Tuesday, February 23, 2010

The General Election 2010: one you would prefer to lose?

Have Cameron and Osborne blown the 2010 General Election?

The fact is that the list of their mistakes grows long indeed. The latest is an almost Sarah Palin moment from David Cameron, where he could not identify what £72 billion of his proposed budget was earmarked for.

As I have noted before, the Conservative leadership is long on personal charm but very short of either executive experience or understanding of economics. The result has been a series of policies that are both inappropriate and constructed on little intellectual foundation. These flimsy policies- especially on tax- have broken apart at the first detailed examination. Stupid mistakes- missing decimal points, so that spending numbers are out by ten times order of magnitude- would not be happening if the Conservative Central Office policy units were on top of things: they clearly are not.

This, together with the rat-like cunning of Mandelson, has eaten into public confidence in Cameron. On top of this, it has been the Conservatives that have displayed the most egregious arrogance with regard to the MPs expenses scandal. From Sir Peter Viggars to Sir Nicholas Winterton, it has been Conservative MPs that have annoyed the public most. It must be very frustrating for "Team Cameron" to find themselves consistently blind sided by their own backwoodsmen. However the core of the responsibility for the declining fortunes of the Conservatives in the polls must lie with the failure of Cameron to provide key principles for his party to unite around. This rejection of core principles is not simply a rejection of "isms"- especially Thatcherism- it is a failure of leadership that has created sloppy thinking and drift at the heart of the Conservative Party.

Yet a casual observer might have thought that the election was the Conservatives to win. After all the economic crisis has happened on the Labour watch - and as Gordon Brown was Chancellor before he was Prime Minister, he carries a huge share of the blame. Neither is Mr. Brown a sympathetic figure: his volcanic temper has been a open secret for years. He is clearly a deeply driven, dark and strange man. He has alienated huge swathes of his own party. How could it be possible that the Conservatives can not beat him outright? Well, actually of course they probably will. According to the polls, the Conservatives are quite likely to out poll Labour by quite a big margin, but the seat allocation under our electoral system will probably not allow the Conservatives to gain a majority. In any event the contempt for Mr.Brown is not matched by a corresponding enthusiasm for Mr. Cameron

Even Michael Heseltine, a Tory big beast if ever there was one is wrapped in gloom: suggesting that Cameron can only gain a minority government.

For the Conservatives, such a minority victory could be Pyrrhic indeed. The country faces a series of critical economic challenges.

Firstly it is now urgent that a credible timetable to reduce the government deficit is put into place. Failure to do so could lead to a Sterling crisis in the very short term, and emergency rate hikes that could create considerable disorder across the whole economy.

In any event, although the US and European Housing markets saw significant falls, the UK did not. The result is that the UK has one of the highest levels of household indebtedness in the world. House Prices in the UK, on virtually any measure- whether historic or comparable- look at least 20% overvalued. The tightening of credit in the wholesale market for mortgage banks- building societies- is leading to a sharp contraction in the availability of mortgages, and in any event the building society sector is unlikely to survive in its current form. The inevitability of rate rises makes the UK housing sector at a high risk of significant falls and again these could be disorderly.

Meanwhile the banking system that has been nationalised is still attempting to recapitalise itself, and this means that even nationalised banks are tightening credit, even as they continue to pay unwarranted bonuses for negative or non-existent performance. Unlike the USA, where the Fed seems set to make a profit on its investment in the sector, the UK is unlikely to see more than about 20% of its money returned. The supervision of the banking system will be critical, and the Conservatives have demonstrated an almost total ignorance of what needs to be done to limit the damage. They have also managed to alienate critical business and financial leaders through populist grandstanding rather than detailed policy formation.

Nor is British growth assured, the recovery is feeble, and a double dip is all too likely.

The crisis in the British economy is on the brink of becoming an emergency. The Conservatives are being weighed in the balance and may be found wanting. Their policy mistakes in opposition can not happen in government without serious consequences. A minority government would have its back against the wall from the start in the face of multiple economic breakdowns. Although some Conservatives are sanguine about a minority government, since they believe that they would get a majority in an election held quickly afterwards, they may underestimate the baptism of fire that any new government is going to receive.

Given the credibility of Vince Cable, it may be that they have little alternative but to turn to the Liberal Democrats.

What we should do then, will be the subject of a later blog.




4 comments:

Newmania said...

On the economy, quite superb

Polling in the marginal’s encourages me to think that Brown has only regained votes in seats he cannot lose, and this by appealing to sectional fear in the Public Sector and subsidized sector .Nonetheless it was to be expected that the polls would tighten in the run in (and squeeze on the Lib Dem vote ).In some ways the reality of the choice before us is a welcome development at this stage.
You overreact to the wobbly polls . We only hovered around 40% and I have been saying for a long time Brown is not beaten. You have also, I think, forgotten that it was a commonplace quite recently that beating New Labour was not possible for some years .The Press are always too excited by the day in hand
Merely winning is pointless, that is Cameron’s dilemma . There has to be a mandate or at least not a pack of New Labour style lies. He is cautious because he expects it to be tested and a Lib Dem alliance of any sort is a cost he would feel he has paid to avoid . He would undoubtedly seek a mandate

A Liberal and Conservative cooperation is not a dreadful idea viewed from your Parnassian perspective . Certainly there is cooperation at local level in many places but there is a problem nationally.
It is this. The British Liberal Party is to the left of New Labour . How do I know ? Well one way is to ask, I was able to ask my local MP last Friday , the “Shadow Transport Secretary” Norman Baker .He happily admitted this was the case ( how could he not having campaigned on that basis ) and would not rule out supporting Brown in the fifth Lib Lab pact. This is not a Party anyone can do business with at a national level even if one put up with the bossy bootedness.

How we came to have such a left leaning Liberal Party is rather curious , I gather it is unusual internationally . It makes everything so very difficult

Cicero said...

Right now the Liberal Democrats could be considered as the most right wing party in British politics- especially given the drippy and inane nonsense coming from Osborne and Cameron.

In fact I don't accept left and right as the only scale to measure things upon. In fact both Conservatives and Labour are more statist and more authoritarian than the relatively libertarian Liberal Democrats.

You make a fetish of "left and right" - but it is not a particularly helpful way to examine things in my view. Especially since Cameron's rhetoric is now highly collectivist and welfarist.

Newmania said...

..so was Margaret Thatchers at first Mwoo hoo hoo ha ha ha ...
I admire your powers of delusion god knows what our collection of oddly scented and superannuated hippies would make of it.

"Liberals will cut further and faster than the Conservatives.... Its offocial?"

Watch out fo the pigs on your flight back home won`t you.

Cicero said...

I even hope that you are right that the Tories are simply keeping their options open, but the fact is that they keep being wrong footed in a way that does not suggest that they do actually have some secret plan. The point now is not the speed or size of the cuts- it is their credibility. There are spending cuts that can comfortably be made now, and others that would be difficult or even dangerous to do now, but which will have to happen later. Vince Cable puts forward a reasonably credible timetable- which has to be flexible, since we are walking a tightrope of market confidence. Osborne is an all or nothing guy, and this is a threat to confidence.