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.