The Tories will find it harder to justify austerity now growth has returned

As the economy accelerates, it will become increasingly difficult for Osborne to defend the 1% cap on public sector pay rises.

With the return of growth (some forecasters predict output as high as 3% next year), the Tories are increasingly confident that they can win the next election. While vulnerable to Labour's charge that this is a "recovery for the few, not the many", with living standards falling even as GDP rises, they argue that higher growth will soon translate into higher salaries. As George Osborne remarked after the publication of the most recent GDP figures, “If Britain is growing then the finances of Britain’s families will start to grow.” The unspoken assumption is that so, too, will the Tories’ poll ratings.

But as I write in this week's NS politics column, Labour doesn't buy this optimistic analysis. In its view, the link between higher growth and higher wages has been severed and will not be easily repaired. Ed Miliband’s team point to the pre-crash period, when incomes for millions of low-and middle-income earners stagnated even in times of strong growth, as evidence that the market can no longer be relied upon to deliver for the majority. In an economy as unequal as Britain’s, any gains quickly flow to the top. If there is wage growth before the election, it will be of the unbalanced kind seen in April, when high earners collected their deferred bonuses in order to benefit from the reduction in the top rate of tax (the one month since May 2010 in which real incomes rose).

A further problem for the Tories is the issue of public sector wages. In his most recent Budget, George Osborne extended the 1% cap on pay increases until 2015-16, entailing further real-terms cuts for workers. But with the return of growth, such austerity will become harder to justify; voters will want their slice of an expanding cake.

If, as the Tories hope, private sector earnings begin to rise, they will no longer be able to defend public sector pay restraint on the grounds of fairnes, while voters in general are likely to become less sympathetic to the case for deficit reduction as growth accelerates. One reason why Osborne imposed immediate cuts in 2010 was that he feared they would be harder to defend if he waited until a strong recovery was underway.

If the Tories want to win over the voters they will need to remain the largest party in 2015, they would be wise to offer some relief to the public sector. As Renewal, the Conservative group aimed at broadening the party's appeal among working class, northern and ethnic minority voters, has noted, the majority of Tory target seats have a higher than average share of public sector workers, including 60% of Labour-held targets and half of the top 20 Lib Dem-held targets. While the Tories are likely to pledge to cut taxes for all workers, in the form of a £12,500 personal allowance, they should also consider easing the squeee on the public sector.

George Osborne and Michael Gove listen to speeches at the Conservative conference in Manchester earlier this month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Popperfoto
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How the Oval regained its shape: the famous cricket ground hosts its 100th Test

The challenge for Surrey is to ensure that the new fans drawn to the stadium in recent years keep coming.

Few stadiums have as rich a sporting history as the Oval. After opening its gates in 1845, it hosted England’s first home football international, the first FA Cup final, and Ireland’s inaugural rugby Test.

Though it took 35 years before a cricket Test match – the first ever in England – was played at the ground in Kennington, south London, it was worth waiting for. WG Grace scored 152 runs, setting the tone for many memorable performances  at the Oval. Among the highlights: Len Hutton’s 364 in 1938, still the highest Test score by an England batsman; Viv Richards’s double century and Michael Holding’s 14 wickets for the West Indies before an ecstatic crowd in 1976; England’s Ashes-clinching match in 2005, when a skunk-haired Kevin Pietersen thrashed the Australian attack.

But just five years later, in 2010, the Oval and its host club Surrey were in a bad way. For the first time since 1986, the first day of the annual Oval Test was not a sell-out, and attendances for county games were down. Finances were so stretched that Surrey made a dozen administrative staff redundant, and there was talk of insolvency. The club, which is owned by its 10,000 members and is a tenant of the Duchy of Cornwall, was “very close to a substantial crisis”, Paul Sheldon, then chief executive, said at the time.

Today that seems far away. On 27 July, the Oval hosted its 100th Test, the third match of the series between England and South Africa. The first day was sold out. And Surrey are now the richest first-class county, with £12m of reserves. In 2019, work will begin on a redevelopment scheme that will increase the Oval’s capacity from 25,000 to 40,000, making it the biggest cricket ground in England. (Lord’s, the Oval’s more illustrious rival, can seat 28,000 people.)

“We are in a good place,” said Richard Gould, the current chief executive, one recent afternoon in his grandstand office overlooking the pitch, where a big group of local schoolchildren ran around in the sun.

How did the Oval regain its shape? Gould, whose father Bobby played football for Arsenal and was manager of Wimbledon when the team won the FA Cup in 1988, lists several factors. The first is a greater focus on non-cricketing revenue, taking advantage of the club’s historic facilities. In 2011, when Gould joined Surrey after stints at Bristol City football and Somerset cricket clubs, revenue from corporate events and conferences was £1.3m. This year the projected income is £4.6m.

The second factor is the surge in popularity of the T20 competition played by the 18 first class counties in England and Wales. Unlike Tests, which last for five days, a T20 Blast match takes just three hours. The frenetic format has attracted many people to games who have never previously followed cricket. Surrey, which like Lord’s-based Middlesex have the advantage of being in London, have been especially successful in marketing its home games. Advance sell-outs are common. Surrey reckon they will account for one in six T20 tickets bought in the UK this season, with gate receipts of £4m, four times more than in 2010.

Whereas Test and even one-day international spectators tend to be regulars – and male – Gould estimates that up to 70 per cent of those who attend T20 games at the Oval are first-timers. Women, and children under 16, typically constitute a quarter of the crowd, a higher percentage than at football and rugby matches and a healthy trend for the game and the club.

The strong domestic T20 sales encouraged the Oval’s management to focus more on the county than on the national team. Until a few years ago, Surrey never seriously marketed its own merchandise, unlike professional football clubs, which have done so successfully for decades.

“When I came here, everything around the ground was focused on England,” Gould said. “We needed to put our team first. In the past, county cricket did not make you money. With T20, there’s a commercial business case.”

To raise its profile and pull in the crowds, Surrey have signed some of the biggest international stars in recent years, including Australia’s Ricky Ponting, South Africa’s Hashim Amla, Sri Lanka’s Kumar Sangakkara and Kevin Pietersen, who is now mainly a T20 franchise player. For the players, as with the counties, it’s where the money is.

The challenge for Surrey is to ensure that the new fans drawn to the Oval in recent years keep coming. In common with many businesses today, customer data is crucial. The club has 375,000 names on its marketing database, of which 160,000 are Surrey supporters. But since the average T20 purchaser buys six tickets, many people who attend games at the Oval remain unknown to the club. One way Surrey are trying to identify them is through a service that allows one person to book tickets for a group of friends, who then each pay the club directly. Another method is through offering free, fast Wi-Fi at the ground, which anyone can use as long as they register their email address.

For all the focus on T20, Gould is keen to stress that England internationals, especially Test matches, are a crucial part of the Oval’s future – even if the business model may have to be tweaked.

“We always want to be one of the main Test venues. The problem we have is: will countries still put aside enough time to come to play Tests here? In many countries domestic T20 now takes precedence over international cricket. It may be that we may have to start to pay countries to play at the Oval.” 

Xan Rice is Features Editor at the New Statesman.

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue