‘It’s the economy, stupid.” So read the sign on President Bill Clinton’s desk
to remind him not to repeat the mistake of the man he defeated. George Bush
Sr was thought to have spent too much effort on foreign policy, to the
neglect of the home base. But the triumph of Gordon Brown is that the
economy has hardly featured as an issue in British politics since Labour was
elected a decade ago. Last week the Conservatives tried to revive it.
Perhaps with markets in turmoil, interest rates high and house prices
faltering they have a better chance. Still, growth has been continuous for
15 years and may well yet be sustained. So the Tory critique is not that the
economy is going to the dogs. Rather it is much the same as Labour’s would
be if we had a Conservative government: growth has been accompanied by
mounting social inequality and the nation’s infrastructure, both physical
and educational, has been neglected.
The snag with that line of attack, as Labour discovered to its frustration
throughout the 1980s and well into the 1990s, is that the social casualties
have little interest in politics. They do not believe those who promise them
remedies; they may simply not vote. The middle classes say they care, but
rarely enough to switch their votes. Perhaps they did in 1997 when Labour
won its first landslide, but with youth unemployment and child poverty still
at appalling levels they have evidently now lost interest. Having voted for
social justice 10 years ago, the middle classes have done their bit.
When Labour is in office it is hard to pump up public indignation. The lobby
groups become toothless and the BBC goes limp. If social injustice persists
or even increases under Labour it must be because the problems are
intractable, whereas under the Tories it would be clear evidence of a
callous government.
The report on national competitiveness from the Conservative study group,
chaired by John Redwood, the former cabinet minister, brings together
damning evidence against the government. The real level of people out of
work and claiming benefit is more than 5m. The number of young people not in
work or education — at 1.2m — has grown under Labour despite a couple of
billion pounds spent on the so-called New Deal. There are 600,000 more
people living in severe poverty now than when Tony Blair was first elected,
and 2.2m pensioners are below the poverty line. Unicef found that the
quality of life for children in Britain was the lowest in the developed
world.
Redwood has worked assiduously. His data base should provide the foundation
for Tory attacks and Tory remedies. But there is simply no chance that the
Conservatives can enlist a sense of public outrage, justified though it
might be.
In any case, with the Tories anxious to shed their “nasty guy” image, when it
comes to solutions even Redwood pulls his punches. Welfare isn’t Working is
the title, not of a Conservative publication, but of a pamphlet co-authored
by Frank Field, Labour’s former social security minister. The Tories would
not dare to articulate such a thought. Whereas in much of the United States
and across the spectrum of American thinking, “something for nothing”
welfare has been abandoned because it does not work, in Britain it remains
entrenched despite equally compelling evidence.
The Redwood report is bolder in other respects. It proposes a scheme to
encourage saving (modelled on America), addressing Britons’ alarming
propensity to borrow and spend without a thought for tomorrow. It suggests
huge extra investment in the railways and the end of the separation between
owners of trains and tracks. Those policies have the extra benefit of being
unexpected from Conservatives.
The government will not find it hard to attack the ideas on grounds of
affordability. What Britain can afford is a function of priorities as well
as growth and tax rates. This country’s infrastructure deficiencies are so
glaring that any future administration must find money to tackle them, as
most neighbouring countries have in recent years.
A similar point can be made about Redwood’s tax proposals. Labour will bleat
that cutting corporation tax, or stamp duty on share transactions, would
leave a hole in public finances and betrays the Tories’ concern with the
wealthy, not the poor. But those taxes damage British competitiveness
severely. It would not be surprising if Brown announced a cut in both
(perhaps without implementing it) before the election.
That goes, too, for Redwood’s proposal to exempt most ordinary homes from
inheritance tax and to raise the threshold for higher rate income tax. Brown
is at least as concerned as the Tories are about middle-class votes. So
Redwood’s suggestions may meet with Labour sneers now, but Labour will
surely address those issues before facing the electorate.
Most ridicule will be poured on Redwood’s suggestion that the Tories should
save £14 billion a year on efficiency gains by the end of their first
parliament. The scorn is unjust. Three years ago the Treasury published the
results of Sir Peter Gershon’s report on efficiency, which promised to cut
80,000 government posts. Little has been heard of it since but Gershon’s
work remains valid. Brown favours big government but that does not make it
implausible that David Cameron could implement the savings.
Redwood’s work is competent but it won’t lift the Tories out of the mess they
are in. His reappearance centre stage is a mixed blessing. He unhelpfully
reminds uncommitted voters of the Major government, but reassures Tory
faithful that the party is still Conservative. His policy ideas, although
they will be vilified, blunt the attack on Cameron for lacking substance.
The risk is that proposals for cutting taxes, a traditional Conservative
stance, coming so soon after Cameron’s careful work to make the Tories seem
new, may befuddle the voters. The modernising Tories had a four or five-year
plan. They could spend half a parliament showing all the ways they had
changed and, having established that firmly in the public mind, in the
second half could offer new interpretations of traditional positions. It
might well have worked had the party remained ahead in the opinion polls.
But the possibility of an early election is forcing the leadership to rush
the second phase.
Brown’s heavy hints that Labour is preparing for an autumn poll may be
designed simply to throw the Conservatives into turmoil. They have not
reached the point where people accept that the party has changed. Indeed,
its rebellion against Cameron over grammar schools demonstrates that it has
not. George Osborne’s cautious approval of the Redwood report may seem like
policy incoherence rather than the well planned second phase of a joined-up
strategy.
The Tories are right to continue with serious work on policy but this will
play little part in refloating them. With Brown ahead in the polls, Cameron
has lost the credibility vital for any leader of the opposition. If the
Conservative party could behave itself that would help, and if Cameron could
find ways to look strong that did not seem contrived, that would assist,
too. But much the most likely scenario for the Tories to regain the lead is
that the government sustains some catastrophe. Any time, something could
happen that would wreck Brown’s prestige and set Labour back to where it was
at the start of May.
The Redwood report proves two things. While it is possible to lambast Labour
for many failures and hypocrisies, the Tories cannot argue that the country
is in meltdown — not yet anyway. Second, after 10 years of serious
intellectual effort, the Conservatives have not found a reason why life
would be better under them. They have not thought up the equivalents of
Margaret Thatcher’s council house sales and trade union reform.
Put like that, it is easy to see why Brown might rush to an election. If the
opposition does not possess the means for its own recovery, why should the
government hang about risking its own destruction?
michael.portillo@sunday-times.co.uk
