Cameron and Osborne are benefiting after three years of a crippled economy. Photo: Getty.
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Will the economy hand Tories the election?

The recovery may be feeble, but voters are rewarding the Tories as GDP rises – and the 'cost-of-living' is half the issue it was in 2011.

What issues will decide next year’s general election? For the major parties, the challenge is making their issues the topic of national debate.

For the Tories that means focusing on the economy, immigration and crime.

For Labour, it means steering every news agenda towards health, education and housing.

The Tories are the more trusted stewards. Voters back them to safeguard our finances, control our borders and police the streets – despite three years of sluggish growth, uncurbed immigration levels and cuts in police numbers.

Nevertheless, they are far more trusted on each of those issues than Labour. But, if the Tories are trusted to apportion the money, voters would prefer Ed Miliband’s party spend it.

This reflects a trend across developed democracies. Voters want Scandinavian levels of spending but want to pay Texan-level taxes. They want left-wing parties when asked about their public services but right-wing ones when asked about actually managing the economy or country.

That is what makes Ed Balls’ speech today on taxes and wages interesting. While Labour are reportedly going to focus on the NHS over the summer, Balls is showing how Labour will challenge the economic recovery being trumpeted by the Coalition.

Balls is doing this even though the government’s economic approval rating has dramatically recovered in the past year, buoyed by near 4 per cent growth.

This is despite only a few voters thinking the economy is on the way to recovery. But more voters think the UK is at least now showing signs of it – which most didn’t in 2013.

And in welcome news for the country, if bad news for Labour, the number of voters feeling the cost-of-living crisis has halved in the past three years.

In October 2011, 49 per cent of people were worried they wouldn’t have enough money to live comfortably. Now 25 per cent are.

This is slightly at odds with what has happened to real wages over the past four years. As George Eaton noted today, “Labour will still be able to go into the general election and answer Ronald Reagan’s question – “Are you better off than you were four years ago?” – in the negative”.

That is because inflation has outstripped people’s wages throughout this parliament.

But this appears to have little effect on the government’s economic approval ratings.

Headline GDP appears to be the only statistic that matters. At first glance there is little link between GDP and economic approval.

But, by using a three-month rolling average of GDP, we can uncover a relationship. 

The data implies that if GDP growth were 0 per cent, the government's economic approval would be -30 per cent. But for every 1 per cent of quarterly GDP growth, their approval increases 24 per cent. The realtionship is not that strong – GDP growth explains only about half of the approval rating (R² = 48 per cent) – but there is a link, as we might expect.

The importance of the economy in predicting elections is widely recognised in academic work.

As one paper recently put it, “If all you know is the state of the economy, you know pretty well how the incumbent party will do”. Nate Silver agreed – a composite measure of economic health was one of the pillars of his perfect predictions in 2012.

The fact that link appears to exists for the Tories is worrying for Labour. Until very recently, the economy had been the number one issue for voters throughout this parliament.

The growth of the past year, and the recent UKIP-fuelled focus on immigration, has changed that, but that’s more encouraging for the Tories than Labour – it’s another sign of the recovery.

This is why Labour are zeroing in on the NHS. It is the only issue on which they both have a significant lead and voters care much about (education and housing are not rated as top issues by most voters).

Immigration helps UKIP more than either party, but it helps the Tories before Labour – as their attempt to lead the news with it yesterday showed.

Labour can try and make the NHS the election’s pivotal issue, but this parliament has been defined by the economy. If GDP stays strong the left may face another five years in the wilderness.

Photo: Getty
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The government needs more on airports than just Chris Grayling's hunch

This disastrous plan to expand Heathrow will fail, vows Tom Brake. 

I ought to stop being surprised by Theresa May’s decision making. After all, in her short time as Prime Minister she has made a series of terrible decisions. First, we had Chief Buffoon, Boris Johnson appointed as Foreign Secretary to represent the United Kingdom around the world. Then May, announced full steam ahead with the most extreme version of Brexit, causing mass economic uncertainty before we’ve even begun negotiations with the EU. And now we have the announcement that expansion of Heathrow Airport, in the form of a third runway, will go ahead: a colossally expensive, environmentally disastrous, and ill-advised decision.

In the House of Commons on Tuesday, I asked Transport Secretary Chris Grayling why the government is “disregarding widespread hostility and bulldozing through a third runway, which will inflict crippling noise, significant climate change effects, health-damaging air pollution and catastrophic congestion on a million Londoners.” His response was nothing more than “because we don’t believe it’s going to do those things.”

I find this astonishing. It appears that the government is proceeding with a multi-billion pound project with Grayling’s beliefs as evidence. Why does the government believe that a country of our size should focus on one major airport in an already overcrowded South East? Germany has multiple major airports, Spain three, the French, Italians, and Japanese have at least two. And I find it astonishing that the government is paying such little heed to our legal and moral environmental obligations.

One of my first acts as an MP nineteen years ago was to set out the Liberal Democrat opposition to the expansion of Heathrow or any airport in southeast England. The United Kingdom has a huge imbalance between the London and the South East, and the rest of the country. This imbalance is a serious issue which our government must get to work remedying. Unfortunately, the expansion of Heathrow does just the opposite - it further concentrates government spending and private investment on this overcrowded corner of the country.

Transport for London estimates that to make the necessary upgrades to transport links around Heathrow will be £10-£20 billion pounds. Heathrow airport is reportedly willing to pay only £1billion of those costs. Without upgrades to the Tube and rail links, the impact on London’s already clogged roads will be substantial. Any diversion of investment from improving TfL’s wider network to lines serving Heathrow would be catastrophic for the capital. And it will not be welcomed by Londoners who already face a daily ordeal of crowded tubes and traffic-delayed buses. In the unlikely event that the government agrees to fund this shortfall, this would be salt in the wound for the South-West, the North, and other parts of the country already deprived of funding for improved rail and road links.

Increased congestion in the capital will not only raise the collective blood pressure of Londoners, but will have severe detrimental effects on our already dire levels of air pollution. During each of the last ten years, air pollution levels have been breached at multiple sites around Heathrow. While a large proportion of this air pollution is caused by surface transport serving Heathrow, a third more planes arriving and departing adds yet more particulates to the air. Even without expansion, it is imperative that we work out how to clean this toxic air. Barrelling ahead without doing so is irresponsible, doing nothing but harm our planet and shorten the lives of those living in west London.

We need an innovative, forward-looking strategy. We need to make transferring to a train to Cardiff after a flight from Dubai as straightforward and simple as transferring to another flight is now. We need to invest in better rail links so travelling by train to the centre of Glasgow or Edinburgh is quicker than flying. Expanding Heathrow means missing our climate change targets is a certainty; it makes life a misery for those who live around the airport and it diverts precious Government spending from other more worthy projects.

The Prime Minister would be wise to heed her own advice to the 2008 government and “recognise widespread hostility to Heathrow expansion.” The decision to build a third runway at Heathrow is the wrong one and if she refuses to U-turn she will soon discover the true extent of the opposition to these plans.

Tom Brake is the Liberal Democrat MP for Carshalton & Wallington.