Happy New Year. Or is it? The reality is that 2011 is going to be pretty miserable for the whole country. Any honeymoon period for the Coalition (if there was one) is up. The reality of austerity measures are kicking-in. Turning the economy is like turning an oil tanker. Things will get worse before they get better. We will see more public sector redundancies, we will see more cuts to other services, the VAT rise will trickle to the till, we wont see pay rises in the private sector, even the employed will feel -and actually be in real terms – poorer this April than April two years ago. Health and education reforms will spook the Unions. Protest will spread.
The Government has to accept this and hold its nerve. It cannot do what it needs to do and be popular in the immediate or short term. It needs, in the national interest, to do the right thing rather than the popular thing. With eyes wide-open it needs to understand that its popularity will fall this year and it needs to carry on regardless. The instinct and philosophy of this government is the right one. The challenge now is to be competent in delivery. The quicker we get the pain over, the quicker we start the recovery. If we start the recovery then the short-term unpopularity will dwindle and we have a fighting chance of re-election in 2015. Dither and spread the pain over the whole five years and even if the objective of shoring up the economy is met it will just gift the country back to Labour to mess up again.
Labour will blame the Coalition for the pain. They’ll say: “They’re in Government. We’re not. It is their choices, it is their fault” This is a bit like blaming a doctor for making you ill with chemo rather than the fags you only gave up six months earlier. Nevertheless, while the pain is there the public will buy their argument. The Coalition needs to see its program through and see it through quickly.
The lessons are there in History. Those who remember the 1981 budget may spot certain parallels with today. For the whole period between of 80 and 82 it was inconceivable that the Conservatives would be returned to power. Nerve was held. The budget worked. Britain, after the pain, prospered. Thatcher would have won even without the Falklands. But we must also learn from that period. Nobody would want to see the likes of the Brixton or Toxteth riots again. That’s why it is so crucial that we don’t just deliver on the miserable austerity side of the program – but also on the social side – IDS has made his case well for welfare reform – he needs to be allowed to now get on and deliver . This is the year to get moving. It’s also critical that we strike the right balance in the way we police inevitable protests. Get that wrong and the Government could doom itself.
So on that dour note, I say again: Happy New Year. Put the armour on, 2011 is going to Hurt.