Category Archives: Politics

The right’s lack of positive populist policies

Paul Hunter, Head of Research, The Smith Institute

In the week that Margaret Thatcher died it is instructive to observe how she won both the argument and power with populist policies and what this might tell us about the upcoming election – not least what the downturn means for conservatism.

All governments are inextricably linked to the environment and times in which they come to power. When Thatcher fought her first successful campaign as leader of the Tory party, Labour and the left were divided with the breakaway of the SDP; the 1979 election was fought against the backdrop of the ‘Winter of Discontent’; the Labour government received a loan from the IMF; much of industry was state owned and subsidised; and the cold war continued.

None of this is true today. However, parallels exist and issues are being exploited in a similar fashion to permanently roll back the state. The financial crash was not caused by trade unions – even the most imaginative of spin doctors couldn’t credibly pin it on them. Instead, the enemy within has been welfare scroungers. The argument goes, Labour featherbedded them and as a result government spending spiralled out of control and debt levels became unsustainable. In so doing, the Conservatives have managed to blame the big state (eg Labour) and not big banks. And from without Europe is blamed for both immigration (taking British jobs) and the profligacy of Eurozone countries, which like Labour, have got Britain into ‘this mess’.

This narrative has been incredibly effective for the Conservatives – most still blame Labour for our current economic ills two and an half years after Cameron came to power. However despite the strategy of blame and division (and related policies such as welfare reform), the Conservatives have yet to offer any truly populist policies, similar to what Thatcher did, which seek to materially improve, at least in the short term, the lives of some traditional Labour voters.

The most obvious example of such a policy in the 80s was promoting homeownership through right to buy – Thatcher wanted a home owning, share owning democracy. It was one of Thatcher’s most popular policies however it has run its course. Attempts to re-stimulate right to buy have ended in failure for several reasons most of which have their roots in Thatcherite polices. First, we saw a rapid growth in income and wage inequality in the 1980s (in part due to Thatcher’s attack on the institutions of predistribution) meaning that those who once could take advantage of cut price homes no longer can afford to pay for a mortgage or save for a deposit. Second, the best properties have largely gone. Third, the decision to stop building social housing alongside policy changes in the Wilson/Callaghan government means that new lets largely go to those most in need (or at least in high demand areas) who are least likely to be able to buy a home. Fifth, the lack of social house building has resulted in the under supply of housing which has increased house values, which has priced out social tenants from buying their home whilst in low demand areas the economy and wages remain depressed impacting affordability in a different way. Seventh, the big bang saw the expansion of easy credit (for those at bottom) which is no longer an option with banks fearful of lending and many households over indebted.

Of course this is just one policy but it touches on many other policy areas not least credit, employment and wages. The selling off of other state assets (including share give-a-ways of privatised utilities) can’t happen again because there is little left apart perhaps from hospitals and schools which the Conservatives have been doing by stealth are controversial and don’t benefit people materially.

The other problem for Cameron in a downturn is that the Tories seem tied to fiscal conservatism. Given the stated aim of cutting the deficit (in many respects their number one priority) there is little to offer by way of populist tax cuts – especially after cuts to business taxes. Moreover, as already mentioned, another big bang to encourage what Colin Crouch describes as ‘private Keynesianism’ is an very unlikely option.

So if tax cuts, more personal debt and asset sell offs aren’t an option and the negative propaganda war takes you only so far the only other strategy surely lies on returning to growth before 2015 which would help to reduce the deficit – ‘we have dealt with Labour’s mess and the pain is working’. However, growth could be too little, too late and what’s more it is abstract concept and might not feed into the pay and living standards of workers. After all, much of the growth in recent years has not trickled down into people’s pay packets.

So without a split on the left and few policy options open it remains unclear how the Conservatives can attract a majority of voters. Of course, Labour has its own difficulties. Large increases in public expenditure are also unlikely, not least because Labour are wary of being portrayed as profligate. All of which means that with low growth both parties have as yet struggled to find populist policies to improve the living standards of the electorate.

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Leadership 2013

Paul Hunter, Head of Research, The Smith Institute

2012 was an eventful year, while it may well be remembered in the UK for the Olympics in terms of our political leaders it may be seen as the year when Ed Miliband put the grumbles about his leadership behind him and started to make some real political headway. At the start of the year, despite gloomy economic outlook and many of the cuts announced (if not implemented) Labour had failed to establish day light between the Conservatives. By the end of the year Labour enjoyed a 10 point lead. The general consensus is that the turning point happened on 22nd March with Osborne’s disastrous, omnishambles budget. Within a month it went from all square for the two main parties to a 10 point lead for Labour. The shift, albeit over a longer period, also occurred in leadership ratings but these figures conceal areas where Ed Miliband will be looking to improve.

In 2012, Cameron’s net ratings fell from -1 in January to -19 in December 2012. Ed Miliband meanwhile improved from -26 to -3. 2012 was a successful year for Miliband the leader who managed to part company in ratings terms with the failed Tory leaders since 1997 (Hague, Howard and IDS). It would be unfair to compare his leadership with Blair’s who had the advantage of coming into power when the country really wanted a change from 18 years of the Conservatives. What is pertinent is that Miliband’s net ratings are comparable to those of Cameron’s at a similar stage of his leadership. While Cameron increased his net satisfaction intermittently by April 2010 it stood at just 3 points. This said, Miliband has still to convince more of the electorate. These are net figures; looking at just those who are satisfied we see that both he and Cameron are level pegging (around 40%). It is also worth noting that ahead of the last general election Cameron was in the mid-50s.

One of the reasons why more people aren’t satisfied with Miliband is that he is not seen as capable of taking tough decisions. He and Labour remain someway behind the Conservative leadership on this. Don’t be surprised at all if this is a key battleground for 2013 with Cameron trying to make Miliband look weak on decision-making and party discipline. Although the clause 4 moment (or Cameron’s slightly less fundamental husky/hoody hugging) is much exaggerated, we might expect to see Miliband announce something counter-intuitive to be seen as strong and win favour with electorate. Or Miliband may choose to look strong by taking on vested (elite) interests.

Cameron’s strategy will probably be more defensive because he needs to do much less at the next election – hold on to marginal Lab-Con seats and pick up around 20. If the last six months are to go by we are likely to see a more defensive, negative approach from the Conservatives. Traditional Conservative rhetoric on welfare and immigration can sometimes be popular (whether it is enough is another matter) and if successful could make Labour look like bleeding heart liberals unable to step up to the plate. This of course is what the Conservative’s hoped for with their elephant trap of a bill on uprating welfare payments.

As the shadow boxing of the last couple of years comes to an end and the real bout for victory at the next election begins how Miliband fares on strength will be crucial. The question now is what issue and group he chooses to take on – and not just in rhetoric but also policy.