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Edward Heath U-turned. Will Osborne be forced to do the same?

Creating mayhem is unlikely to be a sustainable, long-run industrial relations strategy. The government already has troubles in the public sector with its cull of jobs – remember all that talk of the enemy? Now it has intervened in an ongoing private-sector negotiation between haulage contractors and tanker drivers and made matters markedly worse. No strike has been called and the two parties are flexing their muscles as they do in the midst of a negotiation. 

A strike threat is not the same thing as a strike. A threatened lockout is not the same as a lockout. A breakdown of negotiations can occur because of the intransigence of either party. Not infrequently, strikes occur because of mistakes.
The chart shows that, over the past decade or so, the incidence of strikes has fallen sharply. 
Working days lost
It plots the numbers of days lost to disputes since 1970 and does not account for the increase in the numbers employed, up from roughly 24.5 million to 29 million over this period. Strikes have not been a major issue in the UK for decades, certainly up until the public-sector workers’ strike over pensions in November 2011. This is in contrast to the 1970s, an era of protracted industrial disputes when we had three-day weeks, power outages and uncollected rubbish on the streets.
The biggest spike in industrial disputes was in September 1979, when 11.7 million working days were lost (compared to fewer than a million last November). A large part of the explanation for the decline in strikes is that globalisation has weakened workers’ bargaining power. There is an ever-present fear that firms could move production to China. Since 2008, during what is now called the “Great Recession”, private-sector workers have accepted reductions in hours and wage freezes rather than lose their jobs.


Pointless point-scoring

The Cabinet Office minister Francis Maude’s reckless comments, encouraging people to fill up jerrycans when there was no need to, unnecessarily created long lines at petrol stations, as well as panic, even though there was no planned strike. He should have followed Monty Python’s suggestion to “shut your festering gob”. It appears that the Tories thought they could score political points because the Unite union that represents the drivers is a major funder of the Labour Party. A Machiavellian interpretation is that this was all just a cynical attempt to move spending from April to March to help lift GDP in the first quarter.
The biggest concern about incompetence is in relation to the coalition’s handling of the economy. I have previously described the last five quarters for which we have data as the “Osborne collapse”. I take this period from the fourth quarter of 2010 until the fourth quarter of 2011. Until recently, official data suggested that the economy grew by 3.1 per cent in the previous five-quarter period under Alistair Darling – the period that I have called the “Darling recovery” – but by only 0.1 per cent under George Osborne. However, the latest data revisions published by the Office for National Statistics (ONS) adjusted the +0.1 per cent growth to -0.1 per cent. On top of that, the Organisation for Economic Co-operation and Development (OECD) lowered its forecast for the first quarter of 2012 to -0.1 per cent, which, when added to the -0.3 per cent for the fourth quarter (revised down from -0.2 per cent), would imply that the UK was in double-dip recession. But most of the cuts haven’t hit yet and the concern is that we are going to see rapidly worsening social consequences – which, in my view, would inevitably add to the government’s unpopularity.

Status symbol

So, what will happen next? There are several instances in recent history of how UK governments were forced into making U-turns on economic policy. The markets forced U-turns in 1967, 1976, 1981 and 1992. Of particular relevance now is Ted Heath’s U-turn on economic policy in 1972 that precipitated what became known as the “Barber boom”. This was forced on the Conservative government primarily by unemployment passing the socially unacceptable one million barrier.
The economics commentator William Keegan has pointed out to me that a big factor behind Heath’s policy reversal was a telephone call to Downing Street from the then chief constable of Glasgow, David McNee. He said that he could no longer be responsible for public order in the city if, with unemployment already high, the government did not rescue Upper Clyde Shipbuilders, which was threatened with closure. In response, in his 1972 Budget, Anthony Barber reduced income taxes and gave big tax concessions to firms to save jobs.
A crucial moment for the coalition could well come as soon as 25 April, when the ONS announces GDP growth for the first quarter of this year, especially if the number is negative, as it may well be. Such an announcement could result in one or more of the credit rating agencies removing Britain’s cherished AAA status. Osborne has claimed that maintaining this rating is an important goal of his strategy, so losing it would be a great blow.
In reality, it wouldn’t be that big a deal even if it happened. France and the US had their costs of borrowing fall when recently they lost their AAA status. The consequences of trying to keep it, with rising unemployment, falling growth and declining living standards, are worse than the costs of losing it.
The Chancellor is surely going to have to change tack. The only question is whether he will do so voluntarily or involuntarily.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 09 April 2012 issue of the New Statesman, Spring Double Issue

David Young
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The Tories are the zombie party: with an ageing, falling membership, still they stagger on to victory

One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.”

All football clubs have “ultras” – and, increasingly, political parties do, too: although, in the case of political parties, their loudest and angriest supporters are mostly found on the internet. The SNP got there first: in the early days of email, journalists at the Scotsman used to receive bilious missives complaining about its coverage – or, on occasion, lack of coverage – of what the Scottish National Party was up to. The rest soon followed, with Ukip, the Labour Party and even the crushed Liberal Democrats now boasting a furious electronic horde.

The exception is the Conservative Party. Britain’s table-topping team might have its first majority in 18 years and is widely expected in Westminster to remain in power for another decade. But it doesn’t have any fans. The party’s conference in Manchester, like Labour’s in Brighton, will be full to bursting. But where the Labour shindig is chock-full of members, trade unionists and hangers-on from the charitable sector, the Conservative gathering is a more corporate affair: at the fringes I attended last year, lobbyists outnumbered members by four to one. At one, the journalist Peter Oborne demanded to know how many people in the room were party members. It was standing room only – but just four people put their hands up.

During Grant Shapps’s stint at Conservative headquarters, serious attempts were made to revive membership. Shapps, a figure who is underrated because of his online blunders, and his co-chair Andrew Feldman were able to reverse some of the decline, but they were running just to stand still. Some of the biggest increases in membership came in urban centres where the Tories are not in contention to win a seat.

All this made the 2015 election win the triumph of a husk. A party with a membership in long-term and perhaps irreversible decline, which in many seats had no activists at all, delivered crushing defeats to its opponents across England and Wales.

Like José Mourinho’s sides, which, he once boasted, won “without the ball”, the Conservatives won without members. In Cumbria the party had no ground campaign and two paper candidates. But letters written by the Defence Secretary, Michael Fallon, were posted to every household where someone was employed making Trident submarines, warning that their jobs would be under threat under a Labour government. This helped the Tories come close to taking out both Labour MPs, John Woodcock in Barrow and Furness and Jamie Reed in Copeland. It was no small feat: Labour has held Barrow since 1992 and has won Copeland at every election it has fought.

The Tories have become the zombies of British politics: still moving though dead from the neck down. And not only moving, but thriving. One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.” His Conservative counterparts also believe that their rivals are out of power for at least a decade.

Yet there are more threats to the zombie Tories than commonly believed. The European referendum will cause endless trouble for their whips over the coming years. And for all there’s a spring in the Conservative step at the moment, the party has a majority of only 12 in the Commons. Parliamentary defeats could easily become commonplace. But now that Labour has elected Jeremy Corbyn – either a more consensual or a more chaotic leader than his predecessors, depending on your perspective – division within parties will become a feature, rather than a quirk, at Westminster. There will be “splits” aplenty on both sides of the House.

The bigger threat to Tory hegemony is the spending cuts to come, and the still vulnerable state of the British economy. In the last parliament, George Osborne’s cuts fell predominantly on the poorest and those working in the public sector. They were accompanied by an extravagant outlay to affluent retirees. As my colleague Helen Lewis wrote last week, over the next five years, cuts will fall on the sharp-elbowed middle classes, not just the vulnerable. Reductions in tax credits, so popular among voters in the abstract, may prove just as toxic as the poll tax and the abolition of the 10p bottom income-tax rate – both of which were popular until they were actually implemented.

Added to that, the British economy has what the economist Stephen King calls “the Titanic problem”: a surplus of icebergs, a deficit of lifeboats. Many of the levers used by Gordon Brown and Mervyn King in the last recession are not available to David Cameron and the chief of the Bank of England, Mark Carney: debt-funded fiscal stimulus is off the table because the public finances are already in the red. Interest rates are already at rock bottom.

Yet against that grim backdrop, the Conservatives retain the two trump cards that allowed them to win in May: questions about Labour’s economic competence, and the personal allure of David Cameron. The public is still convinced that the cuts are the result of “the mess” left by Labour, however unfair that charge may be. If a second crisis strikes, it could still be the Tories who feel the benefit, if they can convince voters that the poor state of the finances is still the result of New Labour excess rather than Cameroon failure.

As for Cameron, in 2015 it was his lead over Ed Miliband as Britons’ preferred prime minister that helped the Conservatives over the line. This time, it is his withdrawal from politics which could hand the Tories a victory even if the economy tanks or cuts become widely unpopular. He could absorb the hatred for the failures and the U-turns, and then hand over to a fresher face. Nicky Morgan or a Sajid Javid, say, could yet repeat John Major’s trick in 1992, breathing life into a seemingly doomed Conservative project. For Labour, the Tory zombie remains frustratingly lively. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.

This article first appeared in the 01 October 2015 issue of the New Statesman, The Tory tide