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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In the 1980s, I went to a rally where Labour Party speakers shared the stage with men in balaclavas

The links between the Labour left and Irish republicanism are worth investigating.

A spat between Jeremy Corbyn’s henchfolk and Conor McGinn, the MP for St Helens North, caught my ear the other evening. McGinn was a guest on BBC Radio 4’s Westminster Hour, and he obligingly revisited the brouhaha for the listeners at home. Apparently, following an interview in May, in which McGinn called for Corbyn to “reach out beyond his comfort zone”, he was first threatened obliquely with the sack, then asked for a retraction (which he refused to give) and finally learned – from someone in the whips’ office – that his party leader was considering phoning up McGinn’s father to whip the errant whipper-in into line. On the programme, McGinn said: “The modus operandi that he [Corbyn] and the people around him were trying to do [sic], involving my family, was to isolate and ostracise me from them and from the community I am very proud to come from – which is an Irish nationalist community in south Armagh.”

Needless to say, the Labour leader’s office has continued to deny any such thing, but while we may nurture some suspicions about his behaviour, McGinn was also indulging in a little airbrushing when he described south Armagh as an “Irish ­nationalist community”. In the most recent elections, Newry and Armagh returned three Sinn Fein members to the Northern Ireland Assembly (as against one Social Democratic and Labour Party member) and one Sinn Fein MP to Westminster. When I last looked, Sinn Fein was still a republican, rather than a nationalist, party – something that McGinn should only be too well aware of, as the paternal hand that was putatively to have been lain on him belongs to Pat McGinn, the former Sinn Fein mayor of Newry and Armagh.

According to the Irish News, a “close friend” of the McGinns poured this cold water on the mini-conflagration: “Anybody who knows the McGinn family knows that Pat is very proud of Conor and that they remain very close.” The friend went on to opine: “He [Pat McGinn] found the whole notion of Corbyn phoning him totally ridiculous – as if Pat is going to criticise his son to save Jeremy Corbyn’s face. They would laugh about it were it not so sinister.”

“Sinister” does seem the mot juste. McGinn, Jr grew up in Bessbrook during the Troubles. I visited the village in the early 1990s on assignment. The skies were full of the chattering of British army Chinooks, and there were fake road signs in the hedgerows bearing pictograms of rifles and captioned: “Sniper at work”. South Armagh had been known for years as “bandit country”. There were army watchtowers standing sentinel in the dinky, green fields and checkpoints everywhere, manned by some of the thousands of the troops who had been deployed to fight what was, in effect, a low-level counter-insurgency war. Nationalist community, my foot.

What lies beneath the Corbyn-McGinn spat is the queered problematics of the ­relationship between the far left wing of the Labour Party and physical-force Irish republicanism. I also recall, during the hunger strikes of the early 1980s, going to a “Smash the H-Blocks” rally in Kilburn, north London, at which Labour Party speakers shared the stage with representatives from Sinn Fein, some of whom wore balaclavas and dark glasses to evade the telephoto lenses of the Met’s anti-terrorist squad.

The shape-shifting relationship between the “political wing” of the IRA and the men with sniper rifles in the south Armagh bocage was always of the essence of the conflict, allowing both sides a convenient fiction around which to posture publicly and privately negotiate. In choosing to appear on platforms with people who might or might not be terrorists, Labour leftists also sprinkled a little of their stardust on themselves: the “stardust” being the implication that they, too, under the right circumstances, might be capable of violence in pursuit of their political ends.

On the far right of British politics, Her Majesty’s Government and its apparatus are referred to derisively as “state”. There were various attempts in the 1970s and 1980s by far-right groupuscules to link up with the Ulster Freedom Fighters and other loyalist paramilitary organisations in their battle against “state”. All foundered on the obvious incompetence of the fascists. The situation on the far left was different. The socialist credentials of Sinn Fein/IRA were too threadbare for genuine expressions of solidarity, but there was a sort of tacit confidence-and-supply arrangement between these factions. The Labour far left provided the republicans with the confidence that, should an appropriately radical government be elected to Westminster, “state” would withdraw from Northern Ireland. What the republicans did for the mainland militants was to cloak them in their penumbra of darkness: without needing to call down on themselves the armed might of “state”, they could imply that they were willing to take it on, should the opportunity arise.

I don’t for a second believe that Corbyn was summoning up these ghosts of the insurrectionary dead when he either did or did not threaten to phone McGinn, Sr. But his supporters need to ask themselves what they’re getting into. Their leader, if he was to have remained true to the positions that he has espoused over many years, should have refused to sit as privy counsellor upon assuming his party office, and refused all the other mummery associated with the monarchical “state”. That he didn’t do so was surely a strategic decision. Such a position would make him utterly unelectable.

The snipers may not be at work in south Armagh just now – but there are rifles out there that could yet be dug up. I wouldn’t be surprised if some in Sinn Fein knew where they are, but one thing’s for certain: Corbyn hasn’t got a clue, bloody or otherwise. 

Will Self is an author and journalist. His books include Umbrella, Shark, The Book of Dave and The Butt. He writes the Madness of Crowds and Real Meals columns for the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser