Pegging electoral success to the economy is a risky business - as Alex Salmond is finding out

The emotive, victory-clutching style of the Yes campaign is at risk of floundering before the cool, hard realities presented by the UK Treasury.

The last time I had dinner with Alistair Darling was in 1997. Sitting next to him, I suggested that tying your electoral fortunes to the economic cycle was foolish: better to make the Bank of England independent and set targets to deliver the revenue to be spent on ideological grounds. “Oh no”, Darling replied, “We’ve been out of power for thirteen years – we aren’t going to give that up so easily”. Four weeks later, and for the only reason they had planned it all along, the New Labour administration under Tony Blair made the Bank of England independent and inflation targeting followed.

So it was with some trepidation that I approached the “Better Together” dinner with the same Alistair Darling in London last week. Darling has been through the wringer since 1997, having been handed the poison chalice: sorting out the mess left by Gordon Brown in the wake of 2008, while simultaneously having to fend off attacks from his own side, who favoured Ed Balls for Chancellor at the time. Amazingly, Darling, to his credit, has come through the experience without becoming bitter. It is an object lesson in self-preservation – don’t let others in and you will be the stronger for it.

So taking on the task of putting the case against Scottish Independence comes as a sign of energy, and a desire to remain relevant. At the dinner, Darling said little that he hadn’t already said in public – no Chatham House rules need breaking here. But it was good to hear it from his own lips:

  • The polls show an almost constant 30 per cent of Scotland in favour of independence, but 25 per cent of the population remain undecided.
  • The SNP has a war chest of £7m to fight their campaign, while “Better Together” has managed to scrape together £2.5m.
  • The SNP under Alex Salmond has a vice-like grip on the media in Scotland, where no opposition is tolerated and all “victories” are hyperbolically spun.

The “Better Together” campaign has had to confine itself to largely technical issues based on economic factors many of which fly over the heads of all but the most dedicated economics geeks. This makes it difficult to connect territory that Salmond, who refuses to debate with Darling, and the SNP have monopolised: the emotional level. It almost characterises the two men: Salmond the firebrand ideologist, all rhetorical claymore and political intelligence, versus Darling, the cool-headed technician who appeals to the mind. In a world where the phrase “The personal is political” has been raised to the level of a mantra, the emotional will always win.

But there are a number of tricks being missed here. The dinner coincided with Alex Salmond’s triumphal declaration of victory over the UK Treasury – they “blinked first” as he put it – when it announced that a devolved UK would stand by its existing debts. It is Salmond’s aggression and quickness to claim even the most minor victory that is his Achilles' heel. The gap between the evidence and reality increasingly makes Scotland look like a Celtic dictatorship, because, arguably, Chief Secretary to the Treasury Danny Alexander laid an economic trap that Salmond happily walked into.

When it comes to assuming part of the UK’s interest payments the only thing that a devolved Scotland can now do if negotiations about what “fair and proportional” means break down, is walk away. They already have form in being unable to reach any amicable compromise with Westminster - so it is not inconceivable. In that case, nobody will lend Scotland a penny to fund its commitments, except at a punitive rate and with the status of an Emerging Market.

Equally, Salmond’s flip-flopping on the newly independent Scotland’s currency is a red herring. Whether Scotland adopts the UK pound or not it should be made clear it matters nothing to the UK. In the same way that Hong Kong, Singapore and a swathe of Latin American nations peg themselves to the fortunes of the United States and follow their interest rate cycle, the Federal Open Market Committee sets interest rates with reference to its domestic economy. A devolved UK would be no different. “No change there then”, some might say. But in a broken Union it is conceivable the Bank of England will pursue an interest rate policy which is exactly contrary to the economic needs of a new Scotland.

Finally, neither the “Better Together” campaign, nor for that matter, the SNP have ever really answered the question of why Independence needs to happen. There are a series of “wants” on display, mainly those who want a place in history or increased political power for themselves, but need? That is yet to be demonstrated. The Scottish Assembly already has control of health, education, law and order and child care. Scottish independence will change nothing in those areas. It also has its own tax-raising powers – taxes that can be spent exclusively on Scottish priorities – but it has never used them. Scotland already has democracy in abundance – local, national, UK and European representation. How much more democracy and say in its own matters can Scotland conceivably need or tolerate? What is the need that Scottish Independence satisfies?

There is both hope and despair for Darling and the “Better Together” campaign: hope that the polls will hold and despair, like in the Canadian experience when there was a never-explained last minute 10 per cent surge in support for Québécois independence, that things could swing disastrously the other way. One thing is for sure: if there isn’t a decisive rejection of independence this time, the SNP will be back again in five years' time.

Johann Lamont, Alistair Darling, Ruth Davidson and Willie Rennie at the launch of the "Better Together" campaign in 2012. Photograph: Getty Images.

Head of Fixed Income and Macro, Old Mutual Global Investors

Photo: Getty Images/Ian Forsyth
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The big battle in Corbyn's Labour party will be over organisation, not ideas

Forgotten and near-moribund institutions of the parliamentary Labour party will become vital once again, explain Declan McHugh and Will Sherlock. 

“Decidedly downbeat” was Chris Mullin’s assessment of the first Parliamentary Labour Party meeting following the 2001 landslide General Election victory. Blair was “received well, but without elation … the managing director was treated to some blunt warnings that this time around the boys and girls on the shop floor expect to be treated with more consideration.”

Assuming he wins the leadership, Jeremy Corbyn’s first PLP meeting will be anything but downbeat. The ‘shop floor’ will be more akin to a Lions’ Den. Labour’s new figurehead will face a PLP overwhelmingly opposed to him. Many will question the legitimacy of his election and some will reject his authority. From day one, he will face a significant number of Labour MPs not merely against him but actively out to get him. There has probably never been a situation where a leader of the Labour Party has been so far removed from the parliamentary party which he supposedly commands.

The closest historical parallel with Corbyn is arguably George Lansbury, another ardent socialist who took charge of the party after serious electoral defeat. But the comparison doesn’t really stand up to scrutiny. Lansbury may have been on the left but he had been a leading figure at the top of the party for many years. Corbyn has never been anything but part of the Labour fringe – rarely even attending PLP meetings.

Nevertheless an immediate move to oust him is unlikely. Whatever their concerns about the circumstances of his election, the scale of the contest will make MPs nervous about executing a coup. And crucially there is no obvious alternative leader waiting in the wings.

The internal battle against Corbyn will instead be more drawn out and fought through the internal structures of the party. The number of Labour MPs showing a sudden and hitherto undiscovered interest and expertise in the PLP Standing Orders is an indication of what is to come. When Labour is in government, journalists pay little notice to obscure internal committees. Now they are going to be the centre of attention. The PLP may be energised on an organisational front in a way that it never was during the Blair, Brown and even Miliband years. Conflict is likely to be focused in the following arenas:

  • Shadow Cabinet

Corbyn is now understood to populate his shadow cabinet by appointment, but opponents in the PLP are seeking a return to the system of elections. That will not be straightforward. Although the 2011 decision to end elections was primarily achieved by means of a PLP vote to change Standing Orders, it was subsequently agreed by the NEC and passed into party rules by Conference. It will be harder to undo that constitutional knot than it was to tie it. The PLP can vote to change Standing Orders again but the NEC and Conference will need to reflect that in further amendments to party rules if the decision is to have constitutional authority. That sets the scene for a messy clash between the PLP and the NEC if Corbyn chooses to defy the parliamentary party.

 

Even if elections are restored, it is not clear how Corbyn’s opponents in the PLP will respond. MPs seeking the return of shadow cabinet elections hope to run a slate of candidates who will work to emasculate the new leader. But others have already resolved to boycott the front bench, regardless of how it is selected. Corbyn’s opponents face a dilemma. On the one hand abandoning the shadow cabinet may be viewed as walking off the pitch at a time when others are prepared to get stuck in and organised. On the other, it will be impossible to take a shadow cabinet post without signing up to some level of collective responsibility. That means undergoing the daily grind of defending the party line in front of the 24 hour media spotlight, with all statements scrutinised and recorded by Conservative researchers for future use.  How many Labour MPs would be willing to support a Corbynite line on foreign affairs, defence and economic policy? The new Labour leader will soon find out.

 

  • PLP meetings

The Monday evening meetings of the PLP are a weekly arena in which the frontbench and the party leadership are held to account by the wider parliamentary party. In the Kinnock, Smith and Blair days, although occasionally raucous, there was a degree of deference to the Leader. That has waned of late but will likely be non-existent under Corbyn. No one can remember the last time the PLP voted on a matter of policy, but Standing Orders permit it to so – expect opponents of the leadership to use this device.

 

  • PLP Chair

John Cryer, the current PLP Chair, will have his work cut out trying to manage what are likely to be stormy meetings. Moreover, the annual election of the Chair is an important barometer of the parliamentary party’s mood and the easiest means of organising a proxy vote on confidence in the leader. Importantly, the Chair of the PLP approves what motions can be tabled at the weekly PLP meeting. 

 

  • Parliamentary Committee

The parliamentary committee are effectively shop stewards for the backbenchers and the election of representatives is similarly a reflection of political sentiment in the PLP. New elections won’t happen until next May but the PLP could decide to initiate earlier elections. Labour MPs will ask whether the current committee, which includes one Corbyn nominator, is representative of the majority view. If not, a slate opposed to the leader could be organised. The Parliamentary Committee has executive powers that it rarely uses but this may change and will be significant. 

 

  • Departmental Groups

The PLP’s internal policy committees have been in decline since the early years of Tony Blair and have rarely made waves but have potentially important powers, including the right of Committee Chairs to speak from the Despatch Box. MPs may use these bodies to challenge frontbench policy positions in a way that no leader has experienced, promoting alternative agendas at odds with the leadership line on foreign affairs, defence and the economy. The Chairs have not yet been elected and this could be a key focus in the autumn.

 

  • Whips Office

The idea of Jeremy Corbyn directing the PLP to follow three-line whips is, to many, a source of amusement. A man who regularly topped the charts of rebel MPs will struggle to maintain the traditional system of party discipline – and indeed he has already indicated that he has no intention of “corralling” MPs in the traditional way. Most likely the whips will play a distinctly different role in the future, acting more as shop stewards for backbench MPs who want their concerns made clear to the Leader’s Office. And the likely deputy keader Tom Watson, who hails from the right wing union tradition but is close to some of the left, will play a major part in trying to balance the needs of the new leadership with the real anger of backbench Labour MPs.

Corbyn’s lack of authority and support within the wider parliamentary party puts a major question mark over his long term prospects as Labour leader. He would certainly lose any direct trial of strength against the PLP.

But the Corbynite group will seek to avoid confrontation inside Westminster. They believe their strength lies in the party outside Parliament and in the new influx of members and supporters. Their agenda will be to capitalise – though they might not use the term – on the leadership triumph by instituting rule changes that will revive the left within the party machine. Not just inside the NEC, the Conference and the party HQ but in the regional and constituency party organisation.

Most particularly, they are likely to seek to convert supporters into members, with a role in the selection of parliamentary candidates. By such means they will seek to apply external pressure on MPs from their own constituency parties. Labour members may be understandably wary about moving to decapitate a new leader so soon after his election. But they face a race against time to prevent him and his supporters from reshaping the party machine in ways that will undermine them from below.

 Will Sherlock and Declan McHugh are former Labour special advisers who now work at Lexington Communication.