Cicero Policy Briefer

Issue 17, October 2007

Is Now the Start of Labour’s Period of Discontent?

By Terry Paul

Act One (Conservative Conference, Blackpool 2005)

With the Conservative Party down on its luck, the outsider (Dave C) in the leadership race pulls off the performance of a lifetime, speaks without notes, paints a vision of a new party and is subsequently crowned leader of the Conservative Party.

Act Two (Conservative Conference, Blackpool 2007)

Down in the polls, struggling to respond to a new PM, but on the back of voter-friendly tax proposals, Dave C makes another speech without notes and sets in train a serious of events which causes the once-feared Labour party election machine to march back down the Westminster hill.

The above are neither scenes from Groundhog Day nor a Shakespearian costume drama; it’s just another period in our great political history, which in years to come will make future political historians quite a few bob and no doubt clog the Christmas book bestseller lists!

The old political phrase was that “a week is a long time in politics”. Perhaps it is time for a new slogan to enter the political lexicon: “The first 100 days are a bloody nightmare”.

The political dynamics have shifted once again, with the Conservative Party looking more confident and assured, and the Labour Party looking at how it can neutralise any conservative party proposals especially on tax. So what does the new political environment mean for the retail financial services industry?

Firstly, it will have to be incredibly focused on desired policy outcomes: we have now approximately 20 months before a general election, assuming Brown is not forced to do a John Major and hold out for a full five-year term. A few issues of note will be the Government’s response to the financial capability agenda, the onset of personal accounts, the ramifications of climate change and welfare reform; the industry must be intent on focusing its engagement with Government with real vigour.

The industry must now take this forthcoming period of political choppy waters with both hands and seek to shape its own destiny. It must develop products, services and views that are transparent, clear, honest and trusted by consumers who are better-informed than ever. The industry must ensure its issues are not simply lost amongst the imminent poster campaigns and covert electioneering, and that the assurances given are not subsequently dropped for political expediency.

With an emboldened opposition looking to score points, the industry must not simply start to build up their engagement with the opposition for the sake of it, but offer to all parties real and meaningful solutions which advance the greater good of the industry and customer, not just individual short term commercial considerations. Time spent ploughing meaningless furrows to advance sectoral interests will do the industry no good at all, especially when parliamentary time might be scarce.

The 2007 Pre-Budget Report, with its lower growth forecasts and tighter public spending limits, together with the spectre of housing market difficulties, makes it likely that we will be entering a period of political populism: a focus on measures which enhance the war between the main political parties but leave the voter and/or retail financial customer looking in from the outside on a battle between those in the red and blue corners, occurring on a battlefield neither of the industry’s liking nor for the consumer’s benefit.

David Cameron and the Conservative party have scored a decisive tactical victory by causing the Prime Minister to postpone the General Election, but as any amateur military historian knows, it is the strategic rather than the tactical battles which determine overall victory—together with skilful movement by clever and lucky generals.

Terry Paul can be contacted on +44 (0)20 7665 9533 or click here to email.

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