Monday, January 03, 2011

So what kind of year has it been? Part 1.

Certainly a varied one.

While the Tories would clearly have preferred an outright majority in May's elections, Cameron can feel reasonably happy with the result. By accident, they have acquired human shields that are used to conduct away the worst of the opprobrium - whenever a controversial policy needs to be defended, then a Lib Dem is wheeled onto the Today programme to take a battering from Humphrys & Co. Meanwhile, the Conservatives are in absolute control of the key ministries and are implementing their chosen policies, laying the groundworks for a future that should worry all genuine progressives out there.

Pickles is wielding a ham-fisted axe at local government, shrewdly shuffling the blame for thumping cuts off to councils. Vague promises of localism will not be supported with much - if any - actual money, but you can be sure that councillors will take the electoral heat for the cuts that they are forced to make because of central government funding changes. Essentially, this is the government passing the buck for cuts to elected representatives further down the line, so when key Labour programmes like Sure Start get the axe, it will be local authorities that decide it and you can be sure that they will devolve responsibility down to the local community, offering the chance to run the nursery or the local library to a community group and when that group feels unable to take on the responsibility, cite lack of local interest as a justification for closing it. In its own way, this is brilliant spin, but appallingly irresponsible governance.

At education, Gove is doing a passable impression of a bull in a china shop - a man in a tremendous hurry to do as much as possible and who feels no need to experiment or pilot some far-reaching changes in the way our children are educated, injecting the market regardless of the inefficiencies and risks. His little spate of public u-turns are adding to a general image of incompetence, but it is instructive that neither of the recent reversals over school sports or the Book Trust seem to have been quite as comprehensive as the spin would suggest. Vince Cable is happily cutting university courses - intriguingly, those pesky liberal arts courses will be early victims, thus cutting the long term supply of leftward leaning individuals who value the many over the few.

Over at health, Lansley is, largely unremarked by the public, applying a wrecking ball to the NHS - shoehorning financial and commissioning into a part of the organisation patently unprepared for it and opening the system up to the onrush of privatisation. Remember that Labour was able to promise treatment within 18 weeks of seeing your GP? I'm aware of one PCT that is now saying that all treatment will be at least 12 weeks away. The targets and their monitoring systems are being swept away so that we won't see how fast the performance declines - we've already seen delays increase and it will only get worse. Lansley is actually even scarier than Gove - these plans will cost over £2 billion to implement and he's not trying a pilot programme either.

The reason for the pace is simple - Cameron understands from both Thatcher and Blair, as well as the experience of several US presidents, that he only has a limited time to push through the most unpopular reform policies before normal politics bogs him down. This government has had the shortest honeymoon period that I can remember - Blair managed to get into the second term before running into political sand - but it has taken only six months for violent demonstrations to hit our streets and those of us lucky enough to live in Birmingham are already coping with piles of rubbish on the street thanks to strike action brought about by incompetent council decisions.

While the economic crash has proved a major asset to the Conservatives as it has provided a justification for anything that they want to do - although that argument seems to be wearing a little thin with people, so much has it been overused - it also poses a medium-term threat. Their electoral future effectively hangs on the next two years - three at the outside. The calculation is that any anger over cuts and job losses will be diluted by the recovery, with the effects being felt by around 2013, with Osborne's slush fund kicking in to allow tax cuts presumably in April 2015 in advance of the election. All this presumes that the economy doesn't fall off a cliff in the meantime. I still think that there is a small, if significant, risk that we could slide back into recession. In the immediate term, the pre-Christmas poor weather will have hit retail, the housing market remains depressed by poor mortgage availability and is forecast to slide back five or ten percentage points this year and fuel duty has just gone up and VAT will rise on the 4th January to compound that impact, as well as hurting the economy more generally. There is pressure on the Bank of England to raise interest rates, a move bound to seriously impact on those who are currently just able to sustain their mortgages and one which risks increasing repossessions. I suspect that the most likely outcome is very low growth, in spite of government policies being tailor made to neuter it. It is highly improbable that this growth in the private sector will able to absorb the job losses from the public sector over the medium term, so higher unemployment will be a fact of life for years to come. Cameron has to hang on and pray that he can ride the crest of the economic cycle into a victory in 2015.

The other issue for Cameron is his own party, as there are rumblings even now within the parliamentary party about how much ground he has surrendered to the Liberal Democrats and I would suspect that this may have more potential to threaten the coalition than any form of dissent from the Liberal Democrat benches. He has already had to reverse course on a number of issues - with the hunting ban vote being kicked into touch for the course of the parliament (largely because the parliamentary maths would suggest that a free vote would not guarantee a repeal), sentences for knife crime, a referendum on the Lisbon Treaty and prison expansion. The promising morsel of tax cuts in 2014/15 should be enough to keep the vast majority loyal, but European issues lurk just beneath the surface with the potential to cause immense damage. Here, Cameron has the added strength of the Liberal Democrats who insulate him from damaging public opinion, but also shield him from the nuttier end of the Tory spectrum, allowing him to survive quite a hefty parliamentary rebellion and still retain control. The perennial spectre at the feast will remain Europe, as the key policy area likely to galvanise sufficient Tory opposition to force a parliamentary defeat if a sceptic-friendly compromise cannot be hammered out or the whips fail in their arm twisting.

In political terms, Cameron can feel happy enough at the end of the year, with poll ratings of 39/40% despite a negative approval rating now declining to 19% and showing no signs of recovery, but he will know that there are many shoals still to navigate if he is to reach the calm waters in advance of the next election and that the weather may ensure that he never does.

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