Things are bad ... ... but they'll get worse

Calamity in the local elections, historically low opinion poll ratings, scandal and cock-up at every turn - John Major and his team are in deep trouble. Almost two years may remain before the next general election, and with most governments we could exp...

Education

THE MESS WE'RE IN: As parents and governors dig in for a year- long campaign against education cuts, the extent of the Government's failure over school reform is plain. Parents were the people whom reform was meant to please. In the mid-1980s, they were hostile to teachers and keen to see the balance of power tip away from them. Parents were angry about strikes and worried about the use of trendy methods in the classroom. Yet now, a decade later, government policies have thrown parents and teachers into an unprecedented alliance.

In 1988 the Government promised to address parental worries about standards by introducing a national curriculum and testing. Parents were given the option to choose any school regardless of where they lived. Schools were allowed to leave council control and receive money directly from the Government.

Every one of these policies collapsed. The curriculum and testing proved so unwieldy and bureaucratic that within five years they had to be revised. Teachers' unions forced ministers into a humiliating retreat by a boycott of national testing. More than £740m of taxpayers' money has so far been spent.

Opting out, once the Tories' leading education policy, is now its biggest problem. Only 1,065 schools have opted out and in the last year only 13 secondary schools - the main target - have voted to do so.

Parental choice has proved an illusion. The chance of a place at the school of choice is probably no greater now than it was in 1979 because desirable schools are oversubscribed. The Government has raised parental expectations without finding a way to satisfy them.

WORSE TO COME: The arrival of sensible Gillian Shephard to replace gaffe- prone John Patten suggested improvement, but all Mrs Shephard's charm cannot disguise the pitfalls ahead. Nursery vouchers are first. If the Government goes ahead with low-cost nursery vouchers to fulfil John Major's promise of nursery education for all four-year-olds, the upheaval will make the fuss over testing look like a picnic. Bureaucracy will increase, public spending will go up and parents will find themselves having to "top up" the voucher to pay for a nursery place. There is no guarantee that supply will match demand, so thousands of voucher-bearing parents might be left without a place. The Government is also casting around for a way to increase opting out. One solution being considered is legislation to compel all secondary schools to opt out instead of waiting for parents to vote for it. That would make nonsense of the claim that opting out increases parental choice.

Funding schools properly while delivering tax cuts remains the biggest challenge. The Prime Minister and Mrs Shephard have promised more money next year but no one has said how much and the Cabinet's battle with the Chancellor has yet to be won. After four years of cuts, even funding next year's teachers' pay award will not be enough to prevent many schools and authorities running into severe difficulties.

Health

THE MESS WE'RE IN: It is four years since the Government introduced the internal market to the NHS, turning hospitals into autonomous trusts and many doctors into fundholders. Now cracks are opening up all over the system. The Royal College of Nursing and the British Medical Association report that morale is at an all-time low. Midwives have voted to suspend their no-strike rule and GPs are threatening disruptive action in protest over pay and conditions.

Official figures quoted by Labour last week showed 36,000 beds and 300 hospitals had closed since 1990. The lack of intensive-care beds was highlighted by the frantic attempt to find a place for a brain-damaged patient who was eventually flown by helicopter from Kent to Leeds. He subsequently died. Further public alarm has been aroused by stories of patients waiting - and dying - on trolleys. "Care in the community" for the mentally ill has become a sick joke, NHS dentistry has almost disappeared and doctors have reported that the abolition of free eye tests has led to a deterioration in older people's sight and an increase in eye disease.

Little wonder, then, that a Tory party memo leaked last November concluded that when it came to the health service, "we can never win on this issue".

WORSE TO COME: Though there is talk of slowing the pace of reform, there is little prospect of any let-up in the furore over the next couple of years. Health staff can be expected to express their anger, and the widespread public suspicion of reform shows no sign of abating.

The Treasury is pressing for more privatisation through the Private Finance Initiative, by which hospitals must seek private funding before state funding for capital projects and for the running of some services. More hospital closures are inevitable, especially in the big cities, as specialist services are "rationalised" and concentrated on fewer sites.

The theory behind the closures is that better primary care by GPs and health centres will lead to less pressure on hospitals, but people are not behaving as the planners predicted. There is increasing evidence that better primary care leads to more demand for hospital care as more health problems are picked up. Meanwhile GPs, whom the Government assumed were eager to take on hospital work such as small operations, are giving warnings that they are already overworked.

Psychiatrists predict a crisis as courts and prisons, under orders from the Home Office, say mentally ill offenders should not be in prison but in hospitals, many of which are already running at 120 to 140 per cent capacity.

Further ideas being mooted include charging for non-medical care such as "hotel" services during convalescence, visits by GPs and and for prescriptions for better-off pensioners. It is doubtful whether the Government could face the outrage that such policies would provoke.

Crime

THE MESS WE'RE IN: Since the Conservatives came to power 16 years ago the official crime figures have doubled. In 1994, 5,251,100 crimes were reported to the police. Experts may argue about the meaning of the figures, but there is no way around it: crime is up. According to the Home Office's British Crime Survey, a gigantic study of 14,500 households, the "real" number of offences is actually 15 million a year, three times higher than the police figures record. One in 30 people is a victim of common assault each year; one in 60 is a victim of wounding.

Since 1992, Kenneth Clarke and now Michael Howard as Home Secretaries have adopted a "hard man" approach to the problem, with repeated legislation to tighten up the justice system and in consequence a dramatic rise in the prison population - up from 40,000 in January 1993 to 51,000 last week. With ministers vigorously promoting a policy that "prison works" and urging ever-longer custodial sentences, there is nothing to curb this trend.

The system is under great strain; police, prison governors and probation officers are all angry. Senior policemen see their autonomy undermined by the Home Office's extension of central control. Prison and probation officers are openly contemptuous of Mr Howard's taste for the right-wing crime policies of the United States. The traditionally apolitical Civil Service is appalled by ministers' refusal to listen to evidence that contradicts their prejudices.

WORSE TO COME: There is every sign that Mr Howard intends to harden his hard man persona. That is his style, and he also sees it as an electorally popular approach likely to cause Labour difficulties. But numbers in jail cannot go on rising and prison sentences cannot get longer and longer without the system cracking. If the prisoners don't riot, the prison officers may.

Meanwhile, Mr Howard strides on. Pilot projects to fit electronic tags to offenders begin next month - even though previous tests ended in an expensive farce. He is also considering putting offenders through military training in American-style boot camps, even though evidence from the US and earlier Tory experiments with short, sharp shocks show they do not work.

On immigration, ministers are promising even tighter controls and more visa restrictions will be announced in the Queen's Speech this autumn, even though the last restrictions on asylum seekers, which halved the numbers seeking refugee status in Britain, were brought in only two years ago.

Ministers are also well down the road to forcing everyone in the country to carry an identity card, although it is far from certain that such a historical, cultural departure would get past the Cabinet and Parliament.

The Economy

THE MESS WE'RE IN: The cruel truth for the Conservatives is that the economy as a whole appears to be going like a train but most voters feel either left behind on the platform or mangled under the wheels. Interest rates have risen three times since last September and more hikes are expected despite Kenneth Clarke's decision not to raise them on Friday. The housing market is moribund. Prices fell by 0.3 per cent in April, according to the Halifax Building Society, and by 1.4 per cent over the past year.

The gloom is compounded by changes in the structure of employment. Although the unemployment figures have been falling by 30,000 a month for the past two years, the types of job being created are less secure. Part-time work and self-employment are growing at the expense of full-time work. All this insecurity, combined with the effects of the Government's tax increases last year, has hit consumer spending.

The news on inflation - currently at 2.8 per cent - has been better, and exports, too, have done well, growing by 8 per cent over the last year, helping to push overall economic growth to a better than normal 4 per cent. However, businesses have been reluctant to invest in plant and machinery; finance and leasing houses last week reported renewed weakness in corporate borrowing to fund investment.

The Government's own finances are in a poor state. The public sector borrowing requirement last year ballooned to £35bn, or 5 per cent of GDP, as the recession hit the tax take.

WORSE TO COME: The paradox of the "feel-bad" factor looks set not only to persist but to worsen. Unemployment should continue to fall, exports will continue to do well; investment will slowly increase (provided interest rate rises do not destroy business confidence) and public sector finances should improve. But house prices and mortgage rates are vital to voter and consumer morale, and there the outlook is bleak.

Interest rates are likely to go on rising so that by the middle of next year mortgage rates will probably be in double figures for the first time since 1992. The house market, moreover, shows no sign of recovery, with the Halifax saying last week it saw no end to the flatness in house prices.

Moreover, a new spectre is emerging: the weakness of sterling. Because a weaker pound makes imports dearer it is inflationary, and it will mean even greater pressure for higher interest rates.

Foreign Affairs

THE MESS WE'RE IN: Douglas Hurd is highly respected for being a smooth diplomat with a "safe pair of hands". But all his urbanity cannot conceal the difficulties Britain faces abroad. A recent conference on Britain's place in the world, devised by the Foreign Office as a showcase for the country's virtues, turned into a lengthy examination of weaknesses. Speaker after speaker said that because of its half-hearted approach to Europe, Britain risked losing influence on the Continent and further afield. The only exception was a Japanese financier who, not unreasonably from her point of view, preferred an offshore Britain with cheap labour, a floating currency and no tiresome legislation to curb the entrepreneurial genius of management. Not even Mr Hurd could quite bring himself to endorse this vision - although it is one to which many of his colleagues adhere.

As if the intellectual drubbing over Europe were not enough, the star speaker, Henry Kissinger, spoke of a "special relationship" between America and Europe, referring to Germany at some length.

WORSE TO COME: Next year the British government will attend the Inter- Governmental Conference on the future of the European Union, an event which Mr Hurd insists will not be "epoch-making". Nevertheless, it is approaching the IGC with the enthusiasm of someone about to undergo root- canal surgery. However modest the IGC's agenda, it is bound to produce further strife in the Conservative Party. The conflict will dominate the run-up to the next general election.

The Government, unlikely to be a pivotal force in the EU, will not find solace elsewhere. It is already in dubious standing with the Clinton administration. John Major can expect little change from his ideological soulmates on the Republican right simply because most are ardent isolationists who distrust British nostalgia and guile.

The next round of strategic arms talks between the US and Russia could bring forward the day when Britain's nuclear weaponry is placed on the negotiating table - an excruciating prospect for a government wedded to the idea that it already has the minimum credible deterrent. Bosnia and the hand-over of power in Hong Kong are another couple of minefields through which the policy makers will have to pick their way with delicacy.

As if all that were not enough, the Foreign Office looks likely to be heavily criticised when the Scott report on arms-to-Iraq is published later this year. And it will not be alone.

Transport

THE MESS WE'RE IN: The vision of the "great car econ-omy" which characterised the Conservatives' transport policy until very recently has become a millstone round their necks. The road-building programme that was supposed to solve the country's traffic problems failed miserably. Instead it inspired a widely based opposition movement which has scored a number of notable victories on individual schemes and has helped to change the public's attitudes to road-building.

Moreover, the policy of allowing free rein to cars while not providing adequate support for public transport has become unsustainable. As air quality continues to deteriorate and roads become increasingly clogged, the public seems increasingly ready to accept the notion that car use has to be restrained, whether through the stick of tax increases or the carrot of improved alternatives.

The other main plank of Tory policy has been rail privatisation, but the structure dreamt up by the Government - breaking BR into 100 companies - is now considered unworkable by everyone but a few of the party's MPs.

WORSE TO COME: Transport is creeping up the political agenda, but the Government is adrift. It knows that its old laissez-faire policy is defunct but has yet to develop coherent ideas on how to improve things. Meanwhile congestion worsens and smog threatens our health.

Brian Mawhinney, the Secretary of State for Transport, is trapped by his own party's dogma, whether it be on bus deregulation (a disaster) or on railways. Moreover, despite the doubts about the rail structure, the Treasury is pushing privatisation forward, trying to ensure that the parts that will attract the most money into its coffers will be sold in time to fund tax cuts.

The move to private railways has already provoked a chorus of protest, but more is to come. The train operating companies are proving difficult to sell (and they are arguably worthless because they will all require annual subsidy) so the public is likely to be left with a half-privatised railway consisting of a lot of mutually hostile companies. Services are unlikely to benefit.

While the debate over roads continues, the situation on the ground continues to deteriorate. Dr Mawhinney has all but abandoned plans to introduce motorway tolls, seen by most transport experts as the essential starting point for progress.

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