Sunak remembers Tunbridge Wells

The Pantiles, Royal Tunbridge Wells – photo Paul Collins

Media commentary on British prime minister Rishi Sunak’s cabinet reshuffle largely misses the point – the exception being the FT’s Stephen Bush, whose newsletter came out after I started drafting this – and who is absolutely on point here. Most reflect on the ironies of the shock appointment ex-prime minister David Cameron to be Foreign Secretary, and the impact this may have on various groups of voters. Many cast it as the desperate act of a failing administration. I would rather see it as a rather brilliant move to the front foot.

First things first. The most important move yesterday was the removal of Suella Braverman as Home Secretary. She was never qualified for the job and, predictably, proved a loose cannon. But she is a darling of the Tory populist wing, who gave her a rapturous reception at the party conference – and her appointment was widely regarded as necessary for Mr Sunak to secure his uncontested nomination to the top job. Last week her attention-seeking criticism of the pro-Palestinian demonstrations and criticism of the police helped take the heat off Labour leader Sir Keir Starmer’s typically leaden response the Gaza crisis. This was an excellent opportunity for the Conservatives to cast doubt on Sir Keir’s ability to take on the job of prime minister. Instead the story was Ms Braverman’s extraordinary conduct – which included direct defiance of Mr Sunak in an article published in The Times. That undermined Mr Sunak’s authority. This exasperated respectable Tory-leaning voters in places like Tunbridge Wells, without doing much to rally disaffected voters in places like the West Midlands, site of a recent spectacular by election loss, which had been critical to the party’s success in 2019.

But by appointing Lord Cameron, as we must now call him, to the cabinet Mr Sunak relegated the Braverman story to the back pages. Instead of outrage by her supporters bringing attention to the fractured state of the Conservative Party, all anybody wanted to talk about was Lord Cameron and Mr Sunak stamping his mark on on the cabinet. Ms Braverman’s sacking was passed off with a shrug as a rather obvious move. She will try to regain the initiative – she is clearly politically ambitious – but it will be hard for her to recover. Her moment has passed. The Tory populists will seek out other standard bearers.

This will do much to reassure those voters of Tunbridge Wells, a short drive from where I live. Here a traditionally safe Tory seat is under attack from the energetic Lib Dem candidate, Mike Martin. These voters, to generalise, never rejected the Cameron brand of politics, as the West Midlands voters had. To them the problem with Ms Braverman wasn’t really her politics, it was the fact that she wasn’t a team player, and showed no particular signs of administrative competency. To people who are professionals themselves, as so many of these voters are, this is a cardinal sin. It is a point that the Brexit-supporting populists simply cannot understand. The professionals have warmed to Mr Sunak, who is well to the right of their normal politics, because he displays this professionalism – unlike his two immediate predecessors – Liz Truss and Boris Johnson. They abhorred former Labour leader Jeremy Corbyn with a passion, as he was the diametrical opposite of professional.

But, alas for Mr Sunak, Sir Keir is a consummate professional too. As is Sir Ed Davey, the Lib Dem leader – and indeed this group of voters rather liked the Lib Dem – Conservative coalition that Lord Cameron led, and probably like the idea of a Lib Dem-Labour one (anathema as that is to Sir Keir). Mr Sunak may have stopped a rout, but he will need to do more to secure a win.

To do that Mr Sunak will need to show that he is getting to grips with the crisis in public services, and the chaotic illegal immigration in small boats across the Channel. Pretty much all public services are in a sorry state, but the most important politically for now are the NHS, the courts and water and sewage (where problems are close to home in Tunbridge Wells). But to seize the initiative here Mr Sunak will need to unlock public spending, to invest in facilities and to restore lagging pay – otherwise he will not be seen as serious. This matters more than the tax cuts beloved of the Tory right. There is talk of cutting Inheritance Tax, as this is a wedge issue with Labour. Inheritance Tax does weigh heavily in the minds of the wealthier people of Tunbridge Wells, with its high property prices – but my guess is these voters would be unimpressed with such shameless politicking. The forthcoming Autumn Statement from the Chancellor of the Exchequer will be a critical test for this government.

But as Stephen Bush says, just as Mr Sunak was unable to capitalise on gestures to the populists because of his lack of follow-through, he will not capitalise on his gesture to voters of Tunbridge Wells for the same reason.

This is the wrong way to leave the EU

It is quite likely that the British public will vote to leave the European Union this week. Supporters of staying in are left with straws to clutch at. Perhaps the pollsters have overestimated the propensity of less educated Leave supporters to turn out and vote. Perhaps the awful murder of Remain supporter Jo Cox MP will give people pause. Polls show that there may be a modest swing back to Remain, but the political momentum behind Leave still looks formidable.

But the consequences of a vote to leave are incalculable, not because the aim of leaving the EU is necessarily so awful, but because Britain’s governing institutions are so unready for the consequences of the vote.

This shows the limits of the referendum as a means for governments to consult their electorates. Referendums work best when the electorate is offered clear and coherent alternatives. This is only likely if the government of the day is recommending a change from the status quo; it is clearly going to be accountable for the change – while the status quo is what the public and governing institutions are familiar with.

This is what happened in 2014’s referendum on Scottish independence. In that case the Scottish government ( though not the UK one) set out a prospectus for independence, and it was clearly up for leading the country through the transition process. A referendum proposal that had been cobbled together by members of the public without the support of major political institutions would have been a wholly different thing.

The EU referendum does not fit the bill. It was designed by David Cameron’s British government to make his Internal Conservative critics, who passionately oppose the EU, go away. But nobody has formulated a clear prospectus for life outside the EU; instead a number of half-baked and irreconcilable alternatives are advocated (characterised in an earlier post of mine, as following Singapore, Switzerland or Japan), and it is far from clear which the public is being asked to sign up to. And exit does not command a parliamentary majority, still less any of its particular versions. A Brexit vote would create political chaos. And, given Britain’s dependence on trade and external finance, this political chaos threatens economic chaos. It is the lack political leadership, more than the exit proposition itself, that threatens the country’s economic stability.

This was illustrated by the Chancellor of the Exchequer, George Osborne. Last week he suggested that a Brexit vote would have to be followed by an emergency budget, driving through austerity measures as government revenues fell with the economic shock. This was clearly a stunt, which convinced few – even those, like most economic forecasters, who accept that Brexit would put government finances under pressure. And yet many Conservative MPs immediately said they would reject such a budget, and they were joined by the Labour leader Jeremy Corbyn, who rejects all austerity ever. This presents the prospect that there is no working parliamentary majority for any given way forward. Neither is it clear from where any such parliamentary majority would emerge, even if there were a general election. There might even have to be another referendum to resolve the constitutional deadlock.

So it is not hard to imagine that a financial crisis could follow a Brexit vote. Inward investment would halt to see how the dust settled. Sterling could dive as a result, and the government could start finding it hard to fund the National Debt, with the still considerable budget deficit, as it loses its status as an international safe haven. Creating new money to fund the debt may solve the short-term crisis, but only at the expense of harming the country’s longer term financial standing. Britain has a large current account deficit, meaning that it depends on flows from abroad – a key point of departure from the inveterate money printer, Japan. This could be worse than the financial crisis of 2008 to 2010; the deficit may be smaller, but overall debt is larger, and political leadership then was clearer; indeed this was the most compelling logic behind the Conservatives forming a coalition with the Liberal Democrats in 2010. In due course the British government might have to call in the IMF to stay afloat. Something like Mr Osborne’s putative budget might then follow. The irony than an attempt to become independent of EU institutions led only to becoming dependent on the much more intrusive IMF would be bitter.

I happen to think this sequence of events is quite likely if Britain votes to leave, though many would consider it absurd given how easily the country floated through the earlier crisis of 2008 onwards. But what is unarguable is that the lack of political leadership on the Brexit side, with no clear political accountability for any Brexit result, makes this outcome more likely.

This is the wrong way to leave the EU. What should happen is that one of the main parties puts leaving the EU in its election manifesto, gets a majority, and then takes the proposal to the country in a referendum. If it wins, it is clearly responsible for the consequences.

Curiously enough, in today’s grumpy politics, the lack of a clear prospectus, and the threat of political chaos, seem to be no disadvantage to the Leave side in the referendum. Indeed it adds to an anti-establishment appeal. There seems to be a curious death wish at large. The leaders of the Leave campaign thrive on their power without responsibility, seemingly relishing a ringside seat in the chaos that would follow.

Mr Cameron’s judgement looks poor in getting us to this dismal point. And yet what could he have done instead? His big mistake was his attempt to lead his party to a place it did not want to go. The most honest thing for the Conservatives to have done would have been to elect a leader that was explicit about leading the country out of Europe. If they had done that, then Gordon Brown might still be Prime Minister, but the politics would have been more honest, and the risks to nation fewer.

 

The tide is turning against Heathrow expansion

Last week the British government decided to defer its decision on whether to expand London’s Heathrow airport. This has been roundly condemned by people the media calls “business”,  referring to self-appointed lobby groups of large companies. But what is all this about? Now it could be what the lobbyists claim, which is weak government pure and simple. Or it could be a straw in the wind for a much more interesting change in attitudes in the political economy.

The story so far. Heathrow has long been operating at near capacity. London’s second airport, Gatwick, is approaching capacity too. If you believe that air travel must increase for a healthy economy, then something must be done to expand capacity. In the long view this conventional wisdom is open to question: but as a good liberal I must accept that the freely made choices of my fellow citizens point to further growth in air travel. The politics, however, are toxic. Airports in the prosperous south east of England are not popular with those that live nearby, whatever benefits they bring. Since Heathrow is quite close to the London conurbation, that adds up to an awful lot of people. Many of these people live in marginal constituencies.

Nevertheless the Labour government prior to 2010 supported an extra runway at Heathrow. But both the Conservatives and the Liberal Democrats, spying opportunities in these south west London seats, were vehemently opposed. The Conservative leader, David Cameron, went as far as to say: “No ifs, no buts, there will be no third runway at Heathrow” (or something like it). When these two parties turned Labour out in 2010 and formed a coalition, the existing expansion plan was thrown out. Instead the government set up an Airports Commission to evaluate the alternatives, to conveniently report after the next General Election, in 2015. It duly reported in the summer, recommending a new runway at Heathrow, in a different place to the previous plan. By then the Conservatives had crushed the Lib Dems and were in government on their own. It would have been a good moment to show decisive leadership and accept the Commission’s results. They would have been able to steamroller opposition from their London MPs.

But Mr Cameron didn’t. He dithered. Why? There seem to be two nakedly political factors. The first is that Zac Goldsmith, the Tory MP for Richmond Park, had threatened to resign and cause a by election if the government supported Heathrow expansion. That ordinarily would be a little local difficulty – but he is the Conservatives’ candidate for London Mayor in 2016. A split would be messy. The second is that Mr Cameron’s “No ifs, no buts” promise is weighing on him. He fears a “Nick Clegg moment”, referring to the collapse in the Lib Dem’s leader’s public standing when he decided to reverse a pledge on student tuition fees after 2010. And Mr Cameron needs all his political capital to carry through his referendum on the European Union. Perhaps this is enough to explain last week’s announcement to defer the final decision until next summer, after further reviews of the implications for air pollution. By then the Mayoral election will have happened, and so might the EU referendum.

But there may be something deeper. It could be that the tide of conventional wisdom is moving against Heathrow expansion, recognising that the terms of reference of the Airports Commission were flawed. If that is the case then the delay is a process of gathering more evidence against Heathrow, so that a decision to expand Gatwick instead will be better proofed against judicial review.

Why might the tide be turning? Well, the case for Heathrow is based on 20th Century economics. The idea is that to make a big airport even bigger is more efficient that building up smaller airports. Time was when the concept of economies of scale was so baked into the conventional wisdom that this logic would not have to be seriously examined. But for airports it does have to be questioned. For a start, any air traveller knows that larger airports are less efficient for point to point travel. Every stage of the process takes longer than for a smaller airport. I remember vividly that taxiing to the terminal after landing at Schiphol airport took as long as the flight itself.

But there is a clear benefit of a running a large airport: that of making connections. This is referred to as being a “hub”. There are two aspects to this. The first is that hub airports can consolidate short distance flights into long distance ones, in a configuration that allows demand for long haul journeys to be met more efficiently. The second is that the presence of a lot of people waiting around in hub airports is an economic opportunity for the host country: it can sell them things. It is on the benefits of the hub operation that the Airports Commission’s recommendation is based: expanding Heathrow will generate bigger benefits to the British economy as a whole than would expanding Gatwick. This can be challenged, however.

The first point of challenge is on the efficiency of the hub model as the best way of managing long haul traffic – or of a hub based in London. One argument is that technology is moving against this. Smaller, efficient long haul aircraft are being developed that allow the alternative, point to point model to be more viable. The second is that the Arabian Gulf is emerging as an alternative airport hub location, and one which has a clear comparative advantage, if not an out and out absolute advantage. Pumping up a London hub is fighting the laws of global economics.

The second point of challenge is on the business of running a hub: the shops and restaurants. The London economy is already overheated, as shown by very high property prices. There really is no need for the extra income. If the hub was in the north of England, that might be a very different matter. The fact that the airport is so unpopular locally gives a clue to this.

And on top of these direct challenges there is a strategic tide. Politicians and economists are worried that economic growth in developed countries like Britain is bypassing most people, and ending up in the pockets of large multinationals and a tiny elitesof people that run them and provide supporting services such as tax avoidance advice and banking. The penny is dropping that this may largely be down to the excessive market power of large businesses, extracting monopolistic profits. And yet the Heathrow business case seems to be a paean to this form of monopolistic capitalism. And those business lobbyists provide an unwitting confirmation of this.

Before the Commission reported, it was arguments such as these that induced me to predict that Gatwick would win over Heathrow. The Airports Commission was a blow; but I am holding to my prediction yet.

 

 

David Cameron: master of the middle ground

After diverting my readers with the fringe entertainment of the Labour Party, and the even more eccentric fringe of the Liberal Democrats, it’s time to look at the politics that really matters: Britain’s Conservative Party. They had their annual conference last week, and this gives us some idea of what to expect in the next five years.

The speed with which the Tories, led by David Cameron, have assumed the ascendency in British politics is astonishing. Not six months ago I, along with many others, thought that they would be unable to win the General Election in May, and that they were so toxic to the other parties that they would have difficulty in forming a new government. But they succeeded in securing a narrow but decisive victory. I had failed to understand how England’s centrist voters regarded the political scene, and how cleverly the Conservatives were able to exploit those voters’ anxieties.

And as if that result wasn’t good enough for the Tories, the subsequent left-wing takeover of the Labour Party has removed the principal opposition party from the field for the time being. The Labour leadership’s priority seems to be to consolidate the left’s power in the party, rather than take on the Tories.  Meanwhile the Liberal Democrats have been crushed, and even Ukip, the Tory’s rivals to the right, look like a busted flush. Only the SNP look in fighting form, and they are confined to Scotland, which is of minimal electoral importance to the Tories. The next General Election is due in 2020, and at present nobody can see that it can produce anything other than another Tory victory, and quite possibly a landslide.

How the Conservatives take things from here is therefore the most important question in British politics. The first thing to note is that the position of its leader, David Cameron, looks secure. The vultures were circling for his expected failure in May, so his triumph is a very personal one. And he has earned his strong position. He has a powerful instinct for the middle ground in English politics (which extends to much of Wales too, though he seems to have little grasp of Scotland’s politics). What he understood in a way Labour politicians did not is that this middle ground, the floating voters who decide elections, had not moved to the left, as it was fashionable to suggest. These voters accept much of the economic conventional wisdom that the left dismisses as “neoliberal”. They do not want higher taxes; they think that the previous Labour government spent too much on benefits and public services; and above all they fear the loss of private sector jobs that might arise from a new economic crisis. These are concerns that Labour failed to address, because, as we now see, much of its core support disagreed. Middle ground voters in England became so afraid of the consequences of a Labour government (and especially one dependent on the SNP), that they happily ditched the Lib Dems, who were also trying to pitch for their votes.

But Mr Cameron understands other things about these middle ground voters, which make both Labour and Lib Dem politicians uncomfortable. They are suspicious of the European Union, but open to pragmatic arguments for staying in. They are nervous about immigration, especially (whisper it) of those from Islamic countries. But they also don’t want to be racist. Mr Cameron treads this ground with skill.

What the conference made clear was Mr Cameron’s strategy for his party, shared by his chief ally, the Chancellor George Osborne. He plans to set up a fortress in the centre ground, much as the Labour leader Tony Blair did for his party, to secure its hegemony over British politics. He will continue to push through his largely neoliberal economic policy, and in particular a dramatic rolling back of tax credits. They hope to reduce the overall cost of the state to a historically low level, by making further cuts – though trying to preserve the beloved National Health Service. Within this overall framework Mr Cameron and Mr Osborne want to tackle three important issues: the European Union; the economic weakness of northern England; and the country’s overheated housing market.

On the EU, Mr Cameron aims to “renegotiate” Britain’s terms, and then present the country with an in-out referendum. This is a bold enterprise, not least because his party cares deeply about it, and mainly disagrees with him. It could profoundly change the party he leads; it could even destroy it. Losing the referendum (i.e. taking the country out of the EU) would cause his whole project to unravel.

On the north, the duo’s approach is to devolve and invest. This will be very interesting to observe – their approach is surely sounder than previous attempts to address the issue. They hope that it will revive the party’s fortunes in the north, much as Mr Blair revived Labour’s in the south (ground that Labour has now lost).

On housing Mr Cameron seems to be surrendering to the conventional economic wisdom – that is a simple game of numbers, and that setting targets for new homes, and taking a firm hand on planning delays, will help ease the crisis and make home ownership more widely available. Social housing plays no role in their thinking; neither is there a recognition of the pernicious role of cheap finance. Few feel that their strategy has sound foundations. Housing looks like something of a Tory blind spot – they draw too much support from owners of homes who enjoy the sky-high prices. They may yet surprise us though.

The biggest problem with Mr Cameron’s plan to establish Tory hegemony is his wish to step down as party leader and Prime Minister before the close of the parliament. None of his possible successors has his touch. Mr Osborne is a better strategist, but the public will find it harder to trust him. Theresa May, the Home Secretary, is playing to the party’s right, endangering her centre-ground credentials as she does so. Boris Johnson, the London Mayor, has flair but lacks depth. A messy transfer of power could easily upset the project.

Two other hazards await, just to deal with the known unknowns. The first is Scotland. The SNP’s dominance remains unchallenged. Mr Cameron has not played his cards well here, with a particularly foolish bid for “English votes for English Laws” made too hastily of last year’s independence referendum.  He does not like to fiddle with the British constitution, and yet some kind of federal settlement, involving much such fiddling, looks to be the only way to seize the initiative. If the SNP were to secure a second referendum and win it, it would be catastrophic for the Tories – who set much prestige on the union, even though it actually makes life harder for them politcally. Just fighting them off could be a massive distraction.

The second hazard is the economy. All looks well for now, and yet the growing problems in “emerging” economies threaten the developed world’s financial system. This could cause a new financial blow-up just as the US sub-prime market did in 2007 and 2008. That could dent the government’s reputation for economic competence, which is core to its appeal.

But such is the weakness of Britain’s opposition parties, that it is hard to believe that even these troubles could stop the Tories. But things can change quickly in politics.

And this demonstrates a political truth that all should ponder. Political success requires both a strong core vote and an appeal to middle ground voters. It is a hard conjuring trick. Labour failed to, or were unable to, understand and appeal to the middle ground. The Lib Dems failed to develop and retain a core vote. Mr Cameron has pulled off this trick for the Tories. He successor may fail. And that would make British politics very turbulent indeed.

 

 

Heathrow is a big test for David Cameron’s leadership

The election is done with, so now it is safe for the Airport Commission to report on options for expanding airport capacity in England’s South East. They have duly proposed that another runway be built at Heathrow airport.

Personally I was a bit surprised. I had expected the Commission to recommend expanding Gatwick. An article in the FT a while back led me to think that its Chair, Howard Davies, favoured the expansion of point to point services, which allow greater levels of competition, over the conventional arguments for the economies of hub airports, which favour big operators. But if he felt that way he was overwhelmed by conventional economic arguments that pointed to expanding the biggest airport, while skating lightly over the pollution and noise arguments that arise from this airport’s proximity to the main London conurbation.

I am emotionally very anti Heathrow airport. Living under its flightpath I find the noise of planes coming into land irksome, especially when they thunder over before 6am. I hate the way it ruins such beautiful places as Kew Gardens. I hate it as a passenger, as it is hard to get to by public transport or car, and when you arrive it is just too big. Every step in your journey before take-off or after touchdown takes longer than it should, and the whole enterprise is managed with the lack of imagination we expect from major corporate operators who know that you have no choice. Gatwick is a delight by comparison, especially since it was put under independent management. And I resent the history broken promises from the airport’s operators after each previous bid to expand. Which in turn undermines many of the promised safeguards proposed by the Commission. Heathrow’s lobbyists know how to dismantle such promises one at a time; their victory in this battle would give them immense sway.

But I have to admit that I’m not on top of the business arguments in favour of Heathrow’s expansion. And I have to question how much we can keep shooting ourselves in the foot, in conventional economic terms, while trying to maintain the tax base to support the level of public services and benefits as the population ages. Through gritted teeth I will admit that there may be case to be made for expanding this horrid airport.

But our Prime Minister, David Cameron, and his Chancellor George Osborne, should entertain none of these doubts. They have a conventional economic liberal approach to the economy. The Commission’s logic should make perfect sense to them, and it is exactly the sort of opportunity to invest for growth that the country badly needs in their world-view. It means the country is “open for business” in a commonly-used phrase. As such it is much more solidly based than the distinctly shaky HS2, the proposed high speed rail line from London to Birmingham and beyond. The only thing against it is the politics.

A number of their Conservative colleagues are passionately opposed to Heathrow expansion. These include the current London Mayor, Boris Johnson, and the prospective mayor Zac Goldsmith, who has threatened a by-election. These opponents all have seats in the west and southwest of London, where the party did well in May’s General Election. And in 2009 Mr Cameron himself said, “Ni ifs, no buts, no third runway.” But, as the FT’s columnist Janan Ganesh points out, Mr Cameron’s honeymoon is going to end soon anyway. Why not end it in a manner of his choosing, and on an issue that he feels is right? The quote was before a different election, and against a different proposal; and anyway he will be stepping down before the next election. The Lib Dems, who will oppose, have been reduced to a tiny rump in parliament; the Greens only have one MP. MPs from the the SNP, Plaid Cymru, and the Northern Irish parties are unlikely to show much interest either way. Massive lobbying by Heathrow’s backers will ensure that most of the Tory party stays true, and that any Labour opposition will be divided – indeed their first official response has been to support Heathrow expansion. This is something he can push through. If he acts decisively the whole thing will be a fait-accompli by the time of the General Election in 2020. Even in southwest London it will surely be trumped by other issues by then.

Will he have the nerve? Opponents of Heathrow expansion will hope he doesn’t.

Will the Conservatives trip up?

In my survey of the changed political landscape after Britain’s General Election it is time to look at the unexpected winners of that election, the Conservatives. Just as a pall of doom hangs over the defeated Labour Party, and an even darker one over the Liberal Democrats, a bright glow surrounds the Conservatives, who now have an aura of invincibility, to judge by the commentary. We form our opinions in such ephemeral ways.

How well is this aura deserved? The Conservative majority is a narrow one. There is a huge gulf between them and the second-largest party, Labour, but if they lose thirty seats or so, a rainbow coalition of some sort could replace them, incorporating Labour, the SNP and the Lib Dems. Perhaps sensing this, the Tory leader, David Cameron, is making a bid for working class voters, especially those in northern England, to consolidate his hold on what I have called Middle England. These are voters employed by the private sector who view left-wing rhetoric about extending the state with scepticism. This is backed up by the Chancellor George Osborne’s “northern powerhouse” idea of restoring the fortunes of northern England through devolution of power and infrastructure investment. If this plan succeeds Labour could retreat yet further. Labour is badly shaken and is uncertain about what to do next; it can’t simply rely on mid-term government unpopularity to sweep itself forward: it badly needs a better narrative of its own. Meanwhile the Lib Dems have now lost the huge benefit they had of incumbency, and may be laid low for a very long time.

A further factor is that the Conservatives could redraw constituency boundaries to secure themselves another dozen or so seats. There was a big kerfuffle about this in the last parliament – when the scheme was also part of a plan to reduce the size of the House of Commons – as it still should be, according to the Conservative manifesto. But British politics may be more fluid than the politicos think. Labour was supposed to have an inbuilt advantage on current electoral boundaries – but if I have understood the psephologist John Curtice correctly, this vanished in this year’s election. Since blatant, American-style gerrymandering cannot be done here, it could well be that redrawing the boundaries will have little actual effect on the balance, or even an adverse on on the Conservatives.

Still, I think three things could upset the Tory bandwagon. The first, and most obvious, is Europe. Membership of the European Union (i.e. opposition to it) has been something of an obsession for many Tory activists for a generation. And yet the leadership clearly favours staying in the EU, fearing the uncertainties that would follow a withdrawal. The party has been close to tearing itself apart, and divisions contributed to its fallow period from 1992 (shortly after their victory in that year’s general election) until Mr Cameron assumed the leadership in 2005. Mr Cameron’s strategy is to lance the boil with an in-out referendum in this parliament. Will this referendum allow the party to bury the hatchet? Or will it cause civil war and either a Eurosceptic coup, or mass desertions of rank and file and even MPs? Mr Cameron’s victory gives him a lot of political capital in the party, and his views on Europe probably match those of Middle England very well. He may yet pull this off.

Secondly there is the economy. It was economic policy that did for John Major’s Tories, when he was forced into a humiliating U-turn in September 1992 on the European Exchange Rate Mechanism. Divisions on Europe, and a revived Labour Party under Tony Blair simply finished things off. The British economy is not as strong as the government claims. It is too dependent on private sector debt and consumption, resulting in a substantial current account deficit. Moreover the standard econometric models, still used by almost everybody, including the Office for Budget Responsibility (OBR), do not account for many of the headwinds a modern developed economy now faces. The government has no answer to weak productivity, which underlies Britain’s mediocre economic performance and the failure of wages to advance. The fact is that economic performance is simply not in any government’s gift, and the outlook is cloudy.

Not that any economic crisis, like that of 1992 looms. A new banking crisis cannot be ruled out, but the country does not look as vulnerable as it was in 2008. But slow growth, and even relapse to recession, is distinctly possible. This matters because the government’s financial plans depend on relatively optimistic predictions provided by those econometric models. If this is not forthcoming the government will either have to cut spending more deeply, or raise taxes, or borrow more. Each of these would be particularly difficult for a government that has set so much store by its “long-term economic plan”. It will be particularly poisonous if the government is forced to raise one of the tax trio of income tax, National Insurance or VAT – there was an election promise to enact a law against raising these. But what if the alternative was to renege on its funding pledge to the NHS? Such an invidious choice could well confront the government. And, of course, this problem could come together with the European one (as it did for John Major). If the country votes to leave the EU, or if it looks as if this is a strong possibility, then the adverse effects on the economy, in the short term at least, could be severe.

The third threat to the Conservatives is more speculative. It is that the Tories are very old-politics when a sea-change could be coming. They favour minimal constitutional change – and such change as they do offer seems to be about handing more power to the executive. They look to older voters more than the young. They use classic old-style fear campaigns ruthlessly. This old, Westminster-centred politics was in bad odour before the election, and that the bad odour has gone away. Tory strength reflects their opponents’ weaknesses. Labour and the Lib Dems are just as tainted in electors’ eyes. Ukip’s foray into the politics old- fogeydom disqualifies them in the eyes of many. The Greens’ fantastical economics and obsession with abstract nouns (austerity, inequality, neoliberalism, etc) limits their appeal. Perhaps this general negativity reflects the national mood well, but the party should take heed of what happened to Labour in Scotland. The SNP’s success is not jut based on a nasty, narrow nationalism, though that is part of their formula. It also draws strength from an inclusive, bottom-up politics, that is not so heavily managed by spin-doctors and narrow calculations of electoral advantage. They have managed to ignite hope – and in the face of hope the old-politics world had no answer.

Can the politics of hope be ignited in England? It should not be ruled out. Perhaps a breakaway faction from Labour or the Conservatives can set it off it, much as the SDP did in 1981. Perhaps a future Labour leader will have the vision to be part of an electoral alliance including  the SNP, the Lib Dems, the Greens and Plaid Cymru, and based political reform, including a federal constitution and proportional representation at its heart. Such a brave and unexpected move could capture voters’ imagination, especially if the Tory reputation for sound economic management is wearing thin.

It may well take another crushing defeat for Labour before they are ready to embrace such radical thinking. Whether the SNP might play ball I have no notion. But  these are strange political times and we must dare to think the unthinkable. There is no inevitability about another Conservative victory.

British election: tactics have triumphed over strategy. The result is deadlock and danger.

To make sense of the opinion polls in Britain’s general election it is best to look at the BBC poll of polls.

BBC Poll of Polls

There just isn’t much going on. When each poll comes out there is a breathless headline, as the votes seem to shift from the last time the poll was taken – and this is usually expressed in terms of the gap between the top two parties. For example yesterday the Ashcroft poll showed a 4% Conservative lead rising from zero the previous time; and ICM showed the Conservative lead dropping by 2% to 2%. But all that is happening is random variation around something quite stable: Conservatives and Labour both on 34%; Ukip on 14%; the Lib Dems on 8%; and the Greens on 5%. Perhaps the Conservatives and Lib Dems have edged up slightly at the expense of Labour and Ukip in the last few days – but it is too early to tell. The big picture is remarkable stability.

The Conservatives seem to be the most perplexed by this. The party had a plan, the best possible professional advice, carefully tested on samples of voters, and everything had been working well. Good economic statistics have been coming out each week; they easily outmanoeuvred Labour in the Budget; the press mobilised and they have plenty of money. But they are stuck.

Their plan was to scare voters with the prospect of a Labour victory, both by demonising Labour’s leader Ed Miliband, and raising the prospect of higher tax or borrowing under Labour. Against the minor parties luring voters away, they created the phrase “coalition of chaos” to tap into general scepticism that coalitions mean broken promises.  With this, they had clearly calculated, they could bring in an election winning score, with the upper 30s in poll ratings and a lead over Labour of 6% or more. This was more about hauling voters in from Ukip and the Lib Dems, and abstainers, than actually converting Labour voters from 2010.

But the Tory approach to this election has proved to be all tactics and no strategy. Those professional advisers call themselves “strategists”, but they their brains carry no strategic thoughts. This is how the modern political class thinks: and so they are blaming failure on poor tactics. Much has been made of Mr Miliband doing well on television and so exceeding the low expectations. There is some evidence for this (his ratings seem to be a bit less dismal). But his performances cringe-worthy as ever – full of abstract ideas and only token connection with real people. The real problem is that the Tories are fighting against two very damaged brands. First their own, as the “nasty party”, on the side of the rich. Second the general brand of mainstream politicians as slippery so-and-sos out for themselves. And their problem is that strategically the party has gone backwards in the last five years. No clever tactics can cover for that.

Things had been picking up for the Conservatives when David Cameron took over in 2005. He worked hard to detoxify the Tory brand by associating it with softer policies and softer images. This had been working very well until shaken by the twin shocks of economic crisis and the MPs expenses scandal. Still, going into coalition with the Liberal Democrats in 2010 was an excellent strategic move. It gave substance to the detoxification process. But thereafter it collapsed. It turned out that detoxification was a tactic for the 2010 election, not a strategy. Out came all the vile Tory instincts: obsessive anti-Europeanism; bashing the disadvantaged; scepticism of environmental policies; and so on. This was mainly driven by the party’s backbenchers – but Mr Cameron lifted not a finger to stop it. A low point came in 2011 with the party’s campaign against implementing the Alternative Vote  (AV) electoral system, when they not only deployed a series of spurious arguments, but they launched a particularly nasty attack on the Lib Dem leader, Nick Clegg. Funnily enough, supporting AV would have been a good strategic move for the Tories – as this system tends to reinforce two party politics; advantages to the Lib Dems would have been short-lived. Since then the Tories have compounded their strategic errors – notably by neglecting Scotland and stirring up English suspicions of the Scottish. I will allow Mr Cameron credit for two positive strategic moves: support for gay marriage (which has helped detoxify the brand amongst gays, in spite of interanl opposition within the party) and the renegotiate-and-referendum policy on Europe. The latter is often viewed as a tactical concession to Ukip pressure – but there is real strategic value for the Conservatives in it – though a referendum campaign could kill the party, it is often strategically necessary to embrace risk.

Labour are no better. Their “strategists” conjured up a cunning tactical plan to win them the 2015 election: the 35% strategy. The idea was not so much compete to for the  Conservative vote, but to hang on to their core vote and scoop up a large chunk of the ex-Lib Dem vote. This equates roughly to 35%, and would ordinarily be enough to win under the country’s electoral system, if the Tories remain undermined by Ukip.  This fantastic graphic from YouGov shows that this has largely been working (hat-tip Mike Smithson of Political Betting, on of the best places to go for objective news on polling).

Where they wentLabour have been boosted by a large slug of ex-Lib Dem votes (though the Greens have scooped up a lot of these too – I suspect this is mainly in safe Labour seats). Meanwhile a large slug of the Tory vote has gone to Ukip.

Of course there’s a major flaw in Labour’s plan. Scotland. Labour’s relentless focus on political tactics rather than strategy meant that they didn’t see the SNP juggernaut approaching, in spite of its clear visibility ever since the Scottish assembly elections of 2011. It looks likely that the SNP will sweep Labour out of Scotland, along with the Lib Dems. Labour weren’t ready for this, and have had no effective tactics for handling it. They wasted a lot of energy on trying to tell their voters that a vote for the SNP would let the Tories in. The SNP have had little trouble in torpedoing this notion.

And this is the sort of thing that happens if you systematically neglect strategy, and focus on short-term advantage. You are vulnerable not just to getting stuck in a rut, like the Tories, but to sudden collapses in support. Look at the Lib Dems. The party had been relentlessly tactical in building its support base, especially under the watch of Charles Kennedy, its leader from 1999 to 2006. Nick Clegg, the current leader (since 2007), is more strategic but could not undo the party’s vulnerability; he completely misread the danger from promising not to raise student tuition fees in particular.  The result was that the party’s support collapsed as soon as they entered coalition with the Conservatives – even though this was a correct strategic decision. It was viewed as betrayal by many of the party’s voters and the party’s brand has been badly damaged. Though it is saying many sensible things in the campaign, and much that a lot of people would agree with, most people just aren’t listening – and its new pledges invite a sceptical response. It now relies on popular candidates to maintain its place in parliament. The party has some hard strategic choices to make after the election.

The only party that looks truly strategic is the SNP. They have had an easy hand to play, admittedly – simply to exploit the neglect of Scotland by Britain’s political class. But you can see them thinking two moves or more ahead all the time, allowing them to capitalise on their gains. They are now executing a tricky manoeuvre from the political right to the left without incurring any real damage.

But for Britain’s main parties strategy is much harder. To gain strategic advantage they have to sacrifice tactical benefits, and to take tactical risks. They need to address the generally bad reputation of politicians by being less negative and less aggressive towards their opponents; they need to embrace political reforms (on party funding and electoral systems) that may cause them short-term setbacks; they need to have open rows within their own ranks about what their parties stand for. For the Tories it looked as if Mr Cameron might embrace this agenda, but he lacked the courage. For Labour, David Miliband might have done so, but the party opted for his younger brother.

The highly professionalised and tactical focus of Britain’s political class has led to the current electoral impasse.  After the election it could lead to the breakup of the Union and the country’s departure from the EU. Does the country’s political class understand the danger it is in? Will the right leaders emerge to make the difficult political decisions needed? I’m not counting on it.

 

Cameron lets the cat out of the bag. The election isn’t a two-party contest

Last night David Cameron, Prime Minster and Conservative Party leader, announced that he would not take part in the proposed leadership debates this year’s UK General Election. Or rather, he wouldn’t unless the Green Party was also invited alongside Labour, Lib Dems and Ukip. This was after Ofcom, the media regulator, suggested that the Greens were not a major party, but that Ukip and the Lib Dems were.

In the petty tactical thinking that so dominates thinking amongst Westminster’s political elite, it is easy to understand Mr Cameron’s move. Two birds can be killed with one stone. First the Greens have emerged as a thorn in Labour’s side, as they are promoting an unambiguously leftist policy platform, and also attract Lib Dem defectors, who are central to Labour’s electoral strategy.  They do not trouble potential Tory voters though. The second aim is that Mr Cameron is not much interested in taking part in the debates anyway. These debates were an innovation in 2010, and greatly expanded political engagement, especially amongst younger voters. But the conventional Tory wisdom were that they were a mistake, assisting the Lib Dems at their expense. And this time Mr Cameron has more to lose than gain. Especially if Labour’s Ed Miliband turns out to be much less of clump than the Tories are portraying him to be.

The announcement was also an opportunity for Mr Cameron to sneer at his coalition partners, the Lib Dems. His claim for the Greens to be a major party was that the Greens beat the Lib Dems in last year’s European elections. But the Lib Dems have 57 seats and record in government to defend, compared to the Greens’ single seat. Mr Cameron’s voice dripped in sneering condescension in a way that only upper class Brits can do.

But it’s a strategic mistake, for all that. Along with the Labour party, the Tories claim that they are the only parties that matter in the election. Electors must choose between these two; everybody else is a waste of time. They dream that a few days before the election, electors will come to their senses and return to voting for the two establishment parties. But now Mr Cameron has painted a picture of a multiparty leadership debate, rather like those we saw on the Danish TV series Borgen. Yet this idea is toxic to the two-party vision. If he had said that he would only debate with Mr Miliband, it would have had strategic value.

All of which reinforces a general sense of Mr Cameron’s weakness as a prime minister. Too clever for his own good. Ever after gaining a tactical advantage, but with no idea of his, or his country’s, strategic interests.

David Cameron pitches for the political centre on immigration and EU. How depressing

The Conservative leader and British Prime Minister David Cameron’s grasp of the dark political arts is not gone. Last Friday he gave a long-awaited speech setting out his proposals on managing immigration from other EU countries better. It received generally favourable coverage. And, before anybody had a chance to think through what he had said, the story was muscled out by a series of announcements about public spending commitments, in advance of tomorrow’s Autumn Statement by the Chancellor of the Exchequer. If this goes according to plan, Mr Cameron has redefined the political centre ground at a stroke. Will he succeed?

In the preceding weeks, not coincidentally while the Conservatives were trying to fight off a by-lection challenge from Ukip, various suggestions had been floated about what the speech might say. The most eye-catching was some sort of quota system for accepting intra-EU migrants. This drew much criticism from other EU leaders. In the event this idea was dropped. Instead Mr Cameron proposed to limit their access to benefits and tax credits, including those for both those in work, and those out of work. Migrants would not be entitled to these benefits unless they had been resident for a full four years.

In terms of pure politics this was astute. More moderate commentators were relieved that the quota idea, and its immediate confrontation with other EU leaders, was buried. Limiting access to benefits, on the other hand, sounds a bit like what the opposition Labour Party, and even the Liberal Democrat coalition partners, were suggesting. But the time limit and scope was much greater than anything these parties proposed – pleasing the more hawkish commentators, especially in the right-wing press, who are the main attack-dogs in British politics. Sensibly he left the matter of access to free health services under the NHS untouched. Many older Britons have retired to Spain, where they get access to that country’s health services for free; indeed Britain seems to be exporting oldsters almost as fast as it importing youngsters – something the government will not wish to discourage.

And so Mr Cameron will try to present himself as the voice of sweet reason and moderation as the General Election approaches. On the one hand we have the liberals and the left, who are ignoring the British public’s anxieties over immigration. On the other we have the swivel-eyed loons of the Ukip, who demand must more drastic measures, including departure from the EU, which would do severe harm to the country’s economic prospects. Mr Cameron does the faintly plaintive, sweet moderation act pretty well. He praised the contribution of immigrants in his speech, and simply suggested that the country had been having a little too much of a good thing.

And the bulk of the British public may well agree. Mr Cameron’s suggestion that we renegotiate our EU treaties and put the result to an in-out referendum sounded similarly sensible and centrist. That the political centre seems to be drifting so far towards muddled populism might alarm liberals like me, but this is reality.

But there are problems. The most immediate is whether his own fractious Conservative Party will buy it. Many party workers, and a lot of MPs, actually agree with Ukip about immigration and the EU. Mr Cameron’s policy may sound like a cop out to them. If they start to get  vocal, the Tories will look divided, and their credibility will fade. There were mutterings over the weekend, but we will have to wait and see on that. His party did allow Mr Cameron a free hand before the 2010 to define it as more moderate than it really was. If they have any sense they will do so this time. If the British public has any sense they won’t fall for it.

The political class are obsessed with the General Election due in May 2015. Any dates after this only matter in terms of manoeuvres designed to secure an advantage at that point. And in that light, divisions within the Tory party are Mr Cameron’s main threat on the issue. It is looking beyond that date that the real un-wisdom of Mr Cameron’s stance starts to emerge.

The first point is that it still leaves a problem with the EU renegotiation. While there is some scope to limit access to benefits under current EU treaties (by moving towards a contributory principle), changes of this nature will apparently need treaty changes. Mr Cameron had calculated that the EU would need treaty changes anyway to secure the struggling Eurozone – so adding in a few goodies for his benefit would not be too onerous. But the EU’s leaders are heading in a different direction. With anti-EU populists on the rise across the continent, leaders want to avoid any treaty change, since these are likely to be held hostage to referendum results. Unfortunately voting No to a treaty change has not proved fatal to any EU country so far – it has simply improved negotiating leverage. Going through this process just to save Mr Cameron’s bacon may well be too much. This takes the country a further step towards the EU exit, something that Mr Cameron seems to want to avoid.

The second point is that this plan does not actually address any major economic stress point. Access to Britain’s benefit system does not seem to be a major draw for intra-EU migrants – though it may be a stronger incentive for migrants from outside the EU. The British public will not notice a diminution of EU migrant numbers. The policy is designed to address tabloid exaggerations, not reality. The tabloids will simply move on to some other nonsense. All that pain for no real gain.

Still practical solutions to the country’s problems count for little in the current political debate. The populist right blame the EU and immigrants for the country’s problems. The left blames some combination of bankers, capitalists, greedy rich people or deluded neoliberals. We may suspect that our problems lie deeper – with demographics, globalisation and the development of technology. We may also suspect that the proffered solutions of left and right will make things worse not better. But no politician, campaign group or tabloid journalist seems to care. That is the real scandal of Britain’s political class.

Sliced bread, beer and politics. We must embrace pluralism

mothers prideSometimes I still hear the expression “the best thing since sliced bread”. This refers to the 1960s revolution in bread production, whose leading brand was Mothers Pride (missing apostrophes were another aspect of 1960s modernity). This was not just a matter of slicing the bread, but the invention of new baking processes that made the bread last longer. What was not to like about the new, modern stuff? It lasted longer and you did not have the hassle of cutting it. Sandwiches and toast became a doddle; the daily trip to the baker was no longer needed. And it was much cheaper, being mass produced in big factories. The new bread swept all before it, and traditional high street bakers disappeared.

But my mother hated the stuff, which she referred to as “cotton wool”. Mothers Pride was banned from the Green household. Eventually we resorted to baking our own bread. But in this, as in so many other things, hers was a lonely voice, to be sniggered at behind her back. But she was right. Bread consumption started to fall, and then to collapse. The new invention had solved many problems, but it had compromised its core values – taste and texture. Bread became pointless. Eventually craft bakeries sprang up as the middle classes, at least, were prepared to pay extra for something like the old product.

This is a pattern that repeats in the modern world. Another exampleHeineken is beer. Traditional beer is tricky to produce. But our industrial behemoths succeeded in creating bland, gassy and cheaper products. And then they set their marketers and advertisers onto the task of selling the stuff (a process that also happened to bread). There was more resistance at first. But the advertisers won through with lager. Clever, funny advertisements, like those for Heineken (“refreshes the parts other beers cannot reach”) hit the zeitgeist, and traditionally made beers fell into rapid decline. Advertisers loved lager. They regarded it is a pure marketing product. It sold only through the strength of marketing, which had nothing to do with how it tasted. Indeed, researchers found that the blander it tasted, the faster, and more, people drank. The brewers adjusted their products accordingly.

And now the brewers are in crisis, in developed markets anyway. Beer drinking is in decline. All the momentum is with craft brewers, who produce small quantities of the stuff using more traditional methods – and which taste of something.

And so to politics. Politics used to be a labour intensive business. Political party membership would run to millions, and it was an essential part of social fabric. You won elections by knocking on doors, putting on public meetings and other events. Election literature was mainly a local affair. But the professionals got hold of this. They wanted something much more productive, with a wider impact. They pulled apart campaign messages and reconstructed something better crafted to the process of winning elections, using mass media to promote it (mainly a politically aligned press in Britain). This strategy, in essence, was to demonise the opposition with negative campaigning, while toning down your own offer to cause minimum offence. And persuasive effort was focused on a minority of swing voters. The message to more reliable supporters was was simply: I know you aren’t keen on a lot of what we are saying, but please come out and vote to stop the other lot. This required lots of money, but fewer people. These modern techniques worked. No modern mainstream political party would be without its professional advisers, armed with polling, focus groups, target voter analysis, and an array of modern marketing techniques.

And sure enough, public engagement in politics has declined. Voter turnout has steadily fallen. This bothered the professionals little, apart from some token public handwringing. What mattered was winning elections, after all. But now the political equivalent of craft breweries are on the rise. Smaller, tightly focused but distinctly unprofessional political parties. In Britain the winning political party would usually get over 40% of the votes cast (and in the 1950s about 50%). Now polling shows both main parties bobbing along at about 30%, even as the third mainstream party, the Liberal Democrats, languishes at about 7% when it used to reach two to three times that level at this point in the cycle. At the European elections earlier this year, the only national elections held under proportional representation, voters were confronted with a bewildering array of political parties, many brand-new. Few of these make much headway, but three “craft brewer” parties are making seeing success: Ukip, who won that election,  the Greens, who won more seats than the Lib Dems, and the SNP are sweeping all before them in Scotland (and who I would not accuse of being “distinctly unprofessional”).

This phenomenon is not unique to Britain. In America there are few in the way of craft parties – but there are distinct craft elements within the main parties, especially the Republican Tea Party groups. In Europe an array of fringe parties are doing well, as establishment parties take a diminishing share of the vote.

Can this decline of mainstream parties be reversed? Occasionally a charismatic leader can reverse the fortunes of mainstream parties. Junichiro Koizumi and Shinzo Abe in Japan; Tony Blair in Britain; Matteo Renzi, perhaps, in Italy. There is an interesting common feature in with all these politicians. They set themselves up as taking on their own party’s establishment, and picked fights with the conservatives on their own side. But the instincts of Britain’s current main party leaders, David Cameron and Ed Miliband, are to paper over the cracks in their parties and not to pick fights. Perhaps, unlike Japan and Italy, there is not enough wrong in the British establishment to make such a battle credible. Tony Blair’s fight with the Labour left was spectacular, but his electoral platform reached new heights in blandness.

What to do? Personally I think that the fragmentation of British politics is a good thing, and that our electoral systems should be changed to facilitate it. This would turn politics into a squabble between smaller parties. In due course something more coherent would emerge. The idea that a single political party can encompass enough of a national consensus to have a mandate to govern belongs to the past. The choice of bread and beer in Britain is steadily improving now that the big businesses have been pushed back. It is perhaps the best it has ever been. Pluralism is not failure.