The Tory re-election strategy is not going according to plan

Dec 2, 2011
Richard Ehrman

Plan A was meant to allow for one or two generous budgets before 2015 – not just more of the same

BARACK OBAMA'S first chief of staff, Rahm Emanuel, once famously said that "you should never let a serious crisis go to waste." Here, the publication this week of the worst economic forecasts for a generation, followed in short order by what was billed as the biggest strike for 30 years, starkly underlined the seriousness of the crisis we are facing.

In the lead-up to Tuesday's Autumn Statement, the coalition's spin doctors did their best to prepare us for the worst. Governments in a tight corner always try to manage expectations down. But while the public sector walk-outs may have turned out to be "a damp squib", to quote the Prime Minister, nothing could disguise the full horror of what his Chancellor had to say on the economy.

Looking tired and sounding hoarse, Osborne's appearance would have given the game away even if his message had not been so unremittingly grim. With his plan to get the deficit under control before the next election in tatters, and any hope of meaningful growth postponed for at least two years, cuts will now continue right up to 2017.
Worse still, he explained that his forecasts actually erred on the optimistic side. If the eurozone implodes, all bets are off. Head down, hunched over the dispatch box, the chancellor compared himself to a man battling through a storm. To those feeling queasy, the best he was prepared to offer were various schemes to boost investment, most of them undefined and using private money which he has yet to secure.

But at least his combination of defiance and gritty realism got him through a difficult day. The markets were reassured and he comfortably saw off Ed Balls, who will never rebuild Labour's economic credibility if he keeps insisting the last government had it right all along.
On a strategic level, though, it is hard to see where the Government goes from here – or, rather, where the Conservatives go. More of the same for years to come is hardly an appealing prospect.
Osborne's celebrated Plan A always had a political as well as a financial purpose. With the deficit safely under control and growth re-established, it was supposed to allow for one, if not two, generous budgets in the run-up to the next election. If this proves impossible, what will the Tories have to offer?
It looks unlikely to be economic reform. Osborne had public sector pay in his sights on Tuesday. However, tricky areas which impact on private business, like planning and employment law, hardly got a mention. In his Budget in March they were top of the bill, but both have run into trouble since. The Prime Minister no longer seems much interested in them either.

Ask many Tories how they will fight the next election, and instead they point to Labour's lack of credibility. Yet while the Opposition may not look electable at the moment, it still has several years to get its act together. The Conservatives also have a touching faith that the voters will reward them at the polls for saving the country. But again, that may not be how it feels to the voters.

On Wednesday the independent Institute of Fiscal Studies predicted that, on its analysis of the Chancellor's forecasts, the median household will have seen its disposable income fall by over seven per cent between 2009-14.  For a couple with two children, that is the equivalent of a drop of £50 a week.

Come the 2015 election, they are unlikely to be feeling very grateful. And even if they are, history suggests that gratitude rarely features strongly in voters' minds; look at how Churchill got his marching orders in 1945.
Even under the worst prognosis, the situation at the next election is most unlikely to be as bad as it was then. But the lesson from 1945 was that after a great crisis the voters plumped not for the leader who had led them to safety, but for the one who offered them a new beginning. Something of the sort also happened in 1979.

When it next goes to the polls, the country is likely to be feeling pretty battered, and insecure about the future. Yet, today, all the parties seem oddly oblivious of the need to develop a convincing strategy for the post-crisis world. All of them seem to think that, somehow, we can return to the way things were. The biggest danger in British politics is not that this crisis will sink us, but that - through sheer exhaustion, if nothing else – we will let it go to waste.

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