Would you want to be in No 10 for the next parliament? Photo: Getty
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What’s in store for the 2015 victor: winner’s curse or a steady recovery?

Even in these fragile political times, May 2015 may not be as unattractive an election to win as it first appears.

One of the laziest lines in politics is that there are good elections to lose: five years in opposition are rarely rewarding. But it’s certainly true that there are less attractive elections to win and for many 2015 falls into this category. As others have said: beware of the winner’s curse.  

This pessimism is increasingly hard-set. To even raise the prospect of there being any upside in the next parliament is to risk ridicule. This week at the Liberal Democrat conference I was chastised for having the audacity to host an event called sharing the pain and the gain of the next parliament. “Don’t you know it’s only going to be pain?”

You can see the point. Regardless of who wins the election, we are likely to see fragile political leadership, quite possibly in the form of a minority government or an unhappy coalition, being buffeted by strong economic and fiscal headwinds while grappling with the pressures of resurgent English and Scottish nationalism.

Above all, the gloom is rooted in the economic outlook for Britain’s households. Three grey clouds hang over the next parliament, the darkest of which concerns the public finances. Whether it is George Osborne’s £25bn or the £37bn of tightening that organisations like the Resolution Foundation and the IFS have pointed to (and that’s not including the £9bn cuts already pencilled in for 2015/16, nor the £7bn of tax-cuts promised by the Conservatives last week), there is an awful lot of misery still to dish out. All the more so when we are told the NHS needs £30bn of extra resources by 2021 to sustain itself. There is no version of the next Parliament that doesn’t involve severe fiscal pain.  

The second challenge, a family relative of the first, is wage stagnation. Six years of falling pay remains the central economic fact of our times and there is no shared sense of when it will end. Actually, there is: it’s always next year. Most economists are still dazed by what’s happened in part because they didn’t think seriously about the deteriorating wage slow-down that occurred in the years before the crash and thus didn’t reflect on what it might imply for what arose afterwards. Falling pay is not just hurting families, it’s hobbling the exchequer too (due to what the OBR has termed ‘reverse fiscal drag’). A wage–poor recovery will mean a revenue-poor one too.

Add to this the third challenge – the inevitably of higher interest rates bearing down on debt-laden households – and the grounds for anxiety grow. Even if typical mortgage rates only go up by 1.5 per cent by 2018 – which many would say is optimistic - it would add £1500 to the annual costs of a £150,000 mortgage. If interest rates spiked for whatever reason then things could get truly nasty.

So far, so scary – and that’s before we even contemplate what a deflationary spiral in the Eurozone, or a hard-landing for the Chinese economy, might mean.  Yet to imply that any of this is pre-ordained is to over-claim. We shouldn’t get stuck in a doomy-gloomy way of thinking. A counter case for cautious optimism, or at the very least pessimism-lite, should also be entertained.    

The performance of our jobs-market has massively surpassed expectation. Assuming this continues, at some point wage growth will resume at least for a while (a few prescient voices have long maintained this would occur when unemployment falls to 4-5 per cent). Just because the economic establishment was wrong about the point at which wages would grow it doesn’t mean it’s never going to happen. And there are now, very belatedly, signs that a solid recovery is underway in business investment which should eventually feed through into productivity.   

Wage growth will eventually help improve the fiscal outlook; but before then the Treasury may well get a boost when, later this autumn, the OBR’s forecasts of potential output are updated. Even a fairly modest upgrading, to nudge it into line with those of the IMF, could dent the size of future austerity. And let’s not forget that fiscal timetables tend to be malleable. Regardless of anything that gets pledged pre-election, don’t be surprised if greater pragmatism emerges afterwards. A bit of extra time creates quite a bit of wriggle room.

As for interest rates and the so-called debt time-bomb, judging how long interest rates can remain on the floor is always going to be a high-wire act but to date the Bank has shown itself willing to face down calls for a precipitous rise. And to a significant degree the wage challenge and the monetary one offset each other: until wages grow interest rates are unlikely to shift much. 

All of which means it’s possible to sketch out a picture of the next Parliament that is less gruesome than we might think. Steady, job-rich GDP growth. The eventual resumption of pay rises as unemployment continues to fall. A very slow and gradual path of interest rate increases following rises in living standards, assisted by stable inflation and a housing market tamed by tougher regulation rather than the need for higher mortgage rates. And a timetable for chipping away at the deficit that extends over the parliament.

Sure, that’s a very rosy scenario. Any number of things could derail it. It would require plenty of good policy judgement, not to mention luck, for it to arise. Even then it would be a bruising and enervating parliament that would severely test the most robust of governments. But steady growth is a salve to most problems, and to be in power is always to have real choices. Don’t rule out the possibility that the 2015 election winner might not necessarily be as cursed as the current zeitgeist would have us believe.

Gavin Kelly is chief executive of Resolution Foundation

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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Hyper-partisan Corbynite websites show how the left can beat the tabloids online

If I were a young Tory looking forward to a long career, I’d be worried.

Despite their best efforts during the election campaign, the Sun, Daily Mail, Telegraph and Express failed to convince voters to give Theresa May a majority, let alone the landslide she craved. Instead, Labour made inroads thanks partly to increased turnout among younger voters who prefer to get their news online and from social networks.

The centre of power in the media has been shifting to the web for years, but during the election we saw just how well a crop of hyper-partisan left-wing news sites are using social media to gain the kind of influence once restricted to the tabloid press.

Writers for sites such as the Canary or Evolve Politics see themselves as activists as much as journalists. That frees them to spin news stories in a way that is highly attuned to the dynamics of social media, provoking strong emotions and allowing them to address their audience like a friend down the pub “telling it how it really is”.

People on Facebook or Twitter use news to tell their friends and the wider world who they are and what they believe in. Sharing the Canary story “Theresa May is trying to override parliamentary democracy to cling to power. But no one’s fooled” is a far more effective signal that you don’t like the Tory government than posting a dry headline about the cancellation of the 2018 Queen’s Speech.

This has long-term implications for the right’s ability to get its message out. Research by BuzzFeed has found that pro-Conservative stories were barely shared during the election campaign. It appears the “shy Tory” factor that skewed opinion polling in previous elections lives on, influencing what people are prepared to post online. If I were a young Tory looking forward to a long career, I’d be worried.

Distorted reality

Television was once the press’s greatest enemy. But its “newspaper reviews” now offer print titles a safe space in which they are treated with a level of respect out of all proportion to their shrinking readership. Surely this must change soon? After all, the Independent sometimes gets a slot (despite having ceased print publication last year) for its digital front page. How is it fair to exclude BuzzFeed News – an organisation that invests in reporting and investigations – and include the Daily Express, with its less-than-prescient weather predictions?

Another problem became apparent during the election. Because the press is so dominated by the right, coverage from the supposedly impartial broadcasters was skewed, as presenters and guests parroted headlines and front-page stories from partisan newspapers. Already, some political programmes, such as BBC1’s The Andrew Marr Show, have experimented with including news from outside Fleet Street. One of the newspaper industry’s most reliable allies is looking for new friends.

Alternative facts

The rise of sites spreading the left-wing gospel across Facebook may be good for Labour but that doesn’t mean it’s good for the public. This was illustrated on 16 June in a post by a relatively new entrant called the Skwawkbox, which claimed that a government “D-notice” – now called a DSMA-notice – might be in place restricting news organisations from reporting on the number of casualties from the Grenfell Tower fire.

The claim was untrue and eventually an update was added to the post, but not before it was widely shared. The man behind the blog (who gives his name in interviews only as “Steve”) insisted that because he had included a couple of caveats, including the word “if” in the text of his article, he was justified in spreading an unsubstantiated rumour. Replacing an irresponsible right-wing tabloid culture in print with equally negligent left-wing news sites online doesn’t feel much like progress.

Blood and bias

Narratives about the corrupt, lying mainstream media (the “MSM” for short) have become more prevalent during the election, and it’s clear they often hit a nerve.

On 17 June, a protest over Theresa May’s deal with the DUP and the Grenfell Tower fire made its way past BBC Broadcasting House, where a small group stopped to chant: “Blood, blood, blood on your hands!” Hours later, in the shadow of the burned-out tower, I heard a young woman complain loudly to her friends about money being used to fly BBC news helicopters when it could have gone to displaced victims.

The BBC cites the accusations of bias it receives from both ends of the political spectrum as evidence that it is resolutely centrist. But while many of its greatest critics would miss the BBC if it goes, the corporation could do a better job of convincing people why it’s worth keeping around.

Grenfell grievances

Early reports of the attack on a Muslim crowd in Finsbury Park on 19 June exhibited a predictably depressing double standard. The perpetrator was a “lone wolf”, and the Mail identified him as “clean-shaven”: phrases it is hard to imagine being used about an Islamist. Yet the media don’t just demonise Muslims in its reporting; they also marginalise them. Coverage of Grenfell contained plenty of references to the churches in this part of west London and its historic black community. Yet Muslims and the relief work carried out by local mosques received comparatively little coverage. Community issues such as Islam’s requirement that the dead are buried swiftly were largely ignored, even though a large number of those killed or made homeless by the fire were Muslim.

I suspect this may have something to do with outdated ideas of what north Kensington is like. But it also must reflect the reality that just 0.4 per cent of UK journalists are Muslim, according to a study by City University in London. The lack of diversity in the media isn’t just a moral issue; it’s one that affects our ability to tell the full story.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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