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Achilles’ Heels & The Liberal Icarus

November 22, 2010

Nobody loves the coalition more than Ed Miliband.

On the 6th of May, David Cameron’s Conservative party polled 36% of the popular vote to secure 306 seats and became the largest party in Parliament, but did not crush the Labour Party, who finished with 258 seats. The Liberal Democrats retained 57 seats despite winning 23% of the popular vote. The result was a pyrrhic win for the Liberals, who saw their leader launched into the Deputy Premiership, and his deputy named to the relatively minor post of business secretary. What is obvious is that the Liberals negotiated poorly: a coalition between Labour and the Liberals seemed more credible to their electorate than an alliance with the Conservatives. The resulting lack of LibDems in senior government has contributed to a trampling of LibDem flagship issues, which is now undermining the party’s popular support. While this plays into Labour’s hands, they have chosen to focus instead on attacking Conservative headline policy while limiting attacks on Liberals to more withering individual criticism. Why?

For two reasons: first, the Liberals have entered a position from which they can exit only by dissolution or defection, and thus can only play to Labour long term advantage, and second, Labour needs time to allow the Coalition time to execute changes to social welfare. Labour knows it cannot make these changes, but does not contest that they are needed. Labour’s complicity is evident in the weak opposition offered currently.

Labour’s strategy is clear. The party intends to be in a position to force a coalition crises within two years. To do this, it amplifies its issues with Conservative policies, thus forcing toxic headlines onto the weaker coalition member by association. This erodes the Liberal power base, a move which might result  in lethal obscurity for the Yellows. Grinding the Liberals could trigger an insurrection in the coalition – an event which would swiftly return Labour to power. The unlikely way out of the trap would be for the Conservatives to acquiesce to proportional voting, a key Liberal issue which is toxic to Tories.

This situation suits a Labour party under new management, because grinding takes time to mature, thereby granting space for the new party leadership to form populist policy. Harry notes that the leader of the opposition was recently away from work for paternity leave; the papers barely shrugged.  The implicit prejudice stands up to analysis: Labour emerges as the more likely alternative for disenchanted Liberal voters than a Conservative party focused on dismantling 20 years of Labour largesse.

And the strategy is working. The Liberals have fallen from a 27% share of voter intention on the 5th of May (they polled lower the next day) to a current 14% according to MORI, a polling agency. The Liberals’ votes have been polarized; Labour has moved from 29% to 39%, eclipsing the Conservatives’ 36%: together the big two parties control 75% of the vote, up from 65% at the last election.

To actually win back control in the current absence of policy, Labour either needs the Conservatives to push the Liberals into outright rebellion (a medium probability), or for the coalition to make a major policy error. Conveniently, there are a number of potential errors in the pipe, ranging from such evocative issues as University fees (students have every incentive to protest), to over stretching the military (Harry wonders if the Conservatives actually read history? One does not need to be an Admiral to appreciate the impotence of empty carriers). With protests proliferating, and the mob sensing that it can influence policy, the room for error can only increase.

… But Labour needs fresh ideas to credibly win back power

Opposition parties win voters by identifying areas of weak administration, and then showering them in a haemorrhage of publisher’s ink. Opposition parties seek to win over tabloid proprietors with shameless packages of tax breaks in exchange for rivers of ink to flow only through the government’s benches. Since the current government is dealing harsh medicine, the populist urge of the papers will doubtless ensure that the ink will spill. But Labour needs to find a credible alternative to the previous regime’ toxicity and win over the bondholders. More scary for Labour is the apparent popularity of Conservative welfare reform, which is behind the party’s electoral share gain. To some extent, Miliband needs Cameron’s action to create his own policy response, ideas of which are doubtless scattered across his dining room table on little pieces of paper.

But the real issue isn’t a lack of policy; it’s the prevalence of poverty.

Labour’s strategists know that 20 years of Blair and Brown effectively did nothing for the really big story in Modern Britain: the hollowing out of the economy and the increasing reliance on financial services as a growth driver. A major piece of Miliband policy should be aimed at invigorating the industrial heartland of the country. The deep problem that Miliband has to square is that Labour’s historic policies have made manufacturing uncompetitive, thereby contributing to a population that the Office of National Statistics rather bloodlessly calls in ‘inactive’ – all 9.2 million of them. That’s not easy when your core policies misprice unskilled labor. The direct impact of benefit in all its forms – housing benefit, income support benefit, and all the others – is that it creates a powerful incentive to do nothing when the average wage in the country is £25,500. This is just another reason why a smart Labour party is happy to let the coalition carry on – secretly it knows it cannot reduce benefits, much as it would probably like to do so; the Conservative campaign plays like music to Labour’s spinners.

A further issue faced by the Left is the very real probability of over taxation. Brits pay both high upstream and downstream taxes, the combined burden of which saps the will to live. The resulting escape – into drink and cigarettes – is also taxed aggressively. This shafts the poor hard, since after tax income is typically measured against income tax, not against total taxation. Saving on a middle income in England is practically impossible, since the government consumes the margin. Labour loves this because it creates a virtuous electoral circle: people keep voting for subsidy, and that keeps the towns red. The only solution to this mess – cut into subsidy and lower taxation – works only for an exhausted Middle England, but not for a Labour party which struggles to contemplate cutting expenditure.

At least one answer, for both Mr Cameron and Mr Miliband, is to introduce enterprise outside of London. The Brown government tried this by proposing to move the BBC to Manchester, conveniently forgetting that the media reports, rather than creates, news. London’s relative success has been bought at the expense of the country’s other principal cities – many of which have lagged the capital in extremis over the last twenty years (To show but one example: Newcastle is home to 260,000 people, making it around half the size of Portland, Maine; in 1901, Newcastle’s population of 215,500 equalled Buckinghamshire; today it is barely a third of that county). Brits need incentives to go to work, not stay at home, and more taxation just keeps them shirking, not working.

Mr Miliband and others in the Labour leadership know that their party has failed the poor – put simply, after 20 years of comrades at the helm,  the poor are still poor. That means the previous experiment didn’t work, and Labour now needs to concoct a new experiment to succeed. To be successful, the party must find ways of making poor people sustainably rich. That means getting people off welfare, which Labour is incapable of doing. To address this shortcoming, the Party first needs to allow the coalition time to reduce subsidies to get people into private sector work. The risk is that a more mobile population might rally, and pass Labour by; but this is the United Kingdom, where change is slow and Liberal meltdown in the resulting furore is more probable.

Beware the Kingmaker

Confident politicians lay long term plans and attempt to carry out heroic, yet generally futile, renovations to both government and society as a whole. Scared ones attempt to up their poll results by spinning bored tabloid editors, so they can go on to implement heroic, yet futile, initiatives. As grassroots pressure on his MPs escalates, Nick Clegg will be forced to consider his political destiny: stay with the coalition too long, and he could risk being seen as the Liberal’s Icarus; cut too early, and he could doom the party in the next general election. Clegg’s immediate priority is to soften Conservative ideology while protecting Liberal issues, but the likelihood of this bulwark holding is poor. News that the Liberals intend to contest every by election – therefore running against their own coalition partners in some cases – does not surprise in the slightest. Clegg and the Liberals seem to forget so easily that they are the kingmakers in the coalition, and could so easily throw the Crown to a newly resurgent Labour; Mr Clegg should not ignore that his most potent weapon is to simply end the party for Mr Cameron.

The realities of a fickle electorate and a baying tabloid monster hold that pressure on Mr Clegg to use that weapon will only increase, meaning that the question is only when he will do so.

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