Mystic Martin

My powers as a soothsayer looked a little bit wobbly on my return from holiday. In my first column after the break I suggested that Tony Blair could announce the timetable for his departure “well in advance” of party conference. Oops! Such are the risks of political prophecy. In Thursday’s Times the PM made it clear he had no intention of doing anything quite so sensible. Instead he had decided to allow civil war to break out in the Labour Party.

Sorry, but even I didn’t think he would be quite so silly. More significantly, nor did my ultra-Blairite source, who thought it would be madness not to announce the timetable before Manchester. Although he was wrong to be so convinced Blair would outline his plans, he was right in two significant ways: firstly he said that if the PM left it too late “the situation will become intolerable and it will be impossible to push through new reforms”. That is quite possibly already the case. And secondly, he siad that that it would be entirely in character for Blair to delay the decision, which he duly did.

The Prime Minister is becoming an increasingly islolated figure and is now flying virtually solo. The idea that the week’s events were a closely coordinated Blairite plan are fanciful. Even his closest political allies recognise that Blair himself is becoming a serious problem and even a potential block on the reforms necessary to secure the new Labour legacy.

In today’s papers, Francis Elliott’s reporting and analysis in the Independent on Sunday is spot on as usual. As Francis says, many Labour MPs up to cabinet level now believe Blair is seriously deluded in refusing to commit to a timetable. Andrew Rawnsley in the Observer is also correct to suggest that even Blair’s closest allies agreed that he would have to agree a timetable before party conference “if the gathering in Manchester was not to turn into a riot of speculation and agitation”. That is now what we will have at the end of the month: all the more interesting for the commentariat, but devastating for the party.

Having made the Labour Party electable, Tony Blair seems intent on reducing it to the state in which Neil Kinnock found it in 1983.

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How the Conservatives lost the argument over austerity

After repeatedly missing their deficit targets, the Tories can no longer present spending cuts as essential.

“The age of irresponsibility is giving way to the age of austerity,” declared David Cameron at the Conservatives' 2009 spring conference. Fear of spending cuts helped deny his party a majority a year later, but by 2015 the Tories claimed vindication. By framing austerity as unavoidable, they had trapped Labour in a political no man's land. Though voters did not relish cuts, polling consistently showed that they regarded them as necessary.

But only two years later, it is the Conservatives who appear trapped. An austerity-weary electorate has deprived them of their majority and the argument for fiscal restraint is growing weaker by the day. If cuts are the supposed rule, then the £1bn gifted to the Democratic Unionist Party is the most glaring exception. Michael Fallon, the Defence Secretary, sought to justify this largesse as "investment" into "the infrastructure of Northern Ireland" from "which everybody will benefit" – a classic Keynesian argument. But this did not, he hastened to add, mean the end of austerity: "Austerity is never over until we clear the deficit."

Britain's deficit (which peaked at £153bn in 2009-10) was the original and pre-eminent justification for cuts. Unless borrowing was largely eliminated by 2015, George Osborne warned, Britain's public finances would become unsustainable. But as time has passed, this argument has become progressively weaker. The UK has cumulatively borrowed £200bn more than promised by Osborne, yet apocalypse has been averted. With its low borrowing costs, an independent currency and a lender of last resort (the Bank of England), the UK is able to tolerate consistent deficits (borrowing stood at £46.6bn in 2016-17).

In defiance of all this, Osborne vowed to achieve a budget surplus by 2019-20 (a goal achieved by the UK in just 12 years since 1948). The Tories made the target in the knowledge that promised tax cuts and spending increases would make it almost impossible to attain – but it was a political weapon with which to wound Labour.

Brexit, however, forced the Conservatives to disarm. Mindful of the economic instability to come, Philip Hammond postponed the surplus target to 2025 (15 years after Osborne's original goal). Britain's past and future borrowing levels mean the deficit has lost its political potency.

In these circumstances, it is unsurprising that voters are increasingly inclined to look for full-scale alternatives. Labour has remade itself as an unambiguously anti-austerity party and Britain's public realm is frayed from seven years of cuts: overburdened schools and hospitals, dilapidated infrastructure, potholed roads, uncollected bins.

Through a shift in rhetoric, Theresa May acknowledged voters' weariness with austerity but her policies did not match. Though the pace of cuts was slowed, signature measures such as the public sector pay cap and the freeze in working-age benefits endured. May's cold insistence to an underpaid nurse that there was no "magic money tree" exemplified the Tories' predicament.

In his recent Mansion House speech, Philip Hammond conceded that voters were impatient "after seven years of hard slog” but vowed to "make anew the case" for austerity. But other Tories believe they need to stop fighting a losing battle. The Conservatives' historic strength has been their adaptability. Depending on circumstance, they have been Europhile and Eurosceptic, statist and laissez-faire, isolationist and interventionist. If the Tories are to retain power, yet another metamorphosis may be needed: from austerity to stimulus.

George Eaton is political editor of the New Statesman.

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