The party conferences bring closer what is shaping up to be a hard-fought election. The public spending metrics suggest this could be a good one to lose
Party conferences are the gateway to the final months of the current parliament. Senior politicians will be setting the scene for what will be the most tightly fought general election since 1992.
Opinion polls during 2014 have suggested some tightening of the race between the Conservatives and Labour. Indeed, it is generally the case that governing parties start to shake off their ‘mid-term blues’ as the election campaign approaches.
The Liberal Democrats, in particular, must be hoping their baleful poll ratings recover between now and May. After years of building their strength in local government and Westminster as a party of protest, being in government has caused drastic losses of councillors at each set of council elections since 2011. It appears inevitable that the LibDems will lose MPs at the general election.
TheUK Independence Party are in the opposite position. Buoyed by spectacular successes in the 2013 and 2014 local elections, and in this year’s European poll, Nigel Farage’s party now holds a number of council seats and is the opposition on a number of authorities. Farage will be hoping that he (at least) can win a Westminster seat next year.
For Labour and the Conservatives a dreadful and bitter struggle lies ahead. The electoral mathematics of the Commons mean that Labour could win the election with only 34% or 35% of the vote. The Conservatives probably need to win 39% to 40% to win outright. Labour only received 29% of the vote in 2010 but, as the election approaches, appears likely to be close to the magical 35%. The Conservatives, by contrast, need to win a bigger share of the vote than they did in 2010 to have any hope of forming a majority government.
Thus, despite being under consistent challenge, Labour leader Ed Miliband is probably the marginal favourite to win the largest number of seats in 2015, though many of his MPs are privately far more pessimistic. London mayor Boris Johnson’s decision to seek a seat in next year’s election will provide the Tories with a boost in tacking their Ukip flank: few Conservatives are better at holding ‘Ukip waverers’.
Better-informed Labour supporters must wonder if 2015 would be a good election to lose. The public finances remain dire, with the deficit for 2014/15 likely to be in excess of £90bn and tax receipts not growing as fast as expected. During the summer, shadow chancellor Ed Balls ruled out an increase in National Insurance or a so-called ‘death tax’ (a levy on estates to pay for end-of-life care), which leaves him with few ways of raising additional revenue.
Labour is committed to reduce the UK’s budget deficit (for spending apart from capital investment) to zero, so Balls would confront several years of managing the deficit downwards after 2015/16. But Labour’s real problem would surely be the expectations that would be heaped upon it. The NHS, schools, defence and welfare all have good claims to an increase in funding above current levels. After five years of austerity, an incoming Labour government would be expected by its supporters to produce magic money from thin air.
The Conservatives would face a bigger need to cut spending than Labour, because George Osborne is committed not only to removing the entire deficit (ie. funding current and capital expenditure from in-year revenue) but to running a budget surplus. On the other hand, the public are used to the Tory-led government making cuts, so expectations would be very different than for Labour.
In terms of austerity, 2015 is the end of the beginning, and no more. The opening salvos of the 2015 election will take place in Manchester, Birmingham and Glasgow during the next few weeks. The electoral and public spending calculations facing the main parties are complex and unpredictable. There can be no real winners.
Tony Travers is director of LSE London at the London School of Economics
This opinion piece was first published in the September edition of Public Finance magazine
