Wednesday, May 27, 2015

How did the Tories do that? Election May 2015

It was probably the choice of rabbits and one particular rabbit pulled from the electioneering hat that won the May 2015 election for the Tories. 

Lesson for future elections for all parties? Promise carefully attractive goodies for various sectors of the electorate and also spread scare stories about your opponents. The Tories quickly produced rabbit after rabbit: massive discounts for housing association tenants to buy their homes; a special deal for family homes freed from  inheritance tax up to £1m;  an extra £8bn for the NHS; free 30 hours of childcare - all these from the austerity party! Most of these trumped the equivalent Labour rabbits who failed to impact the voters with any unique selling points that could stick with enough people all the way to the polling booth. The Labour refusal to add in a EU referendum given the popularity of UKIP was extraordinary.   

Election rabbits are also the scare stories each party spreads about the others. A Tory one about Labour was the pressure Labour would be under from the more extreme anti-austerity SNP as quasi-coalition partners. Probably the most important anti-Labour rabbits coming from the Tories were:  Things That Show Labour Is Economically Incompetent. The show stopping prize rabbit was the letter written in 2010 by Liam Byrne that he left on a desk in Whitehall in 2010 for his Treasury successor:  'I'm afraid there is no money'. 

Labour never had a good answer for that letter which backed up the Tory message that they were not to be trusted to run the economy again. Instead of seriously rebutting it, Ed Balls claimed it was a joke and was trounced for being flip. But  The Times on 13 April  had Prof Richard Layard making what looks like a sound defence of the earlier Labour handling of finances after the world was overtaken by the 2007/8 financial crisis.  Why was Labour unable to get such reasoning across?  The Prof shows that the Coalition, in insisting on the austerity programme of rapid deficit reduction forced economic growth down:

 ' The IMF has studied 173 cases of budget cuts around the world and found that the consistent outcome is economic contraction. Far from improving things the Conservative plan almost certainly made them worse'.  

But such a message never gained traction from Labour over the 5 years to rebut the need for harsh austerity. The problem is that Labour did have some issues they failed to address. One was Gordon Brown's classic:  'no more boom and bust' repetition made during his Chancellorship giving a display of hubris and lack of common sense that was never resoundingly apologised for by the now-defunct Labour old guard.     

Maybe the Tory strategy is illuminated by a passage in the book The Free Lunch - Fairness with Freedom  (p. 114-5, written in the time before fixed-term parliaments): 

'But UK governments do have a possibility of 'riding the [economic] cycle' as they allow it to work more naturally, with some possibility of timing elections, rather than attempting to manipulate it around fixed electoral dates.'  

I think that Prof Layard's remarks about the Conservatives setting the wrong economic policy in their early coalition years,  shows that they were manipulating the economic cycle for electoral purposes, around the new fixed-term parliament timetable introduced by the Coalition. They chose a short term deficit reduction period (ideological reasons given of course), and its austerity outcome more importantly chimed with their political aims of downgrading Labour's competence. 

Continuously through the Coalition parliament they built up an excessive slur on Labour's reputation for economic management. Cleverly the Conservatives insisted on Labour failings by conflating the reasons for the 2007/8 world financial crisis with whatever errors could be found from Labour's record over the previous decade. Over the Coalition parliament the 'Labour mis-management' narrative took hold with even the austerity outcomes giving them ammunition to shoot at Labour.  As the election approached, by now having managed to bring on the delayed growth to give voters a 'feel-good factor', the refrain:  'You can't trust Labour with the economy'  was accepted truth and the Liam Bryne letter was ready to be produced a few weeks before voting - as a wonderful, scary, Tory rabbit.

Prof Layard says that by 2010, GDP was rising along with Labour's policy of 'a sensible long term plan to reduce the deficit without aborting the recovery'.  David Cameron claimed when speaking on the Byrne letter, that the UK in 2010 was as risky as Greece - implying that austerity was essential. Layard says there was no comparison of the UK with Greece: 'There was no crisis'... 'In 2010 our net debt relative to GDP was lower than the G7 average'. He also explains that the Osborne austerity measures slowed the economy from 1.8% (2010) to 0.8 % (2011) to 0.2% (2012). 

The argument here is that George Osborne's austerity was mainly an anti-Labour policy and not an ideological one. In economic terms it didn't work very well anyway as the deficit reduction deadlines have been stretched and stretched into the future, to 2018 and possibly beyond. Back in 2010 under the less austere Labour programme the economy had started to heal itself and a continuation of that might have aided deficit reduction faster.  But the Tories shot the UK economy in the foot, slowing growth and used this self-induced outcome to dupe electors away from Labour. The UK public suffered three years of unnecessary delayed growth, and the Tories won in 2015. What a triumph!  

Alternatively in 2010 for the Tories to have allowed Labour's plan to run and bring more growth would imply that Labour were competent and the Tories were carrying on their good work. If this had been done, by 2015 the core election issues would have been very different. The new Tory 'One Nation' theme looks hollow against the refusal to recognise reasonable economic management whichever party it comes from.  With George Osborne's continuing failure to meet his own deadlines the time is overripe for some humility from him as well as from Labour maestros.  The UK public deserves more than tiresome election fisticuffs over economic management - why can't we have consensus? 
posted by Charles Bazlinton. Author The Free Lunch - Fairness with Freedom         

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