It seems to me that we have no other credible option but to return the current government to power in May. The alternative imperils the undoubted progress that has been made and just seems too much like a leap in the dark. As to whether we return the Conservatives with a working majority or oblige them to seek an accommodation with their present partners… that, for the moment, cannot be predicted. They may be forced – hold your breath on this one – to seek an accommodation with Labour if that party, as seems likely, is obliterated in Scotland. Oddly, for a coalition, it has been surprisingly radical in the hot potato issues it has tackled. The Liberal Democrats may have helped keep the more swivel-eyed Tories in check and were certainly right in making it a condition of signing up that the lower paid be taken out of tax altogether. It was always an affront to justice that tax was levied at such an obscenely low level of income. But now we learn that the fully converted Tories are planning to take the process a step further in the forthcoming budget and steal some of the Lib Dem’s clothes by taking the same people out of National Insurance contributions and paying for it by reducing concessions to better off pension contributors. That looks like a surprisingly egalitarian measure which will help allay the perception that the Tories only look after the rich.
If it is true that elections are decided first and foremost on the state of the economy, then we would be hard put to gainsay the achievements of the present incumbents. They came to office in about as dire a situation as it possible to imagine. In fact the country was teetering on the edge of economic catastrophe.
For years we had allowed ourselves to live beyond our means, forgetting that age-old truth that you cannot spend more than you have the guts to raise in taxation. A balanced budget was never, so to speak, a lifestyle choice and sound money should always have been at the heart of any government’s considerations. Once it has taken care of these then it should go hell for leather for an enterprise economy.
In thinking where we are to cast our vote in May, let’s take a look at some of the core issues and see if we can make a balanced judgement. Business is not everything, but it is something we have to get right if we are to become prosperous enough on a personal level and yet have enough left over to fund a compassionate society.
Recently the Organisation for Economic Co-operation and Development (OECD) – one of the world’s most respected forums – positively gushed at our efforts, lavishing praise on the economic turnabout we have enjoyed over the past five years. Far from being the basket case that our perilous situation seemed set to consign us to, we are, so it seems, a “textbook” example for economic success: the most go-ahead enterprise economy currently in the developed world.
Moreover, it isn’t just the OECD saying these things – it’s just about everybody, including the International Monetary Fund. Christine Lagarde, its CEO, has said that “Britain is an example to the world and is leading it in a very elegant and convincing way.” That’s praise indeed, especially coming from the woman who only two years ago trembled at the possible consequences of what the Chancellor was doing. So gutsy ‘Boy George’ has been vindicated and proved right all along. I don’t remember so many economic pundits getting it so wrong since 364 wrote to Mrs Thatcher predicting certain doom for her policies back in the early eighties.
And balancing the books? Well, we’ve got some way to go on that but the direction of travel is the right one and the deficit is on the way to being halved. With business confidence soaring and GDP expanding, tax receipts will balloon and we will find ourselves in a virtuous circle in which even paying down the national debt will become easy.
What about our currency? Well, it doesn’t get more trusted than when you have convinced the money markets that you are a “textbook” example and “leading the world both elegantly and convincingly”. In these circumstances your purchasing power remains strong and national borrowing costs nosedive, along with the dole queue. Against all received wisdom, job creation in the UK has leaped ahead during this recession, with jobs created running at twice the rate of lay-offs in the public sector. Here, again, Osborne’s prediction has confounded critics. Perhaps the most graphic proof that you now enjoy a strong currency is to be found when you next go abroad. Your money will go an unbelievably long way. Also, the imported goods you buy will mysteriously start getting cheaper as less and less of your precious dosh needs to be handed over to Johnny Foreigner. And all this hasn’t been brought about – as it usually has been – at the price of being forced by poor management of the economy to hike your interest rates. Indeed, the reverse is true: they are at an all-time low and likely to remain so for some time yet.
Then there’s the ever important matter of inflation. Like all the rest, we are in a very good place here. And while some people worry about the dangers of deflation, this seems unlikely to happen in our case. The reason is that pay rises are now running – thank goodness – well ahead of inflation (six times) and this will edge inflation up and so prevent a downward spiral of falling prices which cause people to hold back purchases in the belief that things will get cheaper still. In Europe, with growth remaining stagnant, only a minority in the efficient north is getting a pay rise (and then not much) and so there is not the pressure from this direction to force inflation to rise. While ours can be said to be a virtuous circle, theirs is a vicious one.
So, in all these extraordinary circumstances, why is the governing party not seeing the benefit in the polls? It is a very great mystery. On the face of it, getting re-elected should be a shoo-in. In normal circumstances, economic success translates into electoral victory. However, these are not normal circumstances and this is not an iron rule. Ask John Major. When he faced Tony Blair in 1997 we were doing so well we were even paying down the national debt and – until Gordon Brown sold off half at fire sale prices – our gold reserves stood almost at a post-war high. Gold, then, had hit rock bottom, but within no time had shot through the roof. What made the man do it? Nobody knows and Brown won’t tell us. Perhaps we should ask the would-be Chancellor, Ed. Balls. Ed was his hatchet man at the time. Anyway, the upshot of it all was this little exercise cost us billions.
Before that happened – and when New Labour took over – their inheritance was, in the truest sense of the word, a golden one. Blair and his surly, Heathcliff-like Chancellor, then proceeded to throw it all away. To reassure the country and the City to trust their fiscal rectitude, they pledged to keep to Tory spending plans for two years. When, later, New Labour called time on that irksome arrangement, Brown, together with his side-kick – who hopes to move into the Treasury again in May – went on an epic spending spree. Borrowing like never before, they displayed a level of fiscal incontinence rarely if ever seen in British politics.
With unmatched hubris, Brown – the man who doubled the size of the Revenue and Customs guide book so that only the largest and most expensive accountancy firms could fathom its complexities – shouted to the rafters, budget after budget, that he had solved one of the economic cycle’s greatest mysteries: how to avoid boom and bust. Later on he would let slip in the Commons how he had ‘Saved the World’ during the time of the credit crunch. The wonder is that some fool in Scandinavia didn’t find a Nobel Prize to award him… one as daft as that Save the Children award to Tony Blair, which was, actually, hugely insulting.
While we may find much to criticise in the ‘posh boys’ who make up much of the present cabinet, they have in most respects delivered. Quite apart from the economy, we all knew that the welfare system was a busted flush in desperate need of root and branch reform. It had encouraged a malaise of worklessness in which many had come to believe that they had a perfect right to live off their neighbour’s taxes if they were daft enough to get up on a cold winter’s morning and go off to graft for the stinking, exploitative capitalists. It also turned a goodly proportion of fundamentally honest people into cheats and fraudsters. Then, again, in education we each knew that our parents had enjoyed a sounder education in the basics than we had, and that all the certainties which had made that possible had been thrown out of the window by the fanciful, misguided notions of the teachers’ training colleges and their ilk. Discipline was also a casualty of all that trendy thinking. Meanwhile our kids slipped ever further down the international league table of academic excellence.
Another thing we all knew was that an insatiable public sector was not only looking after itself too well at the rest of the nation’s expense, but that it was gobbling up an unsustainable amount of its wealth.
It therefore is a puzzle that a government which has successfully bitten so many unpalatable bullets is struggling to get its message across. They were bullets so toxic that no government before had had the balls to bite on them. Perhaps the coalition was stiffened in its resolve to do so by the opportunities presented by the worst recession in 100 years.
Finally… what about fixed term parliaments? Another of the measures brought in by this unexpectedly reformist government. They may have many drawbacks, but one decided advantage is that there is ample time to examine the record and forensically explore the proposed alternatives. Springing a surprise election when things are temporarily looking good, but you know they are not going to stay that way was an old trick. A three-week campaign denies your opponents the time needed and allows you to work a flanker. That ruse is now firmly off the table.