Tuesday, 16 September 2008

Dave, be nice to Nick

Nick Clegg is in a strange position. As leader of the country's third political party he knows he has no chance of winning a general election and becoming Prime Minister, yet he also knows that a close result might leave neither of the major parties with a majority in Parliament so he could have considerable power by offering his MPs' support to one side or the other in return for a few policy concessions. As things stand today the prospect of a hung Parliament seems very unlikely, but you never know.

This week the Liberal Democrats are meeting and some interesting changes seem to be afoot. A party which has argued strenuously for higher taxation over the last decade now appears to be changing tack. It is hard to tell exactly what is going on because poor Mr Clegg is walking from one twisted knicker situation into another. One day he is going to reduce taxation, the next day there will be no overall reduction; one day he is going to cut government expenditure by £20bn a year, the next day he only thinking about it; one day income tax will be cut for the poor, the next day it is unaffordable. What one can discern as a distant vision through the dense yellow fog is that the general attitude at the top of the LibDem's is changing. Not long ago it was unthinkable for the leader even to hint at tax cuts and a reining-in of government spending, that we are getting confused hints now is a move in the right direction.

It is particularly interesting to see how this is being reported in the mainstream press because that has a significant effect on public perception. Generally the position is being put forward that the LibDems are proposing reductions in tax for those at the lowest end of the income scale and that it will be paid for by cutting unnecessary bureaucracy. It seems to me that this is part of a general realignment of all three parties in the light of the country going fast down the economic drain. Any realignment is likely to be very bad news for Labour, very good news for the Conservatives and could hit the LibDems either way.

The reason I am confident that it will be bad for Labour is that they can only move one way, back to their natural Marxist philosophical ground. For ten years Tony Blair was able to keep a lid on ranting lefty rhetoric. Of course the occasional dinosaur would surface from the bog, let out a large burp and then descend again, but on the whole the message he was able to send was that old-style interventionist economic management of the type that brought the country to its knees in the 1970s was a thing of the past. Many of us believe the tax and spend approach poor Gordon adopted when at Number 11 was little different from traditional old-Labour policy, especially when combined with the crippling red tape rolled out from Brussels and gleefully wrapped around the throats of British businesses by our government. But that was not the message being received by the public. The message was that Mr Blair's government was committed to the market economy. Now that opinion polls suggest Labour is facing annihilation in the ballot box it must show itself to be different from the alternatives in order to have any chance of saving its skin. The only path open to it is a move back to overt socialist economic management. In my view that is a recipe for a long spell in opposition.

The Conservatives, on the other hand, have spent the last three years projecting themselves as the new friendly and fluffy party. Just as Blair's smarmy charm worked so well electorally, so David Cameron's cheerful moderation and espousal of trendy do-gooding has hit a chord. No longer is his the nasty party, now it is just as cuddly and caring as Mr Blair's Labour. It is all a matter of image, of course. Because an election is approaching it is necessary for Mr Cameron to be much more specific about what he would actually do. He has played the "I'm a nice guy" card very well and, as part of that strategy, has adopted some curiously unconservative policy proposals in order to woo popular support. Any policy necessarily only woos popular support, however, while that policy is popular.

All the "vote blue go green" piffle of the local elections worked well while people thought man-made global warming to be both a reality and something they could change. Now that the theory behind it is facing increasingly strong challenges and the price of doing something about it would hit our way of life very hard, the game is changing. The game is changing in many other areas too because there is irritation at ever increasing taxes, disappointment at only marginally improving health care, despair at the inability of government to provide good education for all, disgust at snouts in the quango trough, frustration about increased official snooping and a realisation that the government has encouraged us all to live on a bubble of unaffordable credit. The default position has changed from even eighteen months ago. Instead of the government being seen to be credible and on our side it has become the architect of economic pain and social discomfort. How true the old perception was and how true the new perception is are beside the point because it is the prevailing perception which determines how new policy announcements will be received.

This time last year we witnessed a quite extraordinary event. The economy was already slowing, house prices were starting to fall and a little nervousness was in the air, yet still the government was holding up well in opinion polls even after ten years in power. Then George Osborne gave his speech at the Conservative Party conference promising a massive increase in the Inheritance Tax threshold and suddenly the mood changed. Almost immediately opinion polls swung heavily in favour of Mr Cameron and since then the floundering Prime Minister has been unable to say or do anything other than make matters worse for him and his party. But that does not mean that one speech could ever be enough to win an election. The question still remained whether the underlying public mood in favour of high government spending would surface again as the election approaches.

Against that background, reports that Mr Clegg's LibDems feel the need to cut taxes and government spending are highly significant. The significance is nothing to do with getting the LibDems into power, it is all to do with the mood of the country, because it helps to shape the underlying general perception of the right course to follow. Few will believe that cutting taxes and spending will ever be favoured by Labour, so if both opposition parties agree that it is the right course to follow it can only add to the anti-Labour sentiment. The more that sentiment becomes a prevailing opinion, the more people will wish to vote not just against Labour but for a possible alternative government. When a mood forms for change, protest votes get squeezed and practicalities take over.

Whatever one might think of the Liberal Democrats, they are a major party and received votes at the last election far greater than their representation in Parliament reflects (almost six million votes, 22% of those cast). This was by far their best result in a general election for many decades and included a large element of protest votes, people disenchanted with Labour but not persuaded by the Conservatives.

With Mr Clegg and his colleagues giving approval to a central Conservative Party principle they have, I believe, helped to tip the mood firmly in favour of the Conservatives as well as strengthening the anti-Labour sentiment. Time will tell whether continued economic upheaval will allow Mr Cameron to go as far as many of us would like, but I am fairly sure he will put both the green stuff and his promises to match Labour spending targets on the back burner and concentrate on creating clear water between his party and a thoroughly discredited government. He must remember to be polite and write a thank you letter to Mr Clegg.

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