Muddling Through

A history that might provide some solace to the Conservatives

Looking ahead to the return of Parliament in September, it is clear that the run up to the election will be at the forefront of debates, whether the election comes in May or later in the year.

And everyone seems to think that Labour will win the election thanks to Starmer’s “stabilisation” of the party, the potential to win some seats in Scotland after a disastrous year for the SNP, and the potential to win back Red Wall seats from the Tories after an uber-disastrous year for the Government.

There’s little reason to doubt any of that.

But when everyone seems so sure about a certain outcome, it’s worth at least thinking about reasons why they might be wrong.

At the start of this year, Rishi Sunak pinned his chances on five “pledges”, which looked to most people like a sure way to doom his hopes of retaining power at an election — and possibly even an escape ladder to climb down into early retirement before the election.

However, as I noted at the time, the pledges are vague enough that numbers and impressions can be massaged to fit their targets, even those that seem as unalterable as the weather, such as inflation.

Indeed, in this week’s news-cycle the indicators can be read both ways.

The small boats and migrant crisis continues apace. This could be bad news for Sunak who promised to “stop the boats”. Except really he promised to “pass laws” that would stop the boats. So, pass the law and blame the French.

And anyways, if the problem persists it could be a good campaigning issue for the government, who are more comfortable than Labour (despite the latter’s best efforts) talking tough on immigration. It may also draw out the internal squabbles within Labour that Starmer has done so much to repress.

While wage growth figures from Tuesday suggested that another Bank of England base rate hike will come in September, potentially sending Sunak’s economy into recession, but the July figures out on Wednesday showed inflation slowing significantly. It’s not like Labour have any other suggestions about what to do about inflation; they completely accept the course of the Bank of England.

As important as immigration and inflation will be at the next election (they will be very important), however, elections can be more mercurial things. Not necessarily reducible to any clear cut “issue”, elections can be shaped by broader and deeper historical and political factors.

Sunak’s failure to solve any of the issues he has highlighted, which blight the country, are seen as the cause of his certain downfall at the election.

But, it’s not clear what it means to “solve” any of these issues.

The goal for Sunak needn’t be to solve any of them, but to muddle through in a way that gets enough votes for re-election.

It’s something that the Tories have done remarkably well for 200 years.

Duncan Weldon’s book on the history of the British economy (and politics) Two Hundred Years of Muddling Through (2021) provides some interesting hints at how this muddling through happens, and, more interestingly, how just-so stories about politics and the economy are continually confounded by reality.

Weldon sees a world of unintended consequences, muddling through and deferring difficult decisions, and his long historical view provides a healthy dose of scepticism about how change happens.

Economic orthodoxies rise and fall, but they turn out to be different attempts to manage the “trilemma” of exchange rates, capital markets and interest rates.

As radical as Lloyd George’s 1909 budget and the New Liberalism seemed, he was forced to do things with national debt during the First World War that he could never have imagined before 1914.

Observing the fall out of wars from the Napoleonic era to the Second World War, Weldon observes that wars do not necessarily lead to booms or busts, but potentially both.

Nor does high unemployment does necessarily lead to the election of apparently radical or Left-wing governments.

Government policies to target investment in local areas (Special Areas Act 1934, Levelling-up 2021) are usually a flop… until rapid growth comes through unexpected new needs having to be fulfilled.

“The case for radar, Spitfires and new bombers did not rely on [Keynes’] General Theory.” (173)

The “Treasury View” always restrained policy proposals… until it didn’t.

The rule was that government debt couldn’t be above 40% of GDP, until the financial crisis… then the rule was not surpassing 6% of tax revenue as the cost of servicing debt, until the pandemic…

At the big turning points, such as 1945 and 1979, it turns out that:

“Mr Atlee’s revolution was less complete than it often appears.” (197)

and

“Thatcher talked a good game on cutting back the size of the state but much of it was rhetorical.” (261)

The Conservative government of the early 60s introduced greater planning; the Labour government of the mid 60s cut public spending.

In 1935, 1984, 1992 and 2015, incumbent Conservative governments (including the 1930s National Government) won re-election under conditions of high unemployment and economic hardship, often on modest don’t-rock-the-boat (or “stick to the plan”) platforms.

“The path of least resistance is usually the easier one and there is something very British about a ‘make do and mend’ approach to economic problems.” (306)

All of which goes to show that the “obvious” political outcome of economic circumstances does not always pertain, and one doesn’t have to “solve” anything to win an election, but simply muddle through.

Despite all the signs pointing to a Labour victory, that question of muddling through might prevail once again.

As Robert Shrimsley recently wrote in the Financial Times:

“While pundits debate whether Keir Starmer is more influenced by Tony Blair, Gordon Brown or Harold Wilson, the figures who loom largest are Ed Miliband and Neil Kinnock. These leaders seemed to be heading for victory only to see it snatched away.”

There are those however, who are calling on Sunak to avoid muddling through and to take a strong ideological position — pressuring him to be more populist out of fear of loosing the “populist vote” in the Red Wall seats that secured Boris Johnson’s majority.

Next week I will take a look at that perspective, reviewing Matthew Goodwin’s book Values, Voice and Virtue. The week after, I will look at the legislative agenda in September, with Parliament due to return on the 4th.