Kristian Thulesen Dahl, leader of The Danish People’s Party, celebrates after the election. Photo: Linda Kastrup/AFP/Getty
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Why even Scandinavia is moving to the right

The fall of Prime Minister Helle Thorning-Schmidt and Scandinavia’s move to the right.

Another week, another setback for social democracy in Europe. On 18 June, Helle Thorning-Schmidt – the charismatic Danish prime minister, Neil Kinnock’s daughter-in-law and taker of selfies with Barack Obama – narrowly fell short of keeping power despite a remarkable comeback from political torpor two years ago. Her centre-left “red” bloc gained 47 per cent of the vote, against the centre-right “blue” bloc’s 51 per cent.

The result is further evidence that the global financial crisis has not tilted the arc of history to the left. It also illustrates another significant political story of our time: the squeezing of the established parties. In southern Europe, the Greek Syriza and the Spanish Podemos are mobilising against austerity; in the north, Eurosceptic parties of the right are on the rise.

In Denmark, the vote share of the populist Danish People’s Party (DPP) – the country’s equivalent of Ukip – surged to over 21 per cent. It became the second most successful party in the election, leapfrogging Venstre, the mainstream centre-right liberal party. The four parties that had dominated Danish politics for decades (Venstre, the Social Democrats, the Conservative People’s Party and the Social Liberals) gained only half of the vote between them.

Denmark’s shift to the right and the squeezing of its establishment are closely linked phenomena. They explain how the DPP managed to colonise ground on both sides of the electoral landscape. It has been nibbling the support of right-wing parties for over a decade by forcing immigration into the mainstream political debate. And yet, focusing on immigration alone, it struggled to get much more than 13 per cent of the vote. What made its campaign different this time was that it managed to reinvent itself as a party of the left – or the “left behind”.

The DPP performed particularly well in rural Jutland, the peninsula that makes up most of Denmark’s land mass, which suffers from lower growth rates than metropolitan areas. As one Danish politician explained to me, “The core dividing line in this election was between Jutland and Copenhagen.” The DPP has set itself up in opposition to the entire metropolitan political elite and won record levels of support.

As well as stealing votes from the centre right, the DPP tacked left by opposing the centre-left government’s plan to cut social benefits and pensions, a campaign based on “maintaining the Denmark you know”. It argued that the government should stop spending money on migrants and foreign aid, and should invest instead in social benefits for Danes. By linking migration to the future of the Scandinavian welfare state, the DPP managed to win support without sounding hysterical about immigration. In the televised debates, it was the two mainstream candidates – Venstre’s Lars Løkke Rasmussen and the Social Democrats’ Thorning-Schmidt – who were toughest on migrants.

Many Social Democrats, including a former minister who asked to remain anonymous, argue that the DPP was able to reinvent itself because their party had lost credibility by cutting taxes and consenting to austerity. The Social Democrats were caught in a pincer movement of their own making, hoping to win votes from Venstre by adopting a conservative economic platform and from the DPP by focusing on immigration. In the process, they lost their identity, leaving the door open for the DPP to grab a clutch of left-leaning voters.

The problem for Thorning-Schmidt was that although her party managed to defy expectations and top the poll with an impressive 26 per cent, the vote share of her putative coalition partners the Social Liberals and the Socialist People’s Party collapsed to under 5 per cent. Her campaign was successful for the Social Democrats but it destroyed support for her allies. It was a classic pyrrhic victory. Sweden is now the only country in Scandinavia that still has a centre-left government, contrary to the general view of the region.

Denmark’s Social Democrats were caught in the same trap as other leftist parties across the continent, unable to own or to challenge the neoliberal consensus. As a result, they were torn between reassuring the electorate by mimicking the right and mobilising it by offering a distinct alternative.

This is also the choice that will confront the Labour Party’s leadership candidates in the UK. The Danish election has relevance beyond Copenhagen. Like the human drama that captivated the world in the television series Borgen, it points to a universal progressive dilemma.

This article first appeared in the 26 June 2015 issue of the New Statesman, Bush v Clinton 2

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.