How to ride the feelgood factor to the election
As elections draw near, Chancellors of the Exchequer are badgered by the party faithful, who want to know when the feelgood factor will kick in. They badgered Kenneth Clarke, who told them: “May 2, 1997.” In a 40-year career in government which started under Heath and has ended under Cameron, this was his apogee. The election, unfortunately, had been scheduled for May 1.
He had taken over a feel-ghastly factor — a raging hangover, in fact. The pound’s ill-advised entry into Europe’s dress-rehearsal for the euro had been followed by its ignominious exit. Dear money and debt had brought on a recession, and the pain persisted. His predecessor, Norman Lamont, had been borrowing £1 billion a week, which would now look almost provident but was then unheard-of.
The new Chancellor found himself urged on all sides to treat the poor fragile economy gently. Whatever you do, said the CBI, don’t abort any prospective recovery. He paid no attention. First, so he said, he was going to put the public finances into order, for until that was done nothing else would go right. This meant raising taxes, which he did, and arranging to spend less, which is always harder. Two strokes of luck favoured him. He was and is a card-carrying europhile — back in the 1970s, he had been Heath’s whip for Europe — but after what had just happened to sterling there was no question of putting that card on the table. It was also true that an economy where demand had dried up had combined with a cheaper pound to create, entirely by accident, the conditions for an export-led recovery. It arrived, and the hangover abated.
Chancellors in search of the feelgood factor will always be tempted to borrow and spend by way of an example to the rest of us, with a correction to follow once the votes are in. Clarke scarcely needed this. He could approach an election with the recovery established, the economy prospering, and the public finances in order. His forecast turned out to be right to the day. New Labour swept to power and enjoyed the good feeling.
No one enjoyed it more than the incoming Chancellor. Gordon Brown was at pains to point out that he was taking over Clarke’s plans and projections. Prudence was to be his watchword. Poor Prudence! She served her turn, which was to establish his credit. Once this was secure, he used and over-used it, to destruction. Prudence, we realised, was never his squeeze, she was only his walker, to be at last commemorated as the Blessed Prudence, virgin and martyr.
Now, as another election approaches, we have a recovery which is still cosseted, and the public finances are supposed to be back in order by the end of the decade. Clarke could be excused for chuckling over his cheroot. Success does not come to every Chancellor, or stay with him — and few have had the luck to get out at the top.