Tories get a kicking on economic competance

22 April, 2008

Alistair Darling has a difficult act to follow. Gordon Brown was Britain’s most successful ever chancellor. The period of economic growth that he helped sustain is the longest in British economic history. Obviously since Brown has moved into No 10 we have seen the emergence of the credit crunch, Northern Rock, and the beginnings of a down turn in the housing market. Couple this with a government in its 11th year in power and you would expect the opposition to be viewed as more economically sound by the voters.

The problem for the Tories is that they aren’t. Thanks to our friends at conservative home (cheers guys!) I found out Darling has a 6% lead over Osborne. Why is this the case?

1) The voters can differentiate better government incompetance as in being dumped out of the ERM under Major and the effects of a globalised economy where subprime lending in the US housing market is causing banks around the world to question the value of mortgage based collateral that the banks want to use to get wholesale loans to then us to lend ordinary punters like us.

2) The voters support what the government has been doing. Your average voter is not a world class expert in economics but they can see what the government is doing to solve the problem in the credit markets and with northern rock. They may not like the paper liabilities on the public purse which is frankly completely understandable but they also realise that the consequences of inaction could be much much worse.

3) The Tories simply haven’t put a convincing case. Ask people what is the Tory alternative to the governments economic policies and you are going to get a lot of vacant looks. There simply has been a failure by the shadow chancellor to sell his message whatever it is to the country. The modern conservative party has not yet realised it is not enough to gain the confidence of the voters by saying what the government has done is bad. They actually have to put to the people what their alternative vision is.

4) The real economy is still going along OK, not brilliantly but OK unemployment is still low and getting lower, the economy is still forecast to grow this year. House prices may fall a bit over the next 12 months but this is on the back of massive growth over the last few years. Also if house prices do fall there will be plenty of gainers such as first time buyers and people who want to trade up to a bigger property. They will all benefit.

So lets be clear. Taken together this is a massive problem for the Conservatives. The opposition should be taking the government to the cleaners but they have really failed to articulate an alternative policy and while the economic policies of the government aren’t causing dancing in the streets people are seeing them as responsible, combine that with people’s propensity to base their vote on economics at a general election then the Tories esp Iain Dale may be in for a shock at the next general even if they do well in the up coming mid term elections in a few days.

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4 Responses to “Tories get a kicking on economic competance”

  1. I’m not a Tory voter but your somewhat blinkered assertion that voters support what the government has been doing is nonsense. Where do you live? Do you look at opinion polls?

    It’s true that much of the economic downturn we now face had nothing to do with the government but Labour’s policies have left us massively exposed. Brown & Co did everything to encourage the rampant and reckless borrowing that we are now having to pay for and have forced the UK to live beyond its means in order to pay for the public sector which is far, far too large to be sustainable.

    People who want to trade up to a new property will not benefit from a house price drop if they find themselves with negative equity on the house they’re selling.

    Unfortunately the economy needs less public spending and lower taxes in order to flourish again, and we all know which party is eternally committed to those…

    (hint: it’s the party that I’m going to be voting for for the first time on May 1st)

  2. parburypolitica said

    Dear Steven,
    thank you for your kind comments. Please allow me to return the favour.

    I’m not a Tory voter but your somewhat blinkered assertion that voters support what the government has been doing is nonsense.

    Sid you not read the poll on ConHome?

    Where do you live?
    Like I give out my address to random people on the net!

    Do you look at opinion polls?
    The story was quoting an opinion poll, what do you think the answer is going to be then?

    Labour’s policies have left us massively exposed.

    The actions the government have taken have put some large liabilities on to the public purse but as they are all backed up by mortgage assets the risks of action are considerably less than the risks of inaction. Of course the great british public could collectively decide they want to live in cardboard boxes then we really are stuffed.

    Brown & Co did everything to encourage the rampant and reckless borrowing.

    What Brown did do was give the bank of england operational independence over interest rates which has made a significant contribution to the longest period of economic growth in British history.

    The problem is not the amount of borrowing in the UK which is large but it has not been of the reckless kind found in the US where it has been to easy to sell on bad debt packaged as good giving US mortgage providers no incentive to lend responsibly because they can pass the risk on to others.

    Actually if you read the state we’re in by will hutton his argument is that traditionally the british economy has credit which is to hard to obtain at least for business and that the german method which involved more debt was actually a cheaper way of financing investment.

    UK to live beyond its means in order to pay for the public sector which is far, far too large to be sustainable.

    With respect this is claptrap, many countries have a far larger public sector than the UK

  3. I guessed that you read opinion polls, I just couldn’t understand how you could have read any opinion poll in the last 6 months and still believed that people are pleased with what the government is doing!

    Whether other countries have larger or smaller public sectors than the UK is not the issue. The problem is that public sector spending has far outstripped economic growth and the tying up of £100bn of tax revenue in Northern Rock took government debt over Brown’s designated “safe-level” of 40% of GDP, not only meaning that the UK is now saddled with an overly-large debt, but also jeopardising future investment in the public sector.

    There is the question of course as to whether all public sector problems can really be solved simply by having more money thrown at them, but that’s another issue.

  4. michael said

    “So lets be clear. Taken together this is a massive problem for the Conservatives. The opposition should be taking the government to the cleaners but they have really failed to articulate an alternative policy and while the economic policies of the government aren’t causing dancing in the streets people are seeing them as responsible”
    It would seem that the perception (or would that be the way that the media chose to present both political parties in the manner that it reported them!) of New Labour was truly flawed!
    What was being reported as ‘responsible’ government is now being seen as what it really was.
    The only thing people are now seeing Brown and New Labour as ‘responsible for’ is the failure to understand what was really happening in the financial sector and their failure to regulate and control this free market.
    We are all (most of us anyway) going to suffer the consequences of this for many years.
    Those who have lost their houses, jobs and businesses are the true casualties of this failure of the government to govern.

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