Wednesday, 25 June 2008

What are you going to do, Mr Cameron ?

With this morning's ICM poll in The Guardian putting the Conservatives on 45%, twenty points ahead of Labour, the mood in the political blogsphere seems to be moving to a question of not ig but when David Cameron becomes Prime Minister and head of a Conservative Government elected with a more or less solid majority.

Tomorrow's Henley by-election will hopefully show the Liberal Democrats still to be a factor and we can't be certain (though it seems likely) that Gordon Brown will lead Labour to its heaviest defeat since 1987 (or possibly 1983) in the summer of 2010.

Once the gloating has died down and George Osborne has told us just how bad the public finances and the state of the economy really are, it may well be that the euphoria will crack a bit at the edges and I suspect the next Government will not have anything like the honeymoon its predecessor enjoyed.

It's hard to think that it's nearly sixteen years since Britain was forced out of the ERM on "Black Wednesday" which was a political catastrophe for John Major and an economic disaster in that in a single day billions of pounds of reserves were thrown away in a futile attempt to buck the market.

Since then, we have enjoyed a period of benign economic weather - low inflation, low interest rates, low unemployment, strong growth, cheap credit, cheap raw materials and above all cheap energy. This allowed a huge asset bubble predicated on rising property prices to develop. As long as the property market kept on going up, people could manage and above all spend.

In the last few months, we have entered a new economic reality caused by much of what went before. As China and India have grown and developed, their need for raw materials and oil has increased, their demand for better food and a better quality of life has also grown. The wholesale folly of the banks in lending almost anything to almost anyone has come back with a vengeance.

Oil has soared to over S130 a barrel and shows no sign of easing in price anytime soon - the days of cheap credit, cheap fuel, cheap food and cheap raw materials seem to be over.

While some of what has happened can be blamed on the Labour Government, much cannot. In the same way, the Conservatives, if elected in 2010, will inherit a poor economy with no obvious sign of a return to the "good times". It's not unreasonable for any voter (and even right-wing activits on have conceded this) to ask searching questions of a possible Government.

The prevailing mood, unfortunately, is driven more by contempt for Labour, anger at what has happened and fear for the future than any rational analysis of the Conservative prospectus. The maxim seems to be it's "time to give Cameron a chance". Fine, but this is the country we're talking about. We don't have the luxury of trying things out. Nor can we predicate our choice of Government on some naive hope that a different vote will, in itself, make things better.

The other myth doing the rounds is that with £600 billion of spending, there is plenty of room for spending cuts to fuel tax cuts. This is far from clear - inflation within the adult and children social care fields is running at between 8-10% so these will need extra funding. Osborne has also committed to finding extra money for the Police, armed forces and prisons. This would be fine if the economy were growing strongly but this is unlikely to be the case.

In the shorter-term, rising inflation threatens the 5% Council Tax cap while industrial discontent seems likely to spread as workers seek higher wages as a way of paying off increased food and energy costs. Whether we are looking at a "Winter of Discontent" seems doubtful at present but there is a lot of anxiety out there. When Cameron talks about "family" it all sounds woolly and out-of-touch with most people's immediate concerns about their mortgages and jobs.

The reason, I think, that Cameron scores so highly is partly (and obviously) because of Brown's copious failings but also because he (Cameron) doesn't sound threatening or talk about things that worry and confuse. Instead, he talks about lofty principles and ideals. Fine, but one day he will have to "get serious" and say things people may not enjoy hearing.

That, and the inevitable Ministerial gaffes, blunders and unforeseeable crises, will be the test of this man, possibly the most inexperienced (politically) ever to be Prime Minister. So, Mr Cameron, what are you going to do ?

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