Sunday, 31 January 2010

'U-turn' by Dave?

The language of British politics has not been enhanced by the notion of the U-turn. It was originally introduced to describe Ted Heath's dramatic policy shift in 1972 and Mrs Thatcher subsequently declared: 'U-turn if you have to. The lady's not for turning.' In fact it is quite sensible for politicians to adjust policies to changing circumstances. If the facts change, then one can change one's mind, as Keynes in effect said.

Now Dave Cameron has in effect been accused of a U-turn over an apparent retreat from a pledge to make early cuts in spending: Spending

This will be a very difficult decision for whichever party is in government after May. There is no doubt that the economic recovery is anaemic (particularly compared with the latest figures from the US) even if the GDP figures for the final quarter of last year are subsequently increased. My own intuitions rely to some extent on what I hear from the chamber of commerce network in Oxfordshire and the word there is that the weather in January hit demand quite hard. They are also noting a lack of one person start ups of new business which normally occur in that area. There is a real risk of a 'W' shaped recession if public expenditure is cut too quickly.

On the other hand, if sufficient cuts are not made (as distinct from projected) the UK's bond rating will be downgraded and we will end up paying a lot more in interest on our gilt edged, if we can sell it. The pressure is on Greece now, but it may switch elsewhere.

It may be that Dave's softening of his tone was a response to the latest poll figures which suggest that the Conservative lead has been cut. There are also unsubstantiated reports of a rift between Dave and Boy George: Poll

A 9 per cent lead would result in a hung Parliament with the Conservatives as the largest party (no doubt backed by the Ulster Unionists following their recent discussions). However, one has to be careful about reading off from a national poll to individual seats.

The Conservatives have been making a big effort in key marginals. A simple reading of this poll would cast doubt on the chances of Chris White winning Warwick and Leamington for the Conservatives. My sense, however, is that the Conservatives are still doing well in the constituency.

The political science literature tells us that campaigning makes a difference. Chris White fought the constituency last time and he is a local councillor. He has been assiduously courting key groups who might not necessarily be natural Conservatives. Last week he met nurses at Warwick Hospital and the meeting seems to have gone well.

There is a long way to go yet and I do think that some voters harbour negative memories of the last Conservative administration and fear a 'slash and burn' approach to public expenditure. It's a difficult path for Dave Cameron to tread.

Wednesday, 27 January 2010

100 days to go

I got an E mail message this morning from Chris White, the prospective Conservative candidate for Warwick and Leamington, reminding me that it is 100 days to the expected date of the general election on May 6th. Chris also points out that there has been only one change of government in Britain in the last thirty years, something he is hoping to change by bringing the constituency into the Conservative column once again.

Although Warwick and Leamington was not selected as one of the homes of 'motorway man' in a recent article in the Financial Times Chris may find some of them as he goes door to door given the proximity of the M40. 'Motorway Man' replaces 'Worcester Woman' as the new median voter. A typical motorway man is a middle aged middle manager in industry from a Labour voting background who is materialistic in his outlook. He lives with his family in a modern house, perhaps on reclaimed land, so close to a motorway that it may be in earshot. Read more here:


Chris may take heart from the latest British Social Attitudes survey which suggests that the number of Conservative identifiers now exceeds the number of Labour identifiers for the first time for many years. Moreover, voters' attitudes seem to have shifted to the right on economic issues, but not on social issues which is consistent with Dave's stance (leaving aside his rather retro views on marriage): Attitudes

As a voter who has not yet made his mind up how to vote, I am surprised that so many Labour supporters seem to think that Gordon will win or that there will be a hung Parliament. Dave does need a big swing, even if the Conservatives are doing better in key marginals than elsewhere. But will voters really opt for another five years of Gordon Brown just to keep Dave out? They may not be enthusiastic about Dave, but they are even less so about Gordon.

The election may provide an opportunity for the Liberal Democrats and other small parties, but whether they can seize it remains to be seen. An interesting article has appeared in the latest Political Studies on the BNP vote which confirms that Labour is very vulnerable to them and also that UKIP voters, although sometimes overlapping, are generally different in their characteristics and outlook from BNP supporters.

Tuesday, 26 January 2010

The core executive that isn't

The notion of the 'core executive' has been given a central place in analyses of British government. But an important new report from the influential and well connected Institute for Government found a conspicuous lack of joined up thinking between Numnber 10, the Treasury and the Cabinet Office revealing a 'strategic gap' at the heart of Whitehall.

Read more here: Core

Friday, 22 January 2010


'Quangos' are a popular target for public expenditure cuts and certainly there has been justifiable concern about the salaries paid in some of these bodies. The term 'quango' was originally invented by Tony Barker of Essex University to refer to 'quasi non-governmental organisations', i.e., private bodies that were 'chosen instruments' for public purposes such as the National Housebuilders Registration Council. In contemporary use, 'quangos' are what used to be called 'quasis' or Non Departmental Public Bodies in official terminology.

Their numbers and size have increased as a result of two main trends which have reinforced one another. First, the move towards the 'regulatory state' so ably traced by Mick Moran, reflecting in turn a more risk averse society and the demands of the media that 'something be done' every time there is some kind of scandal which usually means setting up a new regulatory agency. Another driver is the European Union which is a regulatory state par excellence.

Second, the move towards depoliticisation which tries to take awkward decisions away from ministers and place them in a more technocratic setting. NICE, the National Institute for Clinical Excellence, would be a classic example but it has not really succeeded in depoliticising difficult and often inherently emotional choices about spending on drugs, particularly for the terminally ill.

One really needs to ask three questions about quangos:

1. Should the task be performed by government at all?
2. Is it better performed by a public agency rather than a government department? (a trend which started in the 1970s and gathered pace in the 1980s).
3. How can one secure accountability? (This involves not just conventional accountability to Parliament but also accountability to stakeholders).

My direct experience of these bodies is principally in the area of environmental policy where agencies are carrying out tasks that the public seems to want, e.g., cleaning up beaches or polluted rivers or controlling the use of potentially toxic substances. These are not tasks that can be done on the cheap as they require at a minimum techically skilled individuals and often people educated up to PhD standard.

My general impression is that in the health and education area there are bodies that overlap or duplicate one another. Since the Hampton Review, there has been an effort to merge quangos, although the resultant efficiency gains are often not as great as was hoped for.

When one is talking of 17 per cent real terms cuts in public expenditure over three years, quangos cannot expect to escape, but one also needs a sensible debate about what they should be doing and how they should be doing it.

Sunday, 17 January 2010

The populist right

Parties of the populist right may not win any seats in the general election, but the votes they take could be quite crucial in marginal seats where they could exceed the margin of victory for either party. Although I don't have any data to hand on this, my impression has been that UKIP has tended to appeal to broadly middle class voters who might otherwise vote Conservative.

UKIP have also been very much focused on the issue of Britain's relationship with the EU which has worked well for them in European elections, but the narrowness of their focus has been a handicap in general elections (where voters, up to now at any rate, have been inclined to revert to the main parties). They are now seeking to broaden their appeal to working class voters: UKIP

The Conservatives might have grounds for concern about this, although it is noticeable that they are taking a stronger line on immigration and a report in the Sunday Times yesterday suggested that this might be helping them in key seats. The overall 9 per cent lead for them in the YouGov poll is not as large as they need to be really confident of a solid overall majority, even if they are doing better in marginal seats.

Although it is difficult to generalise, the BNP vote has often come from those who would otherwise vote Labour or might not vote at all. A report in The Times in their interesting 'broken Britain' series in which writers re-visit their old home times tried to get beyond the usual clich├ęs about racism as the single explanation to explore what was happening in Burnley, a town where the BNP has done relatively well. You can read the article here: Burnley

For those who do not know Burnley, it is important to emphasise that this former textile town suffers from serious economic and social deprivation. I have seen scenes of urban devastation there that are more characteristic of the United States. One couple referred to in the article had low paid jobs and were struggling to pay a mortgage on a house that was declining in value. These are the very 'working poor' that Labour claimed it would help.

Those interviewed were inclined to blame Mrs Thatcher and Labour deserting the working class for the plight of Burnley. One thing that wasn't mentioned was 'globalisation', but however much people dispute the concept, it is a reality which has hit those with limited skills in towns like Burnley.

To end on a positive note, a relatively small and deprived town has produced a football club which looks like it might survive in the Premiership.

Doubting Dave

It is sometimes argued that the only thing Dave Cameron cares about is getting the Conservatives back into office. There is no doubt that he does genuinely believe that the Conservatives would do a better job than Labour and some people might think that was not too difficult.

I always thought that one of the keys to understanding Tony Blair was his religious beliefs, caught so effectively in Private Eye's 'Vicar of St. Albions' series which also featured characters such as 'Mr Prescott from the working man's club.' Blair still makes the occasional appearance as head of an ecumenical organisation called DAFT.

In my view Blair was the most devoutly religious prime minister we have had since Gladstone. Sensitive biographers like Antony Seldon, surely one of our outstanding chroniclers of modern British politics, picked up on this. Students were always more sceptical, but I think that some of his behaviour on Iraq could be seen as a misconceived moral crusade.

Dave Cameron is a doubting high church Anglican, but I think that some of the ideas he really cherishes stem from his beliefs. Whether they make good policy is another question.

As a general narrative, Dave emphasises the 'broken Britain' thesis. I would agree with him when he says that people should not expect government to sort out all their problems and that local communities should do more for themselves. However, that is easier in some communities than others and often a lot depends on one or two dedicated individuals with leadership qualities who aren't available everywhere. And if Britain is broken - and I am not sure that I like such negative messages - I am not sure that government can put it back together again (although its actions can have positive or negative effects).

More specifically, Dave wants to support marriage and stable families. In his own life, he has experienced challenges in his family which would test most people. I am not sure I would have coped as well as he has if I had experienced similar circumstances, particularly if I was in public life.

The Conservatives want to use the tax system to support marriage. Personally, I can't see a lot of difference between a long-term stable partnership in which two people are married and one in which they are not. To be fair, Dave's definition of marriage includes civil partnerships and I am quite sure that he is not pursuing any kind of anti-gay agenda.

Some research has now come out under the aegis of the authoritative Institute of Fiscal Studies which suggests that the proposal to introduce a married couple's tax allowance would not achieve the party's goal of reducing child poverty. When I looked at this more closely, I found out that the research had actually been carried out by Gingerbread, the one-parent charity. They are a very reputable organisation but, quite legitimately, they have a particular view about family policy. (If you want to look at the study go here: Gingerbread .

Paradoxically, the two Conservative policies I have most reservations about - the marriage tax proposals and the inheritance tax changes - are ones that I (or my estate) would benefit from.

Of course, one can never base a voting decision on particular policies. One has to look at a party's programme in the round, its leaders, its likely competence in office compared to its opponents - and, last but not least, its local candidate. One could vote for a candidate who one would thought would make a good addition to his party's ranks while still having reservations about that party's policies.

What concerns me about the marriage tax proposal is that runs counter to Dave's avowed commitment to modernity. The inheritance tax proposals seem to me to buying into a Daily Mail agenda when the real beneficiaries will not be middle Britain folks whose houses have become worth a lot of money. There may be a case for raising the threshhold, but not as far as £1 million.

Of course, given the state of the public finances, neither policy may be put into effect all that quickly. But symbolism in politics is very important.

Having been somewhat critical of the Conservatives, I must say that Labour strategy seems to be at sixes and sevens or perhaps, to put it more charitably, it is an attempt to appeal to everyone that it is unlikely to succeed. The core vote strategy appears to have gone out of the window for now and an attempt is being made to portray Labour as the party of aspiration and 'middle Britain' which doesn't seem to be very credible to be given that so many 'new' Labour policies have been ditched.

Indeed, Mandy now seems to have come out in favour of an interventionist industrial policy which is surely an abandonment of new Labour's creed as outlined after the election by guru Giddens. But that is for another day.

Thursday, 14 January 2010

Vox pop

Radio 5 were running a rather interesting set of interviews this morning on Derby North. This is the constituency that the Conservatives have to win get an overall majority (Warwick and Leamington would give them an overall majority of two). It's quite a complicated seat in the sense that the Lib Dems came second last time and control the local council.

What voters say in these vox pops does not constitute social science, but it is nevertheless illuminating:

Voter 1, a woman in her late thirties with concerns about mugging and social disorder, had voted Labour in the past because her dad had voted Labour, but had now stopped voting. If she voted, she would vote Labour, but she doubted whether she would vote, even given the marginality of the constituency.

Voter 2 worked in the school buildings industry and praised Labour for their funding of school building, although he thought his local school was a 'mess'. He also would like a 20 per cent tax cut. It's voters like these that make you realise how hard a politician's job is.

I missed the start of the Voter 3 interview and at first I thought she was a Derby Council spokesperson droning on about 'innovation' and 'skills'. She was in fact a small business entrepreneur, knew how she was going to vote, but wouldn't say.

At one time small business people were the most solidly Conservative occupational group (apart from large-scale farmers). It's a bit more complex now with a new generation of graduate entrepreneurs. I know something about this because one of my children has done the classic garage business to big factory in five years story and I have met some of her network of entrepreneurs of a similar age in Oxfordshire.

First, I say that they are apolitical in a party sense, although often quite involved in local politics or more particularly business politics (chamber of commerce, small business associations, trade associations). Some of them vote Conservative, if they vote at all, but I would hazard a guess that others see the Lib Dems as the party of smaller businesses.

Hear my podcast on the general election here: Election

Tuesday, 12 January 2010

A vacancy in Shakespeare's town

John Maples has announced that he is to stand down as MP for Stratford upon Avon. This is a gold plated Conservative seat with Maples taking 51.3 per cent of the vote at the last general election. Many years ago it was the seat of John Profumo of the Profumo scandal.

Maples was at one time seen as something of a rising star in the Conservative Party holding two Treasury posts before losing his seat at Lewisham West in 1997. He returned to the Commons in 1997 and held various shadow posts until 2000.

Redistricting in Warwickshire has created a new safe Conservative seat in Kenilworth and Southam. The Conservatives should be able to win Rugby from Labour and they should also take Warwick and Leamington if they do as well as expected.

All these seats have male Conservative candidates. Indeed, in Warwick and Leamington there may not be a woman on the ballot paper. David Cameron has been keen to increase the number of women Conservative MPs, but this is not always easy in safe Conservative seats. Labour has used all women shortlists which are often unpopular with the electorate but academics like Sarah Childs who have researched the subject suggest that it is the most effective way of reducing the gender imbalance in the Commons.

Whoever does become the Conservative candidate for Stratford will be nominated for a plum seat that contains some attractive towns, villages and countryside.

Sunday, 10 January 2010

Will Ainswoth resign?

There has been a fresh outbreak of fraternal feeling in the Labour Party with claims that defence minister Bob Ainsworth may resign: Ainsworth

This would be a fresh blow to Gordon Brown, but hardly a fatal one. The one person who could make him go is Lord Mandelson who could not credibly be a candidate for the leadership, but although his support for the prime minister is lukewarm, he enjoys the post of deputy prime minister.

The so-called 'curry house' plot has, however, diminished Gordon Brown's authority. He is having to consult more widely and Alastair Darling has come out and said that there will have to be the harshest cuts in public spending for twenty years. In other words, the cuts auction between the parties is back on again, after the electorate seemed to be blink at what was required.

It's very easy to get voters to favour cuts in a poll, but it is a different matter when they face actual cuts. If Dave Cameron becomes prime minister, the greatest service he could perform would be to reduce electors' expectations of what government can reasonably be expected to do, in particular in terms of regulation.

Saturday, 9 January 2010

Our election coverage

As has been promised before, this blog will follow the campaign in Warwick and Leamington. This is a key constituency: if the Conservatives win it, they will have an overall majority of 2. It is therefore a 'must win' constituency for them, something emphasised by the recent visit of David Cameron.

Up until the 1966 general election, the Nuffield election studies of each general election used to have constituency case studies. They were dropped in favour of more analytical material, and arguably they had become rather superficial. Nevertheless, there is an interest in following the campaign from the perspective of a particular constituency. Rather than being retro, it gives a 'bottom up' perspective on the national campaign.

The broad plan of attack will be as follows. We will start by reviewing the history of the constituency which is quite unusual given the role of the Countess of Warwick as the first Labour candidate and the long tenure of Sir Anthony Eden in what became known as the 'Garden of Eden'.

Subsequently, we will look at the demographics and composition of the constituency. Despite the 'Royal Spa' image, historically Leamington and Warwick were manufacturng towns with an emphasis on the motor industry. They were broadly prosperous communities, but they had and have substantial pockets of real deprivation.

I have lived in Leamington for 35 years, but I am not a 'townsman', someone born and bred in Leamington. The numbers of such people are higher than one might think. It is quite a heterogeneous and unusual place and I wouldn't claim that I understand it fully.

At a later stage, when they are known for certain, we will look at the candidates. The contest is interesting in that it involves a re-match between sitting Labour MP (since 1997) James Plaskitt and Conservative challenger Chris White. There will certainly be Liberal Democrat and Green candidates, almost certainly UKIP and possibly BNP. In a close fought contest, the share of the vote taken by these candidates could be significant.

We will also be following the campaign. In one sense, that has already begun. For example, this week Chris White has revealed through Facebook that he has been discussing Conservative proposals for the NHS with local health service professionals as part of a broader outreach effort to various groups in the community.

As for the electorate, they are probably preoccupied at the moment with the icy conditions on the streets and pavements and the interruptions to services such as refuse collection. Even in such a marginal constituency, perhaps a third of them will not vote at all, reflecting in part a disllusionment with the political process.

I have recorded a podcast on the (national) election which will be available in a week or two. I did refer to James Callaghan's remark before the 1979 election that every so often there is a sea change in politics which one can't do much about. In 1979 the Conservative secured office for 18 years, helped in part by disarray in the opposition for much of that time. Labour will have been in office for almost 12 years by the time of the election and it took some time for the Conservatives to get their act together as a credible opposition.

One must be careful of assuming, however, that long tenures in office are necessarily typical. Between 1959 and 1979 we had a Conservative government, then Labour, then the Conservatives again, then a Labour government which eventually became dependent on other parties to stay in office (before it was brought down by a usually absent independent 'abstaining in person'). There were four elections in the 1970s and that turbulent period has some parallels with today.

In any event for anyone interested in politics it will not be a boring election, not least in a constituency at the heart of England.

Thursday, 7 January 2010

The plot that failed

It now appears that Geoff Hoon and Patricia Hewitt, or 'Dim and Dumb' as one newspaper has called them, thought that up to six Cabinet ministers would come out to support their attempt to unseat Gordon Brown: Plot

Quite why they thought cabinet ministers would be willing to put their heads up the parapet when they haven't in the past is unclear, particularly given that Geoff Hoon is a former Chief Whip and should understand the parliamentary party. Perhaps the person who posted in response to an editorial in The Guardian had a point: 'I'd alway's thought Hoon was a "bit" dim, but after his appearance on Newsnight tonight I'd have to upgrade that to "thick as two short planks", qualified with "mind bogglingly naive".'

There are quite a few losers from this failed attempt. Gordon Brown had David Cameron on the back foot in PMQs yesterday, but now Labour once again can be presented as a divided party that is more interested in internal in fighting than the many problems that face the country. One of the problems is that Gordon is clearly in a state of denial over public expenditure cuts, thinking that a growth miracle that no one else believes in can stave them off or at least reduce their impact.

As Trevor Kavanagh of the Sun - one of our best political correspondents - pointed out on Radio 5 this morning David Miliband comes out of this badly. His endorsement of the prime minister, PSA prize winner Kavanagh pointed out, amounted to saying 'I am in the government as foreign secretary and working on my boxes.' Once again he has shown himself unable to wield the knife, something that has already finished off the hopes of fading star Alan Johnson. Of course, the problem is that if you wield the knife you may debar yourself from the prize, Michael Heseltine being the prime example.

Increasingly this looks like an exhausted government that has run out of ideas and has lost the collective will to live. The risk for Labour is that whoever becomes Leader of the Opposition may inherit a shattered and divided party. Even Harriet Harman with her aristocratic iciness and her trade union credentials might find that a poisoned chalice.

Wednesday, 6 January 2010

You really couldn't make it up

To say I was surprised would be an understatement when Reuters rang me up to say that two former Labour ministers are proposing a secret ballot on whether Gordon Brown should continue as party leader. I am pleased that a more experienced commentator also finds it extraordinary: Coup

Leaving aside the dubious constitutionality of the move, taking this action just months before a general election is unprecedented. If it was successful, it would be some while before a new leader was installed. In the interim, chaos would reign. And just who is this charismatic leader in waiting who is going to save Labour's bacon? This is a gift wrapped present for David Cameron just after he had an uncertain start to his policy launch.

The underlying narrative is that there are Labour MPs who think that it is Gordon Brown who is denying them a chance of winning the general elction. Brown is unpopular, but this is not really just about personalities. It is about the exhaustion of the New Labour project with a battle going on between those (e.g., Peter Mandelson) who are still loyal to the project and those who want to see a return to core Labour values.

Political scientist loses the plot

Olafur Grimsson, the president of Iceland

In 1976 I was attending the conference of the International Political Science Association in Edinburgh and a tall man bounded up and introduced himself to me as 'political science in Iceland'. Indeed, Olafur Grimsson had been the first person in Iceland to obtain a PhD in political science from the University of Manchester's Department of Government then under the tutelage of the formidable Professor W J M Mackenzie.

Olafur Grimsson has for many years been the president of Iceland. In many ways it is a figurehead position but now he has used his reserve powers to overturn a 33-30 decision by the country's parliament (located in a singularly undistinguished building) to agree a plan to pay back money owed to Britain and the Netherlands as a consequence of the collapse of the country's banks.

The continuation of the left-of-centre government is now endangered, but of broader significance is the fact that the decision will now have to be put to a national referendum. Many Icelanders feel that they are not personally to blame for the mistakes made by their over ambitious bankers and that as a country of 300,000, they are being bullied by Britain in particular. As we saw during the Cod Wars, they are very good at mobilising sympathy.

Lord Myners, City minister, said that Iceland would 'effectively be saying that it did not want to be part of the international political system.' What would that mean in practice? Britain could veto Iceland's bid to join the EU, but it is far from clear that the country's citizens want to join anyway.

More seriously, it could block some of the IMF loans which are to be made available as some of them have conditions attached which require arrangements to be made for debts to be settled.

One can feel some sympathy for this beautiful country. Its citizens have a quiet pride in its unique identity, but can also be roused like the streams of lava which break through its surface from time to time.

One could look at the terms of the repayment, but these are quite favourable as Iceland has been seven years' grace with no interest accruing before the first payment is due. Then it will have to pay back £2.35bn over 15 years to the UK and £1.3bn to the Netherlands at 5.5 per cent interest. Possibly the interest rate could be reviewed.

In the meantime, Fitch, the rating agency, has downgraded the country's main soveregn credit rating to junk status. An OECD member country is becoming one of the casualties of the global financial crisis.

Tuesday, 5 January 2010

Dave has a wobble

Much talk in the press, e.g. the pink 'un, over Dave Cameron's 'wobble' over tax relief for married couples. This is the sort of item that attracts the attention of the 24/7 news agenda: who has made a gaffe, how have they made it, and what's the recovery strategy. 24 hours of point scoring between the main parties (with Nick Clegg getting his oar in by saying the Lib Dems can't be bought cheaply) and I am already getting tired of it. What must less interested voters think?

The Conservatives clearly think they are on to a winner with Dave and the NHS. Posters are going up round the country with Dave looking serious and reassuring and making his pledge to increase NHS spending in real terms (which means cuts of up to 20 per cent elsewhere). Interestingly, there is no mention of the Conservatives on the poster, but that adds up when Dave is running ahead of his party in the ratings.

On a more serious note, I do have a serious concerns about the Conservative plan to 'repoliticise' decisions on the NHS by involving ministers more. NICE has been the subject of considerable criticism, some of it justified, and it is, of course, a quango. But the reason for setting it up was to get away from a NHS agenda driven by the pharamecutical industry and pressure groups. Indeed, research shows that there are often close links between patient groups and companies selling drugs.

The pressures on the NHS are immense: an ageing population, continually improving technology, constantly rising patient expectations. Some day we are going to have to think the unthinkable and consider whether some services will have to be charged for. Politically, of course, that's a very difficult nettle to grasp, especially in an election campiagn.

In practice, it has already happened with dental treatment. You can find a NHS dentist, but it's not easy. Private dentists don't come cheap. In many ways, it's not a good model for the future. But someday someone is going to have to face up to the dilemmas. The electorate may demand that the NHS is treated as sacrosant and I'm sure it's good electoral politics. But is it good policy?

Monday, 4 January 2010

The gilt edged strike is back

I remember writing in the 1970s about the possibility of a gilt edged strike: the risk that the markets would refuse to buy government debt or at least in the quantities that was needed. Now that is back as a real risk given the huge amounts of government debt that have to be serviced. Even a small increase in the cost of government debt would have a big impact on the deficit.

However, if one started to cut two deeply and too quickly, one might produce a 'W' shaped recession. No great surprise then that economists (once again) are divided down the middle about what should be done: The economy

I tend the share the view of the CBI's chief economist: it is not the starting point that matters so much as the medium-term credibility of the plan.

This article also argues that what Britain needs is not shock therapy but a credible five year plan: Therapy

The risk is that a new Conservative Government would seek to hit the ground running by making deep cuts; the resultant rise in unemployment would hit the recovery; and the Government would become unpopular on two fronts - reduced public services and poor economic performance. Some of this could no doubt be blamed on Labour, but that alibi would wear thin after a while.

Realistically, the Conservatives expect to be unpopular and feel that they can ride out the storm until the sunlit uplands are reached. Maybe, but it will require good timing and great political skill.

Saturday, 2 January 2010

Ken: Dave could have to raise taxes

Shadown business secretary Ken Clarke had admitted that the Conservatives may have to raise taxes if they win the general election. He did not rule out an increase in VAT. He also said that Dave Cameron was having 'a struggle' to get his message across: Ken

From one point of view this is welcome honesty about what is needed to balance the country's book.s Without tax rises it would be difficult to start to deal with the deficit without cuts in public services that would be unacceptable to many voters. However, it does give some potential ammunition to Labour as VAT is a regressive tax.

In terms of Dave's message, which he started rolling out with a speech to his party workers in his constituency yesterday, the polling evidence would seem to suggest that voters are fed up with Gordon Brown and Labour, but do not yet feel confident about Dave and the Conservatives. Indeed, in some respects the Conservatives have been falling back, although the upcoming series of launches may help them to seize the agenda.

Conservative workers in key marginals seem to be quietly confident without being in any way complacent. It is in these seats that the election will be decided.

Friday, 1 January 2010

Going to the IMF

As a regular user of the National Archives, I hadn't realised that discussions held on Privy Council terms were never supposed to be released. This story from 1974 which has somehow got under the wire has some relevance to contemporary economic policy: Heath