The Tories' UKIP problem shows why they should have supported AV

Those now calling for a Tory-UKIP pact should consider how AV could have prevented a divided right.

Even before the votes have been counted, the idea of a Tory-UKIP pact is already gathering pace. Daniel Hannan has called for a Canada-style 'Unite The Right' initiative, while Nigel Farage himself has reminded us that he's willing to consider running joint candidates, with David Cameron the only obstacle. If Conservative losses exceed the 310 forecast by Rallings and Thrasher (the deserved subject of a leader in today's Guardian) and if UKIP perform as well as predicted, expect Tory MPs to start pushing the idea on Friday morning. 

The reason is obvious. In the 1980s, it was the formation of the SDP and the consequent split in the left-wing vote that allowed Thatcher to win successive landslide victories. In 2015, a divided right could bring Ed Miliband to power. At the last general election, there were 21 seats in which the UKIP vote exceeded the Labour majority (one shouldn't make the error of assuming that all UKIP voters would automatically defect to the Tories, but many would), a number that is likely to significantly increase next time round. 

It's worth noting, then, that the Conservatives missed a good opportunity to reduce, if not eliminate, their UKIP problem when they chose to oppose the Alternative Vote in the 2011 referendum (as Lib Dem blogger Mark Thompson has previously argued on The Staggers). The introduction of AV would aid the party by allowing it to win the second preferences of the fifth of Tory voters who have defected to UKIP since 2010 (again, one shouldn't assume that all would vote Conservative, but many would). 

When I put this point to Conservatives, they reasonably reply that they opposed AV on principle; self-interest did not enter into it. But those now advocating some form of pact or tactical voting (as Toby Young does here) are certainly making partisan calculations. 

Of course, even if the Conservatives had campaigned in favour of AV, the voters still might have backed first-past-the-post (although it's worth remembering how decisive Cameron's intervention was). But as they mourn the loss of hundreds of councillors tomorrow, the Tories should take a moment to consider how different their position would now be if Clegg and co. had won the day in 2011. 

David Cameron gives a speech opposing the Alternative Vote at the Royal United Services Institute building on February 18, 2011. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR