Financial Crisis: Political state of play
By Ian Dunt
It has become a cliché to say the financial crisis has changed everything. Economic analysts who once railed against government interference now claim to have regulation in their blood. Politicians whose only mention of the market was to describe its wonder and beauty now proudly exalt the role of government in a brave new world.
Party politics has changed utterly. Things may not be quite as revolutionary in the UK as they are in Iceland, where the government was forced to resign in the face of national meltdown this week. But the fortunes of Britain’s three main parties have oscillated madly as the crisis developed.
Think back to last September, as the Labour party conference got under way.
Gordon Brown was gearing up for his speech, described – much like the conference speech of any leader of any party at any time in British politics – as the most important speech of his life. In Brown’s case, however, it was no lie. His support in the country was insanely low and his standing in the party pitiful. By the start of October things were already brighter for the prime minister. It wasn’t because of the speech. It was because Labour – despite its years of praising the market and privatising anything that moved – was still ideologically better placed to understand what was happening around it.
A few days later it was the Conservative conference, in Birmingham. The party struggled to gain any headlines at all as the world’s financial system crumbled around them. There followed a bout of self-doubt and nervousness in the Tory leadership. First, David Cameron intervened in the conference to assure delegates, and more importantly the country, that he would work with the government in this moment on national crisis.
Then two things happened. Firstly, Labour started doing rather well. Promises of government action and the prime minister’s weirdly reassuring lack of charisma, combined with his experience, made the government team look like a better bet. The Tories were at risk of being lost in the shadows, whispering their agreement on matter in which no one cared what they thought. Things got worse when the Deripaska affair threw shadow chancellor George Osborne into the foreground, complete with Russian billionaires’ yachts and old photos of the Bullingdon club. There was another problem. Labour was gearing up to spend a lot of money. Serious money.
Something had to change, so Cameron suddenly made precisely the opposite announcement he made at the conference. He would detach the Conservatives from Labour’s spending plans. Everything is still misty and complicated in the fortunes of the party in the crisis, but from this distance, that decision seems the right one. Economically, the Tories were uniquely uncomfortable with the level of spending and debt, and the party could now keep to their conservative economic policies, despite world opinion moving in precisely the opposite direction.
It was also wise politically. If Brown’s spending gamble paid off, the Tories would have remained the party that had nothing to offer and merely agreed from the sidelines when crisis hit. All suspicion of them being too young and inexperienced for government would have been confirmed. If the gamble went wrong, the Tories would have been tarred with the same brush. Cameron took the only route he could, carving out a unique space, ideologically, politically and economically.
In general it’s a less popular space than the one Labour occupies. Labour’s criticism of the Tories being the ‘do nothing’ party are unfair, but they are certainly the ‘do-less’ party, and there are many people who will have a harder few years if the Tories reach power. But as the public begin to feel the implications of the sheer amount of money Labour are spending, the Conservative policy of prudence will become more and more attractive.
The polls are now beginning to reflect that. A Guardian/ICM poll yesterday put the Tories ahead on the economy for the first time. A ComRes poll for the Independent on Monday still had them slightly behind, but put support for the government on a far lower footing than it had been at the tail-end of last year.
In all this, the Liberal Democrats remain a footnote, but unfairly so.
Vince Cable, the party’s economic spokesman, was one of the first to predict trouble in the economy if the housing bubble continued as it was. His analysis of the situation has the enviable quality of describing complex economic ideas in terms easily understood by the public. Throw an object at a television tuned to a 24 hour news channel and the chances are it’ll end up on Cable’s face, so constant is his attendance in the studios.
His party leader, Nick Clegg, has focussed on the less-well off, with almost every question in prime minister’s question time related to how those facing repossession can be helped, or what safeguards there are for those who are in trouble for unwittingly receiving too much tax credit and being unable to pay it back.
But they don’t get anywhere with it. In fact, some polls show support form them slipping slightly, mainly towards the Tory direction. Their problem is that they are out of step with the narrative the media has created around the crisis, which is a polarity between experience and change. Do you want an experienced government team with years of economic management under their belt? Or have they ruined it so badly we need the fresh new faces on the opposition front benches? The Lib Dems don’t fit here. They’ve been written out of the debate.
But if the fate of the two main parties continue to change so drastically, we could be still be looking at a hung parliament when the general election eventually comes – probably in 2010. If that happens, the Lib Dems will suddenly become critical. Their behaviour since the crisis hit – coherent, with a focus on the less-advantaged and a backdrop of useful and competent economic analysis – indicates they would be highly valuable coalition partner for either of the bigger parties.
