise closely. He may well be right that Ukip poses a severe long-term challenge to Labour in its northern heartlands, where its organisation is weak. But even he admits that this is more of a problem for 2020 than 2015.

So Ed Miliband’s Labour party could secure an outright majority after next election. And then his problems will really start. He is bound to disappoint his left wing supporters, including those Lib Dem defectors. The British economy remains fundamentally weak and unable to support the size of public sector that these supporters seem to feel is their birthright. There are no quick answers to this underlying weakness, and many of Mr Miliband’s ideas will make things worse, not better. Neither will he please the grumpy working class voters to whom Ukip is appealing. There will be a sense of betrayal among one group of their supporters, and panic amongst the Labour machine politicians in northern towns, who have taken their power base for granted. And the question of Scottish devolution’s affect on England will need to be faced, or, worse, the impact of Scottish independence. The party would surely be overwhelmed, rather like the Conservatives were after 1992.

But the Conservatives will not be much better off. They will remain divided between pragmatists, who lean towards EU membership, and idealists for whom the EU represents all that is bad. The party is likely either to lurch to the right or fall apart. Ukip, feeding off disillusioned Labour voters, will rise relentlessly.

You could hardly define more propitious circumstances for the Liberal Democrats, provided they stay away from any temptation to form a coalition with Labour. Labour will end up by prolonging many hated coalition policies, vindicating the party’s record in coalition. Meanwhile the rise of Ukip will create a strong anti-Ukip political backlash. As the Tories fail to contain their right, and Labour panics over its loss of working class votes to Ukip – this backlash will present a real opportunity for the Lib Dems, in a highly dynamic four-party play. This opportunity would be best exploited by a new leader. It would be ideal if this was a commonsense, well-grounded female – a Birgitte Nyborg. Alas I cannot see such a choice being available (my preference, Dorothy Thornhill, Mayor for Watford, is unlikely to be in contention). But the opportunity for a comeback is palpable.

What should the Lib Dems do now though? It has little choice but to stick to its guns in the coalition, and concentrate on winning any parliamentary seat where local strength is sufficient to make it winnable. This will mainly be about denying seats to the Conservatives. If things go very badly for the Tories, they may start to pick up some centrist voters from them generally – though that’s a long shot. But they must remember: the opportunities will be after 2015, they should do nothing that will make that comeback harder.

Interesting times indeed!

Why you should vote Liberal Democrat on 22 May

Britain, along with the rest of the EU, faces a very interesting set of elections this week, for the European Parliament. Our polling day is Thursday 22 May, when there are also local elections in many parts of the country, including London, where I live. I am not an impartial observer of these elections, but I do try to express my views dispassionately, and set aside the pure propaganda. Here is what I think of the various contenders.

Let’s clear the decks a bit. I am thinking mainly about England; my knowledge of the politics of other parts of the UK is better than that of most English people, but that is a low bar indeed. In Northern Ireland I have a strong inclination towards the Alliance Party, because of its non-sectarian ethos. I dislike the Scottish Nationalist Party (SNP) mainly because I am a unionist. But I will say for its politicians that they put Scottish politics above Westminster politics; SNP politicians do not aspire to a place in the British cabinet. Still, this is less relevant to the European Parliament than elsewhere. I have rather more sympathy with Welsh Plaid Cymru, who tend to set out a clear social democratic, reformist agenda. But Welsh politics is messy, and I don’t feel confident talking about it.

And neither will I talk about the local elections. These should be determined by local issue and the local politicians’ records – and not the subject of a sweeping blog post like this one.

In England there are five contenders for your vote: the Conservatives, Labour, Ukip, the Greens and the Liberal Democrats. Voting for any other party is a wasted vote, even under our proportional system – since there is no system of transferable votes outside Northern Ireland. There are many other parties contesting these elections, but they simply don’t have enough traction to get up to the level needed win a seat. This is to be welcomed in the case of the BNP, who did manage to win a couple of seats last time, in 2009.

The party everybody is talking about is Ukip. The main reason offered by people for voting for them is that they are political outsiders, and that supporting them will give Britain’s established political elite a well deserved black eye. This is about the only good reason for voting for the party. They are chaotic and ill-disciplined, and they don’t take the work of the European Parliament seriously, and so their presence will damages the national interest. Inasmuch as you can detect clear views, they tend to be illiberal. If you are a Eurosceptic, there are other parties you can vote for who will do a better job of representing you and the country in this forum, which has significant political power, whether or not you accept that is a good thing.

But do our political elite deserve such a kicking? Many of the voters I have met on the streets think so; they feel let down. This is not just our newspapers stoking things up, with the rest of our media in tow. Politics has become too professional, and not enough politicians genuinely engage with voters. Focus groups and polling might be quite useful for informing politicians about what people are thinking, but they don’t help people feel involved. But will the shock of voters defecting to Ukip, or not voting at all, make them change their behaviour? There is little sign of this. I am not sure the problem is entirely soluble in a modern, developed society. But to make things better we need political reforms, not protests. These reforms need to make politicians more responsive to voters. This means changing our electoral system, and it means devolving more power to local levels where it is much easier to involve people in decisions.

The trouble is that Ukip stands for a sort of conservatism. They want political reforms, but focusing on the European level, not at the national level, where they are most needed. This sort of conservatism tends to reject useful reforms, as we saw in the debate on the Alternative Vote system (which would have been a small step in the right direction), and the soft spot so many people seem to have for our appointed House of Lords. It’s not the right kind of kicking, and it is the wrong election to do the kicking at.

Most Eurosceptics would be better served by the Conservative Party. The Conservatives have a clear view on Europe: renegotiation and a referendum. This is surely the most sensible way forward if you believe that being part if the EU is bad for the country. The European Parliament cannot deliver on this agenda – but Conservative MEPs will be taken much more seriously in Brussels than Ukip ones, and will thus do a better job of representing the country – though they would have had much more influence if they had not left the parliament’s Christian Democrat grouping.

But is a referendum right for the country? Like many supporters of the European project I dither on this. I don’t think it is a good idea for the UK to leave the EU. This is mainly because emotionally I feel a strong European identity (maybe because I have lived a short while outside Europe). But more practically, our obligations within the Union are forced on us by our economic circumstances, and leaving it would make little difference. It would be a colossal waste of political effort that should be devoted to other issues. Meanwhile the uncertainty it would create, as so many things of commercial importance are renegotiated, would blight the country exactly where it can least afford it. Many of the same arguments apply to just having a referendum on the issue – never mind actually leaving. The main argument for a referendum is that it would lance the boil and let the country move forward. I would sooner wait until the EU is forced to undertake more significant structural reform that anything the UK can force on its own.

And so to the Labour Party. Their campaign for the European Parliament is focused on the “cost of living crisis”. Regardless of the merits of this, it is exactly the sort of irrelevant focus-group based politics that has given politicians such a bad name. Their election literature mentions practically nothing about Europe or the European Parliament. This kind of cynical campaigning should be rejected. Politicians should be courageous; currently Labour only want to play safe. I can respect David Cameron for his referendum strategy on Europe, which required quite a bit of courage. Labour are running from the fight.

And the Greens? They deserve respect: their literature (at least here in London) at least talks about what they would do in the European Parliament. They don’t talk about Britain in Europe, but about the sort of Europe they want. That is what these elections should be about. I am just less than convinced about their vision. For me it is too anti-business. Good intent is no substitute for knowhow. We should be pushing Europe towards an environmentally sustainable future – but we have to take the public with us. We have to challenge big business vested interests – but also allow big business to keep people in jobs, and provide that element of economic stability people crave. I don’t think the Greens have a clear idea of how to get that balance right.

Which leaves the Liberal Democrats. The Lib Dems are the most Europhile of the parties (though quite a few Europhiles inhabit the Labour Party and the Greens). This has one particular advantage: it means that they part in the European Parliament’s processes with more enthusiasm, and so are much more influential than they would be otherwise. Liberal Democrats have held some very influential positions (such as Sharon Bowles’s chairing of the Economic & Monetary Affairs Committee). In this work they do a good job of standing up for British interests – and can actually talk about their track record in the Parliament with pride. They have also shown a lot more courage in standing up for a pro EU position – unlike the Labour Party – and unlike the party has done in previous elections to the European Parliament. You may not think all of their pro EU arguments are convincing (though the same can be said of most of the anti EU arguments), but they have done the campaign a service by talking about it.

Right through the country’s history Britain, and England before it, has never been sure about the role it should take in Europe. There have been times when the country has successfully pursued a global agenda while retaining minimal involvement in European affairs, such as in the mid to later 18th and 19th Centuries. At other times the country has been a fully fledged player, such as Waterloo in 1815 and the First and Second World Wars in the 20th Century. Right now the country’s dependence on trade leaves it no option but to be heavily involved in its European connections, whether or not the country stays in the EU. I believe that means that the country’s leaders should try to shape the EU from within. Others feel that by leaving the EU, it will be easier for the country to find the best path in the world. If you share my view, then the Liberal Democrats are the party for you. If you don’t, then you might still consider voting for the party as highly effective operators in the parliament. Otherwise think of voting Conservative or Green. Don’t vote for Labour or Ukip, whose campaigns are taking British politics in entirely opposite but wrong directions.

Politics is not about policies. Why the politicians are failing.

Today the FT’s excellent Janan Ganesh writes on how the British Conservatives are failing to get the ethnic minority vote (£). Also this morning two opinion polls showed that the Labour Party had lost its poll lead to the Conservatives. We can add the Liberal Democrats and the Greens to the list of underperforming political parties in Britain, leaving the field clear for the insurgent Ukip. Mr Ganesh points to a reason for the Conservatives’ failure, that applies just as much to others (except the Greens perhaps).

Mr Ganesh says that the problem is that politicians “…think politics is about policy.” And yet voters hardly know what policies the particular parties stand for. The Conservatives note that conservative values and fear of immigration are at least as prevalent in ethnic minorities as elsewhere. So they freely talk about immigration being excessive and about the need for stronger controls. And yet all this heightens voters’ suspicions that the party is not inclusive. The Conservatives have been here before. In the 2001 election they went down to a catastrophic defeat after pushing policies (on Europe in particular, as well as immigration) that seemed to play well with voters, and yet heightened their reputation as the most toxic brand in politics. They fared little better in 2005, when they tried similar “dog whistle” tactics. Their fortunes only changed when David Cameron went to prodigious efforts to de-toxify the Tory brand by advocating policies (environmentalism, gay marriage, and so on) that could distinguish the party from their former selves. Unfortunately for them, this change did not go deep enough into the party’s inner being, and it is wearing thin.

Labour seem to be in a similar fix. They have used a lot of clever researchers to fix on a series of populist policies. These include fixing energy prices and controlling private rents. All these policies, apparently, play well with focus groups. Also they have chosen “the cost of living crisis” as their overarching theme – since many voters feel hard done by in the aftermath of the recent economic crisis. And yet their poll ratings are fading. The policies are popular but they are damaging the Labour brand – or at least doing nothing to strengthen it.

The Lib Dems find themselves in a not dissimilar predicament. Most people seem to think that their influence on the coalition government is for the good. They are associated with some popular policies, such as raising tax thresholds. And yet their poll ratings languish around the 10% mark. They are perceived as politicians no different from the others in moral fibre, who enjoy being in power a bit too much.

The paradox is that British politics has never had more sophisticated advice. Each party leader is surrounded by clever people with access to the latest evidence-based theories. and yet they are all failing – and the height of ambition seems to be to fail at a slower pace than the others. What is needed is a bit more old-fashioned nous.

The last really successful party leader in this country was Labour’s Tony Blair. He employed a lot of sophistication as well, but the secret of his success was that he understood political brand building. The rise of Labour in the 1990s under his leadership was nearly a policy-free zone. So much so that when he won in 1997, his government lacked momentum because it did not have a clear idea about what to do.

What Mr Blair realised is that to build voters’ trust you have to do things that are hard. In Mr Blair’s case, he took on the Labour left, overturning all their sacred policy shibboleths, and changing Clause 4 of the party’s constitution. It was a process of destroying polices, rather than making them. To be fair on Mr Cameron, his rebuilding of the Tory brand involved some hard things – but he chose not to be quite as radical, and left the conservatives in his party silent but undefeated.

For the Liberal Democrats, their time in government might in time come to be seen as courageous rather than self-indulgent. Their leader Nick Clegg’s firm stand on Europe is a clear step in the right direction – though as yet there is no sign of a poll boost. Petulant rows within the coalition, such as this weekend’s on schools, are probably not helpful though. Proper rebuilding of their party’s brand will have come after next year’s General Election.

That applies to Labour too. It is too late for Ed Miliband to resolve the tensions within his party, and so give voters a clear picture of what the party stands for, beyond its headline grabbling policies and slogans. For all party’s difficulties with ethnic minorities, it is perhaps the Conservatives that have least reason for discomfort, once the European elections next week are out of the way. They are failing more slowly than the others, and if they don’t panic they will recover a lot of the ground they have lost to Ukip, unlike Labour. It probably won’t be enough to win them a majority, because they failed to reform the electoral system in their favour, in spite of clear opportunity having been presented – through a combination of the Alternative Vote and boundary changes.

So here’s what I predict for 2015. The Conservatives gain some seats but fall short of a majority. The Lib Dems lose 10-20 seats, but still leaving a substantial voting block in Parliament. Labour make few advances. Ukip will pile up 10% or more of the vote, perhaps surpassing the Lib Dems,but get one seat at most – they will take most of their votes from Labour. The Conservatives will attempt a minority government.

Why Labour are losing the election in 2015

According to press chatter, there is mounting worry amongst those that surround Ed Miliband, the leader of Britain’s Labour Party. I don’t know anybody in this elite circle, and I can’t offer an opinion on whether this is true. What I can say is that it should be. After ducking hard choices when the going was good, he is now in real trouble.

The immediate cause of the Labour wobble, if that is what it was, was the poll bounce for the Conservatives after the recent Budget by the Chancellor, George Osborne. The previously secure Labour lead simply vanished. This poll bounce disappeared as quickly as it came. Clever charts showing that it was part of a longer-term trend look premature. But it did show that Labour support is not solid, and that the Tories are not quite as terminally unpopular as many suggested.

But what really convinces me that Labour are in deep trouble is this exclusive piece in yesterday’s Independent, highlighting an article Mr Miliband had written for the paper. Here’s the first paragraph:

Ed Miliband has promised to rescue Britain’s struggling middle classes by boosting their living standards as he warns that the “cost-of-living crisis” will last for at least another five years.

This seems to be part of a bid by Mr Miliband to rebuild his electoral standing; today he is launching a policy about devolving more power to “super-City” regions, building on a policy developed by the Liberal Democrat leader Nick Clegg, as he will not say.

This political drive builds on two themes that Mr Miliband has been developing. The first is “the squeezed middle” – a deliberately vague reference to people who feel they are neither favoured by government handouts, nor part of the rich elite. It is interesting that this seems to have migrated to “the struggling middle classes”, when it might just as easily refer to working classes (if you get beyond the bureaucrats’ tendency to use the term “working class” to refer to people who are not working, and entitled to state support, as an alternative to the word “poor”). The second idea is “the cost of living crisis”, referring to the fact that for most people incomes have not increased as fast as prices over the course of the last government.

No doubt Labour’s polling shows that these ideas cover a large swathe of generally unhappy people, who might therefore be sceptical of the government’s record. The problem is how to appeal to them. Almost by definition, these people are out of the scope of state benefits. In fact they tend to resent the size of the state benefits bill, apart from the old age pension, whose cost they tend to underestimate. They are not employees of the state, a separate and distinct constituency, even if they share some of the same problems). So how to address their standard of living? There are two ways: tax cuts and a stronger private sector economy. On both counts Labour’s credibility is behind that of the Coalition.

The best sort of tax cut to reach the squeezed middle is a cut to personal allowances, i.e. the point at which people start to pay tax (including its National Insurance equivalent, something all parties seem happy to ignore). But the Coalition has already been increasing this quite aggressively, mainly at the expense of higher rate tax payers, some of whom are now claiming to be part of the squeezed middle too. Worse, it is one of the few policies that is closely identified by the public with the Liberal Democrat part of the coalition, which Labour is extremely keen to denigrate – they have picked up a lot of ex Lib Dem voters. They have floated the idea of a 10% tax band, which is just a less efficient way of delivering the same policy – and has uncomfortable echoes with one of the last Labour government’s policy mistakes.

There is an even bigger problem with taxes. Labour has to convince voters that it will not put taxes up to pay for an expanded state. That means signing up to a series of things, like a cap on benefits expenditure, that will be unpopular with core Labour voters, and not even particularly sensible from the point of view of economic management.

But tax cuts are a fairly minor palliative. What would really cheer voters up is the prospect of incomes rising in the private sector. The trouble is that Labour has done nothing to dispel its reputation for being anti-business. Quite the opposite. Mr Miliband’s view is that there are good businesses (“producers”) and bad ones (“predators”). Wages are being squeezed by the predators to benefit their top managers and shareholders. So his anti-business policies are directed at these predators (banks and energy companies to the fore), while helping the producers. This argument is not entirely without merit, but it is a tough sell. And in practice it is pretty much impossible to create policies that discriminate successfully between the two classes of business, and all those that inhabit the grey zones in between. The result is that Labour’s policies designed to address this problem, such as the devolution to the cities, don’t look as if they will deliver much of a boost to wages in the short term – even if they are perfectly sensible. And sensible policies are liable to get matched or pinched by the coalition parties anyway.

The Conservative counterattack to Labour will point to the fragility of the current economic recovery, and say “Don’t put all this at risk”. Of course one thing that could put the fragile recovery at risk is the Conservative plan for a referendum on the EU. But does Labour want to go out with all guns blazing on that issue? Perhaps I underestimate Mr Miliband, and that is his plan. But so far he is happy for Mr Clegg to take the lead on the issue. In fact you could not inaccurately describe Labour’s emerging strategy as “I agree with Nick”. A liberal, centre-ground stance that wants more devolution from Westminster, but with a strong attachment to the EU.

So Labour is embarking on an impossible task to convince the electorate that it can out-do the coalition parties at their own policies. This won’t work. But what it will do is to de-motivate their core constituencies of public sector workers and the squeezed bottom, as I might call the voters suffering from benefits cuts.

The trouble is that Labour hoped to get the best of both worlds after Mr Miliband was elected. That they could adopt a “Blair-lite” strategy that allowed an appeal to the centre ground, while at the same time harnessing the wave of anger from their core voters at the government’s austerity policies, which, incidentally, allowed them to harvest a lot of Lib Dem voters. But Blair-lite lacked credibility as soon as the economy started to revive. There was a choice to be made for either Blair II, an unashamed dash for the middle ground, including an apology for the record of the last government’s economic policies (though that would have been too much for Mr Blair himself). Or they could have gone for unashamed social democracy, making a case for higher taxes, a bigger state, and less aggression on cutting the deficit (isn’t going for a balanced budget just willy-waving after all?). The first of these two choices might well have destroyed the party, given the depth of anger over “The Cuts” – but the second choice was never properly debated or confronted. It would have been perfectly respectable and courageous – even if expanding the state back to the size it was in 2008, or even 2010, would have taken a very long time.

The Conservative General Election campaign has not got started yet. They will allow Ukip their moment of glory in this year’s Euro elections, then quietly mug their voters by stoking up fears of Labour. Labour’s credibility will fall apart, and they will have increasing trouble fending off Tory attacks and keeping their core supporters loyal.

If I was advising Ed Miliband, I would be worried.

The remarkable politcal success of Michael Gove

Shortly before the British General Election in 2010 a headteacher at a local school told me: “Well, however is the new Education Secretary cannot be worse then Ed Balls.” Mr Balls, now Shadow Chancellor, was then Labour’s Education Secretary. He had built up a reputation for political posturing and bullying, while presiding over new Labour’s muddled education policies. I have not asked that headteacher how she thinks the new education Secretary, Michael Gove, compares to Mr Balls. I don’t have to; her prediction was spectacularly wrong. Mr Gove is even more loathed by education professionals than was Mr Balls. But Mr Gove, unlike Mr Balls, counts as a political success.

Mr Gove has been in the news recently. Yesterday he gave a speech spelling out his vision for state schools; over the weekend there was a fuss over his failure to reappoint the Chair of Ofsted, the schools’ inspectorate. His spin doctors have been pushing out a story of his reforming zeal against an educational establishment referred to as “the Blob” after a 1950s sci-fi movie. This has received a lot favourable coverage in the right-wing press. More neutral observers, such as the FT as well as the BBC, seem content to faithfully report Mr Gove’s spin while not openly taking sides.

All this is in stark contrast to the government’s attempts to reform the NHS, led by former Health Secretary Andrew Lansley. The government side of this argument hardly got a look in, as the picture of chaotic reforms took hold. This negative coverage stiffened opposition to the reforms, muddling them further, so that they have ended up being the biggest blot on the Coalition government’s record – though some good may yet come out of them. There has been little public support for opponents to Mr Gove’s education reforms, however. Mr Gove, an ex-journalist, is clearly a better communicator than Mr Lansley, an ex-doctor. The education system is also much simpler than the health service. But the political skills of Mr Gove’s “Blob” are totally lacking, unlike those of the doctors and nurses opposing Mr Lansley. The teaching unions have long been a bit of a comedy act, resisting basic workforce reforms, like performance appraisal, that non-teaching professionals have long since got themselves used to. Other educational professionals rarely raise themselves beyond the minutiae to give politicians and the public a clear vision of what they are trying to achieve.

Are and were British schools in a mess? Yes and no. International comparisons show a mixture of good and bad news. Overall performance is unspectacular but not awful. We have a long “tail” of under-achieving pupils that schools give up on too quickly. There is a lot of mediocrity, especially amongst rural schools, who “coast” by getting average performance from pupils capable of much more. But over the last two decades, the Blob has pulled off one of the most spectacular episodes in school improvement in the world: the transformation of London schools. This has given the lie to the standard line of the Left that the educational prospects of poor pupils will only be transformed once other social problems, like jobs and housing, have been fixed. The Borough of Tower Hamlets, one of the country’s poorest, regularly outperforms much wealthier districts outside London.

The transformation of London’s schools remains one of the last Labour government’s greatest achievements. But politically, it is problematic. It owes nothing to the various policies pushed by politicians and think tanks, such as creating semi-independent Academies. It was largely down to good old fashioned management: officials at national and council level holding school managements to account, and replacing heads of mediocre schools. As a result politicians are strangely reluctant to take the credit.

What of Mr Gove’s reforms? They are a mix of good, bad and ugly. On the good side, Ofsted’s remit has been sharpened up a lot. Previously it had expanded into such areas as “community cohesion”, which are highly sensitive to context, and inspectors did not show any great aptitude. Now they focus much more sharply on the quality of teaching. This gets to the core of what drives school performance. Some older teachers hate this – but it really isn’t any different to the pressures that accountants and lawyers find themselves under. Younger teachers seem accept the much greater level of accountability that is expected – and respond well to it. (My evidence on this is rather anecdotal though – based on my experience as a school governor in a London primary school).

Another good thing, though largely unremarked, is that Mr Gove’s Academy programme is putting private schools under real pressure. Many private schools outside the South East are now signing up to be state schools, run as academies. My local Free School is recruiting many middle class youngsters that would formerly have gone private. No doubt some on the left see this as a sinister subsidy to the middle classes – but a much higher level of social mixing occurs at these new state schools than would have occurred at private schools. And social mixing at schools helps the poorer children achieve more. It is worth noting that this policy works as well as it does thanks to two measures insisted on by the Liberal Democrats: a “pupil premium” giving extra funding for poorer pupils, and insisting on non-academic selection. Many Conservatives want to recreate academically selective Grammar Schools. These may once have been engines of social mobility, but now academic selection is simply used as a way of weeding out pupils from poorer backgrounds and reducing mixing.

The bad: there is a lot of wasted energy on changing things that don’t need changing. That particularly applies to changes to the curriculum. Mr Gove and his supporters seem to have an old-fashioned view on what should be taught in schools, to reflect a 1960s private education. Now it is true that the Blob has developed a lot of woolly curriculum ideas that don’t seem to be of lasting educational benefit (especially in “applied” qualifications), but they were gradually sorting out this mess by themselves. Mr Gove seems to have little idea as to what modern universities and employers actually want the product of a secondary education to be. A lot of the drive to turn state schools into academies seems a bit pointless, and will probably create problems of accountability in later years. It has a sinister aspect too: the Academy chains who are the main beneficiaries are politically well connected – and it is their political connections that seem to be critical in their success.

The ugly. We are getting more religiously founded state schools. Given religiously founded schools’ role in cementing toxic community relations between Catholics and Protestants in Northern Ireland and Scotland, I am very nervous about this. But it could be that making these newer schools conform to modern educational norms, and forcing them to engage with a wider civil society, will bring benefits. But I really would prefer it if our children went to schools attended by children of many faiths and none. But the alienation of some religious communities is such that they would not engage in such arrangements, and for them a state religious school is a second-best.

My verdict on Mr Gove is that he is not quite as evil as he cracked up to be. But he is wasting a lot of time and energy. What should be absorbing energy is teaching standards, establishing a broad curriculum appropriate to modern life, and establishing better systems of accountability which don’t tempt schools to game the system by neglecting “hopeless” cases. Fix these and Britain’s state schools would be world class. But alas, we are distracted by political gimmickry.

Labour are in serious trouble

Not long ago Labour supporters seemed very confident. Their lead in the polls pointed to a comfortable majority; the electoral system was loaded against the Conservatives; they (in their own minds) had won the argument on austerity. It was a good moment to move to the political left and drop the Blairite obsession with the political centre. But now Labour’s poll ratings are sinking, and the Tories catching up. The 2015 election increasingly looks like a stalemate or worse for Labour. What can they do?

And it is not difficult to see the source of Labour’s problems: Britain’s reviving economy, and rapidly falling unemployment. This is not running to the Labour script – which was that austerity policies doomed the British economy to stagnation and misery. It used to be that Labour’s Shadow Chancellor, Ed Balls, sounded easily the most economically literate of the front-bench spokesman of either side (challenged only by the Lib Dem Business Secretary, Vince Cable). Now he sounds panicky and flustered. His arguments, that the recovery is shallow because it is based on consumption rather investment and exports, is technically correct but irrelevant. Labour’s alternative policies of fiscal stimulus were promoting an equally shallow recovery. Labour has no serious ideas on how to promote investment and exports. Meanwhile, the rising economy is giving government spokesmen more confidence: Lib Dem Treasury Secretary Danny Alexander sounded more in control of the economic arguments than he has ever been on the radio this week, managing to pick apart arguments presented by the FT’s Martin Wolf. The Tory Chancellor George Osborne, always more interested in politics than economics, is not wasting any opportunity to skewer Labour using much less sophisticated arguments.

Labour started their damage limitation strategy last Autumn by their leader, Ed Miliband: to try and change the subject. First there was the “cost of living crisis”, focusing on the failure of pay to keep up with prices. Now it is the top rate of tax, where they want to restore the 50% rate rashly reduced to 45% by the Coalition in 2012. Labour’s policy is popular, and the criticism coming in from business groups is unconvincing. These lobbyists say that reducing taxes, especially on the better off, is what is need to awaken dormant business investment. And the government has duly cut taxes (that top rate, and also the rate of company tax) without investment budging. The trouble is that Labour’s policies sound unfriendly to businesses, and therefore likely to stall growth and cause general taxes to rise.

It gets worse for Labour. The energy that drives their activists comes from opposition to austerity: fighting cuts which are seen as mean-minded and ideological. The theory was that the fighting the huge government deficit should be left until later, when the economy was growing. That “later” has now arrived. So how will Labour cut the deficit? Being specific about this, as they will have to be by 2015, will cause huge angst and disillusionment amongst their core supporters.

And in any case Britain’s electoral system is not so weighted in favour of Labour as some supposed. There is a pro-Labour bias in the distribution of seats it is true, but there is also a pronounced benefit to incumbency. When it comes to asking which seats the party will have to capture to win an outright majority it looks hard going. Battersea, the seat where I live, is a case in point. The Conservatives took it off Labour in 2010, but it looks very difficult for them to win back. In the last 3 years I have heard nothing from Labour, but regularly from the Tories; residents aren’t being given the impression that Labour are in contention. The hard fact is that modern politics, with fewer volunteer workers and high postal costs, is an expensive business. Labour surely do not have the money to capture enough marginal through trench warfare tactics in the marginals. They need a national landslide effect, such as they achieved in 1997 under the hated Tony Blair.

So what to do? A change in leadership is out of the question, especially as the most popular alternative, David Miliband, Ed’s brother, is out of contention. A ruthless reshuffle of the front bench might help, but only if it went alongside a wider change of strategy. I think promising more money for the NHS, struggling to keep up with demand, would play to their strengths. But they would have to have credible tax policies to back it up. Taxing just the very rich won’t quite cut it. But taxing a wider body of people would totally undermine their rhetoric on the cost of living. They have dug themselves into a real hole.

Their best bet may just be to keep calm and hope the Tories self-destruct. They show every sign of wanting to do so over the toxic issues of Europe and immigration. Labour’s best chance of benefiting from this tendency to suicide is to appear moderate and centrist. Not a good moment to lurch to the left.

And what of the Liberal Democrats? About half their voters at the 2010 election deserted them for Labour. The polls that show Labour sinking do not show any real benefit for the Lib Dems. But if the contradictions of Labour’s criticism become exposed in the next year or so, then they may get their opportunity. The centre ground, though treated with justifiable suspicion by many of their activists, is a sound place for them to stick to for now.

Nick Clegg is right to aim for the centre ground

This morning I got a grumpy email from the Social Liberal Forum, a left-inclined pressure group within the Liberal Democrats. It complained about the apparent support the party is giving to the Conservative policy of aiming for a balanced budget, and so a continuing diet of austerity. It criticised this idea for being economically illiterate. It went on that the policy was

Cold comfort … to the people having to choose between heating their homes and eating this Winter, to those forced to go to foodbanks to feed themselves and their children, to families struggling with the cost of living crisis

They also criticised the party leadership aiming at a “mythical place known as “the Centre ground””, and of being closer to the Conservatives than Labour.

All this illustrates the disarray on the British left on economic policy following the unexpected turn for the better the economy has taken. Previously the left could unite around the proposition that the government’s austerity policy was “too far, too fast”, causing hardship amongst society’s least well off. They took immense comfort from the support of many Keynesian economic heavyweights, who said that, in the absence of growth, the state should disregard the government deficit and stimulate the economy to get it moving – or at least stop making the situation worse through cuts. Hence the government’s supporters being “economically illiterate”. Yes they said, the government should tackle the deficit, but not until growth has been restored.

Though some might not realise it, that fox has been shot by the economic upturn. It isn’t that those economists were wrong, or that “too far, too fast” did not have economic validity at the time; it is that circumstances have changed. If the economy is growing, it is not a good idea to add further stimulus to it. And the “later” when the government should start to tackle the deficit issue has started to arrive. The awkward question that much government expenditure before the crisis was unsustainable, and would have to be cut in due course, cannot now be dodged.

In response the Labour party has changed the subject. Instead it is focusing on a “cost of living crisis” which they blame on badly behaving businesses, from energy companies to house builders. They are proposing a series of populist but economically naïve policies to change these companies’ behaviour. They appear to have no macroeconomic strategy, and the Shadow Chancellor, Ed Balls, is conspicuously floundering.

Politically, Labour’s strategy is interesting. Instead of following political conventional wisdom by chasing voters who float between the main parties (which is what is meant by the “Centre ground”) they seem to be chasing left-inclined or working class voters who will never vote Conservative, but who do not currently vote at all. Centrist voters are worried about the management of the economy, and seem to think that the Conservatives have the stronger case on that front. Instead of trying to reassure these voters by making it clear that they would continue with austerity policies to bring the deficit under control, they are chasing other voters.

What is even more interesting is that the Conservatives are also showing little interest in the Centre. Centre voters are worried about “fairness”, and the state of public services, where they trust Labour more. But instead of doing much to reassure voters here, they are stirring up headlines on immigration and the European Union, where they are proposing policies that are just as economically naïve as Labour’s. Again, quite apart from fighting off the populist challenge presented by Ukip, they seem so be after right inclined people who are not voting, but would never vote Labour if they did.

So if there is no serious contest for the Centre, and if both of the two bigger main parties are pursuing populist but foolish policies, there is surely an opportunity for the Liberal Democrats. Nick Clegg, their leader, is right to make a bid for this, which his party is doing with its “Stronger Economy, Fairer Society” slogan, which epitomises the centre ground. The critics within the party of this strategy are right to point out that this is not ideological secure space, and will do little to built the party’s weak core vote. But if the party is to hang on to its representation in Parliament it will need the support of floating voters.

And so to economic policy. George Osborne, the Conservative Chancellor, is wrong to make a fetish of budget balance – and perhaps deserves to be called economically illiterate to do so. But it is economically sensible to manage the public’s expectations on what the state can afford. It may be that some economists are right, and that a “trend rate” of economic growth of 2-3% per annum is there for the taking in the medium to long term, as everybody seemed to think before 2007. But there are good reasons to suppose that they are wrong, and that much slower growth is “the new normal”, once a bit of catch-up growth is over. If so we will have to get used to a much smaller state and a less generous benefit system. Floating voters sense this, and will not vote for the Liberal Democrats if they think that they might help the Labour party take risks by reversing austerity. Nick Clegg may or may not be economically illiterate, but he is surely right on that one.

Labour can win in 2015. A disaster beckons in 2020.

Is it just me, or can I see a certain spring in the step of Britain’s national politicians? Ever since the party conference season last September they have been focusing on one thing above all: winning the General Election due in May 2015. The perplexing state of the country is now simply a source of ammunition to batter the other side. Actually solving the problems can be left until afterwards. What a relief!

The Labour leader, Ed Miliband, is having the better of it, if the relentlessly superficial media chatter is to be believed. This is quite a turnaround, since the same chatterers had him as toast as late as August. He has abandoned his party’s “too far, too fast” criticism of the government’s austerity policies, which helped rally the faithful (and rattle Lib Dem activists) but cut little ice with the country at large. The recovery of the country’s economic statistics has not invalidated their argument, but it has made it far too complex a proposition to argue, especially since their rhetoric had placed far too much reliance on these “flatlining” statistics in the first place. Instead they are focusing on living standards, and things, like fuel bills, which affect them.

From a campaigning perspective, this change of tack is astute on at least two counts. First, it appeals to direct personal experience, rather than the ephemeral world of economic statistics, to which the country’s GDP growth statistics belong. Second, it is such an intractable problem that the government is unlikely to be able to neutralise it. All that remains is to find some eye-catching policies to embarrass the government and keep the political debate on their ground. The centrepiece of this is the pledge to freeze energy prices for two years if Labour takes power, while they put in place a longer term fix to limit the damage inflicted by the greedy energy businesses they blame for the problem. A second push has been to enforce a “living wage” significantly higher than the legal minimum wage, through government procurement, and a tax break for employers who raise their wages.

In this line of attack Mr Miliband is the first of our national politicians to make political capital out of one of the most important developments in the British economy, along with many other developed economies, notably America’s. For the majority of people, wages are not keeping up with growth in the wider economy. In Britain this trend was clearly established, I read in this piece by Chris Giles in the FT, 2003/04; since 2010 (i.e. when the current government took over) wages have not even kept up with average prices. The benefits of growth are going to mainly to a privileged elite, while government interventions tend to be focused on the other end of the spectrum: the very poor. While the main economic issue is slow growth of pay, the main flashpoints are in taxes (especially for things like fuel) and energy costs.

There is, however, a snag. How on earth to actually fix it? This does not seem to bother Mr Miliband too much. His policy proposals are at best ineffectual, and at worst will actually make things worse. In the field of energy Britain is being overtaken by a crisis, as old nuclear and coal-fired power stations are shut down, and replaced by renewable energy sources that place wholly different strains on infrastructure. What the country badly needs is investment, in new capacity, and, especially, in distribution infrastructure (e.g. moves towards a “smart grid”). Just how Labour’s attack on the energy companies is going to solve this problem is, to say the least, unclear. And, if some of what I read is true, the pressure will break out into real problems in two or three years time. Labour’s living wage policies are no better thought through. Using government procurement to do heavy lifting in this area, along with many others, risks weighing it down with compliance costs – a process that tends to push out smaller businesses, as well as inviting scandal and fraud. The tax break looks totally unsustainable and an invitation to unscrupulous companies to manipulate the system.

The Conservatives are planning their counterattack. There is growing talk of 1992 (which this blog has long been banging on about), when a well-funded late campaign destroyed what had seemed to be an inevitable Labour victory. They will focus, probably, on frightening voters about the economy and taxes; their newspaper allies will concentrate on personal attacks on Mr Miliband to undermine his credibility as a prime minister. The Lib Dems are crafting a “centre ground” campaign, no doubt hoping to benefit from the damage the big parties will do to each other.

I have urged my readers not to underestimate the Conservatives. That advice still applies. But my current instinct is the Labour will weather the storm enough to form a minority government. That is when Mr Miliband’s problems will start. The country will face electricity shortages; clever schemes to enforce the living wage will unravel; living standards for the majority will stay under pressure; Labour activists and trade unionists will be on the government’s case to raise benefits and expenditure. The calamity that has struck Nick Clegg and the Lib Dems will visit Labour, for very similar reasons. I understand Labour’s strategy for winning in 2015; how on earth are they going to win in 2020?