Full-time results: they all lost the election

May 8, 2010

Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. –

Could there have been a worse outcome to Britain’s General Election?

The result was disappointing for all concerned. The three main parties all did worse than expected, as did the nationalists. On the lunatic fringe, only the Greens have reason to rejoice – none of the others were anywhere near winning a seat.

In the meantime, Britain is fortunate that the financial markets have plenty of other countries to worry about. The only thing stopping a collapse in the pound and panic in the gilts market is that, for the moment at least, investors cannot see a more attractive (or less unattractive) alternative.

The Eurozone is in chaos, Japan appears to be in long term decline with the constant threat of a descent into chaos under its erratic new government and, as for the U.S. – it is hard to have much confidence in a country which has all of Britain’s problems writ large, plus near-bankrupt subnational (i.e. state and city) governments and, worst of all, no apparent appetite for actually doing anything (certainly not anything the slightest bit painful) to remedy the situation.

Perhaps the worst aspect of the UK post-election scenario is the focus it has already given to the question of electoral reform. This is disastrous because the last thing we need now is a debate on our constitutional arrangements, instead of concentrating on the economic situation.

One of the ironies of the current predicament is that, in spite of a disappointing outcome both in terms of votes and seats, the Liberal Democrats are living the dream. They have emerged as kingmakers, a situation which will of course become the norm if they manage to extract a commitment to proportional representation (PR) as the price of their support for a future Tory or Labour government.

However, LibDem leader Nick Clegg’s room for manoeuvre may be more limited than appears at first blush. For one thing, he dare not risk overplaying his hand. Voters may be less inclined to opt for permanent coalition government in a future referendum if they see the fate of the country hanging too precariously on deals secretly hammered out in what used to be called smoke-filled rooms.

In any case, his tactical decision to talk first to the Tories reflects the reality that he can only keep Labour in power if it is seen by the public to be a last resort.

Predictably, given the kind of person he is, Prime Minister Gordon Brown has offered Lib Dems their heart’s desire – PR (he would throw in the Crown Jewels and an offer to clean Clegg’s car too, if he thought it would help keep him at No.10). But the problem is that voters may not be very forgiving if, thanks to the LibDems, they have to face another four years of a discredited government already rejected by over 70 percent of them.

Moreover, as the junior partner in the coalition, the price of whatever they extract from Labour could be a lethal combination of responsibility without power, as they would inevitably have to share the blame for imposing what will need to be absolutely brutal cuts in spending, without really being able to do much to influence the key decisions.

On the other hand, a coalition with government headed by Conservative leader David Cameron could always be presented as force majeure, and they can look forward to spending four years playing the good cop while the Tory bad cop lays into the public-sector unions. The preferred Tory option (at least as far as the party activists are concerned) is bound to be minority Government, but it is hard to see what they can offer LibDems to persuade them to offer their support.

As far as Labour is concerned, the PM rescued the situation somewhat, thanks to the fact that he upped the ante in the final days of the campaign. Not content with simply claiming that a future Labour government would keep public spending more or less unchanged, with only minor, mostly painless efficiency savings, he actually launched into blistering attacks on the Tories, detailing the cuts they would make and the jobs that would be lost if they won – implying that everyone would be safe, if only the country kept its faith in him.

To some extent, the tactic appears to have worked. Abraham Lincoln was right to say you can fool a proportion of the people all of the time. In Britain, that proportion seems to be around 30 percent.

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