Review of the Year 2011

Ever since the formation of the Coalition between David Cameron’s Conservatives and Nick Clegg’s Liberal Democrats in the aftermath of the May 2010 general election, British politics has by and large been dominated by two interrelated questions.

The first was whether, in spite of the obvious chemistry between the two leaders, an alliance between two parties with such vastly differing worldviews could actually come close to achieving its stated aim of governing for a full five-year Parliament.

The second was whether the tough economic measures it adopted would succeed in tackling the deficit, as the Tories had argued during the election campaign, or merely succeed in choking-off an incipient recovery, as Labour had warned.

Eighteen months on, those questions remain unresolved, but as the political year 2011 draws to a close, we are at least a little closer to knowing the answers.

On the first point, I wrote at the start of the year that if the Coalition managed to get through 2011, it would in all likelihood survive until its target date of 2015.

In making that prediction – which I may well be forced to revise over the coming 12 months - I was looking to May’s referendum on reform of the voting system as the likeliest breaking point between the two partners.

As it turned out, the Lib Dems’ crushing defeat in the referendum did not prove the Coalition breaker some of us thought it might, despite Mr Cameron having apparently given his party the green light to launch some bitter personal attacks on Mr Clegg.

And late in the year another issue emerged which on the face of it now seems much more likely to prevent the Coalition going the course: Europe.

Mr Cameron’s self-imposed isolation at this month’s European Summit capped what on the face of it was not a great year for the Prime Minister.

He found himself forced into a series of policy U-turns – over privatising forests, reducing prison sentences for defendants who plead guilty, and most notably over the ill-judged attempt to impose competition on the National Health Service.

Meanwhile the phone-hacking affair at the News of the World threw the spotlight on Mr Cameron’s close personal links with the Murdoch empire, while the travails of his defence secretary Liam Fox forced him into his first reshuffle.

And with the economy flatlining and unemployment on the rise, Chancellor George Osborne was forced to revise growth forecasts downwards and borrowing forecasts upwards as he conceded that the deficit would not, after all, be paid off in the current Parliament.

The fact that, in spite of all this, Mr Cameron ended the year ahead in the opinion polls probably says less about him that it does about the plight of the Labour opposition.

Party leader Ed Miliband’s one big success – and it was a not inconsiderable one – was to lead the attack on Murdoch and in so doing prevent him taking control of BSkyB - the first time the political establishment had stood up to the ageing media mogul in three decades.

He also made by far the most substantial of the three party leaders’ speeches in what was otherwise a distinctly unmemorable conference season, setting his face against the “fast buck culture” of the Thatcher-Blair years.

But the largely negative public reaction to the speech showed the extent of his task in winning over an electorate that still seems resolutely underwhelmed by him, and as Parliament broke up for Christmas, the muttering about his leadership in the Labour ranks was growing.

Mr Miliband’s failure to make the political weather was all the more baffling given the grim economic news, which increasingly appeared to bear out Labour’s warnings against cutting “too far, too fast.”

Inevitably the impact of the cuts was most keenly felt in the North-East, where more than 30,000 public sector jobs disappeared at a time when they were apparently still being created in other more prosperous regions.

But Labour remained hampered both by its failure to articulate a clear position on the deficit and by its perceived complicity in having created the problem in the first place.

And unless and until the public changes its collective mind about who is really to blame for the country’s economic plight, Mr Cameron’s continued political ascendancy seems assured.

On the big issues, is Cameron actually a worse PM than Brown?

A few weeks ago, a backbench Conservative MP got himself into a spot of bother after being caught on tape using a four-letter word to describe his leader David Cameron.

Given that the offending word used by backbencher Patrick Mercer began with an ‘a’ rather a ‘c’, the implication was not so much that he finds the Prime Minister personally unpleasant as that he regards him as a bit of a clown.

Mr Mercer’s accompanying description of Mr Cameron as “the worst Prime Minister since W.E. Gladstone” was generally viewed at the time as a rather unwarranted slur on both of these two worthy occupants of Number 10 Downing Street.

But in the wake of his potentially career-defining veto at last week’s EU summit on the future of the Eurozone, the question ‘Is Cameron actually any good?’ has suddenly assumed an added pertinence.

It is, of course, far too early to tell whether the Prime Minister did the right thing by blocking the proposed Treaty on stabilising the currency or whether it will turn out to be, in the words of his own deputy Nick Clegg, “bad for Britain.”

It may be a decade or more before we are able to arrive at a settled historical judgement on the issue, by which time Mr Cameron will almost certainly no longer be in office.

Will Hutton, the former Observer editor and author of influential 1990s tome ‘The State We’re In,’ believes it will turn out to be a mistake of historic proportions, and that by 2020 a flatbroke Britain will be begging to join a newly-thriving Eurozone.

This is however currently very much a minority view. Mr Cameron may have turned us into what one Cabinet minister this week called ‘the Billy No Mates of Europe,’ but if the opinion polls are anything to go by, the public seems to be applauding rather than condemning him for that.

As far as short-term tactical considerations are concerned, Mr Cameron’s actions at the summit cannot be faulted.

He knew that if he agreed to the proposed Treaty, his party’s increasingly self-confident right-wing would use it as an excuse to demand a referendum on Britain’s membership of the EU – the last thing Mr Cameron wants to see.

Rather than entertain that possibility, he chose instead to risk infuriating his Liberal Democrat coalition partners, knowing full well that they are in no position to bring down the government and fight a general election, especially over the issue of Europe.

Political pundits who tell us that Europe is a potential coalition-breaker are forgetting the fact that the Lib Dems’ pro-Europeanism is wildly unpopular in the Southern seats where the Tories are their main opponents.

So looked at purely from a domestic political point of view, Mr Cameron’s gamble seems so far to be duly paying off.

After a fortnight in which the Chancellor admitted his borrowing forecasts were wildly off course, unions staged the biggest strikes seen in a generation, and the Prime Minister was outvoted 26-1 at an important international gathering, the Tories pulled two points ahead of Labour in the polls.

This is a deeply worrying state of affairs for Labour leader Ed Miliband, one which victory in the Feltham and Heston by-election on Thursday night will have done little to alleviate.

As I wrote in this column the week before last, Labour ought to have a compelling narrative on the economy, but the public is currently not listening. So too it is with Europe.

Ultimately, however, Prime Ministers are not judged on whether or not they manage to secure a short-term tactical advantage over their opponents, but on whether or not they are seen to have acted in the national interest – a judgement that will rest in part on consequences as yet unseen.

It is already clear, for instance, that Scottish First Minister Alex Salmond intends to use the issue to ratchet up calls for full-blown Scottish independence, arguing that the UK’s new-found isolation will harm the economy north of the border.

For Mr Cameron, who leads what is still nominally called the Conservative and Unionist Party, this would be as perfect an illustration of the law of unintended political consequences as you are ever likely to see.

Perhaps the so-called ‘Little Englanders’ in his ranks should be careful what they wish for.

A large slice of humble pie for Osborne - but was it really a game changer?

An extra £111bn of borrowing over the next five years. A fresh squeeze on public spending. No prospect of any tax cuts before the next general election.

It is easy to see why many commentators have described Tuesday’s Autumn Statement by Chancellor George Osborne as a ‘game changer’ in British politics.

Here we have a government that was elected in order to sort out the nation’s finances and eliminate the budget deficit by 2015 admitting that it will fail in that central objective.

Far from the being able to fight the next election on the sunlit uplands of fresh economic growth following the hard years of austerity, it will now have to do so against a continuing backdrop of cuts.

As the BBC’s James Landale put it on Tuesday evening: “Just as the facts have changed, so must the politics.”

“Until this morning, the assumption had been that the election would be about which party was best placed to use the proceeds of an incipient recovery – what taxes would they cut and what spending would they increase. That debate is now for the birds.”

And yet, and yet…I wonder if the Chancellor’s statement really has altered the terms of the underlying political debate about the country’s economic prospects all that much.

Despite all the economic doom and gloom, and the large slice of humble pie that the Chancellor has been forced to swallow this week, nothing has yet happened to demonstrate beyond doubt either that the government’s prescription is mistaken, or that a better alternative exists.

On the face of it, Labour’s narrative ought to be a compelling one. It is that an incipient recovery that was already under way by the time of the last election was then choked-off by a combination of spending cutbacks and “austerity rhetoric.”

But the public remains to be convinced that Labour’s more limited ambition to halve rather than eliminate the deficit in four years would not have landed us with a different set of problems.

There is also, still, a powerful residual feeling that Labour is really to blame for the country’s economic plight, even though history will surely show that Gordon Brown’s actions at the height of the banking crisis in 2008 saved us from a far worse fate.

This is a large part of the reason why, for all Mr Osborne’s difficulties, the opinion polls continue to show that Ed Miliband and Ed Balls are still less trusted on the economy than their Conservative counterparts.

A real political game changer is the kind of event which transforms the fortunes of the key players involved almost overnight.

Sadly for Mr Brown, his decision not to hold an election in the autumn of 2007 was one such example. After that self—inflicted humiliation, the public never saw him in the same light again and nothing he did was able to reverse that negative perception.

For the Tories, the ejection of the UK from the Exchange Rate Mechanism in 1992 is the one that sticks in the mind, destroying in one fell swoop the party’s hitherto prized reputation for economic competence.

I’m no apologist for George Osborne, but I don’t think being forced to downgrade the growth forecast for 2012 from 2.5pc to 0.7pc or even up the public sector borrowing requirement by £111bn quite falls into the same category.

For all the talk of game changers and transformed political landscapes, I actually find myself wondering whether this week’s events might not help the Conservatives in the longer-run.

If history is any guide, it suggests the answer might be yes. While voters appear to have a habit of ditching Labour governments at times of economic difficulty (1979, 2010) they seem more inclined to stick with Conservative ones (1983, 1992).

The Tories will of course hope that some of the pro-growth measures announced this week – for instance bringing forward £5bn of spending on infrastructure improvements – will have made at least some impact by the time we come to go to the polls again, even if few in this part of the world will have been fooled by the reannouncement of some old money for the Tyne and Wear Metro.

But if not, they could find that their most potent message come 2015 could well be that familiar old refrain: “Keep hold of nurse for fear of something worse.”