28 Nov 2019

General Election 2019: week five

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Are you feeling lucky? This may not be the most scientific way to inform your risk assessment (ok, it is the exact opposite), either in business or politics, but politicians take risks (or are required to) in ways that few in business would accept, and often with a much more limited evidence base than commercial life requires. Whether or not political leaders make big choices based on how they feel first thing in the morning I don’t wish to speculate - but judgement calls, as much as empirical facts, lie at the heart of many of the decisions they make.

Calling an election is one of the biggest risks that a Prime Minister can face. It is hard enough to get the right outcome when you have a healthy poll lead, as Mrs May found in 2017, and it can be a risk not to call an election, as Mr Brown found (to the extent that we can assume the counter-factual) a decade earlier in 2007. How will history judge the 2019 campaign?

Certainly at its start there were plenty, including in the Conservative Party, who worried about Mr Johnson’s decision to force an election in the middle of winter. But with a fortnight to go until polling day, his party’s current ratings suggest his risk-taking could generate a healthy return. Should things stay as they are, the other parties (perhaps with the exception of the SNP) may be regretting agreeing to the election, since Mr Johnson could not have held one without their agreement.

But there are still those two weeks to navigate. Not everything is done and dusted, although this week we have seen detailed polls published by YouGov and others which may suggest to some that it’s game over. These are much larger in scale than normal surveys and by using ‘multi-level regression and post-stratification techniques’ (no, me neither) they are able to offer more detailed constituency projections, and so an apparent clarity, which we rarely enjoy. So, as we exercise our democratic rights as voters, this has the neat effect of democratising the availability of information which would normally only be enjoyed by the political parties.

The timing is very important, too, for those registered, postal ballots are about to arrive and so the first votes cast. At this crucial moment, these polls allow campaigners and analysts to home in on key seats where the fabled ‘two-horse race’ has become clearer, which is a challenger’s delight. Maybe these polls could facilitate informed tactical voting in seats across the country and have an interesting impact on the outcome. Or maybe they won’t.

You will notice the proliferation of ‘coulds’, ‘woulds’ and ‘maybes’ in these paragraphs - hands up, it all remains highly speculative. While there have been moments in the past when large scale tactical voting has worked (spectacularly so in 1997, for instance), we do have to mind the gap between the availability of the information (itself a snapshot of a moment in time) and any behavioural impact which changes results in key constituencies. But even the possibility of tactical voting has provoked Conservative campaign chiefs to dismiss their apparent poll lead for fear it breeds dangerous complacency amongst those doing the door-to-door canvassing around the country.

Otherwise, with the manifestos all now launched, we have passed another key election milestone (we will consider them in more detail in our webinar this coming Monday, sign up here). Generally, they have been at the bolder end of ‘normal’ election manifestos, with significant public spending commitments (up to £1,100 billion from Labour) and of course lots on Brexit. Aside from ‘getting Brexit done’ (a wonderfully simple, and potentially highly effective slogan, whatever one makes of its meaning or desirability), the Conservatives were at the more cautious end of the spending or policy pledge spectrum (though hardly parsimonious – this is after all, a relative measure).

Such caution is not what you might expect from a risk-taking party leader, but by leaving the manifesto late (and remembering how the 2017 document de-railed the Conservative campaign), it was perhaps a good moment to play safe. In the end, nobody, not even Mr Johnson, really wants to rely on luck to win the election. We are getting closer to knowing if a (relatively) disciplined, safe campaign, after a bold election call, can deliver the outcome he, or his opponents, want.

Michael Moore
Director General, BVCA



Poll Watch


Britain Elects Poll of Polls

Poll accurate as of 4pm 28 November




Manifesto watch

Get Brexit Done – Conservative manifesto

The key headlines for business include:

Taxation

  • abolish employers’ National Insurance Contributions for under-21s

  • review of business rates

  • new anti-tax avoidance and evasion law, which will include measures to avoid profit-shifting by multinational companies to avoid paying tax

  • Digital Services Tax

  • redesign the tax system to boost growth, wages and investment

  • no rise in income tax, National Insurance or VAT

  • raising the National Insurance threshold to £9,500

  • increase the Employment Allowance for small businesses

  • reform insolvency rules and the audit regime


Entrepreneurs and small business

  • increase the employment allowance for small businesses

  • support start-ups via government procurement and commit to paying on time

  • expand start-up loans

  • continue the Seed Enterprise Investment Scheme and Enterprise Investment Scheme

  • review and reform Entrepreneurs’ Relief


Something extra from Labour

Two days after launching their main election manifesto, Shadow Chancellor John McDonnell unveiled Labour’s Fair Tax Programme in which a Labour Government would undertake a 12-month independent inquiry into the UK finance sector. The inquiry will look at the role played by participants in the finance sector (including private equity) and assess how good the current regulation is and whether the rules for the finance sector need changing.

It also states ‘profit fragmentation’ schemes allow private equity managers to divert profits to an offshore entity where little tax is paid. Profits will then come back to them through complex offshore trust structures. Labour say it will deter individuals from engaging in these schemes by introducing reforms requiring them to pay back the tax owed immediately as an enquiry into their scheme opens.

Read more here.

Stronger for Scotland

The SNP manifesto includes a demand for another referendum vote on Scottish independence in 2020 and a further EU referendum vote. It also wants the UK government to match Scottish per capita NHS spending, and plans to scrap Trident, and add an extra 12 weeks of parental leave for fathers.

Party manifesto

The party's ‘Contract with The People’ was unveiled last Friday, with Nigel Farage promising a ‘clean break’ from all EU institutions. The 21-page document also contains policies on transport, the environment and business.


Key December Dates

Downing Street has announced if the Conservatives are returned to power, the new Parliament will sit on Tuesday 17 December with the Queen’s Speech taking place two days later on 19 December (déjà vu here as the last one only took place a little under seven weeks ago), with a push to get the Brexit Bill through by Christmas.


Featured poll

The big one this week was YouGov’s MRP poll as Michael mentions above, which was hotly anticipated after getting the 2017 so close. The results were

Conservatives: – 359 seats, 43% vote share
Labour – 211 seats, 32% vote share
SNP – 43 seats, 3% vote share
Liberal Democrats – 13 seats 14% vote share
Plaid Cymru – 4 seats, <1% vote share
Green Party – 1 seats, 3% vote share
Brexit Party – 0 seats / 3% vote share
This gives the Conservatives a majority of 68.

Read more here.



Commentators' corner

Each week I’ll pick a blogger/commentator who has something interesting to say about the campaign and the election. More than 3.1 million people registered to vote between the day the election was called and when the registration deadline closed on Tuesday. That's well over 800,000 more than the comparable pre-deadline period during the 2017 election. Approximately two-thirds – 2.1 million - who've applied to are under the age of 35. Read more at the Electoral Reform Society here

The Institute for Fiscal Studies has published its analysis of the party manifestos, saying Labour’s promised spending and tax rises is at a level never seen before in peacetime, whilst suggesting the Conservatives would end up spending more than implied within their manifesto. The IFS is also critical of the Conservative claim that you could increase spending without increasing borrowing or tax. The Liberal Democrats’ plans involve lower levels of borrowing than implied by either the Labour or Conservative manifestos, and are the only party to put debt on a decisively downward path.

“It is highly likely that Labour, at least over the longer-term, would need to implement other tax raising measures in order to raise the £80 billion of tax revenue that they want and even just sticking to those proposals they would clearly increase taxes for many millions outside the top 5%”, the IFS said. On corporation tax, the IFS highlights Labour plans would “take corporate tax revenues to their highest ever in the UK and to among the highest in the developed world. They would also raise effective rates of corporate tax to levels that are high by international standards.” The IFS also stated Labour’s Financial Transaction Tax may not raise the sums expected. See more here.

If there is anyone you would like to suggest, then please share with me. Or, if you have any views or insights on the election trail, then don’t be shy, send them my way.

Only another 13 days to go!

Lisa Hayley-Jones
Director of Political & Business Relations


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