Healthy economic growth and falling unemployment are not the trump cards the Tories might imagine. To neutralise the threat posed by UKIP, they need to reach out to the disaffected.
No government, facing the electorate after five years in office, can with any credibility blame ‘the last lot’ for their difficulties. Ironically, there are good reasons for attributing Britain’s current problems to the 1997-2010 Labour administration. The snag for the Cameron team is that they cannot credibly say so.
It was Labour, for instance, which miscalculated that it could defuse the Scottish independence issue by granting limited devolution, a ploy that simply handed the Scottish National Party a power base from which to campaign for more.
Likewise, Labour’s much-vaunted ‘cost-of-living crisis’ long pre-dates 2010. Average wages have been falling ever further adrift of inflation since 2007, and the gap between wages and the cost of essentials has been evident for even longer. This, of course, is not going to stop Ed Miliband from trying to pin the blame on the Conservatives.
Even Britain’s foreign policy travails are rooted in the inheritance from Labour. Public disquiet about intervention in the Middle East results directly from the continuing absence of the full facts about the disastrous invasion of Iraq in 2003.
The biggest case of a toxic inheritance is, of course, the economy. Even in the so-called ‘boom’ years before 2008, Britain was borrowing far more than £1 for each £1 of growth, whilst public spending expanded by 53%, in real terms, in the decade before 2010. One reason why growth has been slow since 2010 is that the economy had, by then, become hopelessly unbalanced, with nearly 70% of economic activity based on private borrowing or public spending. A distorted, debt-shackled economy is simply not something that can be fixed in five years.
So the apparent trump cards in Tory hands – economic growth and low unemployment – are far weaker than the complacent might believe. Growth may be the best in the G7, but it remains debt-financed. Employment numbers may be robust, but wages are not. The deficit, though reduced, remains far too big, and debt continues to grow.
In this context, the pledges delivered at the conference are pretty small beer, perhaps wisely so. The voters distrust the pulling of rabbits out of hats. The Conservatives have promised to cut benefits, and to deliver seven-day GP cover, but far bigger problems remain unaddressed.
Miliband may lack charisma, but at least Labour’s campaign brief is a simple one. Labour will play declining real wages - the ‘cost-of-living crisis’ – as its trump card, contrasting the hardships of working people with the continuing prosperity of the wealthiest. It will also rally around the NHS, accusing the Conservatives of seeking to privatise the service. Both charges will be hard to counter, as the government has done very little to reduce widening inequalities of income and wealth, whilst some primary care services are now in private hands, even if they remain free at the point of use.
To cap it all, the Conservative pledge to renegotiate membership of the European Union is unlikely to fend off incursions from a UKIP undoubtedly strengthened by English reactions to the largesse promised to Scotland in a last-ditch pre-referendum panic.
UKIP actually holds the key to the developing political landscape. Though Nigel Farage’s party is identified with exit from the EU, its real appeal lies in ‘anti-politics’, where it speaks to the millions disaffected by a perceived ‘us and them’ division between the wealthy and the rest, and between governing and governed.
What the Conservatives really need to do is to reach out to the disaffected. Whether they are prepared to alienate their natural supporters in order to do so is another matter.
Tim Morgan was global head of research at Tullett Prebon from 2009 to 2013, is the author of Life After Growth, and is now an independent economist. He can be contacted at http://www.surplusenergyeconomics.com/
