Saturday, 31 May 2008

Now Dave has his chance against Lib Dems

Dave Cameron's chances of winning an overall majority at the next election don't just depend on taking seats off Labour, but reclaiming former Conservative seats from the Liberal Democrats.

He may soon have a chance to show what he can do. Mark Oaten was at one time a potential party leader, but his career was damaged by a rent boy scandal. He was planning to stand down at the next election anyway, but may go early to take up a job opportunity.

Although his majority of over 21,000 may appear to be cast iron, it was obtained in a by-election after the Conservatives have overturned the original result in the courts. Winchester was once a solid Conservative seat and Dave will be hoping to take it back. If he can, it will be a further boost to his chances of success at the next general election.

Saturday, 24 May 2008

Blair without the salesmanship

As Labour MPs claim that Gordon Brown is 'Blair without the salesmanship', a review of the odds for Labour leader shows that there is no clear alternative candidate. This is evident when one considers that Jack Straw is in the running at 7/1. He has been home secretary and foreign secretary, but he was moved on because he was not seen as a great success.

Boy wonder David Miliband is favourite at 5/2. But he could well be Blair without the common touch who comes across as a think tank wonk. Alan Johnson at 6/1 would be a safe pair of hands, but says he doesn't want the job. But then others have said that.

The dearth of candidates is shown by the fact that James Purnell is in the running at 10/1. A virtual unknown, he has been promoted as the 'heir to Blair' by the Spectator which does him no favours.

Bring up the rear of the field are Brown clone Ed Balls ('it's all Balls') at 8-1. Jon Cruddas at 10-1 who has soft left backing and back bench malcontent Charles Clarke at 33-1. As Private Eye would put it, that's enough candidates.

Increasingly, the true heir to Blair looks like Dave Cameron: informal, approachable, modern, compassionate and aspirational.

Friday, 23 May 2008

As bad as it gets

The Conservatives' reversal of Labour's majority at Crewe and Nantwich is as bad as it gets for Labour. It is evident that not only did some Labour voters stay at home but many of them switched straight to the Conservatives. Whether they will stay with them in a general election remains to be seen.

However, Gordon Brown is not going to resign nor are 70 MPs going to nominate an alternative leader. There is no clear alternative candidate. Alan Johnson would go down well with party activists, backbenchers and trade unionists, but less well with Middle England. David Miliband is still too inexperienced.

In many respects it's a case of 'The Economy, Stupid' and an economic recovery could do a lot for Labour's fortunes. However, it looks like there has been a step change in the price of oil which is not good for inflation or the economy generally. One welcome by-product is that East Asian countries may now reduce their subsidies of oil.

The Liberals got badly squeezed at Crewe, but can blame this on a two horse race.

Wednesday, 21 May 2008

Dave prepares for government

Conservative leader Dave Cameron thinks there are two likely scenarios for the outcome of the next general election - a small overall majority for his party or a large one. He is planning for government based on both scenarios. Talks with permament secretaries will start next January, although how much they are told about Conservative plans will depend on how receptive they are.

Dave Cameron thinks that Tony Blair ran a brilliant campaign, but was insufficiently prepared for government. Possibly Blair's mistake was to follow Conservative spending plans for his first term (which they would have topped up anyway) and then to over react in his second term by increasing spending rapidly, leading to the current problems with the public finances.

Sunday, 18 May 2008

A summer of discontent?

Refuse collectors, home helps and social workers are threatening 'sustained strikes' this summer as unions prepare for a wave of industrial action over below-inflation pay deals. Unions sense that the 10p tax U-turn has left Gordon Brown vulnerable. One problem thus leads to another.

The news from Crewe and Nantwich is not good for Labour. An ICM survey for the News of the World found that 45% of Crewe and Nantwich constituents plan to vote Conservative, compared with 37% backing Labour. Meanwhile, a YouGov poll for the Sunday Times put the Tories on 45% to Labour's 25%.

Brown continues to face criticism from left-wing Labour MPs who were hoping for a lurch to the left while Blairites continue to mourn their lost leader. However, there is not really a credible alternative who would rescue Labour from their travails. Charles Clarke anyone?

Wednesday, 14 May 2008

Darling seeks to end 10p tax row

Alastair Darling has sought to defuse the 10p tax row, but at considerable expense to the public finances. Facing a difficult by-election in Crewe and Nantwich, and a revolt by Labour backbenchers which could have derailed the Finance Bill, Darling decided to raise personal allowances by £600. Higher rate taxpayers will not benefit because of an adjustment to the threshhold.

The move will cost £2.7bn and will not help all those who lost out by the abolition of the 10p rate. The package still leaves 1.1 million people who earn between £6,635 and £13,355 worse off. These include childless workers who are under 25 or work less than 30 hours and some female pensioners under 65. Moreover, people earning between £19,000 and £40,000 have already gained from tax changes and now will get more.

The money to pay for the package is to be borrowed which will put the 40 per cent debt rule under further pressure. The deal is for one year only and difficult decisions will have to be made later in the year about how to recover the money. It is not easy to see where additional tax revenues can be raised.

Monday, 12 May 2008

The narrative of defeat

This is the phrase The Economist uses in a leader to describe the way in which the media construct the misfortunes of the government into a seemingly coherent narrative. After a while such a narrative becomes self-sustaining.

Of course, one very real defeat that the Government may face is in Crewe and Nantwich where the first local poll suggests a swing to the Conservatives of around 10 per cent, giving them a majority of 1,000. What may well happen is that there will be relatively little increase in the Conservative vote, but Labour voters may stay at home. Quite a lot also depends on whether any of the 16 per cent of voters plumping for the Liberal Democrats switch to the Conservatives.

Peter Riddell points out in The Times that by-elections are much rarer than they used to be. Since 2005, there have been an average of only just two a year, following a mere 1.5 annually over the previous four years. Between the mid 1960s and the mid 1980s the average was eight.

Gwynneth Dunwoody was rare in dying in harness. Now that they have good pensions, and face increased demands from their constituents, MPs usually stand down before the state retirement age.

Friday, 9 May 2008

YouGov reports 26 per cent lead for Conservatives

The latest YouGov poll is putting the Conservatives on 49 per cent with a 26 per cent lead over Labour:


This would imply a clear Conservative victory at Crewe and Nantwich and Dave himself has said that a failure to win would be a 'bad' result. Labour is trying to portray the Conservative candidate as a 'Tory toff' from a Cheshire commuter village. Whilst having people going round dressed up in top hats and tails is mildly amusing, I am doubtful whether it will shift any votes.

We have to remember that a general election is now probably two years away and a lot could happen in the meantime. No doubt there will be a revival of speculation about Gordon Brown's leadership, but 70 Labour MPs would be required to mount a challenge against him.

When I was in Canada recently, I was interested to read that a political leader was allowed one attempt to get elected. Brown hasn't even had that. At one time, leaders were given several chances - Attlee led his party in four elections, twice to victory and twice to defeat. Heath contested four and won one. Wilson contested five and won four. Mrs Thatcher was, of course, never defeated at the polls.

Wednesday, 7 May 2008

Crewe and Nantwich

Despite the recruitment of Tamsin Dunwoody as the Labour candidate (already being portrayed as a Brown clone), the Conservatives must be odds on favourites to win the Crewe and Nantwich by-election. The Conservatives are pouring substantial resources into the fight and Dave Cameron was seen on television last night rather awkwardly evading a voter's question about whether he would restore the 10p tax band if he was in charge.

Of course, he couldn't without wiping out the standard rate tax cut, even though in my view that was a mistake in the first place. This issue continues to fester away for Labour with the proposed 'compensation' necessarily being portrayed as inadequate given that there is no money left in the coffers to pay for it.

The word from the Conservatives is that losing this seat would be a 'killer blow' for Brown. This strikes me as a bit odd given that in the Wilson and Callaghan governments the Government losing a by-election in mid-term contests was a routine event, even rock hard Labour seats such as Ashfield succumbing to Mrs Thatcher's onslaught (much to the surprise of the Conservative victor who subsequently slipped into obscurity). Most of these seats werwe won back at the subsequent general election, although Liberal Democrat victors are generally better at holding on to their conquests.

But supposing Brown went, would that help the Conservatives? Surely better for them for him to remain in office as a perceived weak and ineffective leader of a divided party? Public rhetoric aside, no doubt they have worked that out for themselves. But it might encourage union leaders, petrol protesters and the like to have a go at the Government.

Like any Government that has been in office for a long time, the Government is starting to look exhausted. It is running out of ideas and any new initiatives are open to the charge 'why haven't you done that before now?' The Conservatives propose to unveil one policy at a time in a kind of strip tease, but at some point people are going to ask for a clearer idea of what Dave is going to do when he is in charge.

North of the border

Aberdeen: Yesterday the Financial Times had a small item buried away on an inside page announcing that Wendy Alexander, the Scottish Labour leader, had decided to call the SNP's bluff and demand that they go ahead with their referendum on independence now rather than wait until 2010. When I got to Scotland, the item received major attention on the Scottish news. It seemed that the move had split Scottish Labour MPs and that Alexander had gone ahead without the approval of Gordon Brown, no doubt hoping to force the issue.

Apparently, Alexander is considering bringing forward her own bill if the SNP does not act. No doubt this will cause some embarrassment for the SNP given that polls consistently fail to show a majority for the independence option. However, at the moment a commission is considering the transfer of further devolved powers to Holyrood and it should really be allowed to complete its work before any decisions about the future are taken.

Having written on the comparisons between Scotland and Quebec in the past, it seems to me that the role of Scotland in the UK may follow a similar path in the sense that further concessions on devolution will be granted, but the issue of separation will never quite go away. In Canada, which has a proper federal structure, the equalisation formula between provinces continues to be a source of tension between provinces, just as the Barnett Formula raises suspicions in England that Scotland is getting a good deal at the expense of the English taxpayer (although Scotland has plenty of counter arguments to deploy).

Saturday, 3 May 2008

The dangers of reading off

There is a need to be cautious about reading off from this week's election results to the conclusion that Dave Cameron is good as installed in Downing Street. The results are clearly bad for New Labour, but choosing a government is somewhat different from voting in a mid-term set of local elections. As Peter Kellner of YouGov has pointed out, there is a lot of negativity towards Labour, but still limitations in positive feelings about the Conservatives.

The danger for Labour is that they will start to fall out with each other. There is no serious support for replacing Gordon Brown and no clear alternative available. He could, however, allow more prominence to other members of his team. The economy may yet recover between now and a poll which could be delayed until 2010.

Of course, there is a wider challenge with globalisation. A report from Statistics Canada this week has shown that the long-term trend here has for the rich to get richer, the poor to get poorer and those on median incomes to 'flat line' at best. That is not, I would suggest, a distinctively Canadian phenomenon.

The risk for the Conservatives is that they could think the election is already won. However, Dave Cameron is too politically smart to think that. As they look more like an alternative government, it may also be that some more awkward questions will be asked about their policies.

Friday, 2 May 2008

The gas tax issue

Montreal, Quebec: Watching some of the coverage of the US presidential election from just across the border, one of the big issues this year has been a federal gas tax holiday. Hillary Clinton wants a tax holiday and proposes to pay for it with a windfall tax on big oil which strikes me as a classic piece of populist opportunism. McCain is in favour but wouldn't charge big oil. Barack Obama is against - after all it would only save the average family $30.

I was trying to work out with an American colleague last night the difference between motor fuel prices in the US and the UK, but we reckoned that UK consumers are paying more than twice as much. US consumers are nevertheless howling with pain. In the UK there has been another protest by hauliers and there seems to be a popular view that the tax should be cut.

What the proponents of a tax cut never say is which other taxes should be raised or which areas of public expenditure should be cut. If you cut fuel taxes you have to do either or a mixture of both. You can't responsibly borrow any more to cover the loss of revenue.

It was interesting to note the President of Shell saying the other day that easily recoverable oil production in the world will peak in 10 to 20 years. In other words, the cost (including in some cases the environmental cost) of recovering oil will rise. Given that many countries in the world subsidise the consumption of oil by industry and consumers, demand is not going to fall. So it is difficult to see how an increase in hydrocarbon prices can be avoided in the medium term.

Given that, some sort of adjustment has to start to be made. Of course, demand for motor fuel is very price inelastic. Even so, a cut in tax would not discourage consumption and given the long-run picture it doesn't seem to be a very smart move.

Thursday, 1 May 2008

Boris and Ken: a Canadian view

Montreal, Quebec: Extracts from the Globe and Mail:

One is a hard-drinking socialist who has five children by three different women. Another is a some-times quiz-show host who once called black children 'pickanninnies' and admitted that he tried cocaine, but squeezed instead of snorted. The third is an openly gay former top policeman.

No, they're not contestants on the latest reality TV show - they're the leading contestants to become mayor of London. A campaign that is supposed to be about key issues ... has often seemed more like an open-mike night at a comedy club.

The piece ends my quoting one of my fave political scientists Philip Cowley from Nottingham: 'You've got two maverick politicians ... They both have great strengths, but they're both deeply flawed as well.'

My guess is that Boris will win. In academic work one is not supposed to take anecdotal evidence seriously as one risks committing an individiualistic fallacy, but sometimes a vox pop can give you a useful intuition. One London voter commented that he would vote for Boris because it would be more fun.

Whether it will be an easy ride for the Conservatives we shall have to wait and see. We are told that men (and some women) in suits will actually run the city. But Boris will still be the symbolic leader of one of the great cities of the world - and he once said that voting Tory 'will cause your wife to have bigger breasts and increase your chances of owning a BMW.' Will he be able to keep his mouth shut?

Equally I can understand why Londoners are fed up with Ken. It doesn't speak well of the calibre of political leadership in modern politics.