Osborne is losing political control of the economic debate

The once mighty 'Plan A' is reduced to a pile of cold pasties.

In today’s Telegraph, Liam Fox has written a brisk précis of the analysis often heard on the right wing of the Tory party about why the economy isn’t growing. The problem, in the former Defence Secretary’s view, is a lack of rigour in pursuing supply side reforms.
 
Chiefly, that means aggressive labour market deregulation. The theory is that rules protecting employees’ rights are deterring companies from taking on staff. Relaxing those rules - making it easier to sack people - is thus supposed to lubricate private sector job creation. This was the essential thrust of a report commissioned last year by Downing Street from Adrian Beecroft, a venture capitalist (and Tory party donor).
 
The Beecroft report got bogged down in coalition warfare as Lib Dems briefed heavily against it – suggesting it was a shoddy piece of work with recommendations that were mostly peripheral to the task of rebooting the economy. Fox takes a swipe at Nick Clegg’s party for “intuitive left-wing opposition to supply side reform”.
 
It is worth recalling at this point what Lib Dem Energy Secretary Ed Davey said in a New Stateman interview on this subject recently.  (He was the employment minister at the time of the most ferocious rows over Beecroft):

I never bought the argument that our labour market was the most regulated there is. All the evidence shows we have one of the least regulated labour markets in the world.

One reason this issue ignites internal coalition tension is that it becomes a proxy for pro- and anti-European feeling. The right wing of the Conservative party sees the EU as an engine of pernicious bureaucracy and regulation. Eurosceptics put setting employment rules at the top of their list of powers to be “repatriated”. The Lib Dems are desperately trying to steer the government into a more consensual approach in Brussels and find all talk of repatriation unhelpful.
 
But there is a different political problem for David Cameron and George Osborne contained in Fox’s intervention. The news of a double dip recession has emboldened both the left and right in their conviction that the coalition’s current course is failing. Naturally, they have entirely different diagnoses and as a sense of urgency - bordering on panic – takes hold, that divergence will become more extreme. The great danger for the Prime Minister and the Chancellor (and, by association, for Nick Clegg and Danny Alexander) is that they will lose control of the economic debate entirely.
 
As the Tory backbenches get frothy about bolder supply side measures and deeper cuts, Labour bangs its Keynesian drum for a change of course in the opposite direction. That leaves Downing Street holding a bunch of discredited budget measures that no one thinks will make the blindest bit of difference to growth. Plan A is reduced to a pile of cold pasties.

 

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.