the party leaders britain`s economy the public

B R I TA I N 2 015
THE PARTY LEADERS
BRITAIN’S ECONOMY
THE PUBLIC FINANCES
IMMIGRATION
CITIES AND LOCALISM
DEFENCE AND FOREIGN
POLICY
LAW AND ORDER
WELFARE
HEALTH CARE
BUSINESS AND
ENTREPRENEURSHIP
INFRASTRUCTURE
ENERGY AND GREENERY
EDUCATION
THE FUTURE OF THE UK
ELECTORAL ARITHMETIC
I ELECT ION BRIEFING
INTRODUCTION
The 2015 variety show
CONTENTS
2 Party leaders
4 The economy
6 Public finances
7 Immigration
It is the wackiest, most diverse, least predictable election for many years
F
IVE years ago the voters of Britain did
something improbable. Defying the
mathematics of Westminster’s majoritarian, “first past the post” electoral
system, which had produced a series
of mostly solid Conservative and Labour governments, they cussedly refused to give any party a majority. The Conservatives, who were in first place with 36% of the
popular vote, had to cut a deal with the third-place
Liberal Democrats, leaving Labour as the main opposition party. Britain had got its first coalition
since the second world war.
Many said it could not endure—but, oddly, it did.
Tories and Lib Dems turned out to share a conviction that the far-reaching state built by the previous, Labour, government needed pruning. Their
coalition launched into big reforms to schools, welfare, the National Health Service and the police.
Shared ambition bound them together. And so did
a constitutional innovation. By law, the date of the
next election—something normally in the gift of
the prime minister—was set firmly at May 7th. The
coalition partners would have to suffer each other
until then.
Though the date is predictable, little else is. The
2015 general election is the strangest that Britain
has seen for many years. An election is normally a
boxing match; this one is a variety show. Political
conventions that had been thought immutable
have been discarded. And, while predictions are
even harder than usual this time, the result of the
vote could be even less conclusive than in 2010.
The most obvious difference is that the field is
much more crowded. Though often described as a
two-party system, Britain has since the 1980s actually been a two-and-a-half party system, with a
few footnotes. The two parties were the Conservatives and Labour, the half was the Liberal Democrats, and the footnotes were the Green Party, the
Scottish National Party, Plaid Cymru of Wales and
a clutch of Northern Irish parties.
Over the past five years the Lib Dems have gone
from being half a party to one-quarter of a party:
many erstwhile supporters deserted as soon as the
leadership had to make compromises in government. Meanwhile some of the footnotes have become rampaging challengers. The Green Party has
scooped up left-wing protest votes in England. Despite losing an independence referendum in September 2014, the Scottish National Party has
surged: it threatens to take dozens of seats from Labour. Then there is the UK Independence Party, a
Eurosceptic, anti-immigration outfit that could
pinch votes from all the others. UKIP will not win
many seats in the House of Commons—its support
is too thinly spread—but it is a terror to the big parties all the same. It has already helped to push David Cameron, the Conservative leader, into promising a referendum on Britain’s membership of
the European Union if his party wins in May.
Another oddity is the way the two big parties
are behaving. From the moment Tony Blair took
control of the Labour Party in the mid-1990s, it has
been understood that the way to win British elections is to occupy the political centre ground. The
opposition party promises not to rock the boat too
much, at least when it comes to big things like taxes
and spending. Mr Blair won a huge majority in 1997
after promising to stick to the Conservative budget.
Having been relegated to the opposition benches,
the Tories then repeatedly pledged to match Labour’s splurge on hospitals and schools.
That convention has been tossed out. As our
briefings explain, Labour and the Conservatives
are now miles apart on many issues, including the
biggest ones. A Labour government would cut the
budget deficit much less deeply than a Conservative one. The Tories would hold a referendum on
Britain’s EU membership in the next parliament;
Labour would almost certainly not. Labour would
scrap elected police overseers, cut university tuition fees and beef up regulations on banks and energy firms. The Tories are having none of it.
Labour goes into this election with a leader
who seems more comfortable on a protest march
than in a boardroom. Ed Miliband thinks equality
a prize in its own right and calls some businesses
“predators”. He is on the cerebral left of his party.
Mr Cameron, meanwhile, has largely given up hectoring the Conservative Party to become more
moderate. Opinion polls show that Britons think
him well to the right of the political centre, just as
they see Mr Miliband as far to the left.
And both men are restrained next to the leaders
of the smaller parties, with whom they might have
to deal in a coalition. UKIP would skip out of the
EU. The Green Party proposes to end austerity, renationalise the railways and abolish both carbonemitting and nuclear power. The Scottish National
Party would evict Britain’s nuclear arsenal from a
Scottish loch (in effect the only place it can be kept).
The Lib Dems alone are trying to hold the centre
ground, though it is not doing them much good.
All are trying to sway an electorate that has become disinclined to believe anything a politician
says. Britons are not as gloomy as they were a few
years ago—the economic recovery has helped
there—but they are still jaded and suspicious. Politicians canvassing for votes over the next few
weeks will no doubt be told that they are all the
same. That has never been less true. 7
8 Cities
9 Defence and
foreign policy
11 Law and order
12 Welfare
13 Health care
14 Business and
entrepreneurship
15 Infrastructure
16 Energy and greenery
17 Education
19 The future of the UK
21 Electoral arithmetic
UK ELECTION 2015 / The Economist April 11th 2015
1
T H E PA R T Y L E A D E R S
In the land of the blind
It is not so much a popularity contest as an ugliness competition
A
FTER a five-year slumber,
millions of Britons are reawakening, grouchily, to
politics. For the leaders of
the mainstream parties—
David Cameron, Ed Miliband and Nick Clegg—this
heightened exposure, which more presidential government and the TV debates inaugurated in 2010 have reinforced, must be
painful. It is hard to think of another election in which the candidates to rule Britain
were so unpopular.
The proportion of people who approve
of Mr Cameron’s leadership is 16 points
lower than the share who disapprove of it,
according to Ipsos MORI, a pollster. In recent times only Tony Blair, politically
ruined by the Iraq War, has made it back to
10 Downing Street with worse ratings. Yet
Mr Cameron’s rivals are loathed by comparison. Mr Clegg, who went into the previous election as his party’s great strength,
has a rating of minus 36. Mr Miliband’s
number, minus 31, makes him easily the
most derided politician to have a solid
chance of becoming prime minister. The
only Labour challenger to have worse ratings in the approach to a general election
was Michael Foot, in 1983.
This is the context in which the Tories
are running a “presidential-style” cam-
2
paign around Mr Cameron, whose ruddy
features are prominent in their campaign
literature. The Tory leader, whose ratings
have been fairly steady over the tough
course of his premiership, is his party’s
great asset. Even in Scotland, where Tories
are about as welcome as cholera, Mr Cameron is preferred to Mr Miliband. This is
clearly an advantage for the Tories, but, given Mr Cameron’s own sub-stellar ratings,
not necessarily a winning one.
Why does he not do better? An easy
manner of command and an ability to project empathy, quick wits, vast self-confi-
Party leaders
Net satisfaction*, %
Labour
Conservatives
DAVID
NICK
CAMERON CLEGG
Lib Dem
UKIP
ED
MILIBAND
40
NIGEL FARAGE
20
†
+
0
–
20
40
60
2005
07
Source: Ipsos MORI
UK ELECTION 2015 / The Economist April 11th 2015
09
11
13
15
*Satisfied minus dissatisfied
†Not polled before 2013
dence, moderate instincts and other equipage for high office radiate from the Tory
leader. Whether at the dispatch box or G7,
he looks and sounds the part. Asked why
he wanted to be prime minister, he once
said he thought he’d “be good at it”. It was a
dreadful thing to say, but superficially true.
So why is his fan club not bigger, and its
members so muted in their praise?
Mainly because it is not clear what Mr
Cameron stands for—which is not to say
his views are a mystery. He is a pragmatic,
modern conservative: fond of tradition, allergic to dogma, with a dash of the social
liberalism he showed in legalising gay
marriage. He is neither a stick-in-the-mud
shire Tory nor a metropolitan liberal but a
bit of both, as one would expect of a man
formed by county privilege and London
life. Yet this is merely the political canvas
on which Mr Cameron paints, and his colour scheme is confusing.
After taking over, in 2005, a party made
unelectable by feuding over Europe, he
sought to sanitise it, by embracing environmentalism and other softer-hued causes.
But, as waves ofdisaffection with immigration, bankers and politicians have broken
over his cash-strapped government, Mr
Cameron’s modernising has largely gone
missing. To placate the Tory right, he has
dabbled in Euroscepticism, promising a referendum on Britain’s EU membership—
along with curbs on immigration that
seem incompatible with that membership.
Had he stamped his imprimatur more
boldly on his few modernising achievements—including a fairly green energy
policy—such tactical shifts might seem less
important. But stamping is not Mr Cameron’s style. Even when trumpeting the coalition government’s successes, in education reform for example, he can sound 1
2 more congratulatory of his ministers than
possessive. Mr Cameron is more chairman
than CEO—a communicator, a facilitator,
not an agenda setter. “Cameronism” is
more an attitude, a confident yet phlegmatic approach to the world, than a creed.
This frustrating lack of clarity has probably made Mr Cameron’s battle to keep his
job harder than it should be. But if he succeeds, what would he do? Roughly the
same again, probably: some steep (though
less than promised) cuts to defence, local
government and other unprotected budgets; some decent reform—perhaps to the
police, who the Tories are itching to squabble with—and stasis elsewhere, including
in difficult departments, such as justice, or
wherever Mr Cameron lets an underperforming minister settle. Meanwhile the Euroscepticism that the prime minister’s pandering has not satisfied will maraud like a
clumsy drunk. Polls suggest Mr Cameron
could secure the EU “In” vote he wants, but
the experience would divide his party and
distract the government more than Britain
can afford.
Mr Cameron might quit soon after that,
leaving it to one of his three likeliest successors—George Osborne, the chancellor of
the exchequer, Theresa May, the home secretary, or Boris Johnson, the mayor of London—to reunite his party. He insists he
wants a full second term. But by 2018 he
would have been Tory leader for 13 years
and prime minister for eight, the sort of
vintage at which Tony Blair and Margaret
Thatcher turned to political vinegar.
More than their leader’s strength, the
Tories’ main hope lies in Mr Miliband’s
weakness. The Labour leader is a liability
for his party. When Mr Cameron, playing
the bully in Parliament, asked how many
Labour MPs were putting his rival’s picture
on their campaign leaflets, only three
raised their hands.
Mr Miliband’s problem is partly presentational, which these days matters. He is
gawky, has an adenoidal voice and—as he
has rather sweetly acknowledged—looks a
bit like Wallace, an Oscar-winning animated character fond of knitted pullovers,
cheese and tea, and regularly outsmarted
by his dog, Gromit.
It should not matter, of course. Mr Miliband is clever, amiable, genuinely motivated to improve Britain and, in his parliamentary jousts with Mr Cameron,
anything but hapless. His big idea, that Britain’s surpassing problem is rising inequality, exacerbated by too many unproductive
jobs, also has considerable merit. So do
some of his suggested fixes, including an
increase in apprenticeships and perks for
small- and medium-sized firms.
Also laudably—and against the advice
of some of his advisers—Mr Miliband has
refused to match Mr Cameron’s EU referendum pledge, and not only because he believes there would be few votes in it for Labour. In outlook a European-style social
democrat, he has no appetite for an exercise that promises to foment more Euroscepticism than it allays. Yet given that this
is the view of most big companies, it is
striking how few support him. Asked to
name a single businessman backing Labour, the shadow chancellor, Ed Balls, muttered: “Erm, err, Bill”.
The problem is not only that Mr Miliband appears more interested in reapportioning wealth than making it. It is that he
seems to disapprove of those who do—
thus his attacks on energy companies,
banks and football clubs and, in Labour’s
tax proposals, on high earners generally.
Again, his criticisms are often justified. But
the effect of these serial assaults, unassuaged by praise for enterprise, is to sug-
consume much more of his attention than
energy markets. Not least, because Mr Miliband has done little to prepare his party for
exacerbating the Tory cuts it has spent five
years denouncing. That is a promise of dissent within a Labour government—which
would be much rowdier if, as looks likely, it
were forced to rely on the populist Scottish
National Party for support. The SNP has
sworn to end austerity. Its putative leader
in Westminster, Alex Salmond, a former
Scottish first minister, could make mincemeat of Mr Miliband.
The Labour leader might be happier in
a partnership with the Liberal Democrats,
whose leader Nick Clegg has been a constructive deputy to Mr Cameron. Much
good has that done him: being a bit-part
player in an unpopular government has
been disastrous for the Lib Dems—and for
their leader especially. It has made Mr
Clegg, a decent and, unlike most in his
party, truly liberal man, perhaps the most
reviled public figure in Britain.
Given the party’s gift for local campaigning, the Lib Dems may retain enough
of their 56 seats to be kingmaker again. But
that would be no thanks to Mr Clegg, who
is also well-hidden in his party’s campaign
bumf and under pressure from Labour
even in his Sheffield constituency. If he
wins there, the Tories win the election
without a majority and the Lib Dems hold
enough seats to put them back in government, he may yet survive as leader and
deputy prime minister. In any other scenario, he would likely take the hint and go.
In this litany of put-upon politicians
there is a big exception. Nigel Farage has
been indispensable to UKIP’s surge from
the irrelevant fringe of British politics.
Without his acumen and blokey charm, it
could not now be contemplating winning
half a dozen seats—including for Mr Farage
in South Thanet—and costing both the To-
NEITHER ED MILIBAND NOR NICK
CLEGG APPEAR ON MANY OF THEIR
PA R T I E S ’ E L E C T I O N L E A F L E T S
gest a naive left-winger, careless of business and out-of-touch with the aspiring
middle class on whose support British governments are generally founded.
Though justified, this impression has
led to exaggerated fears about Mr Miliband, whipped up by the right-wing press.
The Labour leader may disapprove of British capitalism, but as prime minister he
would be able to change it less than he
would like. The exigencies of austerity,
which Labour has committed to extending, albeit less onerously than the Tories
would, mean that public services would
ries and Labour as many again.
But that is as much a verdict on UKIP’s
meagre talents as Mr Farage; and it looks
unlikely to play a formal part in Britain’s
next government. UKIP would be compelled to ask Mr Cameron, its only plausible coalition partner, for more populist
concessions than its weight in seats could
command. And he, already under fire from
the Tory right, would rather take help from
almost any other hand. But the irrepressible Mr Farage is going to carry on enlivening British politics regardless, unless the
ciggies get him, or the booze. 7
UK ELECTION 2015 / The Economist April 11th 2015
3
BRITAIN’S ECONOMY
A strange recovery
What is more important: the state of the economy or people’s wages?
The answer might determine who wins the election
L
ISTEN to a Conservative politician for more than one minute and he or she is sure to
utter the words “long-term
economic plan”. The slogan
is projected behind them
when they give speeches
and plastered across their campaign literature. It has been shoehorned into any number of policy announcements, no matter
how uncomfortably. A scheme to give miscreant drivers10 minutes’ grace before they
are slapped with parking tickets, for example, was said to be part of a long-term economic plan. The phrase bores Tories to
tears—yet it might win them the election.
Just two and a half years elapsed between the run on Northern Rock bank,
which marked the start of Britain’s financial crisis, and the formation of the coalition government in May 2010. In the
meantime the economy took a huge hit.
From the peak in early 2008 to the trough
in 2009, GDP per person fell by 6.9%.
The new government promptly dedicated itself to fixing the resulting hole in
the public finances (see next story). But the
big economic problem was weak demand.
Fearing for their jobs, consumers were paying down debt rather than splashing out on
new cars or televisions. Businesses were
not investing. Unemployment rose to
8.5%—lower than in other wealthy countries, but still painfully high. And many of
those in work had too little of it: part-time
jobs and self-employment had replaced
many full-time jobs. Then, just as things
began to look up, the euro crisis crushed
Britain’s biggest export market.
From great to middling
GDP per person, 2000=100
160
Germany
150
Britain
140
France
130
120
United States
110
100
90
2000
Source: IMF
4
05
10
14
By 2013 the IMF was complaining that
Britain remained “a long way from a strong
and sustainable recovery”. Moody’s, a
credit-rating agency, downgraded the
country’s debt from AAA to AA1, citing
“continuing weakness” in growth. And the
Labour Party, which had lost economic
credibility during the financial crisis, began to close the gap with the Conservatives on economic competence.
Then things began to turn round. The
economy grew by 1.6% in 2013. The next
year, growth accelerated to 2.8%—faster
than any other member of the G7 group of
rich countries. On the way Britain created a
million net new jobs, taking the employment rate to its highest ever level, 73.3%,
and unemployment back down to 5.7%. In
January Christine Lagarde, head of the
IMF, praised Britain’s leadership as “eloquent and convincing”.
The recovery would appear to set the
Conservatives on course to win the election. Voters often tell pollsters that they are
most concerned about things like immigration and health care, but their behaviour
suggests economics trumps such worries:
Labour won big victories in the 2000s despite dire ratings on immigration, for example. And the public is crediting the Tories. David Cameron and George Osborne,
the chancellor of the exchequer, have a 15to 20-point lead on economic competence
over Ed Miliband, Labour’s leader, and Ed
Balls, his economics spokesman. But it is
not as simple as that, because Britain’s recovery has been so joyless.
Real wages had already been falling for
two years when Mr Osborne entered the
Treasury. For most of the 2010-15 parliament they continued to decline. This was
all the more painful because Britons had
become accustomed to steady rises in living standards. From the turn of the millennium to the eve of the crash, real earnings
had grown by an average of 2.6% per year.
Since then they have fallen by an average
of 1.2% a year, putting Britons through the
longest period of real wage falls since records began in 1855, according to the Bank
of England’s data.
Much of this was caused by imported
inflation. The tumble of the pound after
the crisis made imports more costly, before
energy and food prices soared in 2011-12. In
the government’s first two years, inflation
UK ELECTION 2015 / The Economist April 11th 2015
was more than a percentage point above
its 2% target for 22 of 24 months. Little could
be done about this: tighter monetary or fiscal policy would have strangled a weak
economy and further pummeled wages.
But pay also stagnated because British
workers’ productivity did. Output per
hour worked—which determines wages in
the long run—plunged during the crisis and 1
Happily toiling
Unemployment
rate, %
10
Change on previous quarter, ’000
Full-time employees
Part-time and other*
300
8
200
6
100
4
0
2
100
+
–
0
200
2010
Source: ONS
11
12
13
14
*Including self-employed
Spending spree
Cumulative contribution to GDP growth
since trough, percentage points
GDP*
Consumption
Total investment
Net trade
Other
12
10
8
6
4
2
+
0
–
2
2009
10
11
12
Sources: ONS; The Economist
2 remains 2% lower than in 2008. In the rest
of the G7, it is 5% higher. Low wages and a
ready supply of low-skilled immigrants
have encouraged firms to hire people rather than invest in computers and other
things that might make them more efficient. A gummed-up banking system probably prevented the most productive firms
from expanding, too.
In a sense, the wage squeeze was welcome. It kept unemployment down, thereby spreading the pain of the downturn
more widely. Economists usually blame recessions at least partly on the difficulty
firms have in cutting wages when demand
dries up; that problem was not much on
display in Britain.
So Labour and the Conservatives go
into this election talking across each other.
The Conservatives argue that the economy
is recovering. Labour says that households
are struggling. Both are right. Yet this is
something of a puzzle when one considers
what has driven Britain’s growth over the
past few years.
A few years ago it was an article of faith
13
14
*% increase since trough
among all the major parties that the economy would have to be sustained by something less gluttonous than consumer
spending. There was talk of Britain paying
its way in the world through stronger exports, and of a manufacturing revival. That
has not happened. Instead, the recovery
has been domestic. Since 2013 consumer
spending has grown at a healthy annualised rate of 2%. Buoyed by the return of
consumer confidence, firms have boosted
investment in tandem (see chart above).
This seems odd, given how pitifully
low wages have been (even if a collapse in
the oil price has removed some of the pressure). Despite suffering the stagnant pay
that Labour laments, households have driven the recovery that the Tories boast of.
Britain’s consumption boom came
from two sources. The first was population
growth. Thanks to immigration and a baby
boom, Britain’s population is 3-4% bigger
than in 2010. While GDP is up 8% over the
2010-15 parliament, GDP per person is up
only 4.8%. The second was confidence: as
workers stopped fearing for their jobs, they
started to save less. The household saving
ratio fell from 8% in 2012 to 6.4% in 2013
(though it has since picked up a little).
Confidence could not have returned
ised not to consider raising interest rates
until unemployment fell below 7%.
Another, classically British, stimulus
kicked in at about the same time. House
prices went up by 5.5% in 2013 and by another 9.8% in 2014. In crowded London
they have risen by 27% in the last two years.
This made household finances healthier
and may have given consumers the confidence to open their wallets.
The sober-headed will not celebrate
that trend. Young people—nicknamed
“generation rent”—find it ever harder to
buy a home. To address this, in 2013 the coalition launched a scheme—named “help
to buy”—to top up some mortgages with
government loans and guarantee others.
That, of course, probably pushed prices
even higher. In his final budget, Mr Osborne announced subsidies for those saving for a first home. That would be likely to
create still more demand.
The fundamental problem is too few
houses: in the decade to 2014 only 176,000
were built per year on average, when perhaps 240,000 were needed. Antiquated
planning regulations constrain supply, especially in the prosperous south-east.
Britons are ever more desperate to get on
the housing ladder before it is pulled up
out of reach. As a result, the Bank of England worries about a debt-fuelled bubble
and in 2014 intervened in the mortgage
market to curb excessive lending.
Instead of rebalancing, Britain has returned to its old ways: growth has been led
by consumers and fuelled by house-price
increases. Net trade has in fact made a
slightly negative contribution since 2009,
as British firms have struggled to export to
a Eurozone that is only starting to recover.
British consumers, meanwhile, continue to
import aplenty. This, together with a drying up of income on Britain’s overseas investments, has pushed the current-account deficit to fully 5.5% of GDP.
A consumer-driven recovery is not nec-
FAR FROM REBAL ANCING, BRITAIN
HAS GONE ON A DEBT-FUELLED
BINGE
without a prop from policy. Unlike its European neighbour, the Bank of England kept
its eyes fixed firmly on the horizon during
the imported inflation of 2011-12, recognising that turbulence was temporary and
keeping monetary policy loose. The bank
also recognised that boosting lending required more than just monetary policy. It
clubbed together with the Treasury to provide cheap funding for banks. The salvo of
stimulus was completed in 2013, when the
bank’s new governor, Mark Carney, prom-
essarily a concern. There is nothing inherently good about exports or inherently bad
about consumption. But in the long run,
more household spending must be funded
by wage rises, not declining saving or a
boom in house prices. The next government’s main challenge will to boost productivity rather than demand. That will require careful thought, targeted investment,
and an acknowledgment that cutting the
budget deficit is not the be-all and end-all
of economic policy. 7
UK ELECTION 2015 / The Economist April 11th 2015
5
THE PUBLIC FINANCES
The national interest
The parties’ fiscal plans are miles apart
A
LL the big political parties
agree: Britain badly needs
to get its public finances in
order. The country probably borrowed about £90
billion, or 5% of GDP, in the
2014-15 fiscal year—more
than Italy, France or even Greece. Yet the
parties do not agree in the slightest on how
much further borrowing ought to fall, or
how to bring it down.
The Conservative-Liberal Democrat coalition came to power in 2010 declaring
that deficit reduction was “the most urgent
issue facing Britain” and that it should be
achieved mostly by cutting spending, not
by raising taxes. Barely a month into his
new job, the flinty Conservative chancellor, George Osborne, laid out a bold plan to
do this. It turned out to be considerably
more flexible than he implied.
Mr Osborne set out two targets. First
and most important, the structural current
deficit—that is, the deficit adjusted to reflect
the economic cycle, and excluding investment—would be forecast to be in balance
five years in the future. Second, national
debt would fall as a percentage of GDP by
2015-16. At the time both targets sounded
like a plan to finish the job of deficit reduction in one parliament.
A euro crisis and sluggish growth quickly messed it up. The Treasury brought in
less tax revenue than it had expected and
had to spend more on benefits. As a result,
borrowing stayed high. Meanwhile ever
more of the output lost to the recession
was written off as gone forever, making
more of the deficit look structural. Mr Osborne could have got back on track by cutting spending more deeply or raising taxes.
Instead, he quietly allowed the completion
date to slip. As long as the job was still forecast to be completed five years in the future, he had not missed his main goal.
Thus a chancellor who had expected to
borrow about £50 billion less than he actually did in 2014-15 nonetheless claims to
have stuck to his guns. That he gets away
with this is partly a tribute to his bendy targets and partly a comment on the ineffectiveness of the opposition Labour Party.
But Mr Osborne’s reputation for austerity
also endures because of the way he has cut
government spending.
Beyond the protective “ring-fence” the
6
coalition erected around the NHS, schools
and international aid, departmental budgets have been slashed by 21% on average.
Local government is getting by on twothirds of its pre-austerity budget. Publicsector employment has fallen from 6.3m to
5.4m. Civil servants’ pay was frozen for
three years and then rose by only 1%.
The government saved about £25 billion from the welfare budget, mainly by
limiting annual increases and means-testing child benefit, a previously universal
handout. (Other welfare reforms grabbed
headlines without saving much money.)
But an ageing population and generous increases in the state pension—which accounts for 40% of the welfare budget—have
offset these savings. Overall, welfare
spending has barely changed since 2010.
If the Tories win, Mr Osborne must do it
all again. Provided the recovery is sustained, the chancellor wants a £7 billion
overall surplus by the end of the parliament in 2020. Current government plans
imply a further cut of 16% to departments
outside the ring-fence, according to the Institute for Fiscal Studies, a think-tank.
That will be tough, for three reasons.
First, the easiest cuts have been made. It is
Selective squeeze
Departmental budgets, 2010-11 to 2015-16
Forecast, % change
Current
Capital
International
Development
Energy &
environment
NHS
80 60 40 20 – 0 + 20 40 60
Transport
Education
Defence
Home Office
Business,
innovation & skills
Ministry of Justice
Work and Pensions
DCLG: Local
DCLG: Communities
Total
Source: Institute for Fiscal Studies
UK ELECTION 2015 / The Economist April 11th 2015
Total
hard to see local government repeating the
big savings made during this parliament,
for example: councils will soon run up
against their legal obligations to provide
services. Reforms to university funding,
which provided the bulk of the business
department’s savings, were a one-off. Second, holding down public-sector salaries
will become harder as private-sector pay
rises. Third, the population is older and
needier. The NHS says a freeze in its budget
will not do—it wants an £8 billion boost.
Mr Osborne says that, unrestrained by
coalition, he would cut another £12 billion
from the welfare budget. Half of that money would go on tax cuts; the other half
would reduce cuts in departments outside
the ring-fence to about 9%. If pensions are
protected, though, the Tory plan would require savage cuts to working-age welfare.
Labour promises only a surplus on the
current budget, excluding investment—
which on current plans will be £30 billion
in today’s money (or 1.4% of GDP) in
2019-20. The party has not specified when
exactly it would achieve this. By contrast,
both coalition parties want current balance
in 2017-18, which would demand deep cuts
for two years. From then on, the Lib Dems
would borrow about half the investment
budget, putting them, as so often, in a middle ground. The SNP does not want to cut at
all, and instead suggests a 0.5% annual
boost to departments’ budgets. That would
leave a small current budget deficit in 2020.
The gap between Labour and the Tories
is huge—£30 billion amounts to about a
quarter of the entire health budget. The IFS
reckons Labour could, as a result, make no
cuts and instead raise departmental budgets by 2%. The two parties have not been
so far apart on fiscal policy for at least five
elections. Labour does not emphasise this
difference, for fear of looking spendthrift.
But the choice facing voters is stark. 7
IMMIGRATION
Raise the drawbridge
Every big party wants much less immigration
C
ANDID mea culpas are rare
among politicians. Tony Blair
continues to insist on the
rightness of the Iraq war. An
apology from Ed Balls about
the role played by Labour’s
light-touch banking regulation in the financial crisis was qualified
with a hefty nod to others’ faults. When it
comes to immigration his party is much
more frank: Labour got things wrong. The
decision to grant Poles and other Eastern
Europeans unfettered access to Britain a
decade ago was, according to Jack Straw, a
former Labour home secretary, “a spectacular mistake.” All pledge not to repeat it.
Immigration, and not just from Eastern
Europe, did indeed surge under the last Labour government, which expired in 2010.
The recession caused net migration (immigration minus emigration) to tail off towards the end of Labour’s term. But the
economic recovery has drawn immigrants
back. The latest figures show net migration
was 298,000 in the year ending September
2014, higher than when the ConservativeLiberal Democrat coalition came to power.
The figure makes a mockery ofDavid Cameron’s promise—to which he insists he will
stick—to reduce net migration to the tens of
thousands per year.
His government tried. It abolished visas
that allowed students to stay after completing their degrees. It squeezed the numbers
of highly skilled migrants allowed entry
and closed schemes allowing unskilled
They’re back
Long-term gross immigration, ’000
GENERAL ELECTION
700
600
500
Other
400
300
New EU†
200
100
Old European Union*
0
2004
Source: ONS
10
14
*Includes expat British
†Joined EU since 2004
workers in from outside the EU. It insisted
that Britons wanting to bring foreign
spouses into the country earn at least
£18,600 a year—more if the couple have
children. Yet such measures have had little
impact on the headline figure because they
do not affect EU migrants. The latest to arrive are Romanians and Bulgarians, to
whom Britain fully opened its labour market in January 2014.
Britons have long disliked mass immigration. Even in 1995, when net migration
was well under 100,000, two-thirds wanted it cut. But they worry more about it
these days. Since the beginning of 2014 voters have consistently cited immigration as
the first or second most important issue
facing the country. As the economic outlook has brightened, the shadow of immigration has grown comparatively darker.
If elected, the Conservatives vow they
would restrict new immigrants’ access to
welfare and clamp down further on abuses
of the system. Labour would get rid of the
overall net-migration target—though it, too,
would make EU migrants wait longer for
out-of-work benefits. It is likely that few
voters will believe either party. Two-thirds
tell pollsters that the government has no
real control over immigration.
Many Britons do, however, like what
they hear from the UK Independence Party
(UKIP). Its stridency on the subject is the
most important factor in its rise—more important even than its hostility to the EU.
UKIP says it will allow employers to discriminate on the basis ofjob applicants’ nationality. It promises to crack down on illegal immigration and boost the border
agency. Migrants would only be eligible for
unemployment benefits and for Britain’s
generous in-work benefits after spending
some years in the country. UKIP also wants
Britain to leave the EU, which would allow
the country to regulate European immigration much more strictly.
The best research, by the academics
Christian Dustmann and Tommaso Frattini, suggests that immigrants have boosted
Britain’s public finances. They are young,
healthy and (whatever the politicians imply) less likely than Britons to claim benefits. Immigrants from Eastern Europe are
the best of the bunch. Labour and the Tories are thus lamenting, and UKIP is promising to stop, something that has made
Britain richer.
That might help to explain why Britons’
views are a little more complex than the
headline figures suggest. Though voters
cite immigration as the most pressing national issue, only one-fifth say it is the most
important issue facing them or their families (the economy, health, pensions and
tax all beat it). Ipsos MORI, a pollster, finds
that although 70% consider immigration to
be a problem for the country, fewer than
20% worry about it locally. And, though
voters dislike immigration, they are less
bothered by actual immigrants. Almost
half reckon that Poles, who have been arriving in large numbers for over a decade,
make a positive contribution to the country, similar to the figures for Americans,
Australians and Germans. (Britons feel
much less warmly towards Romanians.)
UKIP fares exceptionally well in some
places where hardly any immigrants live. In
Clacton, the place that gave the party its first
elected MP, just 4% of people are non-British,
compared with 13% nationally. In such
places, and elsewhere, dislike of immigration is driven by nostalgia for a simpler time
and fear of too-fast social change. That does
not render people’s anxieties invalid, but it
does make it awfully hard for politicians to
do anything to assuage them. 7
UK ELECTION 2015 / The Economist April 11th 2015
7
DEVOLVING POWER IN ENGL AND
Urban uprising
Everybody is promising cities more power. For once, they might mean it
I
F, A few years ago, somebody had
suggested that a Conservative
chancellor of the exchequer
would hand a Labour-dominated English city much greater
spending powers, few people
would have believed it. But in
February of this year George Osborne said
he would do just that, by transferring control over a £6 billion local NHS budget to
politicians in Manchester. The chancellor’s
move was revolutionary. If similar powers
were given to other cities it would change
the way Britain is run, reversing a decadeslong trend towards the centralisation of
power in Westminster.
Many attempts have been made to give
cities and regions more clout. London got
an elected mayor in 2000, who has gradually become more powerful. But there
have been big setbacks. In 2004 voters in
north-east England voted overwhelmingly
against a regional assembly. In 2012 ten
large cities that lacked mayors (including
Manchester) were asked whether they
wanted them. Nine voted no.
That defeat might have spelled the end
of decentralisation. Instead two things
happened. First, urban councils began to
fuse into metropolitan governments with
some power over transport and services.
Manchester led the way: in 2011 ten councils joined to form the Greater Manchester
Combined Authority. Second, the coalition
government began working on bespoke
“city deals”. These involved Whitehall de-
cities looked at that and decided they
would like some more power, too.
One reason to give them what they
want is economic. Britain relies far too
much on London and the south-east.
Something needs to be done to revive provincial cities, and that something might be
stronger self-government. But Mr Osborne’s plans (they belonged to him much
more than to David Cameron) also had a
political rationale. The Conservative Party
has been all but wiped out in the urban
north. Mr Osborne, whose constituency is
near Manchester, is looking to boost Tory
fortunes there.
And the Labour politicians who run the
cities are often willing to work with him.
Manchester’s leaders in particular are
hard-nosed and keen to attract business.
Asked by Labour headquarters in London
to badmouth a speech Mr Osborne had
given about building a “northern powerhouse”, Sir Richard Leese, leader of Manchester council, is reported to have responded with a fruity expletive.
Decentralising control over NHS spending would help with a bigger reform. It
would allow cities to co-ordinate their
medical care (now run centrally) with their
social care (run locally) and thus make savings that are hard to bring about from
Whitehall. The Tories cannot trumpet such
a plan, for fear of being accused of dismantling the universalist principles of the NHS.
But this could prove a useful way to slow
the inexorable increase in spending on
THE ECONOMY OF GREATER MANCHES TER IS
BIGGER THAN THAT OF WALES, YET WALES
HAS FAR MORE POWER
volving the budget for transport and for
skills (including apprenticeships and traineeships) and powers to “earn back” tax
from the Treasury, in exchange for responsibility to deliver local growth.
Progress was slow at first. But then
came the Scottish independence referendum. In a desperate attempt to prevent the
country from leaving, the main Westminster-based parties all promised greater
powers to the Scottish Parliament in Holyrood. Local officials in England’s better-run
8
health care. And it is hard for Labour politicians to argue, when such powers have already been devolved to the Welsh and the
Scots. Greater Manchester, for instance, has
a bigger economy than Wales.
Labour is conflicted about this. As the
party that created the post-war welfare
state, it worries about fragmenting the
NHS. But some Labourites, like Lord Adonis and Jon Cruddas, are keen on further
decentralisation from Whitehall. And the
party has a new reason to listen to them.
UK ELECTION 2015 / The Economist April 11th 2015
The Scottish referendum has supercharged the “West Lothian Question”—the
anomaly, caused by devolution, by which
Scottish and Welsh MPs can vote on laws
affecting England while English MPs have
scant power over Scotland and Wales. The
Tories propose to solve this by stripping
Welsh and Scottish MPs of voting rights in
Parliament—something that would make it
hard for Labour to run a government, since
it is strong in the Celtic fringe. If Labour
handed more power to cities this threat
would not go away. But, by creating more
anomalies, it would make the West Lothian Question seem less offensive. It might
soon be asked, for example, why Manchester MPs are voting on national health bills.
There is little public clamour for decentralisation. And Mr Osborne had trouble
persuading central departments to cede
power to regional cities. But once Manchester gets more powers other cities might well
demand them too. If re-elected, the Tories
are likely to set a mayoral election for Manchester in 2017 as part of the deal. Sir Richard has said that he wants full devolution
of all £22 billion of state spending to the
metropolitan authority. And if that occurs,
which many believe likely, the ability to
raise taxes cannot be too far behind, perhaps in the parliament after next.
It will take many years for English cities
to gain the kind of power enjoyed by rivals
such as New York. That city raises 69% of
the money it spends; London raises just
26%. But at least the process has begun. 7
DEFENCE AND FOREIGN POLICY
Keeping up
appearances
No party is promising renewed engagement with the world
G
ENERAL elections are hardly ever fought on foreign
policy. Even the exceptions,
such as one in 1935, which
pitted Conservative rearmament against Labour pacifism, and 1983, in which
Margaret Thatcher soared on the back of
the Falklands war, were mainly about domestic issues. Yet the absence of foreign
policy debate in the 2015 campaign is nonetheless remarkable.
That is chiefly because the world is
pressing. The takeover of eastern Syria and
northern Iraq by Islamic State has produced a jihadist haven, on the edge of Europe, more threatening than anything
Tony Blair or George Bush warned of. British warplanes are again bombing Iraq. And
whatever government is formed in May,
that campaign will not end soon, not least
because it has an urgent counterterrorism
purpose. Over 500 Britons—including the
London-accented murderer known as Jihadi John—are among thousands of young
Europeans with the death cult, and Britain’s domestic spy agency, MI5, claims to
have foiled over a dozen terrorist plots inspired by it. It cannot be long before one
comes off.
Russia’s attacks on Ukraine have mean-
while stirred the NATO alliance, of which
Britain is, even after recent defence cuts,
probably the second-most capable member after America. This has raised questions about not merely the scale of the cuts,
but also the purpose of Britain’s armed
forces. The shrinkage they are undergoing—which by 2020 will reduce the regular
army to 82,000 and cost it most of its heavy
armour—is based on a notion that Britain
no longer faces a serious conventional
threat. Yet that is what Russia represents to
NATO’s eastern flank.
There is more than this for the next foreign secretary to worry about. Among failing states, Libya, northern Nigeria, Yemen,
Afghanistan and Pakistan all represent particular British interests or responsibilities.
Meanwhile Iran’s quest for a nuclear
weapon, Europe’s to regain competitiveness and America’s for new Asian allies
are strategic issues Britain is struggling to
understand, let alone respond to.
The world has been busy before, of
course, and it is not easy managing a power that is fated—despite Mr Blair’s raging
against the dying of the light—to decline in
relative terms. These crises nonetheless
amount to an important test of Britain’s
ambition to be an active, collaborative,
medium-sized Western power, which its
leaders are flunking.
The Foreign Office is underfunded and
demoralised. The Conservative foreign
secretary, Philip Hammond, is a competent
manager with little enthusiasm for the
wider world (a senior security official describes him as “not exactly a little Englander, but…”) Every other week a retired
British general denounces the defence cuts.
These were supposed to shrink the defence
budget by 8%, but thanks to a historic shortfall of £45.6 billion in the kit budget and a
decision to shift responsibility for maintaining Britain’s nuclear weapons to the defence ministry, the squeeze has been closer
to 25%. Sir Peter Wall, a former army chief,
diagnoses “a lower level ofglobal ambition
for UK involvement in global security than
ever before.”
Neither the Tories nor Labour appear
hugely troubled by this diminution.
Bruised by economic weakness, the failures of Mr Blair’s hyperactivity and their
own unpopularity, both parties seem increasingly resigned to Britain playing a
sharply reduced role in the world—which is
much less than the coalition government at
first promised.
Though it had little choice but to cut the
defence budget, the government’s strategy
review in 2010 promised a security policy
with “no less ambition for our country in
the decades to come”—and David Cameron at first seemed to mean that. He founded an admired National Security Council,
set William Hague, as foreign secretary, to
pep up the Foreign Office, showed enthusiasm for Britain’s military intervention in
Afghanistan and launched a new one,
alongside France, in Libya in 2011.
Sparked by fears of a massacre in Benghazi, the Libya campaign was supposed to 1
UK ELECTION 2015 / The Economist April 11th 2015
9
2 define a lighter, more intelligent mode of
intervention. Unlike Mr Blair’s campaigns
in Afghanistan and Iraq, which involved
the deployment of over 50,000 British
troops, it was limited to air strikes; it was
also blessed by the UN and Parliament. But
Libya is now a mini-Iraq, a source of extremism and regional instability, and Mr
Cameron’s new model mainly looks like
intervention on the cheap, without responsibility. The alacrity with which the
prime minister washed his hands of Libya
has done yet more damage to Britain’s reputation in the Arab world.
If that suggested a prime minister with
a sporadic interest in foreign policy, he has
reinforced the impression. History must
judge whether he was right to advocate
bombing Syria’s regime in 2013, after it
used chemical weapons against its people.
But it is already clear that, having failed to
win Parliament’s approval for that campaign, Mr Cameron has lost much of his
former appetite for bold action abroad.
Having become convinced that the Afghanistan campaign was a profligate stalemate of which voters had tired, the prime
minister withdrew almost all Britain’s
troops last year, leaving the NATO force
they were part of under-manned. Even a
memorial to the 453 Britons killed in Afghanistan was dismantled, stone by stone,
and removed to an arboretum in Staffordshire, lest it be desecrated in Helmand.
Britain’s latest Iraq campaign is tentative—and not only because, to sneak it
through Parliament, Mr Cameron had to
make an incoherent promise to bomb IS in
Iraq but not in Syria. British warplanes
have carried out only 6% of the strikes in
Iraq and there are almost no British military personnel in Baghdad, which arguably makes Britain a less important participant in the US-led campaign than
Australia. Were scepticism about the intervention behind this modest contribution,
it might be understandable. But Mr Cameron’s diffidence is more obviously explained by flickering attention and fear of
his domestic critics.
If the Tories return to power, even with
a majority, there is no reason to expect a
more ambitious or coherent foreign policy.
Mr Cameron would remain ready to go to
war, but perhaps only if it didn’t involve
difficult rows in Parliament or look too expensive. The rise of IS and Russian marauding has made the threat assessment
underpinning the strategic review look
sanguine; but they have not persuaded
George Osborne, the chancellor, against
making further cuts to the defence budget.
It is already bound to shrink below 2% of
GDP—the level that NATO demands and
which Mr Cameron endorsed passionately at the alliance’s summit last year. He can
do passion, he can do intervention and,
10
with his presentational gifts, he can look
statesmanlike at times. But in foreign policy, as otherwise, Mr Cameron lacks the sustained grip that strong leadership requires.
The prime minister’s Europe policy is
further evidence of this. Having sworn to
stop his party “banging on” about Europe,
he was bullied by those same head-bangers into promising a referendum on Britain’s EU membership by 2017. This would
be a costly distraction and, in the event of
an “out” vote, which Mr Cameron does not
want, it would speed Britain’s global decline. (That is even before contemplating
the prospect of Europhile Scotland demanding a fresh independence referendum, as it would, and seceding.) An “in”
vote looks more likely. Even so, the exercise
would cast additional doubt over Britain’s
global posture and offend old allies.
It already has—as witnessed by Britain’s
no-show in a Franco-German effort to
make peace in Ukraine. If Britain is feeling
increasingly averse to its European friends,
the feeling is mutual. Yet if it is not with Europe, where is it? The trans-Atlantic alliance is weakening with Britain’s wilting
military punch—America has also warned
Mr Cameron against further defence cuts.
The Commonwealth, which Eurosceptic
Tories dream of refashioning into an Anglophone trading block, is a non-starter: almost none of its members wants that.
Meanwhile the government’s effort to im-
the armed forces, given its historic reputation for being weak on defence. So the
question is whether Miliband would be a
stronger ambassador for British values and
interests than Mr Cameron has been; and
the answer is, maybe not.
While instinctively comfortable in Europe, Mr Miliband shows little interest in
Britain’s evolving role there, as a big economy outside the euro zone. As Labour
leader, he has made only a handful of foreign trips. His critique of British capitalism
takes such little note of global trends as to
seem naive. Perceived in Washington as
the villain of the Syria vote, he faces an uphill road there. “Ed doesn’t really do
abroad,” a member of Mr Miliband’s shadow cabinet has quipped.
Then there is the effect of the minnows
to consider, in the event of a coalition or minority government. Ironically, their biggest
impact on foreign policy would be if the
strongly Europhile Liberal Democrats, back
with the Tories, were to allow Mr Cameron
his EU referendum. They probably would.
Another likely Tory (and possible Labour)
ally, the Democratic Unionist Party, has
suggested it would demand a boost to defence spending as the price of support from
its eight or nine Northern Irish MPs.
The Scottish National Party, whose MPs
would probably be required to prop up a
Labour-led government, is dedicated to
ridding Scotland of Britain’s sole nuclear-
L I BYA L O O K S L I K E I N T E R V E N T I O N
O N T H E C H E A P, W I T H O U T
RESPONSIBILIT Y
prove relations with China and India,
though good in itself, has seemed more craven than productive. Irked by its decision
to join a new Chinese financial institution
that might one day rival the World Bank,
America snapped at Britain’s habit of “constant accommodation” to China.
Labour should not find it too hard to improve on this record. And indeed, Ed Miliband’s refusal to match Mr Cameron’s referendum pledge looks sensible. So does
the gist (despite its annoying name) of the
“progressive internationalism” outlined
by Douglas Alexander, the shadow foreign
secretary. This would include more effort
to build alliances—by which he mainly
meant in Europe—and uphold the UN.
Europe aside, in fact, there is not much
to separate the two parties. Despite his refusal to support action in Syria, Mr Miliband is not flat against force: he voted to
bomb Libya and Iraq. Labour shares Mr
Cameron’s slightly quixotic commitment
to spending 0.7% of GDP on foreign aid. Perhaps Labour would spend a bit more on
UK ELECTION 2015 / The Economist April 11th 2015
weapons base. Given the high cost and several years it would take to move it south,
this would probably mean scrapping it altogether. In practice, the SNP would probably settle for a review of the issue—which
Labour, having no desire to rekindle its
anti-nuclear past, would quietly provide.
The potentially damaging effect of the UK
Independence Party has been similarly exaggerated. Nigel Farage has suggested he
would support a Tory government in return for an EU referendum “before Christmas”. But that is unimaginable, and both
parties would balk at such a tie-up.
That leaves the Greens, whose hopedfor seat or two would be available to Mr Miliband. Besides pro forma things like slashing the defence budget and scrapping the
nukes, they have plans for the Foreign Office: “One of the main purposes of embassies would be to learn about culture and
current affairs of their host countries by immersion in a wide variety of local activities.” Funnily enough, that is exactly what
Britain’s desk-bound diplomats need. 7
L AW AND ORDER
The lesser-spotted
worry
Law and order is not a big election issue. But it ought to be
B
RITONS may at last be
grasping what has long
been true: theirs is an increasingly staid, law-abiding country. The official
Crime Survey of England
and Wales—which, contrary to what newspapers and opposition
politicians say, does not lie—shows that
crime has fallen to its lowest rate since 1981.
Voters continue to tell pollsters that lawlessness must be going up. But they appear
not to believe themselves. In May 2005
crime was top of the list of people’s concerns, as measured by Ipsos MORI, a pollster. It is now tenth on the list.
2010 and 2014, and some Victorian gaols
have been shut. Yet the prison population
is no lower than it was when the Conservatives and Liberal Democrats came to power. The remaining prisons are overcrowded
and understaffed, and becoming more
violent. Perhaps more promisingly, the coalition tried to cut costs by outsourcing probation services to private companies, although the extent of any savings—and the
impact of the new system on reoffending
rates—are unclear.
The most radical reform to criminal justice in the past few years has nothing to do
with the coalition. In April 2013 Scotland,
then as now run by the Scottish National
BY FAR THE MOS T RADIC AL REFORM
TO POLICING HAS TAKEN PL ACE IN
SCOTLAND
That may be in part because Britons
have other things to worry about, like the
economy and immigration. And, strangely,
the economic slump that began in 2007
may actually have contributed to the fall in
crime. Many assumed that lawlessness
would soar after the financial crisis, as unemployment rose and welfare cuts bit.
Apart from a brief spasm of rioting in 2011,
that did not happen. Violent crime has fallen since the coalition came to power, perhaps because young men have less money
to go out boozing. Acquisitive crimes such
as burglary and car theft are also down, by
14% and 27% respectively (although shoplifting and pickpocketing have ticked up).
Anti-social behaviour, once the country’s
great bugbear, continues to drop.
Voters’ sanguine attitude might also reflect the way politicians have quietened
down on matters of law and order. Whereas New Labour was panicky and frenetic,
launching endless criminal-justice reforms, the coalition has mostly just tried to
save money. Police forces in England and
Wales have faced budget cuts of 20% since
2011. In September 2014 the number of officers stood at 127,075—the lowest since 2001.
The coalition is also trying to trim the £2
billion legal-aid bill by about a quarter.
In one area the cuts have hurt. Prison officer numbers dropped by 41% between
Party, merged its eight local police forces
into just one. Some Scots fear that policing
is becoming too uniform and that the police will abandon rural areas. But the reform saved £64m in its first year and the
transition has been fairly smooth. Police
chiefs south of the border look on enviously. England and Wales plod on with 43
forces, many of them far too small to deal
with complex crimes such as kidnap and
trafficking. Labour has implied it would
ditch the current set-up and move to a
smaller number of regional forces, although it has not gone into much detail.
The Conservatives are unlikely to entertain such a reform, partly because it might
offend their rural supporters but also because it would entail abolishing their biggest criminal-justice innovation in government: police and crime commissioners
(PCCs). These 41 elected watchdogs—one
for each police force in England and Wales
outside London—were meant to provide
democratic oversight for the police. Yet
they have failed to grab the public imagination. Fewer than 15% bothered to vote for
them in 2012, the lowest turnout in any
election since the second world war. When
the PCC for the West Midlands died two
years later, just 10% went to the polls to
choose his replacement. He had argued his
job should be scrapped; Labour has prom-
ised to do just that.
If it wins an outright majority, the Conservative Party would probably try to repeal the 1998 Human Rights Act, which incorporates the European Convention on
Human Rights into English law. A “bill of
rights” would replace it. That would cause
a political ruckus, not to mention a legal
one. Not all Conservatives hate the Human
Rights Act; not all Labour MPs like it. But
even if the Conservatives managed to ditch
the act, the country would still be bound
by the EU’s Charter of Fundamental Rights,
which itself draws on the convention,
along with other international treaties.
And after 17 years many convention rights
are firmly rooted in English common law.
The Liberal Democrats promise radical
reform, too. They would review whether to
decriminalise cannabis and would remove
responsilibity for drugs from the Home Office, handing it to the Department of
Health. Such a shift might make decisions
such as that in 2014 to ban khat, a mild narcotic, a shade less likely. That particular
prohibition was introduced despite advice
to the contrary from the government’s advisory council on the misuse of drugs and
the House of Commons Home Affairs
Committee.
The Conservative Party is having none
of that. But for much of this parliament it
has adopted a strikingly liberal position in
the balance between security and liberty.
The government got rid of “control orders”,
introduced under Labour, which placed
draconian restrictions on people suspected
of terrorism but not convicted of a crime,
and replaced them with rather less stringent “Terrorism Prevention and Investigation Measures”.
As more Britons go to join the Islamic
State in Syria and Iraq and fears about
home-grown radicals swell, though, no
politician will want to look soft on terrorists. Labour has called for stricter security
measures, including the revival of its control orders. On this issue, at least, the politics of law and order may turn into a fight to
be toughest. 7
Bang-up job
England and Wales, 2005=100
120
Prison population
Police officers
100
80
Violent crime
60
2005 06 07 08 09 10 11 12 13 14
Sources: Ministry of Justice; ONS; Crime Survey
for England and Wales
UK ELECTION 2015 / The Economist April 11th 2015
11
WELFARE
Benefits treat
Expect even bigger changes in the welfare system
A
LTHOUGH Conservatives
revere the memory of Margaret Thatcher, they have
mostly abandoned her style
of politics. The conviction
that reforms must be driven
through even when they are
highly unpopular; the vision of politics as
a ceaseless struggle against one’s enemies;
the stark dividing of society between decent, aspirational folk and the idle of all social classes—such things went out with leg
warmers. But they sometimes resurface,
no more so than in welfare policy.
The last Labour government presided
over a boom in welfare. Between 1997-98
and the crisis year of 2007-08, spending on
social security rose by 44% in real terms, according to the Institute for Fiscal Studies, a
non-partisan think-tank. It jumped even
more sharply as the economy slumped
and unemployment went up. In 2010 the
new coalition government announced it
was time for a revolution.
That revolution had two parts. The first,
and the noisiest, was an attack on workingage welfare. “Where is the fairness”, asked
George Osborne, the chancellor, channelling Thatcher in 2012, “for the shift-worker,
leaving home in the dark hours of the early
morning, who looks up at the closed
blinds of their next-door neighbour sleeping off a life on benefits?” He limited increases in working-age benefits, stripped
12
There’s a limit
Social security benefits and tax credits
2015-16 prices
% of GDP
15
£bn
Non-pensioner
Pensioner
250
12
200
9
150
6
100
3
50
0
1997 2000
10
15
0
Source: IFS
well-to-do families of child benefit and
capped the amount of welfare that could
be given to any one family. The Tory work
and pensions secretary, Iain Duncan
Smith, meanwhile went after the roots of
dependency by nudging people into work
and by merging numerous benefits into a
single “universal credit” (UC) that would
taper only slowly as people found jobs,
thus making work pay.
Mr Osborne’s stinginess paid off. Although the household welfare cap hardly
saved any money—huge families subsisting on handouts being rarer than politicians think—the overall freeze on workingage welfare has slowed the rate of increase.
Between 2013-14 and 2015-16 most benefits
UK ELECTION 2015 / The Economist April 11th 2015
will rise by only 1% a year; had Mr Osborne
not intervened, the increases would have
been 2.2%, 2.7% and 1.2%.
Mr Duncan Smith’s morally charged reforms fared less well. Large savings were
supposed to come from changes to disability benefits, but the coalition stumbled badly. The process of assessing whether people
on sickness benefit were fit for work was
contracted out to a firm, Atos, which mismanaged the task, leaving many genuinely
disabled people without any income, others stuck in a clogged appeal system and
observers concluding the government did
not know what it was doing. A welfare-towork project known as the Work Programme proved susceptible to fraud. The
universal credit has been dogged by IT problems and is well behind schedule.
Meanwhile, more quietly, a second big
reform to social security has rolled along.
The state pension, which accounts for twofifths of welfare spending, is to be simplified: a complex dual-tier system is being replaced by a single flat-rate pension. In
sharp contrast to working-age welfare, pensions are protected by what is known as a
“triple-lock”: they rise each year in line
with prices, average earnings or 2.5%,
whichever is higher. People approaching
retirement are therefore in luck—though
the young will fare less well, since the retirement age is going up.
If Mr Osborne is still chancellor in midMay he promises to squeeze working-age
welfare harder, trimming the budget by
about £12 billion by 2017-18. He has been
vague about how he would do this,
though, beyond hinting at a further freeze
to benefits. Labour and the Lib Dems
would cut working-age welfare much less.
The day after Mr Osborne’s final budget on
March 18th, his Liberal Democrat counterpart, Danny Alexander, unveiled an alternative budget that contained just £3.5 billion of welfare cuts. The Scottish National
Party and the Greens would be milder still.
Labour has so far said less, for fear of a
return to Thatcher-era unelectability, when
the party was painted as being on the side
of the workshy. The party would, however,
impose a means test on the annual “winter
fuel” payment that currently goes to all
pensioners. Although that would save little
money, it suggests that Labour could be a
trifle tougher on the old—a bold gesture,
given how frequently the old vote.
As for Mr Duncan Smith’s attempt to
transform the welfare system, that might
be put on hold whichever party wins the
election. One of the next government’s first
decisions will be whether to carry on with
UC, or pause and recalibrate, or scrap it altogether. That would be a disappointment:
universal credit is a good idea. But if the coalition demonstrated one thing, it is that reforming welfare is tough. 7
HEALTH C ARE
Too big to bail out
The National Health Service has been weaponised
B
RITONS will not hear a
bad word said about the
National Health Service,
but its problems are becoming hard to ignore. A
combination of austerity
and an increasingly needy
population has left it short of money. It also
suffers from a kind of developmental disease. The NHS was built in the 1940s, when
health care was mostly about treating broken legs and infections in hospital. Its biggest task now is to improve the quality of
life of chronically ill old people. The NHS
needs to change profoundly while running
flat out. Managing that will be a mighty
challenge for the next government.
In 2010 the Conservative Party put up
posters promising the party would “cut the
deficit, not the NHS”. The Tory-Liberal
Democrat coalition stuck to that promise,
yet the health service is feeling the pinch.
Although NHS spending has risen by an average of 0.7% a year in real terms, spending
per person has been falling in England
since 2013.
Many hospitals are struggling. Large accident-and-emergency wards often fail to
see 95% of patients within four hours, as a
government target suggests they should—
and they are missing by bigger margins. In
2014 fully 3m people, the highest number
in six years, were waiting for treatment. It
does not help that money is being frittered
away. Unnecessary drugs and X-rays cost
£2 billion a year, according to the Academy
of Medical Royal Colleges; the Cancer
Drugs Fund, which pays over the odds for
2020, the sum NHS executives say is needed, increasing yearly spending after tackling the deficit in 2017/18.
If the Tories have a plan to reform the
NHS, they will probably keep quiet about
it: after all, they spent the second half ofthe
2010-15 parliament rowing back from an
immense reorganisation that they had
launched in the first half. This reform,
which aimed to stimulate competition and
enabled groups of local doctors to purchase services, was unpopular with voters, caused much upheaval and delivered
few obvious benefits. The Tory health secretary, Andrew Lansley, was replaced by Jeremy Hunt, who has mostly tried to keep
the NHS out of the news.
Still, many think structural reform is
overdue. Healthcare is currently separate
from “social care”—a catch-all category encompassing mental-health services, nursing homes and the like, which are often run
by local councils. Fusing the two seems
sensible. And it would probably save money, if hospital beds could be emptied of
people who could manage at home with a
bit of extra help. Labour has claimed the
idea as its own, dubbing it “Whole Person
Care”; the Tories quietly back a similar
plan by Simon Stevens, the head of NHS
England. But no party will be drawn into
discussing specifics. Moving care into the
community might mean closing hospitals,
which would be desperately unpopular.
And it would not be easy to keep the current service ticking along while the new
one is built.
The Conservatives’ election campaign
MUCH OF THE PRIVATE PROVISION
IN THE NHS WAS INTRODUCED BY
LABOUR
new medicines, drained £280m last year.
The Conservative Party is again pledging to protect the NHS budget if it returns to
power, with up to £2 billion extra a year until 2019-2020. Labour has promised to shell
out £2.5 billion more than the Conservatives, spending it on new doctors and nurses, although the cash might not be available until 2017-18. The Liberal Democrats
plan to spend £8 billion more a year by
will focus on increased transparency and
inspection—the most successful part of
their record (if the classic last resort of a beleaguered health ministry). Putting outcomes online—especially those of surgeons—has lead to improvements and
vigorous patrolling has driven up standards, albeit mostly by increasing staff levels. The Tories made hay out of an inquiry
into the awful neglect of patients in Mid
Stafford hospital, which had happened on
Labour’s watch.
Labour will accuse the Tories of plans to
shrink and privatise the NHS. In fact, by
signing up to Simon Stevens’ plan Labour
has committed to stepping up privatisation, and in any case much of the private
provision in the system appeared as a result of reforms launched by the last, Labour, government. Under the coalition, on
the other hand, competition has not grown
much. The Tories retort that Labour’s line is
mere “political posturing”. Polls suggest
most people do not much care about how
NHS services are delivered, as long as they
are good and free at the point of access.
The Liberal Democrats are likely to talk
about their Better Care Fund, which has
managed to shift small amounts of money
from the NHS to social care. Nick Clegg is
also keen to prioritise mental health. Both
ideas, ofcourse, could starve other NHS services of money.
Conservatives were outraged when it
was suggested that Ed Miliband, Labour’s
leader, wanted to “weaponise” the NHS as
a political issue in the election. But it is already so. Scottish separatists claimed last
year that the country must break away to
protect its health service from free-market
Tories in London. David Cameron has attacked Labour’s management ofthe NHS in
Wales. Every party will wield health care
as a weapon, regardless of the strength of
its arguments. 7
UK ELECTION 2015 / The Economist April 11th 2015
13
BUSINESS AND ENTREPRENEURSHIP
(Almost) sealing
the deal
Were they less Eurosceptic, the Tories would have the business vote in
the bag
F
EBRUARY 19th was “Demo
Day” for 16 technology startups in London. A succession
of Steve Jobs wannabees
bounced onto a stage to deliver three-minute pitches to
venture capitalists. English
self-deprecation was nowhere in evidence.
One team showed how it could compress
online videos by 50% more than the competition, another how architects might be
persuaded to use a virtual-reality system.
In 2013 more businesses were created in
Britain than in any year for at least a decade. One lobby group, Enterprise Nation,
estimates that last year’s tally was even
higher. Many of these will be one-man or
one-woman outfits—builders and publicsector workers shaken out of their regular
jobs by recession and austerity. Increasingly, though, businesses are being started by
the sort of ambitious, well-educated folk
who will end up creating jobs. Some reckon London has the most vibrant startup
scene in Europe.
When the coalition government took
office in 2010, it was obvious that the two
engines of growth Labour had relied
upon—financial services and an expanding public sector—were sputtering. The coalition quickly declared its intention to “rebalance” the economy from the public to
the private sector, from services to manufacturing and from London to everywhere
else. As Demo Day suggests, it achieved
one of those three aims.
The Conservative chancellor of the exchequer, George Osborne, cut corporation
tax from 28% to 20% and trimmed the top
rate of income tax to make Britain seem
more business-friendly. To encourage innovators, barriers to entry were lowered in
industries such as banking and energy. The
coalition government also tried to tackle
two big corporate gripes: the reluctance of
banks to lend following the financial crisis
and a shortage of skilled workers. Vince
Cable, the Liberal Democrat minister for
business, created a British Business Bank—
the equivalent of Germany’s famed Mittelstandsbank—to dole out loans to small- and
medium-sized businesses. The Treasury
changed tax rules in an attempt to encourage people to invest.
About 440,000 people started an apprenticeship in 2013-14, up from 280,000
14
when the coalition came to power. All the
main parties agree on the virtues of these
schemes and are trying to outbid each other in promising even more. David Cameron says that he wants to fund 3m apprenticeships by 2020, while Labour has
pledged to create 80,000 “high-quality”
ones a year.
The coalition government also tried to
give a hand to manufacturing industry. Export financing is now more generous. The
ugly-sounding “high-value manufacturing
catapult”, set up in 2011, prods business, academia and government to work better together. This is part of a new chain of elite
technology and innovation centres trying
to bridge the gap between early innovation (a traditional British strength) and industrial-scale manufacturing (a familiar
failing). Whether all this has helped manufacturing, however, is not clear. Its share of
GDP has stayed at 10% over the past few
years. And what little export recovery has
occurred has been driven by services, not
manufactured goods.
Businessmen tend to support the government—whatever its complexion—not
the opposition. But the Labour Party has
made that seem intuitive. Not since Michael Foot in the early 1980s has a Labour
leader had such a poor reputation in corner offices. Whereas his “New Labour” pre-
UK ELECTION 2015 / The Economist April 11th 2015
decessors, Gordon Brown and Tony Blair,
courted the business vote, Mr Miliband
revels in doing the opposite. He has picked
rows not just with unpopular firms, such as
energy companies, but also with the leaders of trusted companies like Boots. He appears keen on intervening in markets and
adding costs to businesses. As for Labour’s
proposed “mansion tax” on expensive
homes, the party “could not have come up
with a tax more calculated to irritate businesspeople,” says one London businessman. The dwindling band of bosses still
sympathetic to Labour hope that Ed Balls,
the shadow chancellor, and Chuka
Umunna, the shadow business secretary,
will temper Mr Miliband’s instincts if he
becomes prime minister.
But then there is Europe. The ever more
Eurosceptic Conservative Party promises a
referendum on Britain’s membership of
the EU if re-elected—a plan that strikes
many business folk as unnecessary and
dangerous. One poll by the Confederation
of British Industry showed that 71% of its
members think that the EU has had a “positive impact”; a recent poll from the British
Chambers of Commerce reveals that well
over half of its members think a withdrawal would “impact negatively” on their
businesses. Partly, enthusiasm for Europe
reflects concerns over immigration policy.
Companies want workers from continental Europe to make up for skills shortages in
Britain. Technology firms have lobbied furiously for more software engineers.
Business folk are not blindly pro-Europe. They are irritated about the tardiness
of completing the single market in services,
in particular. But they loathe the uncertainty that a referendum would generate. If
there is to be one, they say, get it over with
as soon as possible. 7
INFRAS TRUCTURE
Creaking foundations
The next government will face an infrastructure backlog
W
HEN the Conservative-Lib Dem coalition
came to power in
2010,
infrastructure
projects were pushed
down the agenda. The
government had a lot
to be getting on with: it had launched big
reforms to schools, welfare and the NHS.
Balancing the books seemed more urgent
than splashing out on roads and sewers
that would not even be finished by the end
of the parliament. Besides, there was an
Olympic Park to be built.
Over the past four years, as the construction industry slumped and trains became ever more crammed, the government tried to find a forward gear. George
Osborne, the chancellor of the exchequer,
donned a hard hat at the slightest opportunity and boasted about returning to a Victorian age of engineering. A few big projects are under way and others were given
the go-ahead. Yet the next government will
face a huge infrastructure backlog. This
will cost political capital as well as money,
for railways and airports divide opinion in
all the big political parties.
Despite Mr Osborne’s enthusiasm, net
public-sector investment has fallen from
£53 billion in 2009-10 to £25 billion in
2013-14 and is set to remain low in the years
to come. Yet building stuff has become
even more costly: between 2012 and 2014
the cost of infrastructure increased by 5% in
real terms. The shortfall is becoming an
electoral issue. Liberal Democrat MPs, in
particular, are running hard on the issue of
potholes. Between 2010 and 2015 money
for flood defences managed by the Environment Agency, a quango, decreased by
15%. This became an embarrassment when
parts of south-west England were submerged for several months at the end of
2013. Declaring, uncharacteristically, that
money is no object, David Cameron quickly replenished the budget.
Having ruled out building more airport
runways around London, the coalition
government half-relented. In 2012 it appointed a commission led by Sir Howard
Davies, an economist, to tell it what to do.
He has come up with a short list of three
options. Two involve laying more tarmac
at Heathrow; the other would entail building another runway at Gatwick. Conveniently for the coalition government, Sir
Howard will say which one he prefers a
few weeks after the general election.
This will, of course, be highly inconvenient for the next lot. The previous, Labour,
government approved a new runway at
Heathrow Airport. But among the dissenters was the then environment secretary,
now Labour leader, Ed Miliband. Airports
divide the Tories, too. Many Conservatives
in the south-east loathe the prospect of
more low-flying jets over their constituencies. Among them is the ambitious mayor
of London, Boris Johnson, who will run for
Parliament in a west London seat. Mr Johnson wanted an entirely new airport east of
London. Sir Howard ruled this out, but Boris might find a way to rule it back in.
After much wrangling in Parliament,
the government pushed through legislation for HS2, a controversial £50 billion
high-speed railway between London and
Manchester. The railway is opposed by
mostly Conservative MPs whose constituents live along the route in the Chilterns,
and who have added to the costs by insisting on extra tunnelling. Some in the Labour
Party, such as Ed Balls, the shadow chancellor, have been sceptical of the railway; but
if he decided to postpone it he would have
to answer to Labour leaders in Manchester,
who are keen supporters. The Greens and
UKIP both oppose it.
Despite low borrowing costs, the government expected private investors to fund
around 64% of its wishlist of nationally significant projects. Yet uncertainty over
whether or not schemes will go ahead has
made many cautious. And the government
only belatedly started to cut red tape. On
February 12th Parliament approved an infrastructure act which will cut delays on
projects that have received planning permission. It will also make the Highways
Agency, which manages Britain’s trunk
roads, into a government-owned body
with guaranteed funding.
Part ofthe challenge for the next government is working out how to pay for big projects such as HS2 without neglecting the
sort of basic repairs to roads and railways
which do not entail ribbon-cutting but
which, if not done, infuriate voters. Boosting private investment would help, but so
would ring-fencing infrastructure investment from cuts and giving priority to less
glamorous schemes. Labour and the Liberal Democrats would probably have more
money to splash around. Whereas the
Conservatives propose to bring the entire
budget into balance, the other two parties
would borrow to invest in infrastructure.
Even if the cash can be found, getting
things moving will be tricky. Part of Labour’s plans include setting up an Infrastructure Commission to advise on important bits of railways and roads and to try
and make the planning process a bit
smoother. The Tories counter that this
could just add more bureaucracy to the
whole system. Giving local authorities
more power may be more helpful. This has
worked in Manchester: since 2012 the combined authority there has been able to keep
some tax revenues after investing in the
transport network.
But the main task will be to persuade
politicians—who work within a five yearly
cycle—to start planning for future generations. If they do not, Britain’s roads and airports will continue to moulder. 7
UK ELECTION 2015 / The Economist April 11th 2015
15
ENERGY AND GREENERY
Power play
Greens to the left of them, angry consumers to the right of them
A
MONG the large problems
inherited by the coalition
was a monster in energy.
Around a fifth of Britain’s
electricity generation capacity, including a lot of
condemned coal-fired and
nuclear facilities, faced closure—and, after
decades of under-investment, it was not
clear what would replace them. The industry regulator, Ofgem, warned of power
cuts by 2015. Under European Union rules,
moreover, much of the new capacity had
to use renewable energy sources, which
are expensive, and Britain was broke.
For extra complication, the energy portfolio was taken by the Liberal Democrats,
whose energy secretaries, Chris Huhne,
then Ed Davey, became hate figures for the
many Tory backbenchers who disdain renewable energy, the EU and Lib Dems similarly. That Britain had helped design the EU
strictures—which should mean around
30% of Britain’s electricity coming from renewables by 2020—impressed them not a
bit; nor did it that their leader David Cameron, who had installed a tiny wind turbine on his roof, was supposedly a serious
green. That just made them angrier. A row
over the spread of onshore wind turbines—
one of the cheapest sources of renewable
energy on a blustery island, but disliked by
many country-dwelling Tories—raged
throughout the parliament.
It was tough; but Mr Huhne, angrily,
and Mr Davey, in his more conciliatory
way, got a lot done. A new energy law
passed in 2013 rebuilt the market around
subsidies to renewable energy producers,
most ofwhich are covered in increments to
household bills. Even before this the coalition was raining money on green energy. Between 2010 and 2015, £37 billion went
on thousands of solar panels, shimmering
on suburban rooftops, two of the world’s
biggest offshore wind-farms and other climate-friendly paraphernalia. With bigger
wind-farms planned—including a 400-turbine behemoth off Yorkshire—the cost of
Britain’s renewable roll-out is set to triple,
raising energy bills by over £50 a year by
2020. If Germany, which gets over 30% of
its electricity from renewables, is a guide,
this will also cause major grid management problems, further hiking the cost.
With its commitment to the market, ex-
16
The cost of hot air
Domestic energy prices and inflation
January 2000=100
350
Gas
300
250
Electricity
200
150
Consumer
prices
100
50
2000
05
10
15
Source: Lazarus Partnership
cellent universities and (by European standards) dislike of throwing taxpayer money
at greenery, Britain should be leading the
effort to restore economic sanity to a European energy policy that looks, if not clearly
unsustainable, then appallingly ill-timed.
The coalition government tried to do that:
by bringing forward a reverse auction of
green energy contracts in February it
claimed to have driven down wholesale
prices, saving over £100m a year.
Yet this was a marginal saving; and falling coal and gas prices have made Mr Davey’s insistence that the renewables
splurge will one day appear good value
seem wishful. Britain’s next government
will need to think much harder about how
to mitigate the cost and glitches of the energy policy the current one has been forced
to implement.
No party promises that. Lib Dems love
renewables. And though Mr Cameron is
UK ELECTION 2015 / The Economist April 11th 2015
said to now deride EU energy policy as a
load of “green crap”, his EU reform agenda
is devoted to less complicated, mostly less
important, changes, like curbing migration.
Meanwhile Ed Miliband mainly wants to
tackle, in the wrong way, a smaller part of
Britain’s energy quandary—an energy retail market dominated by six big suppliers.
One of the Labour leader’s few moments of real popularity came in 2013,
when he promised that a Labour government would freeze household energy bills
for 20 months. He has not dropped that
promise. Labour would also give Ofgem
new powers to enforce additional cuts in
fuel bills, which Mr Miliband says could be
worth a further £100 a year to households.
Little wonder voters liked that: average energy bills rose between 2004 and 2013 by
75%, to £1,140, when overall inflation
amounted to just 23%.
This was not all the fault of the “big six”.
The rise has recently been driven largely by
green subsidies and by the costs the firms
incurred in closing down dirty power-stations—both of which, as a former energy
secretary, Mr Miliband helped initiate. No
matter. The big six were accused of profiteering and became the focus of a Labour
attack on corporate greed.
The Tories and Lib Dems say Mr Miliband’s promised price freeze is irrelevant,
or ridiculous. Together with a steep fall in
the oil price, competition has started to
push prices down a little. Indeed, the Tories
argue that Labour’s threat has kept prices
artificially high: they suspect the energy
firms are holding them up to avoid having
them frozen at a low rate. Still, unnerved by
Labour’s attack, the coalition transferred
some green levies from household bills to
general taxation, which has encouraged
the party’s backbenchers to demand they
be scrapped altogether. Led by Owen Paterson, an aggrieved former environment
minister and climate-change sceptic, they
want an alternative splurge, on shale gas,
which Britain has plenty of. But it may be
hard to get at, in a crowded country, and
urging the government to pick a different
sort of winner—not windmills but fracking
rigs—is hardly enlightened.
The row provides an opening for the UK
Independence Party, which wrongly attributes the high energy prices simply to
green subsidies. It scoffs at mainstream climate science, so logically considers that
there is no need for “ugly, disgusting” wind
turbines, as UKIP’s leader Nigel Farage calls
them. On the left, the Greens, unimpressed
by the coalition’s historic splurge, meanwhile advocate a “major programme” of
investment in green energy to achieve a
zero-carbon economy pronto. This is what
happens when mainstream parties shirk
their responsibility to hold a serious and
necessary debate: fanatics take it over. 7
EDUC ATION
Repeat after me
The coalition has reformed schools more than anything else
I
N THE coalition government’s
darkest days—when deficit reduction stalled, the economy
seemed to slip back into recession, health and welfare reform
went awry and continental
Europeans vexingly refused to
do what the British wanted them to—there
was always one point of light. At least
school reform was chugging along. It was,
indeed, the coalition’s most obvious accomplishment.
Every government is determined to
transform schools, and almost every government fails. In 1976 the Labour prime
minister James Callaghan declared that
schools must do more than give workingclass children “just enough learning to
earn their living in a factory”. Margaret
Thatcher and John Major brought in a national curriculum and tougher inspectors.
Tony Blair fought to ensure that every
primary-school child was at least literate
and numerate.
Still, there remained far too many of
what one Labour Party spin-doctor called
“bog-standard comprehensives”. In office
between 1997 and 2010, Labour tried to
change that, but its efforts were constrained by the teachers’ unions and by the
local education authorities that oversaw
almost all schools. PISA tests conducted by
the OECD, a rich-world think-tank, reveal
the truth: although Britain spends more
than most on schooling, English 15-yearolds fare no better than average. And their
test results have hardly improved over the
years, while countries such as Poland and
South Korea have zoomed ahead.
To revivify England’s schools, the coalition embarked on a colossal structural
reform. Soon after coming to power it
changed the law to allow many schools to
become “academies”, giving them much
greater say over how they spend their budgets and deploy staff. Academies had existed before, but under the coalition their
numbers exploded from just over 200 to
more than 4,000. The government also
oversaw the birth of hundreds of “free”
schools, which have the same freedoms as
academies but were set up by parents,
churches or community groups and are
thus, as it were, untainted by a history of
local-government control.
Most attention was paid to poor pupils.
Schools that educate lots of children from
poor families or broken homes were given
extra money to spend on them. Some used
this “pupil premium” to pay for extra
teachers; others presented children with
clothes or bicycles to encourage them to get
to lessons on time. Teach First, a clone of
Teach for America, sends some of the most
promising trainee teachers into the poorest
neighbourhoods.
Michael Gove, the Conservative secre-
tary of state for education from 2010 to
2014, also pushed through what seemed
like endless tweaks to curricula and exams. He toughened GCSEs, which had
been prone to grade inflation. Courses
have been made more rigorous, though
also more parochial and inward-looking
(rather like Britain itself in the past few
years). There is more British history in the
history curriculum, more British geography in the geography curriculum and more
emphasis on practical skills in science.
Marks are increasingly based on written
tests rather than on coursework.
All this earned Mr Gove the hatred of
teachers, for whom curriculum changes
mean holidays spent preparing new lessons. He returned their contempt, sniping
at the teachers’ unions and referring to the
education establishment as “the blob”.
Though he was the government’s most effective minister, he was removed from his1
UK ELECTION 2015 / The Economist April 11th 2015
17
2 job by David Cameron in 2014. He had sim-
ply attracted too much opposition.
Still, early evidence suggests that Mr
Gove’s reforms are working. A study by
two academics at the London School of
Economics found a rapid—if small—improvement in test results at secondary
schools that became academies. The most
startling improvement can be seen at the
schools belonging to well-managed chains
such as ARK and Harris in London and Perry Beeches in the Midlands. One report for
the Sutton Trust, a charity that promotes
social mobility, found that the proportion
of poor pupils achieving five good GCSEs
in the five top academy chains is at least 15
percentage points higher than the average
for similar pupils in non-academy schools.
Yet these are encouraging signs, not the
proof of overall improvement that would
silence doubters. And sceptics can point to
some embarrassing failures. Some academies and free schools proved so dire that
they were shut down or handed to other
sponsors to manage. A handful of Muslim
and Christian free schools also turned out
to be reinforcing narrow-mindedness
among pupils. Since these schools are in effect under the auspices of central government, the coalition got the blame when
they went wrong.
There was a hint, too, of metropolitan
bias in the coalition’s reforms. Free schools
appear to attract the children of middleclass parents disproportionately. Teach
First started in London and has only recently spread to the south and east coasts of
England. Yet London and the big cities are
not the places that need the most attention.
The three local authorities with the worst
results in England are Knowsley (a poor,
mostly white Merseyside suburb), Blackpool and the Isle of Wight. Such places
have few aspirational immigrants and
struggle to attract good teachers.
Scotland and Wales, which run their
own education systems, have stood apart
from all this. But their schools could do
with a shake-up, too. Scotland marginally
outperformed England in maths and reading on the last PISA tests, but fell behind on
science. Welsh education has slumped in
all three areas. A shortage of effective, recently trained teachers looks like the main
reason for that. Scotland, which prides itself on a more egalitarian outlook than its
southern neighbour and offers free university tuition, nonetheless does badly by its
poorest children. A mere 2% of the poorest
fifth of Scottish 18-year-olds had grades sufficient for entry to top-tier universities, a
percentage point behind England.
Whatever the complexion of the government, schools will feel the pinch in the
next parliament. The Conservatives have
promised to protect per-pupil spending
only in cash terms—that is, not accounting
18
No sticker shock here
University entry rate for 18-year-olds
from poorest quintile, %
20
England
Northern
Ireland
15
Wales
10
Scotland
5
0
2004
06
08
10
12
14
Source: UCAS
for inflation. Labour and the Liberal Democrats propose to be only a shade more generous. That will make change tougher,
since money helps to lubricate reform.
If they stay in power, the Conservatives
nonetheless promise to plough ahead with
their structural reforms. David Cameron
has promised 500 more free schools. The
other parties would not reverse course, exactly, but would proceed much more slowly. The Liberal Democrats have argued that
money should be spent on repairing dilapidated schools rather than on setting up
new ones. Tristram Hunt, Labour’s education spokesman, has criticised free schools
for hiring unqualified teachers and for adding capacity where it is not needed. He
wants stronger oversight of free schools
and academies.
Ofthe Westminster-based parties, UKIP
has the most radical education policy. It
wants more selective grammar schools—
which would return England to a school
system it mostly abandoned in the 1970s.
Grammar schools are also at issue in
view into university funding by John
Browne, an oil man. That review suggested
removing the cap on annual fees. The Conservative-Liberal Democrat coalition did
not take that radical step, but it raised the
maximum considerably, to £9,000 a
year—to the rage of many Liberal Democrat-voting students, who promptly abandoned the party.
In opposition, Labour has turned
against its old policy. It now promises to
lower the maximum that universities can
charge from £9,000 to £6,000 a year. Ed Miliband, the party’s leader, argues that students are graduating with crushing quantities of debt and points out (correctly) that
high tuition fees are not cheap for the taxpayer: student-loan repayment terms are
so generous that a large share is in effect forgiven by the state.
Labour’s proposals worry university
leaders, who reckon that student fees are
much more reliable than government
funding—which can always be nibbled
away in future spending rounds. To add to
the uncertainty, many in Labour think the
proposal may end up shifting towards a
graduate tax if the party wins power. And
Labour’s plan is one of its most regressive.
The Institute for Fiscal Studies, a politically
neutral think-tank, says that, perversely,
the move would benefit high-earning graduates more than moderate earners. Those
who go into, say, banking tend to repay
their debts quickly and in full, so a cut to tuition fees helps them a lot. Others are more
likely to have their debts written off.
British higher education, always fairly
strong, is bigger and more varied than it
was before tuition fees. The “graduate premium” (the value of a degree in terms of
lifetime earnings) has held up through a
TUITION FEES HAVE MADE HIGHER
EDUC ATION BIGGER AND MORE VARIED,
WITHOUT DETERRING POOR STUDENTS
Northern Ireland, where many excellent
ones have clung on. Sinn Fein, the dominant nationalist party, is against them. So is
the Catholic Church—strangely, since
many grammar schools are Catholic.
UKIP aside, no national party has what
politicians call a “retail offer” on schools.
Promises to set up more free schools and
arguments over oversight, though important, are hard to sell to voters. But when it
comes to higher education the dividing
lines are sharp.
Labour introduced university tuition
fees in 1998 at an extremely low level and
gradually permitted colleges to charge
more and more. Just before it was turfed
out of office in 2010 it commissioned a re-
UK ELECTION 2015 / The Economist April 11th 2015
long economic slump. And higher fees
have not dissuaded youngsters from less
cosseted homes from applying to university, as many feared they would. Quite the reverse is true—though the poor are still far
less likely to get into a top university than
are pupils from privileged backgrounds.
Britain is the second most popular destination for international students, after
America. It would probably draw even
more had the coalition government not
tightened visa rules in an attempt to hit a
target of restraining net migration to below
100,000 a year. The country’s universities
are popular, growing and often prospering.
The main task for their political guardians
is not to mess up a good thing. 7
THE FUTURE OF THE UK
Pulling at the seams
The United Kingdom is far less united now than it was in 2010. It could
unravel in the next parliament
P
OLITICAL rivals had to admit it: he was perhaps the
canniest statesman of his
age. He led a powerful, disciplined group of MPs, who,
by offering and then withdrawing support from the
big political parties, caused havoc in Westminster. He loathed England, seeing it as
snobby and imperialistic, and was determined to loosen its grip over his homeland. And in the end his country broke free
of the United Kingdom.
He was Charles Stewart Parnell, the
grandfather of Irish independence. But is it
any wonder that Alex Salmond reportedly
sees parallels between Parnell’s career and
his own? The charismatic former leader of
the Scottish National Party (SNP) will almost certainly return to Parliament as an
MP in May, at the head of a band of separatists. There, like Parnell, he will try to win
more powers for his country while steering it towards self-government. Unlike in
Parnell’s case, separation might well occur
in his lifetime. Indeed, it could happen in
the next parliament.
When a Labour government began to
devolve power to Scotland—and, to a lesser extent, Wales—in 1998, many believed
that nationalism would fade away. And for
a few years that seemed to happen. But the
Scots have come to feel more and more
Urban rebels
Scottish referendum results, 2014
Orkney
Islands
Shetland
Islands
YES, >50% by*:
5-10
0-5
NO, >50% by*:
15-20
10-15
5-10
0-5
Dundee
OVERALL
RESULT
45% 55%
Glasgow
YES NO
Sources: Electoral
Commission office;
©OS. Media 028/15
*Percentage points
separate from the rest of Britain. Elections
to the Scottish Parliament have gradually
turned into referendums on the government in Westminster, chiefly benefiting Mr
Salmond’s SNP. The party formed a minority government in Scotland in 2007 and
swept to outright victory in 2011.
The unionist parties in Westminster
tried to stop the nationalist engine, promising Scotland more powers over tax and
home affairs—and then actually delivering
them in the Scotland Act of 2012. But it was
too late. Conservative politicians have
long been toxic in Scotland, where they are
blamed for the decline of heavy industry
in the 1980s. But Labour is a spent force, too.
The party has neglected Scottish politics,
regarding the country as a kind of Westminster farm team. Brilliant left-wing Scots
such as Gordon Brown, the last Labour
prime minister, and Alistair Darling, the
last chancellor, are spirited out to play big
roles in London.
In October 2012 David Cameron agreed
to hold a referendum on Scottish independence. For many months unionists were
complacent: in January 2014 one senior figure in Better Together, the pro-union campaign, told The Economist that the only
question was how large the margin of victory would be. But the nationalists ran a
shrewd campaign. Scots were assured they
could keep everything they liked about
Britain, such as the pound, while getting
rid of everything they loathed, such as
Tory governments and austerity.
When a YouGov poll put the nationalists narrowly ahead just two weeks before
the vote, unionist leaders panicked. They
published a “vow” assuring Scots that
they would receive extensive new powers
over taxation and welfare if they voted No.
Championed in a barnstorming eve-ofpoll speech by Mr Brown, this pledge
seemed to work. On September 18th Scots
voted by 55% to 45% to stay, though the
working-class Labour strongholds of Glasgow and Dundee both voted Yes (see
map). Mr Salmond resigned.
The unionists kept their word. The day
after the vote, Mr Cameron announced
that a commission led by Lord Smith, a
Scottish peer, would draw up plans for further devolution. The Conservative, Labour and Liberal Democrat parties all go
into May’s election committed to his rec-
ommendations. All would give Edinburgh
control of at least 60% of its spending, including full power over income tax. Nationalists say this does not go far enough.
And the nationalists are on a roll. Membership of the SNP has risen from 25,000
on referendum day to some 100,000 (with
the whole of the United Kingdom to draw
from, the Conservative Party has about
150,000 members). Under Nicola Sturgeon,
Mr Salmond’s leftish successor, the SNP
has surged to almost 50% in polls of voting
intention in Scotland. One poll published
on March 4th by Lord Ashcroft, a rich Tory
peer, suggested that the SNP might take 56
of Scotland’s 59 seats in Westminster, up
from just six in 2010.
Even if support for his party falls back
somewhat before the election in May, Mr
Salmond will probably lead the third-largest Westminster party and play a pivotal 1
Och aye the yes
Voting intention, %, for:
SNP
Scottish independence
SCOTTISH PARLIAMENT
ELECTION
REFERENDUM
CAMPAIGN START
SCOTLAND ACT
VOTE
50
40
30
20
2010
11
12
13
14
15
Source: YouGov
UK ELECTION 2015 / The Economist April 11th 2015
19
2 role in the next parliament. He could dis-
rupt the unionist consensus as flamboyantly and effectively as did Parnell.
It is hard to imagine a scenario in which
the election result does not help the SNP
and the broader cause of Scottish nationalism. Another Tory-led government would
reinforce the party’s central myth (and it is
a myth): that Scotland is starkly more leftwing than England and thus should break
free from its right-wing neighbours. A Toryled government would also hold a referendum on Britain’s EU membership. That
would give Ms Sturgeon and Mr Salmond
a fine excuse to go into the 2016 Scottish
elections asking for a mandate for a second
independence referendum. Why, they will
ask, should Scotland be yanked out of the
EU by English voters?
A Labour government might be even
more dangerous for the union. If the party
does not obtain a majority, it might try to
govern with the support of Scottish
nationalist MPs. Although the two parties
probably would not form a coalition, the
SNP has declared itself open to an arrangement where it would support a Labour
government in budgets and votes of confidence in return for concessions such as further devolution to Scotland. The prospect
ofa government dependent on a party that
is determined to break the union—and under Mr Salmond’s canny leadership determined to use that leverage to secure more
spending for Scotland—would almost certainly fuel anti-Scottish feeling in England.
The English are increasingly hacked off
about Scotland’s privileges. Under the
20
much-criticised Barnett Formula, which allocates cash to Scotland, Northern Ireland
and Wales, the British state spends about
£1,300 ($1,900) more per head north of the
border than it does nationally. Moreover,
Scottish MPs in Westminster get to vote on
devolved subjects like health care that affect the English but not their constituents.
Since the referendum, this so-called “West
Lothian Question” has burst out of university common rooms and onto the pages of
the tabloids. For most of the last decade the
share of English voters thinking that Scottish MPs should not vote on English laws
hovered around 20%. A poll by ComRes in
October put the figure at 66%.
change would weaken Parliament by creating two classes of MP.
So if the Tories win power, Labour and
the SNP will complain that Scots are being
sidelined. If Labour wins, the Tories will
tell the English that they are being held to
ransom by Scots. Both scenarios threaten
to plunge the country into a vicious cycle
as each attempt to placate one side alienates the other, eroding the assumption of
shared interests underpinning Britain’s unitary state. To satisfy resentful voters on
both sides, London might have to make the
country’s constituent parts self-governing
in domestic matters. But even federalism
might not hold the union together: support
for independence has exceeded 50% in
some recent Scottish polls.
Scotland is not the only place where nationalism has rumbled. The Welsh may not
fancy independence (support for it there
hit a record low of 3% after Scotland’s referendum) but they do want to loosen London’s grip. Like the Scots, they got a devolved legislature and government in 1998,
but theirs are comparatively weedy. In February Mr Cameron and Mr Clegg offered to
devolve income tax-raising powers to
Wales to move it to the “reserved” model of
devolution that Scotland uses (whereby
powers are assumed to sit at the devolved
level unless specifically withheld for Westminster). Carwyn Jones, the Labour first
minister, called this proposal insufficient,
huffing that Wales was not being treated
with as much respect as Scotland.
The prime minister was more cautious
about offering the Northern Irish more autonomy. That spoke of doubts over the
province’s ability to handle new powers.
Profound disagreements over cultural matters like flags, marches and history have
paralysed the Northern Ireland Assembly,
blocking progress even on humdrum matters like welfare reform. It has fallen to the
IT IS HARD TO IMAGINE A
SCENARIO IN WHICH SCOTTISH
NATIONALIS T S DO NO T WIN
These controversies could explode under either a Conservative or a Labour government—but in different ways. The Tories
go into the election pledging to give English
MPs the right to debate independently on
legislation only affecting their constituents, known as “English votes on English
laws”, and to reject income-tax changes
imposed by Scottish MPs. The Liberal
Democrats and the right-wing UK Independence Party support such a reform in principle. But Labour, whose governments
tend to rely at least partly on Scottish MPs,
has shuffled its feet, warning that this
UK ELECTION 2015 / The Economist April 11th 2015
London and Dublin governments to lead
efforts to break it. Even so, most think that
Belfast should at least get control over corporation tax by 2017. In January the government published a bill to that effect.
It seems unlikely that the next parliament will see the end of the United Kingdom. Yet before the 2010 election it looked
improbable that Britain would be as far
down the road to fragmentation as it is
now. The past five years have shown that
momentum can overcome tradition. If the
next five are even halfas dramatic, the kingdom will be in serious trouble. 7
ELECTORAL ARITHMETIC
Ain’t got that swing
Why this election is exceptionally hard to predict
N
O BRITISH election is
complete without a swingometer. The classic version looks a bit like the
bottom half of a clock,
with the hour hand
showing the “national
swing” from one of the main parties to the
other—and indicating how many seats will
change hands as a result. It first appeared in
the BBC’s report on the 1959 general election, as a hand-operated dial on a blackand-white map of Britain. These days it is
snazzier, with digital animations. But in
May it will be almost completely irrelevant. Though the fundamental mathematics of the election are unchanged—to win
an outright majority, a party needs about
320 seats—the notion of a national swing
has been thrown out. As a result, predicting the outcome of the election is even
harder than usual.
The rise of the smaller parties is the
most important explanation. In 2010 the
Conservative, Labour and Liberal Democrat parties carved up most of Britain
(though not Northern Ireland) between
them. UKIP, the Scottish National Party
and the Green Party won just 6% of votes
together. But some recent polls have suggested that those three could scoop as
much as a quarter of the popular vote this
time. Although only the SNP’s voters are
concentrated enough to carry many parliamentary seats, the Greens and UKIP could
skew the results in dozens of constituencies. In some places they will split the Labour vote, in others the Tory one; in still
others they could help to bring down a Liberal Democrat. So the old assumption that
elections are decided by the direct exchange of votes between the two main
parties no longer holds.
A second change is the regionalisation
of British politics. In the post-war decades
the country swayed fairly uniformly, like a
pendulum, between the two main parties.
Now different regions have different political dynamics. Labour emerged from the
2010 election as the party of the north and
the big cities, the Conservatives as that of
the south and rural areas (see map). The
north-south economic divide reinforces
this; for example, in this election Lib Dem
MPs will probably fare worse in leftish
parts of the north, where the coalition’s
public spending cuts were deepest, than in
the more prosperous south.
Another big shift is that MPs are becoming more independent. The internet makes
it easier for them to develop personal
brands, and the public’s disillusionment
with politics encourages them to behave
like outsiders. Many in Westminster mention Gisela Stuart, a Labour MP, as the example to follow. Her Birmingham Edgbaston seat should have gone Tory in 2010, but
she held it by campaigning energetically
on local issues and by being conspicuously
independent-minded. If more MPs are acting like her (and it seems they are: the outgoing parliament was the most rebellious
since at least 1945) the national swing will
be even less relevant.
All this explains why it is fiendishly
hard to tell which way the election will go.
With so many cross-cutting questions—
“will UKIP gift Tory seats to Labour?”,
“how will the Lib Dems hold up in the
south?”,“will more local-champion MPs
hang on to seats they would otherwise
lose?”—it might be past breakfast time on
May 8th before the result is clear.
But that is chiefly a problem for psephologists. The problem for politicians is
that forming a government after the election might prove complicated. Geographically polarised, hemmed in by insurgents
and only partly in control of their MPs, neither Labour nor the Conservatives have a
commanding lead. If that does not change
in the next few weeks, Britain might
end up with another hung parliament.
The question then becomes: what
combination of parties’ MPs would
add up to more than 320?
At first glance, Labour has the most reasons to be chipper. Its votes are more efficiently distributed than those of the Conservatives, so under Britain’s “first past the
post” electoral system it gets more seats for
less support. Fully 36% of the vote put the
Tories 20 seats short of a majority in 2010;
35% gave Labour a majority of 64 in 2005.
And Labour might be able to team up with
two hefty partners—the Lib Dems and the
Scottish National Party. The Tories have
only the Lib Dems.
Yet the Tories have the momentum.
Since last summer David Cameron’s
party has erased a ten-point Labour
lead. As this briefing went to press,
Elections Etc and Electoral Forecast, two
websites run by political scientists, respectively projected that it will emerge with 296
and 283 seats, with Labour on 261 and 280.
Anything much above that should put another Tory-Lib Dem government (possibly
with the support of Northern Irish unionists) within reach. Nick Clegg, the Lib Dem
leader, would probably prefer to deal with
David Cameron than with Ed Miliband.
It is also possible that the next government will not have a majority at all, particularly if the Lib Dems are too small to prop
up either of the main parties. Thus a weak
minority government would emerge, probably getting little done but possibly wobbling on for a surprisingly long time. The
Fixed-Term Parliaments Act, introduced in
2011, means an election could only be
called before 2020 if two-thirds of MPs
agreed to it (or one government is voted out
and another is not in place after two
weeks). And MPs will only support an early dissolution of parliament if they have a
good sense of any election result—which,
to judge by how unpredictable British politics is these days, they will not. 7
Tangled up in blue
UK constituencies as of March 2015
Conservative
Lib Dem
Labour
UKIP
Green
SNP
Plaid Cymru
Sinn Fein
Respect Party
Democratic Unionist Party
Social Democratic & Labour Party
Other
SCOTLAND
Constituencies
depicted at true size
WALES
LONDON
Source: The Economist
UK ELECTION 2015 / The Economist April 11th 2015
21