Labour is now confronted with a serious strategic dilemma, but the Conservatives also face huge economic and political challenges
The election result surprised everybody, except perhaps Lynton Crosby. The eleven pre-election polls accurately predicted the vote share of the Liberal Democrats and UKIP, but seriously underestimated the Conservatives and overestimated Labour. Cameron needed a 7% lead over Labour to secure a majority and that is what he achieved, with two million more votes than Labour (11 million to 9 million). The actual number of seats changing hands between Labour and the Conservatives was very small, but both benefited from the collapse of the Liberal Democrats who lost 49 seats.
Why were the polls so inaccurate? The way voting intentions were translated into actual voting may be part of the explanation. Despite the apparent closeness of the race, and the claims by many politicians and newspapers that there was a momentous choice to be made, turnout rose only 1% from 2010 – to 66%. This means that once again the biggest party was non-voters, comprising 34% of the electorate. By contrast, only 25% of the total electorate voted Conservative, a rather slim basis of legitimacy for government of any kind. As with so many in the past, the Conservative victory was made possible by the first-past-the-post system. It is unlikely there will be much Conservative enthusiasm for changing it any time soon. Under PR, according to the BBC, the Conservatives would have got 256 seats, Labour 200, UKIP 85, the Lib Dems 50, the SNP 25 and the Greens 20.
Although the result was surprising when the exit poll was first announced, in retrospect it is not. For five years Labour had lagged behind the Conservatives on two crucial measures of public support: economic competence and best Prime Minister. In each case the margin was up to 20 points. Miliband began to improve his personal ratings a little during the election campaign, but the success of the Conservatives in making their interpretation of the financial crisis the dominant common-sense was shown in the final TV ‘Question Time’ when Miliband was harangued by the audience for Labour overspending. Normally the advantage on economic competence and leadership the Conservatives had secured, together with the evidence of economic recovery taking hold, and the flurry of election give-aways to almost every part of the electorate in the budget and the manifesto, should deliver victory to an incumbent government. There was therefore some nervousness in the Conservative high command when there seemed to be no movement in the polls, which were all predicting right up to polling day a second hung parliament in which the party arithmetic would be against the Conservatives forming a government, even though they were likely to be the largest single party.
Their strategy was to focus single-mindedly on the economy and leadership and grind out a victory. But in the last two weeks of the campaign they developed a third strand, warning about the consequences of a minority Labour Government relying on the votes of the SNP. As David Marquand has pointed out, the calculated demonisation of the Scots recalls how the Conservatives reacted after 1910 to the Liberal Government when it was reliant on the votes of the Irish Nationalists. The Conservative party and media were preparing to do the same and challenge the legitimacy of a minority Labour Government. But it was not needed because the warnings struck home and enough voters in the end went Conservative, fearful of the potential instability which was conjured up before their eyes.
The spectre imagined into being by the Conservatives did have some basis. The SNP did win 56 of the 59 Scottish seats, up from 6 in 2010. Like the Conservatives, they benefited hugely from first-past-the-post. They won 50% of the vote, only slightly more than the 45% the ‘Yes’ campaign secured in the referendum, but that delivered them 95% of the Scottish seats, wiping out one of Labour’s main heartlands. Without the renewed momentum of the SNP after the referendum Labour would have retained most of its 41 seats, and this would almost certainly have made Labour the largest single party, because the Conservative economic message on its own was not cutting through. The major realignment of the parties in Scotland is the major event of this election and by means of adroit Conservative electoral tactics helped cost Labour the election in England. The Conservatives played the English card, which helped boost the SNP in Scotland still more, but its primary purpose was to drive home the Conservatives’ advantage in England. It succeeded triumphantly.
This was a very significant victory for the Conservatives. They have not won an electoral majority since 1992, the longest period in their history in the modern era. It is also a long time since any incumbent government increased its seats and vote share. It was beyond both Thatcher and Blair. The Conservatives seized the political initiative back in 2010, and now they have consolidated their position. Labour, although it slightly increased its share of the vote, has gone backwards in terms of seats because of the loss of Scotland. Conservative governments seem to be once again the default option for the UK. In the nine elections of the neoliberal era since 1979 the Conservatives have now won six and Labour three.
The Conservatives are closely aligned with the contours and main structures of interest of the political economy of Britain as they have emerged in the last thirty years after the structural crisis of the 1970s, with the central features being a finance-led growth model based on financial services, personal debt, high consumption, asset bubbles and house ownership. Labour managed to win three elections and governed for thirteen years by adjusting to the constraints of this new political economy, but it was shipwrecked in 2008 and under Ed Miliband the New Labour approach was mostly abandoned. Miliband argued that the 2008 financial crash presented an opportunity for shifting the political agenda to the left. His problem was that his programme was not sufficiently left to stop the defection of Scottish voters to the SNP, but not sufficiently centrist to persuade enough voters in England, fearing for the value of their savings, pensions and houses, to switch to Labour.
Only the New Labour strategy has succeeded for Labour in England since 1979, giving it majorities of seats and votes in England in 1997 and 2001. But the New Labour strategy will not work in Scotland and is also blamed for the disengagement of many core Labour voters in England who are now inclining towards UKIP. The party and its next leader will have to confront a serious strategic dilemma. Left populism has worked in Scotland, but it has so far failed in England whenever it has been tried.
The electoral map of England is once again an almost unbroken sea of blue in the south-east outside London, and now also the south-west. Yet this is deceptive. 37% of the vote does not yet make the Conservatives truly dominant again. The UK has become a multi-party state rather than a two-party state, but the electoral system does not reflect this. The two main parties only won 67% of the vote between them and only 45% of all voters. One of the reasons the Conservatives did not score a more decisive win was that their economic argument did not cut through because the recovery has been so slow in coming, partly due to policy errors by Osborne in 2010. As a result, living standards had barely risen for the majority.
The new Government faces a number of intractable problems. For all the election bluster the recovery is still very fragile. Interest rates have still not risen, and the budget deficit and the balance of payments deficit are both 5% of GDP. The Conservatives are committed to another bout of severe austerity in the next two years, and must hope this does not have the same recession-inducing effect it did between 2010 and 2012. Productivity is very low and this partly explains why wage growth has been so meagre. The rebalancing of the economy which the Coalition sought has not occurred. Instead, it had to rely once again on stimulating private credit and increases in house prices.
The Conservatives also made numerous pledges during the election campaign to increase spending – on the NHS, on the Right to Buy for housing association tenants, on child care, on rail subsidies, and many other issues, while at the same time pledging not to increase any of the main taxes, and indeed promising big tax cuts before the election in 2020. They are pledged to find £30 billion in spending cuts, while continuing to ring-fence pensions, the NHS, overseas aid and education. The targets look as incredible as those announced in 2010, which had to be abandoned in 2012. The Government’s projections are heavily reliant on economic growth continuing at its current rate through all five years of the next parliament. The risk of new external shocks from a number of sources in this period is high, so the Government is likely to struggle to stay on track. It may face a serious setback to the economy with consequences for its reputation for economic competence. It fought the election on the claim that austerity was almost at an end, and will find it difficult to explain if it turns out this is not the case.
Two other key problems are how the Government will manage the two unions – with Scotland and with Europe. The Conservatives are likely to concede still greater powers to Scotland, particularly on taxation, while also bringing forward a version of ‘English Votes for English Laws’ which will create a de facto English Parliament, substantially increasing the Conservative majority at Westminster in most divisions. There is no evidence as yet that opinion on independence has moved very much since the referendum, so a game of constitutional chess will develop. The Conservative strategy will be to cut off the SNP from influence in Westminster by offering it something close to fiscal autonomy within the Union, in the hope that the SNP will lose popularity when it can no longer blame Westminster for holding it back. The SNP strategy will be to ensure that Westminster can still be blamed for imposing conditions on Scotland which place constraints on the choices Scotland wants to make. Unionism is politically so weak in Scotland now, and the Conservatives’ behaviour since the referendum has done so much to undermine the Union still further, that the chances of keeping Scotland within the Union presently look small. Once support for independence rises above 60%, the SNP can be expected to press for a referendum, sooner if England votes to leave the European Union in the 2017 Referendum while Scotland votes to stay in.
The European Union is the other big challenge the Conservative Government faces. The Referendum will be held in 2017, which gives Cameron and Osborne two years to put together a package of concessions allowing them to recommend a vote to stay in. Up to a third of Conservative MPs, including some Cabinet members, will not find the package sufficient and will vote to leave. Cameron risks splitting his party on this issue; the problems he encountered in the last parliament with the UKIP wing of his party do not bode well. He will have strong support from business, but the referendum will be held in the mid-term of the parliament, normally the time when any government is at its least popular and many voters take any opportunity to vote against it. UKIP won the last European Parliament elections and four million votes in the general election. It will link with a substantial part of the Conservative party and the Conservative media to make it very difficult for Cameron to win. Public support for EU membership has fluctuated in recent years, depending on how well or badly the Eurozone is doing. Whether the EU will look strong or weak in 2017 is out of Cameron’s hands. He will not want to be remembered as the last Prime Minister of the United Kingdom and as the Prime Minister who presided over Britain’s exit from the EU. But it will require great political skill and luck on his part to avoid either one or the other or possibly both from occurring.