Consciousness of Sheep
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There are those who mistake Boris Johnson’s “Bojo the Clown” façade for the man himself. But nobody gets to rise to the rank of Prime Minister without a degree of cunning and ruthlessness. Nevertheless, Johnson does stand out as something of a chancer who, thus far at least, has won every marginal bet he’s made. And it was that chancer who emerged yesterday to tear up the manifesto pledges made to the British people less than three years ago.
The problem, following the response to the pandemic, was that the government was left with few options which would not amount to an assault on the recovery. Nevertheless, further government borrowing threatens the value of the pound, but there are some giant holes opening up in NHS and local government budgets. At least one of the big taxes – corporation tax, income tax, national insurance and VAT – would have to rise to fill the gap; even if this might give ammunition to the opposition.
The Labour Party though, is notable largely for its absence. Insofar as anyone has witnessed any flickering of an opposition in the last two years, it has only been on those occasions where Labour spokespeople have agreed with the government but claimed that Labour would have done it better. Meanwhile, at the mid-point in the parliament – when a serious opposition party ought to be leading in the polls – Labour continue to lag ten points behind the government. Moreover, it is only a few months ago that Labour lost another red wall seat (Hartlepool) and came within a whisker of losing another (Batley and Spen). If there was ever a time to announce potentially damaging and unpopular policies yesterday was it.
And so we are given a 1.25 percent rise on National Insurance, which will become a separate Health and Social Care tax from 2023. We also have the suspension for a year (rather than the anticipated scrapping) of the triple lock on pensions, and a push to cut 5 percent from the non-frontline budgets of government departments.
Increasing national insurance rather than income tax is a problem for two reasons. First, the percentage of income that is paid to national insurance decreases as incomes rise so that while someone on £51,000 per year pays more than someone on £20,000, the proportion of their income taken is less. The bigger problem though, is that employers must also pay national insurance on their workforce. Nor is this a trivial amount; the Employer’s National Insurance on every 12 employees earning the median wage, for example, would pay for an additional median wage worker. More importantly, Employers’ National Insurance is not adjusted for profitability, so that an increase may force struggling firms to lay off workers or even to become insolvent. And coming on the back of the lockdown-losses and the increased debt taken on by businesses to remain solvent, the short-term impact could be serious.
The political gamble is that it doesn’t matter. Just as the neoliberal left’s ongoing whining about Brexit has failed to dent the government’s poll ratings, the calculation is that the low-paid jobs that are lost will be replaced by higher-paid one’s anyway. And, as has happened with the recent shortage of lorry drivers, the neoliberal left are in danger of coming out in favour of low-pay and exploitative business practices.
Quite reasonably, most commentators – including me – have written off the current iteration of the Labour Party as entirely unfit for purpose. And while – barring a miracle – this means that a Labour victory at the next election is impossible, it does not mean that the government cannot fall as a result of its own actions. And the important measure here is not in the government’s overall poll ratings, but how these transfer onto Britain’s electoral geography.
It appears that Labour’s strategy between now and the general election will be to put a big dent in what has been called “the Tories’ blue wall.” As Steve Akehurst explains:
“I think the best way of getting our arms around these constituencies is to set the following criteria:
- Held by the Conservatives since at least 2010 (although in many cases long before).
- Where Labour or the Lib Dems have overperformed their national swing versus the Conservatives in both 2017 and 2019.
- Where, as a result, the Conservative majority now stands at under 10,000 votes – such that either Labour or the Lib Dems, or both, are within striking distance.
This produces about 41 Conservative-held seats, from a long list (majority >10k) of around 100… they are mostly suburban areas in England, often on the outskirts of cities or large urban conurbations. They largely lean Remain and so have larger numbers of the demographics that have turned against the Tories since 2016: under 40s, university educated, more socially liberal. More likely to prioritise issues like climate or housing.”
Unfortunately, as Matthew Goodwin at UnHerd points out:
“It is simply not big enough to bring down Boris Johnson’s majority. Even if Labour were to overperform here, it still needs to find significant gains elsewhere. This is what happens when you double down on liberals in a first-past-the-post system. While your analysts might tell you that you are putting a bet on the future, liberals are often too strongly concentrated in the big cities and university towns to deliver the broad support that you need for a stomping majority in an electoral system like Britain’s.”
And Goodwin was correct at the time of writing – just prior to the Hartlepool by-election – to rule out “significant gains elsewhere.” A Channel 4 News/J.L. Partners poll in March had show that of 45 seats taken directly from Labour by the Tories in 2019, Labour were on track to take back just 18; nowhere near enough to provide them with a majority in parliament. This positive result for the Tories may easily be seen through rose-tinted glasses though. By March the UK was over-performing on rolling out the vaccines and was looking forward to “Freedom Day” (which was later postponed) in June. By contrast, the same poll taken in November 2020 – when government was widely believed to have mishandled the pandemic – had shown Labour winning back 36 of the 45 seats, with the Tories holding onto just nine.
There is every reason to believe that the global economy will experience a significant downturn in the aftermath of the pandemic as a combination of rising prices and shortages collide with austerity cuts and interest rate rises to cause overly-indebted businesses and households together with over-inflated stock markets to crash and burn. As with John Major’s government after Black Wednesday in 1992 and Gordon Brown after the 2008 crash, Johnson’s government will likely be punished for a similar downturn on their watch.
Even if the downturn is less serious, electoral success is far from guaranteed. The secret sauce to winning an election requires a party to lean left on the economy (which is why Jeremy Corbyn did unexpectedly well in 2017) but to be small “c” conservative on social issues. But both the Tories and Labour are essentially neoliberal parties; favouring small government, free markets and social liberalism. The cliff-edge ending of the various pandemic mitigation measures, the demand for a five percent cut in spending across government, the increase in National Insurance and the temporary cut to pensions indicate that the austerity-minded, liberal wing of the Tory party has won the economic argument for now. And if the red wall Tory voters experience this as a cut in their living standards between now and the next election, they may well – albeit reluctantly – vote Labour as a protest.
Not of course, that Starmer’s Labour are about to embrace social democracy when it comes to the economy. But it is more often governments who lose elections rather than oppositions winning them. And in the event that Johnson’s gamble hits enough people in their pockets, the result at the next election could look a lot more like 2017 than 2019. And if, like Theresa May before him, Johnson loses his majority, that will be the end of him.
As you made it to the end…
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