Mid-term blues the Tories may not shift

AS THIS is the last of the present series of political columns, it seems appropriate to focus on the strange and unhappy plight of the governing party. At about the same stage of the last parliament I wrote in response to the prevailing orthodoxy that, despite its unpopularity and poor performance, the Government would secure a fourth term. The one thing which might deny the Conservatives victory was not the onset of recession, but the alarming extent to which Margaret Thatcher had become a politician utterly removed from political reality. Tory MPs reached the same conclusion and the rest is history.

The main reason for my conviction, which never wavered, was that the tide of history still flowed strongly with the Tories, or, more accurately, against Labour. Because of the mountain Labour had to climb in 1992, it needed an electoral earthquake to win; merely to be the largest party at Westminster it required a swing of 6.5 per cent in marginal constituencies. And political earthquakes, like real-life earthquakes, don't happen unless something big is going on beneath the surface.

At the beginning of the decade the biggest thing going was the overthrow of Communism. However remote the connection between corrupted Marxist-Leninism in Eastern Europe and the British Labour Party, what was happening did at least appear to be the final rejection of socialism in favour of market liberalism of the kind that the Tories under Mrs Thatcher had promoted.

If history seemed stacked against Labour five years ago, then so, too, did the character of the socio-economic changes that had been stimulated by the Tories in the preceding decade. The extension of home-ownership, changing employment patterns and the huge rise in prosperity for most people living south of the Wash had eroded the class loyalties to which Labour could once appeal. The party still seemed at best uncomprehending, at worst antagonistic to the liberal individualism that prevailed at home and abroad.

Today, the underpinnings of Labour's massive opinion-poll lead look considerably more substantial. In the first place, the electoral mountain is no longer quite so high. According to calculations made by John Curtice of Strathclyde University, even on fairly unfavourable assumptions about the impact of the boundary changes Labour needs a swing of about 2.7 per cent in the marginals to emerge as the largest party, while 4.5 per cent would secure it an overall majority. If the Liberal Democrats achieve a higher swing in some key Tory southern marginals, Labour's task becomes proportionately easier. But what is really working for Labour is the very different spirit of the times.

I do not believe, as John Gray argued in a recent pamphlet published by the Social Market Foundation, that the liberal individualism of the Eighties, with which Mrs Thatcher's governments so successfully identified themselves, was a dazzling digression. Most people, certainly the swing voters who determine general election results, have no desire to return to the statist Seventies. But there also seems little appetite these days for more of the same medicine. A sign of the times is the level of public support for the striking signalmen. Poor though their case may be in terms of strict economic logic (why should people be paid extra for past productivity gains that result largely from investment in technology?), middle-class commuters are now so battered by change and insecurity themselves that they seem prepared to empathise with the strikers.

For these traditional Tory voters, the seminal, confidence- shattering event was the 1990-92 recession. Although less deep than the recession of 1980-82, it has had profoundly different economic and political consequences. This was the first recession for 60 years that really scarred the lives of the middle classes - a recession of the south rather than the north; in services not manufacturing.

After the Lawson-Thatcher bourgeois triumphalism, it has been an almost unbearably painful nemesis. Although the anger and the disappointment were already well formed by 1992, the Government survived for two reasons. The first was fear. Labour seemed not remotely to understand the southern nightmare. Indeed, its tax and spending proposals would have meant a substantial transfer of resources from south to north, both prolonging and intensifying the recession. For the debt-laden middle classes, many of them technically bankrupted by negative equity in their houses and few with savings other than their pension schemes, Labour's intention to raise taxes on middle and upper incomes was like a gun pointing straight at their heads.

The second reason for Tory victory was hope: the explicit promise that the return of a Conservative government would end the recession and pave the way for tax cuts. The implicit suggestion was that the Eighties had represented an economic 'normality' to which it was both possible and desirable to return.

In one, largely technical, sense, the Tory promise was not hollow: revised economic statistics show that the official end of the recession did come weeks after the election. In just about every other sense, however, the Nineties have carried on being pretty miserable for many of the Government's natural supporters.

The causes of continuing middle-class distress are both micro- and macroeconomic. Unfortunately, the Government has little power to alter either. At the micro level, 'corporate downsizing' has played havoc with middle-class expectations of job security. The permanent search for lower costs combined with recent management theories and computer technology is laying waste the great middle management bureaucracies in private and public sectors. Although the recession may have spurred the culling, this is a secular rather than a merely cyclical phenomenon, which economic recovery has, if anything, intensified.

At the macro level, the key driver of change is also secular rather than cyclical - namely, the gradual reduction of oil revenues. As Bill Robinson of London Economics has argued, oil revenues in the Eighties helped to finance the nation's consumer spending bonanza. When they slumped, the consumer boom could no longer be paid for. The first stage of adjustment was recession, but the second stage is a somewhat muted recovery restrained by swingeing tax increases. The current mix of monetary and fiscal policy is designed to support investment and exports at the expense of consumption and is precisely the right way to restore balance to the post-oil economy. What it will not do, however, is replicate the feelgood conditions of the Eighties for Tory-voting southerners.

The political consequence of profound upheaval in the working lives of the middle classes and the absence of the kind of recovery which would quickly release them from debt (that is one with a big dollop of house-price inflation) is a widespread belief that the Tories have betrayed the very people who elected them. What makes the outlook so bleak for the Government is that while it still seems stuck with the old slogans, Tony Blair is articulating, although far from answering, the concerns of the bothered and bewildered bourgeoisie. In many ways, this Government is better than it is fashionable to suppose. But if, as I suspect, the tide is indeed running out for the Tories, that will make little difference.