Ted Heath remains a hate figure for many Tories. Two reasons for this are well known. He took us into Europe and he conducted the longest sulk in political history when he was deposed by Margaret Thatcher. The third, less publicised reason, was the economic U turn he performed midway through his government in the early seventies.


In 1970 Heath came to power with a right wing agenda to deregulate and make a transfer from direct to indirect taxation. Rising unemployment knocked him off course and his Chancellor Anthony Barber reflated the economy. The resulting inflation was controlled by an incomes policy which led to the miners strike, the three day week and the Conservatives lost the 1974 election.


When Margaret Thatcher faced a similar economic crisis early in her premiership, she was not for turning and became a heroine of her party. Such a status is never likely to be available to David Cameron and George Osborne but next week they do face a similar situation. The cries to modify the austerity and borrow our way out are deafening. Labour point out that as the economy flat lines we are borrowing more anyway.


I don’t expect the Chancellor to ease up. The Budget is likely to include fuel duty relief and more spending on infrastructure but I expect a broadly neutral budget as ministers cross their fingers and hope that the economic course on which they are set, works.


There are economic indicators which support the Chancellor’s approach, the mortgage market is easing, business start ups are growing and unemployment is down.


It is worth reflecting on that last point. It is one of the outstanding features of this recession. In Heath and Thatcher’s time, unemployment rocketed up as the economy slumped. Why hasn’t it happened this time. It is partly because the figures mask the fact that a lot of people are part time or under employed. Workers have been prepared to suffer wage freezes and reduced hours to keep their jobs. The trade unions, once able to bring down governments, are whispering from the sidelines. Sad but true, strikes are not really an option in the 21st century.




One of the many reasons why people are turned off from politics is that the great and the good generally don’t pay with their jobs when things go wrong.


If a brickie builds a dodgy wall and it falls down he gets sacked. If a car mechanic does a shoddy job on your vehicle; same fate.


But when it comes to police officers failing to pick up on complaints about Jimmy Savile or health disasters like Mid Staffs, none of the people at the top lose their jobs.


The glaring example is Sir David Nicholson, head of the strategic health authority which covered Mid Staffs. Now head of the whole NHS for England, he has defied repeated calls to resign.


Just occasionally justice is served as we saw this week with Chris Huhne and Vicky Pryce, but this does not detract from the need for people who take high salaries to walk the plank if things go wrong.


Do Peel Holdings have the voters of Eastleigh to thank for the government go ahead for the massive Liverpool Waters project?


The decision not to hold a public inquiry is a clear sign that ministers are pinning their hopes on infrastructure growth to get us out of this economic malaise. While it’s true that it will be years before the scheme is completed, the government want to create a sense of momentum and confidence with projects like the Northern Hub, High Speed Rail and Liverpool Waters.


The other reaction has been for some Tory ministers to flirt with ever more right wing policies in the face of the UKIP advance. The suggestion that the UK might quit the European Court of Human Rights is a disgrace. The spectacle of the country that stood alone in the Second World War to preserve democracy and liberty, quitting the institution that protects those freedoms is deeply depressing. It would have unforeseen consequences at home and abroad would send all the wrong signals to countries where attachment to democratic values is tenuous.


I forecast that the Lib Dems would hold Eastleigh, but that was before the accusations came up about Lord Rennard. Given that and the fact that the by election was caused by the lies of Chris Huhne. Neither of these issues prevented the Lib Dems holding on. Of course this was an ideal seat for them to defend, nevertheless it does suggest that people care less and less about the scandals of the Westminster village and more and more about practical local issues that affect them.


It is all part of the huge disengagement people feel with conventional politics. The scale of the disenchantment is now becoming clear whether it be a stand up comedian doing well in the Italian elections or UKIP in Eastleigh. Heaven knows what the American public are making of the continued deadlock between the President and the House of Representatives. I raised this issue with Jack Straw the other day given his long experience in high office and as MP for Blackburn since 1979. He had no clear answer to my question as to when people might trust their politicians again. He did agree with me that apart from issues like expenses and poor moral behaviour, the continuing recession meant that politicians can no longer promise a visionary future of prosperity because they just would not be believed.


So where do the parties stand after Eastleigh. Nick Clegg gets a reprieve and the Coalition remains stable but Eastleigh was an ideal seat for them and they won’t be able to put in that massive effort across the country where their poll ratings remain weak.


UKIP are on a surge. They have been accused of being a one man band in the shape of leader Nigel Farage, but I thought their Eastleigh candidate, Diane James, was the best of the bunch. Now they face the challenge of the county council elections. What are UKIP’s policies for running Lancashire County Council?


Tory backbench reaction remained muted after coming third, but backbenchers remain unhappy with David Cameron and a flat budget might see a summer of discontent.


Labour didn’t try in Eastleigh, putting up a candidate who had made highly offensive remarks about Margaret Thatcher. They are still blamed for the economic mess and need to start fleshing out their proposals for the future more.



With inflation heading for 3%, the Governor of the Bank of England wants £25bn more quantitative easing. What are we to make of Sir Mervyn King’s views revealed by the publication of the latest Monetary Policy Committee (MPC) minutes?


He may have been influenced by Mark Carney’s indication last week that inflation targeting may be eased when he becomes Governor in July, or he may have run out of ideas to help our flat lining economy. In any event he was overruled by a majority of the members of the MPC.


Having been cheered up midweek by a speech by Sir Howard Bernstein, Chief Executive of Manchester Council at a Downtown event full of ideas about the city’s drive for foreign investment; reading the MPC deliberations was a reminder that we are in a dark forest economically with few chinks of light.


The Budget is less than a month away but there are low expectations that the Chancellor can pull any new rabbits out of the hat. The headwear is empty. Quantitative Easing, low interest rates and infrastructure spend have all been tried but the headwinds blow strongly.


There are indications that the mortgage market is easing and the infrastructure investment has long lead times but the recession continues to take its toll with Axminster carpets following HMV, Jessops and Blockbuster off our high streets. George Osborne was also a billion short on what he expected from the 4G sale.


Last December the Office for Budgetary Responsibility had factored in £3.5bn from the sale. It was an important factor in the Chancellor being able to claim that the deficit was falling. Some economists now claim the government overshoot this financial year will be £10bn.


Internationally there is talk of currency wars breaking out as countries try to boost exports. Japan has certainly embarked on this course. The pound is weak which partly explains the 10p hike in a litre of petrol since Christmas. By the way a friend of mine was asking the other day where are the fuel protests that we saw in 2000? A good question I thought.



Against this background local councils across the North are fixing their budgets for the forthcoming year. In our urban areas most people will face a rise in council tax. The politicians will argue they have no choice considering the cuts in government grant. Cynics will point to the fact that the metropolitan councils from Leeds to Liverpool have no elections this year. The Environment Secretary Eric Pickles is threatening to penalise councils like Manchester who have found a way round the need for a referendum if council tax rises by more than 2%.



Meanwhile the voters of Eastleigh have to choose between the two parties of government as they go to the polls next week. We can judge the seriousness of Labour’s challenge by the refusal of their candidate John O’Farrell to live in the constituency if he was elected.


So it’s between the incumbent Liberal Democrats who have a dull but worthy candidate and an off message Tory. I don’t expect the “Chris Huhne” effect to be too damaging and I’d bet on the Lib Dems getting some good news at last.