Friday, 24 April 2009

The Return of politics.

This week Chancellor Alistair Darling used his budget to give a bleak picture of the economic situation. Government borrowing is set to top the £175 billion mark, creating a debt that will eat up 79% of Britain’s GDP by 2014.

He made a prediction that the economy would start growing again later this year which few people listening to his speech in the commons or watching it on the evening news believed. Even if he is proved right the message delivered this Wednesday was a stark one. The party’s over, the debts are being called in and the bad times are going to go on rolling for a lot longer than the good ones ever did.

Despite the best efforts of the junior ministers and tame economists bussed into the nation’s television studios to try and deny the obvious this is almost certainly a budget that will lose Labour the next general election.

It will do so not because of some high minded critique of fiscal policy or a reaction against the profligacy of the past quarter century, it will lose them the election because it sees Labour overturning, with good reason given the struggle Mr Darling is going to have balancing the books, the promise it gave way back in the nineties that it had given up forever on the idea of taxing the rich until the pips squeak.

You, I and just about everyone else know that the seriously rich people who will be hit hardest by the new 50% tax rate for anyone earning over £150,000 will simply move their money offshore, if fact most of their number have probably done so long ago. Who do you think will end up picking up the bill? You guessed it, Mr and Mrs Middle England, and they are not at all happy about it.

At the next election they will either switch their allegiance to the Conservatives or, more likely, stay away from the ballot box in sufficient numbers to let David Cameron sneak in via a hung parliament.

Whatever they do Mr and Mrs Middle England may find once the electoral dust has settled little has really changed, the incoming government will have to go on delivering what are, by modern standards, austerity budgets for most of the next decade. The alternative to borrowing money to prop up ailing banks, keep people in their homes and help the unemployed find work is the creation of another ‘lost generation’ of people with no hope of finding work or living independently of state support isn’t a cheap option or a way of cutting ‘big government’ down to size; it’s a recipe for economic disaster and political extremism.

Although the budget and its fallout could spell doom for Labour at the polls in the short term it could be good for politics in the longer term.

For the first time in a generation or more politicians will have to take tough decision rather than simply talking about doing so, the lack of money to be thrown at short term initiatives designed to distract voters means they will be brought face to face with the electoral consequences of their actions far sooner and will have to learn to be more responsive to public feeling.

Ideology, for a long time seen as an occasionally interesting add-on to the political process suddenly matters again and will only grow in importance as the long road to recovery starts. The left must find a way of squaring its belief the state has a role to play in taming the worst excesses of capitalism with a need to stimulate a moribund economy; the right will have to balance its fundamental belief in the power of the market with a proper compassion for the individuals and communities hit hardest by the downturn.

Most importantly the next government, whoever leads it, won’t enter office with a thumping majority and a tame electorate more interested in shopping than politics, the bursting of the credit bubble has knocked the scales from our eyes, years of scandals over MP’s expenses have killed off much of the trust we once placed in our politicians. It will take more than fine words, carefully crafted photo-opportunities and spin to win it back.

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