Would the Conservative Party have preferred a hung Parliament?

I wrote before the 2015 general election that the Conservatives would prefer a hung Parliament so that they wouldn’t have to implement their more extreme election pledges, such as a law extending Right to Buy and another law freezing income tax, VAT, and National Insurance until 2020. But the public’s attachment to simple austerity/deficit logic was too strong and the Conservatives gained an overall majority. This is what I wrote before the election:

The Conservative Party 2015 Election Manifesto promises to extend Right to Buy to properties owned by Housing Associations, which are private charities. The notion that government could force charities to liquidate their assets seems outlandish. As the National Housing Association says “This policy could set a very worrying precedent for government interference with other commercial organisations”[1]. It would surprise many if the policy proved to be legal, but as there is bound to be a hung Parliament the legal issue does not create problems for the Conservatives. Any Party will be able to abandon its most extreme promises during coalition-building.

But the values expressed in the promise are more significant. Together with the relatively lackadaisical Conservative campaigning, this and other unpopular promises suggest that some Conservative MPs may have become so fearful of a second term that they are allowing Party extremists to alienate the electorate. Backbenchers’ career prospects would be improved by the retirement of current leadership that would follow a defeat. The prospect of having to continue to defend Mr. Osborne’s handling of the economy is daunting now that the detailed autopsy data is available from ONS, BIS, and OECD:

  • In his 2010 budget Mr Osborne forecast 12.5% growth 2010-2014. He achieved only 8.7%;
  • GDP per head, the normal measure of economic success (but see [2] below) still has not returned to its level before the 2008 crash;
  • Although unemployment is down, employee productivity has failed to resume its normal upward growth since the 2008 crash, probably because of the mistaken cuts to the Adult Education budget which used to help employees to upskill and move to more productive occupations;
  • Another mistake was to increase R&D budget for equipment by nearly £1bn while cutting the budget for people to use the equipment by £3 bn [3]. UK publicly-funded R&D is half that of Germany and below EU average [4];
  • Wages are still 2% below 2008 in real terms [5];
  • business investment and bank lending has slumped [6]
  • To attract inward investment, corporation tax has been cut from 28 to 20%, way below our EU competitors and on a level with other countries offering an unskilled workforce, such as Russia and Turkey [7]. The UK is now competing on price, not quality.

It would not be surprising if some Conservative backbenchers lost the will to live at this point. The time is right, some might think, for the handover of a ‘growing economy’ to Labour who can later be blamed for the cost of putting things right.

[1] https://fed-owncloud.housing.org.uk/owncloud/public.php?service=files&t=2eaf52a52fafdc64080c6ed50adda3c9

[2] The use of year-to-year difference in GDP as an indicator of economic success is a common misuse of the GDP calculation. GDP is designed to show how much and what type of capacity existed to do something useful, not to indicate that anything useful has been produced. This has been clarified by the recent (2014 on) addition of illegal prostitution and narcotics dealing as well as purchases of weapons from overseas for use rather than for sale.

[3] see http://www.matureeconomy.org/?p=1861

[4] BIS Growth Dashboard, slide 33

[5] OECD report on UK, slide 3

[6] BIS Growth Dashboard, 22; OECD Report on UK 11, 19, 20;

[7] BIS Growth Dashboard slide 19

 

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