Now that the government has been forced to nationalise Northern Rock, after
five months of pursuing every other option, what is the impact on the
fortunes of the political parties?
The Conservatives have gained several advantages. For the first time since
1992, when John Major’s government chaotically exited the exchange-rate
mechanism (ERM), the party is comfortable talking about the economy.
Throughout Gordon Brown’s period as chancellor, his opponents had little to
say. Year upon year of economic growth made Labour invulnerable. Brown’s
initial stringency won him a reputation for competence that was little
challenged, even when prudence gave way to profligacy.
Recently, as an economic downturn has loomed, the Tories have worried that
Brown stood to gain rather than lose from Britain’s reversal of fortune.
When people go through hard times, perhaps they cling to a man of
experience. So, as economic pessimism increased, the Conservatives’
electoral optimism did not.
Northern Rock changes that. Brown has fumbled. For five months he sought at
all costs to avoid nationalisation because it might remind us of old Labour.
Now that the government has been forced to acquire the bank, it is not old
Labour’s ambition to seize the commanding heights of the economy that
springs to mind, but rather old Labour’s lack of economic grip. Brown’s
government has been forced to do what it said it would not, just as Harold
Wilson’s was obliged to devalue the pound in 1967, having initially set its
face against it.
Brown has chosen a style of nationalisation that should keep the problem in
the public eye until the general election. While his objectives are unclear,
he evidently does not envisage selling the bank’s assets soon. So the
government is left to handle the thorny issue of how to run a bank well
enough to improve its value and badly enough to avoid being anticompetitive.
The Conservatives now know what to say about Brown, whereas they never
developed a sustainable line of attack against Tony Blair. It is an
important breakthrough. It is believable to accuse Brown of dithering and
incompetence, whereas the charges were incredible when levelled at his
predecessor. The Tories have moved on from accusing Brown of being left
wing, or the enemy of Blair’s public service reforms, to a clearer narrative.
Another blessing for the Tories is that the government team, the prime
minister apart, is so weak. Normally an opposition looks Lilliputian against
the hulks who occupy the government front bench. But such giants as Labour
has are outside Brown’s administration. Alistair Darling, the chancellor,
cannot shake off the image of being Brown’s bag carrier, even if some of his
judgments on Northern Rock were better than his boss’s.
To compound their Rock misjudgments, Brown and Darling have also botched
changes on capital gains tax; and on both inheritance tax and taxation of
the nondomiciled they have allowed George Osborne, the shadow chancellor, to
make the running.
However, the Conservatives enjoyed less success over Northern Rock. They, too,
were embarrassed to recommend nationalisation. That was a political
crossover too far even for the modernisers who now run the party. The
Northern Rock debacle demonstrates a weakness in our political system.
Unlike many other democracies, our politicians are not technocrats.
Worryingly, nor are our civil servants. With a complex issue such as a run
on a bank, government and opposition lack the expertise to act sure-footedly.
That makes the performance of Vince Cable, the somewhat techno-cratic Liberal
Democrat spokesman, all the more remarkable. His consistent advocacy of
nationalisation since the crisis began enabled him gently to tease the
government last week. But in reality his political courage has high-lighted
deficiencies in the Tory opposition as much as the government. Osborne and
David Cameron have built on Northern Rock a case that Labour is incompetent,
but the saga has not proved that they would be less so.
It is an important failure, because in key areas of policy the Conservatives
rely on convincing the electors that they would run things better. If people
are fed up with Labour, it is largely because in health and education it has
spent huge sums for relatively little improvement. The Conservatives could
argue that the systems do not work and must be changed. But they avoid
saying that because it might scare the public. They fall back on claiming
they would use our money more effectively, but why should voters believe
that?
When Blair was opposition leader he used two methods to convince us that
Labour would cope better. First, he ran Labour tightly and invited us to
infer that a man who could tame that unruly party was qualified to run the
country. Second, he secured adoration in the media, rather as Barack Obama
has today in America. Blair portrayed himself as a different sort of person
from those then in power. Voters believed that a better kind of person would
be more competent at governing, which was at least a nonsequitur.
Cameron has never been far enough ahead in the opinion polls for long enough
to look wholly in control of the Tories. Last summer, when he slipped
behind, his party savaged him. Many in the media respect Cameron but they
are not besotted with him. An Etonian who worked for Norman Lamont at the
time of the ERM shambles is hardly an outsider and so not the sort to whom
voters - in periodic fits of naivety - look for miracles.
All that explains why Cameron’s opinion poll lead is unimpressive. He has
stayed ahead because the government has been damaged by successive scandals
and accidents, from Labour party funding to the loss of sensitive data.
Given those disasters, the Conservatives could hope for a double-digit
advantage by now. To their disappointment the harm that Northern Rock has
done to Labour does not match the fatal blow that the ERM dealt Major’s
government.
Restless voices will call for a more radical Tory policy agenda. In the 1980s
I was a member of the No Turning Back group, young turks in the junior ranks
of government. We suggested to Margaret Thatcher, the prime minister, that
she adopt a more radical schools policy. She told us to grow up. Cameron
must be tempted to make the same retort to his critics today. The electorate
displays no appetite for new economic experiments and the party has
insufficient time to prepare the ground. In any case it is the flip-flop
that Brown longs for Cameron to make.
That is not to argue that Britain does not need a radical overhaul. A
consultant from Mars looking at how we run our National Health Service, our
schools and our welfare system would advise us to stop hitting our head
against the wall and recognise that those services cannot function as
organised.
Cameron will be acutely aware of that. He probably dreams of being elected as
a consolidator in order to govern as a reformer. His problem is that while a
radical manifesto would guarantee defeat, consolidation is too dull a
platform for victory.
So despite Northern Rock, Brown looks likely to be prime minister after the
next election. That might be no bad thing for the Tories, if they can only
have patience. If Cameron served two terms as leader of the opposition he
would have time to think not just about how to win an election, but also
about how to be prime minister, something which in the past few have managed.
As public weariness with Brown continued to mount during that second term,
Cameron could look with assurance to winning the following election. He
could then devise, maybe even articulate, a radical agenda.
Those who believe that Britain needs a shake-up of Thatcherite proportions
should not be bullying Cameron to abandon his careful strategy today.
Instead they should guarantee him enough time as leader to complete the Tory
revival and to achieve personal political maturity. They might then live to
see a government of which they could thoroughly approve.
Martin Ivens is away
