Is it misleading to think of the government as shambolic – even comprehensively shambolic? It has made some bad mistakes, but politically it has been fairly stable, so far. The Conservatives have achieved most of what they wanted with the Lib Dems acting as cover – probably more than they would have managed as a minority government. The NHS legislation would never have survived had the Lib Dems not been in the government and decided to follow what they understood to be the conventions of coalition. Right-wing Tories chafe under its bonds but they have had little to complain about. Our absence from the Eurozone saved the government from the worst of the European financial crisis. The unemployment rate is still among the lowest in the OECD. And while it is obviously convenient, it is not unreasonable for the government to argue that the problems of the EU, our largest market, are largely beyond its control. It can also point out that however badly it is doing in the polls, the number of people who say they will vote Tory or Lib Dem still exceeds those who say they will vote Labour.

The notion that it is all a shambles dates from the last budget. On the whole, the coalition’s other policies, especially the huge cuts in public expenditure, though they can be thought wrong-headed or too severe, have not been those of a government that has lost its grip. It survived, with a great deal of patchwork, what might have been its first real crisis, the NHS legislation. But the budget, which was largely fiscally neutral, did suggest a government that had lost its grip: not so much on broad policy as on crucial details, ones the electorate is likely to remember. It managed to offend many people in the pursuit of very little, while also suggesting a cabinet out of its depth. This is the least experienced Conservative or Liberal government in modern history. The Lib Dems, of course, have no ministerial experience at all; of the Tories in the cabinet only Kenneth Clarke has had a significant ministerial career (William Hague’s at the Welsh Office was brief). Blair’s first ministry was equally inexperienced, but it never seemed as lightweight, and it came to office in much more favourable circumstances.

Another reason we think the government is shambolic is that we know the worst of the cuts have yet to come, something ministers have never tried to conceal, on the grounds that austerity equals virtue and virtue is always rewarded. Unease is heightened when ministers insist that there isn’t – and can’t be – a plan B. For a surprisingly long time they got away with their assertions that there was no alternative to their policies. With the help of the media, they contrived to turn a crisis of the banks into a crisis of the welfare state, giving them the chance to reshape the welfare state in ways many Tories had always wanted. The crisis, they argued, was genuine: a result of the deficit, whose size they have always exaggerated, and which they blamed on that familiar stereotype, Labour’s profligacy. So long as rhetoric doesn’t depart too far from reality this is politically quite effective. The danger is one that the Thatcher government also faced: it is difficult to impose a radical reshaping of society by holding out the promise of future economic success. Thatcher’s government was able to satisfy enough of the electorate enough of the time: John Major paid the penalty.

The present government has gone on about benefit fraud and claimed that cuts will stiffen the backbone of the poor, but it has primarily justified its policies on economic grounds, claiming that the private sector will pick up the slack. Government spending in this view robs the private sector of investible funds: cuts will free funds to be invested in the private sector; the private sector will spend these funds and will expand; in expanding it will create more employment; those whom the cuts have made redundant will find employment in the private sector and equilibrium will be restored. There is a certain theoretical plausibility to this argument, but little evidence to support it. If demand contracts, which must be the immediate consequence of budgetary cuts, the private sector will not invest. Even if it were to, the assumption that the workforce can move painlessly from job to job, regardless of skills or experience, is false. How far Cameron and Osborne actually believe any of this we don’t know. It is perfectly likely that for them it was a politically useful argument whatever happens in the future. The electorate is patient but sooner or later it will want to be rewarded for what it has put up with. Unless the rewards appear soon the government will just seem incompetent.

We don’t know much about the internal dynamics of the coalition, but we must assume that tensions inside it will increase simply because the policies on which its members agree have already been enacted, and because it is politically and electorally necessary for the Lib Dem leadership, Nick Clegg especially, to assert itself. It supported ‘deficit reduction’ because it believed in it, but disagreement is likely over issues that are important to MPs but probably of little significance to the electorate. Gay marriage, for instance, is important for Clegg and the Lib Dems, but also important, in a quite different way, for many Tory MPs. Clegg’s immediately hostile reaction to Michael Gove’s suggestion that O-levels could be restored for brainy children but not for the rest is another instance. Gove, despite what he says, is a social reactionary; Clegg is not. Cameron’s recent musings on the desirability of further welfare cuts will also test the loyalties of Lib Dem MPs.

Above all, there is Europe. No British government has ever been able to make the issue go away. Europe divides the government in two ways. It divides the Conservatives, who are at best only tepid Europhiles, from the Lib Dems, and it divides the tepids from the quasi-UKIPs within the Tory Party. Compromise here is scarcely possible. The Lib Dems are Europeans or they are nothing. The UKIPs are anti-Europeans or they are nothing. This makes Cameron’s position exceptionally difficult. He doesn’t share UKIP’s Europhobia and even if he did he knows that what they want – withdrawal from the EU – is not practicable. But since for many of his backbenchers Europe trumps everything else he can’t ignore it, even though in trying to placate them he has already had his fingers burned. His decision to withdraw the Conservatives from the centre-right grouping in the European Parliament and join the extreme right, which must somehow have looked like a good idea at the time, has led to his and Britain’s virtual exclusion from European political negotiations. Then there is the question of another referendum. The leaders of all three parties have danced around it, all trying to avoid a referendum without spelling it out, all believing the likely result (withdrawal) would be immensely damaging, and all knowing that the pressure to hold one is becoming stronger and stronger. Europe could do to Cameron what it did to Major, even if in the Lib Dems he has a protection Major never had.

Then there is UKIP itself. In its dogged Englishness – despite its name it is primarily an English party – it has much in common with the Tory Europhobes. Many of its members regard themselves as authentic Tories who represent the Tory tradition better than the Conservative Party’s backsliding leadership. In some ways UKIP resembles Rothermere’s Anti-Waste Campaign of the 1920s or the interwar imperial protectionist movements which represented strands of Tory belief that were resisted by the party leadership aware that, in their pure form, they could be electorally off-putting. They had the explicit support of the Daily Mail and Daily Express, however, whereas UKIP has only implicit support from the Tory press. How much damage UKIP might do to the Tories at the next election is impossible to gauge. Much depends on the readiness of disaffected Conservatives to return to the party at the general election, on Cameron’s ability and willingness to buy UKIP off, and on where UKIP chooses to put up candidates. Had the Alternative Vote been introduced there could have been a formal or informal exchange of preferences. Now there is no such possibility. As a result UKIP will probably harm the Tories much more than the Greens will harm Labour. But any serious agreement with UKIP could alienate the Lib Dems to such an extent that the coalition breaks up – which is exactly what the Europhobes want and Cameron doesn’t.

All this contributes to a crisis of the British system that might have overwhelmed a less resilient man. Historically seen as fairly stable and relatively uncorrupt, the system has now been shown to be neither – which won’t have surprised any casual reader of Private Eye. That it has been so thoroughly corrupted morally and financially is unexpected, however. I doubt that anyone anticipated what the Leveson inquiry would reveal, or imagined that virtually all the country’s past and present political, media and police leadership would appear before it, often abjectly. The Libor disaster would once have been genuinely shocking. Now it seems just part of the way the system operates, and not in the least surprising given what we had already learned of the bankers and their ways. There is hardly any part of Britain’s power structure that has not been tainted. This has put the coalition under immense strain, partly because the Lib Dems were never really part of the power structure and so are largely exempt from the revelations. As Clegg pointedly noted, not all political parties sucked up to Murdoch. But the system was not a shambles. On the contrary, as a means of mutual reward and assistance it worked very well, until one of the participants over-reached himself.

The most important question is how such a corrupted system emerged. It is, of course, difficult to know whether it really is the case that historically Britain wasn’t a corrupt society. It’s easy to exaggerate its probity, but reasonable even so to argue that in the second half of the 19th century Britain did become an unusually uncorrupt society. Even economic movements were given moral justifications. Free trade, for example, was thought superior to protection partly because the quest for tariffs was believed to be inherently corrupting. (Contemporaries had the United States in mind.) The elimination of ‘corrupt practices’ from elections was largely successful. The British state was one of the few which could expect its citizens to pay their taxes; this is no longer true today.

Doing favours, buying influence, providing jobs for the boys or the family – these practices lubricate the wheels of most systems. They could hardly function otherwise. For much of its history the Third Republic in France was a vast rural Tammany and, partly as a result, it worked rather well as a democratic system. Much of the European press was (or still is) open for hire. Although the relationship between the Murdoch press and virtually the whole British political class has no precedent in British history it would not be possible to write a study, say, of Lloyd George that ignored his relations with the press, some of which he purchased. He even gave political office to two of the great press bosses, Lords Northcliffe and Rothermere. The present system has deep roots, but it isn’t merely an extension of what was always there. The Met, for instance, has long had a dubious reputation but it is unlikely that in the past it was as intimate a part of the system as it appears to be today. Did it always lend horses to the leader of the Conservative Party? And the recent behaviour of News International isn’t just a refinement of existing practices. Clearly other factors must be taken into account.

The first one, now a cliché, is the extreme professionalisation of politics. Politics today is dominated by a comparatively young elite for whom politics is all of life. And politics is less a matter of legislative achievement – though that still matters – than of electoral success, and that is won by those who are part of the system, even if it means flying to Queensland (as Blair did) to impress the arch-mediaman himself. Social Democratic political parties are particularly vulnerable – and not only in Britain. As they abandoned socialism, however defined, and moved to a vague progressivism, a vacuum was created which has been partly filled by a manipulation of the system validated by electoral success. Although the revelations of the last year have most embarrassed Cameron, himself very much a product of the system, it was the last Labour government that brought that system to perfection. The Thick of It, attempting to satirise all this, lost some of its force, because the world it was satirising was actually like that, beyond satire. But the system that can raise you up can also bring you down, as Labour and now Cameron have discovered.

The second factor, inevitably, has its origins in Thatcherism. The ruling values of Thatcherism always had the potential to corrupt. The dismissal of what we might call public spirit, of the idea that someone might do something disinterestedly, of the notion of collective endeavour, has left Britain open to a corrosive and shameless individualism of which the attitude of the bankers to their bonuses is the archetype. The increasingly ambitious programme of privatisation and the sale of underpriced public assets, often for political reasons, confirmed that everything could be bought and sold: power companies as well as opinions or stories in newspapers.

The City, as a shorthand for banking and finance, has been a major presence in British life for a long time, but since 1986, the year of the Big Bang, banking and finance have come to dominate the system as never before. Comparatively insignificant as an employer, the City has no equal as a political and social force to which the political class defers. Protected by light-touch regulation, which meant in effect no regulation at all, it has been cosseted as no manufacturing industry ever was. For a while it yielded much of the revenue that funded Labour’s spending programmes. But the good times ended, largely as a result of the City’s own practices. The shift in Britain’s economic and social balance from manufacturing to finance has had profound consequences.

Manufacturing takes place within the social world. Different kinds of people have an interest in it and its success or failure has observable social effects. Banking and finance, though we need them, are now asocial activities. When banks still had managers and close links to their local communities their attitudes were not so different from those of their clients. That is much less true now. The making of money, often a great deal of it, takes place in an enclosed world where long-term consequences are not considered. There has always been some feeling of separateness in banking and finance, but it has become much more pronounced in the last twenty or thirty years. The testosterone-fuelled atmosphere in the trading rooms bears little resemblance to most workplaces, except perhaps to the newsroom of the Sun or to 10 Downing Street during the last Labour government. But the bankers persuaded the country’s political class that they were essential and that their values and way of doing things were socially desirable. They became even more enmeshed in the system and with them came money and a love of money. The result was the light-touch regulation which gave the City all it wanted and left the country to pick up the pieces. All this was inevitably corrupting, not because anyone consciously set out to corrupt, but because it greatly encouraged the abandonment of moral restraint and further distanced the activities of banking and finance from their social consequences.

What the future holds for the present government is difficult to predict. Much, of course, depends on the economy. At the moment its prospects look bleak and nothing the government has so far done suggests they will soon look rosier. But the next election is almost three years away and some kind of recovery is likely. How much, and with what electoral effect, we don’t know. But that isn’t the only variable. Both Cameron and Clegg have an interest in preserving the coalition: Cameron to protect him from his Europhobe right and Clegg to demonstrate that the Lib Dems are an effective and progressive party of government. Both want to postpone for as long as possible a decision on how they fight the next election. Both, it would appear, like office. But the disintegrative forces seem stronger. Europe as an issue and the Tories’ Europhobic resentment can only become more of a problem for the coalition, while disagreements over policy more generally will almost certainly increase. Even at an elementary level of competence the government’s grip seems weaker day by day. The G4S affair illustrates almost everything that is wrong with the system: in a kind of security PFI, public policy was handed to a private sector seriously not up to the job; inexperienced ministers believed they could not only make severe cuts to the number of people working for the Border Agency while demanding that every person entering the country be subject to full security-checking, but at the same time, and without inquiring whether it was feasible, hugely increased the security requirements of the Olympic Games. For a political party crucially dependent on its reputation for competence this looks very bad. The government is now in any case seen as the product of a discredited and possibly unworkable political system. The Lib Dems don’t see that as any responsibility of theirs, and they may choose to get out while the going is good.

20 July

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