Those Conservative economic travails.
This must be a truly strange time to be a supporter of the Conservative party. To enter cliché for a moment, all the chickens have finally came home to roost. The man who promised an end to Tory boom and bust has succeeded in abolishing boom, while the prospects for the bust look increasingly ominous. The economy which he boasted was among the best placed to deal with the global downturn is in actual fact one of the worst placed to deal with it, according to the IMF and the European Union. Unrelenting, the Labour party believes that the solution is to borrow more to fund the tax cuts to stimulate the economy. As Larry Elliot has pointed out, this is a direct contradiction of what Gordon Brown formerly believed. At the weekend the same man attended a conference which he claimed would back up his solution to the downturn; it did nothing of the sort, and predictably only agreed to more or less meet again. Gordon Brown, by rights, ought to be finished.Instead, it's the Tories themselves that look as though they're the ones in need of some sort of a stimulus. By contrast to Brown, who seems unaccountably at the moment to be walking on water when he should be sinking like a brick to the bottom, they're the ones looking washed up. Nothing they do at the moment can get a look in, or when it does it's almost immediately knocked down for its flaws. Take their hastily cobbled together policy on tax breaks for employers, which was dismissed almost universally as being the kind of tax con which the Conservatives have so often accused Labour of pulling. This week's panic was, with it looking almost certain that there will be at least £15bn worth of tax cuts in Monday's pre-budget report, the minimum needed for it to be minimally beneficial, to declare that they would, despite everything which they've previously said, not stick to Labour's spending plans for at least the first year should they win the next election. In any event this was always a false promise, but such was the apparent anxiety within the party over the floundering response to Gordon Brown's sudden found decisiveness that red meat had to be tossed to those who have always wanted tax cuts before anything else.
Even this though leaves the party looking contradictory, or at least at first glance it does. On the surface it looks like a standard, fiscally conservative measure: you can't borrow your way out of a crisis, so don't try. Instead, spending cuts will have to be found. Yet the Tories are still committed to spending the same as Labour on the NHS, the police and on education, whilst refusing to say where the cuts would be made. Even abandoning ID cards, as they promise, will not immediately summon up the £20bn that they are forecast to cost once they are fully introduced. The figures simply don't add up. As a consequence, the Conservatives are again being accused of being the do nothing party, and it's an insult that for the moment appears to be sticking.
Some of this is undoubtedly thoroughly unfair on the Conservatives. An element of their plight at least is that the media has become bored of the prospect of the Conservatives sleepwalking towards victory at the next election, and with Brown's sudden self-proclaimed saving of the global economy, they have a new horse to get behind, even if it's the same one they were previously saying was only fit for the glue factory. Also influencing it though is that despite all the plaudits mystifyingly bestowed upon George Osborne, such as politician of the year, they have been absolutely hopeless on the economy ever since the run on Northern Rock. Their immediate tactic was to portray the potential nationalisation as a return to old Labour, which could have worked if they had a realistic alternative policy. Gordon Brown took fright, which is partly why they dithered and dithered and made things worse by not doing it sooner. The problem was that the Tories didn't have an alternative, and that everyone got so fed up with waiting for them to come up with one that Vince the Cable suddenly emerged as the politician who knew what he was talking about, given pride of place as the first man to turn to for analysis which ought to have been coming from the real opposition.
The other reason though is that they like Brown and New Labour truly believed the rhetoric. They honestly thought that the economy was now an area of consensus, that growth was natural and endless, and that it was social policy on which they should concentrate. A nasty and pernicious social policy it is, calling a society broken when is isn't and which their solutions for fixing are the opposite of what is needed, but a policy it was, and one which the conservative press especially were fully behind. They may have made some murmurings on personal debt, but they offered no substantive opposition to the government on its spending and borrowing plans, and as Labour has rightly pointed to, they even proposed loosening the regulation on mortgages. Their belief, like Labour's, was that we didn't need to worry about not actually making anything, it was making London the city in which to do financial business which mattered most. In fairness, many of us became caught up in this fantasy: that neoliberalism, despite all the evidence to the contrary, could deliver, and that through almost indiscernible redistribution, played down at every opportunity, that the proles would not become too upset at being continuously shafted. The latter it seems can still be contained, for now, but it was neoliberalism itself which has come in for the mightiest of shocks.
From being 28 points ahead at one point in the craziest poll, the Conservatives are now down to just 3 points in front, within the margin of error, in the mirror craziest poll. Unlike New Labour prior to 97, whenever things aren't going their way, the Conservative approach seems to be to panic. Last year, during Brown's brief honeymoon, there were murmurings of defenestrating David Cameron, such was the concern that the change in leader would affect their fortunes. Luckily, Brown succeeding at shooting himself in the foot not just once but on numerous occasions, first through a dismal conference speech, then over the election which never was, then the obsession with 42 days, then the 10p tax rate etc etc, coupled with Osborne's moment of supposed genius, the raising of the inheritance tax level to £1m. This time round Osborne himself is the casualty, not helped by his dalliances with yachts and trying to win in an unpleasantness contest with Peter Mandelson.
The really strange thing is that the Conservatives have arrived at the right policy in the circumstances in a completely Byzantine way. Although their claims that we are among the most heavily indebted nations in terms of GDP is bogus, even if you include the nationalisations, PFI and pensions, they are right that we should not be further adding to those figures without explaining fully and comprehensively that this means taxes are going to have to rise significantly, or that spending is going to have to be cut considerably to return at some point to equilibrium. After a crisis that was caused by private-sector debt, the public-sector should not be seeking to emulate it. If we are going to have tax cuts, then we should be funding them appropriately by either cutting the ludicrous number of databases we are planning or which are in use, abandoning ID cards, getting rid of Trident and not replacing it, not "investing" in aircraft carriers, by getting out of Afghanistan and Iraq now and by raising the top rate of tax on the richest considerably. It was our indulgence of them that led to this mess, and while our politicians should more than shame the blame, they should also help to pay for it, by also closing down the loopholes that allow so many to evade tax altogether. The party that again seems to be leading the way is the Liberal Democrats, who are flat-lining in the polls and have more problems it seems than the Conservatives. That, sadly, is modern justice.
Labels: Conservatives, David Cameron, economic downturn, economics, George Osborne, politics, recession, tax, tax cuts
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I was with you till you started praising the Lib Dems...
The Tories certainly believed Brown's hype about abolishing boom and bust, which is of course what all the talk of "sharing the proceeds of growth" was all about. But then so did almost everyone else, with the exception of a few doomsayers, whom no-one likes. The trouble is that when you're in a bubble it always looks like this time it's different - and it never is. I don't blame Cameron and Osborne for not talking down the economy. What I blame them for is not having worked out a proper policy in advance for dealing with the inevitable downturn, so that they now look like they're scrabbling around.
Posted by
The Heresiarch |
Friday, November 21, 2008 10:43:00 AM
Now, let me see; we are facing credit crunch, meaning we have been borrowing too much and spending too much. So what do out lords and masters do to solve our problem? They borrow and borrow and borrow and spend, spend, spend! So, this is the way to solve our problem? When our lords and masters have borrowed so much that there is no more left in the world to borrow, we will just have to approach the Green Men from outer space to help us borrow and spend more from all those other civilizations from outer space, who will then approach…
Posted by
stofcons |
Friday, November 21, 2008 8:47:00 PM