17 October 2015

Trouble ahead for the Tories


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David Cameron is a damn lucky general. Incoming fire on the field of battle, that would do serious damage to other leaders, tends to ricochet off the current UK Prime Minister leaving him relatively unscathed.

In the last parliament, 2010-2015, there were numerous moments when he danced round what looked like substantial threats to his authority.

In the riots he returned to Britain just in time and found the right tone for the moment. The inquiry into press wrongdoing did him little harm in the end. And having alienated, needlessly, a lot of voters who flocked to the Eurosceptic UKIP, he won back enough of them by election day in 2015 so that, combined with moderate Labour switchers who no longer trusted their old party, he had sufficient votes in the bag for a famous victory.

Since that stupendous election success, it has gone like a dream for the Tories. Labour has elected a dim-witted 1970s Marxist as leader (that sounds harsh, but it is obvious he is not the sharpest tool in the box) ‎and the opposition has set off on the latest stage of its long march to irrelevance.

Tory MPs are in such high spirits about their party’s dominance that they hooted with laughter when the Shadow Chancellor John McDonnell was filmed shouting the word “embarrassing” five times in the Commons as he attempted to ‎explain his latest u-turn. Having decreed two weeks ago that Labour would back the government’s fiscal charter – which makes it law that the government must run a surplus in good times – he changed his mind last week in a chaotic manner.

It is quite an achievement by McDonnell, to end up in the right place in principle but still look thoroughly incompetent.

Osborne’s fiscal charter is a ridiculous measure. It is a sham rather than serious policy. It is a piece of cheap manoeuvring and political game-playing designed to embarrass the opposition, and no government sticks to these rules or misses the chance to fiddle them later when priorities change. McDonnell and Corbyn were being set-up with this charter and they duly obliged Osborne by backing the measure and then u-turning.

But those Tory MPs hooting with laughter ‎at McDonnell’s confused antics should not laugh too loudly. On multiple fronts, the new Tory government is heading for trouble.

As James Clark argued on CapX this week, the cuts the government is making to tax credits are turning toxic. Tax credits, by which the government tops up the wages of the lower paid, need reform, certainly. The bill is now £30bn and incentives are distorted. However, the pace at which changes are being made and the strain being imposed on “hardworking families” – venerated by the Tories in the 2015 campaign – is such that unless the government moves it will spend the next 18 months being accused of hammering the voters it won the election claiming to represent. Awkward.

The Prime Minister and the Chancellor are also in a major pickle on their renegotiation with the EU. This week, the Tory leader had to agree to speed up the delivery of his demands. EU leaders rightly ask what on earth it is the UK government wants. The answer appears to be not much.

The In/Remain campaign has also had a pretty poor start. As Bruce Anderson wrote for CapX, its launch this week was deeply unimpressive. How on earth have the Prime Minister and Chancellor become convinced that Karren Brady – one of the main faces of the campaign – is such a prize political asset when she isn’t? It is almost as though they have a weakness for famous people.

Meanwhile the Out/Leave crowd (Leave it Out, as I call them) are in high spirits and determined to inject some fun and excitement into the race, which could make the In gang look like a dated bunch of Establishment bores.

Cameron and Osborne must now contemplate the serious possibility that their renegotiation delivers little and the referendum that follows goes against them. It is difficult to see how such an outcome could do anything other than up-end British politics. That being the case, have they left enough room to change sides to Out if the In campaign’s troubles worsen? If they haven’t, they might need to start thinking along those lines.

And ‎then there is the NHS, which appears to be heading for one of its intermittent winter crises. Trying to explain the British debate on its nationalised health service to any non-Briton produces blank stares or an incredulous double-take. The state-run service is short of money, but even the slightest attempt to introduce market mechanisms to make scarce resources go further (one of the benefits of markets) is met with expressions of sheer horror. That leaves the government looking for extra money to hand over in exchange for efficiency savings as ministers pray that the weather, and their luck, holds this year again.

Is this an unnecessarily gloomy prognosis of the government’s condition? (It’s being so cheery that keeps me going.) The government has a majority, UK employment is up, wages are up and voters price in that governments mess things up along the way, don’t they?

What should worry the Tories, though, is the potential for those difficulties I have cited to combine over the course of the winter and into the rest of next year. It happens to governments, even when they have just won an election. They can lose their way and within a year people are astonished they ever won, which gives the opposition scope to rethink and recalibrate. That downturn in Tory fortunes happened in 1992 and it happened in 1987. What is clear is that to get out of the tax credits imbroglio, dodge the EU fandango and avoid an NHS nightmare, Cameron is going to have to be even luckier than usual.

Iain Martin is Editor of CapX