Lord Flight: The Conservatives can still win next time if they find a "silent majority" agenda

Lord Flight is a former Shadow Chief Secretary to the Treasury who is now chairman of Flight & Partners Recovery Fund.

As we reach, what would normally be the half-way house between General Elections, and in the light of growing criticism of the Government in the media, it is arguably a good time to take stock of what has gone right and what has got wrong. 

The economy and the public finances have to be the most important issue.  The Government/George Osborne got off to a good start.  This has been undermined somewhat by some “silly carelessnesses” in the Budget and a flat economy.  In my judgement also, the tax increases have been too great and the cuts in spending too little.  It remains an injustice and economically wrong that, level by level, people are paid substantially more working in the public sector; with shorter hours and better pensions and job security than in the private sector, they should be paid some10% less.

Osborne should have followed the Irish initiative in cutting public sector pay and raised taxation less.  Had he done so I believe that economic growth and confidence would now be better.  More widely, we are clearly in a prolonged period when consumption can grow little - essentially as the country has been living above its means for over a decade, where growth now has to come from rising exports and capital investment.  I think the Government could have been more effective in organising worthwhile infrastructure investment.  Broadly, a tight fiscal policy matched by easy money makes economic sense, but even with QE, (some would argue the wrong sort of QE) the money supply has fallen below trend, contributing to poor economic growth.

The political decision to exempt certain areas from cuts – NHS and Overseas Aid looks increasing misplaced especially where it is unwise to be cutting our armed forces, when the world is becoming increasingly unstable.  I do not believe the Government can be blamed for the “City scandals” but these have been harmful to the Government, notwithstanding.

Iain Duncan Smith has made a good start on reforming Welfare expenditure, although I would argue he has been too generous; and that there remains substantial “fiddling” in the system to be addressed.  The real total for welfare spending, including tax credits and items covered under Regional Aid, is of the order of £220bn p.a. which is an unaffordable drag on the rest of the economy.  Michael Gove has also been a success in education. 

It seems a great pity that the Prime Minister has not learnt from his vetoing of the proposed EU austerity package last December.  His popularity surged because people were pleased to see him standing up for the UK, even without particularly understanding what it was all about.  I believe the PM has failed to grasp that a substantial majority in this country are fed up with the EU; with its cost, its excessive regulation, its economic failure and constant interference in our affairs.  There is major momentum for a referendum on whether or not we should remain in the EU, to which I believe the Prime Minister would be wise to commit, coincident with the next General Election.  He runs the risk that if he delays too long Labour will “pip him to the post”.

Growing dissatisfaction, particularly from older, Conservative voters (normally the Conservatives’ best constituency) reflects, firstly a perception that the Prime Minister does not share their Conservative convictions as a basis from which to take decisions.  Secondly, there have been too many mistakes and speedy reversals, making the Government look immature and amateurish:  people are also annoyed by the time wasted by the unnecessary and foolish House of Lords Reform initiative, against the background of the Government being seen not to be addressing our economic priorities adequately.  Above all, I believe there has been a sharp decline in confidence in this Government as being up to the very considerable challenges of our time.

The most dangerous coming threat to the Conservative Party is that droves of older supporters will vote UKIP in the EU Elections. I do not believe the excuse that it is a Coalition Government carries much weight.  The Liberals have nowhere to go and risk being decimated on the EU issue.

Although it sounds trite, and as I have argued before - iin what is now old fashioned language - the Prime Minister should be following the “silent majority” agenda, which comprises most of the obvious things that need addressing and which, I believe, would have widespread popularity.  It is probably a good thing for the Conservative Party that there are now around 100 strong charactered, new Conservative MPs prepared to stand up for what they believe is right.  Politically, they have become the Prime Minister’s most important constituency and they may end up the saviours of the Conservative Party.

Ending on a slightly more optimistic note: my observation is that the economy at least from Birmingham South is faring better than the figures suggest.  I encounter more and more niche businesses which are doing well internationally and domestically, notwithstanding the worsening, nightmare Eurozone crisis.  London also remains a huge magnet and safe haven for wealth and the wealthy from all over the world.  The Government can still get the politics right.  People forget that by bold measures in the mid-1930s Neville Chamberlain achieved growth averaging 4% per annum compound for 5 years – the period of highest growth in the 20^th Century.  I believe there is much to be learnt from his strategy.