Power of two: Ed Miliband and David Cameron at the State Opening of Parliament in June. Photo: Getty
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Leader: The end of the “two-party” party

The Conservatives and Labour could once boast of membership of over two million. Today the figure for both is under 200,000. The decline has deleterious practical effects for them.

In 1951, 97 per cent of the electorate voted for one of the two main parties in Britain. By 2010, this had fallen to 65 per cent – and, according to a new poll published by the psephologist and Tory peer Michael Ashcroft, just 59 per cent of those who vote in May’s general election will opt for the Conservatives or Labour.

Rather than seeking to expand their electoral base, both main parties are defensively pursuing core vote strategies. As George Eaton writes on page 22, “Unable to inspire itself, Labour has never seemed further from inspiring the country.” Little better can be said of the Conservatives. Relentless tub-thumping on immigration, including the notorious “Go home” vans, demonisation of welfare recipients and “banging on” about Europe of the sort David Cameron once railed against have combined, in the argot, to retoxify the Conservative brand. The latest ruse from George Osborne was to send letters to taxpayers showing them how their money was spent. In and of itself, such transparency should be applauded but lumping unemployment benefit, in-work tax credits, disability living allowance and public-sector pensions under the banner of “welfare” was disingenuous.

The Conservatives and Labour could once boast of membership of over two million. Today the figure for both is under 200,000. The decline has two deleterious practical effects for them. First, it reduces their campaign funds. This is particularly problematic for Labour, which will be outspent by at least two to one in the election. It also matters for the Conservatives, increasing their dependence on hedge fund managers and leading to the drip-drip of donation stories that reinforce the perception of them as the party of the rich. The second consequence is a lack of activists on the ground, limiting the parties’ ability to mount powerful campaigns outside their heartlands. The collapse in membership could be disastrous for Labour in Scotland: the SNP now has more than 80,000 members, compared with less than 10,000 for Labour north of the border.

The Blair government’s decisions to devolve power to Scotland and Wales and introduce proportional representation in the European elections were a boon to challenger parties. But if these decisions accelerated the growth of insurgent parties, they are not singularly responsible for them. The spasm of “Cleggmania” at the last election and the rise of the SNP, Ukip and even the Green Party are manifestations of the long-run simmering loathing of the political class. Both the Conservatives and Labour have been acquiescent in this.

In many ways the decline of the two main parties is deeply unsatisfactory. It is not good that the Conservatives appear to have written off most of Scotland and much of the English north; the same is true for Labour south of London. Given the scale of the social and economic challenges that the UK faces, the prospect of no government (even a coalition) having a mandate after the next election is worrying. Britain remains lumbered with a voting system that is a two-party relic in a multiparty age.

It could be worse. In the US, on 4 November, the Democrats suffered a bruising result in the midterm elections, confirming that Barack Obama will govern for the last two years as a hugely diminished president. But if this was a protest vote, it was not clear what the US public was protesting against. In an exit poll, just 19 per cent of voters said that they approved of Congress, yet they opted to return the overwhelming majority of these congressmen to office. This owes nothing to satisfaction with them. It is the result of the financial, constitutional and administrative barriers to entry that the Democrats and Republicans put up to prevent the rise of challenger parties.

While Britain does not follow the proportional voting systems favoured by continental Europe, it does allow for a more pluralistic politics. The duopoly of Labour and the Conservatives cannot be maintained indefinitely unless they find new ways to engage with voters. If that is bad news for both main parties, it also means that the British electorate has never been more empowered. 

This article first appeared in the 06 November 2014 issue of the New Statesman, Running out of Time

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.