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Will unemployment sink the coalition?

Why Cameron can't ignore the electoral consequences of rising joblessness.

In February 2012 unemployment reached 8.4 per cent of the workforce, or 2.67 million people, according to the Office of National Statistics. The jobless total increased by 48,000 over the previous quarter, and with current polices it is only a matter of time before it reaches 3 million. On the other hand, this does not appear to be helping Labour very much, with a YouGov poll in the Sun earlier this month putting the Conservatives on 40 per cent in voting intentions compared with 38 per cent for Labour. From the 1950s to the 1980s governments ran scared of unemployment since it appeared toxic to the re-election chances of an incumbent party. In these years it appeared that a governing party would be rewarded in the polls if unemployment fell and punished if it rose. So what has happened to this relationship and can the coalition safely ignore the electoral consequences of rising unemployment? There are good reasons to think not, and there is a real chance that this issue will sink the coalition government at the next election in May 2015.

There were seventeen general elections between the first fully peacetime election in 1950 and the most recent one in 2010. The chart below shows the relationship between vote shares for the governing party and unemployment in the election year. The diamonds represent the elections and the striking feature is the strong negative relationship between unemployment and votes for the governing party, particularly in fourteen of the seventeen elections. In each of the fourteen elections the governing party, whether Labour or the Conservatives, took a big hit in their vote share if unemployment grew on their watch. This was most apparent in 2010 when unemployment reached 2.4 million under Labour and the party achieved the lowest vote share of any government in the era of mass democratic politics.

Unemployment and Votes for the Governing Party 1950-2010

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So what happened in the cluster of three elections in the chart which do not appear to fit the pattern? These were the elections in the Thatcher era between 1983 and 1992. Unemployment grew rapidly after the Conservatives won the 1979 election when the Thatcher government started to make rapid cuts in public spending and introduced very deflationary monetarist policies. As a consequence Conservative support in the polls started to decline rather rapidly and it is fairly clear that they would have lost the 1983 election were it not for four key factors. The first factor was Labour's split in 1981 which gave birth to the Social Democratic Party and greatly weakened the party electorally, since voters dislike a divided party. The second was the Falklands war in which the Conservatives managed to snatch victory from the jaws of defeat and this raised their support dramatically overnight. The third was Michael Foot who may have been admired by many Labour Party members, but was very unpopular with the voters. Finally, there was the Labour manifesto of 1983 famously dubbed 'the longest suicide note in history' and this damaged support even more. Cumulatively this combination of factors put paid to the party's chances and served to protect the Conservatives from the consequences of their economic policies.

Once Mrs Thatcher had got over the hurdle of the 1983 election and more than 3 million unemployed, joblessness started to slowly decline and fell to 2.8 million by 1987 and to 2.7 million by 1992. As a result the Conservatives could claim that their policies were slowly but surely working, a claim which was successful as voters forgot what had happened in the early eighties. The key point here is that the relatively strong relationship between unemployment and votes for the governing party was overridden by a very unusual set of events in 1983. These events were rare by historical standards, since major British political parties do not split very often, and it is not very common for the country to win a short, sharp, legitimate war. This means that if events are momentous enough and produce sufficient cumulative bad news for the main opposition party, the impact of unemployment on voting is going to be greatly weakened. But as 1983 demonstrated it takes a great deal for this to happen.

So the key question is what are the chances of the coalition government repeating this and being insulated from the consequences of its economic policies in 2015? At the moment the chances look pretty slim. Unlike in the early eighties Labour is a united party despite the grumbling about Ed Miliband's leadership, and he is unlikely to face a leadership challenge in the present Parliament. Actually his popularity and that of the Labour Party is likely to increase as it becomes more and more apparent to the voters that Labour has been right about the economy and the Conservatives have got it wrong. The party will receive an additional boost if as seems likely Barack Obama is re-elected President of the United States. This is because the US economic strategy under Obama has been much closer to that advocated by Labour than to the government, and unlike Britain the early signs of a recovery in the US economy are now emerging. Overall the Labour Party has a very good story to tell about the economy in the run-up to 2015.

Events in the Eurozone are currently conspiring against the government. Even if the coalition were pursuing a growth strategy, it would largely be stymied by the Eurozone crisis. As is widely recognized the Euro bailout is all austerity and no prosperity so it is very likely to fail. Moreover the one success the government can claim, low borrowing costs in international financial markets, will be undermined if Britain loses its AAA credit rating as the deficit continues to rise. It may sound a bit far-fetched but I would not rule out a Labour landslide victory in 2015 if things go on as they are.

Paul Whiteley is Professor of Government at the University of Essex and Co-Director of the British Election Study.

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