Starmer’s Disgraceful and Damaging Remarks

 

I’m on holiday, and wasn’t going to write a blog post this week. But after a splendid day out on the Northumbrian coast I made the mistake of reading Starmer’s remarks on Labour’s immigration white paper. I have in the past gone through speeches by Cameron or Osborne to point out the lies and deceptions they contained, because most of the media and generally the opposition would not do this job. Unfortunately much the same is now true for what Labour says about immigration. Going through the speech:

1. In the first para: “This strategy will finally take back control of our borders and close the book on a squalid chapter for our politics, our economy, and our country.” Elsewhere he said that high immigration had done ‘incalculable damage’.
   
   You may not have liked the immigration policy of the previous government, but calling a system that prioritised skilled over unskilled immigration or allowed migrants to take jobs in areas where shortages were causing real harm (social care) is hardly ‘squalid for our economy or country’ and it certainly did not cause incalculable damage. This is nonsense language worthy of a Trump style populist.

2. Apparently the previous government’s immigration policy was “A one-nation experiment in open borders conducted on a country that voted for control.” That is a simple lie. A visa system that excludes most low skilled migrants is not an open borders policy. Yet apparently it risked the UK “becoming an island of strangers, not a nation that walks forward together.” Starmer has no evidence to support this, so it’s just a simple appeal to xenophobia, with a long tradition (e.g.)
   
   

3. “Migration is part of Britain’s national story…..But when people come to our country, they should also commit to integration, to learning our language, and our system should actively distinguish between those that do and those that don’t.” Integration is of course important, but implying that this is all down to migrants and nothing to do with the government is false, and voters understand that. So why not say this? Perhaps because the white paper proposes doubling the time before migrants can apply for citizenship, which hardly encourages integration.
   
   

4. The previous immigration system meant “Fewer people who make a strong economic contribution, more who work in parts of our economy that put downward pressure on wages.” There is no good evidence for this, and plenty that shows it is false. If Starmer is talking about social care, then what would he have done when acute shortages emerged and the previous government allowed substantial immigration for social care jobs. Nothing, allowing job shortages to persist with all the suffering that would bring? Or would he have raised taxes or cut government spending to make room for higher wages to attract more to take up social care jobs? By pretending this dilemma doesn’t exist he is being deceitful.
   
   

5. “But at the same time, we do have to ask why parts of our economy seem almost addicted to importing cheap labour rather than investing in the skills of people who are here and want a good job in their community.” As the above shows, ‘parts of the economy’ here includes this government.
   
   

6. “If we do need to take further steps, if we do need to do more to release pressure on housing and our public services, then mark my words – we will.” The old lie, repeated at every opportunity by Reform and many Tory politicians, that immigration puts pressure on public services. The evidence suggests the opposite is true, as the OBR have noted. What the OBR thinks matters a lot, because if immigration is less than they expect that will mean their projections for the public finances will get worse, not better, and the Chancellor will respond with higher taxes or more spending cuts. As for housing, there is this.
   
   

7. “So perhaps the biggest shift in this White Paper is that we will finally honour what “take back control” meant and begin to choose who comes here so that migration works for our national interest.” This statement suggests a fundamental change in our immigration system, whereas in reality the white paper essentially keeps the same skilled based visa system and just changes its parameters.
   
   

Taken as a whole, what I find distasteful about these remarks is not their political viewpoint but instead their simple dishonesty. They suggest, just as right wing populists do, that reducing immigration involves no costs, and in particular it’s unequivocally good for the economy. From these remarks you would be forgiven in thinking that there are no trade-offs at all. You might also wonder why, if that is the case, previous governments have found it so hard to control.

If a government told you that you could have lower taxes and higher public spending without additional borrowing you would be a fool to believe it, but politicians continue to treat voters as fools when it comes to immigration. It is as if politicians believe that being honest will be seen as a weakness of resolve, whereas in reality the opposite is true.

That is why these remarks are disgraceful. They are damaging in part because they validate the rhetoric and dishonesty of both Reform and the Conservatives. But, incredibly, they are also seriously damaging for the Labour government itself, for reasons I spelt out here and here. By seeming to validate almost everything right wing populists say it only makes them more attractive to voters, while remarks like this are almost designed to make social liberals and anyone with a bit of knowledge of the issue disinclined to vote Labour again.

This government had a golden opportunity, with immigration numbers falling, to try and make the UK's debate about immigration more honest. It has done the opposite, and the chance is unlikely to come again. As a result, the UK's squalid and damaging discourse on immigration will continue. 

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The mistakes that have led the Conservatives towards annihilation, and Labour copying them

 

Despite what you read, we have been here before. In the 2019 European Election, Farage and his Brexit party won over 30% of votes, with Labour on 14% and the Conservatives 9%. That directly led to the Conservatives adopting populism by electing Johnson as its leader. The Conservatives under Johnson ticked most of the boxes that define right wing populism: an all powerful leader, endemic lying, attacks on our pluralist democracy (e.g. suspending parliament), sidelining expertise (the second and third Covid waves), culture wars, corruption and so on. The one box he didn’t tick was reducing immigration, which is one reason the Conservatives lost big in 2024 and why Reform has now taken their place. [1]

To some extent the elections last week told us what we already knew, which is that both the two main traditional parties are very unpopular. It emphasised this unpopularity, however, because both Labour and Conservatives underperformed their current national polling as many of their voters didn’t bother to turn up. As the Liberal Democrats and the Greens also did very well, last week was about Labour and Conservative unpopularity more than the popularity of Reform.

If last week’s vote shares were repeated in a general election Ben Ansell calculates that Reform might win an outright majority, but with a bit of tactical voting a Labour/LibDem coalition is more likely. But neither result is that surprising when you see that the same calculations give the Conservatives just 10-20 seats. The Conservatives are in annihilation territory, with Reform taking their place.

Reform gets most of its voters from the Conservatives, and Farage sees the future of Reform as replacing them, so it is instructive to see why the Conservatives have so far utterly failed to stem the Reform tide. Under Sunak and Badenoch their line seems to have been: we agree with Farage on the key socially conservative issues and their importance, which is why you shouldn’t vote for him. It was Farage who first popularised the issue of what he termed an ‘invasion’ of small boats, and the Conservatives who invented a crackpot scheme to deal with them.

By adopting largely the same rhetoric of Farage on asylum and immigration, but failing to change things, the Conservative government set themselves up to lose large numbers of votes to Reform. Worse still, by adopting the language of Farage they alienated those Conservative voters who were economically right wing but socially liberal, and so in the General Election they lost a large number of seats to the Liberal Democrats.

There seems little chance that Badenoch will change this failed strategy, but equally there seems little chance that the strategy will suddenly come good. Put simply, their record on both immigration and asylum will over the next few years weigh more heavily with voters than their Farage-like rhetoric. So why would a voter who really cared about these issues vote for the Conservatives rather than Reform?

On the other hand, the success of the Liberal Democrats has a less secure foundation. If the Conservative party moved away from trying to beat Farage on socially conservative rhetoric and policies, and instead started to sound a little more liberal and less populist, then there is the potential to squeeze the LibDem vote in a general election. The Conservatives' not unreasonable argument would be that voting LibDem would keep Labour in power, because the Liberal Democrats are clearly not against cooperating with a minority Labour government while Reform could not.

To make that transformation the Conservatives would need a new leader, and here they have a problem. James Cleverly is the obvious alternative leader to achieve such a switch, but while a ballot of MPs might put him first, his main rival Robert Jenrick is far more popular with Tory members. These members, who are largely sympathetic to Farage and his agenda, have the final say in choosing a leader and will not want to choose someone who sounds more liberal.

The Conservatives seem to be hoping that over the next few years Farage and Reform lose some of their current appeal. That could occur if Reform makes a mess of running some councils and that gets media coverage, but would that coverage ever be extensive enough to influence predominantly low information Reform voters? Is there any other reason why the media might start subjecting Farage and Reform to proper scrutiny, when they have largely avoided doing so until now. The right wing press is increasingly acting as the media arm of Reform rather than the Conservative party.

Equally it is quite possible that, with more Reform politicians at the local level, we will see more internal dissent within the party. But that has happened already, and it doesn’t seem to have done Reform any harm at all. This is partly about media coverage, but it is also about the nature of a populist party where the leader is king, and unlike the Conservatives there is no means for the king to be deposed.

It is therefore not obvious why what happened to the Conservatives last week will not continue to happen over the next few years, and they will be facing wipe-out at the next general election. For this reason they will be desperate to do some kind of deal with Reform, but equally there is no obvious reason why Farage should cooperate. The final card Conservative MPs have is to offer Farage a merger that included his leadership of their party, which takes us back to those 2019 European election results. Conservative MPs dealt with that existential crisis by giving the leadership to their own right wing populist, when most MPs knew full well that he would be a terrible Prime Minister.

The possible death of the Conservative party is such a momentous milestone in UK politics that you would think the other main traditional UK party, Labour, would be doing everything they could not to make the same mistakes. Yet incredibly Labour seem to have decided to follow much the same strategy that failed the Conservative government so badly. They too are employing rhetoric and making policy that says Farage is right about small boats and immigration. This is alienating parts of their core vote just as the Conservatives alienated its southern heartlands.

The only way a Labour government can avoid a similar fate to the previous Conservative government is by having a really good (in the eyes of social conservatives) record on immigration and asylum. A record that was Farage proof. To see why that is very unlikely to happen, they just need to remember Cameron’s immigration targets.

What Labour, the Conservatives and Reform will not admit is that measures to directly reduce immigration have clear economic costs. If you stop granting visas during a period, like now, of low unemployment you create labour shortages that will reduce output in the short term, and may move jobs, output and therefore income overseas in the longer term. If you stop overseas students going to UK universities you will bankrupt some (with big losses to the local economy) and require government money to help others out. That is on top of the fact that cutting immigration makes the public finances worse. [2]

There was a reason why Cameron didn’t try to hit his targets for immigration. But the fact that he had targets which he missed played into Farage’s hands, who blamed free movement under the EU. Is Labour really prepared to reduce real incomes and growth to hit low levels of immigration? Even if they did, small boat numbers are largely governed by events overseas over which the UK government has almost no control. By mimicking Farage on these issues they are laying the ground for their failure in the eyes of voters.

Will Labour see sense on this? The FT’s George Parker writes: “Morgan McSweeney, Starmer’s chief of staff, will pore over the results on Friday and is likely to conclude that he is right to pursue a “Blue Labour” strategy to address the populist threat — a policy which is already starting to be deployed.” Parker is probably right, unfortunately, but hasn’t this strategy already been deployed since Labour were elected, and for some time before that as well? Are last week’s results more a comment on the failure of that policy?

Or George Eaton in the New Statesman: “expect an increasing number of MPs to demand a “reset” – greater action to reduce immigration (one of the defining issues in Runcorn) and an avoidance of further austerity measures.” Except as any Labour MP should know reducing immigration will increase the need for austerity measures given Labour's fiscal rules, or do these MPs believe the Reform party politicians who falsely say the opposite?

And this, suggesting Labour’s unpopularity is all the fault of Ed Miliband and trying to save the planet! And this. Many Labour ministers, MPs and advisors seemed to have learnt nothing from the demise of the Conservative party.

As I have argued before, it would be far better if Labour started developing a more distinctive line on immigration issues, which didn’t just parrot Farage. Crucially they need to start relating immigration to the jobs immigrants do, and start talking about the causes of high UK immigration at the same time as showing why crude targets are either pointless or damaging. On asylum they need to talk about international fairness and establish safe routes. As yet there is no sign of any of those things happening. [3]

[1] Even earlier, right wing populism achieved its first majority win in the UK with the Brexit referendum.

[2] Migrants tend to be young, so pay taxes but put below average demand on public services. In the short term it is what the OBR does that matters, and here is their analysis.

[3] Unfortunately the Labour government is not just copying Conservative strategy on immigration and Reform, it is in danger of effectively doing so on growth and public services too. In the General Election the Conservatives lost so badly not just (or even mainly) because of immigration but because living standards were stagnant and public services had been run into the ground. There is some evidence that, in terms of losing voters to Reform in Runcorn at least, these issues mattered more than immigration.

On growth and public services Labour wants to do much better than the Conservatives, but they have not as yet put the resources in place to do so. Joining the EU’s customs union and harmonisation of standards would lead to significantly higher growth quite quickly, but Labour are moving much more slowly because they don’t want to upset social conservatives. By pretending they can make Brexit work they are not using one of their strongest weapons against the man who championed it during the referendum.

On public services Labour have stopped the ridiculous additional cuts the Conservative government had pencilled in, but they haven’t raised taxes enough to significantly improve service provision compared to levels they inherited. Hence their very unpopular decisions to end the winter fuel allowance and cut disability benefits. As I note here, planned total current public spending in four years time is slightly below the level it was at the end of the previous Conservative government.

Labour say that they have taken unpopular decisions to enable improvements that will come good over the next few years. If they believe that then they are in serious danger of deluding themselves. The reality is that they have taken unpopular decisions for very little money, so the big danger is that voters will not see future benefits and will decide that a Labour government is little better than a Conservative one, and vote for something different.

What Labour is getting wrong in fighting right wing populism

 

We can guess that, however well the Liberal Democrats or Greens do in this week’s council elections, the main headlines will be about the success of Farage and his Reform party. David Jeffrey, in discussing how to fight right wing populism here, has a clear message for Labour. “For social democratic centre-left parties, academic research is clear: do not move towards the populist radical right on policy.” Yet that is what Labour did last year, with such apparent success, and what it is continuing to do. Is this because our FPTP voting system means that lessons from Europe do not apply to the UK?

There is a simple trade-off. By adopting a more socially conservative position Labour may attract voters who would otherwise vote for one of our two right wing populist parties, but they may lose socially liberal voters who might normally vote Labour. What do current polls tell us about this trade-off? We know that the big changes since last year’s general election are a big increase in the Reform vote and a big fall in Labour’s vote. But that isn’t because lots of Labour voters are switching to Reform.

Take for example this YouGov poll from mid-April. Most ‘new’ Reform voters come from the Conservatives, not Labour. Labour have lost twice as many voters to the Liberal Democrats than Reform. If you equate right wing populism in the UK with Farage and Reform, then what the Conservatives do to combat Reform matters much more than anything Labour does, and Labour are currently losing three times more voters to the LibDems plus Greens than Reform.

However it is incorrect to follow the media in believing that right wing populism is confined to Reform. There was little difference in the last election between Reform and the Conservatives on policy, and the latter hasn’t exactly become more socially liberal since then! In addition, Labour should plan on the basis that there will be a Tory/Reform pact at the next election. Yet even taking this point on board, currently Labour are still losing twice as many voters to socially liberal parties than socially conservative parties.

There is an obvious problem with this calculation. It might tell us something about the number of voters Labour could win back by changing their socially conservative stance, but it doesn’t tell us how many more voters Labour might lose to the Tories or Reform if they did so. To put it another way, Labour have since the general election lost a substantial number of voters to right wing populism despite maintaining a socially conservative stance.

There are two good reasons why this numerical exercise overestimates the potential cost of defections by socially liberal or left wing voters. The first is that this is an opinion poll, not a general election. Labour clearly thinks [1] that, come a general election, many of these voters will return to Labour to avoid a right wing populist party winning. I discussed here some reasons why many might not, but some certainly will. However even if this ‘they will come back’ argument is correct, it ignores the political costs of Labour being seen as a very unpopular government between now and the next election. The second is that many of the Labour voters being lost to more socially liberal parties will be in city seats that are safe for Labour. As Brexit showed, FPTP is biased towards social conservatism.

However there are also strong arguments that triangulating towards socially conservative policies will not stop many Labour voters defecting to Reform or the Conservatives. The first is that triangulation makes much more sense for an opposition than a government.

When a government is unpopular, it makes sense for the main opposition to diminish the differences between itself and the government, because by doing so it can attract voters who might be sympathetic to the government’s goals but disappointed in its record. If the opposition instead promised radically different policies, that might sound dangerous to these voters. Those who want large changes will vote for the opposition in a general election anyway (probably but not necessarily hoping for greater change). Triangulation by the opposition makes sense, because it reduces fear of change.

In contrast, it makes much less sense for an unpopular government to try and diminish the differences between itself and the opposition, because voters will base their decisions on the government’s record rather than its rhetoric.

Take immigration as an example. The last government said it was tough on immigration, but their record said otherwise. As a result many of those who wanted lower immigration were unhappy with the Tory government and voted to defeat it. As the Labour opposition said they like low immigration too, these voters feel safer in voting the government out.

Now think about a Labour government in 2028/9. Immigration, although lower than 2024, is still likely to be higher than socially conservative voters want. The Conservatives and Reform will be fighting Labour on this issue, so socially conservative voters will turn to these two parties. It doesn’t matter if the Labour government says they want lower immigration, because their record counts for much more in voters’ minds than what they say.

To put the same point another way, other things being equal, if you are a social conservative you will vote for a party that is most convincingly socially conservative. As David Jeffrey notes, “when parties adopt populist radical right positions, voters are more likely to defect to the radical right instead.” That didn’t work for the last government because of their record. The only way a Labour government could get voters whose primary concern was immigration to vote for them was if their record on immigration was just what socially conservative voters wanted, but that is very unlikely to happen.

The best way for a Labour government to win over socially conservative voters is on its economic record, and to contrast this with the economic record of right wing populists. This is because Labour voters who are ‘Reform curious’ are socially conservative but left leaning on economics. Although Labour understands this, I have argued repeatedly that it is failing to do what is necessary to achieve its economic ambitions. Even some in Blue Labour seem to agree. On public services, Labour has failed to raise tax by enough. It could do more to tax wealth, but if this is not enough it needs to raise taxes on income. As Labour keep saying, the world has changed, so they cannot cling to pre-election promises. [2]

Which brings us to another strong argument against Labour’s turn to social conservatism. Social conservative policies tend to lead to economic harm. If Labour adopts socially conservative policies and rhetoric, it at best undercuts what it can say on public services and growth, and at worst it undermines their attempts to improve public services and growth. It can also hinder their case against right wing populism.

Brexit is a clear example. To appease socially conservative voters Labour are approaching realignment with the EU at a snail’s pace, when doing more would have an appreciable impact on economic growth before the next election. Immigration is another example. Despite all the research showing otherwise, too many voters believe that cutting immigration will improve their access to public services. Yet instead of the government counteracting the right wing media’s propaganda on this, it seems instead to prefer not to believe the evidence! Equally universities have been a UK economic success story, but they are currently struggling in part because they are hit by Home Office concerns over immigration numbers.

At present, Labour are creating for themselves the worst possible background to the next election. By triangulating too far towards right wing populists, they are limiting what they can do to improve personal income growth and public services. By talking about immigration in the same way as the Conservatives and Reform, they are laying themselves open to a general election where the right wing press sets an agenda that has been validated by this government’s rhetoric.

This is not an argument for Labour to switch to social liberalism on issues like immigration, even though this would be closer to my own policy preference. Instead it is an argument for creating a more distinctive approach, which recognises the concerns of social conservatives but which is more honest, and as a result does not compromise living standards or public services. The Social Democrats in Denmark have shown how this can be done successfully. If you like, Labour can be tough on the causes of high immigration rather than employing empty or damaging rhetoric about being tough on immigration.

On economic issues it needs to do far more than just attack particular Reform policies. These will have a limited purchase on low information voters (who instead see stuff like this) and there is always the danger that Farage will co-opt left wing policies as he has before. He can do that because, like other right wing populists, he is quite happy to lie.

Which brings me to the two most effective weapons Labour currently have to fight Reform and Farage. The first is Brexit. Most voters, including a majority of Leave voters, recognise that Brexit has not been a success. Farage along with Johnson were the two major figures who championed leaving the EU. Farage pretends that this failure is somehow due to how Johnson enacted Brexit, whereas in reality they are inherent in Brexit itself. To an outsider it must seem incredulous that someone who can be so wrong about such a major issue, and who has made voters poorer as a result, is currently so popular. The reason is in large part because the Labour government refuses to be honest about the costs of Brexit.

The second potent weapon against Reform is Donald Trump. The simple way of getting across the message that Farage’s policies will have severe economic costs and that his claims otherwise are just lies is to equate Farage to Trump. Trump’s tariffs are hitting the US economy and causing chaos, just as Farage’s championing of Brexit has hit the UK economy. Trump promised lower prices but his policies are increasing them, and equally Reform’s promises on the economy are worthless and their policies will reduce living standards. The simple message that Labour should be repeating at every opportunity is that if voters want to know what a country led by Farage would look like, they just need to see what is happening to the nation led by his friend Donald Trump.

[1] The child benefit cap is more of a social than economic issue for some voters, because it is seen by many social conservatives as a benefit going to the undeserving poor.

[2] Labour claims that tax is a cost of living issue, but as the US election showed, what many voters blame the government for on the cost of living is higher prices, not lower real earnings. Furthermore, tax increases now will be forgotten or forgiven if it enables better public services by the time of the next election.

Is two-party politics really dead in the UK?

 

Rob Ford, previewing the upcoming election on 1st May in the Guardian, emphasises how the Liberal Democrats, Greens and Reform are likely to make big gains. Going further, in a recent article in Prospect, Peter Kellner suggests the domination of Labour and Conservatives, even in general elections where the First Past The Post (FPTP) voting system gives them a huge advantage, is over for good. I started out being more sceptical, but as I’m an amateur on these matters, I thought it was worth discussing in more depth.

The key evidence in favour of the view that multiparty politics in the UK [1] is here to stay is the trend in vote shares since shortly after WWII. Here is a more complete version of the numbers that Kellner gives in his article.

Since 1951, the UK vote share of Labour and the Conservatives combined has fallen from nearly 90% to below 60% in 2024. However the last observation is important. Kellner argues, convincingly in my view, that 2017 and 2019 are outliers because Brexit polarised politics, and so 2024 represents a return to a falling trend for the two main party’s vote share. But is this really a trend or a series of step changes due to clearly defined political developments?

Until 2010, the fall in the Lab+Con share was largely about a rising share for the Liberals/SDP-Liberal Alliance/Liberal Democrats, and here there is a clear step change around the 1970s. From 1945 to 1970 the Liberal vote share oscillated just below 10%, but from 1974 to 2010 it averaged around 20%. The rise in nationalist parties in Scotland and Wales plus the rise in UKIP in the 2000s (to achieve a 3% vote share in 2010) has a more modest influence over this period. In 2015 the LibDem vote collapsed, but the UKIP vote, and to a lesser extent the Green party vote, rose to almost compensate. Even if we discount 2017 and 2019 as Kellner suggests, 2024 looks like another step change, with the combined vote share of Reform, LibDems and the Greens being 33%.

The argument I want to present is that these two step changes occurred when the two major parties moved away from being close to where the average voter is. To understand more recent movements, we need to look at policy space in two rather than one dimension.

In the diagram above, the centre is where the average voter is, which may change over time as voter opinion changes. From 1945 to 1970, both parties were close to the centre of electoral opinion, with Labour being a little more left wing and socially liberal, the Conservatives more right wing and socially conservative. [2] Most of the political action was about economics, and voting was largely class based. FPTP ensured that there was little scope for other parties to gain a substantial vote share.

The 1970s brought inflation and industrial unrest, and I would suggest as a result public opinion moved away from both the union movement and a Labour party using incomes policies to reduce inflation. In terms of the diagram above, Labour shifted left because its policies didn’t shift with public opinion. This produced a step increase in the Liberal vote in 1974. The Conservatives in the 1970s (particularly after Thatcher became leader) moved right in economic terms, a move that in 1979 went well beyond public opinion and so they moved to the right in the diagram above. The gap between Labour and the Tories in economic terms was greatest in 1983, when the Labour vote share collapsed and the SDP-Liberal Alliance won almost as big a vote share as Labour. After 1983 Labour gradually moved back towards the economic centre ground, and won power again in 1997.

At this point the Conservatives were now much further away from the centre ground than Labour on economic issues, and as a result they began to campaign much more on social issues, and immigration in particular. Voting became less class based, and more age based (because older voters tend to be more socially conservative). This may have allowed the Conservatives to make inroads into traditionally Labour working class areas, but initially at least economic interests meant that their socially conservative rhetoric was not matched by actions. This led to the emergence of a populist right wing party, UKIP, that started to gain a significant vote share.

Skip to 2024, and Labour moved to adopt some moderately socially conservative policy positions, and also implicitly a more right wing policy in terms of public service provision. The Conservatives, in an attempt to counter the threat from Farage, adopted even tougher socially conservative policies (principally Brexit) and became increasingly populist in nature. This had two effects. The first, relatively minor, was to give the Green party its highest national vote share at 6.4%. The second, and perhaps more important, was to give the socially liberal LibDems their highest seat total since WWII.

For power, under FPTP, seats count for everything and vote share nothing. If the Conservatives stay as they are, which is a populist party advocating pretty extreme socially conservative views from a populist perspective, this leaves socially liberal but economically right wing voters very reluctant to vote for them. The Liberal Democrats in 2024 succeeded in capturing many of these votes, and as a result they obtained their highest seat total since WWII with a much lower vote share than most of the 1974-2010 period.

Seen in this way, the 2024 General Election was not the latest point on some inevitable trend to multi-party politics, but the result of shifts in the policy stance of the two main parties. Essentially the Conservatives first moved to neoliberalism, and then to right wing populism, and now Labour has moved in that direction leaving a large part of policy space empty for other parties to fill. As a consequence, whether this situation persists or becomes more marked will depend on whether the two main parties stay where they currently are, or whether they move back to where they once were.

If the Conservatives continue to focus on competing with Farage, then the LibDems have a good chance of keeping their high seat total, but their scope for further growth is modest as they were last year second in only 27 seats. [4] Otherwise the main beneficiary of this Reform/Tory battle is Labour. If Labour stay where they currently are, the Green party is second to Labour in 39 seats and therefore has scope to increase both its vote and seat total. [3] If Farage can be persuaded into an electoral pact or (less likely) the Conservatives collapse, we could get the neat result that the UK becomes a four party system, with each party representing one of the quadrants in the diagram above.

However it is equally possible that 2024 represents a low point for the two main parties. Labour could, if only for purely electoral reasons, shift back towards a moderately socially liberal position while at the same time increasing taxes further to fund better public services, as they did in the early 2000s. The Conservatives, under a new leader, could focus more on winning back the Liberal Democrat rather than Reform vote. In those circumstances Labour could use the prospect of a return of a Tory government to squeeze the Green vote, with the Conservatives using the same tactics to squeeze both the LibDems and Reform.

Both scenarios are possible. In particular, with less tactical voting in Council elections and more protest voting, the pressure on the two main political parties to change their policy positions and tactics before the next General Election will be intense. What is clear, if this analysis is right, is that any continuing decline or resurgence in the fortunes of the two main parties lies largely in their own hands.

[1] Multi-party politics has of course been with us for some time in Scotland, Wales and Northern Ireland, so this is really a question about England.

[2] In this diagram the centre is the average of voter opinion, which in terms of policy positions may shift over time. For example, since WWII voters have been becoming much more socially liberal. Undoubtedly opinion did shift left in 1945, which was why Labour’s radical policy agenda was able to win that election, and Conservative policy did then shift left to reflect that.

[3] Competition from existing or new left wing parties would of course hinder this.

[4] The main danger for the LibDems is if Labour become very unpopular among economically right wing voters, and the Conservatives successfully argue that the LibDems would support a minority Labour government. 

The new silent majority

The term silent majority, in both the UK and US, was once used for voters who were socially conservative and also, it was assumed by the politicians who used the term, moderately conservative in their economic views. While the ‘majority’ part was dubious, the ‘silent’ bit had some validity. In the UK members of parliament have long been far more socially liberal than the public that voted for them. For example MPs voted to abolish the death penalty for murder in 1965 and completely in 1988, while opinion polls still suggest a majority of voters would reintroduce it for various crimes. In addition an older generation that tended to be more socially conservative were not strongly represented in the broadcast media.

It still appears true that MPs in the UK are much more socially liberal than voters, but this cannot be said for the political party platforms of the two main political parties. The reason is familiar. The political right in the UK, following the US, started weaponising social conservatism in a big way to gain votes when neoliberalism started to become increasingly unpopular among voters. For reasons I discussed here, in the UK this ironically created the space for an insurgent party to challenge the Conservatives for not being socially conservative enough. After its heavy defeat in 2019, Labour in opposition adopted far more socially conservative policies. As I noted here, its success in the 2024 General Election has encouraged it to maintain that stance in government.

While the three main political parties in terms of current opinion polls have socially conservative policy platforms, they are also on the right in terms of taxation and public services. While not surprising for the Conservative party, this positioning for both Reform and Labour is more interesting. Undoubtedly Nigel Farage’s own economic views are pretty right wing, but in other countries right wing populist parties have found it advantageous to adopt a more left wing rhetoric on some economic issues. This is because many socially conservatives have left wing views in terms of disrespect for the economic system and economic elites, and a more favourable view of redistribution and the provision of public services. Farage is conflicted because his main aim is to replace the Conservative party, but in general elections Reform is the challenger party in many largely working class Labour seats yet his policies don’t fully reflect that.

On some specific issues, like workers rights and protections for renters, Labour can claim to be significantly more left wing than the Conservatives. However on public services they have failed to raise taxes sufficiently to lift the share of public spending in GDP beyond the level at the end of the previous Conservative government. While that share is high in historical terms, this just reflects the growing demands of health across OECD countries, as well as in the last few years higher interest rates on debt. It seems hard to see this government significantly improving on the current dire provision of public services, so in this crucial respect Labour are right rather than left wing.

If we use the term silent majority to represent those voters without a strong voice in terms of political representation and public debate, then in the UK and perhaps also the US the new silent majority are those voters who are either socially liberal, or centre to left wing in terms of public service provision (or both). This new silent majority is probably actually a majority of voters. It extends way beyond what is typically referred to as the left in the UK.

This rather strange state of affairs is encouraged by the voting systems in the US and UK. Social liberals tend to be younger, and younger voters tend to be concentrated in cities, which means that the majority of parliamentary seats will be socially conservative even if socially conservatives only make up half of the voting population. Brexit was a good example of that. The US senate and electoral college is also biased towards rural and red state voters.

The term silent majority seems particularly apposite when it comes to public debate in the UK. The print media has always been heavily skewed to the right, but the broadcast media has tried to be impartial. Impartiality in practice has focused on being even handed between the two main political parties. When the two main parties promote socially conservative policies and argue against tax increases to improve public service provision, that can mean that a social liberal and economic centre or left point of view struggles to get much airtime. The BBC's obession with Nigel Farage also does not help. To take just one example, voices reflecting the majority view that immigration into many types of job should be encouraged are rarely represented in the media.

Things might have been different if the Liberal Democrats had managed to get more seats than the Conservatives in the 2024 General Election, and had as a result formed the official opposition. That they failed to do so was not due to the Liberal Democrats so much as Labour, whose vote declined during the campaign. If their vote had been a little stronger, even more Conservative seats would have fallen to Labour. In this respect the argument from some on the left that tactical voting was no longer necessary in 2024 was both unhelpful and ultimately harmful to the left.

Ignoring the new silent majority worked for Labour in opposition because the principle aim of most voters was to get rid of the terrible Conservative government, and they knew that could only be achieved in most constituencies by voting Labour. Where it could be achieved by voting LibDem or Green, voters did that too. Labour achieved a huge majority with only a third of the popular vote not through any brilliant strategy, but because voters’ primary aim was to be rid of a Conservative government, and socially conservative voters could vote Reform rather than Conservative.

To the extent that votes in local elections reflect national issues, the situation will be very different over the next four years. Those in the new silent majority who want to use local elections to send a message to the government will vote Lib Dem or Green, or not vote at all, and a few may even vote Reform. As disappointment in Labour’s performance on improving public services grows, this silent majority revolt will only increase.

Is the government’s strategy to take these ‘mid-term’ losses in its stride, and assume that the silent majority comes back to Labour in the next general election? There are at least three problems with this idea. First, I have seen many times that once people start down a road they can find it difficult to turn back. Many will continue to vote in protest against Labour even though a Conservative (or Conservative/Reform) government would be much worse.

Second, among feasible results the ideal for social liberals will not be a Labour majority government, but instead a minority Labour government which is dependent on the Liberal Democrats to get legislation passed. This is because the Liberal Democrats have a platform that is generally more socially liberal than Labour. Many in the new silent majority may justify not voting Labour through a desire to achieve this result.

Third, building on the previous two, without the active support from the new silent majority a Conservative/Reform electoral pact could sink Labour. Whether this happens seems to depend on the views of one man, Nigel Farage. Any strategy where success depends on which way the UK’s pre-eminent populist moves in four years time is not a good strategy.

For these reasons, for Labour to continue to ignore the new silent majority seems at best very risky, and at worst foolhardy. Unfortunately it is also easy to see why they are making this mistake. Generals tend to fight the last war, and when the last war resulted in a huge victory in terms of parliamentary seats, fighting the last war is all the more tempting. Pursuing socially conservative policies and keeping the state small also reflects the ideology of some of those on the now dominant Labour right. In addition I suggest here that Labour ministers are hugely overestimating the extent to which their better, less ideological management of the public sector can bring about improvements in services that the public will notice. Finally, when there is so much media discussion of why populism is on the rise, it is easy to focus on these voters at the expense of everyone else.

Understandable mistakes, but clear mistakes nevertheless. The number of poor decisions Labour have made since they came to power, and the speed with which it lost its honeymoon period, testify to their ability to make political errors. Most recently their initial attempts to cast Trump in a positive light (remember ‘project chainsaw’) continue to show a basic lack of political understanding. It may take some very poor performances in local elections before Labour recognises the danger of ignoring the new silent majority.

Why populists can do so much harm

 

Trump’s ‘Liberation Day’ naturally reminded me of Johnson’s ‘Independence Day’. There are of course many differences between the two. Tariffs are a tax on imports, while Brexit erected bureaucratic barriers to trade with the UK’s largest trading partner. A more important difference is that tariff barriers can go down as quickly as they went up, while Brexit was a much more drawn out and permanent affair that couldn’t be reversed quickly. But essentially both are bad because they stop mutually advantageous trades taking place.

Another difference between Brexit and Trump’s Liberation Day tariffs is that the latter only impact US imports directly. US exports are only hit if other countries respond with their own tariffs against the US. If other countries do not respond by raising tariffs on US exports, then the impact of the US tariffs can be offset by an appreciation in the dollar. This is one of the many reasons that raising tariffs across the board to improve your trade balance makes little sense.

If other countries retaliate with tit for tat tariff increases, then we wouldn’t expect an appreciation in the dollar. That situation is more like Brexit, and just as Sterling depreciated following Brexit a US led tariff war might lead to a depreciation in the dollar, because the hit to the US economy is bigger than the hit to the Rest of the World. Of course we cannot really infer anything from exchange rate movements immediately after Trump’s announcement, because higher tariffs had been anticipated for some time before that. (In contrast, Brexit went from a possibility to a certainty the moment the referendum result was announced, so we know Brexit depreciated Sterling against the Euro.)

As Mark Carney notes here, it took time for the impact of Brexit to influence GDP, and the impact of Trump’s tariffs on the real economy is also unlikely to be instantaneous. As a result, monetary policy has time to react, and the bond market seems to be expecting the US Federal Reserve to ‘look through’ the direct inflationary impact of higher tariffs and instead cut interest rates faster to support economic activity. If a US recession happens this year, it will not be just because of tariffs, but rather a result of the uncertainty created by giving so much power to just one individual who has little contact with reality.

I would be very happy if Starmer and Reeves use Trump’s tariffs as an excuse to put up taxes, but what they are really an excuse for is to abandon Labour’s red lines on the EU, an excuse the UK government seems determined not to make. The harm US tariffs might do to the UK are only a fraction of the damage leaving the EU’s Single Market and Customs Union have already done and will continue to do. The best way for the rest of the world to deal with Trump’s tariffs is to encourage trade diversion from the US to elsewhere. Retaliatory tariffs are best kept to measures that will have an immediate negative political impact on Trump himself.

Yet another potential difference between Brexit and Liberation Day is that Brexit ended free movement of labour between the UK and the other EU countries. But Trump has that covered, not only by restricting immigration but also deporting immigrants on a largely random basis, sometimes to a prison camp in a third country. The real difference may be that what Trump is doing will actually reduce immigration into the US, and therefore do some sectors of the economy real harm, whereas for the UK Brexit largely ended up diverting the origin of immigrants from the EU to elsewhere.

While immigration is central to right wing populism, erecting trade barriers is not. We didn’t get Brexit because some politicians wanted to erect trade barriers with the EU, but instead because some feared the EU and others thought backing Brexit would help their careers. With Trump I don’t think he is erecting tariffs because they are some part of a grand economic strategy. Instead I think Trump just likes tariffs. In part this is because he sees them as a solution to a problem that is in his mind only (bilateral trade deficits). In part it is because he likes the idea of countries giving him things in deals to avoid tariffs.

Whatever the personal motivations, the United States and the Rest of the World have to live with a disastrous policy because of the whims of an elderly narcissist with no respect for facts. In the UK we got Brexit because another narcissist with little respect for truth wanted above all to become Prime Minister. The reason that successful populists can do so much harm when they gain power is not just because they are inherently evil characters, or lack empathy of any kind, or because they lie all the time, but also because populists dismantle the checks and balances that are inherent in a pluralist democracy.

As regular readers may remember, I tend to follow Jan-Werner Müller in seeing opposition to a pluralistic democracy as a defining characteristic of populism. For the populist leader, their views reflect the will of the people, and therefore if a party, cabinet, parliament, the civil service, the courts or parts of the media oppose their wishes then their wishes should hold sway rather than those of these other institutions. In short, the populist wants to be a king. Where once a king might have justified this unchallenged authority through god, now for the populist king absolute power comes not from divine right but from the imagined will of the people who elected him.

But whether you see this as a defining characteristic of populism or not, populists invariably do try to dismantle the checks and balances embodied in a pluralist democracy. Johnson illegally suspended parliament, and his supporters in the media condemned the judges who called out its illegality. Trump has usurped the power of Congress through his executive orders and the antics of Musk, and attacks judges when they call out this illegality.

Imagine a British Labour Prime Minister who decided it was a good idea to set tariffs of 20% or more to end the deficit on the UK’s balance of trade, against the advice of pretty well all the economists inside and outside the country. They would have to persuade a sceptical cabinet, and in particular a very reluctant Chancellor backed up by a Treasury happy to provide chapter and verse on why it was a terrible idea. Even if they succeeded in this, parliamentary approval might be one obstacle too far, with rebel MPs encouraged by a highly skeptical if not antagonistic media. [1]

The key difference between Trump’s first term and today is the extent to which he and his followers have eliminated most of the features of a pluralist democracy that might oppose his views. In his first term Trump had little time to pick his cabinet, and as a result they often tempered or eliminated some of his crazier ideas. This time he has picked yes men and women, which often meant selecting those with little or no experience or expertise. In his first term Trump had just been elected, so there were plenty in the Republican party that were prepared to stand up to him. Today all but a few fear the electoral consequences (in primaries) of doing so. The power of Congress has been usurped but the Republicans in Congress have so far rolled over. In his first term it took time to select a Supreme Court that would allow him to break the law, but now it is in place and he can. Trump has become king, not only in his own court but also in his own country. If these differences seem as obvious to you as they were always obvious to me, then let’s just follow Paul Krugman in noting that many in US business and financial elite missed this point completely.

We can take the checks and balances of a pluralist democracy for granted, and ignore how important they can be in avoiding some of the more damaging ideas of political leaders becoming a reality. [2] But often the way politics is presented by the media actually devalues pluralist democracy. Media discourse is too often about leaders and their wishes, and when these leaders defer to other political institutions or actors they are described as ‘weak’ and ‘failing to get things done’. Partly as a result, systems of government in the US and UK have moved to give more power to the executive and its leader. It is therefore perhaps not surprising that sections of the electorate see little difference between populist leaders like Trump, Badenoch or Farage and those of other political parties. In all these ways we have made our pluralist democracies more vulnerable to a populist takeover.

[1] Here Brexit is not a good analogy, because trade barriers were a by-product of leaving the EU, rather than its central objective.

[2] They don’t always do so, of course. I learnt in 1980 that Margaret Thatcher was very keen on a poll tax. The Treasury was horrified by the idea, and it took almost a decade before she managed to implement it (first in Scotland, then England). But then it was her party that stopped it, just as it was the party that ended Johnson’s premiership.

Last week’s spending cuts were not the fault of the OBR or a medium term golden fiscal rule

 

In my last post I said that Rachel Reeves’s statement last week, and more generally the way fiscal policy has been done since 2010, had nothing to do with the OBR. Many have subsequently questioned this, noting that the OBR was set up in 2010 by George Osborne. When one of the UK’s best journalists suggests that the OBR’s “creation has had unintended consequences and reinforced a short termist, tail chasing psychology to UK economic policy making” you know that these misconceptions about the OBR are widely shared.

Why are they misconceptions? Because the OBR was created to do one key job, and that was the macroeconomic and fiscal forecasting that had previously been done by H.M.Treasury. The Treasury had, by act of parliament, produced a forecast twice a year, so the OBR did as well. The Treasury before 2010 also did a 50 year projection once a year, so the OBR does too. Essentially the Treasury farmed out its macroeconomic forecasting to this new, independent body.

One reason George Osborne liked to give for doing this is his belief that under the previous Labour government Chancellors had leant on Treasury forecasters to produce more favourable forecasts. That may well have happened occasionally (under both Labour and Conservative Chancellors), but it certainly wasn’t routine, for the very good reason that if Chancellors regularly did this Treasury forecasts would lose all credibility. As I showed here, under Gordon Brown Treasury forecasts were at first far too pessimistic about the public finances, and then too optimistic, but it was in 2009 that the Treasury produced forecasts showing massive deficits without policy changes.

So if the OBR had never been created, and the Treasury was still producing its macro forecast, it is almost certain that Osborne's austerity would still have happened, and Reeves would have done exactly what she did last week. Why can I be pretty certain of the latter? Because it was widely known that both growth and tax receipts had been disappointingly poor since the October forecast, and long term interest rates were also higher, so Treasury forecasts were bound to show the deteriorating outlook for tax receipts that I discussed here. If they hadn’t then journalists would have been rightly complaining that Treasury forecasts lacked credibility and that these forecasts should be farmed out to an independent body! [1]

So why is there this misconception about the OBR? [2] The answer is straightforward. The OBR was created at the same time and by the same person who solidified a change in the way UK fiscal policy was done. Before 2010 Chancellors would say that aggregate fiscal policy was about achieving a good macroeconomic performance as well as achieving fiscal rules. From 2010 aggregate fiscal policy became just about hitting fiscal rules. Also important was that Gordon Brown, because of the Treasury’s pessimism noted above, had reduced public debt substantially at the end of the 1990s, so meeting his fiscal rules did not become an issue until the second half of the 2000s.

Osborne thought that by focusing on the deficit he was just following the academic consensus, which said that monetary policy should control short term output and inflation and aggregate fiscal policy should target debt and deficits [3]. His great mistake was not to notice that, both before and certainly following the Global Financial Crisis, macroeconomists were shouting ‘but not when interest rates hit their lower bound’, which they had in 2009. Brown’s government had understood this, which is why fiscal policy was very expansionary in 2009, but it suited Osborne politically to pretend he hadn’t heard or disagreed.

While interest rates remained at their lower bound, fiscal policy should have been directed at achieving a stronger recovery, and debt or deficit targets should have been put to one side. That this didn’t happen is almost certainly partly responsible to some extent for the UK’s poor productivity performance that became evident in the 2010s, and which led to poor growth in real incomes. Since the 2010s productivity growth has declined even further (see here, for example), undoubtedly because of Brexit but also perhaps because of a very badly handled pandemic and continuing austerity.

However, for the last few years interest rates have been well away from their lower bound, so it makes macroeconomic sense to focus aggregate fiscal policy on achieving fiscal rules. Ensuring we have the maximum level of output consistent with stable inflation can be safely left in the hands of monetary policy. Does this mean that any dissatisfaction with what happened last week should be directed at the fiscal rules Reeves has adopted?

Again I think this is mostly wrong, but first let’s be clear what fiscal rules we are talking about. Reeves has two, a ‘falling debt to GDP’ rule and the golden rule, which says spending excluding net investment has to be matched by taxes. The first is economic nonsense, and very damaging nonsense at that, for reasons I outline here. But the rule which is currently binding is the golden rule, so in the remainder of this post I will focus on this.

In my view the golden rule makes a lot of sense. It allows the government to invest as much as it likes, but it says that future taxes should cover planned future current spending. Broadly this rule ensures that government debt stays roughly stable as a share of GDP in the longer term. If we allow future current spending to always be significantly in excess of expected future taxes, the debt to GDP ratio will rise exponentially. That is not sustainable in the long run. [4]

Reeves made two mistakes last week. The first was to think the OBR’s non-budget forecast had to show the fiscal rules being met. As I argued in my last post, a more grown-up fiscal policy would have simply noted the OBR’s forecast, and pledged to take action to meet the fiscal rules in her next Budget. This approach would have been consistent with Reeves’s sensible pledge to hold just one Budget a year, while what she did last week was not. The bond markets would not have collapsed as a result. Her second mistake was to cut spending rather than raise taxes, for reasons examined in detail here, and what is more cutting spending in a particularly cruel way.

Changing fiscal policy just once a year does something to tackle the charge of short-termism highlighted at the beginning of this post. But what about the ‘doom loop’ idea? This is that if growth falters, the deficit increases, leading the Chancellor to cut spending or raise taxes to meet her fiscal rule. But raising taxes or cutting spending reduces output, increasing the deficit, and we get into a downward spiral. If this is what following the golden rule implied, then you could indeed claim that it was helping to depress growth in the longer term.

If interest rates were at or close to their lower bound this would be a real concern, which is why fiscal rules should not apply in these circumstances. But when interest rates are well above their lower bound, as they are now, the doom loop will not operate because tightening fiscal policy will allow monetary policy to stimulate the economy. Crucially, however, monetary policy has to have time to do this, which means that the golden rule should apply to plans and forecasts five years ahead, rather than two or three years ahead. A little noticed mistake that Reeves made in her October budget was to change the golden rule to apply over a three year rather than a five year horizon, which precisely risks creating a doom loop (see the ‘fiscal rules’ section of my post-Budget post here). Needless to say I have seen no analysis in the media about this change, and why it might be harmful.

Why did Reeves make these two mistakes last week, and her mistake in altering the golden rule in October? Of course ministers remain responsible for what they do, but I suspect advice from the Treasury was far from helpful, and that Reeves and her fellow ministers are ill-equipped to depart from Treasury advice. In turn the Treasury may be making poor decisions in part because it has suffered from more than a decade of politicians pursuing poor macroeconomic policy.

I suspect the Treasury would have advised her, incorrectly, that it would be very risky to just note last week’s OBR forecast, with a lot of hand waving and frequent mentions of Truss. It may also have been the Treasury that preferred to listen to the great and the good (including in this case Lords) on fiscal rules without asking those who know rather more about them. This is speculation of course, and I’m happy to hear (in confidence) if I’ve got this wrong. What is clear to me, however, is that last week had nothing to do with the OBR and little to do with the 5 year golden rule, both of which remain valuable bits of the UK’s fiscal framework.

[1] Daniel Susskind argues in the FT that the OBR encourages the Chancellor to adopt policies that the OBR thinks will encourage growth, rather than policies that the Chancellor thinks will encourage growth. I doubt this very much. What the OBR does is look at the evidence in the literature, as it has done with the economic effects of Brexit for example. This is surely a better way to forecast than personal hunches or political wishes. I also doubt very much that the OBR's assessment of this evidence would have much influence on a Chancellor's political agenda.  

[2] Criticism of particular judgements the OBR makes is something completely different. Indeed one of the advantages of the OBR is that it is pretty transparent about the judgements it makes, which allows others to criticise them. 

[3] Of course individual tax measures can be designed to improve productivity. Osborne thought that cutting corporation tax would boost investment. It didn’t.

[4] In the long run we are all dead, so who cares? The simple answer is our children’s children, who will have to deal with a fiscal problem that is much more difficult to solve than it is today.