Party Political Animal

Archive for the ‘Economy’ Category

So Chloe Smith at 27 becomes the youngest Conservative MP for quite a while – since 1983, in fact, when I was also the youngest Tory at 27. Let that be a warning to you, Chloe!

Anyway, Chloe should be congratulated and the Tories are jubilant. But the steadier Tories are cautious too. The personal triumph for Chloe Smith was not as great victory for the Conservatives as appears at first sight – here’s why.

First, only 18% of voters bothered to turn out and vote Conservative in Norwich North. Those 13,591 people were fewer in number than voted Conservative in the 2005, 2001 or even the 1997 general elections.

In fact, the last time the Tories won the seat and a general election, in 1992, nearly twice as many people voted Tory in the constituency – and then, remember, the Conservatives only just scraped home in Norwich and the nation.

Of course, general election turnouts are higher than by elections. But check out the two big pre-1997 Tory by election defeats. In Staffs South East and the Wirral, Labour took the seats with massive swings of around 20% so and 50-60% of the vote on 60-70% turnouts – and those two seats had been considered safe Tory.

Chloe, by contrast, got well under 40% of the vote with just over a 16% swing  on a sub 50% turnout – and contrary to some reporting, Norwich North was not a safe Labour seat. It was and is a marginal which returned a Tory for most of the ’80s and ’90s. Labour, remember, were also hit by justified sympathy for Ian Gibson and Gordon Brown’s dysfunctional handling of the expenses issue.

Third parties, meanwhile, including UKIP and the Greens together polled more than a quarter of the votes. That figure strikes cold fear into the hearts of Tory strategists. They think the only thing that can rob them of outright victory next year is public disaffection with all the of the main parties manifesting itself in quirky third party votes.

I’m not so sure. Third party voting may be a factor in limiting Tory gains, but I don’t think it will be a major one. Few of the small parties really inspire and their showing drops off in general elections. I suspect people will show how pissed off they are by not bothering to vote at all. Public disaffection may have taken a sickening twist upwards since the expenses row, but it has been on the rise for years. General election turnouts peaked at 78% in 1992. Last time it was just a shade over 60%. I’m guessing not much more than 50% in 2010.

This should get David Cameron and the Conservatives thinking hard. The Norwich figures are horrible for Labour and not great for the Lib Dems. But they don’t show a people ready to be inspired by Cameron’s New Tories. Rather, the Tories now seem to be no more than the least bad option for many people.

Cameron has succeeded in changing the tone of the party and of course no-one should expect him to spell out every Tory policy before the election. But somewhere inbetween the broad feel of a party and the hard policy lies a sense of direction – what Blair’s mob used to call the “narrative”.

Thatcher had a narrative. Blair had it too. Cameron has it only in the sense that we all know he wants badly to win. I think people sense that and they’re not wholly comfortable with it. They’ve had it with the professionalised cadre of politicians for whom winning and power is the end, rather than the means to sorting the country out. It all links in uncomfortably in the public’s psyche with MPs ripping off  expenses.

So it’s Labour who are losing this election more than Cameron winning it. Like his role model, Tony Blair, before him, Cameron is very lucky politician. Like Blair, he’s lucky to have become leader at a time when the government is doing a pretty good job of opposing itself.

But if he was in a real scrap, being a great PR guy with the best media advice money can buy would not be enough. It certainly won’t be enough in government – as Cameron’s hero, Tony Blair, pretty quickly found out.

I thought I detected an edge of frayed rattiness in Lord Mandy’s interview with Eddy Mair on Radio 4’s PM this afternoon. “Prevailing market conditions” was his Lordship’s stated reason for “postponing” Post Office part-privatisation. Would that be the political market, Mandy?

Oh dear. It looks like George Osborne and David Cameron are drawing the wrong conclusions from the financial melt-down.

Osborn has been flagging up the need for more regulation. I’m not sure he is right. The FSA has extensive powers already. But as Northern Rock showed, the regulators failed properly to do their job – and the lightweight Treasury ministers failed to oversee them.
Nor do we need politicians and bureaucrats second guessing who banks should lend to. Demutualisation and deregulation of building societies has become a favourite target of the I-told-you-so mob.

Sure, we all miss the cosy, sepia-tinted days of having a paying in book and a high street building society, where we could drop in for a slice of Hovis and chat – in English.
When I tried recently to call the Nationwide about my account, it took six different people and eight calls over two weeks to discover they had lost my address. I had to find a branch – not easy – so I could go and prove who I was. And guess what? No-one spoke any easily identifiable language – and I wasn’t even offered a slice of Hovis.

Fine, we all know that the banks – which building societies have become – are hideously impersonal bureaucracies. But in the good old days, mortgages were horribly uncompetitive and strictly limited, forcing many less-well-off people into rentals. I’m not sure we really were better off.

No, the bigger problem has been the expansion of easy credit – something the Tories have largely ignored. 

Since 2003, the Bank of England has been set an inflation target of 2%. But which inflation rate?

From 1997 to 2003, the Bank targeted a 2.5% rise in RPIX. But from 2003 this was changed to 2% for the CPI.

The crucial difference is that the CPI excluded housing costs and council tax. One reason for the change was to standardise our measure with the Europeans. And at the time, both Gordon Brown and the Bank of England governor told us that house prices rises would ease off.

In other words, monetary policy and interest rates in effect reduced by up to half a percent just as the credit bubble was being huffed and puffed full of air.

So throughout 2006, while the CPI was broadly within the 2-3% range, the RPIX was bombing up towards 5% – a much more accurate indicator of real inflation and the credit/asset bubble.
The exclusion of housing costs from the indices didn’t matter so much in most of Europe where asset prices were more stable – though it did, of course, matter very much in Spain and Ireland, which neatly makes an important point about the disadvantages of a single currency across massively differing economies.

But I digress. Unfortunately at the time Conservative criticism of the switch was muted, with some notable exceptions including John Redwood. Indeed, Osborne remained largely silent throughout 2006 and 2007 even as an increasing number of commentators criticised the mismatch between real and targeted inflation.    

In too many ways the Conservatives have tried to march in lockstep with New Labour. If they are not careful, they will make many of the same errors if and when they reach government.
All the touchy-creepy Steve Hilton stuff is fine. God know, the tone of the Tory party needed changing. But hey, guys, you also need to start to think about what you are going to do with the power, not just how you are going to get it.

Phillip Oppenheim

A year ago, Alan Greenspan, former chairman of the Fed for nearly 20 years, was being hailed by (almost) everyone as the great architect of an era of low-inflation growth.

Meanwhile, closer to home, Gordon Brown was casting himself in much the same heroic role – his name could hardly be uttered by a breathless BBC commentator without the prefix: “the most successful Chancellor since the War”.

But then Mrs Thatcher once dubbed Nigel Lawson as her “brilliant” Chancellor and look how that ended up. Plus ca change…

Phillip Oppenheim