Labour – Page 15 – thinking liberal

The Labour challenge gathers pace, but the ghost of 1992 still haunts

What to make of Ed Miliband’s speech to the Labour Conference yesterday? I did not see it. On reading that it lasted 65 minutes I’m afraid I ducked out of watching it or reading transcript. So what I am relying on is a very indirect impression – much as the rest of the public gets. One thing is clear: it was a big success. This shows that Mr Miliband is a leader who learns from his mistakes, and is consistently raising his game. In my view Labour are now odds-on to win the next General Election with a full majority. What happens after that is another matter.

One way of gauging the speech’s success is silence from the usual suspects. The Lib Dem early morning briefing for activists decided not to mention it. Even more egregiously the right-wing think tank Reform’s daily press summary contained only a tangential reference. Contrast this with the hay that the usual critics were making last year. The most important thing about this is that it confers on Mr Miliband and air of competence – something that is absolutely vital in modern politics. As an aside, I think that the real reason why Republican presidential candidate Mitt Romney is in trouble is not the substance of his so-called gaffes, but that these make his campaign look incompetent.

As to content, this is harder to gauge. Some commentators hail his appeal to the “One Nation” theme of 19th Century Tory Prime Minister Benjamin Disraeli as a stroke of genius. Maybe you had to be there – but this looks like a speech writing gimmick. On the whole the speech seems to have been pitched at the so-called “centre ground”, apparently vacated by the Conservatives in spite of David Cameron, and also eagerly being eyed up by Nick Clegg and his advisers. Vocational qualifications; apprenticeships; housing; not promising to reinstate all the current Government’s cuts. Lib Dems complain that many of these things just exactly what they are already doing in government. That’s politics: the Lib Dem message is being drowned out by the Tories. Interestingly there were some sops to big business on encouraging long-term investment – rather spoiled from their point of view by his attack on the current government’s cut to the top rate of income tax – “writing a cheque of £40,000 to every millionaire in the country” – something that is palpably not true (many, even most, millionaires did not pay the 50p tax rate and are unaffected; quite a few non-millionaires did; almost none will actually get a cheque)…an ill-judged sound bight in the battle for donations, if not conference applause.

This is quite well judged overall, though. Even better, the whole party seems to be singing from more or less the same hymn sheet. This is so unlike the Tories after they were turned out of power in 1997. With this discipline and intelligent messaging, they look set to retain the votes they took back from the Lib Dems, and pick up a few more – while the Tories look out of touch and incompetent.

What can go wrong? All successful political movements require a balancing act, and Labour is no exception. Labour need to harness the anger of public sector employees at government cuts and reforms to give them the ground troops to counter Tory money, and not a few votes too. But, unlike Nick Clegg and his student fees pledge, they plan to win and be in a position to fulfill their promises, so that they can win again. They need to commit to a set of policies that are reasonably workable. It is here that trouble is building for the party.

First is the obvious point that government cutbacks are not just an ideological Tory attack on the state. The size of the state in 2010 was systematically too big, and the country may never return to a state on this scale. Many Labour activists misunderstand Keynesian criticism of the government’s economic strategy into thinking that more state spending will generate lots of growth forever and a day, rather than simply being about the tactics of how a shrinkage is best managed. Mr Miliband is trying to manage these Labour activists’, and especially trade-unionists’, expectations on this front, and it featured in his speech. But most of his ideas still seem to involve more state spending. Expand apprenticeships? That will require state subsidies. The same can be said of turbo-charging housebuilding, now part of the centrist consensus. Upgrading vocational qualifications? This has been a state policy goal for as long as I can remember. The problem is not lack of intentions – it is the prioritisation of resources. Money is by no means the only problem with vocational education – but it is surely part of the solution.

And there is a further difficulty. If Labour can’t promise their activists and union donors extra state spending, then they have to give them something else. And that something else is an attack on privatising public services – especially in the NHS, and in policing too. This will hobble attempts to make state services more efficient and make the problem of dealing with limited budgets that much harder. This is a nakedly ideological policy, when they are trying paint the Conservatives as the rabid ideologues.

A spectre haunts Ed Miliband and the Labour Party: Neil Kinnock’s campaign against John Major’s Conservative government in 1992. Mr Major’s government make the current government’s inept communications look slick. In 1992 Mr Kinnock had them on the ropes; it looked as if the Tories did not even want to win. And then Labour blew it. A strong change of message by the Tories on Labour in the final week concetnrated on allegedly unfunded spending commitments under the title “Labour’s tax bombshell”. Their newspaper allies relentlessly played on the idea that Mr Kinnock was not Prime Ministerial. And Labour lost. There are a lot of differences between then and now, but if I was in the Tory election planing department, I would be gathering evidence for another “Labour tax bombshell” campaign. Labour are providing them with too much tempting material.

What is the core Liberal Democrat identity?

One thing that most people who take an interest in the Liberal Democrats agree on is that the party needs to develop a clearer identity and, to use the popular marketing speak, a clear “brand”. This has characterised much of the coverage of the conference, such as this from the Economist, showing not a particularly good understanding of the party, and this from Michael Meadowcroft, who has an excellent understanding, but does less well in explaining what the party actually needs to do. Unfortunately these articles are all too characteristic of the debate. On the one side outsiders, including recently recruited party staffers, who simply assume the whole thing is about deciding on a politically convenient position and then moving the party to it, and on the other by insiders who fail to articulate exactly what they mean by the clear liberal (or Liberal) principles they want the party to espouse. Let me try to pick a way through.

First: does the party really need to worry about this? Just because all the pundits agree doesn’t make it true. The answer is yes. There are two problems with the party’s current standing, or lack of it. The first is that it struggles with a “core vote” strategy. This is particularly important for elections fought under proportional representation. The ones we fought in London earlier this year were a disaster; party campaigning was directed to floating voters who had long since floated away, and bringing out the vote people who supported the party in other elections for largely tactical or local reasons, and who large did not vote for it on this mandate. Contrast this with Greens, who for much less money and effort got out a similar vote based purely on setting out who they were and what they stood for. This matters because a disaster beckons for the party in the 2014 Euro elections, fought under PR, unless this changes.

The second reason is that there is the perpetual danger of policy confusion. This has been clearly on display in the debate on NHS policy. Do we want to follow the Liberal idea of a service with strong accountability to local communities, but flexibility on who actually delivers it? Or do we want a Social Democratic service which is pretty much the same throughout the country, provided by a single organisation? With the help of Lib Dem ministers, the government started off with something that looked a bit like the former, only for activists to reject it for the latter. This confusion matters when you are an aspiring party of government rather than one simply of protest and opposition, and a party of government is what the party aspires to be.

But a word of warning: you can overdo the clear identity. Successful political parties are coalitions, combining both a sense of common identity and a high spectrum of disagreement. The Conservatives, for example, identify with the rich and those who aspire to be rich: but this brings together social conservatives with those who just want to cut taxes.

It is instructive to consider the two attempts to rebrand political parties that have shaped British politics in the last couple of decades. The first was Tony Blair’s New Labour project, and the second David Cameron’s attempt to de-toxify the Conservative brand. Both involved challenging some deeply held beliefs, and have left a deep sense of betrayal in their parties. In Mr Blair’s case the effort has not been unsuccessful. The party won three elections and even in opposition is cohering much better that the Conservatives have in a similar position. I think that is for two reasons, one intended by Mr Blair, and the other not. The intentional part was the illiberal, strong government aspect, clamping down on civil liberties. This has played well with the working class communities that are the core of the party’s identity – and has also helped forge bonds with paternalistic ethnic minority communities. When Mr Blair assiduously wooed liberals in the 1990s, he never really meant it. The unintentional part of Labour’s rebranding is its identification with public sector workers, expanding their numbers and protecting their interests. A modern economy requires a large state, and appealing to these workers is a powerful political strategy – but one that Mr Blair tried to resist, unlike his successors Gordon Brown and Ed Miliband.

The Conservative rebranding, five years or so on, looks a lot less happy. What quickens the pulse of most young Tory activists seems to be an entirely different agenda from Mr Cameron’s, reminiscent of US Republicans: lower taxes, smaller state, escape from the EU, climate change scepticism and an outmoded idea of “competitiveness”. While some of this chimes with public sentiments at large, as a package it it is not a winner. Combine that with an electoral system that is tilted against them, and the project is likely to be a failure. The Coalition with the Lib Dems, as Mr Cameron clearly saw, was an opportunity to consolidate this rebranding, but the price stuck in the throat of his party and he was unable to follow through. The lesson there is don’t try to take a party to a place that it will not stay.

So what of the Lib Dems? Firstly the party needs a core identity which is able to withstand a large diversity of views. This is both easy, and tricky. The easy bit is that the party stands for openness, freedom for individuals to choose the life they want, all underpinned by a sense of social responsibility and compassion. All Lib Dems, pretty much, will identify with this, and they will think that the other parties do not. The first difficulty is that this identity is an anti-identity: an identity that rejects, or downplays, the usual identities of class, nationality and race. That is a difficult trick to pull off. The second difficulty is that each of the other main parties (and the Greens for that matter) will think that such nice and inoffensive people can be appropriated into their own coalitions with a few warm words. And indeed, many people with these values work for these other parties. It is not quite enough.

But it has two important advantages. First is that it is a natural second choice: not the most liked position, but not the most hated either. Second is that the forces of history are with it. The old identities of social class, nationality and the rest are gradually being eroded – and to the extent that the other parties lean on them, it makes them unattractive.

This is enough for one post. What will count is not this sort of abstract speculation, but the practical steps that follow from them to create a successful political movement. That, I will return to.

Lords reform: the real loser is David Cameron’s project

Today Nick Clegg, Deputy Prime Minister and leader of the Liberal Democrats, announced that Britain’s Coalition government would end its attempt to make the country’s upper house, The House of Lords, mostly elected. It is a bitter blow for Lib Dems, but not unexpected. What does this say about the state of British politics?

The problem was that the plans did not command sufficient support on the Conservative benches. There were 90 or so rebels at an earlier vote, and this is enough to kill the bill if Labour oppose it. Labour had supported the reforms in principle, but said that, as a constitutional measure, it needed more time for debate in the Commons, so opposed the critical timetable motion. This argument is entirely specious. Debate on the floor of the Commons is an exercise in farce; it has to be time-limited or else it degenerates into filibuster. The cynicism of Labour’s position is made plain by the fact that they would not be drawn on the amount of time they thought the bill actually needed. But there was in any case a more substantive argument from the Labour side: in their manifesto they had said that reform should be made subject to a referendum, which the government side did not want to do. We can argue about the logic of Labour’s position on the referendum, but a manifesto is a manifesto.

So Mr Clegg was quite right to abandon his attempt at reform. There was very little credit in the wider world to be had for a fight to the death on this issue. While the public is broadly sympathetic to the idea, they don’t care very much about it. Mos readily agree to the trump card argument of British constitutional conservatives: that there are more important things to be doing.

Just about the only way of getting the reform through would have been to accept a referendum. Although the current polls are favourable, it would be a difficult referendum to win – a bit like Australia becoming a republic. Australians favour a republic in principle, but the never the particular structure of republic that is on offer. It was easy to pick holes in the specifics of the proposals – but that would be true of any proposal born of attempts to create consensus. The risk/reward ratio just didn’t stack.

Lib Dems are very bitter, since they see this as a breach of faith, as Andrew Rawnsley has explained in the Observer. They have knuckled down to vote for a number of proposals that they really hated, such as tuition fees for universities (though to be fair some high-up Lib Dems secretly liked the idea), and elected police commissioners, as well as immigration limits. Of course Tories have voted for Lib Dem policies too, but these are mostly quite popular in the country at large, such as raising tax thresholds. Although the Tories let them have a referendum on AV, their campaign to oppose this modest and sensible reform was so vitriolic and irrational as to come over as a breach of faith, especially when they attacked Mr Clegg personally on the basis that you couldn’t trust him because he entered into coalition with them!

But the public indifference left Mr Clegg with a problem. Why bring the government down over this, and not tuition fees, or many other things which are currently unpopular with the public at large? So the breach is not enough to end the Coalition. Instead Mr Clegg has decided to withdraw the party’s support to boundary changes to Westminster constituencies. This reform would equalise their size, to the benefit, so the conventional wisdom goes, of the Tories.

Here it is Mr Clegg’s turn to be politically calculating. I have heard his supporters make the argument that since there will be no elected upper chamber, we need to retain a bigger Commons – an argument that I struggle to understand. To be fair Mr Clegg does not use this argument in his email to members – where it comes over as a more straightforward tit-for-tat. The Tory sophists argue that the Coalition agreement did not actually say that they would vote for the Lords reforms – just to bring forward proposals. But the same can be said of the boundary changes.

And as things have turned out, the boundary changes are a real problem for the Lib Dems. In ordinary times they would have been much more relaxed, as they have shown an ability to move out of their strongholds in held seats to win over adjacent areas. The London MP Sarah Teather won her seat in 2010 in spite of major changes to the boundaries. But the Lib Dem activist base has suffered with the coalition, and the campaigning environment is much tougher. They have shown an ability to hold on where the party and its candidates are locally well know, but not elsewhere. There are no reserves with which to flood new areas. The boundary changes are a major headache. Neither are the changes partilcualry popular amongst the general public, whatever the intellectual case. To get equally sized seats they have run roughshod over traditional local sensibilities. In Wales the impact is particularly severe. Even may Tory MPs will be relieved if the reforms died a death.

But it will create an awkward moment in 2013 when the vote is due to take place, unless the proposal is abandoned. To defeat the changes Lib Dem government ministers would have to vote against or abstain – this would be new territory for the government and could easily bring it down.

So who gains from this sorry saga? The first winners are Labour, where their cynical manoeuvring have bought rich rewards. First they have made the Coalition look weak and incompetent. But best of all they should now be able to defeat the boundary changes, which they hate. Ed Milliband’s leadership can chalk up another success after his inauspicious start.

The second winners are the grumpy Tory backbenchers. They genuinely hated the Lords reform, and will be glad to kill it. They are also pretty relaxed about idea of the coalition failing. And as individuals the defeat of the boundary changes makes their lives easier.

For the Lib Dems the outcome is mixed. It’s a policy failure but it is very clear who is to blame: the Tory backbenchers and the scheming Labour politicians – unlike the AV referendum. This fiasco is out of the way a long time before the next election is due – and defeating the boundary changes will give their campaigners the best possible chance of hanging on to the 40-50 seats needed for the party to survive as a political force.

The big loser is the Tory leader and Prime Minister David Cameron, and his project of turning his party into a credible one of government. For all the soft soap he puts into the Party’s manifesto, it is clear that he can’t carry his party with him. He took on his backbenchers and came out second. His party can unite around a right-wing Eurosceptic platform, but winning a General Election, especially on the old boundaries, looks impossible. A centrist Tory manifesto will not be credible. His plan to use the coalition with the Lib Dems to de-toxifiy the Tory brand has come completely unstuck.

And the country remains stuck with an antiquated system of government that increasingly loses the respect of both the public and the world at large. The public is paying a big price for its indifference.

The Tories are living up to their “Stupid Party” label.

As I posted yesterday, the recent local elections were bad for the Liberal Democrats, the party for whom I am an activist. But if there’s any cheer to be had, it comes from looking at the behaviour of the other parties.

Labour have reason to be cheerful, but the results contain a trap. Their party has lurched to the left, going back on Tony Blair’s legacy. They want more spending, and more taxes to pay for them. This is a good line for motivating activists, many incandescent over the Coalition’s cuts, which they consider to be unnecessary and ideologically motivated. This is great for getting the turnout up in local elections. But it’s not enough for them to win in 2015 – and the weakness was evident in their failure to capture the mayoralty in an essentially Labour London. Liberal Democrats must hope that they keep reading their Polly Toynbee and let their anger trump their strategic sense.

But what is even more remarkable is the response of the Tories, to judge from the weekend’s press and backbenchers popping up on the radio. It echoes my advice yesterday to the Lib Dems in London yesterday – to shore up their core vote. They think the party will fail because it isn’t right wing enough, and that they should go back to being “the Nasty Party” to fit the nation’s sour mood. This is sheer panic, and befits the party’s other nickname: “the Stupid Party”.

They do have a problem, and one that I predicted over a year ago before the referendum on the Alternative Vote. There is a resurgent UK Independence Party (UKIP) chipping away at their core vote, while the Lib Dems find it easier to convince soft Tories to vote for them than soft Labour voters – and so they are going after them. That is why they should have supported a Yes vote in the referendum last year – or at least not fought too hard for a No vote. The more they go after the UKIP vote, the easier the Lib Dems wll find it to pick their centrist supporters off; the more they shore up the centre, the easier it is for UKIP to continue their progress.

But the correct answer to this problem is “don’t panic”. They should endure a few difficulties in local council elections and the Euro elections in 2014 – because the real prize they are aiming for is outright victory in the General Election in 2015. In this election they should have no difficulty in crushing UKIP, by painting the real enemy as Labour and the Lib Dems. They will then use Labour’s lurch to the left to scare Lib Dem inclined voters into supporting them too, while reassuring them that they are quite nice and liberal really. It’s the latter task that is by far the trickiest, so they shouldn’t jeopardise it by lurching to the right.

David Cameron knows this perfectly well, and his continued leadership represents the party’s best chance of outright victory in 2015. But if the right openly rebels, the party will both make itself look divided, and retoxify the Tory brand. The rebels should shut up and wait for 2015 – much as the Labour left did before 1997, and indeed 2001, before that party lurched to the left with its big spending expansion of government in the 2000s.

Labour lurching to the left. The Tories to the right. This makes life a lot easier for us beleaguered Lib Dems. Please let it continue.

Earthquake in Bradford. Not many dead.

“The most sensational by election victory in history”. For once it is difficult to argue with George Galloway’s comment on his stunning win over Labour in yesterday’s Bradford West by election. But as the dust settles, has anything changed?

The Coalition parties did badly in this election, but can be forgiven for having a chuckle. Labour’s loss was spectacular, and it has been a tough week for the government. For whatever reason, the media had turned on them over a series quite sensible moves (pensioners’ tax allowances, VAT on takeaway food, preparing for a potential strike by tanker drivers), which were admittedly exacerbated by some presentational gaffes. Labour had been taking some undeserved credit for this; and now they’ve been shown to be as out of touch with the real world as they allege the coalition parties to have been.

But Labour’s big problem is that they are seen as a party of government rather than one of protest. This leaves them vulnerable in by elections like this to candidates that seem to embody anger and frustration more. But it is a good thing if they actually want to win a General Election. In the narcissistic game of trivia played out by politicians and political correspondents this is a reverse. But no reason to panic.

Mr Galloway’s Respect party is a personal vehicle, not a convincing political movement. It attempts the feat of allying left-wing (“Old Labour”) ideas with cultivating the Muslim vote; this difficult reconciliation seems only to be feasible through Mr Galloway’s self-obsessed personality. He has tried and failed to broaden his appeal.

For the Lib Dems (not so implicated in the week’s gaffes, but having to share responsibility) the result is not a big deal either. They lost their deposit in a seat where they were already weak; the decline in vote was not quite as spectacular as for Labour and the Conservatives, and they comfortably saw off the Greens and UKIP. But it offers no particular hope of the party digging its way out of its poor standing in most of northern England, to say nothing of elsewhere.

By far the most interesting feature of this election has been the behaviour of the Muslim community – which seems to have been the main factor behind Mr Galloway’s success, harnessed by some very astute campaigning. According to Nasser Butt, a former Lib Dem parliamentary candidate in Tooting, who spent the last week in Bradford, the charge was led by younger members of the community, who persuaded their elders to rebel. This was reversal of the normally paternalistic way that politics is done in these communities.

This is an exciting development, even if it causes liberals some angst. Muslim communities (in this case mainly Pakistani derived) have a strong sense of grievance. This seems to be shaped by two things: the West’s ill-judged military campaigns in the War on Terror, and the generally liberal ways of the society that they inhabit, which runs roughshod over their conservative sensibilities. The latter’s flashpoints are the toleration of gays, perceived insults to their religion from a free-speaking public, and the modesty of women’s dress.

If the Bradford dynamic can be repeated elsewhere, it means that the Muslim vote is much more in play, instead of being stitched up with elders in little local deals, or not voting at all. The liberal fear is that it will put pressure on politicians in the wrong direction on issues like gay rights and freedom of speech. Maybe so, but I think it is a price worth paying. As the communities become more involved in mainstream politics, they will come to understand the need for compromise and building coalitions. And they will feel listened too. They may also come to understand that liberal views are held with passion and principle, and are not merely the signs of decadent society. In the long run this is good.

Meanwhile yesterday also saw a local by election in Southfields, in Wandsworth. There was no earthquake here. The Tories held off a strong Labour campaign, taking nearly half the votes cast. The Lib Dems, who did not put in a major effort, were pushed back to under 6%, but beat the Greens (under 3%) – something that did not usually happen in Wandsworth before 2010. Unlike last year’s Thamesfield by election, when the Lib Dems fought at full throttle to get 17%, Labour can’t blame their defeat on them this time. The Tory one-party state moves on unruffled. There was a Muslim independent candidate, but he made little impact, with 38 votes (1%), two less than UKIP.

Why the Coalition should not last beyond 2015

Some Tories are talking up the idea that the Coalition between their party and the Lib Dems should continue for a second term. This doesn’t sound realistic. And I think it would be a bad idea too.

Some pundits have claimed that Britain’s major parties (aside – I am thinking particularly of the three UK parties here, but there are similar dynamics with the SNP too) have become more alike and simply compete on competence (I often tread this in the Economist, for example). This may be true so far as they way that they each reach out to a group of critical floating voters, but in fact each has a very different view of the world. And it makes a difference which one of them is in government.

That was why it was such a surprise that the Liberal Democrats went into Coalition with the Conservatives in 2010, and why it has been, and remains, so painful for them. To the Lib Dems, the Tories are on the wrong side of a great historical struggle that still shapes our politics. The Tories stand for the rich, cleverly roping in those who aspire to be rich, and social conservatives and nationalists in a coalition of nastiness. The stakes in this battle are rising, since, for whatever reason, the rich have been doing very well over the last couple of decades, and have a lot to protect. Redistribution, in some shape or form, should be high on the political agenda.

The Lib Dems are essentially liberal; they have some fellow feeling with the aspirant well off (or should do), but have historically been the other side of the rich-poor divide – and find social conservatives and nationalists anathema.

But in 2010 the party had little choice. In its own way Labour was on the wrong side of history too. Labour is the party of big government, and its core constituency is public sector managers and workers, the quangocracy and the many organisations that feed off tax funding. The unions are heavily associated with these same interest groups, so its historical alliance with them does not cause undue strain. And just as the Tories marshal social conservatives to keep the show on the road, so Labour marshal those who depend on state handouts, without any real interest in curing them of their dependency.

The first decade of this century proved a happy time for Labour. The economy grew steadily, increasing the tax take, allowing the government payroll, direct and indirect, to expand, as well as the net for all sorts of benefits. To many within the party it must have seemed that they were on an unstoppable march to solving the country’s problems through government action.

But it was a castle being built on sand. Economic growth was not built on substantial advances in productivity, but on a combination of debt and good luck. We should note that most of the debt in question was in the private sector, but it is also true that government debt expanded more than was prudent. The good luck (consciously exploited Labour’s leaders) was the expansion of China and India, and the gains from trade that followed as costs of manufactured goods in particular advanced at well below the general inflation rate. In addition immigration from Poland and other central and east European countries stopped the British labour market from breaking down, and expanded the overall tax take, if not income per head (a matter of some controversy). All this has come to an abrupt halt, so that we are being forced to unpick many of Labour’s advances.

The shock to Labour supporters of finding that their dreams were built on air has been enormous. In 2012 they still mostly don’t really seem to believe it; in 2010 they were in such deep denial they were absolutely unfit to be in government, even in coalition. There was no basis to work with the Lib Dems, whose general world view is somewhat closer to them than the Tories. Given the financial crisis, a coalition with the Tories was easily the best option available to the Lib Dems, with the added benefit of the party learning how to take part in government.

How will things look in 2015, when the next General Election is due? It is still a long way off, but another hung parliament looks quite likely. Labour’s problem is not just that they are on the wrong side of history, it’s that most of the electorate realise it. They instinctively know that Labour’s aspirations cannot be afforded, and that they have no real idea how genuine economic growth can be found, so their support is stuck. But they should still advance from their lows in 2010, making a Tory outright win very difficult to pull off.

And what of the Lib Dems? The general betting is that the party will fall back. A near wipe-out is certainly within the range of possibility, but more likely is a significant loss of seats to, say, 30 or so (from the current 57). The situation in Scotland, source of many Lib Dem seats, looks dire. The consequence of this is that being part of a coalition is very difficult to make work. It’s difficult enough with the current balance between the parties. Could you really have a Deputy PM with just 30 seats? Offered a coalition by the Tories, the party would be wise to turn it down and let them make their way as best they could as a minority. The financial crisis should not be anything like as severe as in 2010, so this will look a more realistic prospect. Coalition with the Tories, especially with reduced moral and actual authority arising from a loss of parliamentary seats, is simply too toxic to continue.

And coalition with Labour? It’s difficult to see how that would work in 2015 too. There would need to be a change in party leader, and not just because he is a hate figure in Labour circles. To the public changing sides without changing leader would stink to much of ducking and weaving just to maintain office; he would need to have pulled off a really good election result to be able to stay. Changing leader is best done while not in government. And the problem of not having enough MPs would still hold.

But what if the Lib Dems should do unexpectedly well in the 2015 election, maintaining or even increasing their representation? This would certainly give the party a new moral authority after all they have been through. But the toxicity of the Tories remains; they are simply on the wrong side of history. With an increased representation, the party may well have the choice of partners, and if so, it should try to strike a deal with Labour, and one that gives the party increased overall clout in government.

But if Labour had done so badly that a coalition with them is not feasible? This would be the Lib Dem opportunity to show that they are the true opposition to the Tories. The party should offer the Tories terms that they are unlikely to accept, and then let them stagger on as a minority. A tricky stunt to pull off, but surely better than five more years in government with the Tories, giving Labour yet another opportunity to recover?

Ballsed up – Labour’s economic narrative implodes

Labour’s economic narrative was always a bit of a balancing act, and now it is coming apart. It is tempting to blame the messengers (Ed Balls and Ed Miliband), but its own contradictions are the real problem.

But what is this narrative? It is rarely reported sympathetically, so confusion is widespread. This is how I understand it:

The Labour government’s careful middle way between free markets and social democratic intervention rewarded Britain with a prolonged period of economic growth, and growth too in public services. Contrary to what political opponents and a hostile media claim, this was perfectly sustainable. Indeed by 2007 Labour had won over most of its critics and the Tories were saying that they would do much the same.
But in 2008 it collided with a global economic storm, originating in foolish economic policies elsewhere in the world, and misguided financial management, mainly in America. Since full participation in globalisation was part of Labour’s economic policy, and had delivered enormous benefits, Britain could not but be affected. After the first shock, sensible economic policies under Gordon Brown were delivering a sustained recovery. These policies were based on maintaining aggregate demand in the economy, in particular by sustaining government expenditure, with only a gradual, carefully measured slow down.
This was all undone by the coming to power of the Coalition in 2010. They panicked (or else were driven by a malign wish to undo Labour’s good works) and cut back too far, too soon. This has set off the classic Keynesian doom loop, where reduced government expenditure reduces private demand, causing further hardship. There are any number of distinguished economists who point out the folly of excessive austerity (Paul Krugman being a favourite).
The Coalition policy is failing, as growth has tailed off and government forecast after forecast is being missed. This is doing long-term and lasting damage to the economy.
Because of this long term damage, by the time we reach 2015 it will not be so easy to pump things back up again to where they were before. As a result, Labour cannot promise to restore the cuts – even as we now declare they are foolish.

It is not my point today to pick holes in the economic logic of this. Both Mr Balls and Mr Miliband are economically literate, and we have every reason to believe that they believe what they are saying. It is not falling apart in terms of economic logic – and the likely future turn of events is not likely to undermine it. The only thing that would be a problem for them is if the economy should start to pick up some serious speed. Nobody believes that it will.

The problem is the politics. Labour have been trying to achieve a tricky balancing act here. The dismantling of so much of Labour’s legacy by the Coalition has sent their supporters into a frenzy of anger. Labour needs to harness this anger to sustain its political “ground war” – the hard graft of daily political advance, for the most part achieved by unpaid volunteers, even if the wider public seems more sceptical. This angry brigade has not accepted that any cuts are necessary, and grasp at the writings of Krugman et al, adding a little A-level economics, to sustain the idea that all the economy needs is more government expenditure to reflate its way back all the way to 2008. They think that the Coalition is waging economic warfare on the poor, as one commenter on this blog put it, with the naive Lib Dems being taken for a ride, along with a large part of the public.

The angry brigade hears what it wants to from the “too far, too fast” mantra and thinks that the Labour front bench is on its side. But the Labour leaders also know that the economy has shrunk so much that many, indeed, most, of the cuts will have to be made eventually. Labour’s plans to cut the deficit before they left office weren’t so very different to the current government’s, and very little at all compared the surprisingly slow pace at which the deficit has actually been cut. Their plan is actually to win back and exercise power again, rather than simply have fun as an opposition party. They know they need to present credible policies for when they are in power again – after all, look what happened to the Lib Dems when they promised that they could cut university tuition fees to harness student anger for their own ground war. And a close reading of what Mr Balls and Mr Miliband have been saying is not nearly as reckless as the mood music of anger.

But Labour have encountered a wider political problem. The passion and anger of their activists burns as bright ever, but the public are simply not convinced. Why? It is tempting to blame economic naivety, which allows the government and its supporters to present the government’s finances as if they were a household budget. Actually I think the feeling runs deep that the economic prosperity of the late Labour years was unsustainable. There is no naivety about that standpoint. Government debt catches the blame – but in fact it was private sector debt that was more to blame. And for those that did not have a government job, the suspicion the state was too big and benefits too generous ran deep. In my description of the narrative most people can’t get past the first paragraph.

And so the two Eds have started to reach out to the sceptics by emphasising paragraph 5 – that the cuts will have to stay. The hope is that this will then give them an opportunity to get a hearing for whatever else they have to say, on corporate greed, the NHS reforms and so on. But the activists are apoplectic. The Guardian‘s weekend article has attracted a whole host of disbelieving and hostile comments from a group of people that is now feeling disenfranchised.

But the narrative is too complex to be accepted by the sceptics either. Only a confession that the economy before 2008 and unsustainable, even without a financial crisis, will do that. Alas the two Ed’s don’t think they can say that. And so politically the narrative falls apart. I would be surprised if Ed Miliband lasts the year. He has had some bright ideas, and has begun to take Labour out of its denial phase. But as denial moves into anger, he will surely be a victim.

Time the British woke up to the crisis in Europe

It is a commonplace for Britain’s politicos to sadly shake their heads and complain that the Euro crisis demonstrates a woeful lack of political leadership. Regardless of the fairness of this charge in respect of Angela Merkel, say, it clearly has resonance for Britain’s own leaders. There seem to be two camps: ravingly impractical Eurosceptics, and sheer paralysis from everybody else. The mood amongst Europhiles (as I witnessed at fringe meeting at the Lib Dem conference) is akin to deep depression. It is time for this to change.

To be fair some key players have been showing something less than paralysis – George Osborne and Nick Clegg have both been conspicuous in raising the seriousness of the situation with their international colleagues – but their pronouncements are hardly more helpful than anybody else’s. They aren’t bringing anything to the party and they aren’t trying bring our own public alongside.

The first point is that the Euro crisis has serious implications for Britain, much though most people seem to think it is happening to somebody else. This is for two main reasons. First is that this country would be caught up in any financial disaster. Our oversized banks are deep in the mess; Euro zone countries are vital trading partners for a country very dependent on trade – especially given that international financial services are so important to us. Our fragile attempts at recovery risk being completely blown off course. Forget Plan B if this lot breaks.

The second reason it matters to Britain is that resolution of the crisis could take the European Union in a direction that is against our interests. Britain leads the single market wing of the union: the chief Euro zone countries are more protectionist in their instincts. We risk being shut out of the design of critical architecture – much as the Common Agriculture Policy was put together in our absence.

How to proceed? We need to tackle the dark spectre head on: the best resolution of the crisis involves changes to the European treaties. To change the treaties will require a referendum here (let’s not weasel out of it this time). If we face up to that challenge now, it will show real courage, and help get things moving.

But, of course, we would need to see something in return. Changes to the treaties that would further our interests. These need to be to promote the single market, to protect London (and Edinburgh) as centres for financial infrastructure, and to reduce unsightly bureaucracy and/or operating costs of the Union (the siting of the European Parliamnet at Strasbourg needs to go on the table, at least). Given our understanding of finance, we might well have useful things to say on the Eurozone architecture too – even though we clearly can’t be part of it.

To do this our leaders (the Prime Minister and the Deputy Prime Minister in the lead) need to build two sets of alliances. The first is within the British body politic, so that the referendum can be won. This needs to cover Tory pragmatists (David Cameron, George Osborne and William Hague), the Labour leadership and, preferably, the SNP. The Lib Dems have an important role in making this hold together since, by and large, they understand the Union the best. Mr Clegg’s experience of deal-making in the European parliament counts for a lot. The next set of alliances is within the Union itself, to create a Single Market bloc. The obvious candidates are the Nordic countries, Ireland and the Netherlands, together with many of the newer members in central and eastern Europe.

This will be very difficult. That’s the point, almost. The reward is a stabler EU, constructed more to our taste, even if we must concede some powers to an inner core of Euro area countries. Everybody wins. And by taking on the wilder Eurosceptic fringe, including their newspaper backers, it will cheer all right-thinking people up. It’s time we stopped being paralysed by fear and came out fighting.

Memo to Miliband: break some eggs

As a political insider it’s very easy to be carried away by partisan emotions, but very dangerous. Thus I have been watching (not literally) the Labour conference with a great deal of caution. I want to scoff, but my better self tells me to be more careful. And that applied especially the Labour leader Ed Miliband’s speech delivered yesterday. After reading the commentary in the papers I decided that I had to read the text of it too.

Let’s start with the good bits. It set out a clear narrative for the past present and future. His starting point was Mrs Thatcher and the 1980s. Some good reforms but she started a culture of heedless self-advancement. New Labour was a step forward because it invested heavily in public services and in tackling poverty – but it didn’t do enough (anything?) to change a reckless business culture, and this brought the whole system down in the financial crash of 2008-09. After the crash the current government is doing nothing to address this underlying sickness, and its austerity policies are choking off growth and making things worse. For the future, Mr Miliband wants to transform society by making government more moral, and finally taming the monster that Mrs Thatcher unleashed.

Mr Miliband’s core constituency, the “squeezed middle”, remained firmly at the centre of his narrative – although he wisely did not use that phrase. These are people who are neither rich nor poor, and whose living standards are being steadily squeezed, as government largesse is focused on those who are poorer. Mr Miliband identified this key group at the start of his leadership, and he is maintaining his aim. He is clearly more successful in this than the Liberal Democrat leader Nick Clegg, who has identified the same group as decisive (using the phrase “Alarm Clock Britain” to describe them, to general derision), but has struggled to hit the right note.

It is easy to pick holes in the narrative, but that would only hint at its main weaknesses. Firstly that to most people it will sound abstract and irrelevant, and second that he failed to tackle the hard choices that would show he meant business.

Irrelevance? Britain stands in the middle of a global financial crisis, lurching towards another episode on a par with the crisis of 2008. The Euro zone is at the heart of this crisis, and thus the European Union, this country’s main diplomatic and economic partner, is facing the biggest challenge in its history. And Mr Miliband’s answer to this global challenge? To fiddle with VAT rates and implement the government’s cuts a bit slower. The world situation got hardly a mention. No doubt the idea is to set a time-bomb for the government, so that as the economy fails to approve he can say “told you so”. But since Labour’s explanation of the 2008 crisis was the world economic situation, what answer do they have if this government says the same thing? As George Osborne and David Cameron scurry round the globe trying to stave off disaster, Labour stays at home and whinges about VAT. This doesn’t look very convincing.

And he did not have much else to say that would help his squeezed middle voters in the pocket, rather than replicating their complaints about benefit cheats and fatcats. In fact he did not have much to say on specific policies at all. He wants to cut university tuition fees (which would in fact help the better off more than anybody) and that’s about it.

The problem is this: change hurts. People know that instinctively, so that to convince them that you are serious you have to do painful things. Tony Blair did so by taking on a number of Labour shibboleths: Clause 4 of the party constitution, not raising income taxes and (as few now remember) sticking to the then Tory government’s austerity plans to tackle the deficit. David Cameron did similar things on socially liberal issues, while eschewing tax cuts. What will Mr Miliband do to show that he is serious about his mission to transform Britain, and win back trust?

Here are some things he might do:

Accept more publicly the logic of the Government’s austerity policies in order to create the funds for tax cuts to the squeezed middle as the economy improves. We did get statements that they could not reinstate all the government’s cuts, but the delivery of these was so muffled that I don’t think most Labour activists noticed them, still less become angry.
Call for reform of the European Union so as to address the unfolding financial crisis, throwing down the gauntlet to Tory Eurosceptics.
Pick a serious fight with the trade unions about public sector strikes and participation in Labour politics.
Call on the government to get serious about coasting schools and sub-standard health services by in the first case getting tougher on teachers and the second closing sub-critical hospitals and putting serious heat onto GPs.
Challenging ordinary voters by pointing out that they also contributed to the crisis by living off credit cards and going for ever bigger mortgages.

Each of these would require a lot of courage – but that’s the point; he must make a lot of people in his party angry. Instead we get some rather bland ideas about favouring “good” rather than “bad” businesses. But these sound rather like things that the coalition is already putting forward on banking reform and reshaping the economy towards manufacturing and green businesses – Mr Miliband even quoted Lib Dem Business Secretary Vince Cable in his support on the radio this morning. Other ideas sound like more bureaucracy.

To make an omelette, they say, you have to break some eggs. Until Mr Miliband starts breaking eggs nobody will take him seriously.

The strange cheerfulness of the Liberal Democrats

I returned from the Liberal Democrat conference in Birmingham yesterday. After the March conference, when things were already looking bad, I blogged under the title of “The Strange Cohesion of the Liberal Democrats”. The cohesion is still there, but to that was added widespread cheerfulness. This was not expected, but widely commented on .

This is strange for a number of reasons. The party’s situation remains dire. The Independent’s cartoonist depicts the party’s bird logo as a dodo. Though I naturally believe the opinion polls showing the party at 17%, this still isn’t that much better than what was achieved at the calamitous local elections last May. And plenty of polls show a much lower rating, down to 10%. Some party leaders (notably Paddy Ashdown) made much of some improved results in local by elections; but these are nearly meaningless, a fortunate confluence of favourable local factors.

And there’s plenty of anger about too, especially over NHS and education reforms, which worry many activists a lot. And not everybody buys the leadership line that there is no alternative to the government’s austerity policy. As Steve Richards of the Independent points out, the second conference after a general election should be when it is safest to display dissent in public; so why was it so muted?

Party conferences are always bubbles where attendees can cheer each other up without too much intrusion from the outside world. And there was undoubtedly an element of this. One reason for both the cohesion and the at times positively aggressive cheerfulness was a response to adversity. As a party that is just one step away from oblivion, people did not have the confidence to display of too much disagreement; we are much more vulnerable than the Labour or Conservative parties when in similar straits. This is not a bad sign; it shows a degree of maturity and survival instinct – in contrast to the response of the SDP in particular to the 1987 election, which resulted the party’s poll ratings dropping into the margin of error of nothing.

Party outsiders will not be convinced that the party’s fortunes are on the mend. But for insiders there are some reasons for cheer. First, of course, the thrill of being in government remains strong. For so long the only hope of getting pet policies into action was that other parties might steal them. Direct access to the levers of power is the ultimate reward for any serious political party. It still feels good; almost nobody says that going into coalition with the Tories was a bad idea.

Further, the threat from the other parties does seem to have receded somewhat. The Left’s rampant anger at the cuts and Lib Dem “betrayal” seems to be burning out. Compared to Sheffield the demos outside the conference were pathetic. And Labour’s poll rating are stuck in a rut. And as for the Conservatives, only last May it looked as if their “human shield” strategy was working to a tee. Our presence in the government was supposed to help de-toxify the Tory brand, while we took the full brunt of the anger at government policies. Since then the party has managed its PR better, so that the opposite seems to be the case: that the Lib Dems get credit for anything progressive that the government does. For example quite a lot was made of the government’s commitment to increasing foreign aid; and yet David Cameron gave this policy much more prominence than we did before the election. In this, ironically, the party has been greatly helped by the Tory right, and their friends in the press. The more they complain about Lib Dem influence, the easier it is for the Lib Dems to take credit for the nice bits.

All this gives credence to Nick Clegg’s “centre ground” strategy, first unveiled in March (I think) to widespread scepticism. That means the party defines itself by what others do, the complaint ran. But neither of the other parties can win a majority without the centre, so denying it to them improves the chances of a hung parliament. And there may just be enough votes there so that the party can hang onto enough seats to be a real influence in the subsequent bargaining. And who knows, if the party stays the course they may even get a little grudging respect from the electorate that so despises it now.

And of course, there is the attention. The party have never had this degree of scrutiny before, leading to the widespread complaint that nobody knew what the party stood for. They still don’t, by and large, but as the party learns how to present its distinctive profile in government this is changing. But will the public like what they see? Or is liberalism just a middle class hobby? Getting people to understand what liberalism is, and persuading them that it is good for them is the real challenge ahead.